1971-11-10

ROUTINE PROCEEDINGS


Mr. G. W. Baldwin (Peace River):: Mr. Speaker, pursuant to Standing Order 43 I would ask unanimous consent to make the following motion concerning the Competition Act which involves substantial changes in Canadian law and the regulation of trade and commerce and deals in several sections with matters of provincial jurisdiction. It is imperative that the question of constitutionality be tested before the bill is passed and implemented. I would therefore ask unanimous consent to move as follows:
That the Competition Act, and in particular Parts 3, 4, 5 and 6, be referred forthwith to the Supreme Court of Canada in order that the Court may give an opinion as to whether any parts of the said act are ultra vires.


Mr. Speaker:: The House has heard the motion proposed by the hon. member for Peace River under the terms of Standing Order 43. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: The motion cannot be put.



POST OFFICE


Mr. Roch La Salle (loliette):: Mr. Speaker, pursuant to Standing Order 43, I wish to move a motion. Considering that it has become urgent that the public be informed of the truth with regard to the conflict between the former employees of G. Lapalme Inc. and the government, I move, seconded by the hon. member for Lotbiniere (Mr. Fortin):
That the House refer the matter to a parliamentary committee so that the two parties may be heard, and, consequently, that everything pertaining to this conflict, which has already lasted too long, be brought to light.


Mr. Speaker:: The House has heard the motion of the hon. member for Joliette. This motion, moved pursuant to Standing Order 43, requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: No.


Mr. Speaker:: As there is no unanimous consent, the motion of the hon. member for Joliette cannot be put.



THE CANADIAN ECONOMY


Mr. John Lundrigan (Gander-Twillingate):: Mr. Speaker, I ask leave to move a motion under Standing Order 43 on a matter of urgent importance. On the basis of the unemployment figures released today, reflecting the persistent lack of confidence of the business community in the economy, and judging by the fact that part-time jobs created exceeded the total jobs created by 14,000, and because of the fact that unemployment with its multifold social and economic implications continues to increase, I would therefore like to move, seconded by the hon. member for Vegreville (Mr. Mazankowski):
That this House request the government to make a full and definitive statement to the country on its economic goals and expectations for the remainder of the fiscal year, and declare, as well, its contingency plans to alleviate hardship on all people and families who will not find jobs this winter.


Mr. Speaker:: The House has heard the motion proposed by the hon. member for Gander-Twillingate. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: There is no unanimity and the hon. member's motion cannot be put because of the dispositions of Standing Order 43.



TABLING OF REPORT OF TARIFF BOARD AND TRANSCRIPT OF PROCEEDINGS

Hon. E. J. Benson (Minister of Finance):: Mr. Speaker, as required by section 6 of the Tariff Board Act, Chapter T-l of the Revised Statutes, I am tabling today the report of the Tariff Board on sugar, reference No. 146, in English and French, and a copy of the transcript of the proceedings.

November 10, 1971
Questions



QUESTIONS ON THE ORDER PAPER

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

Mr. Carter: Has the Government of Canada or any of its agencies entered into a written agreement or given a written commitment to the Government of Newfoundland or any of its agencies that funds will be provided during the present fiscal year for the construction of shell-type housing units in the province and, if so (a) what is the amount of funds to be provided (b) for how many such housing units?


Hon. Robert K. Andras (Minister of State for Urban Affairs):: Although Central Mortgage and Housing Corporation has not entered into a written agreement or given a written commitment to the Government of Newfoundland or any of its agencies for the provision of funds during the present fiscal year for the construction of shell-type housing units, there is an understanding with the Government of Newfoundland that financing by way of loan to individual home owners, builders and in some special cases the Newfoundland & Labrador Housing Corporation, will be provided for up to 300 such units. At an average of approximately $10,000 per loan, the aggregate amount to be loaned would be approximately $3,000,000.


PARRSBORO, N.S.-CONSTRUCTION OF NEW FEDERAL BUILDING
Mr. Coates: 1.	On what date will tenders be called for the construction of a new federal building at Parrsboro, Nova Scotia?
2.	What federal offices will be housed in the new federal building and what is the proposed amount of office space provided by the new construction?


Hon. Arthur Laing (Minister of Public Works):: 1. It is not
intended at this time to call tenders. The Department has under consideration a proposal to lease space in a privately-owned building.
2.	This space, after suitable renovations could accommodate the Post Office and the Department of the Environment.
(a) 1969-70	$ 87,560.00
1970-71	$219,745.00
1971 to July 21, 1971 $334,102.57
(b)	Name cf Band
Afton Band, N.S.
Micmac Grand Council, N.S.
Middle River Band, N.S.
Sydney Band Council, N.S. Kingsclear Band, N.B.


CHARLOTTETOWN AIRPORT
Mr. Macquarrie: 1.	What is the present seating capacity of the waiting room at the passenger terminal of the Charlottetown airport?
2.	Does the Department of Transport consider this adequate?
3.	How many parking spaces are provided in the parking lot at the airport?
4.	Will more parking facilities be made available and, if so, (a) by what date (b) how many additional automobiles will this accommodate?
5.	What improvements in the facilities of the Charlottetown airport are projected for the fiscal years 1971-72, 1972-73, 1973-74?
6.	What is the expected date of the installation of an instrument landing system?
7.	What were the estimated number of passengers making use of the Charlottetown airport terminal during the months of June, July and August, 1971?


Mr. Gerard Duquet (Parliamentary Secretary to Minister of Transport):: 1. Sixty five.
2.	Yes. The number of seats provided is in accordance with the standards used for Ministry Terminals.
3.	Seventy five.
4.	(a) November 30 (b) 50.
5.	1971-72-Instal ramp lighting, further expansion of car parking area; 1972-73-Expand aircraft parking ramp (1971-72 and 1972-73), instal ILS system, instal VASIS system, instal High Intensity Approach Lighting; 197374-Nothing presently programmed.
6.	1972-73.
7.	June-6,326; July-11,666; August-12,670, These figures are for arriving, departing and connecting passengers.


CULTURAL GRANTS MADE TO INDIAN BANDS
Mr. Mazankowski: 1.	Were any cultural grants made to Indian Bands during the fiscal years 1969-70, 1970-71 and 1971 to date and, if so (a) what were they (b) which bands received grants in what amounts?
2.	What is the criteria for the award of such grants?


Mr. Judd Buchanan (Parliamentary Secretary to Minister of Indian Affairs and Northern Development):: 1. Yes.
1969-70	1970-71	1971$	$	$-	4,950	3,650 2,000900	-	-1,000	-	2,0003,250	-	-

November 10, 1971

Tobique Band, N.B.
Abitibi Dominion Band
Bersimis Band Council
Caughnawaga Band
Lorette Band Council
Micmacs of Maria Band Council
Mistassini Band Council
Montagnais of Lac St Jean Band Council
Odanak Band Council
Restigouche Band Council
Sept lies Band Council
Couchiching Band Council Curve Lake Band Council Fort William Band Council Naitcatchewenin Band Council Sabaskong Band Council St. Regis Band Council Tyendinaga Band Council Walpole Island Band Council Birdtail Sioux Band Fort Alexander Band Council Garden Hill Band Oak Lake Sioux Band Oak River Band The Pas Band Battleford Band Beardy and Okemasis Band Big River Band Council Cote Band Council Cowessess Band Little Pine Band Mistawasis Band Council Moose Wood Band Council Mosquito Band Council Muskeg Lake Band Council Pelican Lake Band Council Piapot Band Council Sioux Wahpeton Band Council Witchekan Lake Band Council
Blackfoot Band Council Blood Band Council
Ermineskin, Louis Bull, Montana and Samson Bands
Frog Lake Band Council
Little Red River Band
Paul Band Council
Peigan Band Council
Sarcee Band Council
Stoney Band
Sturgeon Lake Band Council Cowichan Band Council Hazelton Band Council Deadman's Creek Band Kamloops Band Council Musqueam Band Council
Questions
1969-70 1970-71

1,200	735
_	3,000
_	5,000
1,300	3,000
_	2,500
_	3,000
_	2,500
550	1,200
5,000	-
_	3,000
-	1,344
215	-
1,000
-	2,500
-	3,000
-	12,000
-	1,000
_	4,650
-	4,500
-	2,000
3.000	-
500	1,000
2.000	2,000
-	3,000
-	1,000
_	2,000
-	2,000
-	5,000
_	500
-	5,000
-	20,000
-	500
-	8,161
-	4,000
-	11,000
-	2,500
-	5,000
-	3,570
-	500

1,895
5,000
2,700
1,500
5,000
4,000
4.000
4.000 500
5,000
3,500
4,000
3.000 1,500
3.000
4.000
3.000
1.000
3,000
7.000
5.000
3.000
2.500
3.500
5.000
5.000
10,000
2.500
5,000

November 10, 1971
2.	The Cultural Development Division of the Indian-Eskimo Affairs Program, advised by an Assessment Board, considers all applications for grants for the promotion of research, preservation and expression of the traditional culture of the Indian people, including languages, literature forms, dances, games, music, art and drama forms.


DATA ON BANK LOANS OUTSTANDING
Mr. Burton: 1.	Is the Bank of Canada giving consideration to the collection of data on the volume of bank loans outstanding and total money supply by region?
2.	Is Statistics Canada giving consideration to the development of a system of regional accounts?
3.	What statistical series are now prepared on a regional basis?
4.	Is there a study group or task force in Statistics Canada concerned with the development of comprehensive regional statistics?


Mr. J. A. Jerome (Parliamentary Secretary to President of the Privy Council):: I am informed by the Bank of Canada and Statistics Canada as follows:
1.	The regional domicile of the bank loans and bank deposits of nation-wide enterprises which deal with nation-wide banks is not meaningful; loans arranged in one region are frequently drawn on for use in other regions, and similarly deposit balances carried in one region may arise from operations in, or be destined for disbursement in, other regions. Consequently, collecting or estimating figures for total money supply and bank loans on a regional basis would not provide information useful for the analysis of regional economic problems. However, the Bank of Canada is examining whether there may be some sub-categories of chartered bank assets which might be collected to provide meaningful regional data.
2.	No. However, Statistics Canada is working towards an enlarged regional economic data base which, when developed further, would be useful in constructing regional accounts.
3.	Statistics Canada is preparing an increasing number of statistical series on a regional basis. A large number of series are now published in the demographic field, the labour field, in industrial areas and others on regional basis and further efforts are being made in this direction.
4.	Yes.
Mr. JEAN-PAUL MATTE


Mr. Matte: 1.	Has Jean-Paul Matte, the assistant to the Minister of Indian Affairs, taken any holidays during the summer or at any other time during the year and, if so (a) what are the exact dates (b) were these paid holidays?
2.	(a) How many hours a day does Jean-Paul Matte spend in his Ottawa office (b) at what time and on what day does he begin?
3.	Does he go home during the weekend and, if so, on what day and at what time does he usually leave his office in Ottawa to go home?
4.	Does Jean-Paul Matte have any accounts or travelling expenses and, if so (a) what are they (b) must these accounts be approved by the Minister himself (c) what have been the total and
(Mr. Buchanan.]
detailed amounts for these accounts since Jean-Paul Matte has been in the office of the Minister?


Hon. Jean Chretien (Minister of Indian Affairs and Northern Development):: 1. Yes. (a) The beginning of August, (b) Yes, in accordance with the Managerial and Confidential Exclusions Regulations.
2.	On most days, Mr. Matte's hours of work begin at 9:00 a.m., but the end of the day varies from 6:00 to 10:30 p.m. depending on the Minister's needs.
3.	As and when required by the Minister, Mr. Matte is also available during week-ends. Times of departure vary from week-end to week-end.
4.	(a) Yes, in accordance with Government Travelling Regulations, (b) This approval has been delegated to the Minister's administrative staff, (c) From Nov. 1968 to March 31, 1970, Mr. Matte's total expenses were $2,443.45 and from April 1, 1970 to March 31, 1971 they were $2,811.70. Details can only be obtained by searching the travel expenditure files, which costs in manpower and time would be exorbitant or prohibitive.


PARRSBORO, N.S.-FEDERAL BUILDING SITE
Mr. Coates: Has the government purchased a site for the new federal building that will be constructed in Parrsboro, Nova Scotia and, if so, from whom was the site purchased and at what cost to the federal treasury?


Arthur Laing: No, the
Department has under consideration a proposal to lease space in a privately-owned building.


EMPLOYMENT OF TEACHERS BY DEPARTMENT OF INDIAN AFFAIRS AND NORTHERN DEVELOPMENT
Mr. Orlikow: 1.	How many teachers are employed by the Department of Indian Affairs and Northern Development?
2.	What are the minimum qualifications (academic) required for teachers hired by the Department?
3.	(a) How many teachers working for the Department have more than the minimum academic qualifications required (b) how many have a Bachelor of Arts, Bachelor of Science or Bachelor of Education degree?
4.	Is the Department giving consideration to the payment of a bonus or an allowance similar to the $1,000 bonus now being paid by the Ontario Department of Education to teachers in isolated northern schools?


Joseph Jacques Jean Chrétien: 1. In 1970-71, 1,372 teachers were employed by the Department of Indian Affairs and Northern Development.
2.	See answer to Parliamentary Question No. 1,105 tabled in the House of Commons on March 4, 1970;
3.	In 1970-71 (a) 1,212; (b) 338.
4.	See answer to Parliamentary Question No. 1,105 tabled in the House of Commons on March 4, 1970.


RE-EXAMINING OF PROPOSAL OF ADDITIONAL NEW BRUNSWICK-P.E.I. FERRY SERVICE
Mr. MacLean: In the light of the plans for a new national park in New Brunswick, and the cancellation of the Prince Edward Island causeway
November 10, 1971

project, is the Department of Transport re-examining the proposal that a summer ferry service be instituted between the vicinity of this new park and West Point, Prince Edward Island, to relieve the pressure on the Borden-Tormentine Ferry Service, and to provide direct access from this new park to Prince Edward Island and, if such a re-examination is being made, when is it expected a policy decision on the matter will be reached?


Gérard Duquet: No.


EMPLOYMENT OF TEACHERS BY DEPARTMENT OF INDIAN AFFAIRS AND NORTHERN DEVELOPMENT
Mr. Orlikow: 1.	How many teachers were employed by the Indian Affairs Branch of the Department of Indian Affairs and Northern Development in the fiscal year 1969-70?
2.	Of this number, how many of the teachers were in the classification of (a) teacher aide or unqualified teacher who had no professional teacher training (b) the sub-level who had only junior matriculation education and one year of teacher education (c) level 1 who had senior matriculation and one year of teacher education (d) level 2 who had senior matriculation and two years of teacher education (e) level 3 who had senior matriculation and three years of teacher education (f) level 4 who had senior matriculation and four years of teacher education (g) level 5 who had senior matriculation and five years of teacher education (h) level 6 who had senior matriculation and six years of teacher education?


Joseph Jacques Jean Chrétien: 1. 1,645.
2.	(a) 73; (b) 94; (c) 554; (d) 355; (e) 182; (f) 252; (g) 97; (h) 38.


DEPARTMENT OF INDIAN AFFAIRS AND NORTHERN DEVELOPMENT-NUMBER OF PLACEMENT OFFICERS
Mr. Orlikow: How many Employment Placement Officers does the Indian Affairs Branch employ in each province and how many of these are of Indian descent?


Joseph Jacques Jean Chrétien: In 1970-71, the Indian-Eskimo Affairs program employed the following placement officers by province:
Provinces	Placement Officers	Placement Officers of Indian DescentMaritimes	4	3Quebec	7	0Ontario	7	0Manitoba	1	0Saskatchewan	10	6Alberta	12	2British Columbia	9	3


HIGHWAY SAFETY-STUDENT TRANSPORTATION
Mr. Mather: Is consideration being given to encouraging, with the co-operation of the provinces, highway safety standards for pupil transportation involving procedures on establishing uniform school bus markings, colour and lighting systems across Canada, driver
Questions
training, periodic student instruction in safe riding practices and drills in emergency evacuation, semi-annual inspection of school buses and the mandatory wearing of seat belts by drivers and students?


Gérard Duquet: Regulations regarding the safe transport of pupils to schools are incorporated in provincial highway traffic acts. Therefore many of the provinces have given serious consideration to the most desirable method of ensuring the safe transport of students in their provinces. The Department of Transport is also concerned about the safety features incorporated in vehicles used to transport students and in the methods developed to promote safety among the young passengers and for this reason the Department does intend to encourage and cooperate with the provinces to see that the most desirable methods are used universally across Canada.


LOAN GRANTED BY CANADA TO MALAYSIA
Mr. Rodrique: 1.	What was the amount of the loan granted by Canada to Malaysia when the Prime Minister of that country visited Canada?
2.	What is the duration of the loan?
3.	What is the rate of interest of the loan?
4.	What are the reimbursement terms?


Hon. Mitchell Sharp (Secretary of State for External Affairs):: 1. Canada has agreed to make available to the Government of Malaysia a Loan in an amount which is not to exceed $46,500,000.
2.	The duration of the loan will commence from the first withdrawal of principal and terminate on the date to which final repayment is complete. Final repayment of principal is to take place on or before March 31, 2001.
3.	The rate of interest of the loan is to be calculated at 3 per cent per annum on the principal amount of the loan drawn by Malaysia and outstanding.
4.	Reimbursement will be made in 46 equal semi-annual instalments of the principal amount of the loan which is utilized by Malaysia, due and payable on the last day of September and March in each year commencing on September 30, 1978 and ending March 31, 2001. Payment of interest will similarly be made in semi-annual instalments due and payable on September 30 and March 31 in each year commencing from the first withdrawal of principal. Payment of interest will be calculated on the outstanding balance of the principal. The principal of and the interest charges on the loan are to be paid without any deduction whatsoever and in particular will be free from any taxes, charges, or other restrictions imposed under the Laws of Malaysia. The loan will be utilized on the basis of contracts won by Canadian suppliers in international competition. Consequently, the exact amount of the loan which will be utilized cannot presently be determined.


CONSUMER ADVISORY COUNCIL-AGE OF MEMBERS
Mr. MacDonald (Egmont): What is the lowest age of members of the Consumer Advisory Council appointed by the Minister of Consumer and Corporate Affairs?

November 10, 1971
Questions


Hon. Ron Basford (Minister oi Consumer and Corporate Affairs):: The ages of members of the Canadian Consumer Council are not included in our records.


PRICES AND INCOMES COMMISSION-STAFF COMPLEMENT
Mr. MacDonald (Egmont): What is the full staff complement of the Prices and Incomes Commission?


Stanley Ronald Basford: I have been informed by the Chairman of the Prices and Incomes Commission as follows: The number of full-time staff of the Commission on October 18, 1971 was 86.


PRINTING OF INCOME TAX RETURN FORMS
Mr. Knowles (Winnipeg North Centre): Were income tax return forms, guides and any other materials for the year 1971 printed prior to October 14, 1971 and, if so, will such materials have to be re-printed because of the tax changes announced on October 14, 1971, and what is the total cost of the forms, guides and other materials to be discarded?


Mr. Speaker:: Stand.


INDIAN POPULATION
Mr. Robinson: How many Indians are there in each province?


Joseph Jacques Jean Chrétien: As of December 31, 1970, the registered Indian population by province was as follows:
Province	Indian Population
Newfoundland	0
Prince Edward Island	435
Nova Scotia	4,652
New Brunswick	4,423
Quebec	27,671
Ontario	55,342
Manitoba	35,658
Saskatchewan	36,326
Alberta	29,086
British Columbia	48,259
Yukon Territory	2,491
Northwest Territories	6,438


NATIONAL DEFENCE MANPOWER STRENGTHS-MEMBER SERVING IN VARIOUS WARS
Mr. Robinson: 1.	How many Canadians served in (a) the Boer War (b) the First World War (c) the Second World War (d) the Korean War?
2.	How many Canadians served in more than one of the above-mentioned wars?


Mr. Jack Cullen (Parliamentary Secretary to Minister of National Defence):: 1. It is not possible to give an accurate reply to this question as it is impossible to state precisely

how many Canadians served in each of these wars because Canadian citizenship was not established until after the Second World War. Many Americans and others served in the Canadian Forces, some concealing their nationality to do so, and many others resident in Canada travelled to the United Kingdom to join the British Forces. However, as far as can be determined, the numbers were as follows: (a) 7,368 including those who served in the South African Constabulary; (b) 626,636; in addition, a large number, probably between 15,000 and 20,000 was recruited in Canada for the British Air Services; (c) 1,086,343; (d) 25,583.
2. The number of Canadians who served in more than one of these wars can only be ascertained by reviewing the records of all who enlisted in the services between 1897 and 1954. The necessary staff to undertake the large amount of work that this would entail is not available.


FINANCIAL ASSISTANCE UNDER THE VETERANS' LAND ACT
Mr. Robinson: 1.	How many veterans of the Second World War used the establishment credit under VLA?
2.	Do any veterans still have the option to obtain benefits under VLA?


Hon. Jean-Eudes Dube (Minister of Veterans Affairs):: 1.
To September 30, 1971, a total of 125,787 eligible veterans of World War II and the Korean Special Force had received financial assistance under the provisions of the Veterans' Land Act. Separate records have not been maintained as to how many of this number served only in the Korean Special Force.
2. Approximately 142,000 veterans who obtained a certificate of qualification by October 31, 1968 remain eligible to apply for VLA benefits up to March 31, 1974.


VETERANS' LAND ACT-TOTAL AMOUNT OF ASSISTANCE TO WORLD WAR II VETERANS
Mr. Robinson: What was the total amount loaned to veterans of World War Two under the VLA program?


Jean-Eudes Dubé: To
September 30, 1971 the amount of $1,065,903,853 has been loaned under the provisions of the Veterans' Land Act. In addition, grants totalling $16,368,667 have been made to veterans of World War II and the Korean Special Force settling on Dominion and Provincial Lands and on Indian Reserve Lands. Separate records have not been maintained as to how much of these two amounts relates to veterans who served only in the Korean Specail Force.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. Schumacher: Further to the reply to Question Number 1,500 at page 8063 of Hansard, did the Canadian International Development Agency hold meetings or conferences at the Seigniory Club in Montebello, Quebec during February 1970 and, if so (a) what was the duration
November 10, 1971

of such conferences or meetings (b) who sponsored them (c) who attended them (d) were any payments made to the Seigniory Club in respect of such conferences or meetings (e) what was the amount of such payments (f) who was responsible for such payments?
Return tabled.


NORTHERN MINERAL ASSISTANCE PROGRAM
Mr. Robinson: 1.	How many applications under the Northern Mineral Assistance Program have been approved?
2.	Who were the successful applicants?
3.	What amount was allotted to each applicant?
4.	Where is the head office of each successful applicant?
5.	What kind of work will the financial assistance cover in each case?
6.	Where will the work be carried out by each of the applicants? Return tabled.



MOTIONS FOR PAPERS

James Alexander Jerome: Mr. Speaker, I ask that the outstanding notices of motions for the production of papers be allowed to stand.


Mr. Speaker:: Stand.



ORAL QUESTION PERIOD


John Howard Lundrigan: I should like to put a question to the Acting Prime Minister. In view of the unemployment statistics released today, will the Acting Prime Minister undertake to make a statement to the House and the country indicating the goals and expectations of the government for the economy and unemployment and employment this coming winter in order to alleviate the uncertainty in the business community and in view of the fact that of the total increase in jobs reported today 77,000 were part-time jobs, reflecting the uncertainty of the business community?


Mitchell William Sharp: Mr. Speaker, I think the House and the country should be encouraged by the fact that there has been the largest increase in employment ever recorded for any October.


Some hon. Members:: Hear, hear!


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


John Howard Lundrigan: Recognizing the fact that 6.7 per cent of the labour force are unemployed compared with 6.5 per cent last October, I wonder if the Acting Prime Minister would announce to the people of the country a contingency plan to help those people who will not find jobs this winter inasmuch as 40 per cent of the total number of unemployed people in Canada have been out of work for more than four months which is an increase of 4 per cent over last month and 4 per cent over a year ago?


Mitchell William Sharp: Mr. Speaker, it may have been while the hon. gentleman was absent in Newfoundland but the Minister of Finance did bring forward a program for just that purpose.


John Howard Lundrigan: Mr. Speaker, perhaps I should either rephrase or restate my question because the minister, who appears to be in a pseudo-gloating mood today, has not understood my question.


Mr. Speaker:: Order, please. The hon. member might ask the supplementary.


John Howard Lundrigan: I am not talking about the red tape program which was announced; I am talking about the fact that today 40 per cent of the 447,000 people who are unemployed have been out of work for more than four months, 40 per cent of the total of those unemployed-


Mr. Speaker:: Order, please. The hon. member has been recognized to ask a supplementary question. Perhaps he would ask it now.


John Howard Lundrigan: Can the Acting Prime Minister indicate whether the government has any contingency plan to bring forward now or at the November 15 meeting of the first ministers to help the provinces and the municipalities in one way or another to assist unemployed Canadians who will not find work this winter?


Mitchell William Sharp: Mr. Speaker, the Prime Minister will be bringing before the conference of first ministers the proposals announced by the Minister of Finance that require provincial co-operation.


Gerald William Baldwin: An election and a new government.



UNEMPLOYMENT-PROGRESS IN IMPLEMENTING GOVERNMENT PROGRAMS-AVAILABILITY OF SPECIAL LOANS DEVELOPMENT PROGRAM GUIDELINES

Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, may I direct a question to the Minister of Finance. Although there was a decline in unemployment in October from the previous month, and in view of the fact that unemployment in that month was the highest for any October since the inception of the labour force survey I should like to ask the minister whether he can tell the House what progress has been made in getting under way the various programs to relieve unemployment which he announced on October 14 and, particularly, can he tell the House whether the guidelines are now available with respect to the special loans development program which offered $160 million in loans to the provinces?


Edgar John Benson: Mr. Speaker, first of all, my colleague the Minister of Manpower and Immigration is in close contact with the provinces-

November 10, 1971
Inquiries of the Ministry


An hon. Member:: Where is he?


Edgar John Benson: -in order to get the programs moving ahead as rapidly as possible. With respect to the loan program, we are in discussion with the provinces. The general outline of the rules I gave in my statement and, indeed, when I spoke to the provinces, at the meeting of the Ministers of Finance. We are ready to proceed forthwith. The guidelines generally are the same as they were last year except that there is a forgivable feature in the loans program involving 75 per cent of the labour cost incurred during the winter months.



REQUEST FOR TABLING OF WORKING PAPERS RESPECTING ALLOCATION OF SPECIAL LOANS TO PROVINCES- DECREASE IN AMOUNT FOR BRITISH COLUMBIA

Thomas Clement (Tommy) Douglas: Some time ago the Minister of Finance promised to table the working papers on the basis of which the special loans fund will be allocated among the various provinces. Is he prepared to table those working papers and, particularly, is he prepared to explain to the House why the allocation to British Columbia this year has dropped from $39.8 million to $21.7 million, since its unemployment situation certainly does not seem to warrant that?


Edgar John Benson: Mr. Speaker, I would be pleased to carry out my earlier undertaking with respect to the working papers. The reason that the allocation to British Columbia has decreased this year is that, relatively, their unemployment position is better vis-a-vis the other provinces than it was last year. However, this will be shown by the figures which I am quite willing to table.


Thomas Clement (Tommy) Douglas: A supplementary question, Mr. Speaker.


Mr. Speaker:: Order, please. Hon. members will recognize that perhaps eight or ten hon. members are seeking to ask supplementary questions. We will have to limit supplementaries at one point or another. For the moment the hon. member for Nanaimo-Cowichan-The Islands is recognized.



UNEMPLOYMENT-SPECIAL MEASURES TO PLACE HARD-CORE UNEMPLOYED IN JOBS

Thomas Clement (Tommy) Douglas: Mr. Speaker, may I ask the Minister of Finance one other question. Since the figures released today show that nearly a quarter of a million of the unemployment have been in that state for more than four months and that we are developing a hard core of unemployed, is the government taking any special measures to see that this particular group are put into a position where jobs will be available to them?


Edgar John Benson: Mr. Speaker, the unemployment figures will show that a large part of the increase in unemployment has arisen from married women and from people under the age of 25. We are looking particularly at these problems. Indeed, in our programs which we announced last month our aim is to try to do something about this particular problem. There

still is, as my hon. friend will know if he looks at the figures carefully, a rather strange or alarming increase in the participation rate in the labour force. It is more than we forecast-


Mr. Speaker:: Order, please.


Gerald William Baldwin: Alarming, the minister says.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please.


Edgar John Benson: I am not looking-


Mr. Speaker:: Order, please.


Mr. Knowles (Winnipeg North Centre):: The minister's attitude is the alarming part.



UNEMPLOYMENT-CONSIDERATION OF SPECIAL MEASURES FOR THOSE UNDER 25 AT FEDERAL-PROVINCIAL CONFERENCE

Mr. Andre Fortin (Lotbiniere):: Mr. Speaker, I would like to ask a question to the Finance Minister.
The question of increasing unemployment will be on the agenda of the federal-provincial conference, as he just informed us. Can he tell us if the federal government will then bring in special measures dealing with unemployment among people under age 25?


Edgar John Benson: Mr. Speaker, of course this matter will be discussed at the first ministers' meeting. We have indicated what our program is for the coming winter and of course we are urging the provinces to co-operate with us and accept some of the responsibility they must accept in order to create jobs this winter, which I am sure everyone in this House wants to see happen.



UNEMPLOYMENT-CONSIDERATION OF GUARANTEED ANNUAL INCOME AS MEANS OF EASING POVERTY

Hon. George Hees (Prince Edward-Hastings):: I wish to direct a supplementary question to the Acting Prime Minister, Mr. Speaker. As the government has been aware for some time of the recommendation of a guaranteed annual income contained in the report of the Special Committee on Poverty, which is to be tabled in the Senate today, is the government considering the implementation of a guaranteed annual income as a means of easing the burden of poverty caused by unemployment?


Hon. John C. Munro (Minister of National Health and Welfare):: Perhaps I might answer that question, Mr. Speaker. We indicated in the white paper on income security that we were considering the concept of a guaranteed annual income. However, we had a couple of reservations, principally concerning the effect on incentives, which I understand is a concern of the Senate report also. We are also concerned, in the short run, about the cost involved and how we would raise the money necessary to finance the program. In the meantime we have indicated
November 10, 1971

that we are prepared to finance pilot projects in a general way in the various provinces across Canada and in fact one or two provinces have already responded.



UNEMPLOYMENT-LOAN FUND ALLOCATION AVAILABLE TO ONTARIO-TARGET DATE FOR AGREEMENT

Mr. Murray McBride (Lanark-Renirew-Carleton):: Mr. Speaker, my supplementary question is for the Minister of Finance. Since approximately $25 million is now available under the loan program to the province of Ontario, can the minister indicate a target date when an agreement may be entered into with the province of Ontario so that this money will be available for employment opportunities?


Mr. Speaker:: Order, please. I am not sure whether that is strictly a supplementary question. Of course, the question has been asked and the minister might be allowed to reply.


Edgar John Benson: Mr. Speaker, we are willing to move forward just as fast as possible. Last year, as you will recall, the province of Ontario was the slowest of all the provinces in taking advantage of this particular program.


Some hon. Members:: Oh, oh!


Gerald William Baldwin: Don't you know the election is over?


Mr. Woolliams:: That is not what the people said.



UNEMPLOYMENT-ADDITIONAL MEASURES TO DEAL WITH PROBLEM

Mr. Robert C. Coates (Cumberland-Colchester North):: have a supplementary question for the Minister of Finance. In light of the fact the pattern of unemployment this fall is higher than that of a year ago, can the minister inform the House whether the government believes that last month's economic moves will be sufficient to prevent unemployment from going higher this winter than was the case last winter?


Mr. Speaker:: Order, please. The hon. member is inviting the minister to express an opinion. The question as asked is not in order. Perhaps the hon. member might rephrase the question.


Robert Carman Coates: In light of the fact the figures are higher this year, is the government contemplating any steps additional to those taken in October?


Edgar John Benson: Not at this point, Mr. Speaker.


Mr. Speaker:: Order, please. Again I have to invite hon. members to consider the fact we will be running out of time eventually. If we spend half the question period on the first question, a number of hon. members may be disappointed when we approach the end of the question period. In any event, we will continue on the same subject for a while. The hon. member for Cumberland-Colchester North.
Inquiries of the Ministry


Robert Carman Coates: In view of the fact that last month several government ministers questioned the accuracy of the unemployment figures, does the minister question the accuracy of this month's figures and, if so, is a statement going to be made?


Edgar John Benson: Mr. Speaker I do not think I have ever questioned the accuracy of the figures.



UNEMPLOYMENT-ATLANTIC PROVINCES AND QUEBEC- REAPPRAISAL OF REGIONAL ECONOMIC EXPANSION PROGRAMS AND AMENDMENT OF ACT

Mr. James A. McGrath (St. John's East):: I wish to direct my supplementary question to the Minister of Regional Economic Expansion. In view of the figures released today by DBS indicating that unemployment is up substantially in the Atlantic provinces over this time last year and is also up in the province of Quebec, does the minister intend to reappraise or re-evaluate his present regional-economic expansion programs and is he prepared to give consideration to amendments to the Regional Development Incentives Act making it possible for added incentives to be provided this winter?


Hon. Jean Marchand (Minister of Regional Economic Expansion):: Mr. Speaker, I think the hon. member's question is based on wrong facts. The seasonally adjusted unemployment rate declined in Quebec, and there are at least 31,000 more jobs than last September.


James Aloysius McGrath: Mr. Speaker, either the minister has not read the DBS statistics or has not read the breakdown of them or else he is trying to convey the impression that he does not know.


Mr. Speaker:: Order, please, would the hon. member ask the supplementary.


James Aloysius McGrath: I repeat my original question. In view of the fact there are more people unemployed in the Atlantic provinces than there were at this time last year and in view of the fact there are more people unemployed in the province of Quebec than at this time last year, is the minister now prepared-


Mr. Speaker:: Order, please. The hon. member knows it is irregular to repeat the same question. I wonder how often that should be allowed. The hon. member asked a question and he is not satisfied with the reply. Then he seeks the floor to ask a supplementary and simply repeats the question he asked in the first instance. I do not think that is proper procedure. The hon. member might like to rephrase the question.


James Aloysius McGrath: I will rephrase the question, Mr. Speaker. In view of the unemployment figures released today, is the minister prepared to bring in amendments to the Regional Development Incentives Act in order to provide additional incentives for areas such as the Atlantic provinces which are faced with severely high unemployment this winter?
9522

November 10, 1971
Inquiries of the Ministry


Jean Marchand: Mr. Speaker, we shall continue to do everything we can to improve the employment situation in the Atlantic provinces and eastern Quebec.



UNEMPLOYMENT-LACK OF FORMS FOR ON THE JOB TRAINING PROGRAM

Mr. Edward Broadbent (Oshawa-Whitby):: I wish to direct my supplementary question to the Acting Prime Minister. Will the Acting Prime Minister inquire of the Minister of Manpower and Immigration, who is supposed to be here today but is not, and find out why, at a time when we have the highest level of unemployment for these months in the history of Canada, the forms for the on the job training aspect of the programs announced about a month ago are not yet available to Canadians?


Mitchell William Sharp: Yes, Mr. Speaker, I will make those inquiries.



UNEMPLOYMENT-EXPEDITING OF NOVA SCOTIA ECONOMIC EXPANSION PROGRAM TO PROVIDE JOBS

Mr. J. M. Forrestall (Dartmouth-Halifax East):: My question is supplementary to the question asked by the hon. member for St. John's East. I direct it to the Minister of Regional Economic Expansion. In light of the continuing difficulties which exist in the maritimes, particularly in Nova Scotia, would the minister be prepared to have his departmental officials bring on the final five-year DREE program for the province of Nova Scotia so that we might have an indication of those areas in which work might be provided this winter?


Jean Marchand: Mr. Speaker, as the hon. member undoubtedly knows, we have just signed an agreement with Nova Scotia on the matter of roads. Now, all agreements have not been signed, but we do have in mind a program to promote economic development in Nova Scotia.



UNEMPLOYMENT-ACTION TO MAKE JOBS AVAILABLE KNOWN TO UNEMPLOYED

Mr. Jerry Pringle (Fraser Valley East):: Mr. Speaker, my question could be directed to the Acting Prime Minister in the absence of the Minister of Manpower and Immigration. In view of the statement issued yesterday that some 10,000 jobs are now going begging in the city of Montreal, and similar statements issued in other centres of Canada, including press reports in Ottawa, is the government taking special measures to bring this information to the attention of those who are unemployed so that they may be able to take advantage of these thousands of jobs and thereby be able to remove themselves from the unemployment lists?


Mitchell William Sharp: It is one of
the phenomena that we have been dealing with that there is obviously a shortage of labour for many jobs in

Canada. We have been studying the situation and the Minister of Manpower and Immigration has undertaken a special task to find out why it is that these jobs and the unemployed do not match.


Mr. Speaker:: Order, please. The Chair will try to recognize the hon. member for Hamilton West later on this subject but for the moment the Chair will recognize the right hon, member for Prince Albert.



HUMAN RIGHTS


Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, two or three days ago I asked the Minister of Justice whether he would refer to the law officers of the Crown the cavalier treatment of Ron Haggart by the Toronto Star. Has he done so, and what is the result?


Hon. John N. Turner (Minister of Justice):: I did so, Mr. Speaker. The law officers of the Crown have examined this case and it is their view that matters relating to a contract or the negotiation of a contract fall within provincial jurisdiction and are not covered by the Canadian Bill of Rights. In the circumstances they have not been able to conclude that any violation of the Canadian Bill of Rights has occurred. I wish to stress, as I did on Monday when the right hon. gentleman put this question to me, that the views I express are not binding on Mr. Haggart who has his own legal recourses open to him should he desire to exercise them.


Some hon. Members:: Hear, hear!


John George Diefenbaker: I heard some of the hon. members on the back seats opposite who do not believe in freedom applaud that statement. I could identify them if necessary. I would ask the minister-as I cannot under the rules get into an argument with him during the question period- whether there is anyone in his department charged with looking into violations of fundamental freedoms that come within federal jurisdiction?


John Napier Turner: Yes, indeed, Mr. Speaker. The right hon. gentleman is aware that we tried to persuade the provinces-and succeeded to a limited extent-to convert some of the provisions of the Canadian Bill of Rights into a constitutional charter. Had that charter been declared, the situation might well be different.


John George Diefenbaker: It happened to be Liberal provincial governments that refused.


Some hon. Members:: No.


John Napier Turner: You know better than that.


John George Diefenbaker: I would ask the minister whether freedom of the press and of speech has not been declared by the courts to be, except for libel and slander, within the jurisdiction of the federal Parliament?
November 10, 1971


John Napier Turner: That is correct. The Supreme Court of Canada has held that to be true, but the primary matter at issue here is either negotiation for a contract or a contract, and that is a matter of civil law within the jurisdiction of the province.



CONSULTATION WITH FARM ORGANIZATIONS AND PRAIRIE GOVERNMENTS TO FORMULATE POLICY ACCEPTABLE TO FARMERS-ACREAGE PAYMENTS

Mr. A. P. Gleave (Saskatoon-Biggar):: In the absence of the minister in charge of the Wheat Board I will direct my question to the Acting Prime Minister. In view of the clear rejection of the government's grain policy and its grain stabilization bill-


Mr. Speaker:: Order, please. As much as possible the hon. member should ask a question.


Alfred Pullen Gleave: In view of these facts, is it now the intention of the government to initiate a meeting with the farm organizations and representatives of the three prairie governments in order to work out a grains policy that is acceptable to prairie farmers?


Mitchell William Sharp: Mr. Speaker, when the government has made a decision in this matter it will, of course, be made known to the House.


Alfred Pullen Gleave: I am very pleased to hear that the government is considering its decision, but may I ask whether the government will now make the acreage payments to farmers to which it committed itself in letters to per-mitholders as of last July, while the remainder of the proposals in the grain stabilization bill, as the minister has suggested, may receive further consideration?


Mitchell William Sharp: If it had not been for the opposition, Mr. Speaker, I think those cheques would have been sent out already.



CRIMINAL CODE


André-Gilles Fortin: Mr. Speaker, I have a question for the hon. Minister of Justice.
In view of his recent announcement that there would be a debate on abortion in the near future, could he tell us whether such a debate will take place during the present session or early in the next one? Will it follow a motion calling for a special debate or the introduction of a bill?


John Napier Turner: Mr. Speaker, I cannot give an exact date. It depends on the business of the House. In reply to the second part of the hon. member's question, I believe it would be best to obtain the opinion of the House before introducing a bill.
Inquiries of the Ministry



MANPOWER


Mr. R. N. Thompson (Red Deer):: Mr. Speaker, my question was intended for the Minister of Manpower and Immigration but in his absence would the acting minister or the parliamentary secretary inform the House how many projects have been approved and how many jobs have been created by the government's special employment program?


Mr. Speaker:: Order, please. The hon. member will appreciate, I am sure, that normally this kind of statistical information is always sought by way of a question on the order paper. However, if there is urgency or there is some other way in which the question can be asked, perhaps the hon. member might seek the information through another method.


Robert Norman Thompson: Mr. Speaker, I asked the question because of a commitment the minister made to the House last week. In view of the arrival of winter for most of Canada, can the minister inform the House how many projects have been or will be approved and how many jobs will be created prior to Christmas?


Hon. Bryce Mackasey (Minister of Labour):: Mr. Speaker, the Minister of Manpower and Immigration has informed me that he anticipates being back in the House before the end of the question period. I am sure that this information, which is very detailed, can be obtained at the earliest possible opportunity.


An hon. Member:: Where is he?


Bryce Stuart Mackasey: The minister is away on important business involving this type of legislation, but he does intend to be back in time to answer questions.


Mr. Speaker:: Order, please.



OFFSHORE OIL AND GAS DRILLING-USE OF CANADIAN SHIPS AS SUPPLY VESSELS

['The\nanswer is yes. The minister in charge of the Wheat Board and officials of my department and myself are, I would say, in daily contact and carry on a daily review with regard to the shipment of grain. It is, of course, a constantly changing situation. This was why I thought it would be useful, rather than trying to answer individual questions from hon. members on both sides of the House, if I had officials of the railway come here next week so that hon. members could find out what the position is going to be over the next few weeks.\n\nNovember 10, 1971']
Mr. Thomas M. Bell (Saint John-Lancaster):: Mr. Speaker, my question is for the Minister of Transport. In view of the Sable Island discoveries and the probable increase in offshore oil and gas drilling, is the government satisfied that Canadian regulations regarding offshore drilling vessels are adequate to ensure for Canada all the benefits of Canadian resources development?


Hon. Donald C. Jamieson (Minister of Transport):: Mr. Speaker, this question requires a complex answer and I will not try to answer in detail. I will say that no, we are not satisfied that the present regulations are adequate to ensure that Canadian ships get as much of the supply business as possible, and I am moving to close as many of the holes in existing regulations as possible.
24372-43*

November 10, 1971
Inquiries of the Ministry


Thomas Miller Bell: Accepting the fact that oil drilling vessels are in a special category, can the minister say whether the vessels that service these oil drilling rigs are required to be of Canadian registry?


Donald Campbell Jamieson: Mr. Speaker, it was the latter part of the question to which I addressed myself. They are required to be if the drilling is taking place inside the three-mile limit, but there is some question, which has not yet been resolved, as to how much we can exert authority over vessels servicing rigs on the high seas.



Eldon Mattison Woolliams: Mr. Speaker, I should like to ask the Acting Prime Minister a question in the absence of the Minister of Energy, Mines and Resources and the Minister of Industry, Trade and Commerce. In light of order No. G.H.-1-71 of the National Energy Board, and in light of the fact that natural gas drilling rig companies in Alberta are either going into liquidation or closing down operations, can the minister tell the House whether the National Energy Board has approved five applications to export approximately 2.5 trillion cubic feet of natural gas, thus creating thousands of jobs not only in western Canada but in eastern Canada?


Mitchell William Sharp: Mr. Speaker, I cannot answer the question directly other than by saying that these reports of the National Energy Board have not yet reached the cabinet, so I assume that the National Energy Board has not yet made its decision.


RESUMPTION OF DISCUSSIONS WITH UNITED STATES
Eldon Mattison Woolliams: In answer to a question recently about negotiations between Canada and the United States on the subject of energy the minister said that talks are not going on at present. Can the minister now tell the House when these talks will resume in light of the fact that so many jobs depend upon this industry?


Mitchell William Sharp: Mr. Speaker, the fact that talks are not going on with the United States would not prevent us from making decisions on the export of gas when we receive a recommendation from the National Energy Board. Nor would it prevent us from making decisions on any matter affecting Canada-United States relations. There are no formal talks going on at the present time of the kind that were contemplated. It is my understanding, however, that there may be some resumption of these talks in the near future. I believe that a United States official would like to come up to Canada and talk to us about the matter.


Eldon Mattison Woolliams: Would the minister briefly tell us who it was brought these talks which had been going on to an end? They were described by the Minister of Energy Mines and Resources as always continuing. Who brought them to an end, the United States or Canada?


Mitchell William Sharp: Perhaps indirectly the United States did by putting other matters ahead of oil and gas or energy talks.


Eldon Mattison Woolliams: Do you mean the surtax?


Mitchell William Sharp: That is right.


Eldon Mattison Woolliams: Retaliation.


Mitchell William Sharp: Against Mexico too?


Eldon Mattison Woolliams: If you want to go to Mexico, then that is just where you are going to go.


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


THE CANADIAN ECONOMY
Stanley Howard Knowles: Mr. Speaker, may I put a question to the Minister of Finance. On Thursday, October 28, the hon. member for York South asked the minister whether he would table the precise method by which the allocations under the $160 million forgivable loan program were calculated. May I ask the minister whether the assurance he gave earlier today to the hon. member for Nanaimo-Cowiehan-The Islands includes this information, and can he say how soon all of it will be tabled?


Edgar John Benson: As soon as possible, Mr. Speaker.


AIRPORTS
Mr. Robert P. Kaplan (Don Valley):: Mr. Speaker, I have a question for the Minister of Transport. Can the minister say whether the new terminal now under construction at Toronto international airport will ever be completed and, if so, when?


Stanley Howard Knowles: "As soon as possible."


Mr. Speaker:: Order, please. If it would be of any help to the minister I might suggest to the hon. member that the question as asked is argumentative. I might allow the hon. member to rephrase his question.


Robert Phillip Kaplan: Then, Mr. Speaker, I should like to ask the minister whether he is in a position to tell us when the new terminal under construction at Toronto international airport will be completed?


Donald Campbell Jamieson: Mr. Speaker, I assume, under the circumstances, that it will be on the front page of the Toronto Star tomorrow that the
November 10, 1971

first module of a three-module terminal will be completed on April 30 and the remaining two by June 30; and I would invite the hon. member to attend the opening on June 30 as a fixed date.


Some hon. Members:: Hear, hear!
'	.


Mr. Speaker:: Order, please. There is a supplementary by the Parliamentary Secretary to the Prime Minister.
Mr. Barnett ]. Danson (Parliamentary Secretary to Prime Minister): Mr. Speaker, I wonder whether I might ask the Minister of Transport if he could tell us the year.


Some hon. Members:: Oh, oh!


An hon. Member:: That's good!


Donald Campbell Jamieson: Mr. Speaker, I expect it will be after the hon. member has lost his exalted position and therefore he will not be invited.


Some hon. Members:: Oh, oh!


OIL AND GAS-NEGOTIATIONS WITH UNITED STATES- NECESSITY FOR CONSULTATION WITH PROVINCES ON SALES
Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, after that interesting by-play from Toronto may I turn to a minister from Toronto and ask the Secretary of State for External Affairs a question. The other day the Leader of the Opposition raised a question concerning the assertion by Premier Lougheed of Alberta that he wanted Alberta consulted with regard to any negotiations in respect of the sale of energy resources, particularly oil and gas, to the United States. The minister indicated that this is a matter of foreign policy and that foreign policy decisions are made by the federal government. Will the minister tell the House whether he agrees that prior consultation with the provinces with regard to such sales and other matters which may form part of the negotiations with the United States is an absolute necessity, since the federal government does not get one foot of gas or one barrel of oil without the consent of the provinces?


Mitchell William Sharp: Mr. Speaker, I can give the assurance the hon. gentleman has asked for. It has always been the practice of the Canadian government to consult with the province of Alberta or whatever other province is involved in the control of gas and oil. Either the National Energy Board has to approve in advance the export of gas from Alberta or in the case of oil there must be some assurance that the supply is forthcoming. With your permission, Mr. Speaker, may I remind the hon. gentleman that that was not the question put to me by the Leader of the Opposition.


Mr. Speaker:: Order, please. I indicated to the hon. member for Hamilton West a while ago that he would be recognized for a supplementary. This might be the time to do so.
Inquiries of the Ministry THE CANADIAN ECONOMY


UNEMPLOYMENT-INDICATION OF GOVERNMENT PROJECTIONS AND TARGETS TO PROVINCES
Mr. Lincoln M. Alexander (Hamilton West):: Thank you, Mr. Speaker. For a moment I thought you had forgotten. I have a supplementary for the Minister of Finance. In light of the fact that he will be discussing the unemployment situation with the provinces and in view of the fact the provinces have indicated it is difficult for them to plan without any figures from the federal government regarding projections and targets for employment and unemployment, I should like to ask the minister whether there are such figures available and, if so, will there be some indication given to the provinces at the forthcoming meeting as to what those projections and targets are?


Edgar John Benson: Mr. Speaker, I have answered this question many times before.


Lincoln MacCauley Alexander: In light of the fact the Minister of Finance of the province of Manitoba has predicted higher unemployment for the winter of 1972-73 compared with this winter, has the minister any figures which would tend to confirm or dispute that statement?


Edgar John Benson: Mr. Speaker, there are a great many forecasts put out by a great many people and I do not try to dispute each forecast.


AGRICULTURE
Roch La Salle: Mr. Speaker, I wish to put a question to the President of the Privy Council.
Since thousands of farmers are still waiting for the implementation of Bill C-176, would the hon. minister say whether this bill will be brought back to the House soon, or at least before the Christmas holidays.


Hon. Allan J. MacEachen (President of the Privy Council):: Mr. Speaker, it is not possible to say exactly when this bill can come before the House until we have disposed of the tax bill, but it would be possible to have the report stage bills now on the order paper passed after the tax bill has been disposed of.


UNITED NATIONS
Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I have a question for the Secretary of State for External Affairs. Is the government of Canada prepared to sponsor or co-sponsor an appropriate resolution in the General Assembly of the United Nations which will enable the people of Taiwan to be represented in that organization?

November 10, 1971
Inquiries of the Ministry


Mitchell William Sharp: The government on Taiwan shows no inclination whatever to abandon its pretension to be the government of the whole of China.


CRIMINAL CODE
Mr. John Gilbert (Broadview):: Mr. Speaker, this question is addressed to the Minister of Justice. In view of the recent study by the Canadian Civil Liberties Association indicating serious shortcomings with regard to the judicial system, is it the intention of the minister to bring forward any amendments to the Criminal Code in addition to the bail reform amendment and, if not, is it his intention to have the Law Reform Commission study this matter immediately?


John Napier Turner: Mr. Speaker, it is my intention to bring forward further amendments but, as I said last week, a good many of the matters raised in that special report of the Civil Liberties Association pertain to provincial jurisdiction and perhaps I should undertake conversations with the provincial Attorneys General.


PROPOSED JAMES BAY HYDROELECTRIC PROJECT-DISCUSSION WITH QUEBEC GOVERNMENT-CONTRIBUTION TO RESEARCH
Mr. Real Caouette (Temiscamingue):: Mr. Speaker, I wish to direct a question to the Minister of Regional Economic Expansion.
In connection with the James Bay project, is the federal government holding talks with provincial authorities and, if so, what stage have those discussions reached?


Jean Marchand: Mr. Speaker, discussions have been initiated with the provincial government. However, no comprehensive program has yet been devised and no decision has been reached.


David Réal Caouette: I have a supplementary, Mr. Speaker.
As to the talks already held, is the federal government now taking part in the research done in that area?


Jean Marchand: Not to my knowledge, Mr. Speaker. Perhaps another department is involved, but not mine.


TRANSPORT
John George Diefenbaker: Mr. Speaker, a few days ago I asked the Minister of Transport a question regarding a shortage of cattle cars and he acted with speed and effect. I thank him. Now I bring to his attention the serious situation that exists on the west coast. Eight million bushels of No. 2 Northern wheat are needed for ships scheduled to be loaded and the needed trains have not arrived from country elevators on the prairies. Because of the seriousness of this situation, with ships waiting to be loaded and the kind of wheat required not being available, will he use the same diligence at once. We will not be back here until Monday next, and I ask him to bring about a concentration of shipment of this grade of wheat to the coast terminals so that demurrage on ships will not pile up as otherwise will be the case.


Donald Campbell Jamieson: Mr. Speaker, I will do my best to convey this to the railway concerned. I might say that it is customary about this time each year for me to arrange for spokesmen for the railways to appear before interested members with regard to the whole question of grain shipment and I will be glad to arrange that next week as is the annual custom.


John George Diefenbaker: That will be pretty late if we wait until then. Would the minister act immediately in this direction because it seems not understandable, with all the No. 2 wheat that is available on the prairies, that this situation should exist.


Mr. Speaker:: Order, please.


MOVEMENT OF GRAIN-CONSULTATION BY MINISTER WITH MINISTER IN CHARGE OF WHEAT BOARD
Alfred Pullen Gleave: I have a supplementary question for the Minister of Transport. Some days ago I asked his parliamentary secretary whether or not the department or the minister had had consultations with the minister in charge of the Wheat Board regarding the situation that was building up on the west coast with respect to grain movement. I was told then that I would receive an answer. Can the minister give it now?


Donald Campbell Jamieson: The
answer is yes. The minister in charge of the Wheat Board and officials of my department and myself are, I would say, in daily contact and carry on a daily review with regard to the shipment of grain. It is, of course, a constantly changing situation. This was why I thought it would be useful, rather than trying to answer individual questions from hon. members on both sides of the House, if I had officials of the railway come here next week so that hon. members could find out what the position is going to be over the next few weeks.

November 10, 1971



INDIAN AFFAIRS


Mr. Don Mazankowski (Vegreville):: Mr. Speaker, I should like to direct a question to the President of the Treasury Board. Has he had an opportunity to confer with the Minister of Indian Affairs and Northern Development with a view to reaching an immediate solution to the impasse involving the Indians of northeastern Alberta and the Department of Indian Affairs and Northern Development, in light of the difficulties and complaints expressed by members of the Public Service employed at the Indian Affairs regional office in Edmonton arising out of the sit-in being staged there by the Indians?


Hon. C. M. Drury (President of the Treasury Board):: Mr. Speaker, I think the Minister of Indian Affairs and Northern Development has been having discussions with the Indians involved and these have not yet reached a conclusion.


Donald Frank Mazankowski: I have a supplementary.


Mr. Speaker:: Order, please. I have to direct the attention of hon. members to the fact that there are only three minutes left before the end of the question period. There are ten members waiting to ask questions who have not had an opportunity to do so. I pointed out to hon. members earlier that if during the question period there are two, three or four supplementaries to every question some members will be disappointed. This is what is happening again and I can take no responsibility for that.


Donald Frank Mazankowski: Thank you very much for your indulgence, Mr. Speaker. In view of the fact that a telegram was directed to the Minister of Indian Affairs and Northern Development by the employees requesting that the minister either close down the office completely and send the employees home or settle the differences, would the President of the Treasury Board confer with the Minister of Indian Affairs and Northern Development with a view to reaching a solution to the problem immediately?


Mr. Speaker:: Order, please. The hon. member must assume that his suggestion will be taken into account.



REGIONAL ECONOMIC EXPANSION


Mr. Robert Simpson (Churchill):: My question is for the
Minister of Regional Economic Expansion. I should like to ask the minister whether any request or representations have been made by the province of Manitoba or whether discussions have taken place between officials of the minister's department and the province in respect of either the setting up of a new special area in northern Manitoba or the extension of the boundaries of the present special area?
Inquiries of the Ministry


Jean Marchand: As I have already stated in the House many times, we are in the process now of revising these special areas in Canada as well as the designated areas, but I cannot tell the hon. member exactly what the situation is at the moment with regard to Manitoba.



PROTEST AGAINST MOVEMENT OF FACTORY FROM HAMILTON TO ANOTHER PROVINCE

Mr. H. W. Danforth (Kent-Essex):: I should like to direct my question to the Minister of Regional Economic Expansion. Has he received a telegram from the city of Hamilton protesting the movement of a factory from Hamilton to another province, and what does he propose to do about it?


Jean Marchand: Yes, Mr. Speaker, the Minister of National Health and Welfare informed me of the situation, and I received the wire to which the hon. member referred.


Lincoln MacCauley Alexander: Although the minister indicated that he received the wire, can he advise the House what his intentions are with regard to the situation inasmuch as it appears that the minister is creating unemployment in order to create employment in another area of the country?


Mr. Speaker:: Order, please.


An hon. Member:: There is nothing new about that.


Lincoln MacCauley Alexander: I rise on a point of order, Mr. Speaker. In view of the importance of the question may I put it in a shorter form and ask whether the minister would kindly inform the House of his policy? Is it to create unemployment in some areas in order to create employment in others?


Mr. Speaker:: Order, please.


Jean Marchand: I rise on a question of privilege, Mr. Speaker. This is a very important question. I received the wire. The hon. member is the one who asked me the question. A company in Hamilton has decided to close its plant. If we do not give a grant to that company to enable it to establish somewhere else in Canada, it will just disappear. I am not destroying any jobs.



INQUIRY OF THE MINISTRY

John Edward Broadbent: Would the Acting Prime Minister inform the House as to the reason for the absence today of the Minister of Manpower and Immigration. Is it because he has applied for a position-


Mr. Speaker:: Order, please.

November 10, 1971
Inquiries of the Ministry POLLUTION



POSSIBLE USE OF MARITIME COMMAND OR NAVY TO ENFORCE REGULATIONS

J. Michael Forrestall: My question is supplementary to a series of questions asked yesterday and is directed to the Minister of the Environment. Can he indicate to the House whether or not, with respect to the enforcement of regulations, consideration is being given by the government to implementing a recommendation in the white paper on national defence which would extend to the Maritime Command or to Canada's navy the authority to arrest or the civil power of arrest so as to be of assistance in the enforcement of regulations?


Hon. Jack Davis (Minister of the Environment):: Mr. Speaker, I will have to study that question.



UNITED NATIONS


Mr. Warren Allmand (Notre-Dame-de-Grace):: I have a question for the Secretary of State for External Affairs which is supplementary to the one asked earlier by the hon. member for Oxford. Now that the proper representatives of China have been admitted to the United Nations, would the minister state whether the Canadian government is pursuing with other governments the next step toward universality of membership, that is, the admission of the divided state of Germany?


Mitchell William Sharp: Yes, Mr. Speaker. We have been discussing this question very actively and we are waiting for agreement between the Federal German Republic and the German Democratic Republic. I believe the Federal German Republic looks forward, as we do, to the time when the two Germanies are represented in the United Nations.


Mr. Speaker:: Order, please. The time for the question period has just about expired but the Chair will recognize the hon. member for Hillsborough.



EXTERNAL AFFAIRS


Mr. Heath Macquarrie (Hillsborough):: My question follows on the Amchitka blast of a few days ago. In light of this chamber's expressed desire for the termination of all nuclear tests, can the Secretary of State for External Affairs advise the House as to what new initiatives Canada will undertake toward this goal in multinational disarmament discussions and particularly in the use of its good offices with China and with France?


Mitchell William Sharp: I am sure the House endorses the sentiments expressed by the hon. gentleman, and I can assure him we will take advantage of all occasions, at the Geneva confer-

ence, at the United Nations and bilaterally with all the nuclear powers to see whether we can get an end to nuclear testing.


TRANSPORT
Mr. Steven E. Paproski (Edmonton Centre):: My question is for the Minister of Transport. At the first Canadian conference on snowmobiles and all-terrain vehicles it was charged that manufacturers blatantly promote the power of snowmobiles in their advertising and lead people to use their machines in a dangerous manner. Does the government share this position and, if so, is action being taken with regard to the kind of advertising now employed to promote snowmobiles?


Donald Campbell Jamieson: doubt that the general content of that question comes within my responsibility. However, I can tell the hon. member that within about a week we will be issuing the first report on snowmobile safety as a result of official tests held a number of months ago.


Mr. Speaker:: Orders of the day.



BUSINESS OF THE HOUSE


Gerald William Baldwin: I rise on a point of order involving the business of the House. Can the government House leader indicate the business for next week and in particular when the government will be bringing in supplementary estimates to deal with the program outlined by the Minister of Finance on October 14?


Allan Joseph MacEachen: The business of the House next week will be the continuation of the bill now before the Committee of the Whole, and in accordance with the arrangement agreed to in the committee yesterday we will begin on Monday with the general subject of the capital gains tax.
In response to the second question, it is hoped to bring in supplementary estimates next week.


Robert Norman Thompson: I rise on a point of order, Mr. Speaker, for two reasons, first, because of the recent report of Statistics Canada which indicates that there were 22,000 more unemployed last month than there were a year ago, and the plight of many Canadians at this time of the year is desperate. The second reason for my point of order is my inability to obtain an answer which was assured me last week to a question I asked in the absence of the Minister of Manpower and Immigration on a day when he is supposed to be here. I wish to ask whether, tomorrow and the next day not being sitting days, a specific answer will be given next Monday so far as programs and work opportunities are concerned and also whether the government will notify the House of some specific goals so far as
November 10, 1971

timetables for dealing with unemployment in the crucial winter months ahead of us are concerned.


Mr. Speaker:: Order, please. The hon. member cannot suggest that this is a point of order. I am prepared to rule that it is not a proper point of order. Orders of the day.
.00 p.m.)



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Tuesday, November 9, 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. Laniel in the chair.
The Deputy Chairman:: When the committee rose last evening, section 74, with an amendment proposed by the Minister of National Revenue, was before the committee. Sections 16, 67, 69, 70, 72, 74, 76, 78, 79, 81, 126, 144, 145, 148, 149, 198, 199, 200, 201, 202, 203, 204, 205, 206, 207, 248, 249, 250, 251, 252 and 254 had been grouped for the purposes of debate. Sections 16, 67, 69, 70 and 72 were agreed to.
Shall the amendment carry?
On clause 1-section 74: Transfers to spouse.


Mr. Mahoney:: Mr. Chairman, there was considerable debate last Friday and again yesterday on the implications of income splitting and I think it might be useful to the committee to appreciate the significance of it in terms of dollars and cents. In the first place one must note that the options that have been advanced by members opposite would not be available to wage earners; they would only be available to the self-employed.
Second, there has been some talk about people being able to resolve this situation for themselves by incorporating. I suppose that is quite true, but the people who do incorporate take the disadvantages of incorporation as well as the advantages. It is not all clear sailing. In the 1969 tax year, for which we have the most recent 1971 edition of taxation statistics, the average self-employed physician or surgeon in Canada reported a gross income of $32,338. The average self-employed business proprietor reported an average income of $6,485. For the convenience of some calculations, and in order to give the benefit of the doubt all around, I have rounded the doctor's figure down to $32,000 from $32,338, and the self-employed business proprietor's figure up to $6,500. The significance here is the difference that this advantage would give to the higher income people.
Basically, assuming no dependent children and assuming that the doctor employed his wife as a nurse in the business and paid her $10,000 of his $32,000 income, the tax instead of being $11,549.85, which it would be on his income of $32,000, would be reduced to $9,636.25, or a saving for that family of $1,913.60. On the other hand, for the self-employed business proprietor-
Income Tax Act


Gérald Laniel: Order. Is the hon. member for Athabasca rising on a point of order?


Mr. Yewchuk:: Yes, Mr. Chairman. I raise the point of order that the parliamentary secretary is attempting to deceive the House by giving an income tax figure for a gross income. I think this is ridiculous. You have to use net income.


Patrick Morgan Mahoney: Mr. Chairman, I could, of course, have run through the figures for exemptions and standard deductions and brought it down to taxable income, and so on, but I thought since those are matters of record these figures might have served. I have calculated the tax against this income, assuming there were no children and taking the standard $100 deduction in lieu of charitable donations, for medical expenses, and so on. So for the professional man, the doctor who was near the average income for doctors in 1969, and applying table 2 in the "Summary of 1971 Tax Reform Legislation" we have a saving, as a result of that splitting of $32,000 into $22,000 for the doctor and $10,000 for his wife, of $1,913.60.
For the business proprietor whose business income that year was $6,485-and I have assumed here $6,500-we have a tax, after application of the same criteria, of $884.65. If he splits his income in much the same way by employing his wife in the front end of his store, keeps $4,500 taxable income himself and pays her $2,000, he reduces his and his wife's tax to a total of $783.64, a saving of $101.01. So I think the committee will see very obviously, Mr. Chairman, that the advantages hon. members are advocating would certainly accrue not to the small business proprietor but to the high income, professional person.


Marcel Joseph Aimé Lambert: This is a lot of nonsense, Mr. Chairman.


Mr. Rynard:: Mr. Chairman, the parliamentary secretary talks about a doctors' gross income being $32,000. Does he take into account the rooms that are required, often in high-cost areas, all the equipment that is necessary in the carrying on of a medical practice? I think this is a very unfair way to present the matter. There is another question I want to ask him. Supposing a doctor and his wife are practising in the same building, he is an obstetrician and she is a pediatrician-what becomes of that income? How does the minister rate them?


Patrick Morgan Mahoney: Mr. Chairman, the income figure, when I used the term gross income, of course is his business income after he has received his fees and deducted all the costs of doing business. This is the figure that is plugged into the income tax return, from which deductions and exemptions are taken off in calculating taxable income.


Philip Bernard Rynard: You did not answer the second part of my question. If a husband and wife are both practising, one is an obstetrician and one is a pediatrician, how do you rate their incomee? How do you apply this principle to them?


Patrick Morgan Mahoney: If it is a partnership-


Philip Bernard Rynard: Never mind a partnership. They are sharing offices.
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November 10, 1971
Income Tax Act


Patrick Morgan Mahoney: Then there is no problem. If it is a partnership there would be a problem, but if they are just sharing offices and carrying oh independent practices there is no problem.


Philip Bernard Rynard: In other words, you treat those two differently than you would if they were working in a store?


Patrick Morgan Mahoney: Mr. Chairman, I think during the debate on the proposals in the white paper there was an effort to try to identify business corporations with their shareholders, and so on. That concept was rather emphatically rejected by the business community which made representations to us. There is indeed a difference in the way you conduct your business. There is a tax difference that flows from the way the business is conducted.


Philip Bernard Rynard: There is very definite discrimination here. A man's wife could have been running a business of her own up the street, or could have been running it in the same store and they could both come together. This is plain discrimination, and the parliamentary secretary knows it.


Mr. Bigg:: I am very pleased that the parliamentary secretary has sought to enlighten us on this point. I raised it in at least two of my presentations to the committee. This question of net income after taxes is very relevant to low income people. I am not so worried about people with a gross income of $25,000 or $30,000, but I am worried about those with a $6,500 family income. It is all very well to pass the tax off as only $100 or $200, but with inflation and the high cost of living today that extra $100 or $200 in tax is a very serious matter to the low income group.
I am not particularly worried about what happens to the combined income of two well paid professionals. As a matter of fact, I think that the sliding scale of income tax has a great deal to do with this group which is already carrying a large burden of taxation. When one takes into account the years spent at college and the overhead which a doctor, let us say, has to face for clinics, equipment, X-ray material, and so on, the net return for a lifetime of hard work is not as exaggerated as it appears to many people. My emphasis is not on that type of situation. I am concerned with the family that has a gross income of $6,500-the mamma and papa store and many small businesses which require the work and co-operation of the whole family including the children.


Patrick Morgan Mahoney: Mr. Chairman, on a point of order, I wonder if the hon. member appreciates that in those circumstances the children can be hired and paid. The only effect that has is to reduce the exemptions they are entitled to when claiming the children, because the children have income.


Frederick Johnstone (Jack) Bigg: Yes, I understand that there are ways if you seek hard enough. Another difficulty is the bookkeeping that is necessary. I am not against the benefits that we have in Canada, but the bookkeeping that the small income family has to do is hardly worth while. Perhaps we can make it unnecessary to take this $100 away from small income families when there is an inequity in the legislation as the parliamentary secretary admits. It is not

merely a case of saying that some higher income groups have to pay the taxes; we know they have to pay on a much higher scale. I am worried about the net income payable to a family trying to keep a small business open when there is very little escape under this tax bill.


Mr. Ritchie:: Mr. Chairman, I should like to comment on what the parliamentary secretary said about income when the husband and wife are partners. I think he should clear up this question. In his example he cited incomes of $6,500 and $32,000. I think he really meant net income before taxes, because for the professional worker gross income usually means all profit before any deductions for office expenses. Probably this is why there was some misunderstanding.
I think the parliamentary secretary should point out the problem of the professional man who spends many years in studying. Sometimes he is 35 years of age before he makes any income. During this period of his professional life he spends a great deal of his own money and savings on furthering his education. At age 50 he is no further ahead than many people who went into the labour force much earlier in life. This is something we must look at in the future. Income averaging may have a little value, but not very much at this time.
Where a husband and wife are partners in business I think this is discrimination against other people in business. I think it is safe to say that the whole thrust of taxation is against people who wish to be in business. Usually they operate on a cash basis and the wife is often involved, working in the corner store. Canada needs this type of business because of our small and scattered population, particularly in rural areas.
I think the government is making a mistake by not recognizing that there are many valid reasons for treating husband and wife as partners in the business, and I think most farms could be classified as a husband and wife partnership to some extent. This section does not seem to be different from the old act and does nothing to help the small business. With the further capitalization necessary in the small business, the progressive income tax takes more and more income and leaving less for capital savings. There is no help for these people in this section of the bill.


Mr. Otto:: Mr. Chairman, I have been listening to this debate for nigh on 30 days, on this whole business of taxation and tax reform. It is more obvious every day that the bill has lost meaning and that the opposition is filibustering.


Some hon. Members:: Oh, oh!


Steven Otto: That is my opinion, and I have been here a long time. It is a sophisticated filibuster, but it is a filibuster. Normally I would not blame the opposition because that is the name of the game but, Mr. Chairman-


Gérald Laniel: Order, please, I interrupt the hon. member because I do not think that his last remarks were relevant to the section under discussion.


Steven Otto: Mr. Chairman, I shall be moving a motion that this committee rise. Before I do so, however, I want to say that I do not blame the opposition. In normal times it is a
November 10, 1971

good political game. But an economic holocaust is upon us. I do not have to again mention the American surcharge, the revenue bill and all those things. This is not the time for games. On the government side we are talking about the splitting of income between husband and wife. What income? There might not be any income. We are talking about capital gains. What capital? What gains? Equity? The only equity we may have is how to divide poverty equally.
What we should be dealing with, Mr. Chairman, is a government policy. The Minister of National Revenue should be whipping the Canada Development Corporation. The Minister of Finance should be talking about the IDB and how to get it back into shape so that it will serve the economy.


Some hon. Members:: Hear, hear!


Steven Otto: The Minister of Labour should be telling us how we should deal with labour questions and the rise in inflation. Mr. Chairman, in order to give the government some time so that they may end this lame duck, useless session and begin a new session with good, firm policies that we can discuss and so prepare for the economic tragedy that is upon us, I move:
That the committee now do rise and report progress.


An hon. Member:: No progress.


Patrick Morgan Mahoney: No, it would not be the truth.


Mr. Caiik:: Mr. Chairman, I should like to know what progress the hon. member has in mind. I have not seen too much since I have been around here.


Gérald Laniel: Order, please. I must bring to the attention of hon. members that this motion is not debatable, so I shall put it immediately. Moved by the hon. member for York East:
That the committee now do rise and report progress.
Motion (Mr. Otto) negatived: Yeas, 2; nays, 49.


Gérald Laniel: I declare the motion lost. Shall the amendment carry?


Some hon. Members:: Agreed.
Amendment (Mr. Gray) agreed to.


Gérald Laniel: Shall section 74 as amended carry?


Mr. McCleave:: On division.
Clause 1, section 74, as amended, agreed to.
On clause 1-section 75: Transfers to minors.


Gérald Laniel: May I bring to the attention of the committee an amendment to this section, moved by the Minister of National Revenue on October 22, as recorded in Hansard at page 8941. The amendment refers to some changes at page 178 of the bill. Shall I read the amendment?


Robert Jardine McCleave: Dispense.


Gérald Laniel: Shall the amendment carry?
Income Tax Act


Some hon. Members:: Agreed.
Amendment (Mr. Gray) agreed to.
Clause 1, section 75, as amended, agreed to.
Clause 1, sections 76 to 78 inclusive, agreed to.


Gérald Laniel: The committee will now consider section 81. An amendment was moved to this section by the Minister of National Revenue on October 22, as recorded at pages 8941 and 8942 of Hansard. Shall I dispense with the reading of the amendment?
On clause 1-section 81: Amounts not included in income.


Robert Jardine McCleave: Mr. Chairman, I want to direct a question to the Minister of Finance. This question has been sent to some of us and concerns the suggestion put forward by a certain school of thought in Canada. These people suggest that if you have Dominion bonds, they ought to be free of income tax. I understand that on some occasions they are and on others they are not. I think it might be helpful for the record and for those who belong to that school of thought if the minister could tell us briefly why there is no specific reference to these bonds. I admit that they might be embraced by the language of section 81(l)(a).
My other point is this. I thank the minister for carrying forward the provision whereby pension payments arising from deaths and injuries sustained in the Halifax explosion of 1917 are exempt, as are workmen's compensation cases and the like. Nobody wants to take money from the injured and, quite properly, there is an exception here. I thought the minister might like to know that somebody loves him once in a while.


Edgar John Benson: Mr. Chairman, there is no exemption on government of Canada bonds and the interest on them. There is, in some instances, an exemption with respect to withholding tax in cases where foreign owners have bought a general issue of government of Canada bonds which buyers are not taxable in the countries in which they reside. The general situation is that bond interest from government of Canada bonds is taxable in the hands of the recipient. Tax may be postponed by not clipping the coupons and by holding them to maturity. Quite often people aged, say, 55 buy Canada Savings Bonds and hold on to them for ten years. They may cash them when their income is lower and include all the amount received as income.
They have the option, even though they do not clip their coupons, to take the amount that would be received into account with respect to income if they so desire. However, once you move to an accrual basis, you must do that with respect to all interest earned. The same rules apply to non-government bonds. That is, unless the coupons are cashed they do not constitute part of income.


William Gordon Ritchie: Mr. Chairman, would the minister explain the meaning of paragraph (j) on page 187, entitled "Social assistance payments"? Does this provision cover all social assistance payments made by any government? It does not mention a municipality or a town.


Edgar John Benson: Mr. Chairman, all that we have done in paragraph (j), really, to change the existing situation is
24372-44}

November 10, 1971
Income Tax Act
add to the words "the amount of any social assistance payment made on a means or a needs test basis", the words "(i) by a registered Canadian charitable organization". The other part of the subparagraph reading, "(ii) under a prescribed program provided for by an act of Parliament of Canada or a law of a province" is already included in the law. This means, generally speaking, that where payments are made on a needs test, no matter whether they are made by the municipality for the province or not, they are made under provincial law and therefore they are tax exempt payments to the recipient. That, generally, is the case.


Gérald Laniel: Shall the amendment to section 81 carry?


Some hon. Members:: Agreed.
Amendment (Mr. Gray) agreed to.
Clause 1, section 81, as amended, agreed to.
On clause 1-section 126: Foreign tax deduction.


Robert Jardine McCleave: Mr. Chairman, when getting into technicalities such as we face with regard to the provisions of section 126, I suppose that once in a while we must on grounds of prudence throw the ball to somebody else. The ball I throw to the Minister of Finance or the parliamentary secretary is this. Have representations been received from any group with regard to the new provisions in the law that we are being asked to enact and, if so, what was the nature of the government's reply?


Patrick Morgan Mahoney: Mr. Chairman, the answer to this question will be in the category of the answer I gave to another question along the same line yesterday. I am sure that this matter has been alluded to in some of the tens of thousands of letters which have been received on the question of tax reform. I am not aware of any major representations that have come forward, nor am I aware of any forcible and well-reasoned arguments against these provisions.


Robert Jardine McCleave: So those representations are not in the category of the brisk fight that has been put up by the co-operative movement in Canada?


Patrick Morgan Mahoney: Distinctly not; nor are they in the category of the cattlemen.


Mr. Burton:: Mr. Chairman, recently when I was in New York attending sessions of the United Nations it was drawn to my attention that problems face employees of that organization. Those problems relate to income tax. I am sorry that I do not have all the details before me. However, I wanted to bring the matter to the attention of the minister and the parliamentary secretary because I understand that this problem has made it difficult to recruit Canadians for work in the United Nations or United Nations' agencies.
This, of course, has the unfortunate effect that there is not as high a degree of participation by Canadians in some international agencies, which may be due in part to this particular factor. I understand some of these problems are under study at the present time. However, I

would appreciate the comments of the minister or the parliamentary secretary on this matter because I think it is one of considerable concern. Canada as a nation, through the government, has taken a considerable interest in the work of the United Nations and its many agencies. We should ensure that there are no unnecessary handicaps placed in the way of Canadians who may wish to work for the United Nations or some of its agencies.
I would appreciate the comments of the minister. I urge that any problems that exist which may prove to be a handicap to Canadians wishing to work for these agencies be considered and removed.


Patrick Morgan Mahoney: Mr. Chairman, the employees of the United Nations are not taxed by Canada. Employees of the Canadian delegation to the United Nations are taxed in the same way as we tax our servicemen overseas and foreign service employees on foreign postings. However, actual employees of the United Nations who are Canadian citizens are not taxed by Canada. If the hon. member can give me more details privately, I will look into the particular case and report to him. On the general basis of the law as I understand it, there does not seem to be any substance to the complaint the hon. member has heard.


John Stratford Burton: I will be very happy to take up this matter with the department and the minister. I regret I do not have the details immediately before me. I understand that some of the problems go beyond taxation. I will be happy to follow up this matter.
Clause 1, section 126, agreed to.
On clause 1-section 144: "Employees profit sharing plan" defined.


Gérald Laniel: On section 144 there is an amendment moved by the Minister of National Revenue, which appears at pages 8954 and 8955 of Hansard. Shall I dispense with reading the amendment?


Some hon. Members:: Agreed.


Mr. Downey:: I request that Your Honour read the amendment.


Gérald Laniel: Moved by Mr. Gray:
Insert texte no. 1.
That section 144 as set forth in clause 1 of the said bill be amended by adding, immediately after subsection (8), the following subsection:
'Foreign tax (8.1) For the purpose of subsection 126(1), the deduction following rules apply:
(a) that proportion of the income for a taxation year of a trust governed by an employees profit sharing plan from sources (other than businesses, carried on by it) in a foreign country that
(i)	the aggregate of amounts allocated in the year by the trustee under the plan to a particular beneficiary under the plan
is of
(ii)	the aggregate of amounts allocated in the year by the trustee under the plan to all beneficiaries under the plan
shall be deemed to be income of the particular beneficiary for the year from sources in that foreign country: and
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(b) a particular beneficiary under the plan shall be deemed to have paid as non-business-income tax for a taxation year, on the income that he is deemed by paragraph (a) to have for the year from sources in a foreign country, to the government of that country an amount equal to that proportion of the non-business-income tax paid by the trust for the year to the government of that country, or to the government of a state, province or other political subdivision of that country (except such portion of that tax as was deductible under subsection 20(11) in computing its income for the year) that
(i)	the amount determined under subparagraph (a) (i) in respect of the particular beneficiary for the year
is of
(ii)	the amount determined under subparagraph (a) (ii) for the year.'


Robert Jardine McCleave: Mr. Chairman, I think this section follows pretty closely the recommendations arrived at after a considerable struggle and representations before the House of Commons committee. As one who had a part in that, I am not prepared to raise substantial issues about section 144 and the couple of sections following. However, I ask the parliamentary secretary whether there is a substantial body of Canadians who feel their oxen are being gored by this provision, or whether the government is prepared to live with the recommendation of the committee, a recommendation that I support.


Patrick Morgan Mahoney: Mr. Chairman, we have had representations regarding this section, of course. Employee profit sharing plan tax treatment was the subject of considerable representations in the committee subsequent to the publication of Bill C-259.


Robert Jardine McCleave: I ask the parliamentary secretary if the amendment is to meet any substantial point that has been presented.


Patrick Morgan Mahoney: Yes, Mr. Chairman. This amendment does meet one of the very substantial points that has been raised. It is to make it clear that the beneficiaries of an employees' profit sharing plan are able to obtain relief under section 126 for any income taxes imposed on that portion of the foreign service income allocated to them by the trustee. There have been other representations to which we have not agreed to date.


John Gilbert: Mr. Chairman, this section is very important. It was drawn to my attention by numerous letters that I received, especially from the Simpsons company in Toronto which has an employee profit sharing plan which has been in operation for a good many years. I received between 50 and 75 letters from workers of Simpsons who had been notified that the new provisions will directly affect their profit sharing scheme.
When these people retired, under the old scheme they were permitted to take a lump sum payment. There were very generous averaging provisions with regard to income tax. It is my understanding, and their understanding also, that this advantage has been substantially reduced. These people have a perfect right to be concerned about it. There is nothing worse than having a job or position, participating in a scheme with the company in anticipa-
Income Tax Act
tion that when you retire certain moneys will be payable to you, and find when you retire that there has been a change in the rules of the game which was not imposed by the employer but in a taxation scheme of the government. That is precisely what has happened in situation.
I would like the parliamentary secretary to address himself to these questions and give the answers. In my case, the answers will be sent to the people who wrote to me about their problem. First, what changes will take place to the profit sharing plan in which these people participate, as a result of the new legislation? Second, what relief may they obtain from the new provisions of the act? In other words, if a person has to take a lump sum payment and is going to be taxed at the new rate, how can he avoid the heavy taxation he will have to pay?
I think I am aware of some of the answers the minister may give with regard to the increases in exemptions. The personal exemptions may be of some benefit to them. I would like him to go into this question in depth. We have a responsibility to the people who have participated in profit sharing plans and we as a government should take the right steps to protect the security these people have enjoyed.


Patrick Morgan Mahoney: Mr. Chairman, section 144 may not be the section to which the hon. member wants to refer. He may be dealing with deferred profit sharing plans which are covered in section 146. Section 144 deals with the share-as-you-go plan where last year's profits are calculated. Payments are made into an employee's account for the year and he pays tax on it at that particular time. It is basically an employment incentive device. Basically, there are no changes applicable to this provision in the new law that are not of a general nature. For example, capital gains realized in the plan will now be taxable, whereas previously they were not. There are changes of that nature.
The hon. member referred to changes in rates and exemptions. These are covered elsewhere. Since the question has been asked, perhaps I can answer it. In drawing out the money when he retires or becomes entitled to it, the employee is entitled to a general averaging provision. He is also entitled to purchase an income averaging annuity under the new law and thereby defer payment of taxes to minimize the taxation.
Under section 36 of the Income Tax Act a very favourable averaging provision exists. The general averaging that has been offered to these employees for the future will not be as favourable as that which they enjoy under present section 36 for payments made into a plan up to the end of the current calendar year. There is no retroactivity in these changes. Payments made after the new system comes into effect on January 1, 1972, will be subject to the new method. Payments to the plan during the current year, while the present law is in force, will continue to benefit from the provisions of the present law.


John Gilbert: I thank the parliamentary secretary for his answer. I did not notice section 146, Mr. Chairman, otherwise I would have raised the question under that section. The parliamentary secretary is quite correct with regard to the problems of the Simpsons' employees in Toronto. The next question is: What period will be allowed employees who will be sharing these moneys, to spread them out so that they can collect their moneys?

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Income Tax Act


Patrick Morgan Mahoney: The law permits the plan to provide that all or any part of the amount may be paid in equal instalments not less frequently than annually over ten years. Then the employee in purchasing an annuity may choose one of a term not longer than 15 years certain. I apologize to the hon. member for referring to section 146. This is one of the sections we have already passed, so it will not be coming up later.


John Gilbert: Is a person confined to purchasing a government annuity, or are there other annuities he can purchase which comply with the restrictions?


Patrick Morgan Mahoney: It is not required to be a government annuity. It could be an annuity offered by a financial institution with whom he is dealing at arm's length.


Robert Jardine McCleave: May I ask a technical question arising out of section 144? It has to do with the interesting legal phrase "not being dealt with at arm's length". Is this an attempt to differentiate between the owner of a business and a person who manages a business? This wording appears in section 144 (1). The first few lines contain a reference to "arm's length".


Patrick Morgan Mahoney: It is not a managerial section necessarily, but certainly it is an ownership section. If the person setting up a profit sharing plan for himself, in addition to being an employee controls a company or is a member of a group, he cannot do it.
Amendment (Mr. Gray) agreed to.
Clause 1, section 144, as amended, agreed to.
On Clause 1-section 145: Definitions


Robert Jardine McCleave: May I ask a question of the parliamentary secretary with reference to this section which deals with registered supplementary unemployment benefit plans? I did in fact ask this question some time ago, but it might be as well to ask it again so that anybody reading the record can find the answer here instead of pages back in Hansard.
Why was it considered that registered supplementary unemployment benefit plans or payment from such plans should be considered as income, when strike pay is not? It seems to me there is really no difference in principle except that such payments may come from different sources. It is true the unions would be expected to save up money for strike pay and that the registered supplementary unemployment benefit plan could be as a result of collective bargaining. I think a brief explanation would be helpful.


Patrick Morgan Mahoney: This particular plan is one which is funded by an employer who deducts his contributions from his taxable income. The plan itself pays no tax on income as it earns it; the tax becomes payable when employees derive benefit from it. So there is no element of double taxation. In the case of strike pay, it is often financed from taxed dollars contributed by employees generally belonging to the particular union involved, and the taxation of strike pay benefits paid out of such a fund would involve a significant element of double taxation.
[Mr. Gilbert.J


Robert Jardine McCleave: I suppose the answer to the question is that since the people who make contributions to strike pay funds do not claim those contributions as deductions, they are not regarded as taxable.


Patrick Morgan Mahoney: I suppose there could be an element of double taxation since un-taxed dollars go into the fund to the extent that ordinary regular dues, or a portion of them, are allocated to the fund. But any strike pay contributions which are identified as such are not a deductible item from the employee making them.


John Gilbert: Mr. Chairman, prior to the changes in the Unemployment Insurance Act, when a person retired he usually obtained unemployment insurance for a period of one year. As a result of the changes to the act, this is not now the case. If I understand it correctly, a person reaching the age of 65 is now entitled to three weeks' retirement pay. I am wondering whether this amount is taxable, and is it taxable under this particular section?


Patrick Morgan Mahoney: Not under this section, Mr. Chairman, but it would be taxable.
Clause 1, section 145, agreed to.
On Clause 1-section 148: Amounts included in computing policy holders income.


Gérald Laniel: On section 148 the committee has before it an amendment moved by the Minister of National Revenue. The amendment appears at page 8955 of Hansard for October 22 and is designed to correct the French version of the bill. Shall I dispense with reading the amendment?


Some hon. Members:: Agreed.


Gérald Laniel: Shall the amendment carry?


Some hon. Members:: Agreed.
Amendment (Mr. Gray) agreed to.
Clause 1, section 148, as amended, agreed to.
On clause 1-section 149: Employees of a country other than Canada.


Gérald Laniel: On section 149 there is an amendment moved by the Minister of National Revenue, appearing at the same page of Hansard for October 22. Shall I dispense with reading the amendment?


Some hon. Members:: Agreed.


Gérald Laniel: Shall the amendment carry?


Some hon. Members:: Agreed.
Amendment (Mr. Gray) agreed to.
Clause 1, section 149, as amended, agreed to.


Robert Jardine McCleave: Mr. Chairman, could I raise a point of order? The parliamentary secretary and I have discussed this matter but it might be helpful, since hon. members are continuing to dwindle away because we will not be here for the next few days, if the parliamentary secretary would make a statement as to which sections in our "clean-up list", as it is vulgarly known among the House leaders, we will be considering for the rest of the after-
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noon. At that point we would leave the substantial question of capital gains, say, until Monday. Then hon. members will understand exactly what we are being asked to deal with this afternoon.


Patrick Morgan Mahoney: Yes, Mr. Chairman. It would be the government's intention, if we finish this group of items relating to personal income tax, to proceed to division J which deals with appeals to the Tax Review Board and the Federal Court, then to division I which deals with returns, assessments, payments and appeals, and then to part XV which deals with administration and enforcement. Those are areas that are generally related to each other in terms of the collection and assessment of income tax and appeals from assessments. If by any chance we finish those items before six o'clock, we would suggest to the committee that we call it six o'clock and not move to a new area of substantial concern.


Gérald Laniel: Is that agreed?


Some hon. Members:: Agreed.


Gérald Laniel: Is the hon. member for Battle River rising on a point of order?


Cliff Downey: No, Mr. Chairman. I have a question relating back to section 149 and I wonder whether it would be possible for the parliamentary secretary to clarify the point. Do I understand that members of a family or servants of an employer who are employees of a country other than Canada are not subject, under this section, to taxation by our internal revenue department? Is that a correct assumption, or have I misread it?


Patrick Morgan Mahoney: No, Mr. Chairman, that is correct. This provision deals with the assorted exemptions from income taxation. Paragraph (a) of subsection (1) refers to an officer or servant of a government of a country other than Canada. This would be the employee of a foreign country working in Canada, for example. That employee must be a citizen of that foreign country or have come from that foreign country. This provision would not exempt from taxation a Canadian working as a chauffeur to an embassy here, for example.


Cliff Downey: If at any stage such a person applied for citizenship status, he would no longer be exempt under this section?


Patrick Morgan Mahoney: That is correct, Mr. Chairman.
On clause 1-section 198: Tax on non-qualified investments and use of assets as security.


Gérald Laniel: The hon. member is aware, I hope, that section 149 has already been adopted. Shall section 198 carry?


Cliff Downey: Section 148.


Gérald Laniel: No, section 198 at page 483. Shall section 198 carry?


Some hon. Members:: Agreed.
Clause 1, section 198, agreed to.
Clause 1, sections 199 to 203 inclusive, agreed to.
On clause 1-section 204: Definitions.
Income Tax Act


Robert Jardine McCleave: Mr. Chairman, I do not think section 204 is really before us, according to the understanding.


Patrick Morgan Mahoney: Mr. Chairman, if the hon. member will recall, I believe we were dealing with section 204 under another block of sections and agreed to refer it forward to this one rather than deal with it in the previous block.


Gérald Laniel: Shall clause 204 carry?


Some hon. Members:: Agreed.
Clause 1, section 204, agreed to.
On clause 1-section 205: Application of Part.


Robert Jardine McCleave: Mr. Chairman, since there are several sections here, this one and the ones following, dealing with tax in respect of certain property acquired by trusts, etc., governed by deferred income plans, it might be helpful to deal with sections 205, 206 and 207 en bloc. They fall within the same family and the parliamentary secretary might give us an explanation of them. I gather they are uncontroversial, but an explanation might be helpful for the record.


Patrick Morgan Mahoney: Yes, Mr. Chairman. These sections commencing at section 205, being part XI of the bill, deal with certain property acquired by trusts that are involved in deferred income plans. Section 205 describes who will be subject to these special rules. The new rules will apply to a trust for a registered pension plan, a trust for a registered retirement savings plan and a trust for a deferred profit sharing plan.
Section 206 provides that a share of the capital stock or investment acquired after the date of publication of this amendment-this in effect goes back to budget day, June 18-will be foreign property unless it is prescribed otherwise by regulation. Mr. Chairman, we have an amendment to section 206 which will make this clear. Section 206 imposes the tax on the trust for a registered pension plan, a registered savings plan and a deferred profit sharing plan that holds foreign property in excess of 10 per cent of its property, and also defines foreign property. I do not know whether hon. members want me to go into detail on that.
There is an amendment to section 207 which will add a marginal note of considerable impact. Section 207 deals with the filing of the return and payment of the tax that is levied under section 206. I think that covers the whole block of sections.


Robert Jardine McCleave: Mr. Chairman, I suppose this question will be considered to be technical. It arises out of the fact, as the parliamentary secretary said, that the burden of taxation does commence as of a day that has long since gone, June 18, 1971, when the budget was presented. I suppose there must be situations now in which people will be liable for that tax and they will have to know that this particular bill is passed. Am I correct in that? What administrative difficulty arises as a result of this situation?


Patrick Morgan Mahoney: That is not quite the situation, because they are quite free to deal with this type of investment

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Income Tax Act
during the interval. But if they have acquired it since budget day and still own it on January 1, then it does come into the type of property which will be subject to special taxation. However, they are all on notice that this is the effect, and they are quite at liberty to bring their holdings down before the end of the year to a point where they will not be liable to taxation.
Clause 1, section 205, agreed to.
On clause 1-section 206: Tax payable.


Gérald Laniel: There is an amendment to section 206, moved by the Minister of National Revenue, which is to be found at page 8958 of Hansard for October 22. Shall I dispense with reading the amendment?


Some hon. Members:: Dispense.
Amendment (Mr. Gray) agreed to.
Clause 1, section 206, as amended, agreed to.
On clause 1, section 207: Return and payment of tax.


Gérald Laniel: There is also an amendment to section 207, moved by the Minister of National Revenue, which is to be found at page 8958 of Hansard for October 22. It is to amend the French version of this section. Shall I dispense with reading the amendment?


Some hon. Members:: Dispense.
Amendment (Mr. Gray) agreed to.
Clause 1, section 207, as amended, agreed to.
On clause 1-section 248: Definitions.


Gérald Laniel: There is an amendment to section 248, moved by the Minister of National Revenue, which is to be found at page 8960 of Hansard for October 22, 1971.


Robert Jardine McCleave: Mr. Chairman, I wonder if I might make a point here because there are at least two definition sections which refer to coming events, namely, the capital gain or capital loss provisions in the bill, which I am sure we will pass since we are in an especially friendly mood now-and heaven only knows what will happen before the day is out. We may all qualify for the Nobel Peace prize. We all receive nomination letters. I will nominate the parliamentary secretary if he will nominate me.
The question I pose is, if there should be substantial changes in the capital gains situation that is to be considered next week, perhaps we should have a gentlemen's agreement that we would open up the interpretation section again.


Patrick Morgan Mahoney: That is fine, Mr. Chairman, but I cannot visualize that this will be necessary unless we transfer definitions from one section to another, involving renumbering. However, that is quite agreeable.


John Howard Lundrigan: Mr. Chairman, I wish to make a few remarks on this section. I think the hon. member who just spoke has a point which should not be taken lightly. In this section we have all the definitions of phrases used throughout the bill. So if there are to be throughout the bill major amendments or any amendments, this would challenge every definition. As a consequence, if we pass

this section now we will find ourselves in a procedural hang-up which would be difficult to resolve.
I think this section should be left open. For example, the definition here of "fishing" is something which naturally catches my eye. It states that "'fishing' includes fishing for or catching shell fish, crustaceans and marine animals, but does not include an office or employment under a person engaged in the business of fishing." Personally, I would challenge that definition. I could give some details why I would do so. However, rather than becoming hungup on this section now, I think members should take a look at it and make a mental note of places where they might differ with the interpretation. My feeling is that if we become involved in this section after passing it, we could find ourselves in difficulty later. If we are to move on, then I should like to make comments now over and above what I have just said.


Robert Jardine McCleave: Mr. Chairman, once again we could go back to the old bible in the business of commerce, which is the Canadian Master Tax Guide for 1960. The point raised by the hon. member has been well considered in the law courts. Under one decision a supervisor of a commercial fishing company is held not to qualify as a fisherman. I suspect that anyone who goes down to the sea and throws in some bait could qualify, and that someone who sits in an office watching the fishing fleet could not qualify.


The Chairman:: I wish to remind hon. members that there is an amendment moved by the Minister of National Revenue with which we must deal.


John Howard Lundrigan: Mr. Chairman, I noticed a few minutes ago that the Minister of Finance nodded approvingly in respect of the remarks of my friend from Halifax. I wonder, wherever he might be now-perhaps behind the curtains smoking his pipe-if he is in a position to react to the suggestion. We might take capital gains. I do not know what the interpretation is here. However, we are to be involved in a lengthy discussion on that matter. Will these difficulties in any way affect the definition given here? I do not know. I am thinking out loud.
Then there is the definition in respect of "fishing". The danger of the definition here is that it could very well, if it is strictly adhered to, eliminate under this tax legislation 60 per cent or 70 per cent of all the fishermen on the Atlantic or in Canada as a whole, because most Canadian fishing crews are made up of a number of equals in a fishing craft. I do not expect the parliamentary secretary to be able to respond to this now because it is a difficult matter. But most people involved on a fishing craft are equals. There could be five or six people in a small fishing craft, operating in an equal fashion who are in no way subservient to any one member of the crew.
If in calculating or computing expenses for tax purposes they had to be restricted to one individual receiving the nod as being a qualified fisherman under the act, while other people are in an inferior position, it would prejudice these people so far as their taxation position is concerned. I do not know whether I am reading the section properly because, to be honest, I do not understand
November 10, 1971

about 5 pounds, 13 ounces of this bill, but if there is a relevant comment which the parliamentary secretary would like to make, I would be glad to hear it.


Patrick Morgan Mahoney: Perhaps the hon. member has not understood the purport of the commitment which I made to the hon. member for Halifax-East Hants. If when we reach the substantive sections of the bill amendments to this section are indicated, we have committed ourselves to reopen it for amendment. The particular definition with which the hon. member is concerned continues in exactly the same language. The definition contained in the present section 139(l)(q), as the hon. member for Halifax-East Hants has indicated, is enshrined in the law and in a great many judicial precedents.
Nothing in this section will change what exists now, and if the hon. member is dissatisfied with the law as it exists I would assume that there are other places in the act than in the definitions section where his amendment would be appropriate. However, if in dealing with the substantive sections of the bill we strike a position where a definition requires amendment, we will certainly reopen the section for that purpose.


John Howard Lundrigan: I will accept the position of the parliamentary secretary if this is in fact the definition under which we have been working. I am quite satisfied. I was not familiar with it. Also, if that is acceptable to my hon. friend I will go along with it.


Russell Clayton Honey: The Chair will put the motion moved by the Minister of National Revenue. As hon. members know, it appears in Hansard for October 22, at page 8960. Shall the amendment carry?


Some hon. Members:: Agreed.
Amendment (Mr. Gray) agreed to.
Clause 1, 248, as amended, agreed to.
On clause 1-section 249: "Taxation year"


John Stratford Burton: I trust that the hon. member for York East and some other hon. members will note that the section which we have just passed covers a total of 16 pages. But coming to section 249 there is one matter of interest that I should like to take up with the government, that is, where it specifies and defines the term "taxation year". It states that for a corporation it shall be a fiscal period, which of course would mean that it could either be a calendar year or other than a calendar year. But in the case of an individual the section specifies that it shall be a calendar year.
The section makes it very specific that when dealing with individual taxpayers we shall deal with taxation on a calendar year basis. The individual has no alternative. A corporation is provided with the option of establishing its fiscal period in a way that will best suit its business operations. I think there is some merit in such a system. I also realize that there must be some control in this area. I am not sure whether the department simply accepts whatever fiscal period a corporation may decide upon, or if it decides upon a change in its fiscal year whether this is automatically accepted by the department.
I would be interested in obtaining that information from the parliamentary secretary. I know there is no option left
Income Tax Act
open to the individual taxpayer. I see no reason why there should not be a provision whereby an individual taxpayer, because of the nature of his business, the nature of his income earning, should not be able to at least have an opportunity to establish his taxation year other than on a strictly calendar year basis.
I recognize that there does have to be some control over this matter, otherwise it would produce a good deal of confusion and difficulty for the department. I would certainly not object to some control being built in either in terms of variance from the calendar year procedure or leaving it to the discretion or concurrence of the minister. This is certainly in line with many other provisions of the act. But it seems to me that in some cases there is a good case for establishing other than a calendar year. I hope the government would find it possible to qualify this section in such a way that the individual taxpayer in Canada can qualify for variance from the calendar year provision in the same way as a corporation. I hope to have a response from the government on this matter.


Patrick Morgan Mahoney: The hon. member is quite correct. A corporation is free to establish its fiscal year in the initial year in which it starts business. It requires the consent of the Minister of National Revenue to change that year thereafter. So I do not think there is any significant element of tax deferral, and certainly no element of tax avoidance is implicit in the date selected for the fiscal year. What may be postponed in the initial instance is caught up once the company starts operating on a regular basis. There is no real advantage.
However, the hon. member may be under some misapprehension when he refers to the individual taxpayer engaged in a business. Business proprietors are also entitled to select their own year and determine their income during the year for the business. Then the proprietor himself, of course, includes his income, or the partner includes his share of the partnership income in his personal income for that year and pays tax on it the following April 30.
I do not know how many sections of this bill would have to be amended if we were to give individual taxpayers the option to pick their year. The dates on which quarterly instalments are made by people with significant amounts of investment and professional income would have to be made flexible to meet that situation. The dates upon which penalties apply, and many other dates, would be up for revision and would have to be made flexible. I am not really satisfied that it is a workable solution.
The trauma of having the national tax paying day on April 30 every year is one that the taxpayer seems to have become accustomed to on a regular basis. Perhaps it is the sort of thing that one would just as soon get over once and for all, rather than having various people on the block reporting their income tax on a weekly basis and the matter becoming a topic of general conversation 52 weeks a year.


Russell Clayton Honey: Is the hon. member for Regina East pursuing this matter?


John Stratford Burton: I just wish to deal with the comments of the parliamentary secretary. I recognize, of course, that in the provisions which are set out for a corporation it does not

November 10, 1971
Income Tax Act
involve tax avoidance or tax deferral in any way to use a period other than the calendar year. Certainly it was not my intention to suggest any such thing. Nevertheless, it is a matter of convenience for many corporations to establish for their own reasons a fiscal period which is other than the calendar year, and as a further convenience for taxation purposes this fiscal period is deemed to be, in effect, the taxation year. But when it comes to an individual, the parliamentary secretary pointed out that some businesses and proprietors of businesses as such are able to use a period other than the calendar year.
I am not clear whether it is possible for farmers, fishermen and other occupational groups engaged in economic activity which is other than a wage earning type of activity, to take advantage of this provision and I would appreciate having this point clarified. The parliamentary secretary also seems to throw up some road blocks in terms of the mechanical difficulties that would be involved in making a change to this section. I am not too impressed with that point. It seems to me it might be possible to work in an amendment along the lines of stipulating that the tax year in the case of an individual is the calendar year or, if the minister gives his consent, a period other than the calendar year shall be deemed to be the taxation year.
I do not pretend to be an expert in drafting law, but it should be a relatively simple matter to make an appropriate amendment if there were the desire or will to do so. I hope we will have some response from the parliamentary secretary beyond what he has already indicated.


Patrick Morgan Mahoney: First, Mr. Chairman, I am not aware of any provision that would prevent farmers or fishermen choosing any year other than the calendar year, although I am sure, from practice and custom, that very few of them do so. Before the hon. member seriously suggests that an individual on wage or salary be allowed to select his own tax year, he might like to discuss the matter with the treasurer or controller of the federated co-ops to see how they would handle the issue of T-4 slips, accounting for Canada Pension Plan contributions, their own registered retirement saving plans contributions and the other tax deductions they have made within a 365-day period for their several thousand employees, all of whom no doubt would have exercised the option. So that at least a few of those details would have to be issued daily, rather than as a chore which is faced up to once a year for each employee. I think that the hon. member, on reflection, would agree that this would be a rather horrendous administrative burden to foist upon Canadian employers.


John Stratford Burton: Mr. Chairman, I have had experience in doing accounting work for co-operative organizations, and for the information of the parliamentary secretary I do have fairly good knowledge on the matter. In this age of computers and mechanical systems available to undertake such work, I am sure that where there is a will there is a way to solve whatever administrative problems would arise. In fact, I am not sure that this matter has been of great concern in the minds of those drafting some of the other provisions of the bill.
(Mr. Burton.]


Cliff Downey: Mr. Chairman, in regard to this section on the taxation year and the difference in the treatment of corporations and individuals there is a point to be made, because in many businesses there are specific trading patterns, or buying and selling patterns, and the individual in business may not find it convenient to have the calendar year as his taxation year.
I can think of an example that is very common in my own business of farming and ranching. Often, as a result of pressures exerted in the industry due to feed shortages or market fluctuations of one kind or another, there are forced sales where in fact two complete cash crops have to be sold in one year. In this situation we have the individual, rather than paying the much higher tax that he would have to pay if his income were distributed over two years being forced into the marketplace around the end of the year, about Christmas time, and having to make a purchase of livestock. And he may not even take the livestock he purchases back to his place of business; he may leave them in a public stockyard until New Year's Day so that he can qualify for a fairer level of taxation on his business. In such circumstances I cannot see why we cannot treat an individual on the same basis as a corporation.
Maybe we could use the criterion of having 80 per cent or 90 per cent of the shares of a corporation owned by the family or the individual in question. This is a subject we discussed the other day when sections 28 to 32 were before the committee. A brief from the Canadian Federation of Agriculture indicated they thought it would be fair if the family corporation in which 80 per cent or 90 per cent of the shares were owned by the individual in question could be treated the same as an individual taxpayer, taking into account the $1,000 exemption on homes and similar provisions. I think it is only fair that the minister should consider extending this option to the individual so far as the definition of "taxation year" is concerned.


Patrick Morgan Mahoney: Mr. Chairman, I think the hon. member misunderstood or did not hear the answer that I gave the hon. member for Regina East. Certainly there is no reason why a farmer, fisherman or small business proprietor cannot choose his fiscal year. It is his personal income tax that is due on April 30 each year for the previous calendar year, but for business purposes, if it suits his convenience and if there is some advantage to him, he is entitled-the same as a corporation-to pick any one of the 365 days in a year that suits his purposes and, I suppose, his auditor's convenience.


Cliff Downey: Mr. Chairman, I realize the date can be switched once, but I believe there is some difficulty with the department in shifting the date for the year's end more than once. This is something which would have to be looked at very carefully because of the incidence of tax avoidance. But there should be some leeway provided.


Patrick Morgan Mahoney: A businessman is in exactly the same position as a corporation. He may, with the approval of the Minister of National Revenue, change the date of his fiscal year end. The criterion is that it must be for a bona fide business reason. If he were anticipating a very significant amount of income in a particular period, he might have difficulty convincing the minister that his intention
November 10, 1971

in changing his year end is not to defer tax but is for a legitimate business reason. For example, if you propose to merge two companies you can go to the minister and get this permission in order to have all financial statements dovetailed, and start with a clean sheet. There are many legitimate reasons for changing the year end. I suppose "frequently" would not be the correct word, but these changes are not an unusual occurrence.


Robert Jardine McCleave: Mr. Chairman, I should like to be irreverent for about ten seconds and then report an injustice. One distinguished taxpayer was born on February 29 and he annually reports a very substantial income. If the parliamentary secretary's words were to be taken literally, I wonder how much income tax Henri Richard of the Montreal Canadians would pay. He might decide to make his peace with the Income Tax Department every four years instead of every year.
The injustice probably fits in with the general idea of what the taxation year is, and arises out of the circumstances of some Canadians whose income is derived entirely from investment. These investments may be timed through the year so that the first interest payment comes in June and the second in October. As I understand the existing regulations, they can be asked to make four payments a year on those investments. The first payment would take place in March before they had received any income whatever from the investments for that year. I do not want to belabour the point and I only raise it because I think it is an injustice which can be cured by making the regulations more flexible.
These people could be given an option on when the payments start. I do not expect an answer this afternoon but I would expect the parliamentary secretary to say that this question would be looked into.


Patrick Morgan Mahoney: Yes, Mr. Chairman, we certainly will look into it.


William Gordon Ritchie: I have a question related to the question of the hon. member for Battle River. Am I to understand, assuming that an incorporated businessman has multiple income, that he can select a date, say October 31, for a particular business but still report the following April his personal income tax?


Patrick Morgan Mahoney: That is correct. He can select that his business or medical practice operate on a fiscal year basis starting November 1 and ending October 31. The income up to October 31 would be income for that year and he would pay tax the following April 30. The income he earned in business during November and December would be carried forward and not be reported as personal income until the following year, and any tax paid in respect of it until April 30 the succeeding year.
Of course, instalment payments such as the hon. member for Halifax-East Hants mentioned would be paid throughout on that professional income because it is not subject to deduction at source.


Cliff Downey: Mr. Chairman, I wonder what the situation would be if we had a new tax bill reported to be coming in on January 1 and an individual or small corporation with
Income Tax Act
a year end of September 30. Bringing this forward in terms of capital cost allowance, in the depreciation schedule what will the effect be, or how will the taxpayer react to the year end at the end of September and the new system coming in at the beginning of January, in regard to these items.
Will he have to take this interim period and have another tax report filed for those three months? Will the same rules that held under the depreciation schedule hold true until the end of the calendar year so that any item he buys before the end of the calendar year will be recorded under the old tax act? Would the parliamentary secretary clarify this situation?


Patrick Morgan Mahoney: For corporations there will be proration and, for example, if their fiscal year runs from July 1 to the end of June they would have to calculate the tax on half their income on the basis of the present act and half on the basis of the new act.
For individuals there is no problem. They move into a calendar year and the individual tax system is applicable for that whole year. For the proprietor who derives his income from a business, if he derives it from a business until October 31 this year, that is all taxable under the present system. In effect, the income he has deferred for November and December this year would be picked up and he would not receive it as personal income until 1972, and it would be taxable under the new system. There is no proration of personal tax necessary under the new system.


John Stratford Burton: I noted the parliamentary secretary said that farmers, fishermen and any unincorporated type of business enterprise can take advantage of the provision to have the taxation year on a basis other than the calendar year. I accept the parliamentary secretary's word that such is the case. I believe he indicated that he knew of nothing that would prevent a farmer or fisherman using a fiscal period other than the calendar year.
I have before me a copy of the 1970 Farmers and Fishermen's Tax Guide. I have looked through it quite carefully. I may have missed something, but I see absolutely nothing in it that points out to the taxpayer that he can choose a period other than the calendar year-this would be with respect to starting his operation-or that he can change that time period with the consent of the minister. There is nothing in the guide that points this out.
I am not doubting the parliamentary secretary's word, but if that is the case surely it would be reasonable to have a reference in the tax guide to that effect. It seems to me that this is quite inadequate. I agree that there may be many cases when it would not be used, but there are cases when it would. I think there should be provision in the law that consideration be given to problems facing individual taxpayers just as is the case with corporations.


Patrick Morgan Mahoney: I shall certainly refer the hon. member's statement concerning the tax guide to the Minister of National Revenue. I do not have a copy in front of me so I cannot comment on it.


John Stratford Burton: Mr. Chairman, I appreciate what the parliamentary secretary has said and I hope there will be some follow-up because I feel this matter deserves further

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Income Tax Act
attention. I therefore propose to move an amendment to section 249(l)(b) as follows:
Add after the word "year" in line 6 on page 580 the following: "except where the minister gives his consent to the individual
to use a fiscal period other than the calendar year".
I would commend this amendment to the committee because I think we should at least provide an opportunity for the individual taxpayer to have his case considered if he feels he has a case for using a period other than the calendar year. I might point out that the way I phrase this amendment sets the calendar year as the starting point and then simply opens the door to the possibility of a variation of the calendar year approach. I think it is very important that we should consider this question in terms of treating the individual taxpayer in the same way as we treat corporations.


Russell Clayton Honey: The committee has heard the amendment moved by the hon. member for Regina East. Unless there are procedural arguments as to why the motion is not acceptable, I think it should be accepted.
Shall the amendment carry?
Amendment (Mr. Burton) negatived: Yeas, 12; nays, 19.


Russell Clayton Honey: I declare the amendment lost. Shall section 249 carry?


Cliff Downey: Mr. Chairman, since the vote was close perhaps there ought to be a recount.


Russell Clayton Honey: Shall section 249 carry?


Some hon. Members:: Agreed.
Clause 1, section 249, agreed to.
On clause 1-section 250:	Extended meaning of
resident.


Russell Clayton Honey: Hon. members of the committee will note that an amendment to section 250 was moved on October 22 last by the Minister of National Revenue, as recorded at page 8960 of Hansard. Shall the amendment carry?


Some hon. Members:: Agreed.
Amendment (Mr. Gray) agreed to.
Clause 1, section 250, as amended, agreed to.
On clause 1-Section 251: Arm's length.


Russell Clayton Honey: I would draw the attention of the committee to the amendment to this section, moved by the Minister of National Revenue on October 22, 1971, as recorded at page 8960 of Hansard for that date. Shall the amendment carry?
Amendment (Mr. Gray) agreed to.


William Gordon Ritchie: Mr. Chairman, since there may be legitimate dealings within a family that may be at arm's length, and since these transactions may not be always recognized as being arm's length transactions, is there any recourse to appeal or other mechanism for people who wish to establish that the transaction they entered into would come under the purview of this section?


Patrick Morgan Mahoney: Mr. Chairman, the section we are considering defines what is arm's length. To answer the hon. member's question I would need a concrete example of the type of transaction he is asking about. This section does not allow or prohibit anything; it simply defines what is arm's length. It is other sections of the bill, such as the ones that were dealt with at some length on Friday, which preclude non-arm's length transactions being entered into without incurring an element of tax. Tax would not be incurred if the people dealing with each other were totally unrelated.
That my wife and I are not at arm's length is not a rebuttable presumption. We are not. The bill precludes us from entering into certain business arrangements without my incurring a degree of taxation that I would not incur if I made the same deal with the hon. member opposite. So without knowing precisely what type of transaction he has in mind so that I may look at the substantive section of the bill and not the definition section in order to see whether the facts of the case fit into an arm's length relationship, I really cannot answer the question.


Harold Warren Danforth: Mr. Chairman, I have a question to ask, the relevance of which will become apparent as time goes on. I know why these definitions have been incorporated into this particular section. I am curious about the procedures or remedies that will be open to people in cases where there is controversy as to whether a transaction is at arm's length or not. Perhaps I may give an exaggerated illustration to render my meaning clear. If a transaction takes place between me and my wife, it will not be considered as being at arm's length. But if there is a divorce and a subsequent remarriage and a transaction takes place between husband No. 1 and husband No. 2, what is the position? Is that, or is that not an arm's length transaction?


Patrick Morgan Mahoney: Yes, that is at arm's length.


Harold Warren Danforth: Mr. Chairman, I have a further question. That transaction is apparently at arm's length. Yet how will you determine, in cases of controversy, whether such a transaction preceded or did not precede the divorce?


Patrick Morgan Mahoney: Mr. Chairman, the time of the transaction is a question of fact and those asserting that it took place at a certain time would have to establish that date. Also, any person suggesting that it took place at another time would have to sustain that position. That is the sort of thing that appeal boards and courts must determine fairly regularly.


Harold Warren Danforth: Could I be more explicit. How will that determination be made? Will it be through a court action or through departmental regulation? How will the final decision be made?


Patrick Morgan Mahoney: The initial determination would be made by the assessor. If the taxpayer does not agree with that determination he can appeal the assessment and take the matter right up to the Supreme Court of Canada if necessary.


Harold Warren Danforth: Thank you. That answers my question.
November 10, 1971


Mr. Osier:: Mr. Chairman, I have a short question. In some respects this country is still a great big parish and one is often startled to find how many cousins one can run into. Some cousins are kissing cousins and some are not. There are some cousins with whom, according to the laws of consanguinity, you can do certain things and there are cousins with whom, according to the laws of consanguinity, one cannot do certain things.


Gerald William Baldwin: They must be kept at arm's length.


Edmund Boyd Osler: Of course, there is no personal preference in this. Is there any definition of such relationships? It seems to me that you can legitimately do business with people who are distantly related to you by blood. Is there any definition as to where this blood relationship cuts off, so to speak, and where it does not? You will find such a definition in holy mother church and in other areas. Is there such a definition in the law?


Patrick Morgan Mahoney: Mr. Chairman, subsection (6) of section 251 defines the various areas of blood relationship where transactions are automatically deemed to be not at arm's length.


Edmund Boyd Osler: Would the parliamentary secretary repeat that subsection?


Patrick Morgan Mahoney: It is subsection 6 on page 584 of the bill.
Clause 1, section 251, as amended, agreed to.
Clause 1, sections 252 and 254 agreed to.


Russell Clayton Honey: In accordance with the arrangement stated by the President of the Privy Council, as recorded on pages 9494 and 9495 of Hansard for November 9, the committee will now proceed to the consideration of sections 150 to 168. Shall section 150 carry?
On clause 1-section 150: Returns.


Robert Jardine McCleave: Mr. Chairman, there may have been a slight switch in the arrangement. I thought that the part dealing with appeals, which is found in division J between sections 169 and 180, was to be dealt with first and that division I consisting of sections 150 to 168 would be next. Perhaps I could make some brief remarks with regard to division I, if it is the wish of the committee to consider that division first.
We again get into the question, particularly with new law, of estates and capital gains. Can we have an undertaking from the parliamentary secretary-I am sure we will-that should there be other changes when we deal with capital gains proper, we can have the option of reopening this section?


Patrick Morgan Mahoney: Yes, Mr. Chairman.
Clause 1, section 150, agreed to.
On clause 1-section 151: Estimate of tax


Cliff Downey: Mr. Chairman, under section 150, "Estimate of tax," I note there was an excess of tax collected in prepayments last year to the extent of 10 per cent of the total revenue of the government. It becomes a matter of who is a servant to whom, when we look at the estimate of tax and the way it is collected. When it reaches the point
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where 10 per cent of the total funds are being returned to the taxpayer, it seems this is overdoing it. I realize that people die during the year, change employment or lose their jobs and become unemployed. A certain amount of tax collection over and above the amount that is necessary then becomes a fact of life.
We should carefully consider who is working for the convenience of whom. Does the taxpayer exist for the convenience of those who are supposed to work for him, or is the taxpayer a servant of the bureaucracy that exists in the department? I would like to hear this concept discussed, because it can get out of hand. Everything must be relevant.


Patrick Morgan Mahoney: No, Mr. Chairman, the hon. member's concept is not accurate.


Cliff Downey: The parliamentary secretary says that my concept is not accurate. Are the figures that I quoted with regard to overcollection of taxes or refunds to the extent of approximately 10 per cent in the last year very far out? Which of my comments is not accurate?


Patrick Morgan Mahoney: Mr. Chairman, I am not aware of the figures the hon. member is quoting. Perhaps he should cite the source. I will be glad to check them against the source. However, his concept that the taxpayer exists as a servant of the bureaucracy is not, I suggest, accurate.


Cliff Downey: I do not have available the figures I was referring to but I can provide the parliamentary secretary with them at the beginning of next week. It was reported publicly that this was the case-that there was a 10 per cent overcollection of taxes and that this amount had been refunded. If this is the case-and I can provide the parliamentary secretary with the document which cited these figures-has the hon. gentleman any comment to make on this situation?


Patrick Morgan Mahoney: I think the hon. member will agree that in all fairness I should have an opportunity to see the figures before commenting on their significance.


Cliff Downey: I will provide the parliamentary secretary with the figures next week.
Clause 1, section 151, agreed to.
On clause 1-section 152: Assessment.


Gérald Laniel: There is an amendment to section 152, to be found in Hansard of October 22 at page 8955, in the name of the Minister of National Revenue. Shall the amendment carry?


Some hon. Members:: Agreed.
Amendment (Mr. Gray) agreed to.


Gérald Laniel: Shall the section as amended carry?


Harold Warren Danforth: Mr. Chairman, I should like to ask some basic questions which have occurred to most taxpayers. They arise under this section. It is always a matter of concern to taxpayers that when an assessment is made with respect to any delinquency of theirs there are always penalties levied and interest charges exacted against the

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taxpayer. That is fine. But whenever the government is delinquent in returning an overpayment or an amount to which a taxpayer is otherwise entitled, no such consideration is given. It seems the traffic is all one way. How is this principle justified?
The second question is this. According to my understanding it is possible for the revenue department to go back four years for reassessment purposes unless fraud is involved. Is my understanding as to this practice correct, or not? There is always a question in people's minds as to how long they should keep day to day papers recording business transactions on file, or whether they can be disposed of after a few years. I am not thinking of cases involving fraud or misrepresentation but of papers used for the filling out of ordinary income tax forms.


Patrick Morgan Mahoney: First, there is a change in the bill before us as compared with the existing act. The existing act provides that overpayments shall be reimbursed together with interest at 4 per cent. This bill will allow interest rates to be set by regulation from time to time. It is contemplated that the interest payable to taxpayers with their overpayments will be more closely related to the going interest rate in the marketplace than the 4 per cent has been for a long time.
As to the question of reassessment, the hon. member is correct in his understanding that four years from the date of the original assessment, reassessment cannot be carried out except on the grounds of fraud or misrepresentation.


John Stratford Burton: I had intended to raise this matter when we came to the interest section, section 161. I am glad to hear there is to be a change in the interest rate payable, because the present practice has been a source of many complaints. If a taxpayer owed the government money, he was charged interest very handily; but the situation was far different when the department was called upon to make a refund. I hope the interest rate which is set in connection with refunds to taxpayers will not only be more closely related to the market rate but will be very closely related to the rate charged to taxpayers when moneys owed to the government are overdue. Action along these lines would remove one of the sources of irritation concerning tax law.
Clause 1, section 152, as amended, agreed to.
On clause 1-section 153: Withholding.


Gérald Laniel: As hon. members will notice, there is an amendment to this section, in the name of the Minister of National Revenue, to be found in Hansard of October 22 at page 8955. Shall the amendment carry?


Cliff Downey: I take it there are no major changes proposed in this section. I wish to raise a point in connection with which a great many complaints come to my office. It concerns the fact that employers are obliged to work for the taxation department in the capacity of bookkeepers and tax collectors. In many businesses these activities cause considerable additional expense. I think it is unfair to ask employers to do this book work involving the collection of taxes from employees, who often have no particular awareness of the terms of the tax legislation.

Employees who are relatively uneducated in such matters frequently feel resentment against their employer in consequence of the deductions and collections which the employer has to make. This is an injustice, to my way of thinking.
I find myself wondering who is working for whom. It is something like the parliamentary secretary asking me to provide him with figures relating to the amount of refunds paid to taxpayers. The hon. gentleman has at his disposal the services of the officials of the Department of National Revenue who are well able to provide him with this information. No doubt the figures in my possession are a condensation of an assessment made by the Department of National Revenue. I think there should be some formula, some limit set as a figure of gross business expense below which an employer, working on a net income or a gross income, whatever you wish to call it, or a set number of employees, should not be asked to be a bookkeeper for the government.
There is a marginal area here in which it becomes necessary for an additional employee to be placed on staff simply to look after the bookkeeping needs of the company. This is an expense which is passed on to consumers who purchase the product and I think it is unjust of the government to capitalize on employers to the extent they do in getting their bookkeeping done for them.


John Stratford Burton: The amendment before us would provide that deductions shall be made with respect to unemployment insurance benefits and that these deductions shall be made at source. Surely this must be a difficult matter for the department to administer. Before a person draws unemployment insurance he will have an income pattern for the year. He then draws unemployment insurance benefits for an indefinite period in many respects. It is not clear how long he will draw unemployment insurance benefits. Then, after the termination of unemployment insurance benefits, presuming new employment has been obtained, it is not known what his rate of remuneration will be.
I am wondering how the department intends to handle this matter. Since the parliamentary secretary was so concerned about administrative efficiency in organizations such as Federated Co-operatives Limited, I presume he has given consideration to administrative efficiency in the Unemployment Insurance Commission, where I understand considerable problems have arisen in recent weeks due in part to the high number of applicants. I would hope a simple system could be worked out, one which would not add to the task which the Unemployment Insurance Commission has been asked to undertake by statute.


Patrick Morgan Mahoney: I understand that the Unemployment Insurance Commission has satisfied itself as to the system it will use to make sure that excessive amounts are not deducted from those covered by unemployment insurance. I will be glad to inquire as to the details because I must confess this is not one of the things I am carrying in my head.


William Gordon Ritchie: I have one or two questions for the parliamentary secretary upon which I invite his comments. Suppose a houseowner hires an individual to do certain
November 10, 1971

work involving, say, the cementing of a garage floor and payment for labour and materials. I presume there is a dividing line, a means of determining the distinction between a contract and a wage. How does the department settle problems such as this?


Patrick Morgan Mahoney: Is it a contract for service or is it a contract of service? If you hire a man to do a service for you, he is a contractor. If he is hired to work for you on a full-time basis and the relation is that of master and servant, you have an employee and you are obliged to observe many requirements of law in addition to making payroll deductions. The particular instance the hon. member mentioned would suggest a relationship with an independent contractor.


William Gordon Ritchie: Another question for clarification. Suppose, for instance, an employer offered a janitorial job, being willing to pay a certain amount of money each month no matter how many hours were worked or when they were worked, as long as the job was done. Is this a contract or is the question of wages involved?


Patrick Morgan Mahoney: Again, it really depends on the facts of the case. If the man is in fact working what would ordinarily be regarded as full-time doing this particular job for you, and not working for anybody else, there would be a good chance you would have an employee rather than a contractor. If, on the other hand, he was handling similar work for two or three other establishment, he would obviously be a contractor dealing with all these people.
These are questions of a kind that the Industrial Relations Board or the hon. member's solicitor would be glad to field as they arise. The implications are not limited to income tax law. An employer has responsibilities for workmen's compensation payments, for compliance with the minimum wage legislation and many statutes, most of them provincial in origin.
Amendment (Mr. Gray) agreed to.


John Stratford Burton: I should like to ask the parliamentary secretary a question concerning withholding of tax on dividend payments by corporations. As I read this section, it refers to every person-presumably meaning corporations as well-paying salary, wages or other remuneration, or superannuation or pension benefits, a retiring allowance and so on down the list. These persons are required to deduct or withhold therefrom such amount as may be prescribed, and this amount shall be remitted to the Receiver General of Canada on account of the payee's tax for the year under this particular part. Just to clarify the situation, what is the position concerning payments of dividends to shareholders in a corporation?


Patrick Morgan Mahoney: The only deduction at source that corporations are required to make is from dividends being paid to non-residents. However, an investor, if he derives 25 per cent of his income or more from investments from which deductions are not made at source, is responsible for making quarterly instalments.


John Stratford Burton: If I may follow that up, Mr. Chairman, what is the experience of this in practice? I presume there have
Income Tax Act
been problems and it would be very difficult to chase this matter up with every taxpayer, though I suppose when tax returns are examined this question is taken into account. Has the government given consideration to making any deductions at source when payments are made that amount to more than the amount stipulated?


Patrick Morgan Mahoney: Mr. Chairman, I am not aware of any consideration having been given to that matter. Neither am I aware of any significant degree of abuse in this area. Corporations are, of course, required to report, through the use of T-5 slips, dividend payments that they make during the year to their shareholders, and these slips are matched up with the income reported by Canadian taxpayer in the same way as T-4 slips are matched up with wages and salary payments reported by employees. There is no abuse of which I am aware, and certainly there has been no indication that a policy change is desirable.


William Gordon Ritchie: I have a question on subclause (4) on page 427 which deals with dividends received by brokers. In the case where a broker does not know the ownership of dividends on shares, 25 per cent of the amount is remitted to the Receiver General. If subsequently the unknown owner is found, from the income tax point of view I presume an adjustment is made.


Patrick Morgan Mahoney: If the beneficial owner wants to identify himself he can, of course, come forward and claim a refund if there has been an overpayment. The payment under this section is on account of the beneficial owner's tax.
Clause 1, section 153, as amended, agreed to.
Clause 1, section 154, agreed to.
On clause 1-section 155: Farmers and fishermen.


John Stratford Burton: Mr. Chairman, I thought it might be useful to draw to the attention of the parliamentary secretary the wording of this particular section in view of some of his earlier comments to the effect that he was not aware of any provision in the bill to prevent a farmer or fisherman from filing his return on other than a calendar year basis. The wording of this section seems to me pretty well to lock in a farmer or fisherman to the calendar year, which means he files his return by April 30. It may not be a total lock-in, but certainly I think it points in that direction.


Patrick Morgan Mahoney: Again, Mr. Chairman, there is a distinction between a farmer's individual taxation year, which is the same as the taxation year of every other individual taxpayer in Canada-namely, the calendar year-with the tax return to be filed and tax paid by April 30 of the following year, and section 11 which governs businesses. If he chooses to do so, a farmer can account for his business income from farming on a fiscal year basis that is other than the calendar year.
Since most farms are operating under single proprietorships and the income derived therefrom is that of a single farmer, I suppose there is an element of great convenience in having the business year and the individual tax year coincide. But I repeat that I am not aware of any provision preventing a farmer, if he so chose, from using a business accounting year other than the calendar year.

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Income Tax Act


John Stratford Burton: Mr. Chairman, I think it is relevant to point out to the parliamentary secretary the wording of section 155. At the outset it provides:
Every individual whose chief source of income is farming or fishing shall pay to the Receiver General of Canada
(a)	on or before December 31 in each taxation year, 2/3 of the tax as estimated by him-
(b)	on or before April 30 in the next year, the remainder of the tax as estimated under section 151.
It seems to me that this would pretty well lock in just about every farmer who, as the parliamentary secretary put it, is a single proprietor. It seems to me some different treatment is provided a farmer who is incorporated and whose corporate operation is considered separately from his individual tax situation. There is also different treatment where a corporation carrying on a farming operation separates its actual farming operations from its shareholdings. There is no trouble for the national grain company to carry on its operations in poultry farming; there is no difficulty in their using a fiscal year other than the calendar year. Nevertheless, it seems that an individual farmer or single proprietor is locked in to the calendar year basis.


Patrick Morgan Mahoney: I hope the hon. member realizes that without this section a farmer who derives his income from a source other than a source from which deductions are made would be called upon to make quarterly instalment payments. This provision simply recognizes the seasonal nature of a farmer's operation and applies a more practical test to it.
Again I would remind the hon. member that, if he may choose to do so, a farmer may end his fiscal year at other than the end of the calendar year, say October 31, August 31 or May 31. He may assess his income at the end of that year and then carry forward his income from subsequent operations to the end of the next following fiscal year.


John Stratford Burton: I appreciate the point made by the parliamentary secretary in regard to quarterly payments, but I was really relating my comments to what was said earlier about a farmer using other than the calendar year for calculating his tax. I hope this matter will be clarified. Clause 1, section 155, agreed to.
On clause 1-section 156: Other individuals.


Gérald Laniel: On clause 156 there is an amendment which can be found at pages 8955 and 8956 of Hansard for October 22, proposed by the Minister of National Revenue. Shall the amendment carry?


Robert Jardine McCleave: Mr. Chairman, perhaps the amendment could be read and then I should like to make a comment.


Gérald Laniel: The amendment reads as follows:
That section 156 as set forth in clause 1 of the said bill be amended
(a) by striking out line 13 on page 429 and substituting the following:
Other	156 (1) Every individual other than one to
individuals
(b) by adding, immediately after line 25 on page 429, the following subsection:
Mutual	(2) Notwithstanding subsection (1). the amount
fund trusts payable by a mutual fund trust to the Receiver General of Canada on or before any day referred to in paragraph (1) (a) in a taxation year shall be deemed to be the amount, if any. by which
(a)	the amount so payable otherwise determined under that subsection,
exceeds
(b)	I of the trust's capital gains refund (within the mean ing assigned by section 132) for the year.


Robert Jardine McCleave: Mr. Chairman, the point I raised earlier regarding the taxation year might have been raised here. I shall not belabour it except to point out that it can happen that people, by reason of the circumstances of their investments, will be receiving most of their income in the latter part of the year but will be still required to make income tax payments, by reason of section 156(a) in the first part of the year as well as the last part of the year.
I have no magic formula to suggest and do not want to try my hand at drafting because I know how tricky these statutes are. Had I thought of it before, I might have asked the person drafting the statute to put forward a provision which would meet my point so that I could try it on for size. I would ask the parliamentary secretary if his legal advisers would mind considering the point I have made. I do not think anyone would quarrel if there should be a change here in order to have this point straightened away.


Patrick Morgan Mahoney: I would be glad to look at it, Mr. Chairman.


William Gordon Ritchie: Mr. Chairman, a matter was brought to my attention over the weekend by a professional person who meticulously made his payments for a number of years before the dates mentioned, but who every year was charged a sizeable amount of interest, $50 or $100. I checked into this and found that although he had remitted his money to his local bank on the specified date, he was apparently charged interest because the payment was overdue.
This situation can arise in two ways. If the payment is made to a bank, for instance on March 31, it will not usually be credited to the account until the fifth or sixth of the month. There is a further computation in that apparently many people make payments and although the banks receive the money on March 31 they do not get around to remitting it until five, six or even ten days later. I could provide documentary proof of the case to which I am referring.
It seems to me that there should be no penalty if the money arrives at the bank on March 31, since the banks, as I understand it, are the recipients or are in effect the agents. I draw this matter to the attention of the minister and ask for his comments.


Patrick Morgan Mahoney: Mr. Chairman, if the facts are as described by the hon. member, I am rather at a loss to understand how his friend received the treatment he did. If the hon. member would refer the specific matter to me I would be glad to look into it, although of course the

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matter is an administrative one and he might choose to refer it directly to the Minister of National Revenue.


William Gordon Ritchie: Thank you. I appreciate this and I shall provide the details.
Amendment (Mr. Gray) agreed to.
Clause 1, section 156, as amended, agreed to.
On clause 1-section 157: Corporations.


Gérald Laniel: There is an amendment to section 157 which appears at page 8956 of Hansard, in the name of the Minister of National Revenue.
Amendment (Mr. Gray) agreed to.
Clause 1, section 157, as amended, agreed to.
Clause 1, sections 158 and 159, agreed to.
Clause 1-section 160: Tax on income from property transferred between husband and wife or to minors.


Gérald Laniel: There is an amendment to section 160, in the name of the Minister of National Revenue, which appears at page 8956 of Hansard.
Amendment (Mr. Gray) agreed to.
Clause 1, section 160, as amended, agreed to.
On clause 1-section 161: General.


Gérald Laniel: At page 8956 of Hansard there is an amendment to section 161, in the name of the Minister of National Revenue.


Cliff Downey: Mr. Chairman, would you mind reading the amendment to section 161?


Gérald Laniel: The amendment reads as follows:
That section 161 as set forth in clause 1 of the said bill be amended by striking out lines 17 to 21 on page 433 and substituting the following:
*Limitation (4) For the purposes of subsection (2). where a taxpayer is required to pay a part or instalment of tax for a taxation year as estimated by him on or before reference to his taxable income for a preceding year or his estimated taxable'


Cliff Downey: Mr. Chairman, I wish to comment on the matter of interest on instalments. In this area I think a great many taxpayers in this country think there is injustice. It would seem that if a person makes an overpayment on his taxes, he is not paid interest on this money, while on the other hand if for some reason he should owe the revenue department money he is charged interest. When the department has the taxpayer's money, no interest is forthcoming to the taxpayer for the use of those funds.
I have no reason to doubt the statement I made earlier in respect of 10 per cent, approximately, of the money collected by the department being refunded to taxpayers last year. When one looks at a figure of this size and realizes that the government has the use of these funds and is not paying interest to the taxpayer, it represents a considerable amount of money and taxpayers begin to ask whether what is fair ball for one is not fair ball for another. In the interests of having people co-operate with the tax department-we all realize that in order for any
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tax system to be effective there must be co-operation by the people-I think we should be fair and square with them and take a look at the concept that if the taxpayer is charged interest on what he owes, then when the department has his money perhaps it should be paying interest to him.
I would be very interested to know the exact amount of these funds. It would be useful for the committee to know the exact amount of the overpayment of taxes that is made every year, so that we could have a calculation of what the interest on the taxpayers' money would be. I do not expect a reply to this question, but to ensure the co-operation of taxpayers and to increase their faith in the government I think it would be wise for the minister to consider this point.


William Gordon Ritchie: My question refers to subsection (7) on page 434. I presume that the provision means that if there is a loss which is carried forward, the taxpayer will not be able to claim any interest-in a sense he will lose his interest under this section.


Patrick Morgan Mahoney: That is correct, Mr. Chairman. When the taxpayer takes advantage of his right to claim a loss carried forward, he is not entitled to interest on the overpayment of the instalment that might have occurred in that period.


William Gordon Ritchie: This seems unusual. It may be somewhat unfair from the moral point of view. What is the justification for this?


Patrick Morgan Mahoney: The government, of course, has no control over whether or not he had a loss, but the government does offer him an opportunity to offset that loss against the previous year's profit. At the same time, the requirement to pay tax by instalment would mean that during the year of the loss he would be making instalment payments related to his earnings of the previous year. There does not seem to be any justification for the payment of interest in these circumstances. Of course, the taxpayer does get a refund of the instalment payments that he made during that period.


Harold Warren Danforth: I have a question for the parliamentary secretary. Perhaps I missed the implication of this section, but I should like the parliamentary secretary to indicate the amount of the penalty and whether or not a penalty would be assessed. Let me use as an example a farmer who complies with the regulation to forward two-thirds of his estimated tax by December 31 and fulfils the obligation of returning the balance before April 30. If his assessment shows that his computation was far out and he was delinquent in the payment of two-thirds of the amount by the deadline, he is assessed an additional penalty. I am taking into consideration the fact that there are tremendous variances in farm income from time to time and there may be no deliberate intent to defraud. How would the department deal with a situation of this kind?


Patrick Morgan Mahoney: He has two options. He can estimate his current year's earnings on the basis of the previous year's, and that would be valid and binding regardless of the discrepancy which in fact occurred, or he can make an

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honest estimate of it for the current year, as he undoubtedly would if he felt it was going to be somewhat below the previous year's income. If he makes the payment on the basis of what is in fact the situation at that particular time, he will not be penalized; but if he miscalculates arithmetically or if he misrepresents the situation, he would be subject to penalty.


Harold Warren Danforth: May I carry this further because I am not entirely clear. I am aware of how it is estimated, but taking an exaggerated example so that the parliamentary secretary may get my point, suppose the farmer makes two-thirds of his payment by December 31 as prescribed by law, and then, in formulating the balance by April 30, it is found that due to some circumstance he was delinquent on his payment on the two-thirds amount by, say, $5,000. This could be due to the sale of livestock, or some other occurrence which could not be foreseen in the previous season's estimate of normal income. What would be the process in such a circumstance?


Patrick Morgan Mahoney: I do not quite see how the farmer could be delinquent in such a matter, because as soon as you get past the end of the year you are into the next taxation year and the farmer is not concerned with transactions or large profits that come in after the end of December when he is supposed to have made the two-thirds payment. The two-thirds payment relates to transactions of which he should have knowledge when he calculates the amount.


Harold Warren Danforth: Thank you. I am satisfied, Mr. Chairman.


Gérald Laniel: Shall the amendment carry?


Some hon. Members:: Agreed.
Amendment (Mr. Gray) agreed to.
Clause 1, section 161, as amended, agreed to.
On clause 1-section 162: Penalties.


Cliff Downey: I believe that the whole area of penalties and the onus of proof is one of the key provisions in the taxation act. When we look at the advent of the capital gains tax on valuation day we realize that advance rulings will become of increasing significance. I would say that with the advent of the capital gains tax, whoever is making these advance rulings will be very busy and I suppose the staff will have to be greatly expanded.
But we run into the inescapable fact that since advance rulings are made here in Ottawa in the taxation period- the parliamentary secretary can correct me if I am wrong-advance rulings will not be available in the district taxation offices, and many small businessmen and other individuals will look twice before they travel the length and breadth of this country to obtain an advance ruling in the interest of their business. The individual who lives in Vancouver, Victoria or St. John's, Newfoundland, would have to incur the expense of travelling to obtain the advance ruling, the expense of his stay in Ottawa and his transportation. Thus we see that only people in a certain income group can afford to make use of these advance rulings.
This aspect makes the legislation biased against people of insufficient means, those whom the reformed Income

Tax Act is supposed to help, those at the lower end of the economic scale. They will not be able to get the assistance of these advance rulings that people in the higher income brackets can receive. Organizations like Imperial Oil and Home Oil have tax consultants and accountants at their disposal. They can afford to get advance rulings. I believe that in the interests of equity these advance rulings should be available in all district taxation offices.
People in my riding should be able to drive to Edmonton and get advance rulings through the district office there. The other day when talking about income splitting between husband and wife, the parliamentary secretary referred to the question of equity in taxation. In the interests of equity I repeat that these advance rulings should be available in every district office.
For the most part the onus of proof has rested on the individual, but I know many small businessmen who were too busy making a living to keep sufficient records to satisfy the tax department. Some immigrants to this country have worked hard all their lives from dawn to dusk. I am thinking of the corner groceryman and such people. Some have not had the linguistic ability to understand the tax rules and regulations. Ignorance of the law is no excuse, but I do not think it is right that the onus of proof should be placed on such individuals.
I have had people tell me that sometimes officials of the Department of National Revenue entered their premises and took advantage of their ignorance. Sometimes they were asked questions that in law they were not required to answer. Their files were examined, but they were not told of the protections available to them in law. The officials made things very difficult for them. Grave injustices were committed. If they had had tax accountants they could have arranged their affairs in such a way that they might not have had to pay one cent in tax.
I suggest that there should be some switching of the onus of proof. When departmental officials contact such people they should make an accountant or tax lawyer available to advise them of their rights.


Patrick Morgan Mahoney: Mr. Chairman, as the hon. member is aware, the system of advance rulings is of very recent origin and I am sure is a very welcome innovation. Under the system, requests for advance rulings must be handled by mail. If a person wishes to request an advance ruling he must set down in writing the precise details of the circumstances he wishes the ruling on, so such rulings can be quite as readily obtainable anywhere in Canada where there is a mail box as they are here in Ottawa.
The hon. member talked about the burden of proof. I might note that even though we are on section 162 there is a change in section 163 which does shift the burden to the minister where a penalty is being assessed. However, as simple in equity as the hon. member's argument might seem, there always remains the fact that the individual taxpayer is the man who is in possession of the facts and of the evidence to substantiate them.
Right now there are over 7 million individuals who are paying personal income tax, plus several hundred thousand who are paying corporate tax. To suggest that the Minister of National Revenue should require of all these taxpayers the kind of information upon which he can carry the burden of proof is not entirely reasonable.
November 10, 1971_______________COMMONS DEBATES________________________________9547


Cliff Downey: I understand that there may be a mass of documents involved and that the taxpayer is supposed to have them in his possession. But in the case where an assessment has not been made for a number of years and the department requires an individual to produce documents dating back a long time, through carelessness or for other reasons, such as moving from place to place, he may have lost some papers. Once in a while we all lose the odd letter or document. I suggest there should be a shorter limit on the length of time that the department can go back over an individual's records. The parliamentary secretary said advance rulings were available by mail, but I understand there are costs involved in respect of departmental officials.
I think it would be useful for the Hansard record if the parliamentary secretary would indicate the costs inherent in acquiring an advance ruling.


Mr. Thomson:: Mr. Chairman, in addition to the comments made by the hon. member for Battle River I would suggest that occasionally the taxation department makes mistakes. I know of two farmers, both with the name Hammond, near the village of Springwater. The tax people had investigated the case of a cattle buyer and had listed one Hammond as receiving a certain amount of income from the sale of cattle. He was assessed a certain amount and asked why he had not listed it as income. He denied having this income.
The tax people were quite insistent, but in this case they were in error. The farmer went to a lawyer or a tax accountant, at some expense, before the issue was resolved and it was discovered that the cattle were actually purchased from the other farmer named Hammond. Why should the burden of proof be on the farmer in this case, since it was a mistake on the part of the tax collector? Why should the department not pay the expenses incurred by the farmer?
I know of another case where hail damage was listed to two cousins who had land listed separately. The income tax department assessed the hail against the wrong man and the burden of proof was on him. My question to the parliamentary secretary would be, is the department prepared to reimburse the taxpayer in a matter of this kind?


Patrick Morgan Mahoney: Mr. Chairman, I shall have to get the answer to that question from the Minister of National Revenue. It is not within the immediate confines of the bill before us, as far as I am aware. I shall look into the question and report to the hon. member.
Income Tax Act


Cliff Downey: Perhaps the parliamentary secretary did not hear me because the officials were leaving as I spoke, but I was wondering if he could tell us the costs involved in making advance rulings.


Patrick Morgan Mahoney: It is my understanding, Mr. Chairman, that the Department of National Revenue charges a fee for an advance ruling, but rather than attempt to remember it I shall inquire and give it to the hon. member.


Cliff Downey: I gather that it is a reasonably significant amount. Do I not understand that it costs something in the order of $90 a day for officials to study a case? I should like to know if it is a significant amount. The parliamentary secretary must have an idea whether it is $5 a day or $100 a day. Can the average taxpayer afford an advance ruling?


Patrick Morgan Mahoney: Mr. Chairman, I think the average taxpayer who is looking for an advance ruling has in mind a transaction which would not render the fee unduly burdensome if he gets the ruling that he wants. Rather than guess, I would prefer to get the exact amount. It is designed to accommodate the general body of taxpayers of Canada for the services of officials who examine the affairs of a single taxpayer with a view to advising him of the tax implications of the contemplated transaction.


Cliff Downey: This is true as things were in the past when advance rulings would only have been necessary for organizations that could well afford the time and expense of travelling, etc. But with the advent of the capital gains tax it should do well for people who own small businesses, and farmers. A man may have a $50,000 farm-and it does not take much land for a farm to be worth that today- and an advance ruling may help him to the extent of $1,000 or $2,000. To him this is a considerable sum. Once this tax act goes through there will be thousands of advance rulings which could be used to the taxpayer's advantage. I suggest it is vitally important that these advance rulings be available to everybody, not just to the people who can afford to ask for them.
Mr. Chairman, I see the hour is six o'clock and I would call it six o'clock.
Progress reported.


Robert Jardine McCleave: Mr. Speaker, I rise on a point of order. To help the discussion along, perhaps it could be stated on the record that the discussion resumes on Monday on the capital gains provision. I think that was agreed earlier.


Patrick Morgan Mahoney: That is correct, Mr. Speaker.
At 6.01 p.m. the House adjourned, without question put, pursuant to special order, until Monday, November 15.

Monday. November 15, 1971