1971-11-17

PRESENCE IN SPEAKER'S GALLERY OF DR. GERHARD HERZBERG, WINNER OF NOBEL PRIZE FOR CHEMISTRY

Mr. Speaker:: As hon. members know, it is only on rare occasions that the Chair can extend recognition to visitors to the Speaker's gallery who are not here in a parliamentary capacity. I am sure, however, hon. members will agree with me that on this occasion an exception should be made.
I draw to the attention of the House the presence today of Dr. Gerhard Herzberg who was recently recognized for his outstanding contribution to science by the award of the Nobel prize for chemistry.


Some hon. Members:: Hear, hear!


Mr. Speaker:: All Canadians were pleased and felt a great sense of pride when this outstanding scientist was recognized in this way.
On behalf of all hon. members, may I extend our congratulations to Dr. Herzberg for this great honour he has brought to himself, to the National Research Council and to Canada.


Some hon. Members:: Hear, hear!



ROUTINE PROCEEDINGS


Hon. Mitchell Sharp (Secretary oi State ior External Affairs):: Mr. Speaker, Canada has shown its deep concern for the plight of the Pakistani refugees in India by the contributions made by the government, provincial governments and voluntary agencies for their relief in the last few months. We have been concerned not only for the refugees themselves but for the government of India, upon whom the burden of responsibility for relief falls. It is difficult for anyone to come to grips with the dimensions and complexity of the problems caused by the greatest mass movement of mankind in modern history. These problems have both human and political aspects: it is to the human aspect that I am now addressing myself.
The response of the Indian government and people has been magnificent and their efforts to ensure that relief supplies and materials are provided and effectively distributed are beyond praise. India has had to bear a disproportionate share of the burden. The United Nations High Commissioner for Refugees, through whom all United Nations assistance is being co-ordinated, has appealed for further contributions from the international community to meet this great humanitarian need.
To date, the nations of the world have provided approximately $240 million through multilateral and bilateral channels for refugee relief in India. Some $125 million of this amount has been pledged through the United Nations system. This amount has proved inadequate to support the massive relief program that is required and to mitigate its adverse effects on the development program of India. Without additional assistance many of the significant developmental achievements which have been made over the past two and a half decades will be jeopardized, and unless renewed efforts to share the burden are undertaken by the international community the presence of large numbers of refugees will continue to aggravate political tensions in the subcontinent.
In response to the High Commissioner for Refugees' new appeal and following the recent visit to the subcontinent of a team led by Mr. Gerin-Lajoie, the president of the Canadian International Development Agency, the government has decided that substantial additional contributions must be made available.
To date, the Canadian contribution from governmental and non-governmental sources for refugees in India amounts to $6.6 million. Of this sum, $4.3 million has been provided by the federal government, $370,000 by the provinces, and $1.9 million by voluntary agencies and the combined appeal for Pakistani relief. It is the government's intention to supplement these contributions by an amount of $18 million, seeking the authority and funds from Parliament. This will bring the Canadian government's total contribution for the relief of refugees in India to $22 million, coincidentally representing approximately one dollar for every Canadian. Members of the House will be interested to know that Mr. Gerin-Lajoie will be making a statement to this effect on behalf of Canada at the United Nations tomorrow.
In addition to the funds provided for refugees in India, Canada has contributed $7 million in food aid through the world food program for the relief of suffering in East Pakistan and provided to the United Nations $500,000 to help defray the cost of United Nations relief operations there.
The new funds to be provided will be applied in accordance with the needs and priorities as seen by the government of India, the United Nations and the CIDA fact-finding team. A part of the funds will be devoted to direct humanitarian relief through the United Nations High Commissioner for Refugees. Part will be directed through Canadian voluntary agencies' contributions to relief oper-

November 17, 1971
Aid to Pakistan Refugees
ations in India. Part will be provided to the government of India in the form of goods and services.
Different forms of assistance are required. In our view, and that of the government of India, one appropriate kind of assistance would be debt relief to ease the burden on the Indian economy. The Aid to India Consortium, meeting on October 26, discussed this particular form of aid. To be effective, such relief requires the concerted efforts and co-operation of other major donors, and Canada is ready to meet other donors to discuss this question.
Continued, increased and effective aid is a question of the greatest urgency. It will help to alleviate the suffering of those caught up in this human tragedy. Dealing with this aspect of the problem can also help to reduce tension. But it does not offer any solution to the underlying problem. A political solution must be found which will allow the refugees to return to a secure and democratic society in East Pakistan. I regret, Mr. Speaker, that at the moment I see little hope of an early resolution of the problem. Canada once again joins with other nations in urging upon the governments of India and Pakistan restraint and forbearance in the face of the grave difficulties that must be overcome before a lasting settlement can be achieved.


Mr. Heath Macquarrie (Hillsborough):: Mr. Speaker, there have been times in the past when I have taken exception to the actions and pronouncements of the minister and, no doubt, there will be times in the future when I shall do so. But this is not one of them. I applaud what the hon. gentleman has said. It would be easy for a member speaking for the opposition to say that Canada's contribution should be greater. But it would be iniquitous to say it should be less.
I come from one of the disadvantaged areas of Canada, a part which has too little of the economic assets of this country, and the situation is not improving in that respect. I know that among the narrow-minded and the small of heart there is a tendency to say that charity begins at home. My own observations lead me to believe that people who say this are never very charitable at home, either. So I can say to the minister that I have no intention, no matter what may lie ahead, to try to take political advantage of the fact that a goodly sum will be voted in this case.
I have reservations about some of our external aid programs and I believe the time has come to examine them. But this is not in that category. The need is so great, so compelling and so urgent that, while we want to know more precisely the form the aid will take, I applaud wholeheartedly the announcement by the government and support it with every fibre of my being. I hope there will be no wastage and administrative duplication. I hope every effort will be made and every avenue canvassed to give assistance.
I enthusiastically concur in what the minister said about the efforts of the government of India and the people of India. They have been dealing with a massive burden for which they did not ask and which they should not and cannot bear alone. Therefore we, as part of the international community, must respond as the minister has indicated we are responding. We must assist; we must do our part. Even if the minister had announced double the

aid we are going to give we would still be doing far, far less than what is being done by India, a land with such immense economic and political problems of its own. The international community must continue to help; it must do more.
I welcome this new move announced by the government. I hope the governments of the provinces will help as well, and I note that some of them have made special efforts in this regard. But most important of all, I believe, is the response not of Canada's governments but of Canada's citizens. I think this, above all, is the way that we should show the extent of our compassion for what is perhaps the greatest human tragedy in modern times. Most of our people are in and of the Christian tradition. In these days when there has been a flowering of the ecumenical spirit and a breaking down of the walls of bigotry and intolerance I think this is a magnificent opportunity for people of the Christian fold to show compassion and concern for their fellow humans of a different theological belief.
I note too the minister's reference to the political situation and I feel that I must share his general outlook, which is somewhat pessimistic. I do hope that our government is using all its resources, bilaterally, within the Commonwealth and in the United Nations, to do what can be done on the political front to bring about a solution. I say here what I said in India and in Pakistan a few months ago, that war between these two Commonwealth states is an intolerable concept, something that would merely compound to the nth degree the terrible problems that already exist. Therefore something between the painful tragic status quo and war must be achieved. We cannot see repeated in the Far East the terrible, painful continuum of refugees which for so long has prevailed in the Middle East. I urge the government to press for a solution in every possible way. I also urge the government of Pakistan-and I have not joined the "hate Pakistan league"-to do everything within their country to assuage the difficulties and mitigate this terrible human problem.


Mr. David Lewis (York South):: Mr. Speaker, I shall be relatively short. I join the hon. member for Hillsborough (Mr. Macquarrie) in congratulating the Secretary of State for External Affairs (Mr. Sharp) for the step that he has announced. It is always very difficult to say just how much aid should be given because one could argue over the precise amount. But I think we can proudly say that the announcement of the minister represents a generous contribution to assist the refugees. In making this gesture to assist and aid the suffering in that unhappy part of the world I am certain the minister spoke for all Canadians.
I think that countries like Canada should make a greater effort than they have made until now-I do not say that in criticism of any government or minister-in order to seek a political solution. It is very frustrating to a good many people in the world, as it should be to members of this House, that it is possible for a military clique in a country to upset the decision of the people of that country and to oust those who were democratically elected by the people to represent them in the Parliament of that country and substitute for the democratic process a military dictatorship, which is in fact what we have in Pakistan now, and get away with it, despite the fact that millions of
November 17, 1971

people are literally ejected from that country as a result of the circumstances created by the military dictatorship. I suggest the time must not be far off when the international community, through the United Nations, is able to take steps to solve a political problem of that sort.
I also suggest on behalf of my colleagues and myself that we ought not always to remain neutral in these obvious situations of evil doing by military colonels and the like. I suggest that Canada ought now to terminate all military deliveries to Pakistan as well as the economic aid that now goes to that country. When we continue to give military and economic aid what we are enabling the present government of Pakistan to do is to use the foreign currency it might need to purchase things in the world to add to its military strength in order to continue to oppress not only the people of East Pakistan but of West Pakistan as well.
In short, Mr. Speaker, I congratulate the minister for the generous contribution he has offered to assist the refugees. I plead with him and the government to take the other steps I have suggested which might help to bring about a political solution.


Mr. Gerard Laprise (Abitibi):: Mr. Speaker, I will try to be brief even if we are dealing with drama suffered by a part of mankind. In fact, it can be seen that the consequences of the original sin weigh heavily on mankind.
The hon. minister has just announced that supplementary and much more generous assistance will be granted by the government to the refugees in India. We could hardly object to that decision since its purpose is to help suffering mankind.
India is presently facing serious problems due to the millions of refugees who had to flee their country. But India must also face another problem. Although it helps refugees, it would seem that they are much better treated than Indians themselves.
The problem facing that area today did not just spring up but has been around for a long time, and I admit that we should hasten the solution of that crisis through political means, for it is above all a political question.
The piper has to be paid. But India itself is not foreign to the situation prevailing in Pakistan; it is so to speak one of the outside agents of the present conflict, which goes back to 1948.
Mr. Speaker, I feel that the assistance Canada intends to give it should be used by India, not to make investments and enslave part of Pakistan, but to help the Pakistani refugees who fled before the hatred born of political differences.



AIR TRANSPORT


Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, pursuant to Standing Order 43 I ask the unanimous con-
The Canadian Economy
sent of the House to propose a motion on a matter of urgent and pressing necessity. In light of the fact that Canada signed the convention at The Hague last December 16, 1970, in light of the fact that the Canadian Airline Pilots, Association has been pressing the government for legislation to cover the crime of air piracy, and in light of the fact that a terrible tragedy almost occurred on flight 812 out of the city of Calgary, I therefore move, seconded by the hon. member for Peace River (Mr. Baldwin):
That Bill C-231, an act to amend the Criminal Code of Canada, entitled air piracy, be brought forward for second reading and treated as a government measure to be sent to the Standing Committee on Justice and Legal Affairs for study and final implementation.


Mr. Speaker:: The House has heard the motion proposed by the hon. member for Calgary North. This motion is moved under the provisions of Standing Order 43 and requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


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


Eldon Mattison Woolliams: Mr. Speaker, on a point of order, I believe the Minister of Justice really wanted to second it and I am sure the hon. member for Peace River would withdraw as seconder.


Mr. Baldwin:: I would, Mr. Speaker.


Mr. Speaker:: I am not sure that would change the result of the inquiry that has just come from the Chair. Perhaps the hon. member might consider putting the motion again tomorrow in those terms.



THE CANADIAN ECONOMY


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I ask leave to present a motion under Standing Order 43. May I remind the House that when one seeks unanimous consent at this point he is not asking that the motion necessarily be supported by all members. One is simply asking for consent for the motion to be put so that the House can make the decision.


An hon. Member:: Don't be so stupid.


An hon. Member:: We understand that.


Stanley Howard Knowles: Mr. Speaker, my hon. friend across the way says he understands that but the response from the other side does not always lead one to that conclusion. The urgent and pressing necessity for this motion is the desirability of clearing up the uncertainty of the government's position with regard to a certain matter that has been before the House during the last two or three days. I therefore ask leave, seconded by the hon.

N ovember 17, 1971
Questions
member for Nanaimo-Cowichan-The Islands (Mr. Douglas), to move the following motion:
That any minute or other document recording a decision of cabinet respecting the screening of foreign investment in Canada, dated July 29, 1971, or at any time subsequent thereto, be tabled forthwith.


Mr. Speaker:: Again this motion is proposed under the terms of Standing Order 43 and thus requires unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: There is obviously not unanimity on this point and the motion cannot be put.


EXTERNAL AFFAIRS
Mitchell William Sharp: Mr. Speaker, I wish to table the text in both languages of the statement of Canada's position regarding chemical and biological warfare.


Some hon. Members:: Oh, oh!


Stanley Howard Knowles: That is not the
one I asked for.


Gerald William Baldwin: How about parliamentary warfare?


Mitchell William Sharp: This statement was made yesterday at the first committee of the United Nations General Assembly in the course of an intervention on disarmament by the Canadian delegate, Mr. George Ignatieff, and it has the effect of withdrawing Canada's previously maintained option to make first use of tear gas in warfare.


Gerald William Baldwin: We give unanimous consent.



QUESTIONS ON THE ORDER PAPER

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

Mr. MacDonald (Egmont): 1.	Is the Department of Finance presently considering a contingent repayment system to replace the present Canada Student Loan Plan?
2.	Is the Department of Finance giving consideration to developing assistance programs with the provinces for part-time students?


Hon. E. J. Benson (Minister of Finance):: 1. No.
2. The department is continuously reviewing the operations and effectiveness of the Canada Student Loans program including the question of eligibility for loans.


GOVERNMENT GUARANTEE OF LOAN TO MING SUNG INDUSTRIAL CO. LTD.
Mr. MacLean: 1.	With regard to the government's guarantee of a loan of $10,200,000 made by Canadian banks to the Ming Sung Industrial Company Limited, what payments, if any, has the government made to Canadian banks in addition to the $2,962,977.30 paid up until December 10, 1952?
2.	Has the government recovered any of the payments made to Canadian banks under the terms of the government's guarantee of this loan?
3.	Were the assets of the Ming Sung Industrial Company taken over by the Government of mainland China?
4.	Has may attempt been made by the government to recover from the Government of mainland China the amount owing, either before or since the Government of mainland China was recognized by Canada?


Edgar John Benson: 1. The loan to the Ming Sung Industrial Company was for an amount of $12,750,000 not $10,200,000. Payments made to the chartered banks after December 10, 1952 totalled $11,506,205.76, including interest.
2.	No.
3.	The evidence suggests that most of the assets passed into the control of the local authorities of the People's Republic of China.
4.	During the negotiation between Canada and the People's Republic of China which preceded the establishment of diplomatic relationship, the Canadian side referred to the existence of the Ming Sung claims. In response the Chinese indicated a willingness to discuss the matter after relations were established. The Canadian Government intends to raise this and other claims with the Government of the People's Republic of China through local diplomatic channels and hopes to negotiate an equitable settlement.


COST OF LEDAIN COMMISSION
Mr. MacDonald (Egmont): As of October 15, 1971, what amount was spent on the operation of the LeDain Commission on the non-medical use of drugs and what is the overall final budget expected to be?


Hon. John C. Munro (Minister of National Health and Welfare):: (1) Expenditures to October 15,	1971,

(2) Estimated total cost, $2,700,000.


PARLIAMENT HILL-INCREASED SPACE FOR MEMBERS OF PARLIAMENT
Mr. MacDonald (Egmont): What is the present status of the government's plans to renovate the buildings adjoining Parliament Hill with the aim of increasing operating and secretarial space of Members of Parliament?


Hon. Arthur Laing (Minister of Public Works):: The
Department of Public Works has under study the condition and use of the buildings adjoining Parliament Hill.

November 17, 1971


PARLIAMENT BUILDINGS
Mr. Godin: 1.	What were the construction costs for the first Parliament Building (Centre Block)?
2.	What was the value in dollars of this same building when it was restored after the fire?
3.	What is the building's present value in dollars?
4.	In what year were the following buildings constructed (a) East Block (b) West Block?
5.	How much did they cost initially and what is their present value in dollars?


Arthur Laing: 1.

2.	Cost of restoration-$11,919,082.04.
3.	The value of the building in relation to its intrinsic historical posture is impossible to state. The depreciated replacement value would require a very detailed analysis.
4.	(a) and (b) A contract was let for both buildings in 1860 and construction continued over a period of years.
5.	Initial cost: East Block-$688,444.16; West Block- $1,131,735.33; again, an assigned present value would be very difficult because of the subjective aspect of historical value.


CLOSURE OF MILITARY BASES SINCE 1950
Mr. Latulippe: Since 1950, which military bases did the government (a) close (b) open in Canada?


Mr. Jack Cullen (Parliamentary Secretary to Minister of National Defence):: The records on closures and openings of defence establishments were destroyed by a fire in a building at Victoria Island, Ottawa on 31 December 1969. The following reply does not necessarily reflect a complete and accurate report: (a) Defence Establishments Closed in Canada since 1950: Point Edward Naval Base and Supply Depot-Sydney, N.S.; Camp Utopia, N.B.; Camp Sussex, N.B.; McGiveney Ammunition Depot, N.B.: Coverdale Radio Station, N.B.; RCAF Station Lachine, PQ; Ville La Salle Supply Depot, PQ; RCAF Station Cen-tralia, Ont.; CFB Clinton, Ont.; Picton Military Camp, Ont.; RCAF Station Pendleton, Ont.; RCAF Station Aylmer, Ont.; Lakeview Military Camp, Ont.; Niagara-on-the-lake Military Camp, Ont.; London Logistics Complex, Ont.; Headquarters Oakville, Ont.; Cobourg Supply Depot, Ont.; Hagersville Vehicle Depot, Ont.; CFB Gimli, Man.; CFB Rivers, Man.; Fort Churchill and Churchill Radio Station, Man.; RCAF Station Macdonald, Man.; RCAF Station Saskatoon, Sask.; Regina Ordnance Depot, Sask.; RCAF Station Claresholm, Alta.; RCAF Station Grande Prairie, Alta.; RCAF Station Lincoln Park, Calgary, Alta.; RCAF Station Abbotsford, B.C.; Dawson Creek Army Camp, B.C.; RCAF Station Sea Island, B.C.; RCAF Station Vancouver, B.C.; RCAF Station Beaton River, B.C.; RCAF Station Fort St. John, B.C.; RCAF Station Fort Nelson, B.C.; Ladner Wireless Station, B.C.; Lynn Creek Supply Depot North Vancouver, B.C.; Tofino Wireless Station, B.C.; Kamloops Ammunition Depot, B.C.; Northwest Highway System B.C. and Y.T. (including
Questions
HQNWHS and Camp Takhini at Whitehorse and Muskwa Garrison at Ft. Nelson, B.C.); RCAF Station Whitehorse and Radio Station, Y.T. ; RCAF Station Coal River, Y.T.; RCAF Station Watson Lake, Y.T.; RCAF Station Teslin, Y.T.; RCAF Station Aishihik, Y.T.; RCAF Station Snag, Y.T.; Aklavik Radio Station, N.W.T.; Hay River Radio Station, N.W.T.; Norman Wells Radio Station, N.W.T.; Resolute Station, N.W.T.; Six sites along the Pinetree Radar Line 7 Mid-Canada Line Stations.
(b) Defence Establishments Opened in Canada since 1950: Mill Cove Wireless Station, N.S.; CFB Gagetown, Oromocto, N.B.; CFS Val d'Or, P.Q.; Ville La Salle Supply Depot, P.Q.; Cobourg Supply Depot, Ont.; CFB Cold Lake, Alta.; Inuvik Radio Station, N.W.T.; HQ Northern Region Yellowknife, N.W.T.; Alert Wireless Station, N.W.T. ; Thirty-four Pinetree Radar Sites; The Mid Canada Line.


ASSISTANCE TO PROVINCES TO COVER EXPENSES INCURRED IN THE OPERATION OF UNILINGUAL SCHOOLS
Mr. Godin: 1.	Did the government make any grants to the provinces to help them pay the expenses incurred by Canadians wishing to educate their children in the official language of their choice and, if so (a) what amounts were granted to each province during the fiscal year 1970-71 (b) how were these amounts spent?
2.	Has the Nipissing School Board used such grants for its regular unilingual teaching program?
(Translation]


Hon. Gerard Pelletier (Secretary of State):: 1. Yes. (a) In the fiscal year 1970-71 the following grants relating specifically to minority language education at the primary, secondary and the post-secondary (non-university) levels were made to the provinces for minority language education (i.e. English in Quebec and French in the other provinces). Newfoundland, $5,200; Prince Edward Island, $29,800; Nova Scotia, $280,000; New Brunswick, $2,185,500; Quebec, $16,728,100; Ontario, $6,542,200; Manitoba, $181,200; Saskatchewan, $22,800; Alberta, $100,300; British Columbia,- 1. (b) The programme seeks to aid the provinces to meet the supplementary costs incurred in offering educational opportunities to Canadians in the official language of their choice. In view of provincial jurisdiction over education, federal grants are paid directly to the provinces which in turn assume responsibility for distributing the funds according to the needs of their school system.
2. Answered in 1(b).


FEDERAL ASSISTANCE TO FORMOSA
Mr. Rodrigue: 1.	Did the government grant any assistance, loans or otherwise, to Formosa through the Canadian International Development Agency during the years 1963, 1964, 1965, 1966, 1967, 1968, 1969, 1970, and 1971?
2.	If the government has granted such loans (a) how many loans were granted (b) what were the amounts involved (c) what were the terms of these loans?
3.	Does Canada have the assurance that loans made to Formosa will be repaid?

November 17, 1971
Indian Education


Mitchell William Sharp: 1. No.
2.	Nil
3.	Not applicable


MOTION TO ADJOURN UNDER S.O. 26 INDIAN AFFAIRS INDIAN EDUCATION IN NORTHEASTERN ALBERTA
Mr. Paul Yewchuk (Athabasca):: Mr. Speaker, under Standing Order 26 I ask leave to move a motion for the adjournment of the House for the purpose of discussing a specific and important matter, namely, the crisis in Indian education in northeastern Alberta. Therefore I move, seconded by the hon. member for Vegreville (Mr. Mazankowski):
That the House do adjourn to discuss this important matter.


Mr. Chretien:: I wish to rise on a question of privilege, Mr. Speaker. I would like to inform the uninformed member that the two reserves have voted to return to the school system and the pupils should be back in school soon if they are not back now.


Some hon. Members:: Hear, hear!


Mr. Speaker:: I did not understand clearly the purport of the minister's question of privilege. In any event, the Chair will refer to the motion proposed at this time by the hon. member for Athabasca.
The Chair has received the required notice under the provision of Standing Order 26 from the hon. member for Athabasca, dealing with the matter to which he has alluded in his proposed motion for the adjournment of the House.
I have given very earnest consideration to the problem posed by the hon. member, and I wish to state immediately that it is my view that this is a matter of great concern not only to him but I am sure to all hon. members.
I have had an opportunity to give careful consideration to the explanatory material submitted by the hon. member in conjunction with his proposed motion, and in passing I wish to say to him that I am most grateful to him for the assistance he has rendered to the Chair in its perusal of the problem. It is most helpful indeed for the Chair to have as full an understanding on a situation which might affect the granting of a debate under Standing Order 26 as possible.
Having said that, I am faced with the question whether or not the problem alluded to by the hon. member meets the procedural requirements of Standing Order 26.
I have thought about this question carefully and have come to the conclusion that, for the time being at least, I cannot agree that the scheduled business of the House should be set aside for the purpose of an emergency debate on this matter. I say this with some regret, but that regret is tempered by my understanding-that under-

standing was conveyed to the Chair by the hon. member in the written material which he submitted for my consideration along with his notice of motion-that there may be a desire on the part of hon. members to set some time aside by agreement for an opportunity to discuss this problem. If that is the case, consultations might lead to an arrangement under which a discussion could be held in the House at an early moment.
However, having considered all the circumstances and taking into account the possibility of a debate in other circumstances, I would not feel disposed to agree to the hon. member's request for the setting aside of our normal business under the provisions of Standing Order 26.


MOTIONS FOR PAPERS
Mr. J. A. Jerome (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, notice of motion No. 260 is acceptable to the government, and I would like to table the documents forthwith.


CORRESPONDENCE CONCERNING ENVIRONMENTAL DAMAGE FROM PROPOSED TANKER ROUTE
[Stage Direction]
Motion No. 260-Mr. Anderson:
That an humble Address be presented to His Excellency praying that he will cause to be laid before this House a copy of the government's communication to the Government of the United States presented in the latter half of August of 1971 concerning environmental damage from the proposed tanker route between Valdez, Alaska and Cherry Point, Washington.
Motion agreed to.
James Alexander Jerome: Mr. Speaker, would you be so kind as to call notices of motions Nos. 254 and 258.


COPY OF CORRESPONDENCE RELATIVE TO ALLEGATIONS MADE BY ROBIN AUSTIN AND JOHN FEATHERSTONHAUGH, Q.C.
[Stage Direction]
Motion No. 254-Mr. MacDonald (Egmont):
That an Order of the House do issue for copies of all correspondence between the Minister of Consumer and Corporate Affairs and the Combines Investigation Branch relative to allegations made by Robin Austin, Esq. and John Featherstonhaugh, Q.C.
Mr. D. R. Tolmie (Parliamentary Secretary to Minister of Consumer and Corporate Affairs: Mr. Speaker, it is contrary to public policy to produce internal correspondence of the type mentioned which are privileged and confidential communications. In the circumstances I wonder whether the hon. member would withdraw his motion.
Gerald William Baldwin: I think the hon. member may want to make that decision when he returns.


Mr. MacEachen:: Transfer for debate.


Mr. Speaker:: Transferred for debate.
November 17, 1971


CORRESPONDENCE RELATING TO ESTABLISHMENT OF HEAVY WATER PLANT IN MONTMAGNY
[Stage Direction]
Motion No. 258-Mr. Lambert (Bellechasse):
That an humble Address be presented to His Excellency praying that he will cause to be laid before this House a copy of all correspondence, telegrams and any other documents between any department or Minister of the Government of Quebec, as well as Hydro-Quebec and the Department of Energy, Mines and Resources concerning the establishment of a heavy water plant in Montmagny during the period 1965 to 1971.
James Alexander Jerome: Mr. Speaker, a search of the Department of Energy, Mines and Resources files has failed to produce any documents between that department and any department or minister of the government of Quebec as well as Hydro-Quebec concerning the establishment of a heavy water plant in Montmagny during the period 1965 to 1971. I would therefore ask the hon. member for Bellechasse to withdraw his motion.


Mr. Lambert (Bellechasse):: Agreed.


Mr. Speaker:: The motion is withdrawn.
The order is cancelled and the motion is withdrawn,


Mr. Speaker:: Shall the other notices of motion be allowed to stand?


Some hon. Members:: Agreed.


Mr. Georges Valade (Sainte-Marie):: Mr. Speaker, may I ask the Parliamentary Secretary when I can expect an answer to Notice of Motion No. 251 which has been on the Order Paper since September 27, 1971?


James Alexander Jerome: I have made note of that, Mr. Speaker.



ORAL QUESTION PERIOD


Hon. Robert L. Stanfield (Leader of the Opposition):: should like to ask the Acting Prime Minister a question. In view of the answer that he gave me yesterday referring to one discrepancy between the cabinet document and the text as published in the Montreal Gazette yesterday, has the Acting Prime Minister had an opportunity to check further what was published against his own copy of the document, or has he found that his own copy is missing?


Some hon. Members:: Oh, oh!


Robert Lorne Stanfield: Has he had an opportunity to check it and can he tell me whether he has found any other discrepancies between his copy of the document and what was published in the Gazette?
Inquiries of the Ministry


Mitchell William Sharp: As I said yesterday, there are some discrepancies between what appeared and the record as disclosed in the cabinet document. That is the statement I have made and I have nothing more to add to it.


Stanley Howard Knowles: Why not table it?


Robert Lorne Stanfield: In order to clear up the confusion, which I am sure even the hon. gentleman must recognize exists, can he assure the House that, as reported in the Gazette, the cabinet has taken the position in principle that the main policy approach to the question of foreign takeovers would be the creation of a screening process?


Mitchell William Sharp: The hon. gentleman has been the head of a government and he knows that in the process of reaching a final decision-[DOT]


Robert Lorne Stanfield: Yes or no.


Mitchell William Sharp: -many decisions are taken along the way but that no decision is taken on a question until the day that a cabinet minister or the Prime Minister is authorized to make a statement. Up to that time everything is in flux.


Gerald William Baldwin: The cabinet in flux.


Some hon. Members:: Oh, oh!


Robert Lorne Stanfield: Hon. members over there seem to be all worked up about something. I take it that the decision in principle has been made. Arising out of this leak of a cabinet document I should like to ask the Acting Prime Minister whether there has been any communication, either formally or informally, on behalf of the government with the United States government or any officials of that government, either on the initiative of Canada or in response to questions with regard to the subject matter of the leak and, if so, what has been said to the U.S. government or its officials?


Mitchell William Sharp: So far as I am aware, Mr. Speaker, there has been no communication in either direction. Certainly we have taken no initiative, and I personally have not been in receipt of any communications from the United States government on this question.


Eldon Mattison Woolliams: Mr. Speaker, I would like to ask a supplementary question of the Acting Prime Minister. Since giving his answers yesterday has he had an opportunity to compare the original document, which he spoke about, with the document that was printed in the Montreal Gazette?


Mitchell William Sharp: Mr. Speaker, as soon as I read that document in the Gazette it led me to find out whether there was a leak. I confirmed that it was obviously a leak but that it was not a word for word statement of what had appeared in the government document.


Eldon Mattison Woolliams: Mr. Speaker, in view of the fact that the Acting Prime Minister has set out one discrepancy and therefore he has made some disclosure-that is obvious- will he now set out very clearly the differences between

November 17, 1971
Inquiries of the Ministry
the original document and the copy that he compared so that this matter can be cleared up?


Mitchell William Sharp: Mr. Speaker, this seems to me to be a very unreasonable request because otherwise it would be quite possible for anyone to put a document in the papers and say, "This is a government document," and then ask for the production of the one it purported to represent.



FOREIGN INVESTMENT-RESCINDING OR MODIFICATION OF DECISION RESPECTING CREATION OF SCREENING MECHANISM

Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, I wish to direct a question to the Acting Prime Minister. In view of the fact the minister said on Monday that no decision had been taken on the basis of the published version of the Gray Report, and that yesterday a document indicated agreement had been reached in principle in the cabinet, and that the minister was quoted as saying outside the House that this was a question of a cabinet decision being conveyed illegally to the press, can the minister clear up this question of when a decision is not a decision, and may I ask the Acting Prime Minister-


Mr. Speaker:: Order, please. Perhaps the hon. member might like to rephrase the question. It seems to me that the hon. member is asking the Acting Prime Minister to indicate when a decision is not a decision, and at this point I think we get involved in semantics. The question might be rephrased.


Thomas Clement (Tommy) Douglas: Mr. Speaker, I was leading up to ask the Acting Prime Minister if any action has been taken by the cabinet to rescind or modify the decision which was taken on July 29 to agree in principle to the setting up of a screening mechanism to deal with foreign takeovers?


Mitchell William Sharp: Mr. Speaker, all I can say without breaking my oath of secrecy is that the whole subject of foreign ownership has been under discussion many times since July 29. I am hopeful that we will not have to have many more meetings before we reach final decisions.


Thomas Clement (Tommy) Douglas: Mr. Speaker, may I ask the Acting Prime Minister whether he is making the categorical assertion that the statement which appeared in the Montreal Gazette yesterday, to the effect that the government had agreed in principle to the setting up of a screening mechanism, is inaccurate and no such decision was reached by the cabinet?


Mitchell William Sharp: Mr. Speaker, there have been many of these kinds of "decisions" reached by the cabinet on many subjects over a long period of time. I say to the hon. member, as a former first minister of a government, that he knows the only time a decision is made is when some authority is given to make a statement expressing government policy.



FOREIGN OWNERSHIP-DETERMINATION OF SOURCE OF LEAK OF CABINET DOCUMENT-POSSIBILITY OF PROSECUTION

Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, with so many being in fear of the revelation that they

might have participated in this leak and in order to clarify the situation, would the Acting Prime Minister say whether the RCMP have made any reports on their investigation or whether Goyer's refined Gestapo-


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. I would think the right hon. gentleman would know that ministers and members ought to be referred to either by their responsibilities as members of the government or by reference to their constituencies.


John George Diefenbaker: Mr. Speaker, there was no identification of any member. There was simply a description of a new secret organization that has been built up.


Some hon. Members:: Oh, oh!


John George Diefenbaker: Mr. Speaker, will the Acting Prime Minister say, in order to relieve the fears of some members of the Press Gallery and even of some of the ministers opposite, whether or not there has been any determination made as to the source of the leak and, in particular, what the government has in mind as to prosecution against those who revealed what was already known?


Mitchell William Sharp: Mr. Speaker, I am sure the right hon. gentleman would agree that before we make policy we should have the facts. We do not have the facts; we have not yet completed our inquiries, and may I add that the police have not yet been called in.


John George Diefenbaker: Mr. Speaker, in view of the deep sense of concern the minister expressed yesterday and the fact that for two or three days nothing has been found out by the minister himself, does he not think it is about time to start to investigate this serious matter which he spoke of in such dulcet tones?


Mitchell William Sharp: Mr. Speaker, I agree entirely with the right hon. gentleman except for the remark about dulcet tones.


Mr. Speaker:: Order please. There are three or four hon. members who wish to ask supplementaries, the hon. member for Yukon, the hon. member for Cumberland-Colchester North and others. I think we should complete our first round of questioning and then I will return to them. The hon. member for York South.


Mr. Nielsen:: Mr. Speaker, I rise on a question of privilege involving the answers given by the Acting Prime Minister both today and yesterday. If Your Honour will refer to page 9594 of yesterday's Hansard, in reply to the second question of the Leader of the Opposition the Acting Prime Minister, referring to the investigation, informed the House that "an investigation was launched immediately the report was heard on the radio this morning." That was Tuesday morning. But after the oral question period yesterday the Acting Prime Minister appeared in the Commonwealth Room at a press conference and informed the media that the Prime Minister's office had already started some investigations on the Saturday as soon as the matter was revealed in the press. One or the other of these two statements is accurate and one or the other is false. Either the investigations were started on
November 17, 1971

Saturday, as the Acting Prime Minister informed a press conference yesterday, or they were started, as he informed the House, on Tuesday. I wonder which is true.


Mitchell William Sharp: Mr. Speaker, the truth is-


Some hon. Members:: Oh, oh!


John George Diefenbaker: We are making progress at last.


Mitchell William Sharp: -that when the Leader of the Opposition asked me the question I gave my own reaction to it at that time, which was that I had not had or heard that report until the morning of that day. Indeed, I was startled by the question that was put to me on the previous day by the Leader of the Opposition. Unfortunately the Leader of the Opposition then moved the adjournment of the House, preventing continuation of the discussion, and in the interval I discovered that the Prime Minister's office had already begun these inquiries.


Mr. Speaker:: The hon. member for York South.



FINANCE


David Lewis: Mr. Speaker, if the Acting Prime Minister is no longer in flux and still continues to be in a mood to tell the truth I would like to ask him a question arising out of a statement by Secretary of the Treasury Connally of the United States. That other subject and the non-answers are enough for one day. As I say, I would like to ask him a question arising out of a statement by Secretary of the Treasury Connally to the effect that the No. 1 item which the Americans have placed before the Canadians in various meetings is the question of the Canadian exchange rate in relation to the American dollar, and that there has been some discussion and some agreement with regard to it. I would ask the Acting Prime Minister whether exchange rates have been a subject of discussion in the meetings he referred to yesterday in answer to a question which I asked him and whether any-


Mr. Speaker:: Order, please. I would hope the hon. member would ask his question. If the hon. member looks at Hansard tomorrow I am sure he will see that the question, which normally ought to be put briefly and directly, has, it seems to me, been taking a rather inordinate amount of time to be asked. In any event, I invite him to try to ask the question as soon as possible and I apologize to him for having interrupted him.


David Lewis: I was in the middle of it, Mr. Speaker.


Some hon. Members:: Oh, oh!


David Lewis: Has the question of the exchange rate of the Canadian dollar been one of the matters discussed in the meetings between Canadian and American representatives, and has the government indicated any policy with regard to it?
Inquiries of the Ministry


Mitchell William Sharp: Mr. Speaker, the question of exchange rates has, of course, been a central issue in discussions by the United States with countries generally, including Canada. Our position has been that we have complied with the requirements laid down by Secretary Connally who asked at the International Monetary Fund meeting that governments should make tangible progress toward dismantling specific barriers to trade and that they should "be prepared to allow market realities freely to determine exchange rates for their currencies for a transitional period." We have allowed objective, impersonal forces to determine our exchange rate and therefore we feel that we have entirely complied with the requirement of the United States.


David Lewis: Mr. Speaker, the Acting Prime Minister gave us yesterday a list of issues which the Americans had raised at these meetings. Am I right in concluding that the question of exchange rates should have been one of the issues that the Acting Prime Minister should have mentioned yesterday, and are the discussions with regard to exchange rates continuing between the two sides?


Mitchell William Sharp: Mr. Speaker, the question that was asked of me yesterday, if I did not misunderstand it, was in relation to the meetings then going on or which had been going on on Monday. This question of exchange rates was not raised during those meetings.


Mr. Thompson:: On a point of order, Mr. Speaker.


Mr. Speaker:: Order, please. Is the hon. member rising on a point of order?


Robert Norman Thompson: Yes, Mr. Speaker. I believe I was the first member on his feet to ask a supplementary to the original question asked by the Leader of the Official Opposition. Some hon. members are being given the opportunity to ask three or four questions.


Mr. Speaker:: Order, please. The hon. member will appreciate that, according to longstanding practice, an opportunity is given for the leader of each group in the House to lead off with a question on behalf of his group. The Leader of the Opposition led off on behalf of his party and there were a number of supplementaries. I indicated a moment ago that I would return to other hon. members, including the hon. member for Red Deer and the hon. member for Cumberland-Colchester North so they might ask supplementaries. In all fairness, there are other parties in the House and they must be given an opportunity to ask questions also. That is why the hon. member for York South was recognized and will be allowed to ask a further supplementary question.


David Lewis: Mr. Speaker, may I ask a further supplementary on this subject which is obviously a very important matter for the Canadian economy and particularly the export side. Is the Acting Prime Minister in a position to tell the House whether or not the American representatives indicated the level at which they want the Canadian dollar to be with respect to the exchange in terms of rate with the United States dollar?


Mitchell William Sharp: Not to my knowledge, Mr. Speaker.

November 17, 1971
Inquiries of the Ministry



INCOME TAX


Mr. Henry Latulippe (Compton):: Mr. Speaker, I would like to put a question to the hon. Acting Prime Minister.
Is the government ready to comply with the request of the Quebec Prime Minister who asks, first, that there be a joint federal-provincial study of the tax provisions on international undertakings before the tax reform bill is passed and, second, that implementation of the new tax system be delayed for one year because of its complexity and the numerous difficulties involved in its interpretation and implementation?


Mitchell William Sharp: Mr. Speaker, it is my understanding of government policy that the government intends to proceed with the tax legislation that is before the House.


Robert Lorne Stanfield: Mr. Speaker, I feel it necessary to raise a question of privilege in view of what the Acting Prime Minister said a moment or two ago when explaining the answer he had given to the House yesterday in responding to a question from me as to when the government had first learned of the leak of a cabinet document. He said in part, as recorded at page 9595 of Hansard:
I now find that there appeared in one newspaper on Saturday, one that I had not seen and that the Prime Minister had not seen, what purported to be an extract from a cabinet document. If at that time we had realized that the document had been revealed, then the inquiry would have been launched immediately. One was launched as soon as there was some evidence that there had been a breach of cabinet security.
The Acting Prime Minister apparently said something different outside the House and he evidently feels it sufficient, having given that answer to me yesterday, to come into the House today and say that he had no opportunity to make a correction before the House. I have to say in all sincerity, Mr. Speaker, that the answer the Acting Prime Minister gave me yesterday was wrong.


Erik Nielsen: It was not true.


Robert Lorne Stanfield: It is an affront to this House that he should have gone outside and made a different statement and then have seen no reason when he came back into the House to seize the first opportunity to correct what he had said in the House and also feel no necessity to do so today. I must say that as the Leader of the Opposition I feel aggrieved. I feel I have a real grievance and that members of the House have a real grievance in that the Acting Prime Minister has failed to correct what he said in the House. I feel that this constitutes a breach of the privileges of this House by the Acting Prime Minister.


Some hon. Members:: Hear, hear!


Mitchell William Sharp: Mr. Speaker, if I have in any way offended the House it was quite inadvertent, and I make a profound apology. If I had had the information at the time the hon.

member asked me the question, I would have so answered it then.


An hon. Member:: Obviously the minister had it.


Mitchell William Sharp: There were inquiries under way at that time and it seemed to me that this was not a matter of very great importance. However, I regret that I appear to have offended the Leader of the Opposition, and I apologize.



THE CANADIAN ECONOMY


Mr. Robert C. Coates (Cumberland-Colchester North):: Mr. Speaker, my question is for the Acting Prime Minister. In his statement in the Commonwealth Room yesterday he mentioned on a number of occasions the tremendous amount of confusion that has resulted from leaks of government information to the press and he indicated that in order to clear up the confusion there is necessity for an immediate decision on this matter. Can the Acting Prime Minister tell the House when he expects a decision will be rendered in this regard?


Mitchell William Sharp: Mr. Speaker, I speak for all my colleagues when I express the hope that it will be as soon as possible.


Robert Carman Coates: Can the Acting Prime Minister assure us that a decision will be rendered regardless of the problems associated with the 10 per cent surcharge and other problems in the United States?


Mitchell William Sharp: Mr. Speaker, I think it is important that government decisions be taken in light of all the facts, but I can assure the hon. member that the 10 per cent surcharge has very little to do with it.


Mr. Speaker:: Order, please. I hope the hon. member for Red Deer has accepted the explanation I attempted to give him a moment ago and is now prepared to ask his supplementary. I would be delighted to hear from him.



FOREIGN INVESTMENT-CESSATION OF POLICY FORMULATION BECAUSE OF POSSIBLE UNITED STATES RETALIATION

Robert Norman Thompson: Mr. Speaker, my question is supplementary to the original question asked by my leader. It is directed to the Acting Prime Minister. In view of the fact the Acting Prime Minister stated yesterday that any public consideration by the government of foreign investment policy at this time would muddle present talks or relations with the United States, has the government halted its policy-making on foreign investment because it might lead to United States retaliation at this time or because it fears a hardening of the United States position on the surcharge?


Mitchell William Sharp: Mr. Speaker, what I said was that the confusion which resulted from leaks from Cabinet was not helping in the discussions with the United States. But I think we should make up our
November 17, 1971

own minds as to what is in the best of interests of Canada and we should not allow any other country to determine our policy.



GOVERNMENT ADMINISTRATION


Mr. J. P. Nowlan (Annapolis Valley):: Mr. Speaker, I am beginning to wonder to which question my supplementary is supplementary. It arises out of the questions asked by my leader and other members of the House with regard to the news conference outside the House involving the Acting Prime Minister. Was the Acting Prime Minister expressing government policy outside the House yesterday when he is reported to have said the following with regard to the publication of confidential privy council documents, as found in a by-line story by Arthur Bla-keney in the Montreal Gazette today:
This is a very, very serious matter. Moreover, not only do I think that it is very serious, but I don't really think anyone who gets access to government documents has a right to publish them. I don't think so.
Does this accurately reflect government policy, even though the security of the state is not at issue, and does the publication of fact on Tuesday make fiction out of Monday?


Mitchell William Sharp: Mr. Speaker, I stand by the statement I made.


An hon. Member:: Which one?


John Patrick (Pat) Nowlan: In view of that answer, Mr. Speaker, I have to ask the Minister of Justice a supplementary. I hope the Acting Prime Minister understood his own statement and read it well. In view of the answer of the Acting Prime Minister, is the Minister of Justice preparing legislation to prohibit the publication of confidential privy council documents?


An hon. Member:: Come on.


John Patrick (Pat) Nowlan: After all, he implemented the War Measures Act.


Some hon. Members:: Oh, oh!


John Patrick (Pat) Nowlan: If so, have his law officers advised him that such legislation would contravene the Bill of Rights?


Mr. Speaker:: The hon. member for Comox-Alberni.


John Patrick (Pat) Nowlan: In view of the fact the Minister of Justice did not hear the question-


Mr. Speaker:: Order, please. Is the hon. member rising on a point of order? The Chair has recognized the hon. member for Comox-Alberni. I did not see any minister rise to reply to the hon. member's supplementary.


John Patrick (Pat) Nowlan: There is a problem with the sound system today, let alone the many problems across the way. To be
Inquiries of the Ministry
fair to the Minister of Justice, I will repeat my question. I think this is a legitimate question. In view of the answer of the Acting Prime Minister and in view of the history of this Parliament, is the minister preparing legislation to prohibit the publication of confidential Privy Council documents and, if so, has he had any advice from his law officers that the Bill of Rights may be involved?


Hon. John N. Turner (Minister of Justice):: No, Sir.



FISHERIES


Mr. Thomas S. Barnett (Comox-Alberni):: Mr. Speaker, the Acting Prime Minister will be relieved to know that I have a question for the Secretary of State for External Affairs.


Mr. Bell:: He will still mess it up.


Thomas Speakman Barnett: In connection with the upcoming law of the sea conference, has the government of Canada stated a position that all high-seas fishing for anadromous species of fish beyond the 12-mile limit should be stopped and, if so, to whom has this statement of the government's position been made? Also, is it possible for the Secretary of State for External Affairs to table this statement of government policy in the House?


Mitchell William Sharp: Mr. Speaker, I think this is the general policy of the Canadian government. I think the hon. member expressed it reasonably well. As to whether we have yet had an opportunity to make such a statement before a conference, I would have to determine. I do not think there has yet been an opportunity for making that public declaration.



COMPETITION BILL


Gerald William Baldwin: I wish to direct a question to the Acting Prime Minister. Has the Minister of Consumer and Corporate Affairs reported to the cabinet with regard to the new Competition Act, as required by the cabinet memorandum of July 29? If so, does the government intend to amend the Competition Act within the terms of the request contained in that memorandum?


Mitchell William Sharp: Mr. Speaker, I think the hon. member should ask the minister when he is in the House tomorrow.


Gerald William Baldwin: On a point of order, Mr. Speaker, I am asking the Acting Prime Minister whether a report has been made to the cabinet.

November 17.1971
Inquiries of the Ministry


Mitchell William Sharp: Mr. Speaker, I would like to ask my colleague that also.



POSSIBLE INCLUSION OF DENTAL CARE IN PROVINCIAL MEDICARE PLANS

Mr. Murray McBride (Lanark-Renfrew-Carleton):: My
question is for the Minister of National Health and Welfare. In view of information supplied by the minister to this House at an earlier date concerning the fact that no province had yet decided to include dental care under its medical health care plan, do recent news reports indicate that such an agreement has now been achieved with the province of Ontario?


John Carr Munro: No, Mr. Speaker. I have not been advised by the government of Ontario about a desire on their part to extend coverage under medicare to include dental care.



ATOMIC ENERGY


Mr. Donald Maclnnis (Cape Breton-East Richmond):: My
question is for the government House leader. Will the minister assure the House that, on behalf of all the constituents of Cape Breton, he will keep the type of representation in the future that brought to that island the heavy water plant?


Murray Arndell McBride: Order.


Donald MacInnis: Will the minister convey that information to the member for Lanark-Renfrew-Carleton and others?


Mr. Speaker:: The hon. member for Bellechasse. Order, please. I will allow the hon. member a supplementary although I am sure he appreciates that his question, of course, was more in the form of a representation. The hon. member also knows that a question has to be asked of the minister in his capacity of being responsible for certain aspects of the administration.


Donald MacInnis: I rise on a point of order to bring to Your Honour's attention the fact that this is not a representation to the minister. To support my contention, I draw Your Honour's attention to the fact that this question was originally asked by the Premier of Nova Scotia when he was a member of this House. The question was not ruled out of order at that time. I think the minister should make available to his party's supporters who are trying to wreck-


Mr. Speaker:: Order, please.


Joseph Adrien Henri Lambert: Mr. Speaker, yesterday I asked the hon. parliamentary secretary a question-


Mr. Speaker:: Order. I am sorry, but the hon. member for Cape Breton-East Richmond is again rising on a point of order.


Donald MacInnis: I rise on a further point of order. I direct this to the minister. If he does not wish to protect his own government's position with regard to the renovation of the heavy water plant-


Some hon. Members:: Order!


Donald MacInnis: I have available what I think might be considered an official document, 19 pages of copy from Hansard. I will make it available to Liberal members so they will know the truth of the matter.


Mr. Speaker:: Order, please. That is not a point of order. I bring to the attention of all hon. members that we are running short of time and many members are seeking an opportunity to ask questions.



REPRESENTATIONS OF QUEBEC MINISTER TO OBTAIN FINANCIAL ASSISTANCE FROM FEDERAL GOVERNMENT-STUDY OF POSSIBLE INCREASE IN HOG SUPPORT PRICE

Joseph Adrien Henri Lambert: Mr. Speaker, yesterday I put a question to the hon. Parliamentary Secretary to the Minister of Agriculture and he replied that he would inquire and answer me later.
Here is my question: Could he tell us whether representations were made by the Quebec minister of agriculture to the federal government calling for financial assistance in respect of the provincial program in order to assist producers of hogs, eggs and turkeys in the province of Quebec who are now enduring great hardship?


Mr. Marcel Lessard (Parliamentary Secretary to Minister of Agriculture):: Mr. Speaker, after checking with the department I realized that the Quebec minister of agriculture did, some time ago, make representations somewhat similar to those of the hon. member for Bellechasse. That goes back to the beginning of October.


Joseph Adrien Henri Lambert: Mr. Speaker, I wish to ask a supplementary question.
I would like to know if the Department of Agriculture or the Agricultural Stabilization Board is considering at this time the possibility of increasing the support price of hogs which is now $24.14.


Marcel Lessard: Mr. Speaker, the hon. member undoubtedly knows that there is an Agricultural Stabilization Act which also covers hog prices. If the average price for pork this year is lower than that of previous years,-and that, on a basis of 80 per cent,-there might be a support payment-


Mr. Speaker:: Order, please. For the next few minutes the Chair will try to recognize hon. members who were in



AGRICULTURE

[Stage Direction]
N ovember 17, 1971
[Stage Direction]
the House yesterday and who sought to ask questions but were not recognized.

Hon. Martial Asselin (Charlevoix):: Mr. Speaker, I wish to ask a question of the Minister of National Health and Welfare.
We are told that at the federal-provincial first ministers' conference, the federal government has agreed to increase special abatement points for Quebec from 22 to 24 in connection with hospitalization and health insurance programs. Can this concession be taken as a sign of recognition by the federal government of a special status for Quebec, at least in the fields which I have just mentioned, as was indicated yesterday by the Quebec premier at a news conference?


John Carr Munro: No, Mr. Speaker. There were previous arrangements with Quebec relative to hospital insurance dating back to 1964. These are not changed. The province does not operate under the system of tax points with reference to medicare, as the hon. member knows. The health proposals which were discussed with the provinces had to do with a new formula based on a per capita assessment and did not involve the equalization formula per se.


Mr. Speaker:: I would allow the hon. member a supplementary question but the question period has to end at 3.19 p.m. There are four minutes left.



LABOUR RELATIONS


Mr. Lincoln M. Alexander (Hamilton West):: Mr. Speaker, I should like to direct a question to the Minister of Labour or to the Minister of Transport, whichever of the two feels best suited to answer it, regarding the anticipated strike by Bell Canada qperators. As I understand the situation, a 90 per cent vote has now authorized a strike. I am wondering whether the minister is aware of this and whether he is prepared to intervene? Is he in a position to offer some compromise formula on the basis of which the two parties can return to the bargaining table?


Hon. Bryce Mackasey (Minister of Labour):: I am well aware of it, Mr. Speaker. I am also aware of the fact that if the employees decide to go on strike they have a legal right to do so. I believe both parties know that my department is quite prepared, as it did two years ago, to provide mediation services provided, of course, both sides ask for those services. If not, we shall have to see how long we
Inquiries of the Ministry
can make do with a strike affecting the Bell telephone system.



RESEARCH


Mr. Rod Thomson (Battleford-Kindersley):: Mr. Speaker I have a question for the Minister of State for Science and Technology. In view of the statement in Professor Barber's report that Canadian farm machinery companies were not getting their fair share of the market because they could not afford to pay for the necessary technological research and development, is the minister prepared to recommend that funds be provided to assist the three prairie governments which are now setting up a research and development centre for testing farm machinery?


Hon. Alastair Gillespie (Minister of State for Science and Technology):: I am not familiar with the suggestion made by the hon. member but I will be pleased to take it under consideration.



LABOUR CONDITIONS


Mr. John Lundrigan (Gander-Twillingate):: Mr. Speaker, I have a question for the Acting Prime Minister. Can the hon. gentleman inform the House why government regional economists have now been instructed not to release unemployment statistics concerning lay-offs across the country but, rather, that inquiries must be channelled through the offices of the ministers?


Mitchell William Sharp: I shall make inquiries, Mr. Speaker.



UNEMPLOYMENT STATISTICS-INVESTIGATION INTO PUBLICATION BEFORE OFFICIAL RELEASE

John Howard Lundrigan: While we are talking about security regulations, is the Acting Prime Minister in a position to reveal the results of the investigation he made known yesterday into the publication of unemployment statistics for the last two months one day in advance of the official publication?


Mitchell William Sharp: The inquiries are still continuing, Mr. Speaker.



POST OFFICE


Mr. H. W. Danforth (Kent-Essex):: Since my inquiry concerns two departments and since the Postmaster General

November 17, 1971
Inquiries of the Ministry
is not here, perhaps I can direct it to the Minister of Transport, Mr. Speaker. Is the minister aware of some rather serious charges that because of weight limitations affecting air transport between the port of Windsor and Pelee Island mail is delayed, with serious consequences where prescription drugs are concerned? Would the minister look into this matter?


Hon. Donald C. Jamieson (Minister of Transport):: I have plenty of problems with weight limitation, Mr. Speaker-


Some hon. Members:: Oh, oh!


Donald Campbell Jamieson: -but I was not aware of this particular one. I shall take it under advisement and let the hon. member know.



EXTERNAL AFFAIRS


Mr. Steven E. Paproski (Edmonton-Centre):: Mr. Speaker, my question is directed to the Acting Prime Minister in his capacity as Secretary of State for External Affairs. In light of correspondence between Marguerite J. Trussler and the hon. gentleman's department, may I ask whether it is the policy of the government that when applying for passports divorced women must use the names of their previous husbands? If so, is any action being considered to redress this blatant discrimination against women?


Mr. Speaker:: I would think this question ought to be placed on the order paper. If there is urgency, it may be considered at the time of the adjournment.


AIR TRANSPORT
Mr. Ambrose Hubert Peddle (Grand Falls-White Bay-Labrador):: My question is for the Minister of Transport, Mr. Speaker. On November 4, I directed it to his parliamentary secretary, the minister being absent from the House. Is the hon. gentleman aware that the Royal Air Force, which up to now has been using Department of Transport facilities at Goose Bay, is now using United States air force facilities as a result of the deterioration of Department of Transport ramps and hangars? If so, what action is the minister prepared to take to ensure that this RAF activity is returned to the Canadian side? In other words, is he in a position to answer my question of November 4?


Donald Campbell Jamieson: I was
not advised personally of this question. I apologize for that. I would suspect that the explanation does not involve only the condition of the hangars. It may well involve a new arrangement between the RAF and the United States

Air Force. But I will undertake to get a full explanation for the hon. member.


Ambrose Hubert Peddle: Did I understand the minister to say he was not advised of this very important question?


Donald Campbell Jamieson: Yes, Mr. Speaker. It is my habit to be honest with the House on all occasions. This one slipped through somehow or other, and I was not personally advised of it.


FAMILY PLANNING CONFERENCE-REQUEST FOR PUBLICITY CAMPAIGN BECAUSE OF INCREASE IN ILLEGITIMATE BIRTHS
Mrs. Grace Maclnnis (Vancouver-Kingsway):: Mr. Speaker, my question is to the Minister of National Health and Welfare. In view of the welcome announcement that a national conference on family planning will be held in Ottawa next February, and in view of figures just issued by the minister's department which show a steady rise in the rate of illegitimate births in Canada from 5.3 per cent in 1963 to 9.2 per cent in 1969, will the government take the lead at this conference, financially and otherwise, in launching a campaign of public information to deal with this situation?


Mr. Speaker:: I believe the hon. member's question is really in the form of a representation. If there is urgency about the matter it could be considered at the time of the adjournment. Would the hon. member like to rephrase it?


Donald MacInnis: May I ask a supplementary question? Can the minister tell us what organizations will be invited to take part in this conference?


John Carr Munro: Just about every organization of a voluntary nature in the private area we are aware of that has shown an interest in this subject matter in the past.


POLLUTION
Hon. Hugh John Flemming (Carleton-Charlotte):: Mr. Speaker, I have a question for the Minister of the Environment. Has the minister received any report regarding the possible construction of an oil refinery at Eastport on the Bay of Fundy in the State of Maine, and the need for exercising extreme care in the transport of oil to that refinery in the event of its construction?


Hon. Jack Davis (Minister of the Environment):: We are
investigating this matter, Mr. Speaker.


CONSUMER AFFAIRS
Mr. J. G. Lind (Middlesex):: Mr. Speaker, I have a question for the Minister of Consumer and Corporate Affairs. It is my understanding that one of the purposes of the Combines Investigation Act is to ensure continued competition within the business realm. My question is directed to the recent amendment to the Ontario Insurance Act, particularly in so far as it may restrict competition within the life insurance industry. Are the officials of the hon. gentleman's department examining the amendment to the provincial insurance act passed by the present Ontario government in order to determine whether this legislation constitutes a breach of section 32 of the Combines Investigation Act?


Mr. D. R. Tolmie (Parliamentary Secretary to Minister oi Consumer and Corporate Affairs):: Mr. Speaker, the Ontario Insurance Act amendments have been taken into consideration by virtue of clause 92 of Bill C-256 which makes provision for provincial legislation to be taken into account in actions under the proposed Competition Act.


Mr. Speaker:: Order, please. I am not sure which question is the most urgent before we call orders of the day but the Chair will take a chance on the hon. member for Mackenzie.


INDIAN AFFAIRS
Mr. S. J. Korchinski (Mackenzie):: Thank you, Mr. Speaker. I should like to address a question to the Minister of Indian Affairs and Northern Development. Is it part of general government policy or simply departmental maladministration that applications for loans by Indians have been delayed for four months in order to frustrate the applicants?


Joseph Jacques Jean Chrétien: Mr. Speaker, if the hon. member will inform me of the particular circumstances to which he is referring, I can assure him right now that if there is any delay, it may be due to administrative errors, and is definitely not a matter of policy.


Stanley James Korchinski: On a point of order, Mr. Speaker, I have repeatedly tried to get someone in the minister's department to provide me with certain information. I have called the department time after time and tried in vain to get an application considered. I have no recourse at this time but to bring the matter before the House. I have tried in vain to appeal the case on behalf of Hector and Virginia Bird of La Ronge, Saskatchewan. Unless the minister and his officials can be more serious I should like to give
Income Tax Act
notice that on another occasion I will bring the matter up by a motion under Standing Order 26.


Mr. Speaker:: Order, please. Perhaps the hon. member might also consider the possibility of asking the question again at the time of the adjournment. That might be the occasion for him to obtain an answer.
I apologize to hon. members; I have done my best to try to get as many of our colleagues recognized in the question period as possible. I have also tried to notice those who have not been recognized, some of them front benchers, including the hon. member for Brandon-Souris. Having made a note, I will try to give these hon. members priority tomorrow.


Mr. McGrath:: On a point of order, Mr. Speaker, I should like to point out that I have what I consider to be an urgent question for a minister who will not be here tomorrow because of the roster system. I merely point out to Your Honour that you must either rule that the roster system is inconsistent with the practices and rules of the House, or I suggest that the time allotted to the oral question period should be extended.


Mr. Speaker:: Orders of the day.


GOVERNMENT ORDERS
[Stage Direction]
The House resumed, from Tuesday, November 16, consideration in committee of Bill C-259, to amend the Income Tax Act and to make certain provisions and alterations in the statute law related to or consequential upon the amendments to that Act-Mr. Benson-Mr. Honey in the chair.
The Chairman:: In accordance with the statement made by the Parliamentary Secretary to the Minister of Finance, as recorded at page 9630 of Hansard for Tuesday, November 16, 1971, the committee will now resume consideration of the sections that were before the House on Wednesday, November 10, 1971, being sections 150 to 180 inclusive, and 220 to 244 inclusive. Sections 150 to 161 were agreed to. The committee will now consider section 162 of clause 1.
On clause 1-section 162: Penalties.


Mr. Downey:: Mr. Chairman, I have a question I should like to ask the parliamentary secretary. Last Friday when we were discussing this section, I asked a question regarding advance rulings and the cost thereof. The parliamentary secretary agreed that he would look into the situation and I am wondering whether he is at this time prepared to give a close approximation of the cost involved in obtaining advance rulings.


Mr. Mahoney:: Mr. Chairman, there is a minimum fee of $150 charged on advance rulings, and the total cost depends on the actual time spent by the officials. However, the minimum fee is $150.
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Cliff Downey: May I ask a further question? Can the parliamentary secretary give us some indication of the amount of time involved when an official of the department is engaged on a particular case? Is there a charge per man-hour or man-day and, if so, what is that charge? Just what should we expect by way of cost in addition to the blanket fee of $150?


Patrick Morgan Mahoney: The fee is based on a rate of $20 per hour.


Cliff Downey: Has any consideration been given to a reduction in the cost? It may well be that many people would like to obtain an advance ruling, particularly in the case of capital gains. For example, take the case of a widow whose late husband's estate is subject to the capital gains tax. There might be only a few thousand dollars involved and, although the amount would not be large from the government's point of view it might be large from the point of view of the estate.
Has any consideration been given to setting up some sort of legal aid plan under which people who can ill-afford to get an advance ruling could obtain one in a case where it would be essential to the administration of the applicant's affairs? It could be essential for the proper administration of affairs for taxation purposes.
I suggest that $20 an hour on top of the $150 blanket fee could very well mean an additional $160 per 8-hour day if one departmental official is employed on researching a tax ruling. If two employees are engaged on that research the cost would be $320 for an 8-hour day, and this, in addition to the $150, would be prohibitive to a great many people. Therefore, I suggest that the minister and his parliamentary secretary consider reducing these fees to something a little more realistic, even though some people may be able to afford to avail themselves of an advance ruling.


Patrick Morgan Mahoney: The purpose of the advance ruling is not to give ongoing tax advice to taxpayers, it is to give taxpayers a combined ruling in advance of a transaction they propose to enter into. The purpose of setting a fee, which would go a long way at least to compensate the average taxpayer in Canada who has to carry the payroll and other charges on the Department of National Revenue, is to assure that frivolous applications for advance rulings are kept to a minimum. Those who do make these applications and appear to meet the legitimate requirements for them under ordinary circumstances will be anticipating the amount of tax involved in such a transaction and the fee for the advance ruling will be a nominal portion of the potential tax involved in the deal. It is not a system involving ongoing tax. District taxation offices provide that type of information without additional charge.
Clause 1-section 162 agreed to.
On clause 1-Section 163: Wilful failure to file return.


Mr. Aiken:: Mr. Chairman, I might have raised this matter when we were discussing sections 161 and 162, but I think it has more application to section 163. This is the section which creates a penalty for failure to file a return of income, and it involves a penalty of 50 per cent of the tax that should have been paid. There is also section 239 which sets out a similar type of penalty for this offence.

Very briefly, this bill creates a double penalty and places a person in double jeopardy for any alleged offence against the Income Tax Act. There have been objections to this system for a great many years. I think it is most unreasonable that a person who fails to file a tax return should be subject to a penalty under section 163 and also under section 239. This is contrary to normal justice and it seems to me that if the department proceeds under section 163 it should be debarred from proceeding under section 239. Such a provision would then be reasonable.
I do not know why the department has taken this opportunity to fix the penalty at 50 per cent of the amount of tax rather than leaving it as it was before, that is 25 per cent. This is merely compounding the unfairness of the section. Not only is the amount of the penalty increased under section 163 from a minimum of 25 per cent to a minimum of 50 per cent, it also provides for adding that penalty to any fine or penalty under section 239. I should like to ask the parliamentary secretary why it was felt necessary in the first place to increase the minimum penalty to 50 per cent, without any option. Second, I should like to know what his views are on the matter of the double penalty for the same offence, which is fundamentally contrary to our justice.


Patrick Morgan Mahoney: In the first place, the penalty referred to in section 163 applies to people who wilfully attempt to evade the tax payable by failing to provide a return. I call the hon. member's attention to subsection (3) of that section which places the burden of proof on the minister to establish the facts justifying the assessment of the penalty.
Then, going on to section 239, which the hon. member mentioned, subsection (3) makes it very clear that the double penalty need not be involved unless the penalty under section 163 was assessed before the information or complaint was alleged or made which would result in the penalty under section 239. So, the effect of section 163 and the penalty assessed would be known to the magistrate or the judge before he determined what he should do following a conviction under section 239. Very obviously this would be something the magistrate or the judge would take into account.
I think, on balance, considering the fact that we are talking about people who wilfully attempt to evade payment of tax, and who can be proved to have done so, and the burden of proof rests with the minister, I do not think the sections are inequitable.


Gordon Harvey Aiken: I wonder if the parliamentary secretary would answer the first question about the increase of the minimum penalty from 25 per cent to 50 per cent?


Patrick Morgan Mahoney: I really cannot cast any illumination on that, except perhaps to speculate that in cases where very small amounts of tax are involved the penalty should be increased.


Gordon Harvey Aiken: matter is, this is still double jeopardy. This is the sort of thing that is not reasonable, regardless of whether an individual is fined $1 or $1,000. He should not be hit twice. I still think the principle is wrong. I know that it has been in the act for a long time, but we are revising the act now and I think it is reasonable for us to reconsider these sections, particularly in view of the increase in the penalty rate.


Mr. Bigg:: Mr. Chairman, what I have to say touches very closely on that same point. Perhaps I am a devil's advocate in assisting the department, but it seems to me that these sections covering penalties were drafted in a way that confuses the meaning. There is apparently no penalty as long as you file a return. The return can be imcomplete or inaccurate, but as long as it is filed within the statutory limit there is no penalty. If a person had a large amount of tax to pay, say about $1 million, it would be a simple thing for him to file an incomplete or inaccurate statement. He could continue in this manner and forward returns to the department indefinitely. Presumably, in this way he could get around the section which would impose a penalty for not coming forward with a proper return. I wonder whether this fact has been considered.
It is my understanding the penalty is 6 per cent. If so, at present rates of interests, I believe this in effect is a licence to evade the Purpose of the taxation act. If the penalty for not filing or for being delinquent in paying is only 6 per cent it would be to a person's advantage not to pay his tax and earn, shall we say, the difference between 6 per cent and 9 per cent. In other words, once could borrow from the government at a very low rate of interest.


Patrick Morgan Mahoney: Mr. Chairman, the hon. member is not quite correct. The 6 per cent, of course, is interest charged on payments which should have been made and were not made in time. In section 163(2) he will note there is also a penalty of 25 per cent of the tax which should have been paid in the case of a return filed that either contains false statements or omissions. I do not think there is really the loophole the hon. member sees in this particular case.


Gordon Harvey Aiken: Mr. Chairman, I do not feel like allowing this subject to drop so easily. Because of this section I believe the average citizen will accept the 50 per cent assessment on his income tax rather than fight the minister in court. The department in this case has a second lever on the individual who the officials feel has deceived them. Before making any assessment at all someone in the department may feel that a person has attempted to deceive the department. Then, having this feeling the person makes the assessment of 50 per cent and waits for the taxpayer to come back and object to it. This might be the situation if one happens to be in the department on a salary and has an impersonal attitude toward the matter. The taxpayer, however, is scared to death of being hauled into court on a charge of tax evasion even if he feels he is not guilty and, therefore, he probably will not argue about the 50 per cent but will let it go. He will pay his assessment and the 50 per cent and say, "Please, now don't bother me anymore; don't take me into court". For that reason subincome Tax Act
section 3 to which the parliamentary secretary referred is very good in theory but in practice is of very little help except to the large corporate bodies and those who can affort to hire legal counsel and accountants to help them prepare their case.
The average person is hit two ways. He has the terrible lever over his head that if he does not pay the 50 per cent he will be taken into court. The burden of proof does not bother him very much. He does not understand exactly that the burden of proof is on the minister in this case unless he has consulted a lawyer. He would probably decide he would rather pay whatever is owing, which might be $100 or $1,000, rather than face the disgrace of being hauled into court for tax evasion. I believe this is so wrong that I move:
That clause 163 now under consideration be deleted.
I will submit the motion, Mr. Chairman.


Patrick Morgan Mahoney: Mr. Chairman, I really think the hon. member is insulting the average Canadian. I do not think the average Canadian who fails to file an income tax return does so in a wilful attempt to evade the tax payable. Certainly, there are a number of such instances, but the average case is covered in section 162 and not section 163. Section 162 provides that the person who fails to make a return as and when required is liable to a penalty of an amount equal to 5 per cent of the tax up to an amount of $10,000 of the tax payable and $500 if the amount of the tax unpaid is $10,000 or more. That covers the average Canadian. The hon. member seems to be equating the average Canadian who files a return with one who wilfully attempts to evade taxation. I believe that is wrong. I think it would be quite improper to eliminate this type of penalty from the Income Tax Act which is designed to properly penalize people who wilfully attempt to evade taxation.


Gordon Harvey Aiken: Mr. Chairman, I come back to the parliamentary secretary's first argument given when I raised the question. At that time it was slightly different. In this case it does not really matter whether the person concerned is big or little if the department should claim he is wilfully attempting to evade. This is a serious charge and I have no hesitation in saying such a person should be brought into court and prosecuted. But that is not what is happening here. The person is not being brought into court and prosecuted. He is being given a penalty first of 50 per cent and then must go to court to see whether or not he is going to be hit for some more. I do not think this is a proper attitude. The word "lawfully" appears here. So far as the parliamentary secretary is concerned I agree that section 162 relates to a lesser offence, but in section 163 we get into the matter of wilful evasion. So, somebody is to be penalized twice.
This weakens the argument of the parliamentary secretary. The person must satisfy the minister that he was not evading and then must go to court to defend himself. I think this is a most iniquitous section in the Income Tax Act. I dealt with this matter on many occasions while practising law. This did not involve large corporations but rather people who were involved in income tax matters. Perhaps sometimes they were guilty and sometimes perhaps they were not. The point, however, is that they were
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November 17, 1971
Income Tax Act
penalized twice. If they were innocent of evasion, they were sometimes penalized only once. If they were guilty they were penalized twice. There is something wrong with such a system because if these people are innocent, the 50 per cent should not be added to other penalties. I submit that practical people will pay it rather than be hauled into court. As I have said I believe this is an iniquitous situation. It is even worse when the rate of taxation is increased from 25 per cent to 50 per cent.


Mr. McCutcheon:: Mr. Chairman, I, too, should like to add my support to what the hon. member for Parry Sound-Muskoka has said. This is a most iniquitous section and, in my humble opinion, is being used by some branches of the income tax department-I will not say by all of them but by some specific branches-the officials of which are bucking for a corporal's stripes and use this method to intimidate taxpayers. As the hon. member has mentioned, if the department can prove wilful evasion, then the taxpayer is hit twice. However, if they cannot prove it, he is hit only once. In my humble opinion that is definitely unfair, and I have no hesitation in recommending the amendment of the hon. member for Parry Sound-Muskoka.


Frederick Johnstone (Jack) Bigg: Mr. Chairman, I just want to make a short comment regarding the burden of proof. The burden of proof, which is the responsibility of the Crown, is exceptionally easy to satisfy. As anybody who has ever had to go to court knows, as soon as the Crown has established what is called a prima facie case on the simple facts established by the accounting department that the taxpayer is delinquent in the matter of taxation, the burden of proof is switched to the taxpayer and the responsibility of proving himself innocent rests upon him. So I also want to lend whatever support I can to the amendment of the hon. member for Parry Sound-Muskoka.


Mr. Smerchanski:: I should like to make a comment regarding the same section which appears on page 424, section 152 (4)(a)(i), which reads:
has made any misrepresentation that is attributable to neglect, carelessness or wilful default-
I should like to deal with misrepresentation because the penalty referred to by the hon. member for Parry Sound-Muskoka is a heavy one. The question to be asked is what is misrepresentation? It might be that a bookkeeper or someone else in one's office might have made a representation that is attributable to neglect or carelessness, and then the taxpayer is faced with a heavy penalty which might be an unfair one. The point was raised that there is a double penalty. I suggest that instead of increasing the penalty from 25 per cent to 50 per cent, it should be decreased to 10 per cent so that the taxpayer is not penalized unnecessarily and so that the legislation is fair. This section refers to misrepresentation which can be attributable to neglect and carelessness of someone working in one's office or one's corporation, and this is very important. This is a very far-reaching piece of legislation, and I suggest that we take a hard look at it because in my view this penalty section is unfair.


Russell Clayton Honey: Is the committee ready for the question on the amendment.


Cliff Downey: I have a question or two on the penalty section, Mr. Chairman. In the Summary of 1971 Tax Reform Legislation it is stated:
In addition, documents seized other than by search warrant in the course of an investigation must be returned within a reasonable time unless a court decides otherwise. A person whose documents are seized will have the opportunity of reviewing them.
What are the other circumstances in which documents can be seized other than by search warrant? Could the parliamentary secretary clarify this for me?


Patrick Morgan Mahoney: We are dealing at the moment with sections 162 and 163 and I am wondering where one finds the particular words which the hon. member has read in those sections. I would be glad to reply to his question, but I do not see these words in the sections we have been discussing.


Cliff Downey: They may not be in the specific sections but, in essence, they are relevant to this subject. I wonder whether the parliamentary secretary could clarify this situation to a certain extent.
There is another question which I would like to ask him with regard to the enquiries section. This part reads:
At the present time, an enquiry may be held in the course of the administration or enforcement of the Income Tax Act without the presence of the taxpayer concerned. The new legislation will entitle the taxpayer, in most cases, to attend or be represented.
In what situation would the taxpayer not be entitled to be represented? The reference is to, "most cases", and I wonder in what cases he would not be represented.


Patrick Morgan Mahoney: Again, we are dealing with a block consisting of some 53 sections. If the hon. member would be good enough to give the section numbers when he asks questions, I would be very happy to look at them and try to give him answers if the references are to the particular sections with which we are dealing at the moment. Certainly, the questions he is asking are relevant to the block-I am not arguing about that-but I do not see the words he quoted in either section 162 or 163.


Cliff Downey: I ask the parliamentary secretary whether or not it really matters if I provide him with section numbers. My questions are pertinent to the sections with which we are dealing. Why is he not able to give us a simple and concise answer to the questions I asked him, and why is he trying to run me off the tracks by asking me to provide him with certain section numbers? Would the parliamentary secretary tell me in what cases a taxpayer will not be able to be in attendance or be represented when an inquiry is being conducted? Of course, he will recall the first question I asked him. Would he please give me an answer to my questions.


Russell Clayton Honey: Is the committee ready for the question?


Lincoln MacCauley Alexander: I am seeking some clarification. I also support the amendment moved by the hon. member for Parry Sound-Muskoka to section 163(1) which puts the minister in the position of imposing a double penalty. I do not know whether the parliamentary secretary has as yet answered any questions with respect to the increase in the
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penalty. Perhaps he has, but I have not heard him. It seems to me that there must be some reason that the parliamentary secretary, on behalf of the minister, has found it necessary to increase the penalty from 25 per cent to 50 per cent, keeping in mind that a person who is eventually charged with wilfully attempting to evade payment of tax can, in the long run, be faced with another penalty. Why is it necessary to have this section amended in order to increase the penalty?


Patrick Morgan Mahoney: Mr. Chairman, previously under this section the minister had discretion to levy a penalty of between 25 per cent and 50 per cent. It is felt inappropriate that the minister should have discretion in this particular situation, and it is also felt appropriate that the 50 per cent penalty be retained.


Lincoln MacCauley Alexander: With respect to the penalities previously levied or exacted, is the parliamentary secretary in a position to advise whether they were mainly in the lower range of the percentage or in the higher range? Were there more penalties on the 25 per cent level than on the 50 per cent level?


Patrick Morgan Mahoney: I am afraid I have no idea, nor do I have any idea whether that information is available. I will be glad to inquire and, if it is available, I will supply it.


Lincoln MacCauley Alexander: I can recall, from some limited experience I had with respect to court actions concerning the Income Tax Act, that it was always the minimum penalty that was exacted. If the precedents indicate that the minimum was always exacted, why is it now necessary to go to the maximum?


Patrick Morgan Mahoney: Mr. Chairman, I would dispute the hon. member's assertion that the minimum was always exacted. He says he is speaking of court cases where a magistrate levied a penalty, and I have no information on the matter he raised regarding the practice of the Minister of National Revenue in exacting penalties under the section as it stood previously.


Mr. Hogarth:: Mr. Chairman, I have a question for the parliamentary secretary on section 163(1). First, am I correctly construing that section, in the Crown's view or in the minister's view, when I suggest that two things are required to be proven under section 163? First of all is it required to be proven that there was a failure to file the return and, secondly, that in addition there was a willful attempt to evade or is the failure to file the return automatically considered a wilful attempt to evade? It appears to me that it can be read either way.
Secondly, in drafting the statute why did the minister not follow the usual wording of penal sections and say "is guilty of an offence, and is liable on conviction to-"? Why is there a deliberate evasion, if I may use that phrase, of the customary phraseology for penal sections in statutes?


Patrick Morgan Mahoney: In answer to the first question, the hon. member's observation is correct. Both elements of the offence have to be established. The hon. member might look at section 162 where the simple case of failure to file a return is dealt with.
Income Tax Act
On the second question, this is not an offence under section 163 at this point. We get to that when we reach section 239. What we have in section 163 is the minister making a determination that there was a wilful attempt to evade payment of tax by failure to file a return. Then, the minister makes the penalty assessment, and of course the taxpayer has the regular right of appeal to the Tax Appeal Board and on to the Federal Court, as a result of the assessment made by the Minister of National Revenue. It is at this point that section 163(3) comes in, and where there is an appeal by the taxpayer the burden of proof rests upon the minister.


Lincoln MacCauley Alexander: Mr. Chairman, I do not want to pursue this much longer but I point out that in line 28 the words "is liable" appear, which may mean that a person may be liable to a fine, but not necessarily so. I ask the further question as to why this section does not read as similar sections do in other legislation, for example, "liable to not more than" say, 50 per cent? That would give some leeway. I ask the question directly: does "is liable" mean that a mandatory penalty will be exacted? Further, why has some leeway not been provided, as in many other sections, so that whoever is going to administer the law may exercise some judgment? Was this not considered?


Patrick Morgan Mahoney: Mr. Chairman, obviously that was considered because the determination was made to change the previous law which allowed the minister discretion to levy a penalty of from 25 per cent to 50 per cent. With regard to the first part of the hon. member's question, it would be the government's feeling that once the minister made the determination that a wilful attempt had been made to evade payment of tax by failure to file a return, he would have a duty to enforce the penalty.


Lincoln MacCauley Alexander: So then it is mandatory.


Mark G. Smerchanski: Mr. Chairman, I would like some clarification of section 163(2) which reads:
Every person who, knowingly, or under circumstances amounting to gross negligence in the carrying out of any duty or obligation-
The insertion of the word "knowingly" is self-explanatory, but I would like an explanation of what is meant by "amounting to gross negligence"?


Patrick Morgan Mahoney: Mr. Chairman, the term "gross negligence" is one that has been subject to a great many determinations at law in various cases under various circumstances. It is not a term that is defined in the Income Tax Act. This is getting into something that we encountered with the hon. member for Battle River and one or two others the other day, in trying to say what is or is not at arm's length. We can give an example and say that something is or is not a non-arm's length transaction, but to ask for an over-all simple definition of the concept of gross negligence is to ask an impossible question.


Mark G. Smerchanski: In order to get clarification of a piece of legislation being considered by members of the House of Commons is it necessary to leave it in such a vague state that the ordinary taxpayer has to seek an interpretation from the courts? Is this the intention, to frame our rules and laws in such a way as to place this added burden on the taxpayer? Mr. Chairman, I say that this is

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an unfair burden to place on the taxpayer. It would be far better for the minister to clarify this matter of gross negligence. I think it is incumbent upon the members of this House to get clarification of this part of the section rather than leave it worded in such a confused manner that the taxpayer will have to go to the expense of appealing to the courts for a ruling. Many taxpayers would not want to do that. We should have clarification of it now. I cannot accept the explanation that gross negligence is a matter of legality. I am not a lawyer and many taxpayers are not lawyers, and I think we are placing an unfair burden on taxpayers.


Cliff Downey: Mr. Chairman, may I return to the point I brought up earlier. It seems that the parliamentary secretary was not interested in answering me and he asked me to refer to the specific section I was talking about. I cannot tell him that, since I was reading from the Summary of 1971 Tax Reform Legislation, the booklet which is produced by the department for the benefit of the average taxpayer so that he may understand the workings of the 707 page tax bill. I am afraid that most often lawyers will look at it and some of them may not understand it. May I read a paragraph entitled "Enquiries" on page 60 of this little red booklet, the Summary of 1971 Tax Reform Legislation. It reads:
At the present time, an enquiry may be held in the course of the administration or enforcement of the Income Tax Act without the presence of the taxpayer concerned. The new legislation will entitle the taxpayer, in most cases, to attend or be represented.
Let me ask the parliamentary secretary again to what part of the act that paragraph pertains. The officials of the department are sitting at the little table; surely he can ask them. To what part of this 707 page bill does the paragraph I have read refer? I ask him to clarify this matter, so that his answer may be recorded in Hansard. That way, taxpayers who read the Summary of 1971 Tax Reform Legislation will know, if they read the answer in Hansard, the part of the bill to which the paragraph I read has reference.


Patrick Morgan Mahoney: The particular matter the hon. member is raising is dealt with in section 231 of the act, which is in Part XV. That is in the next block of sections we shall deal with after we have finished dealing with the sections in divisions I and J. I wonder if the hon. member would be satisfied to deal with it when we get to that point, instead of dealing with it under the particular sections we are now considering.


Cliff Downey: That would be satisfactory, Mr. Chairman. I would appreciate it if the parliamentary secretary would, on his own, bring this matter up and indicate what the part I have read means. I am satisfied if we proceed on that basis.
Amendment (Mr. Aiken) negatived: yeas, 14; nays, 33.


The Deputy Chairman:: I declare the amendment lost. Shall section 163 carry?


Gordon Harvey Aiken: Mr. Chairman, we have disposed of the amendment. Obviously, section 163 will remain in the bill. However, I am not satisfied and neither are other hon. members, because we have not been told the reasoning

behind the increased rate. I am talking about penalties, which are to be raised to a flat rate of 50 per cent. There is to be no adjustment and no discretion, as there was formerly. The penalty rate might have been 25 per cent, which may have been reasonable. I do not want to press the parliamentary secretary beyond his ability to answer; yet he has not answered our question except to say that it was deemed best to do this. That, surely, is not a proper answer.
I realize the situation he is in and I suspect that within the department lots of problems have arisen. Perhaps one assessor has been asking for 25 per cent, another for 50 per cent and still another for 37 j per cent. I think I agree with him that it was fairest to fix the rate. I am not sure that I disagree with that. I will not argue that point too strongly because it will be fairer to everyone across the board if the same rate is applied. If a person pushes his case to the limit and goes to court, the rate might be reviewed. Nevertheless, the increase bothers me. I do not know why the rate has been jumped to 50 per cent. Surely, the parliamentary secretary can tell us why the rate was increased to the level of the maximum. Why was it not left at the minimum level in a section that involves double jeopardy and a double penalty?


Frederick Johnstone (Jack) Bigg: Mr. Speaker, I must agree thoroughly with the last speaker. Since there is a mandatory penalty of 50 per cent, surely in cases where perhaps $1 million might be involved, extracting $500,000 by way of penalty will be unconscionable. If we were dealing with the criminal law and were concerned about punishment, a man would first have to be found guilty, in this case guilty of depriving the people of Canada of legitimate tax money. He would be just as guilty if he deprived them of $1,000 as if he deprived them of $1 million. I do not think under British law, and I presume we are still a British country, that you could in all conscience impose a penalty of $500,000 in the situation to which I have referred. Nevertheless, taxation law is not criminal law, in the true sense.
From time immemorial most Anglo-Saxons have thought that it was the duty of the Crown to prove 100 per cent that it has a right to your property. A taxation statute merely says that the Crown has a right to your property. I suggest that every man has the right to protect his property, and therefore the onus is on the Crown to prove its case. Of course, I like to think that our courts are always right in their decisions; nevertheless, I still feel that this section may provide, in some circumstances, for a silly penalty. Perhaps $1 million is a large figure to take as an example, because in that case the statutory penalty would be $500,000 under the present wording of the act. Of course, people who face the prospect of paying this kind of penalty can afford to hire the best legal brains in the world and fight the case. On the other hand, the man who may have to pay, perhaps, $1,000 cannot afford a $2,500 lawsuit in order to protect the $1,000, so to speak, that he does not want to pay. Here a stiff penalty would be imposed merely because a man did not want to go to court.


Douglas Aird Hogarth: Mr. Chairman, I want to ask the parliamentary secretary a question in order to see if three sections have been correctly construed. I want to put before him the case of the taxpayer who deliberately fails
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to file a return, for the purpose of evading tax, and, 300 days after the return is due, he files a return in which he gives false information. Let us say that he is finally caught, that everything is fixed, so to speak, and that the amount of tax involved is $5,000. Am I correct that under section 162 this person might be assessed 5 per cent for failing to file a return, which amounts to $250? He might also be assessed under section 163(1) for 50 per cent of the tax for failing to file a return, which would be $2,500. He might be assessed under section 163(2) for putting in false information when he did file a return, and that would amount to an additional $2,500. Under section 238 he may be charged in the police court with the offence of failing to file a return. The minimum penalty for that offence is $25 a day for 300 days which amounts to $7,500.
If I am correct, this person would have to pay $15,000 in penalties and assessments for failing to file a return and making a false statement if he were liable for $5,000 in taxes. If I am wrong, please correct me or show me where I am wrong. Also, please state the correct assessable penalty in the event that I am mistaken. It seems there would be a hell of a pile of money to pay.


Patrick Morgan Mahoney: First, Mr. Chairman, the penalties under sections 162 and 163 cannot both be levied.


Douglas Aird Hogarth: Are they leviable? That is what I want to know.


Patrick Morgan Mahoney: If I may answer to the best of my ability, the penalties under sections 162 and 163 cannot both be levied at the same time. The offence under section 162 is only one of the elements in the offence under section 163. If the minister decided to proceed with section 163, that is where he would go. In the situation the hon. member described, the person ultimately got around to filing a return, and that clearly takes him out of the provisions of sections 163(1) and puts him into the provisions of section 163(2). That person is still subject to prosecution under section 239 and to the penalties that might be imposed under that offence section.
This gets us back to the point originally raised by the hon. member for Parry Sound-Muskoka where we started the discussion on this section. It is quite true that both penalties could be levied under section 163 and under section 239, but the point is that the penalty under section 163 could not be assessed unless it had been assessed before the information and complaint were made. Therefore, the magistrate or judge trying the case under section 239 would be aware and would presumably take into account the section 163 penalty in deciding what penalty he should levy under section 239.


Douglas Aird Hogarth: Mr. Chairman, I want to know what penalties could be assessed. I do not say they would be assessed. I do not say the minister would move under both sections. I want to know if they could be assessed.
It is my understanding from what the parliamentary secretary said a few minutes ago that the gist of the offence under section 163 is for evasion of filing a return. It seems this is not part and parcel of 162. Section 162 relates to failing to file a return. Section 163(1) is concerned with evasion. First, I do not think they are one and
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the same offence or that one is included in the other. Second, I cannot see any prohibition against the minister assessing under both those sections if my first premise is correct. Third, I cannot see where there is any obligation on the magistrate to be concerned with whether the man has been assessed under section 162 or section 163, because the penalty is not less than $25 a day for each day of default.
It is my understanding that the failure to file a return is a failure to file a return as required by section 150. Surely, if you are 300 days late you are not filing as required by section 152. Even assuming I am wrong on the first argument that sections 162 and 163 are one and the same and there would not be an assessment under both sections, is is true this person can be assessed $12,500 in penalties or fines for failure to pay $5,000 in taxes and evading the payment thereof?


Patrick Morgan Mahoney: Mr. Chairman, I am afraid I was not able to follow this. I leave it to Hansard. I will have somebody do the arithmetic and report to the hon. member.


Mr. Alkenbrack:: Mr. Chairman, I think this is a pretty serious situation. With the defeat of the amendment moved by the hon. member for Parry Sound-Muskoka, I cannot understand why members on the government side are in such a hurry to support an unreasonable policy which, as someone has said, can put a taxpayer into triple jeopardy.
Section 163 is quite small. It only has three subsections. Since it deals directly with penalties, it should be placed at the end of the bill. This is usual. This is the first bill I have seen, either in this House or in other places, that does not have the penalties listed at the end where they should be listed. I move:
That this section be stood at this time and be included with other sections that are already stood.


Gérald Laniel: Order, please. The hon. member knows the normal procedure is to ask the committee to consent to standing a clause of the bill. In my opinion, the hon. member cannot do this by means of a formal motion. The Chair is at the disposal of the committee. If it accepts the suggestion of the hon. member, I will gladly stand the particular section.


Almonte Douglas Alkenbrack: I ask the parliamentary secretary to do that at this time. We could consider it later when there are more representatives present on both sides of the House. This can be dealt with in a conclusive fashion later along with some of the other sections that have been stood. It would be better for the government and better for the committee if this were done.


Patrick Morgan Mahoney: Mr. Chairman, I was going along very well with the hon. member until he started to give the reasons for doing this. This is something the committee should decide. The members who happen to be here at this time are the committee. I am not sure why the member feels he needs additional members on his side of the House to help him make a determination on this matter. I really cannot agree with the reasons given to stand the section.

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Almonte Douglas Alkenbrack: I rise on a point of order, Mr. Chairman. I did not make any recommendation along a political line. I think the parliamentary secretary has misinterpreted the meaning of my remarks.


Cliff Downey: Mr. Chairman, I am in complete agreement with the member who just spoke. We should stand this section. The parliamentary secretary did not seem to be in agreement with the reasons given. However, if you look at the penalties being handed out under other laws, you are inclined to think that the judiciary is becoming more permissive in its interpretation of the law. I recall a prominent legal counsel, a member of this chamber, speaking about a situation with regard to a case he defended. It concerned some bank robbers and something in the area of $1 million which was removed from a chartered bank. In the final analysis, fines of $1,000 were assessed against those concerned. This was about two years ago.
We might consider also the degree of permissiveness in the capital punishment area. What has been done to the people involved in the incidents which brought the War Measures Act upon us a year or so ago. Capital punishment is supposedly still with us for murderers of policemen and prison guards. But as I recall it, the last occasion when a man received the maximum penalty in Canada was in 1962. I stand to be corrected, but I think it was about that time. It seems odd to me, bearing in mind the direction society is taking, that in an income tax law we should be asked to double the penalties, and I would use this argument in support of the proposition that the clause before us should be stood, reconsidered and brought forward at a future date.


Patrick Morgan Mahoney: I am quite agreeable to standing the section if good reason can be shown. However, I did not feel that the reason given by the hon. member for Fron-tenac-Lennox and Addington, namely that the members who were present here today were not competent to pass on the section and that we should wait for others to come and discuss it, was a valid one. If the reason is to give the government an opportunity to consider what has been said as to the substance of the clause, and the validity of the arguments advanced, I would be quite prepared to stand it.


Almonte Douglas Alkenbrack: I rise on a question of privilege, Mr. Chairman. The parliamentary secretary intimated I had said the members of this committee who are present today were not competent to deal with the bill before us. I made no such statement. I know perfectly well, and so does the parliamentary secretary, that the members present here are perfectly competent. But if there were more members present from the government side we would be that much more competent to deal with this subject and that much more determined to correct this proposal and give it further consideration. I make one more appeal to the parliamentary secretary to use his good offices and stand this section along with the other sections which have been stood so we can reach a satisfactory conclusion in the near future.


Mr. Ritchie:: I should like to add a few words in support of the proposal that the government stand this bill and have a further look at it. The committee should bear in mind that the previous penalty was, generally, 25 per cent, at least in the experience of one person who had some connection with it. The parliamentary secretary does not seem to be sure why the penalty has been raised from 25 per cent to 50 per cent. It looks as though some bureaucratic action has been taken on the basis that since it was between 25 per cent and 50 per cent, things could be simplified by making the penalty 50 per cent.
As my hon. friend has just pointed out, in this day and age we have become more permissive in many directions and it seems unusual that the penalties should be increased in this particular area unless a very good reason can be supplied. In my opinion, the parliamentary secretary has not yet been able to supply this information.


Douglas Aird Hogarth: I should like to ask the parliamentary secretary whether he would not consider the following to be a valid reason for standing the section. First, there is no limitation as to the number of sections under which the minister can assess. He can assess under 162, 163(1) and 163(2). And even then, he can prosecute under section 238. With respect, I ask the parliamentary secretary whether he does not consider that this is being a little vindictive in the light of the fact that there is a minimum penalty under section 238. Either the department should move to assess or it should prosecute under section 238. One or the other.


Patrick Morgan Mahoney: Well, some time ago I agreed to stand the section. However, it seems that this would deprive hon. members of their opportunity to continue to debate the matter. I am quite agreeable to standing the section-not, as the hon. member for Dauphin suggested, the bill, but certainly this section. On the other hand, if hon. members wish to continue the debate today, I cannot stand it.


Gordon Harvey Aiken: I am not rising to debate the section further, Mr. Chairman. If we had received any reasonable explanation as to why the rate had been set at a straight 50 per cent, we would feel that at least we had carried our objections as far as we could. This is the real point at issue, the point with regard to which, as far as I am concerned, we would like an answer.


Gérald Laniel: Shall section 163 stand?


Some hon. Members:: Agreed.
On clause 1-section 164-Refunds


Cliff Downey: With regard to this section, the parliamentary secretary will correct me if I am wrong, but I gather that refunds amount to some 10 per cent of the total taxes which are collected. Since there is sometimes a long delay in paying these amounts back to the individuals concerned, a great many people are involved. I think we should establish once and for all that what is sauce for the goose is sauce for the gander, and that the taxpayer should be put on an equal footing with the tax department. The question is, who is the master and who is the servant? Are not the officials of the tax department the servants of the taxpayers and the members of this House? Or is it the case that the taxpayers are supposed to make things easier for the tax department?


Patrick Morgan Mahoney: Mr. Chairman, the hon. member is quite correct in suggesting that approximately 10 per cent of taxpayers in Canada annually claim and receive a refund of income tax. However, the basic reason for this is the changes that occur in their domestic circumstances. Births or marriages change their exemptions during the course of the year, and there is the usual failure to file new information sheets with their employer so that their deductions can be changed. Then, in certain cases there are unusually high medical expenses, increased charitable donations and so on. All of this changes their taxable income and is not taken into account on the information sheet. Accordingly, I suggest that the hon. member's amendment is neither acceptable nor reasonable.
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Gérald Laniel: Perhaps at this time the Chair should put the amendment to the committee. I might have some question as to its financial implications, but in view of the previous decision I am ready to put it at this time. The hon. member for Battle River moves:
That subsection (3) of section 164, as set forth in clause 1 of the said bill, be amended by inserting therein at line 31 on page 436, next after the word "annum", the following:
"that shall return not less than the maximum cost that would be receivable on the amount of a loan under subsection (2) of section 3 of the Small Loans Act.


Frederick Johnstone (Jack) Bigg: Mr. Chairman, I hear groans from hon. gentlemen opposite who are usually the so-called champions of the little people. With 150 members, it seems to me the Liberal party could well put up one or two members who are interested enough to protect the rights of Canadian taxpayers.
The sections just referred to were extremely fierce, up to double and triple jeopardy, for the taxpayers who were unfortunate enough to be guilty of some error in filing their tax returns. However, when the small taxpayer has a refund due to him, what does he get? He gets nothing, no consideration whatever. The hon. member has made a very valid argument in suggesting that some consideration should be given to the small taxpayer who wants to spend his money just as much as an ever-greedier government wants to spend every bit of what he earns.
The individual taxpayer in Canada still has the right to have members of this House spend a moment or two begging that his point of view be heard. This large volume in front of us is largely taken up with a new invasion of a Canadian's right to own property. I think that this government, with its array of computers and public servants who are all very capable and efficient, should ensure that the taxpayers should get at least a reasonable return on their money. It is not right that a delinquent taxpayer should be called upon to pay an enormous sum of money-in fact, in some cases, unreasonably large sums of money-because of his evasion.
When the government owes money to a taxpayer because of an over-deduction of taxes, it should pay interest on that money just as it demands that the taxpayer must pay interest on the money he owes the government. There is no reason the government should not pay interest except the very shallow one that it is too much trouble for this army of civil servants with their computers to decide how much should be paid. This should not be difficult to calculate. Any money owing the taxpayer after the year ending March 31 should be paid with the addition of interest at 8 per cent. It would not make any difference whether the taxpayer had a great deal of money coming or a small amount, the situation would be equitable.
If it were possible for a taxpayer to commence a lawsuit against the government I am sure an equitable rate could be worked out. Anyone who borrows money must pay a reasonable carrying charge. When we have war bond drives or patriotic drives to sell bonds, the government offers between 6 per cent and 8 per cent. The income tax department should pay interest on the money it owes the taxpayer because that money is collected from the beginning of the year and the taxpayer has no choice since it is
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deducted. The taxpayer should be entitled to this interest on his overpayment. I commend the hon. member for Battle River for bringing this amendment forward, and I am surprised it did not meet with unanimous acceptance.


Gordon Harvey Aiken: Mr. Chairman, I was really surprised when the hon. member who resumed his seat took part in this debate because there was an indication from the other side that he was perhaps prolonging the debate. Most of us on this side had the privilege of sitting on the other side of the House at one time and appreciate that this sort of debate or argument gets a little bit dull.
For those members who have not been following the debate, I should like to say that the biggest complaint of citizens in Canada can be related to the fact that if they do not pay their income tax, if they are late in paying it or if they fail to file a return they are assessed interest, penalties and costs across the board. However, when the government owes them money they get it back six months or a year later with 3 per cent or 5 per cent interest, or perhaps no interest at all. This is the basic complaint of the people to whom I have spoken.
Income tax is deducted from source at the beginning of every year. Income tax is paid from January of 1971, for example, and if there is an overpayment, by the summer of 1972, if the taxpayer is lucky, he will get back his overpayment-a year and a half later. This money has been deducted under the provisions of the Income Tax Act and represents an overdeduction. In many cases, these people have had to go to the bank, finance companies or small loan companies to borrow the amount of money they know they will be getting back at a rate of interest from 18 per cent to 20 per cent. Keeping this in mind, I think the amendment is reasonable because it relates in some way to the overpayment of tax and the interest an individual must pay on the money he borrows. We should not pass over this point too lightly. There is not a lot of money involved, although I do not know the exact figure.
I should like to ask at this time whether it is possible to get an indication of how much is paid in interest to people who are receiving overpayments of income tax. This may involve an impossible task and, if so, I will not press the matter, but I should like to have some idea of what the amount is. I should also like to ask what the exact rate of interest is. Perhaps it varies, but according to this section the interest would be paid at a prescribed rate which, of course, could be any amount. I should like to ask the parliamentary secretary to tell us the rate of interest now paid on repayments of overpaid income tax. What does this amount to in relation to the total amount of income tax? If it does not amount to much, I suggest that if it were paid the people would be more than satisfied. It might amount to only $4 or $5, but if people felt they were getting the same deal from the government that the government demands from them, I am sure they would be happy. If they are paying 8 per cent they should be getting 8 per cent. What is the rate of interest on overpayments? Is it the same rate that is charged by the government on tax not paid by the individual taxpayer? Perhaps we could get that information, as I think it would be helpful.


Patrick Morgan Mahoney: Mr. Chairman, the rate paid under the statute on voluntary or inadvertent payments, as a matter

of course, is 3 per cent. The intention of this section is to have the rate established on a periodic basis that does, in fact, bear a realistic relationship to interest rates at which the government borrows its money, and so on. This will be established periodically. The 6 per cent rate of interest is payable where the refund to the taxpayer results from a successful appeal in respect of an assessment the minister has made.
I can only point out to the hon. member again that these overpayments are not the result of any malicious design on the part of the government. The simple fact is that people do get married during the year and they do have children during the year. Deduction tables take into account the standard $100 deduction for charitable and medical expenses, and if no other circumstances change and the taxpayer did actually make charitable donations in excess of $100 there would be a refund coming because of the provisions of the act.
The vast majority of these amounts is very small. I do not know what the total figure is but we will try to find it. I am sure it is available but I just do not have it. This involves about 10 per cent of our individual taxpayers and in almost all the cases it results from either a change in domestic or family circumstances during the taxation year or because of medical or charitable expenses and donations in excess of those built into the tables.


Gordon Harvey Aiken: Might I also suggest to the parliamentary secretary that some of the overpayments are incurred by people who may work for only part of the year but have deductions based on 12 months' employment. I think this is the most grievous complaint. Individuals do get married during the year or fall into some of the categories suggested, but they are getting a windfall in the form of a tax return because the money was properly deducted in the first place. The people who really are hurt are those who were on a high salary perhaps for a relatively short period of the year and therefore had a large chunk deducted. I have one last question. Can the parliamentary secretary tell us how this prescribed rate is to be established. The 3 per cent now on the books is not very close to reality. I wonder how close to reality the prescribed rate will be and how it is to be prescribed.


Patrick Morgan Mahoney: It would be prescribed by Order in Council.


Gordon Harvey Aiken: But on what basis? Here we are attempting to make the point that the basis of interest ought to be a reasonable one. Now, the government seems to consider it reasonable to collect a large interest rate and pay back a much smaller one. Can we have any assurance that the prescribed rate will be anywhere near reasonable, because lacking that the amendment of the hon. member for Battle River is the only alternative.


Patrick Morgan Mahoney: Mr. Chairman, I am afraid the statute does not prescribe the criteria the Governor in Council would use in arriving at the rate to be established by Order in Council each year. Obviously, this section would not have been opened up if it were not the intention, as expressed publicly by the Minister of Finance, that this rate should bear a relationship to a realistic interest rate
November 17, 1971

and better than 3 per cent. The interest rate presently established by statute is ridiculous.


Mr. Nesbitt:: I have a very brief question, Mr. Chairman. The parliamentary secretary has told us that in the case of overpayments, where an appeal has been successfully launched by the appellant taxpayer the money is refunded with interest at 6 per cent. As we all know, a great many objections to tax levies never reach the stage of appeal, even to the district or departmental offices. Sometimes representations are made informally to the local tax offices or perhaps to the minister's office, the matter is rectified and the money returned. In these cases, the matter never reaches the Income Tax Appeal Board but has been settled on sort of an informal basis beforehand. Would the parliamentary secretary consider having the money returned with the appropriate rate of interest in cases such as this in which there has been genuine error, either in fact or in judgment, although the matter has been settled sort of informally without actually reaching the stage of appeal.


Patrick Morgan Mahoney: If the hon. member would look at section 164(4) he will note that where the refund is the result of either an appeal, as I indicated a moment ago, or a notice of objection which the taxpayer has filed to the assessment, even if it does not go before the Tax Appeal Board, the interest paid will be at exactly the same rate that is applicable to deficient payments by the taxpayer to the Receiver General. So, the Crown and the taxpayer will be on precisely the same grounds in this situation. The rate we are talking about here to be established by Order in Council is the rate which will apply to the ordinary run-of-the-mill overpayment which results from a person's exemptions changing during the year or something like that, where there is no dispute about the amount and where it is simply a matter of the taxpayer having paid a little more on instalments than was necessary.


Wallace Bickford (Wally) Nesbitt: Mr. Chairman, perhaps I did not make myself quite clear. The parliamentary secretary referred to a successful appeal or a formal notice of objection. I realize, of course, that that is the case, but I was referring particularly to cases in which there has been no formal notice of objection or appeal and in which a genuine error has been made in the assessment or something. I am speaking of cases in which no formal notice has been filed by the taxpayer himself or of cases in which perhaps a Member of Parliament on his behalf has written to the minister or deputy minister in charge of taxation in order to have the matter cleared up. In such cases, when the money is refunded would the money bear interest.


Patrick Morgan Mahoney: Mr. Chairman, I believe the hon. member's situation is covered because when we talk about a notice of objection we are talking about a person objecting to an assessment. The only prerequisite here is that there be an erroneous assessment as the hon. member suggests.


Wallace Bickford (Wally) Nesbitt: I am satisfied.


Frederick Johnstone (Jack) Bigg: Mr. Chairman, I have already stated I am prepared to support the amendment and, therefore, I am simply making another appeal along the same line. I think the rate paid the taxpayer should be exactly the same as
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the rate the government expects to collect when the taxpayer owes the government money. I do not see any argument in favour of anything else. If it is simply a matter of the difficulty involved in the process of bookkeeping, I suggest this is no argument. We have computers and we have a large number of unemployed people who could be engaged in working out these returns so the money might be sent back in a much shorter period than six months.
There should be no problem today in processing these returns. If the rate in respect of overdue accounts is to be set by Order in Council, it would seem strange that the bureaucrats do not take upon themselves the responsibility for setting the penalties in the same way. The House of Commons is seized with the responsibility of setting the penalty and, apparently, of giving its approval to a triple penalty. However, when it comes to making payments to taxpayers with a reasonable rate of interest we say we cannot possibly handle this because it is too difficult; we must hand it over to the bureaucrats so that it will come out in the form of an Order in Council. Personally, I believe the people of Canada are tired of rule by Order in Council and expect us to do these things here. We are now paid a reasonable salary. We are capable men from a general cross-section of the country.
As has been ably pointed out this afternoon, I believe the people are looking to us in respect of this large tax bill of 750 pages, plus amendments, to do something which will be of benefit to the small taxpayers. In respect of overpayments, I believe in most cases we are speaking of amounts of perhaps $200 or less. It has been said that this involves a difficult problem for the bookkeepers. I say it is not a difficult problem at all. At one time I made a typographical error in my return and believe me I was told about it within two weeks after I had filed my return. It did not take long for them to examine the return and put it through the computers. It was found that I owed the government $1.38 and they wanted the money immediately. The penalties under the law for not doing this are still very considerable indeed.
So, I make that appeal again. A citizen certainly pays a reasonable rate of interest on the money which he owes the government, and if the government has the right to take more money from him in the first place and keep it for a year or 18 months, it can well afford to pay those taxpayers, the ones who need that $200 perhaps more than most of us do now, at a reasonable rate of interest. I think that we in the House of Commons should be seized with the responsibility of finding out what a reasonable rate of interest might be, and this should not be hidden in the fine print in the rules and regulations which lie behind this act.


Mr. Ricard:: Mr. Chairman, I should also like to appeal to the parliamentary secretary and ask him to consider seriously the matter since, in my opinion, this request is quite reasonable. Indeed, it concerns a great number of taxpayers each year.
In his answer, the parliamentary secretary explained that refunds were sometimes due to taxpayers, but that in
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almost all cases, it was because they had failed to provide the required information.
However, as stated by my colleague for Parry Sound-Muskoka (Mr. Aiken), if often happens that owing to temporary unemployment or lower wages, an employee is taxed for part of the year at a very high rate, while for the remainder of the year, when it comes to filing his income tax return, he should be granted a refund of at least 6 per cent, as the government itself requires from taxpayers. Surely the parliamentary secretary knows that this generates much dissatisfaction with the people. People who find out that they are thus taxed 6 per cent for a mistake or for having failed to enter the precise amount on their income tax return are greatly annoyed when they have to pay 6 per cent more, whereas the government assumes none of the responsibilities that it imposes upon the taxpayers. So, I believe that it would be wise to give the taxpayer a chance proportionate to what the government requires from him.
I feel that the Quebec government, if it has not already taken measures to suppress the anomaly which afflicts taxpayers, will do so very soon. In fact, I believe that the minister of finance or revenue of the province of Quebec has already expressed the opinion that this should be done. This would be a matter of equity for the taxpayer, and I dare hope that the parliamentary secretary will be kind enough to accept this reasonable request, f English]


Mark G. Smerchanski: Mr. Chairman, with reference to this section on refunds, I think we possibly misunderstand the purpose of subsection (4). I believe that it is fair in that at present an interest rate of 3 per cent is paid on any refunds that are due. If you are successful in an appeal, you get 6 per cent. But the new regulation suggests that this be equalized, and inasmuch as the government must pay a fair rate of interest on the refund, likewise you would pay the same rate of interest if you owed the government money. In other words, I feel that this offsets the inequity that existed under the initial regulation. The only thing that it does not spell out is that the rate of interest shall be a prescribed rate per annum. Perhaps we could resolve that prescribed rate of interest by tying it either to the Bank of Canada prime rate of interest or tying it to the rate of interest that is paid on small business loans, farm credit loans, or something of that nature. Possibly that would tend to clarify the matter of refunds. I submit that as a suggestion.


Paul Yewchuk: I just wanted to make a few comments in support of the amendment moved by the hon. member for Battle River. I think that the practice under the legislation passed by this government in dealing with interest rates on various items such as loans from government agencies has been to leave it open and not set a specific rate. This might be easier in some ways in that the legislation does not have to be amended as often. At the same time, I think it is a rather sloppy way of presenting legislation because the people who are dealing with the legislation do not know exactly where they stand. This becomes more of a guessing game. In dealing with a refund to a taxpayer on an overpayment of taxes to the revenue department, one finds that there is a great similarity to a small loan made to the government because the government can use those

funds for whatever purpose it might find necessary while this money is in its possession. Because of the fact that it resembles a small loan, there is no particular reason the government should not pay an interest rate equivalent to that which a citizen would have to pay if he obtained a small loan from a government agency. So, this kind of amendment makes a good deal of sense.
Even though I indicated at the beginning of my remarks that I do not like unspecified interest rates, this amendment does not set a specific figure either, but it ties the rate to that which would be prescribed on a loan which an individual might obtain from a government institution. The parliamentary secretary said that the present prescribed rate is in the vicinity of 3 per cent. If such a rate were applied, it would certainly not be an inequitable rate. In all fairness, we should have a definite reassurance from the government that the rate which would be paid on refunds would be much more in keeping with the existing rates in the country at that time. I know that the parliamentary secretary indicated that an order in council could be passed from time to time prescribing these rates, but I think that this is not a neat way of doing it. I think it would be much more sensible to adopt this amendment and apply the rate prescribed for small loans.
Could the parliamentary secretary indicate what guidelines would be used in prescribing the rate on a refund? Let us say that this amendment is not accepted by the government. What guideline would be used in setting an interest rate on overpayments of taxes when a refund is made to a citizen? I wonder also if he could answer at the same time how the 3 per cent figure was arrived at previously?


Patrick Morgan Mahoney: Mr. Chairman, I answered that question some time ago, and I indicated that I regretted I could not give the answer sought. Certainly, there are no criteria in the bill to guide the Governor in Council in making that determination, and I am not aware of what criteria would be used in doing it. I think the hon. member should clearly understand that the 3 per cent rate is one that is prescribed by the existing Income Tax Act. It is not a rate that was established by regulation. Certainly, there is nothing in past history to indicate that the government would wish to continue a rather unrealistic rate such as the 3 per cent rate has become. Indeed, that is the reason the matter has been opened up by the government in this particular tax reform package, in order to permit the government from time to time to alter the interest rate as interest rates in the market place change, and to relate it to something realistic in that area. However, what actual factors would be taken into account, I cannot answer.


Paul Yewchuk: Would it be reasonable to assume that the rate prescribed could well be that which is charged for small loans under the sections of the Small Loans Act referred to in this amendment?


Patrick Morgan Mahoney: No, Mr. Chairman. The Small Loans Act is an act that sets upward limits which private companies can charge for small loans as defined in that act. This rate has no relationship whatsoever to any interest rate either paid by or charged by the government or any government agency.
November 17, \911


Mr. Gleave:: Mr. Chairman, I do not think it is difficult to make a case that the interest rate should be set out in this section. The parliamentary secretary has said that 3 per cent is an unrealistic rate, and that it is the government's intention to set a rate that is fair and in line with present rates of interest within the business community. It seems to me that the proposal advanced here is a very practical one. If the government finds this phraseology unacceptable, it could introduce its own amendment. As one of the hon. members to my right said, it is our responsibility as parliamentarians to protect the rights of the ordinary citizen, and to have legislation clearly defined so that the ordinary citizen or accountant may understand the limits within which he can operate. That is the purpose of this amendment, and on that basis we can support it.


Patrick Morgan Mahoney: Mr. Chairman, I am afraid we cannot accept the amendment which would enshrine a particular rate of interest in the statute. The problem there is that these rates do not get changed often enough when they are set by statute. The proposal that the rate be established by Order in Council would give us an opportunity to review it on a more regular basis and keep it within some realistic relationship with the facts of the market place at a particular time. Earlier the hon. member for Parry Sound-Muskoka indicated that most of the members opposite had sat on this side of the House at one time. Indeed, they were sitting on this side of the House the last time this section was revised. In 1958 the Conservative government very generously raised the interest rate from 2 per cent to 3 per cent.
With due respect, Mr. Chairman, I think that since we have come up with something that will allow some flexibility, and hon. members opposite have come up with nothing that will satisfy the realities of the situation-and certainly in six years of being in office they were unable to do anything but increase the rate from 2 per cent to 3 per cent per annum-the amendment should be defeated and the section adopted by the committee.


Mr. Mazankowski:: Mr. Chairman, I want to go on record as supporting the amendment proposed by my colleague. I believe that some measure of incentive should be placed in the bill to make governments refund moneys that they owe. I am dealing with a case right now of a farmer who has been waiting for a refund of $5,277 from the Department of National Revenue since April, 1971. It arose as a result of the five year averaging of his income. Now, it is November and he still has not received the refund. In the meantime he has been forced to borrow money at bank interest rates, and sometimes higher, at the 8 per cent to 10 per cent level.
The relationship between the department and the normal taxpayer is such that the department treats the taxpayer with a form of contempt. I submit that if an interest rate were tied to the amount of overpayment it would be an incentive to the government to get on its toes and return money to the taxpayer. I cannot see any reason in the world why this farmer should have to wait that length of time to get a refund of $5,277.78.
I took up this matter with the Minister of National Revenue. He in turn stepped on someone's toes and I understand the money is being refunded this week. But
Income Tax Act
why in the name of Heaven should we have to go to all that trouble? Some formula should be provided to give incentive to the government to refund such payments. What is sauce for the goose is sauce for the gander. I know that if an individual owed the federal treasury $5,277.78 some pretty drastic steps would be taken by the department.
The relationship between the taxpayer and the department should be upgraded. There should be mutual trust and respect. A lot can be gained by improving that relationship. Making the interest rate realistic in this case would help to do that. The government should consider a reasonable amendment, such as that which has been proposed from this side of the House. I repeat that I strongly support the amendment.


Stanley Howard Knowles: Mr. Chairman, a minute or two ago the parliamentary secretary was poking fun at the Conservatives for coming up with a better idea when they are on this side of the House than when they were the government. I express the hope that next year, when the Liberals are on this side of the House, they will come up with better ideas than they have put forward in this bill.


Some hon. Members:: Hear, hear!


Cliff Downey: Mr. Chairman, I listened to the parliamentary secretary belittling the previous Conservative administration for raising the interest level from 2 per cent to 3 per cent. That was a 50 per cent increase. What can be more generous than a 50 per cent increase?


Patrick Morgan Mahoney: Would the hon. member settle for 41 per cent?


Cliff Downey: That would be much better than what we have. I am not suggesting that the amendment I proposed is perfect. I am merely groping for something that will be acceptable to the committee, to the parliamentary secretary and to the minister. I am suggesting that tying the interest rates we are concerned about here to those applying under the Small Loans Act may not be acceptable. I am merely suggesting an amendment which would say that the Department of National Revenue shall pay the same rate of interest as it requires others to pay on funds owing to the department. What could be fairer than that? Is an amendment along those lines not acceptable? Would the parliamentary secretary agree to the same rate of interest being paid by the Department of National Revenue? Would he agree to a rate that is the same as the one the department demands on funds owing to it? Is there anything wrong with that concept? Would the parliamentary secretary comment on the acceptability of an amendment along those lines?


Patrick Morgan Mahoney: Mr. Chairman, I do not think that type of amendment would be acceptable. I should again remind the hon. member that that is precisely what this bill provides in cases where the overpayment and refund are consequential upon an assessment by the minister-that is, where that assessment proves to have been erroneous. We are still, basically, talking about a situation in which the overpayment has resulted from extra deductions and

Novem ber 17. 1971
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in which those extra deductions, in turn, have resulted from changes in the domestic situation of the taxpayer. There might be extra charitable donations, and so on. These would be matters over which the taxpayer has some control and therefore he could minimize, in many cases, an overpayment by filing an up to date information sheet with his employer.
It does not seem appropriate that the general revenue should meet that particular interest rate in those cases. I could not agree more that the same interest rate should apply in cases where the minister has demanded more tax and where the taxpayer has successfully refuted that attempt through an appeal. The case of the taxpayer who, through his own action, has paid more tax than he ought to have paid is not comparable to the case of the taxpayer who has refuted the demand for more tax, and the hon. member's amendment would not be appropriate.
Amendment (Mr. Downey) negatived: yeas, 18; nays, 35.


Gérald Laniel: I declare the amendment lost.
Clause 1-section 164, agreed to.
On clause 1-section 165: Objections to assessment


Gordon Harvey Aiken: Mr. Chairman, may I ask a question about section 165(3)(b). Where there are several appeals of a similar type before the department, apparently taxpayers may file copies of the notice of objection and the appeal can be entered with the minister's consent. Why has it been inserted here that the minister must consent? I do not think, if a taxpayer wants his case to be considered again, he should need the consent of the minister. In many cases one cannot do anything without ministerial consent, and this is another situation like that. Why was it necessary to say that the minister must consent to the filing of an appeal?


Patrick Morgan Mahoney: Mr. Chairman, the reason is to allow the appealing taxpayer to go directly to court, that is either to the Tax Appeal Board or to the federal court, as he elects, without waiting for the minister's formal reply to his notice of objection. That would arise in cases where, (a) the minister and the taxpayer agree that there is a bona fide case of dispute to be dealt with before the appeal tribunal and, (b) where the best interests of all would be served if the case were dealt with expeditiously and if certain preliminary formalities otherwise necessary were waived.


Gordon Harvey Aiken: Mr. Chairman, I wish to ask another question about subsection (7) and specifically about lines 27 and 28 which cover the situation in which no notice of objection is required with respect to reassessment. The words I am concerned about are, "Where . . . the Minister . . . makes an additional assessment in respect thereof, .. It is not clear from this section or from any other part of the legislation in what sort of situation the minister can make an additional assessment. Could that be clarified?


Patrick Morgan Mahoney: Mr. Chairman, this situation would arise in cases where the new assessment was issued after the matter was already before the court. This would allow the revision of the assessment without it being necessary to go
back over the ground and recommence the appeal in court.


Douglas Aird Hogarth: Mr. Chairman, one comment I wish to make about section 165 is this: the notice of objection must be made in prescribed form. On the other hand, subsection 6 says that the minister may accept a notice of objection despite the fact that it was not served in duplicate or in the manner required by subsection (2). I understand that the intention, when the act was originally enacted, was to make procedures for going before the Tax Appeal Board informal. Surely, we could add words to subsection (6) to provide that the minister may accept a notice that is not in the prescribed form so that the informality of the procedure may be continued. I would like to propose an amendment to subsection 6 to the effect that there be added after the last line the words:
-or is not in the prescribed form


Patrick Morgan Mahoney: I wonder if the hon. member can give some indication of what he means. How could the minister determine whether he had a notice of objection or a letter of complaint in this particular situation? The minister has to have some ground rules in this particular instance. Frankly, I question very much whether the particular amendment would be administratively feasible at least.


Gérald Laniel: The hon. member for Parry Sound-Muskoka.


Douglas Aird Hogarth: I have not moved that far east, Mr. Chairman. The point is if a taxpayer, 89 days after the assessment came to him, wanted to object, surely he could write a letter saying that he objects to the assessment and wants to appeal to the Tax Appeal Board. Because of the fact he did not have a prescribed form in front of him, he would be out of court. He might not have a form. Whether or not it was a notice of objection would be a question of fact for the tribunal to determine. The minister could say the letter he wrote was not a letter of objection but merely a letter of complaint. That is a question for the tribunal to determine. I suggest that to require the taxpayer to file a particular form is very dangerous, keeping in mind the purpose of this particular provision.


Patrick Morgan Mahoney: Mr. Chairman, the particular instance that the hon. member cited would certainly be in the prescribed form because it clearly states that it is a notice of objection. I call to the hon. member's attention that it must be in a prescribed form, not that it be on a form supplied by the department. It must be in a form that clearly stipulates that it is an objection. It can be a letter if it clearly states the intent of the writer. The actual forms are available at district taxation offices throughout the country, but I am advised that the particular example which the hon. member gave would indeed be an objection in the prescribed form.


Mark G. Smerchanski: Mr. Chairman, I would like a little more clarification of lines 34, 35 and 36 on page 439. What happens if the taxpayer waives his right for the reconsideration of the assessment and if the minister does not consent? Is it the intention that the minister will automati-
[Mr. Mahoney.)
November 17, 1^971

cally consent if the taxpayer waives his reconsideration of the assessment by going directly to either the tax review board or the Federal Court?


Patrick Morgan Mahoney: Mr. Chairman, if the minister has not responded to the notice of objection within 180 days, the taxpayer can proceed in any case without awaiting further word from the minister.


Mark G. Smerchanski: There must be another part of this bill where the 180 days is still acknowledged as the time limit within which the minister can either consent or disagree. If he does not, it automatically goes to the Tax Appeal Board or the Federal Court as the case may be.


Patrick Morgan Mahoney: If the hon. member will read a few pages ahead to section 169, he will find this.
Clause 1, section 165, agreed to.
On Clause 1-Section 166: Irregularities


Cliff Downey: I note, Mr. Chairman, that in section 166 there is very little room for any humane attituded. I would like the parliamentary secretary to comment on this. The section reads:
An assessment shall not be vacated or varied on appeal by reason only of any irregularity, informality, omission or error on the part of any person in the observation of any directory provision of this Act.
I would like to know what this entails. Suppose a taxpayer has information which he is mailing to the tax department and is involved in a car accident or has a heart attack on the way to the post office. The forms are lost. As a result of something of this nature, the tax form is late. Instances like this may come under this section of the act. It refers to an omission or error. It would be very easy to make an error in computing income tax on the basis of a complicated document such as this.
Suppose the tax which this person owes is relatively little. For the sake of argument, let us say $50 or $100. An individual who owes this amount of tax can hardly afford to hire the services of an accountant or a tax lawyer to look after his forms. With his education, he may not be able to comprehend this 707 page document or the sections that pertain to his business or type of work. Earlier this afternoon the parliamentary secretary stated that the fee charged by the department for manpower to enable a taxpayer to obtain an advance tax ruling is $20 an hour. The cost of an accountant may be $10 an hour. This person with very low income and little education could very easily run afoul of a section like this.
I would like the parliamentary secretary to comment on circumstances such as these. There are circumstances where accidents and errors do occur. This may happen to any of us. It may happen to some people more frequently than others. What provisions are there to safeguard a situation such as this?


Patrick Morgan Mahoney: Mr. Chairman, the particular sections we are now considering deal with assessments, not income tax returns. It is purely administrative and does not relieve anyone of errors in matters of substance or of law. It does relieve in the case of inadvertent irregularities in procedural matters. The next section, 167, deals with many of the circumstances that would legitimately prevent a taxpayer for some reason or other meeting time
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limits and so on. Perhaps when the hon. member has looked at it, he will have a good part of the answer to his question.
Clause 1, section 166 agreed to.
On Clause 1-Section 167:Application to Review Board for time extension


Gérald Laniel: Section 167 has an
amendment proposed by the Minister of National Revenue. It appears on page 8956 of Hansard for October 22.


Douglas Aird Hogarth: Can we have an explanation?


Patrick Morgan Mahoney: Perhaps it would be a sufficient explanation for the hon. member for New Westminster to know that the amendment is a correction in the French text.
Amendment (Mr. Gray) agreed to.


Douglas Aird Hogarth: As I understand it, section 167(1) is a relieving section for a person who has failed to file a notice of objection within 90 days. If you do not do that within 90 days, you are out of court. You cannot go to the Tax Appeal Board or the Federal Court unless you can get an extension of time under this section. The only way in which you can get an extension of time is to apply to the board or the Federal Court under subsection (4). The only basis upon which this extension of time can be given is in the event of death, an incapacitating sickness or bankruptcy of a taxpayer.
I suggest there might be any number of valid reasons why a taxpayer should be given an extension of time. For instance, I can see a case where a taxpayer's lawyer or accountant died and he could not get the material out of the office of his professional adviser, or something like that. For him not to be given an extension of time in these circumstances would be restrictive. So, I would ask the parliamentary secretary to consider an amendment to that section, section 167(1) reading: "Where no objections under section 165 is filed within the time . . . then the Board may extend the time." The Board could then decide whether or not there should be an extension of the time. It would not have to depend upon the taxpayer being dead, or bankrupt or being incapacitated through sickness. Similarly, in subsection (4), so that the ground may be broader and more just.
Those of us who have been concerned with appeals to the courts find that these time limitations are often missed. Lawyers have to take a lot of responsibility for this. But the courts are not as restrictive as this section when it comes to extending the time limit. They will do it in certain circumstances which they feel to be just, and it does not depend on the death or sickness of the litigant.


Gérald Laniel: Shall the subsection as amended carry?


Some hon. Members:: Carried.


Gérald Laniel: Shall section 168 carry?


Douglas Aird Hogarth: Mr. Chairman, I asked the parliamentary secretary whether he would consider an amendment

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because I did not wish to move an amendment without hearing his point of view as to section 167 (1) and 167 (4).


Gérald Laniel: I have to say I did not
see the parliamentary secretary getting up to answer, so I put the question. But I could now give the floor to the parliamentary secretary.


Patrick Morgan Mahoney: Without reopening the section, the reason is that the Tax Appeal Board up until now has chosen to construe its discretion very narrowly and has not allowed appeals in many cases, although there might have been very good reason for doing so. I would say that this is to give them some guidance and to indicate that perhaps there are cases where they should exercise a discretion of this nature. I am sure that as we see how this works out, if there appears to be merit to seeking further ground for extension of time, we would be glad to entertain such a proposition but I would be most reluctant at this time, on the basis of the speculation here, to handle the matter in that particular way.


Douglas Aird Hogarth: The Tax Appeal Board, as a result of legislation we have passed in this Parliament, is now to be
a very informal board, no longer to be confined to strict forms. I do not believe these restrictions should be approved and in particular I do not think a federal court should be restricted as it is in subsection (4). I would therefore move:
That subsection (1) be amended by the deletion of the words "because of the death, incapacity, sickness, or bankruptcy of a taxpayer".
And that the same words be deleted from subsection (4).


Gérald Laniel: Shall the amendment carry?


Patrick Morgan Mahoney: I was under the impression that this particular section was carried and that I was simply responding to a question. In the circumstances I would certainly much prefer an opportunity, in view of the hour and the importance of the debate which would take place on this amendment, to suggest that it is six o'clock and that the question be not now put.
Progress reported.
At six o'clock the House adjourned, without question put, pursuant to standing order.

Thursday. November 18, 1971