1971-10-25

ROUTINE PROCEEDINGS


Mr. Barry Mather (Surrey-White Rock) moved: for leave to introduce Bill C-271, respecting boating safety.


Mr. Speaker:: Is it the pleasure of the House that the hon. member shall have leave to introduce the said bill?


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


Barry Mather: Mr. Speaker, the purpose of this bill is to promote recreational boating safety and reduce the growing number of casualties from recreational boating. It seeks to do this by the establishment of a boating safety council having on it a representative of the Public Service and others from boating safety organizations. It would enable the making of regulations respecting safety standards of boats and licensing and efficiency standards for pleasure boat operators.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.
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[Stage Direction]
On the order: Government Notices of Motions.
October 22, 1971-The Minister of Transport: That a humble Address be presented to Her Majesty the Queen in the following words:
To the Queen's most Excellent Majesty:
Most Gracious Sovereign:
We Your Majesty's most dutiful and loyal subjects, the Commons of Canada in Parliament assembled, humbly approach Your Majesty praying that You may graciously be pleased to cause a measure to be laid before the Parliament of the United Kingdom to be expressed as follows:
An Act to amend the British North America Act, 1949
Whereas Canada has requested, and consented to, the enactment of the following provisions, and the Senate and House of
Commons of Canada in Parliament assembled have submitted an Address to Her Majesty praying that Her Majesty may graciously be pleased to cause a measure to be laid before the Parliament of the United Kingdom for that purpose:
Be it therefore enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:
Terms of Union of Newfoundland with Canada amended
1.	Term 17 of the Terms of Union of Newfoundland with Canada set out in the Schedule to the British North America Act, 1949 is repealed and the following substituted therefor:
"17. (1) In lieu of section ninety-three of the British North America Act, 1867, the following Term shall apply in respect of the Province of Newfoundland:
In and for the Province of Newfoundland the Legislature shall have exclusive authority to make laws in relation to education, but the Legislature will not have authority to make laws prejudicially affecting any right or privilege with respect to denominational schools, common (amalgamated) schools, or denominational colleges, that any class or classes of persons had by law in Newfoundland at the date of Union, or any like right or privilege with respect to such schools or colleges that any other class or classes of persons have had by law in Newfoundland after the date of Union as members of a religious denomination or one of a group of religious denominations that, by or under the Schools Act of Newfoundland, is or at any time has been recognized as being organized for educational purposes, and out of public funds of the province of Newfoundland provided for education.
(a) all such schools shall receive their share of such funds in accordance with scales determined on a non-discriminatory basis from time to time by the Legislature for all schools then being conducted under authority of the Legislature; and
(b) all such colleges shall receive their share of any grant from time to time voted for all colleges then being conducted under authority of the Legislature, such grant being distributed on a non-discriminatory basis.
(2) In this Term, "Schools Act of Newfoundland" means The Schools Act, 1969, being the Act No. 68 of 1969 (Statutes of Newfoundland), as amended from time to time, or any Act substituted therefor as amended from time to time."
Coming into force of amendment
2.	For greater certainty, the provision of Term of the Terms of Union of Newfoundland with Canada set out in the Schedule to the British North America Act, 1949, in so far as those provisions relate to the aproval and coming into force of the said Terms, do not apply to or in respect of the amendment set out in section 1 of this Act.
[Stage Direction]
October 25, 1971
Questions
Short	3. This Act may be cited as the British North
title and	America Act, 1972; and the British North America
citation	Acts, 1867 to 1965, and this Act may be cited together as the British North America Acts, 1867 to 1972.
Mr. Speaker:: Pursuant to section 2 of Standing Order 21 this notice of motion is transferred to and ordered for consideration under government orders at the next sitting of the House.



QUESTIONS ON THE ORDER PAPER

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

Mr. Lambert (Bellechasse): Did the government contribute financially to the construction of the home for the aged in Saint-Fabien in the constituency of Bellechasse and, if so (a) was the contribution made through the Central Mortgage and Housing Corporation (b) what was the amount contributed (c) if the form of a loan (i) what was the rate of interest (ii) what will be the duration of the loan (iii) what are the reimbursement terms?


Hon. Robert K. Andras (Minister of State for Urban Affairs):: (a) (b) (c) Central Mortgage and Housing Corporation approved a loan in August, 1969, through the Quebec Housing Corporation, to assist in the financing of a home for the aged in Saint-Fabien-de-Panet, in the Constituency of Bellechasse, in the amount of $350,000. The loan was made at an interest rate of 6-7/8 percent repayable over a term of 50 years.


JOB VACANCY SURVEY
[Stage Direction]
Question No. 1,719-Mr. Blackburn:-Supplementary
1.	What was the total expenditure associated with the development and the operation of the Job Vacancy Survey in each of the fiscal years since 1966-67?
2.	How many full-time employees associated with the Job Vacancy Survey were on the payroll of Statistics Canada and the Department of Manpower and Immigration at the end of the fiscal years 1966-67, 1967-68, 1968-69, 1969-70, 1970-71?
3.	What is the operational definition of a vacancy in the survey?
4.	What is the first month in which results from the Survey were prepared?
5.	How many vacancies were found in Canada and in the five regions in this first month and in subsequent months to date?
Hon. Otto E. Lang (Minister of Manpower and Immigration):: In so far as the Department of Manpower and Immigration is concerned, the following applies:
1.	Department of	Department of	
	Manpower and	Manpower and	
	Immigration	Immigration	
	Payments to	Operations and	
Fiscal	Statistics Canada	Administrative	TotalYears	(Under Contract)	Costs	ExpendituresDollars	1966-67	-	-1967-68	289,254	-	289,2541968-69	661,894	22,702	684,5961969-70	1,010,501	54,036	1,064,5371970-71	1,043,733	77,669	1,121,402Department of	2.	Personnel	Manpower and	TotalFiscal	Employed by	Immigration	Full TimeYears	Statistics Canada	Employees	Employees1966-67	i	11967-68	66	-	661968-69	88	2	901969-70	100	5	1051970-71	99	7	1063. The i	difinition of job	vacancies used	in the presentCanadian	Job Vacancy Survey is a job:	(1) That was
vacant for the full reference day. (2) For which some specific recruiting action was undertaken during a specified time period. (3) That was open to workers from outside the establishment and (4) Was either immediately available or available at a specified future starting date.
4.	June, 1970.
5.	The data from the Job Vacancy Survey was being evaluated and prepared for publication. In the initial publication, monthly data for the period commencing June 1970 forward will be reported. Thereafter, the data will be reported monthly. Publication is scheduled to begin before the end of 1971.


NEWFOUNDLAND-FEDERAL GRANTS IN 1971
Mr. Marshall: How many loans have been granted in Newfoundland in 1971 under the following headings (a) Small Business Loans (b) Farm Improvement Loans (c) Fisheries Improvement Loans (d) Industrial Development Bank Loans?


Hon. E. J. Benson (Minister of Finance):: For the period January 1 to June 30, 1971: (a) two; (b) four; (c) ten. For the period October 1, 1970 to 31 August, 1971: (d) 79.


MONTMAGNY, QUEBEC-FEDERAL ASSISTANCE TO HOTEL-DIEU HOSPITAL
Mr. Lambert (Bellechasse): Did the government contribute financially to the enlargement of the Hotel-Dieu Hospital in Montmagny, during the years 1969-70 and 1970-71 and, if so, what was the amount of the contribution?


Hon. lohn C. Munro (Minister of National Health and Welfare):: Under the Hospital Construction Grant Program, based on projects submitted by the province of Quebec, federal contributions of $258,419.37 were made to the province of Quebec for the Hotel-Dieu Hospital of Montmagny towards major renovations and addition of 18

October 25, 1971

new active treatment beds and additional floor areas for community health centre facilities. No grants by the federal government were provided during fiscal year 1970-71 since the Hospital Construction Grant Program was terminated on March 31st, 1970. However, a terminal Federal Hospital Construction Grant payment of $17,071,925.00 was paid to the Province of Quebec. The Province has not yet reported on the breakdown of the construction grants it has made to individual hospitals with this allocation.


CNR-REGISTRATION OF SHIPS
Mr. Skoberg: Are there any ships belonging to the CNR registered outside of Canada and, if so, in what countries are these ships registered?


Mr. Gerard Duquet (Parliamentary Secretary to Minister of Transport):: The Management of Canadian National Railways advises as follows: No.


EVALUATION OF DRIVER EDUCATION PROGRAMS
Mr. Mather: Is consideration being given to evaluating, in conjunction with the provinces, the standards and values of driver-education programs, with particular reference to studying the need for an increased period of supervision or monitoring of the behaviour of newly licensed young drivers?


Gérard Duquet: The Road and Motor Vehicle Traffic Safety Branch of the Department of Transport is planning an evaluation of Canadian driver education programs to determine their effectiveness in reducing motor vehicle accidents. This study will be carried out in cooperation with the provinces and will include an examination of the contents of driver education courses as well as an assessment of their effectiveness. As responsibility for the licensing of drivers is that of the provinces, a detailed study of the performance of newly-licensed young drivers, or of any other group of drivers, will have to be developed in cooperation with one or more of the provincial government departments having authority for such matters.


TRAFFIC ACCIDENTS AS A RESULT OF DRUG USAGE
Mr. Mather: Is a record kept of traffic accidents resulting from the consumption of hypnotic and psychotropic substances by drivers and, if so, does the record indicate (a) that such accidents are on the increase (b) the age groups that are most involved?


Gérard Duquet: While it is understood that some provinces are attempting to identify and record traffic collisions in which drug usage may have been a contributing factor, reliable statistics are not available nor are any such data reported to Statistics Canada at present.


USE OF PHOSPHATE DETERGENTS
Mr. Aiken: 1.	Has the recent announcement by the Surgeon General of the United States concerning the use of phosphate detergents come to the attention of the government and, if so, does the government
Questions
intend to confirm its determination to reduce and eliminate the use of phosphate detergents in Canada?
2.	Does the government intend to proceed as planned with regulations for the cutting back of the phosphate content in detergents in 1972?


Mr. Eymard Corbin (Parliamentary Secretary to Minister of the Environment):: 1. Yes, the Government intends to follow the previously announced program to reduce the phosphate content of laundry detergents to not more than 5 pour cent (calculated as P2 05) by the end of 1972.
2.	Yes.


LOSS AS A RESULT OF FIRES
Mr. Mather: 1.	How many Canadians died in fires during 1970?
2.	How many of these were children?
3.	What was the estimated property loss from such fires?
4.	What was the estimated loss to the economy including lost production and employment?
5.	What were the chief causes of fires?


Hon. Arthur Laing (Minister of Public Works):: According to reports received from the Provincial Fire Marshals and Fire Commissioners: 1. Six hundred and thirty-six.
2.	Two hundred and twenty-four.
3.	Throughout Canada, 68,435 fires reported for a total loss of $202,007,561. No information available on loss from fires in which fatalities were involved.
4.	It is estimated that the indirect losses of fire-stoppage of production and consequent unemployment-are five times the direct loss.
5.	The three leading causes were: Smokers carelessness, 30 per cent; electrical causes, 14 per cent; heating equipment, 10 per cent.


NATIONAL PARKS AND HISTORIC SITES SERVICE-EMPLOYMENT OF JEAN BERGER
Mr. Lambert (Bellechasse): Is the former Member for Montmagny, Mr. Jean Berger, with the National Parks and Historic Sites Service of the Department of Indian Affairs and Northern Development and, if so (a) since what date (b) what are his duties (c) what is his annual salary?


Mr. Judd Buchanan (Parliamentary on Secretary to Minister of Indian Affairs and Northern Development):: No. (a)
Not applicable; (b) not applicable; (c) not applicable.


THIRD REPORT OF THE SPECIAL COMMITTEE ON ENVIRONMENTAL POLLUTION
Mr. Macquarrie: 1.	On what date was the Third Report of the Special Committee on Environmental Pollution transmitted to the Secretary of State of the United States?
2.	On what date was receipt of the document acknowledged by the Secretary of State?
3.	Was a copy of the report sent to the Secretary General of the United Nations and, if so, on what date?
4.	What was the date and nature of the reply of the Secretary General?

October 25, 1971
Questions


Hon. Mitchell Sharp (Secretary of State for External Affairs):: 1. A copy of the Report was handed personally by a senior officer of the Department of External Affairs to the Director, Office of Canadian Affairs of the Department of State in the course of meetings between Canadian and United States officials in Washington at the end of June, 1971.
2.	Receipt of the Report was acknowledged orally by the Director, Office of Canadian Affairs in the Department of State.
3.	No.
4.	See reply to foregoing question.


INDUSTRIAL DEVELOPMENT BANK-APPROVAL OF APPLICATIONS FOR FUNDS
Mr. Schumacher: 1.	What basis is used for determining approval of application for funds from the Industrial Development Bank?
2.	What form of investigation is used to determine the location of parent companies of successful applicants?
3.	What form of investigation is used to determine the controlling administration of successful applicants?
4.	What are the residency requirements of successful applicants?
5.	What are the citizenship requirements of successful applicants?
6.	What priorities are given to strictly Canadian applicants?
7.	What investigation is made to determine whether projects and applicants are strictly Canadian?
8.	What applications have been approved to date, where ultimate control lies outside Canada?
9.	In each case who are the controlling authorities and where are they located?
10.	In each case, how much money was loaned by the Industrial Development Bank?


Edgar John Benson: The Industrial Development Bank is empowered to make loans to any person engaged or about to engage in an industrial enterprise in Canada (defined as an enterprise in which is carried on any industrial, trade or other business of any kind) provided that it can satisfy itself that credit or other financial resources would not otherwise be available on reasonable terms and conditions, that the amount invested or to be invested in the enterprise by persons other than the Bank and the character of that investment, are such as to afford the IDB reasonable protection and that the enterprise may reasonably be expected to prove successful and able to repay its loan. The statute does not distinguish between enterprises in Canada which are domestically-owned or foreign-owned. The IDB does not maintain records in a form which would provide information concerning either the number or amount of loans to foreign-owned or foreign-controlled businesses in Canada. Notwithstanding the absence of statistical date, the proportion of loans to foreign-owned or foreign-controlled businesses is very small. The IDB's customer's are, primarily, small business enterprises, many of which are proprietorships or partnerships and the average size of loan in fiscal 1971 was about $41,000.


NATIONAL RESEARCH COUNCIL
Mr. Thomson (Battleford-Kindersley): 1.	Has the National Research Council been put under the authority of the Minister of State for Science and Technology and, if not, for what reason?
2.	Will the Minister give direction to projects or research carried on under the National Research Council?


Hon. Alastair Gillespie (Minister of State for Science and Technology):: 1. No. The National Research Council continues to report to Mr. Drury, who is the Minister designated for that purpose under the Act.
2. No.


TECHNOLOGICAL AND SCIENTIFIC RESEARCH
Mr. Thomson (Battleford-Kindersley): 1.	In regard to foreign owned subsidiaries in Canada, will the Minister of State for Science and Technology insist on more technological and scientific research by these companies in Canada?
2.	Does the Minister intend to approve government grants for scientific and technological research to foreign owned subsidiaries in Canada?
3.	In which specific scientific or technological areas would the Minister recommend this country rent or hire technology?
4.	What method does the Minister intend to use to avoid the duplication of the efforts made by other countries in scientific or technological research?


Alastair William Gillespie: 1. The Ministry will be assisting in the development of policy in regard to research carried out in Canada by foreign owned companies.
2.	That is not a function of the Ministry.
3.	The Ministry will be examining such questions in depth.
4.	The Ministry already has a close working relationship with many other countries engaged in Scientific and Technological research and will foster and develop those relationships.


UNITED NATIONS-U.S. AND ALBANIAN RESOLUTION FOR SEATING OF CHINA
Mr. Macquarrie: 1.	What member states are co-sponsors of the United States' resolution urging the seating of both China and Taiwan in the United Nations?
2.	What member states are co-sponsors of the Albanian resolution number 93 which calls for the expulsion of the Taipei Government from the UN and all its related organizations?
3.	What is the attitude of the Canadian delegation to these resolutions?


Mr. Gaston Isabelle (Parliamentary Secretary to Secretary of State for External Affairs):: 1. Australia, Bolivia, Chad, Costa Rica, Dominican Republic, Fiji, Gambia, Haiti, Hondurus, Japan, Lesotho, Liberia, Mauritius, New Zealand, Philippines, Swaziland, Thailand and Uruguay.
2. Algeria, Burma, Ceylon, Cuba, Equatorial Guinea, Guinea, Iraq, Mali, Mauritania, Nepal, Pakistan, People's Democratic Republic of Yemen, People's Republic of the Congo, Romania, Somalia, Syrian Arab Republic, Sudan,
October 25, 1971

United Republic of Tanzania, Yemen, Yugoslavia and Zambia.
3. The Canadian delegation will vote for the draft resolution sponsored by Albania and other countries; last year it voted in favour of a similar resolution.
The Canadian delegation will vote against the draft resolution sponsored by the United States and other countries if it is put to a vote.


COST OF PEACE-KEEPING FORCES
Mr. MacQuarrie: 1.	Since its establishment what has been the annual cost to Canada of the UN peace-keeping forces in Cyprus?
2.	To what other peace-keeping forces is Canada contributing and what is the cost in each case?
3.	How many Canadian personnel are currently involved in UN peace-keeping forces or missions?


Mr. Jack Cullen (Parliamentary Secretary to Minister of National Defence):: 1. From inception to June 15, 1971, Canada has absorbdd the following out-of-pocket costs in respect of the Contingent to the United Nations Force in Cyprus (UNFICYP):
1964	$ 3,486,000
1965	3,516,000
1966	2,948,000
1967	2,907,000
1968	1,836,000
1969	1,476,000
1970	1,768,000
1st half 1971	985,000
Total	$18,922,000
United Nations Truce Supervisory Organization, Palestine (UNTSO)-Nil over normal pay and allowances. United Nations Military Observer Group, India-Pakistan (UNMOGIP)-$71,500 recoverable from UN. United Nations Command, Military Armistice Commission, Korea (UNCMAC)-$4,700 non recoverable. (These figures represent annual estimated costs.)
3. 619.


NATIONAL DEFENCE-COST OF SCHOOL SUPPLIES TO DEPENDANTS OF PERSONNEL
Mr. Coates: 1.	Does the government provide school supplies for children of military personnel and, if so, how long has this policy been in effect and is it in effect for personnel within Canada and those serving outside Canada?
2.	What is the total annual cost for school supplies to children of military personnel?


Jack Sydney George (Bud) Cullen: 1. It has been policy for many years to provide school supplies at public expense to children of Canadian Forces' personnel attending DND dependants' schools in Canada or overseas. The term "school supplies" refers only to the provision of consumable items such as scribblers, notebooks, pencils, paper, etc. and does not include text books. The provision of text books at
Inquiries of the Ministry
DND dependants' schools is governed by the applicable provincial regulation.
The departmental accounting system does not make provision for isolating the annual cost of school supplies. To attempt to do so would entail a large amount of work for which the necessary staff is not available.


NATIONAL DEFENCE-DEFENCE PROPERTIES
Mr. Noble: 1.	Has the Department of National Defence any definite plans to make any vacated defence properties available to Crown Assets Disposal Corporation or the Department of Indian Affairs and Northern Development?
2.	Has the Minister of National Defence made a date available to meet with the planning and development committee of the Grey County Council for the purpose of making a decision in respect to the future of the Meaford Tank Range?


Jack Sydney George (Bud) Cullen: 1. It is presumed this refers to defence properties at Meaford. If such is the case, the answer is 'No'.
2. A meeting has been arranged for the purpose of discussing the future of the Meaford Tank Range.



ORAL QUESTION PERIOD


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, since the Minister of Finance, I assume, has now been filled in by Canada's representatives at the meeting of the Group of Ten in Paris I should like to ask him if there was general agreement reached at that meeting of the Group of Ten in respect of a proposed average devaluation of something like 10 per cent for the United States dollar in relation to other currencies and, if so, was any specific percentage change or revaluation suggested for the Canadian dollar.


Edgar John Benson: No, Mr. Speaker. What the deputies were doing was trying to arrive at the quantum of the United States balance of payments problem which the United States has indicated is in the area of $13 billion, which other people thought was about $8 billion and which some thought was less than that. The IMF indicated that if there was a balance of payments problem of $8 billion it would require a change in valuation moving back a long period of time in the area of 10 per cent on average. Nothing like that was agreed upon. It was simply a matter of looking at the problem, considering what it was and referring it to the ministers for future consideration.
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October 25, 1971
Inquiries of the Ministry


Robert Lorne Stanfield: Have the representatives of Canada taken any position with regard to the value of the Canadian dollar vis-a-vis the United States dollar, or is it the position of the government of Canada that the Canadian dollar is floating freely?


Edgar John Benson: Mr. Speaker, generally it is the position of the Canadian government that the Canadian dollar has been floating freely for a period of some 18 months and that it reflects the market demand for the dollar vis-a-vis other currencies.


Robert Lorne Stanfield: Mr. Speaker, does the reply of the minister that the Canadian dollar has been floating freely during the past 18 months mean that the reported massive intervention of the Bank of Canada toward the end of last week constitutes a change in Canada's position with regard to the free floating of the Canadian dollar or does it mean that the Bank of Canada is pursuing an independent policy to protect us in spite of what happens in respect of government policies?


Edgar John Benson: First of all, the intervention through the exchange fund was a decision of the Minister of Finance and not of the Bank of Canada which acts as our agent in this matter. Our policy has not changed.


Robert Lorne Stanfield: Am I to understand that the Minister of Finance is refuting the report that there was a massive intervention on the part of Canadian authorities toward the end of last week?


Edgar John Benson: I am merely following the well established policy of not commenting on activities in the exchange market except at the end of the month when the reserve figures are issued.


Mr. Baldwin:: You are floating back there.


Mr. Speaker:: The hon. member for York South. Order, please. Because of the noise the Chair might indicate to the hon. member for York South that the hon. member for Temiscamingue has a supplementary question.



LOWERING OF INTEREST RATES BY CHARTERED BANKS

Mr. Real Caouette (Temiscamingue):: Mr. Speaker, I have a supplementary for the hon. Minister of Finance.
The reason give by the Bank of Canada to justify lowering of its interest rates from 51 to 4 3/4 per cent is that this makes it easier for borrowers to obtain loans. Is the minister in a position to tell us whether chartered banks in Canada have also reduced their rates by 5 per cent as the Bank of Canada is now doing?

Hon. E. ]. Benson (Minister of Finance): Mr. Speaker, I think that the chartered banks in Canada reduced their rates before the Bank of Canada did in this instance, and our move was simply to indicate that we support low interest rates in Canada.


Robert Lorne Stanfield: You are directing the Bank of Canada now. It is the first time you have admitted it.



THE CANADIAN ECONOMY


Mr. David Lewis (York South):: I want to ask the Minister of Finance a question on another subject. I should like to ask him whether the meeting of federal and provincial officials in Montreal at the end of last week arrived at any program for creating jobs this winter on the basis of the program which the minister announced some days ago, whether that program refers to specific works to be undertaken by the provinces and municipalities and, if so, would he undertake to make a statement to the House outlining what that program may be?
Hon. E. ]. Benson (Minister of Finance): The meeting last week was a preparatory meeting with the officials of the various provinces. The federal-provincial conference, I believe, is going to go forward on November 1 and 2. At the conclusion of that meeting I will, of course, have a statement to make.


David Lewis: In view of the estimate released by the Minister of Agriculture that the $10 million assigned for the building of exhibition buildings would probably provide 1,000 jobs for construction workers on site this winter, were any estimates discussed at the meeting of officials or has any other department of government made estimates as to what number of jobs is involved in the government's program?


Edgar John Benson: First of all, I understand the Minister of Agriculture said "at least 1,000 jobs" and, as my hon. friend knows, this program which has been approved by the government of Canada is a long-range program and I think it will be very important to the agricultural community in Canada in the future.



EARLIER DATES FOR FEDERAL-PROVINCIAL CONFERENCE

David Lewis: May I ask the Prime Minister whether, in view of the information he gave earlier about seeking an earlier meeting of the heads of governments to discuss the Canadian economy, dates earlier than December have now been agreed on and, if so, what those dates are for the meeting of first ministers?


Right Hon. P. E. Trudeau (Prime Minister):: Yes, Mr. Speaker. After all the consultations, of which the House is aware, dates were agreed upon by all the provinces and those dates are November 15, 16 and 17.



LOCAL INITIATIVES PROGRAM-INVOLVEMENT OF CITIES IN PLANNING WORKS-CRITERIA FOR FUND DISTRIBUTION-INCLUSION OF INDIAN RESERVES

Mr. Mark Rose (Fraser Valley West):: May I ask the right hon. Prime Minister whether or not it is the intention of the government to respond to the request of the Canadian Federation of Mayors and Municipalities and involve the cities in the planning, co-ordination and selection processes with regard to local initiative programs?
October 25, 1971

Inquiries of the Ministry THE CANADIAN ECONOMY


Otto Emil Lang: Mr. Speaker, discussions have begun with the provinces in connection with this program. The exact role of the municipalities very often depends on the wishes of the provinces in this regard.


Mark Willson Rose: Mr. Speaker, I wish to direct a supplementary question to the Minister of Manpower and Immigration. When does the government intend to indicate precisely the criteria for the distribution among the provinces of the $100 million under the LIP program and whether or not Indian reserves qualify in much the same way as municipalities?


Otto Emil Lang: Mr. Speaker, certainly Indian reserves are eligible to apply under the local initiatives program. I expect to be able to make a statement on Wednesday about the criteria in regard to the program and the exact application form.



UNITED STATES DISC PROGRAM-GOVERNMENT REPRESENTATIONS FOR WITHDRAWAL AS PART OF MULTILATERAL AGREEMENT

Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, I wish to direct a question to the Minister of Finance. As there is no evidence that the DISC program has been discussed by the Group of Ten as part of a package agreement on trade and currency reform, has the government brought any pressure to bear to have the withdrawal of this program included as part of a multilateral agreement?


Edgar John Benson: Mr. Speaker, first of all I should like to indicate that objections to the DISC program were raised at the meeting of deputies of the Group of Ten and, furthermore, we have made submissions to the United States with respect to our disagreeing with the principles of the DISC program.


George Harris Hees: Is it the opinion of the minister from the talks he has had and the information he has that there is a good chance the DISC program may be withdrawn as part of a multilateral agreement?


Mr. Speaker:: Order, please. I have some doubt whether the question is in order in those terms. The hon. member is inviting the minister to express an opinion. Perhaps the question might be rephrased.


George Harris Hees: Has there been any indication from the discussions that have taken place in the Group of Ten that the DISC program may be withdrawn as part of a multilateral agreement?


Edgar John Benson: There has not even been an indication that the DISC program will be approved by the U.S. Senate.



DEVELOPMENT OF INCOMES POLICY-INQUIRY AS TO DISCUSSIONS WITH BUSINESS AND LABOUR LEADERS- PROVINCIAL PARTICIPATION

Gerald William Baldwin: Mr. Speaker, in the absence of the Minister of Consumer and Corporate Affairs or any reasonable facsimile I will ask the Prime Minister whether the government is holding talks with business and labour leaders with regard to the development of an incomes policy and, if so, will any such proposals involve, include, or require provincial participation?


Pierre Elliott Trudeau: Not at this time, Mr. Speaker.


Gerald William Baldwin: Can the Prime Minister indicate whether the Prices and Incomes Commission will shortly be making a statement with regard to the development of an incomes policy in Canada in light of the United States experience and, if so, at that time will the commission be publishing its research into the causes of inflation in Canada?


Pierre Elliott Trudeau: No, Mr. Speaker.


Mr. Speaker:: Order, please. We will now go from Peace River to Battle River.



GOVERNMENT EMPLOYMENT PROGRAM-PARTICIPATION OF MUNICIPALITIES IN DISCUSSION OF SPECIFIC WINTER WORKS PROJECTS

Mr. Cliff Downey (Battle River):: Mr. Speaker, my question to the Minister of Manpower and Immigration is supplementary to the other questions concerning winter works. Will the municipalities be invited to participate in any meetings to discuss specific winter works projects and, if so, has this been made clear to the Canadian Federation of Mayors and Municipalities?


Otto Emil Lang: Mr. Speaker, I think my earlier answer covered this. The nature of the eventual participation may vary from province to province depending upon our discussions with the provinces.


Cliff Downey: Mr. Speaker, my question was more direct than that. Has correspondence been sent to the federation to give them any direction in this regard?


Otto Emil Lang: I believe that to this point our main contacts have been with the provinces, but I will be glad to check whether there has been anything in addition.



LOCAL INITIATIVES PROGRAM-NUMBER OF JOBS TO BE CREATED

Mr. S. Perry Ryan (Spadina):: Mr. Speaker, my supplementary is directed to the Minister of Manpower and Immigration. How many jobs are intended to be created this winter by the local initiatives program known as LIP?


Mr. Speaker:: Order, please. I am not sure whether this question is in order. Perhaps the minister might reply to the extent that the rules allow him to do so. As the hon.
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member knows, he is asking for what I consider to be statistical information, and asked in those terms the question should not be allowed. Perhaps the hon. member might like to phrase it in some other way.


Sylvester Perry Ryan: Would the minister advise the House whether the provinces will be participating in the administration of LIP and can he state the number of anticipated jobs that the government has in mind?


Otto Emil Lang: The objective, Mr. Speaker, is to create as many jobs as possible and the criteria will be so directed. In the case of those parts of the program relating to municipalities, of course the provinces have a role to play.



INQUIRY OF THE MINISTRY

Mr. Gilbert Rondeau (Shefford):: Mr. Speaker, I direct my question to the right hon. Prime Minister.
Since the Opportunity for Youth program was a fiasco and considering the numerous complaints coming from all parts of Canada-


Mr. Speaker:: Order. The question cannot be put in those terms. It is based on premises that might not be acceptable. In any event, it should be asked in a direct manner and not in the form of an argument.


Gilbert F. Rondeau: Thank you, Mr. Speaker. Would it be the Prime Minister's intention to appoint another Secretary of State soon?



EXTERNAL AFFAIRS


Barry Mather: I have a question for the Secretary of State for External Affairs, Mr. Speaker. Can the minister tell the House whether Canada's ambassador at the United Nations had distributed copies of the resolution which was endorsed recently by all parties in this House urging a cessation of underground nuclear testing and particularly the cancellation of the Amchitka blast?


Mitchell William Sharp: Mr. Speaker, we have seen that the United States administration is being made aware of the action of this House. We also know that the representatives of the various countries accredited to Canada have access to this document and will be transmitting it to their governments. I do not think it would be appropriate at this time for the representative of Canada at the United Nations to take the action suggested by the hon. member. It may be, however, that we will have an opportunity during the
(Mr. Speaker.]
debate on this matter to draw attention to what was a very welcome action on the part of the House of Commons.


UNEMPLOYMENT INSURANCE
Mr. W. B. Nesbitt (Oxford):: I have a question for the Minister of Labour, Mr. Speaker. In view of the complaints regarding the processing of unemployment insurance claims, would the minister refer the annual report of the Unemployment Insurance Commission to the Standing Committee on Labour, Manpower and Immigration so that members of all parties in the House may question members of the commission regarding its administrative practices? Perhaps the commission might also get some information from members of the House in this regard.


Hon. Bryce Mackasey (Minister of Labour):: Mr. Speaker, there will be ample opportunity to question the officers of the Unemployment Insurance Commission when my estimates come before the House. In the meantime, if the hon. gentleman has any specific complaint we will be glad to look at it in the usual prompt fashion.


Wallace Bickford (Wally) Nesbitt: Mr. Speaker, in view of the fact that there seems to be some doubt as to when the next session of Parliament will commence, would the minister not reconsider the question I put before him? Otherwise we will be into the estimates next spring when it is all over.


UNITED STATES IMPORT SURTAX-REMOVAL THROUGH BARGAINING BY CANADA
Robert Lorne Stanfield: have a question for the Secretary of State for External Affairs arising out of his remarks on an NBC program in which he is reported to have said:
-what we have been asked to do-bargain our way out of this surcharge-is an inadmissible situation.
Does this mean that the Secretary of State for External Affairs or the Prime Minister or some member of the government has received direct word from the United States administration that Canada must bargain its way out of the surcharge?


Mitchell William Sharp: Mr. Speaker, the answer to the direct question is no, we have not received any such request-


An hon. Member:: You are not even communicating.


Mitchell William Sharp: -from the United States. The question was put to me in the course of the interview as to whether we would be prepared to bargain our way out and I think I gave an answer that the hon. gentleman would agree with.
October 25, 1971



ADMINISTRATION OF JUSTICE


Mr. Eldon M. Woolliams (Calgary North):: I have a question for the Minister of Justice, Mr. Speaker. Was an Order in Council passed authorizing payment to students for experimentation in the non-medical use of drugs and, if so, would the minister give the date of that Order in Council and be prepared to file it?


Hon. John N. Turner (Minister of Justice):: Mr. Speaker, this question was brought up last week by the hon. member and by the hon. member for the Yukon. With respect to both the growing of marijuana at the experimental farm in Ottawa and the experiments being conducted at the University of Calgary, it is my information that both of these matters are being carried out under the authority of regulations made pursuant to section 12 of the Narcotic Control Act and licences issued by the Department of National Health and Welfare.


An hon. Member:: Eldon wants to take a trip.


Eldon Mattison Woolliams: Mr. Speaker, I am interested in finding out when that Order in Council was passed and whether or not it was passed as a second thought. Since we are now paying young people to experiment in the non-medical use of drugs, is the Minister of Justice now anticipating, so that there will not be discrimination between one class of young people and another, introducing a moratorium on prosecutions for the possession or use of marijuana?


John Napier Turner: Mr. Speaker, there will be no moratorium. These licences were issued for purposes of research and are valid within the terms of the regulations. The licence to the University of Calgary was issued on September 21 and the licence to the Central Experimental Farm was issued on May 19.


Eldon Mattison Woolliams: Would the Attorney General of Canada advise the House and the people whether he does not consider it rather discriminatory to permit those who are covered by an Order in Council freedom to break the law whereas those who are not covered will be prosecuted?


Mr. Speaker:: Order, please. The hon. member is asking the Minister of Justice to express an opinion. In those terms the question is hardly in order.


Gerald William Baldwin: The minister is an expert in selective lawbreaking.


Robert Lorne Stanfield: In licensed lawbreaking.



LABOUR RELATIONS


Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Minister of
Inquiries of the Ministry
Labour. Is the minister prepared to give his personal attention to the labour dispute between Bell Canada and its employees or is he in a position to make a hopeful statement to the House at this time?


Bryce Stuart Mackasey: Mr. Speaker, the dispute in question is at the conciliation board stage and therefore the walkout of the members of the Traffic Employees Association is completely illegal. It would be in their best interests and in the best interests of industrial relations in general if they were to return to work. I would imagine that unless something unexpected happens over the next few hours, the efforts to arrive at a settlement which are presently going on will be fruitless. I am anticipating that the conciliation board will report some time this week, after which seven days must elapse for a strike to be legal.


Stanley Howard Knowles: A supplementary question, Mr. Speaker. May I ask the minister if he is prepared to take steps to speed up the work of the conciliation board?


Bryce Stuart Mackasey: I think, Mr. Speaker, that the conciliation board at the present moment is composed of very experienced people. It is headed by Mr. O'Connor. I anticipate, without actually knowing, that if they have not resolved the dispute by this evening they will be making a report within the next day or two.



MEDICARE-REFORMING OF FEDERAL PLAN TO FACILITATE DEVELOPMENT OF COMMUNITY HEALTH SERVICES-IMPROVEMENT OF PREVENTIVE TREATMENT

Mr. Steven E. Paproski (Edmonton Centre):: Mr. Speaker, my question is for the Minister of National Health and Welfare. The Dean of Medicine of the University of British Columbia has stated that the fee for service payment of doctors developed under medicare is the greatest single obstacle to the development of community health centres. Is the government considering reforming the federal medicare plan in order to facilitate rather than discourage the development of community health services?


Mr. Speaker:: Order, please. If the minister can reply to that question briefly he might be given the floor, but it seems to me that the question is in part debate. I doubt whether the question in those terms is in order and I suggest to the hon. member that it is not.


Mr. Lambert (Edmonton West):: Mr. Speaker-


Steve Eugene Paproski: A supplementary question, Mr. Speaker.


Mr. Speaker:: Order, please. The hon. member cannot ask a question about which procedural reservations have been expressed. However, he may put another question or a different question on the same subject.


Steve Eugene Paproski: In light of the fact that Canada spends more than any other country on acute hospital care as opposed to preventive medical treatment, is the government prepared to review with the provinces present pro-

October 25, 1971
Inquiries of the Ministry
grains and spending priorities with a view to correcting this neglect in preventive medical treatment?


John Carr Munro: Yes, Mr. Speaker-pardon my voice.


Some hon. Members:: Oh, oh!


Gerald William Baldwin: Cut out that smoking, John.


Stanley Howard Knowles: You had better cut it out, John.


John Carr Munro: That type of review is under way at the present time.


Some hon. Members:: Oh, oh!


An hon. Member:: We can hardly hear the minister.


Mr. Crouse:: A pack a day takes the voice away.



FINANCE


Marcel Joseph Aimé Lambert: Mr. Speaker, can the Minister of Finance advise the House whether Canada's observers or representatives at the meeting of the Big Ten in Europe last week with regard to the establishment of new currency systems have been able to report? If so, is there anything the minister can tell the House, because all this silence seems to me to indicate a situation that is far from satisfactory?


Edgar John Benson: Mr. Speaker, I am afraid my hon. friend was not here earlier when I replied to a similar question put by the Leader of the Opposition.



AGRICULTURE


Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, I wish to direct a question to the Minister of Agriculture.
Could he tell the House whether his department has taken any action to ensure an adequate supply of feed grains to Quebec farmers this winter in order to avoid not only a scarcity of this commodity but also a possible rise in the cost of feed grains in the east?


Hon. H. A. Olson (Minister of Agriculture):: Mr. Speaker, there are supplies of feed grain available that could be shipped or at least booked for shipment prior to the freezing of the seaway. Those supplies are at Thunder Bay and there are some supplies of corn in Ontario. I am not sure that we are taking any special measures at this time to make sure that there are large supplies in store.

One of the reasons is that we now have an alternative way of shipping, by rail, the cost of which is very close to the competitive water rate.


Joseph Adrien Henri Lambert: I should like to put a supplementary Mr. Speaker.
Could the minister tell this House whether the prices now paid by eastern producers for feed grains are approximately the same as those currently levied at the Lakehead for feed grains of equivalent quality for export, if export there is?


Horace Andrew (Bud) Olson: Mr. Speaker, I do not have the statistics with me, but grain is available at the Great Lakes, of course, to anyone who wants to put it in the storage system for distribution later during the winter season.



THE CANADIAN ECONOMY


Mr.  R. Gordon L. Fairweather@Fundy-Royal: Mr. Speaker, I have a question for the Prime Minister. How soon is it expected that cabinet consideration of the Gray report will be completed, and when will the right hon. gentleman or someone else in the ministry be making a statement on foreign ownership and investment policy?


Pierre Elliott Trudeau: As soon as we can, Mr. Speaker.


Mr. Fairweather:: In light of somewhat dramatic indications regarding foreign ownership of Canadian industry, will the government publish at least the official statistics about foreign ownership to assist policy consideration by bodies other than the government?


Pierre Elliott Trudeau: We will consider that, Mr. Speaker. If there is anything that can be usefully published we will take it under consideration.



AGRICULTURE


Mr. Rod Thomson (Battleford-Kindersley):: Mr. Speaker, my question is for the Minister of Agriculture. In view of the fact that the three prairie governments are co-operating on a farm machinery testing program, as recommended by Professor Barber, have those three provinces approached the Minister of Agriculture for assistance in this regard? If not, what will his answer be if they do approach him?
October 25, 1971


Horace Andrew (Bud) Olson: Mr. Speaker, we have had a number of discussions about this.



HURRICANES


Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, on Thursday I directed a question to the Prime Minister respecting the receipt of formal advice from Nova Scotia-I see that the Prime Minister is up to his ears in something else. I am sorry, Mr. Speaker. Last Thursday I asked the Prime Minister if he had received any formal request for aid from the province of Nova Scotia to help defray the cost of repairing hurricane damage caused in that province last August. The Prime Minister said he would take the question as notice. I wonder if he has a reply?


Pierre Elliott Trudeau: Yes, Mr. Speaker. I asked for information on this problem and I understand that a group of federal and provincial officials worked together to assess the damage. My information, after getting the hon. member's question, was that at that time there had been no formal request by Nova Scotia for any payment of damage. Whether there has been any request in the last day I cannot say.


George Harris Hees: Mr. Speaker, has any request been received from Mr. Robert Nixon of Ontario for assistance to repair the damage that was done to his party on Thursday last?


Mr. Speaker:: Order, please.



MANPOWER


Mr. B. Keith Penner (Thunder Bay):: Mr. Speaker, I wish to return to the Minister of Manpower and Immigration. My question is whether under the Local Initiatives Program members will be actively consulted about projects in their ridings? I ask this, Mr. Speaker, because I understand that some of the same people who ran the Opportunities for Youth program are also going to run this program.


Mr. Speaker:: Order, please. I suggest that the hon. member's question is argumentative.


B. Keith Penner: Mr. Speaker, I wish to try again with the Minister of Manpower and Immigration and be a little less provocative this time. I ask the minister whether he expects Members of Parliament to be active in finding projects under the Local Initiatives Program and presenting them to him-where there is an evident need in our constituencies ?
Inquiries of the Ministry


Otto Emil Lang: Mr. Speaker, we will be seeking the advice and assistance of all responsible citizens and leaders in the community, including such people as Members of Parliament, to see that good applications are brought forward. Of course we will be seeking sensible advice from any quarter about the quality of the projects on which we have applications.



AGRICULTURE


Mr. Mac T. McCutcheon (Lambton-Kent):: Some days ago I directed a question to the Minister of Agriculture relative to the outbreak of Newcastle disease in poultry flocks in southern Ontario. Is the investigation that he promised at that time now complete and, if so, can he make a report to the House?


Horace Andrew (Bud) Olson: Mr. Speaker,
I am very happy that the hon. member asked this question because I understand there is some confusion. If Your Honour will allow me just slightly longer than usual to clear up this confusion, I will try to do so. In June, 1971, Newcastle disease was diagnosed in a flock of chickens in quarantine in Lambton county. This was not reported in the answer that was given the hon. member to question No. 1700,1 believe, on the order paper. The reason for that is that it is not the practice to consider animals that are in quarantine to be in the Canadian flock.


Eldon Mattison Woolliams: Where the hell are they then?


Horace Andrew (Bud) Olson: They are not regarded as having entered the Canadian livestock herd or poultry flock until after they are released from quarantine. The flock in question was never released from quarantine and was, in fact, destroyed. This is a common practice not only in Canada but in many other countries. When such birds or animals are destroyed during quarantine, no compensation is paid. The health of animals branch have assured me they are confident there was no spread of this disease from these birds that were in quarantine.


Maclyn (Mac) Thomas McCutcheon: Can the minister tell us who in the world would set up a quarantine station right in the heart of the poultry industry in southern Ontario?


Mr. Speaker:: Order, please.



MANPOWER


Sylvester Perry Ryan: I have a further question for the Minister of Manpower and Immigration. In light of the admission by the government that too much of the Opportunities for Youth program funds went to upper income young people, will heads of families and hard-core unemployed be given highest priority in LIP?

October 25, 1971
Inquiries of the Ministry


Otto Emil Lang: Mr. Speaker, in the development of the criteria for applications we are hoping to ensure that projects which are approved are particularly those which are designed to employ persons presently seeking employment in Canada.



REASONS FOR EXCLUSION OF RESERVE INDIANS FROM LABOUR FORCE SURVEY-INCLUSION IN LOCAL INITIATIVES PROGRAM

Mr. A. P. Gleave (Saskatoon-Biggar):: In view of the fact that the labour force survey, for which the Minister of Manpower and Immigration is responsible jointly with the Minister of Industry, Trade and Commerce, excludes Indians living on reserves, will the Minister of Manpower and Immigration explain the reasons for this exclusion?


Otto Emil Lang: Mr. Speaker, the tradition of this exclusion from the statistics of Statistics Canada is of very long standing and would take a more detailed explanation than I could give at this time. In our current programs we are attempting to take into consideration the fact of this exclusion in determining the manner in which applications for the local initiatives program are considered.


Alfred Pullen Gleave: If the minister is considering this, Mr. Speaker, will he also consider whether the Yukon and Northwest Territories should also be included?


Otto Emil Lang: Mr. Speaker, that this will be as was made clear to the House last week.



INQUIRY OF THE MINISTRY

David Réal Caouette: 
Mr. Speaker:: Order, please.



AGRICULTURE


Mr. H. W. Danforth (Kent-Essex):: I wish to direct a question to the Minister of Agriculture. I know the minister is aware of the problem and is concerned. Can the minister state if any progress is being made by the government in establishing a policy to stabilize Canadian commercial corn prices and what such a policy might include?


Horace Andrew (Bud) Olson: Mr. Speaker, we are prepared, and have been not only for months but for several years, to provide the facilities of the Co-operative Marketing Act to the corn producers. It is essential, of

course, that a significant number of those producers representing or having a significant amount of the corn make application.


Harold Warren Danforth: Has the eastern feed grain agency been advised or instructed or has there been discussion with them to place Ontario corn on the same basis as western grains in regard to movement into the eastern provinces during the winter months?


Horace Andrew (Bud) Olson: Mr. Speaker, there is, I think, a comparable level in relation to the actual cost of transport from Ontario to the Maritime provinces as there is from western Canada to the areas where that feed grain is used.



ADMINISTRATION OF IUSTICE


Mr. Elmer M. MacKay (Central Nova):: My question is for the Minister of Justice. In view of the fact that penalties for impaired driving vary greatly across the nation, does the minister have any immediate intention to consult with the provincial Attorneys General to see whether more uniformity in sentencing can be achieved?


John Napier Turner: Mr. Speaker, we are reviewing the question of sentencing as to whether amendments ought to be introduced in the Criminal Code, but entire uniformity will never be achieved as sentencing reflects community attitudes toward various crimes.



CANADA LABOUR CODE


Mr. Lincoln M. Alexander (Hamilton West):: I have a question for the Prime Minister. Both the Prime Minister and the Minister of Labour have indicated that changes will be accepted in the labour bill which has now received first reading. However, the Minister of Labour indicated there will be no changes in the technological aspect of the bill and the Prime Minister stated there will be changes in the bill. Is the Prime Minister now prepared to accept changes to the technological aspect in order to give some confidence to the economy as a result of the American surtax and economic policies which have perhaps placed business in jeopardy?


Pierre Elliott Trudeau: Mr. Speaker, I believe the Minister of Labour made it clear when we introduced the bill for first reading that it was the intention to give all sections of the community an occasion to discuss the pros and cons of the various clauses. The most we can say at this time is that we will study these representations seriously. If some of them call for change, we will consider those clauses and, if they are serious, we will make changes. Otherwise we will not.
October 25, 1971

Income Tax Act GRAIN


Lincoln MacCauley Alexander: In light of the fact that business, industry and manufacturing institutions across the country have certainly shown great fear with regard to the clauses involving technological change, have these pleas been studied by the Prime Minister and the front bench in order to arrive at a definite answer now on whether in fact amendments to these particular clauses will be accepted?


Mr. Speaker:: Order, please. It seems to the Chair that the hon. member is essentially reiterating the question asked in the first instance. The hon. member for Fraser Valley West.


Lincoln MacCauley Alexander: I rise on a point of order. With all due respect, the question is in light of the same type of situation but I am now attempting to find out from the Prime Minister whether as a result of the several hundred submissions the government have had an opportunity to study the impact of these submissions and whether in fact they have now made up their minds in order that the country can be advised as to the government's decision.


Mr. Speaker:: Order, please. The Chair has made a ruling on the point made by the the hon. member. If he thinks that there is urgency in his supplementary, he knows an appeal is provided under the rules. He can raise the matter at the time of adjournment.



PUBLIC SERVICE


Mark Willson Rose: Mr. Speaker, I should like to address a question to the Minister of Manpower and Immigration. Since problems of morale in the Public Service are of long standing, many of them associated with the Public Service Staff Relations Act, and since the minister has had on his desk the report of the Public Service staff relations committee of three since June 15, when does the minister intend to make this report public?


Otto Emil Lang: Mr. Speaker, the report referred to by the hon. member is part of work done in connection with cabinet planning of possible proposals in regard to this whole area. Any decisions about the changes that will follow in consequence thereof will be announced when the decisions are known.


Mark Willson Rose: Since the report is reported to contain recommendations that include the extension of the bargaining process along lines somewhat equivalent to that in the private sector, and also the right to strike under certain circumstances, when does the minister feel that these recommendations, if accepted by the government, are going to be translated into legislation?


Otto Emil Lang: Mr. Speaker, I do not intend to comment on what may or may not be in recommendations, nor try to predict the date upon which a decision will be made.



STABILIZATION BILL-DISCUSSION WITH PROVINCES ON REPLACEMENT

Gerald William Baldwin: Mr. Speaker, I should like to ask the minister who answers for the Wheat Board whether the government is considering introducing into the House or is having discussions with the prairie agricultural ministers leading to the introduction into the House of a more suitable farm income stabilization program to replace Bill C-244?


Mr. Speaker:: Orders of the day. Order, please. I believe the Secretary of State for External Affairs is rising on a point of order.



ROUTINE PROCEEDINGS


Mitchell William Sharp: Mr. Speaker, would the House give consent to revert to motions so I may table a document?


Mr. Speaker:: Is there unanimous consent?


Some hon. Members:: Agreed.


Mitchell William Sharp: Mr. Speaker, I should like to table copies of the communique issued at the conclusion of the first Canada-Mexico ministerial meeting which was held here on October 21 and 22.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Friday, October 22, 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:: Order. House again in committee of the whole on 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. During Friday's sitting, as the Chair understands it, the committee agreed to consider section 109 at this sitting. Shall section 109 carry?
On clause 1-section 109: Deductions permitted by Individuals.


Mr. McCleave:: Mr. Chairman, I suppose one could be pardoned for being a little nervous at this stage, but this is now a brand new part of the ball game. When the ball is

October 25, 1971
Income Tax Act
actually handed to you and you start up field with it, you do the best you can. I hope that those words are on the record and that they might get back to the people in the riding of Halifax-East Hants in a newsletter or something.
May I first raise for the consideration of the minister at some time early in our discussion two matters. First of all, may I ask him what we will do if he has kindly second thoughts and decides to bring in further amendments. Second, since our scope is limited when it comes to making proposals to the ministry-we can lead them to water but not necessarily make them drink therefrom- would the minister on occasion be good enough to entertain the thought of adjourning the debate on a particular section so that he can have some discussion with his advisers and perhaps listen to some of the good points that are being made from, no doubt, both sides of the House.
Now I have the preliminaries out of the way, I should like to deal with two specific aspects of what, to most Canadians, is the most important part of the new Income Tax Act. I refer to those magic exemptions that taxpayers claim when they sit down quivering and quaking to make their peace with the Minister of National Revenue, usually as close to April 30 as they can possibly get. If there is anything that the Prime Minister and his party will be able to point to, and for which to thump themselves on the back and stick out their chests, I suspect it will be one of two measures. One is increased exemptions and the other, long delayed, will be the changes brought about in the family allowance structure.
I am sure the government will wax as lyrical as one of its members who described this as just about the ultimate in the way that taxation can wage a successful war against poverty. One then is entitled to ask, as I ask now, whether this does represent a major victory in the war on poverty and whether there is any ammunition being fired, or is the government simply making loud noises with blank cartridges? It is true that compared to the present exemptions the ones proposed by this section are higher, and from that standpoint one can say that the burden on those on lower incomes is reduced. But it is also true-and I think we have to ask ourselves what is a more appropriate figure-that the proposed figures do not even restore those with lower incomes to the position in which they were in 1949. Reflect on that, Mr. Chairman. We can regard 1949 as perhaps the last vintage Liberal year in Canada. There was a high rate of employment. Mr. King had gone off to seek solace in the shadows at Kingsmere and Mr. St. Laurent was in charge. All was well in the best of all possible Canadian worlds.
If one were to translate the happy tranquility of 1949, following the Liberal's return to power with a good number of supporters and the economy in good shape, in terms of today, one would find that the personal exemptions should be at least $1,700 for a single person and $3,400 for a married couple, slightly above the levels we are considering here. There is a further aspect to this. I hope one does not look upon tax reform simply as a matter of trying to adjust from one year to the next in order to take care of any cost of living increase, inflation or suchlike. We have a number of reports which indicate that the poor pay up to 50 per cent of their income in taxes, directly or indirectly, whereas people higher up the

scale earning over $10,000 per year pay roughly a third or about 37 per cent to 38 per cent. In other words, more than half of the dollar a poor man receives goes to some government in some form of taxation. At the more affluent level, only 37 cents of the dollar is paid in taxes.
We have missed the boat in respect of exemptions. We have made some effort to take into account the increased cost of living and inflation, but we have not reached a point of equity. We can consider the rich and the poor and say they are paying 20 per cent, 30 per cent or 40 per cent, whatever it is, and therefore carry their share of the weight, but they do not pay one tittle more. I hope when we attempt to reform our tax system the next time, it will be done by a Conservative administration and, therefore, with some heart. That is one of the things we are after.
A report was received today from the National Pensioners and Senior Citizens Federation at Fort Macleod, Alberta, and I think I should put on the record one of its resolutions. It is:
Resolved, that we petition the federal government to increase the amount of income tax exemption for senior citizens to $3,000 for single people and $4,500 for married couples.
The amount we are to give a single person as a basic exemption, with the additional $650, is $2,150.
When looking at tax reform we should consider exemptions from the point of view of fairness. The rich should pay the same percentage as the poor instead of the poor having to pay a disproportionate amount. The exemptions should also be tied to the cost of living and, perhaps some day, to the poverty level. The figures presented to us do not represent an official poverty level of the Department of National Health and Welfare, or an official level as indicated two or three years ago by the Economic Council of Canada.
A tax credit system might have been a much more equitable way of solving this problem. It would have been more flexible and could take into account those factors to which I have referred. We are faced with a number of anomalies. The Minister of National Health and Welfare indicated in announcing his family income security plan that he feels it costs as much to raise a child of 12 years of age, but the Minister of Finance has indicated that he feels the exemption should be related to age 16. There is a lack of consistency on the part of government in this matter of exemptions, just as there is in respect of the poverty level in Canada. There are many advantages to a tax credit system but in my opening 20 minute statement I cannot go into all the details.
A committee of the House of Commons dealing with this matter noted that while the tax credit approach has a great deal to commend it in terms of being adjustable from time to time without a restructuring of the rate schedule, the exemption procedure does have the advantage of retaining a method to which individual taxpayers are now accustomed. I suppose the best that can be said for that argument is that one is better off with the punches of Cassius Clay, knowing how hard they are, than with the punches of someone else about which you know nothing.
My second point relates to another class of people scattered throughout Canada. This group is not represented and has not presented any petition regarding their tax
October 25, 1971

position. I think their position is worse under the so-called reform bill than it was under the old law. I refer to those involved in common-law marriages. The law does nothing for these people. Let me quote from the Canadian Master Tax Guide, 1970, as prepared by the C C H Canadian Limited, at page 219:
A common-law wife is not considered a spouse and no marital exemption may be claimed on her account. However, if the taxpayer supports a child in a self-contained domestic establishment and the common-law wife acts as a housekeeper, he could claim a $2,000 exemption on account of the child-
An additional deduction can be claimed by reason of the fact that the common-law wife is a full-time servant. Apparently that is her classification. If you think that is puritanical you should consider the plight of the poor lady under this new legislation. For a time I thought she would be covered by clause 109(l)(b) which deals with individuals not entitled to deductions because of an unmarried status, or being married but not supporting or living with a spouse. However, as I read the clause I found that it really did not refer to a common-law spouse but rather is an encouragement to people to live in communes. Apparently you can live in this way and have the advantage of the higher exemption as well as the value of a lady's company. After reading it again I became totally confused, until I finally looked at the three magic words in the marginal note which are "Wholly dependant persons". I knew then we were attempting to do something for the people whose parents are living with them.
I suggest we should have made a step in the direction of helping these people who live in common-law relationships. I see the minister has left and we are to be blessed with his parliamentary secretary and the Liberal whip. I hope they will give some thought to an amendment giving a common-law spouse some protection. I suppose I have just about used my time at this stage, but I felt I should say something in respect of these people who are not represented by any organization. It may sound strange for a Conservative to stand up and argue in favour of those who have not favoured the sanctity of marriage, but we do have an obligation to present their cause when no one else does it for them.
The only hope I see can be found in clause 63 in respect of child care deductions. Perhaps this can be construed in such a way that a woman with a child in a common-law union could in some way charge a baby sitting fee. If a figure could be set, perhaps an exemption would be allowed; but I am not sure the law is that generous. Perhaps a woman in this situation should set up a day nursery in the back yard to look after her own children and other children in the neighbourhood. She might be better off doing this than she is now under the present tax laws. Apart from a very technical approach such as I have taken, I do not think any help is offered these people.
So I do strike a note for these people. I do not know how many there are. I do not know whether there are thousands in society, but sometimes the common law relationship is the easy way out for many people who may not look upon the sanctity of marriage as you, Mr. Chairman, I and others in this Chamber do. I hope something can be done for these people, and that the parliamentary secre-
Income Tax Act
tary will be attentive to the point I make so that another look may be given at this particular matter.
As you probably have gathered, Mr. Chairman, one can range over the gamut in speaking of the particularities of the income tax system and whether the formula we use is correct,-I say it is incorrect-whether all the classes are covered in a comprehensive manner or whether other people should be covered. I know that, as a result of the strictures upon us concerning what we can or cannot do, one is somewhat tied down, but at least one can speak up where there are injustices. I hope the parliamentary secretary will take those I have mentioned into account.


Stanley Howard Knowles: Mr. Chairman, this proposed new section 109 we are now discussing is the one which provides a new level of personal exemptions with regard to income tax. It is the section that would raise the level for single taxpayers from $1,000 to $1,500 and for married taxpayers from $2,000 to $2,850. The section also deals with the matter of exemptions for children, nieces, nephews, aunts, uncles and other dependents. In addition it increases the exemption that is allowed to persons 65 years of age and over from $500 to $650. In that respect it not only provides the increase I have just indicated but provides that this will apply to all persons 65 years and over, whereas this has not been the case since old age security got down to the point where it was paid at age 65. Therefore, this is a pretty important section with which we are dealing. I think it is all the more important when one realizes there have been no changes in the exemption levels since 1949, 22 years ago. As we said repeatedly during the debate on second reading and during the general debate on clause 1, we do not think it is good enough to raise the exemption levels by such small amounts after 22 years in view of what has happened to the cost of living during that period of time.
We feel that at the very least these exemption levels should be $2,000 single and $4,000 married. There are a number of instances in which the exemption levels might even be higher. However, before I get into a plea to raise the exemption levels, I wish we could engage either the minister or the parliamentary secretary in a discussion about tax credits rather than exemption levels, as a way of dealing with this matter. The hon. member for Halifax-East Hants made reference to this in the remarks he just made. The other day the hon. member for Cardigan proposed a rather ingenious device, which if I may say so struck me as comparable to the concept of tax credits. I do not think I am being unfair to the hon. member for Cardigan when I say he feels these fixed exemption levels, arbitrary as they are, do not take into account the cost of living needs of the people in the lower bracket, people with large families, older people and so on. As I say, rather than our having a long list of set speeches, in view of the fact that we are in committee of the whole where we can speak as often as we want and have back and forth discussions, I wish the parliamentary secretary, since he is here on behalf of the minister at this time, would get into this discussion.
I know this matter has been discussed at length before the standing Committee on Finance, Trade and Economic Affairs. I know that the committee considered all the arguments and that the majority report of that committee

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came down for exemption levels rather than a system of tax credits. Surely, however, it is clear that any system of tax exemptions tends to give the greater benefit to those in the upper and higher brackets. Any system of tax exemptions makes it impossible to meet the kind of special need the hon. member for Cardigan spoke about the other day. One can see this in the effect of the figures that are before us at the present time. I have before me a table that has been worked out showing what the adjusted rates do to people of various income levels. A single person whose gross income was $2,000 when the exemption level was $1,000 had to pay a tax of $109. When the exemption level becomes $1,500 he will pay only $75. This is fine. It is a reduction, but it is a reduction of only $34. On the other hand, a single person with an income of $25,000 under the $1,000 exemption paid $8,945 whereas with the $1,500 exemption level he will pay only $8,468 which is a saving of $297.
I submit that is a very good example of what the exemption level method of dealing with this matter does. It provides a few dollars to those in the lower brackets and provides ever so much more for those in the upper brackets. The table I have in front of me gives the figures for various other income levels, but I need not put them all on the record. The higher the income the more one saves under the exemption method level. On the other hand, by a tax credit system it is possible, as Carter shows, to treat all income from the first dollar as taxable, and to then set a figure such that persons below that figure get a credit that offsets the tax charged against them and therefore pay no tax at all. If ,in order to bring this thing to a head later on we have to move an amendment to raise the exemption levels to $2,000 and $4,000,1 am prepared to do so. I can see procedural troubles, but we will worry about them when they arise. But I would rather not move that kind of amendment because it would only exaggerate the very thing about which I am complaining.
Therefore, I wish that instead we could persuade the government to accept a system of tax credits. The government argued before the Standing Committee on Finance, Trade and Economic Affairs, and that committee contended in its report that you can achieve the same thing if at the time you raise your exemption levels you adjust the rates. It does not work out that way. The figures that I have given show that it is just about impossible to adjust the rates in a manner that will not be of tremendous benefit to those at the top. But if we can get started with a tax credit system, we could then provide that single persons below a $2,000 income and married persons below a $4,000 income pay no tax regardless of what the calculations might charge against them.
In the same way, this could be applied with respect to children, especially children who make up a large family. You cannot really be fair under this exemption system because the wealthy get more exemptions when they have more children, although I have been told that the wealthy do not have more children. At any rate, they do get quite a bit more in this way and the poorer families that may have more children get precious little out of the exemption system. The same thing applies to the extra exemption for person 65 years of age and over. I welcome the

fact that the level has been raised to $650. As a matter of fact, I still think the government should make it retroactive to January 1, 1971, and I welcome the fact that it will now apply to all persons 65 years of age or over whether or not they are drawing old age security. But here again, you introduce the same element of unfairness because the very wealthy person who gets old age security at the age of 65 will receive an additional $960 a year, $650 of that being non taxable, which is quite a bonanza to that person but it is not much of a bonanza to older people on lower incomes.
Again, this could be taken care of quite easily by having a system of tax credits as I suggested, one system of tax credits for single persons and families who are of working age, a system of tax credits for children, and a special system of tax credits for older people. I agree with the plea that has been made by the pensioners organization as reported a moment ago by the hon. member for Halifax-East Hants. I put on the record myself that $3,000 for a single person and $4,500 for a married couple is a reasonable figure for senior citizens, but you do not need that for the very wealthy person. What you need is to guarantee that no older person who has an income of $3,000 a year will have any of that taken away in tax. Go ahead and tax the wealthy, whether they are 65, 70 or 75. There are not many up there but there are some. But with respect to those who really need some consideration, the best way to give it is by a system of tax credits.
I have already said, but perhaps I might repeat it, that we would have to have different sets of credits for different categories-one credit for single and married working people, another credit for children, and a special credit for people of a certain age. I suggest that this is a way that would be much more fair than the exemption level system. I know that one of the replies from the government side of the House is that people do not understand the tax credit system, that people like the idea of knowing that there is $1,000 or $2,000 or whatever you have that is tax free, but they would very soon understand it once the system came into effect.
So, Mr. Chairman, I welcome the contribution made in this area the other day by the hon. member for Cardigan and I welcome the contribution made just now by the hon. member for Halifax-East Hants. Now, I should like to hear from the government side on this issue. Later on if we get nowhere, I am prepared to move that the exemption levels be raised to $2,000 and $4,000, but if we do that without adjusting the rates we will provide more for those in the upper income brackets. I hope that fairly soon we will hear from the government side with respect to the whole question of tax credits which I think is a better way of establishing equity in a tax system than the exemption level system that is being perpetuated in this bill.


Gerald William Baldwin: I rise on a question of privilege. I think it is a matter which I have to bring to the attention of this House as soon as I can. I will raise it again tomorrow probably when Mr. Speaker is in the Chair. There is a Canadian Press story in today's Citizen which is headed "Tax Bill Delays Close of Session". Included in the story is this sentence:
Informants said the government has offered the opposition a week or two extra Christmas holidays if there is a fast completion of the tax legislation.
October 25, 1971


Some hon. Members:: Shame.


Marcel Joseph Aimé Lambert: The reporter must have been smoking government marijuana.


Gerald William Baldwin: Government members appear to be on a perpetual holiday. However, I will not deal with that. But I want to say that this is an unmitigated lie if it is, in fact, a statement made by an informant in the government. I am sure my friend, the hon. member for Winnipeg North Centre will bear me out when I say that at the various House leaders' meetings which we have had with regard to this matter, the House leaders were interested in working out an orderly way of dealing with this bill. As usual, the government got itself in a mess in its legislative program, and we came up with a series of proposals which would permit us to contest the repugnant parts of the bill and deal with the others in due course. It was a suggestion for the orderly treatment of the bill which formed the basis of discussion. This is the kind of thing which makes it exceedingly difficult to work out programs. We offer our help to get the government out of the mess and then we are faced with a situation of this kind. I am raising the matter now because it is the first opportunity. I may have an opportunity to raise it again with Mr. Speaker in the chair tomorrow.


Russell Clayton Honey: I take it the hon. member for Peace River, as he indicated, was giving advance notice of a question of privilege he may or may not wish to raise when His Honour is in the chair. Of course, that is recorded.


Mr. Whicher:: Mr. Chairman, I listened very attentively to the hon. member for Winnipeg North Centre, whose diligence and sincerity everyone in this Parliament appreciates, but one wonders whether, in his keen desire to help, he does not get mixed up and is unable to tell us from what source that help will come. From the remarks to which I listened I gathered that, first, he was criticising the government for not bringing in a system of tax credits, particularly for those Canadians in the lower income brackets. Through you, Mr. Chairman, may I respectfully point out to the hon. member for Winnipeg North Centre that the reason for the omission of the tax credit system is obvious. A large number of the members of this House sat for many months, not just two or three months, studying the white paper and the tax bill presented by the government, then brought in a recommendation that tax credits were not appropriate to our Canadian tax system. The Committee recommended that, instead of using tax credits, we should use tax exemptions, which is what the government has done in this bill.
Really, Mr. Chairman, I think that the hon. member for Winnipeg North Centre should be a bit more fair. He should tell the people of Canada that the reason the government is not bringing in tax credits is that specialists in the field, who have examined this question very closely, have recommended that tax credits not be used but that tax exemptions be used instead.


Maclyn (Mac) Thomas McCutcheon: Do you only do what your specialists tell you to do?
Income Tax Act


Ross Mackenzie Whicher: In fact, in this particular instance, the government has done what the specialists of the Conservative party recommended, because every one of them recommended that there be tax exemptions and not tax credits. So I say to the hon. member, next time don't put your foot in your mouth quite so far.
The hon. member for Winnipeg North Centre said he would introduce some sort of amendment to raise the tax exemptions to $2,000 for single people and $4,000 for married couples. As you know, Mr. Chairman, the existing exemption for a single person is $1,000. I do not always agree with the government, but in this instance I believe that the government quite rightly proposes that the exemption be raised from $1,000 to $1,500. If the hon. member were fair, he would tell the people of Canada that this change is going to cost the Minister of National Revenue exactly $500 million in tax revenues, because every $100 of exemption costs the government $100 million. This exemption, within a matter of a few dollars, will cost half a billion dollars.
The hon. member for Winnipeg North Centre could quite rightly ask the government, "Where are you going to get this half billion dollars"? A responsible government has a duty to reply, and I assume the Minister of Finance or his parliamentary secretary would say, "We are going to get the money by initiating a capital gains tax in Canada." I point out that a capital gains tax has been recommended by the hon. member for Winnipeg North Centre, and by many other people, including the Standing Committee on Finance, Trade and Economic Affairs which considered this matter for many months. But what the hon. member for Winnipeg North Centre does not tell us is where the money would be obtained to make up the loss in revenue if his recommendation were implemented to increase the exemption for single people from $1,500 to $2,000. Mr. Chairman, you do not have to take my word for this. You do not have to take the word of any member of this House. Just look up the facts and figures that can be obtained from any library in Canada and you will find that raising the exemption from $1,500 to $2,000 will cost a further half billion dollars.


Maclyn (Mac) Thomas McCutcheon: That isn't correct.


Ross Mackenzie Whicher: That is absolutely true. Are you doubting my word?


Maclyn (Mac) Thomas McCutcheon: I think your figure is too high.


Ross Mackenzie Whicher: Are you doubting my word? I understand that in this House you either put up or shut up.


George Harris Hees: Oh, come off it.


Ross Mackenzie Whicher: Don't you open that mouth of yours, George. I shut it one night, you may remember.


The Deputy Chairman:: Order, please.


Ross Mackenzie Whicher: I don't mind professionals, Mr. Chairman, but these amateurs!


Gérald Laniel: I think the discussion is very interesting, but I make a plea to all hon. members to direct their contributions to the Chair.

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Ross Mackenzie Whicher: In any event, from the figures I have read, increasing the exemption from $1,500 to $2,000 for single people, and from $2,000 to $4,000 for married couples, will cost in the general area of half a billion dollars, and I believe that that figure is too low, if anything. We all know how sincere is the hon. member for Winnipeg North Centre. As I told him the other day, if he had happened to live at the same time as our Lord was on earth there would have been 13 disciples instead of 12, because he wants to give things away. If he is absolutely sincere, then he will tell this House where he would get the extra half billion dollars.


Some hon. Members:: Hear, hear!


Ross Mackenzie Whicher: Of course, he does say, "We will tax the rich." If he carries his sincerity as far as I hope he does, then he will tell us how many rich people there are in Canada. I tell you, Mr. Chairman, there are very few rich persons in Canada. Every year several hundred of them are leaving Canada because they are being taxed too much now. If you don't believe me ask some of our honourable friends from Alberta, and they will explain the situation to those who do not understand. When the hon. member for Winnipeg North Centre suggests that a single person making $25,000 a year will get more through a tax exemption than he will through a tax credit, again if he is fair he will tell us how many single people there are in Canada making $25,000 a year. I would say there are very few indeed. So, so far as the exemption situation is concerned, I think the government has brought forward a very fair bill.
I suggest that the government, in proposing an exemption of $650 for those who are 65, can be very proud because we know that no country in the world has given such exemptions to people of that age. We are giving higher exemptions to, and taking less taxes from, people at age 65 who are getting the old age pension, than any other country in the world.


Some hon. Members:: Hear, hear!


Ross Mackenzie Whicher: Of course, we would like to be able to establish higher exemptions, perhaps up to $10,000. Why stop at $2,000 for single people and $4,000 for married people? The fact is that somebody has to pay taxes to provide the benefits that we enjoy. Therefore, without prolonging my remarks further, I simply say that while all of us wish the exemption could be more than $1,500, we must consider the facts in this day and age when more benefits are coming from governments, whether federal or provincial, when governments are producing more costly programs, such as medicare, hospital services, higher old age pensions and higher children's allowances. Taking all this into account, I would say an exemption of $1,500 is a good start and will benefit many people in Canada.


Cliff Downey: Mr. Chairman, the hon. member for Bruce who just spoke made some very interesting comments on the tax bill and the amount of revenue that the exemptions are going to cost the federal treasury. However, I think it is difficult to enter into this type of calculation without reference to the fiscal dividends which accrue to
[The Deputy Chairman.]
governments as a result of inflation. A number of hon. members were members of the Standing Committee on Finance, Trade and Economic Affairs which studied the bill. It became evident at these hearings that it was possible to reduce the tax rate and still increase the total revenue of the government as a result of inflation. I say that is possibly what is happening at the present time.
If there are any attractive features in this 707-page bill, they lie in the fields of personal income tax and personal exemptions. I think we can safely say that the increase in personal exemptions and the increased limits on contributions to pension plans do little more than reflect the erosion in the value of the dollar over the years. The last time the tax exemptions were raised was in 1949, so this change is long overdue. The reduction in the top combined rates to 61.1 per cent affects few people. Perhaps it is unrealistic to accept the stated rates when several provinces already levy taxes at rates above the standard 30 per cent used in arriving at the combined level of provincial and federal rates referred to in the tax summary.
To return to the matter of the fiscal dividends, we know that in past years Canada's rate of inflation has been as high as 6 per cent and rarely lower than 3 per cent.


Mr. Mahoney:: On a point of order, Mr. Chairman.


Russell Clayton Honey: The hon. parliamentary secretary rises on a point of order.


Patrick Morgan Mahoney: Mr. Chairman, it was my understanding that the arrangements made between party leaders, and announced in the House by the President of the Privy Council on Friday, were to the effect that remarks would be strictly relevant to the proposed sections of the act under consideration, sections 109 and 110. The general economy, trends in inflation, and rates schedules are not mentioned, so I was wondering when the hon. member was going to relate his remarks to the particular section under consideration.


Marcel Joseph Aimé Lambert: They are all tied in.


Cliff Downey: Mr. Chairman, that is a very interesting comment made by the parliamentary secretary. Was he not sitting here a few minutes ago when the hon. member for Bruce made his remarks? Why was he not on his feet then? He was too busy applauding, but the relevance of those remarks was very difficult to understand indeed.


Marcel Joseph Aimé Lambert: It will take that much longer, Pat. Just be quiet.


Cliff Downey: If I may refer to the matter of fiscal dividends that accrue to governments by allowing the inflation rate to continue-


Russell Clayton Honey: Order, please. With all respect to the hon. member for Battle River, I did wonder if he was not going a bit beyond section 109 which is presently before the committee. If I am in error I know he will point out where I err, but I think we are essentially dealing, as the heading indicates, with the computation of taxable income. The section sets out the various exemptions of people who qualify and so on. I would invite the hon. member to confine his remarks within the four corners of section 109.
October 25, 1971


Marcel Joseph Aimé Lambert: With the greatest respect, Mr, Chairman, may I point out that when we are discussing personal income, certain exemptions are set out and the balance of income is subject to tax on the basis of rates. If the hon. member wishes to comment on the adequacy or inadequacy of the exemption, surely he is within his rights to refer perhaps to the attitude of the government in wanting to continue, as it does, the system of a general flat rate. The flat exemption results in an inflationary bonus for the government; it is as simple as that and surely reference can be made to it. I agree that we are somewhat more limited but not as strictly as suggested by the parliamentary secretary. If we are to proceed in this way, it will be a long haul to complete the discussion of these sections.


Patrick Morgan Mahoney: Mr. Chairman, perhaps there is a disposition on the part of members of the opposition, since they cannot deal with exemptions without dealing with rates, to extend the purview of the current debate to include section 117 which does cover rates. Perhaps we cannot deal with one without the other. Is that the disposition?


Russell Clayton Honey: I want to be as helpful as possible, and certainly do not want to restrict hon. members. I agree in essence with the hon. member for Edmonton West, although it is a matter of degree. I think the hon. member will recognize that, although his remarks may be relative, they might be considered to be a bit outside the four corners of the section; they must be relevant. The hon. member for Battle River.


Cliff Downey: Thank you, Mr. Chairman. I am happy that you bore with me through the preamble. As the hon. member for Edmonton West pointed out, there is a very close association between the rates and the personal income tax section of the bill.
I wanted to comment on the surtax which has been repealed. I do not think anyone can quarrel with that, but when we look at it we see that the surtax was really not a tax on income but a tax on a tax. This affects income retention for only a very few people who were, in practical terms, paying a maximum of 11 per cent. Very few Canadian Taxpayers will find their income increased as a result of this change because the tax amounted to only about one-third of one per cent or about $3 for every $1,000 of earned income. Bearing in mind the present rate of inflation, if individuals do not have an increase in earnings in the next three weeks, they will be back where they started before the surtax was removed. This is quite an accurate calculation of what this means to the economy in terms of real dollars.
Elasticity is a word which becomes familiar when we speak of the tax structure and personal income tax rates. I suggest that the new tax rates have been geared to an even greater extent to the concept of progressive income tax rates. This results in an increase and not a decrease in the tax payable.
Let me take an example from the lower income brackets. A single person earning $1,700 a year would, under the present tax system, claim exemptions of $1,100 and pay $70 tax on his taxable income of $600. If his income rises to $1,800, his taxable income is $700 and he pays $81 in tax. Thus, although his income has risen by 6 per cent,
Income Tax Act
his tax has increased by 17 per cent. It will be seen that under the new tax legislation, every 10 per cent increase in income in similar circumstances is accompanied by an 18 per cent increase in taxes. The tax increase under the new bill represents a higher ratio with respect to the proportion of take-home pay than was the case under the old legislation.
I do not wish to go much further at this point than merely point out these anomalies in connection with tax rates. The hon. member for Lambton-Kent, in directing a question during the question period to the Minister of Agriculture, referred to the fact that a poultry quarantine station had been set up in the middle of the poultry district of southern Ontario. It seems to me that the type of mentality that was responsible for that has manifested itself in the ministry that is responsible for taxation.


Mark Willson Rose: Mr. Chairman, my intervention will be brief and, I hope, specific in form. I agree with the hon. member for Winnipeg North Centre who argues, and has argued for years, that exemptions are too low and that we are taxing people at the poverty level. He says that by so doing we compound the problem of poverty, something that Economic Council reports have pointed out over and over again. As I say, we compound the problem of poverty by adding an additional burden of tax on those who are poor. We realize that the government has difficulty in raising money. Nevertheless, we on this side of the House have suggested how the government might accomplish its aim of greater revenues for the treasury which are necessary in order to provide those benefits which we feel must be provided for an enlightened and progressive country.
The hon. member for Bruce is an interesting and able speaker and likes to keep an argument going. He asked pointedly from what source the hon. member for Winnipeg North Centre thinks all this extra money will come. Instead of answering, may I ask this: From what source did the $1 billion that the Minister of Finance is to make available in connection with winter works, and so on, come? His program calls for $1 billion in benefits. Without going into any great preamble, may I say that we know the source of this money which is to be used for winter works relief. It will come from the people who are paying taxes now; that is where the money will come from, even though the government may borrow the money in the beginning. You see, with taxes being paid on incomes of $5,000 a year and even less, there is little difference between the working poor who are taxed and welfare recipients who receive those taxes. So, by depriving one group of society we are encouraging those who receive low incomes and those who receive welfare to argue about their respective situations, because both groups are in deprived circumstances. I had not intended speaking on this point and have raised it only by way of preamble.
I had intended referring to an anomaly in the former tax law which encouraged the administrators of the act, so to speak, to take a moral position. My remarks will be in a similar vein to those that were made a few moments ago by the hon. member for Halifax East-Hants. Perhaps I could most efficiently deal with my concern by reading a series of letters exchanged between the Minister of Finance and myself. They concern the fact that a person

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who has been ordered by the court to support an illegitimate child not domiciled with him received no recognition under the previous act of the amount spent. This matter may or may not have been corrected in the new legislation. I am referring to subsection (5) of section 109, the "partial dependency" subsection.
May I be permitted to quote from a series of three letters, the first one being dated December 3, 1968. I should say, before I begin, that I am not speaking in favour of illegitimacy. I feel that the law itself should take a neutral position on this matter. At the moment it does not. May I quote from my letter to the Minister of Finance of December 3, 1968? It reads in part:
This concerns the payment of support and maintenance of a child not domiciled under the same roof as the person who is required to supply this support and maintenance. My constituent has written me stating that these payments have been disallowed as a deduction for income tax purposes.
I would appreciate it if you would tell me if the Income Tax Act has been fairly imposed in this case. If the Income Tax Act makes no provision for such a deduction it appears to me that some amendment should be considered so that anomalies such as this might be overcome. Certainly the man who is required to pay this type of support and is doing so is fulfilling the obligations the Court placed upon him and does not have the use of this money for his own living expenses. It seems unfair to me that anyone should be additionally punished by the failure of the Income Tax Act to recognize the partial dependency of the child in question.
I asked the minister to write and provide me with some information. Actually, my letter was preceded by a letter dated September 8 which the minister wrote to my constituent. The second paragraph reads:
Under the present laws, a taxpayer may deduct from his income for the year only those amounts expended for a child who, during that year, was wholly dependent upon him for support. A request such as yours would require an amendment to the Income Tax Act-
I might add that the preceding paragraph related to deductions for tax purposes with respect to payments made by the putative father of an illegitimate child.
Following the letter I wrote and the information I received, I again wrote to the Minister of Finance. My letter said in part that the minister had directed me to look at a certain section of the act, and I suggested that we ought to delete the phrase "of the marriage" where it appears twice in the section, since this wording seems to work against the particular individual concerned. I went on to say in the letter I wrote to the Minister of Finance, dated January 20, 1969, as follows:
This, then, would place my constituent in a position equivalent to married couples not living together who are making payments for child maintenance, or payments required by the court under conditions of separation and divorce.
My constituent . . . has been ordered by the court to pay out for the maintenance of an illegitimate child the sum of $3,840 over a period of 16 years. Because of present tax regulations and rates, he is additionally assessed $1,099.20 for his indiscretion. This seems markedly punitive to me and I would be pleased if you would consider this regulation during the current tax review.
We are now considering the tax review legislation in committee of the whole. I think the argument is quite clear. In this instance, the drafters of the law are taking a moral stand. The person who is required to pay for the support is really, except in the legal and spiritual obligations of marriage, in the same position as any other parent supporting or partially supporting a child. He is entitled to

deduct this amount. I do not see any reason, in the light of the situation of the constituent I have just described, why this deduction privilege should not also apply in the case of an illegitimate child or a court order payment for support of an illegitimate child. There may be thousands of cases like this across Canada.
I am not suggesting that the court has no right to make an order for support. If the support is given, the money is not for the use of the father or mother, depending on which way it works. I would appreciate it if the experts of the tax department and the parliamentary secretary would consider this matter carefully. It may not be a great thing, but the fact that the tax law should be blind as far as this moral or ethical question is concerned, is a valid point. Because they are reasonable men, I hope they will look into this.


Patrick Morgan Mahoney: Mr. Chairman, I am delighted to have the opportunity to accept the invitation extended earlier from across the way to comment at least on some of the points raised. Perhaps I should deal first with the point raised by the hon. member for Fraser Valley West.
The proposed section 109(5) of the new act is very much the same as section 26(6) of the present act. It is quite possible that the parent of an illegitimate child who does not have direct care or custody of that child could qualify for all or part of the exemption that is attributable to that child, depending on establishing the relative degree of support which he affords it. I think on reflection the hon. member will agree that the amount of money which a parent pays for the care and support of his own child in his own household, one who is acknowledged and legitimate, is not available to spend for other purposes. That parent is in precisely the same position as the parent of an illegitimate child.
As I understand the hon. member's argument, he thinks that moneys paid under a court order in this situation should be a form of deduction in taxable income. I suppose if one afforded that privilege to the parent of an illegitimate child, one could not discriminate or make a moral judgment by denying it to the parent of a legitimate child. It would be a very worth-while tax avoidance ploy for parents to get maintenance orders from judges so that they could deduct the amounts paid under those maintenance orders rather than accept the exemption granted under the act. The parent of an illegitimate child in the present circumstances is entitled to claim an exemption or partial exemption, depending on the extent to which he is supporting the child. I refer the hon. member to section 109(5).
I now wish to deal with the main thrust of the arguments raised by the hon. member for Halifax-East Hants and the hon. member for Winnipeg North Centre regarding the adequacy in the increase in exemptions. We must acknowledge that if the $1,000 exemption was adequate in 1949, then certainly it is not adequate in 1971 and will not be adequate in 1972. However, the arithmetic application of the cost of living index to those exemptions is an oversimplification. It fails to take into account many social programs such as medicare, hospitalization and family allowances which have been established and/or
October 25, 1971

improved over the years. They have relieved all Canadians, including low income Canadians, of some of the demands on their personal resources that existed in 1949.
Frankly, I do not think the simple application of the cost of living index is a persuasive argument to support any specific exemption that you may decide upon. We have higher exemptions. This will remove about one million Canadians from the tax rolls and reduce taxes for five million others. While I am sure nothing would make the government happier than to be able to offer the tax paying public even more generous exemptions than those contained in Bill C-259, these were settled upon after a great deal of thought had been given to all the implications, both from the point of view of revenue as well as the taxpayers. They are certainly not inadequate exemptions.
The tax credit system is certainly something that has some merit. However, if there is a country in the world that has tried it and has made it work, I am not aware of it. Certainly, the exemption and graduated rate system that the government has opted for in Bill C-259 is not nearly as inflexible as the more outspoken advocates of the tax credit system indicate. The hon. member for Winnipeg North Centre was most honest when he indicated, at the close of his remarks, that a tax credit system would probably have to involve a different tax credit depending on whether you were married, had children and how many children you had. If the tax credit system were to be fair, it would not be nearly as simple and straight forward as many of its advocates would have us believe.


Marcel Joseph Aimé Lambert: It is the same thing as a flat rate.


Patrick Morgan Mahoney: The fundamental fact is that there is no magic in it. Revenue conceded to low income Canadians by increasing tax credits would have to be made up some place else. This is a very simple fact. You do not avoid it by accepting a system of tax credits.


Mark Willson Rose: Take it from the oil industry.


Patrick Morgan Mahoney: The progressive tax system we have in Canada does, of course, levy a much heavier tax on higher income Canadians than lower. Higher income Canadians have come to expect to pay taxes to take care of this fact. However, the increase in exemptions, combined with the progressive rate of tax, does, in the view of the government, achieve the objects that we desire.
I refer hon. members to the schedule for single status taxpayers in Canada as compared to other countries of the world. Under the new bill, single status taxpayers, assuming that they are employed in business, will pay taxes when their income reaches $1,650. That compares to $1,773 in the United States, $1,011 in the United Kingdom and $470 in Australia. The married situation in Canada is such that married taxpayers will pay taxes after their income has reached $3,041. This compares to $2,533 in the United States, $1,445 in the United Kingdom and $470 in Australia. I do not think we have to apologize to anyone for the net effect and benefits that the increased exemption schedule proposed in Bill C-259 affords to our lower income tax payers.


Robert Jardine McCleave: Mr. Chairman, may I ask the parliamentary secretary to give me the courtesy of a reply to my question about common-law spouses?
Income Tax Act


Gérald Laniel: Order, please. Perhaps the parliamentary secretary is having difficulty replying to the question. I would invite hon. members who want to ask questions to co-operate as much as possible with the Chair so the Chair can recognize them and the questions can be properly answered. Does the hon. member for Halifax-East Hants wish to pose his question again?


Robert Jardine McCleave: Mr. Chairman, I think there are others who wish to take part in the debate, but I guess I have given notice and I will be raising it again if I do not get an answer.


Mr. Orlikow:: Mr. Chairman, I was interested in the comments made by the hon. member for Bruce and in the so-called reply by the parliamentary secretary who said, in part, when there was an interjection about taxing the oil industry, that the progressive taxation system we have in Canada takes care of the oil industry. I would refer the parliamentary secretary to a speech made by the former minister of communications, the hon. member for Duver-nay, to the Canadian Economics Association in which he put on the record figures that the parliamentary secretary should study-if he can read, which I sometimes doubt. These figures show very conclusively that the oil industry is not taxed in any kind of equitable or progressive fashion.
The table used by the hon. member for Duvernay was one prepared for the Calura report in 1968. If one compares the book profit of various business enterprises in Canada during the years 1965-68, one sees that the retail trade paid taxes on 90 per cent of its taxable income; that the wholesale trade paid taxes on 87 per cent of its taxable income; that the manufacturing industry paid taxes on 63 per cent of its taxable income; that-


Gérald Laniel: Order, please. I hesitate to interrupt the hon. member but the matter of relevancy has been discussed before. I would ask him how he relates his present remarks to section 109, which is directly related to the computation of taxable income for individuals.


David Orlikow: Mr. Chairman, I would be delighted to do so. I can relate my remarks to this section very simply. Obviously, if the taxation system does not collect sufficient taxes from sources other than the present ones, then the rates at which basic exemptions are set must be much lower than would otherwise be the case. In his remarks, the hon. member for Bruce said that to do what my colleague the hon. member for Winnipeg North Centre had suggested, namely raise the basic exemption to $2,000 for a single person and to $4,000 for a married couple, would cost $500 million, and he asked where we would get that sort of money. The parliamentary secretary said that the government was already taxing the oil industry quite equitably. I see he shakes his head.


Patrick Morgan Mahoney: I did not mention the oil industry. Did you get permission from Schreyer to say that?


David Orlikow: I will come to what the government of Manitoba says about the taxation system, but what I am trying to point out at the moment is that there are large, untapped sources of income in Canada that could be

October 25, 1971
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taxed, which would mean that the government could easily raise basic exemptions or institute the system of tax credits that we have been proposing.
I know the parliamentary secretary comes from Calgary, which is the headquarters of the oil industry in the province, and that he has a special interest in protecting the oil industry. However, let me put on the record a few more figures. For example, the mining industry was taxed on only 32 per cent of its taxable income; the metal mining industry paid taxes on only 13 per cent of its taxable income. Then, in the minerals field, which I presume includes oil, tax was paid on only 5.7 per cent of taxable income. In other words, we are talking about hundreds of millions of dollars.
The parliamentary secretary, in one of his usual, stupid interjections, asked me whether I had the permission of the Premier of Manitoba to say the things I was saying. Let me summarize for the edification of the parliamentary secretary-if that is possible-a statement made by the Minister of Finance of the province of Manitoba on July 16, 1971.


Patrick Morgan Mahoney: The gospel according to St. Paul.


David Orlikow: I would sooner take the gospel according to St. Paul than the gospel according to St. Pat. The Minister of Finance of the province of Manitoba, commenting on these proposals that we are discussing today, suggested that we replace the tax exemptions that this government is putting forward with a system of tax credits. He suggested that all income, regardless how it is earned, be included as income for purposes of taxation. That cannot be a very radical proposal since it is precisely the proposal that was made by the Carter commission, which was headed by a man appointed by a Conservative government. He suggested that the natural resources industry be taxed on the same basis as other industry.
He then went on to spell out in detail what these changes would mean in terms of dollars. Even using the then tax structure, raising personal exemption to $1,500 from $1,000, as proposed by the government, would mean nothing to people who have no income. This is precisely why we are proposing tax credits, because it is these people who need assistance but who will not get one red cent from the proposal made by this government.
The Minister of Finance of the province of Manitoba also pointed out that for those people whose income matches the exemption level, the new increase to $1,500 will mean a saving of $250, or $463 for those with an income of $10,000, or $1,236 for those people with an income in excess of $400,000 a year. So that those who have will get, as is usual with this government. The proposed exemption of $2,850 for a married couple will result in no saving to those with an income of less than $2,850. It will mean a saving of $551 for those with an income of $250 and who are now receiving an exemption of $2,000. It will mean a saving of $845 for people with an income of $10,000, or $2,348 for people with an income in excess of $400,000. As I said before, those who have will get more.
From the revenue point of view, the Minister of Finance of Manitoba pointed out that, if a system of tax credits were adopted rather than the system of exemptions, an additional $1,140 million would be brought in because the

government would begin to tax people on everything they have and be able to give relief to those people who need it the most. Using tax credits in place of exemptions would bring in $250 million. Full inclusion of capital gains in income rather than the proposed system of half rates on capital gains would bring in another $100 million. The elimination of dividend tax credits would bring in another $139 million, and the elimination of depletion allowances for natural resource industries and the three-year exemption with no offsetting provision, which the government is continuing, would together account for another $224 million. If you limited the capital cost allowances to actual wear and tear, as the hon. member for Duvernay proposed in his speech to the Canadian Economics Association, you would bring in another $360 million. We must add to that the $65 million which would be brought in as a result of the retention of the estate and gift tax legislation which this government is so easily giving up. All in all, the proposals which the Minister of Finance of Manitoba made would bring in not the $500 million odd, which the hon. member for Bruce is worrying about, but $3,282 million. It is obvious that the money is available if you want to find it. If you want to tax those who have money instead of those who have not, as we have done so frequently in the past, this amount of money can be raised.
Let me say a few words about the question of a tax credit system as compared to the tax exemption system. The hon. member for Bruce said the committee which dealt with the question listened to all the experts who all came out for a system of tax exemption rather than a tax credit system. If that is true the committee must have looked carefully for the experts they wanted, those who would give them the kind of answers that suited the government. These people must be doing very well as a result of our inadequate and inequitable tax system. The most thorough and fair study of our tax system was carried out by the Carter Commission. It recommended that we institute a system of tax credits. We also propose that the present tax exemption system should be eliminated and replaced by a system of tax credits.
A tax credit and exemption system are both intended to recognize that a certain amount of an individual's income must be free of tax. We are appalled by the fact that a large number of people who, according to the Economic Council of Canada, are living in a state of poverty will be paying income tax, even after we increase the basic exemptions as proposed by this government to $1,500 for a single person and $2,850 for a married couple. The members of the Economic Council of Canada, appointed by the present government, are not noted as being wildeyed radicals. According to their calculations in respect of the status of poverty, a large number of people will still be paying income tax.
The present legislation specifically states that the exemption will be $1,500 for a single person. The tax credit system does not state the amount of income which should be exempt, but does state the amount of tax that should not be paid in the form of a deduction. The tax credit comes off in the form of a tax credit equivalent to the monthly tax payment. The tax exemption system provides a greater amount of tax benefit to the upper income
October 25, 1971

tax payers than the lower income tax payers. I have already indicated examples of that, and how the tax exemptions proposed by the government will give a greater advantage to the higher income group than to the group at the bottom of the taxable income level. It is for that reason we have proposed a system of tax credits rather than a tax exemption system.
The parliament secretary suggests that the matter is not as simple as we have suggested. No tax system is simple. He suggested a tax credit system would have to be varied for different groups, depending on whether the people are single or married. Certainly the parliamentary secretary knows, if he knows anything at all, that the tax exemptions system does precisely that. It says a person who is single will not pay, according to the present proposal, on his first $1,500 of income, and that a married couple will not pay on the first $2,850 of income. A family of three or more will have a further exemption. In that respect, the tax credit system we propose is in no different from the tax exemption system.
What we have said, and will continue to say, is that the present system of taxation and the present exemption levels as proposed by the government are not equitable. They place an undue burden on those with lower incomes. For the benefit of the hon. member for Bruce who said, among other very interesting things, there are fewer millionaires and wealthy people than there used to be because we are taxing them so heavily, let me refer to an article which appeared in the Toronto Daily Star of April 21, 1969. It is written by Mr. D. H. Fullerton who is well-known to members of this House. He has held a number of positions with the federal government and is an economist and an expert on taxation. After pointing out that a survey in the United States indicated there were 21 people there with incomes of over $1 million per year who paid no taxes at all, Mr. Fullerton went on to state:
Precisely similar data for Canada is not available, but experts in the field agree that the Canadian rich have been just as successful as their American counterparts in finding ways to cut their tax bill. One of the wealthiest men in Canada, in fact, is known to pay no income tax at all. The Canadian tax avoidance methods, however, tend to differ a bit from the American.
The fact that they differ will not be of much comfort to those taxpayers at the bottom end of the taxable scale who know that these people are avoiding taxes. Mr. Fullerton went on to state:
Wealthy Canadians do not have the same benefits on oil depletion but are adept at using others. The favourite Canadian devices appear to be cost chargeable to real estate operations, and various methods for converting current income into tax-free or almost tax-free capital gains, such as setting up a holding company in West Indian tax havens.
Put this on the record because I want my friends on the other side not to feel so sorry for those who have done very well in this country. Mr. Fullerton, in this article, makes a very clear distinction between tax evasion, which is illegal, and tax avoidance, which is quite proper and legal as long as we are stupid enough not to plug the holes.


Mr. Gilbert:: But very immoral.


David Orlikow: My colleague says it is immoral, but one cannot blame these people for trying to live within the limits of the law. One cannot blame them for hiring qualified tax lawyers who specialize in tax matters in order to
Income Tax Act
get the advice they need. One might wish that the ordinary citizen could afford the same kind of highly technical advice which is available to the wealthy of this country.
As Mr. Fullerton said so clearly, the fact is that the wealthy in this country have done well up until now and they will continue to do well when we give effect to the tax bill the government proposes. Those in the lower income brackets in this country who do not earn enough to pay any income tax, as is the case in respect of so many farmers and so many people in the maritime provinces, will receive no benefit from these proposed changes. Those in the lower income brackets who have a taxable income will continue, as they have for so many years with the approval of the parliamentary secretary obviously, to pay a much higher percentage of their income in the form of taxes-income taxes, sales taxes and real estate taxes- than those in the upper brackets who will continue to get off very lightly as they have for so many years.


Marcel Joseph Aimé Lambert: Mr. Chairman, I am sorry if I sound a little like a Canada goose this afternoon, but the cold I picked up last week has not gone away. The minister of health and I must have the same physician because what has been prescribed for us has not been very successful. In any event, I shall do my best to get through this. At the outset may I say the way in which we are dealing with these sections is somewhat of an experiment as a result of consultations between the government House leader, myself and others, concerning how this bill should be handled. It is purely an experiment in some ways and I would hope, in dealing with the general sections on personal income, and having considered shall we say these two sections which group themselves very nicely, that perhaps when the time comes-I do not know when it will be because it depends entirely on the House- we would go to those sections, for instance sections 3 to 8, which involve the computation of income. We are now looking at certain deductions. There are further deductions more minor in nature which lead us further astray in section 111.
Having outlined the plan, I may say that sections 117 and 118 involve the rates, but this is an incidental reference. If we look at this bill we will note that some of the sections and subsections on pages 277 and 289 are merely carrying forward the provisions of the old act. There is some modification in certain areas, changes of a few words, which we hope will be an improvement. There is no guarantee about this and, as a matter of fact, there are some commentaries which suggest these changes are merely more confusing. Then, there are new principles of taxation. Therefore, I believe we must look at what is new. Some portions of the bill which merely carry forward provisions that have been in existence for many years may prove to be wrong. I believe the hon. member for Fraser Valley had something to say about that and I believe we will have something to say about other sections. Certainly, mention must be made of the relationship between husband and wife and the income the wife may earn from a firm in which her husband may be a partner.
The basic thrust I want to make is that which I made back at the time of the committee hearings on the white

October 25, 1971
Income Tax Act
paper in respect of personal exemptions. Notwithstanding what was said by the hon. member for Bruce, I was not one whit impressed by the arguments of those who insisted that this is a better system than the tax credit system. For one thing, the amount of exemption applies to every category of taxpayer. Be he low income, middle income or the highest income individual in the country, he will still come under this provision of $1,500 per taxpayer. This is a tax system which is predicated upon the principle of ability to pay. The total tax system of this country provides no recognition of the fact that the low income taxpayer pays an equal shot with the high income tax payer under customs, sales tax and the many other types of tax in this country. So, it seems to me that for this reason it would be easier to differentiate between the categories of taxpayers in the broad sense by using a tax credit system, were it desired in the future to make these changes.
Certain cabinet ministers talk about guaranteed annual income and all sorts of similar programs. With a fixed basic exemption, it becomes all the more difficult to introduce that type of system. For that reason, it would seem to me it would have been preferable to move toward something that is more flexible, and that is a tax credit system. Second, the change of exemption has proven to be an exceedingly difficult proposition. Ever since I have been in this House I have heard propositions about change in the level of personal exemption for taxpayers under the Income Tax Act. It has taken 22 years-as a matter of fact 23 years because we are dealing with the Income Tax Act of 1948-to make those changes. I suppose, going on the premise of past experience, it may take another 20 years before a further change is introduced. We are introducing a further degree of inflexibility in the income tax system which I think we could well eliminate. Therefore, I feel that the tax credit system again would be of advantage. Third, there is no doubt that the basic exemption is of greater value at marginal rates to the higher revenue earner than it is to the lower income earner. That is all there is to it.
To me there would seem to be a lack of logic in insisting upon this level of $1,500 and $1,350 per annum. I think the parliamentary secretary was frankly trying to engage in a useless comparison in talking about Great Britain, France, the United States and others in respect of the basic rate. It is the same as making a comparison of assessments or taxes in various Canadian cities because you can have high assessments and low tax rates or you can have low assessemnts and very high mill rates. The same thing applies here. We could have a very low exemption allowance but much higher rates initiating tax, yielding roughly the same thing and, so far as the taxpayer is concerned, with about the same effect. So, what the parliamentary secretary had to say does not in any way contribute to a comparison of the two systems.
One thing that I noted also was that the parliamentary secretary had perhaps slipped into the pitfall of trying to compare the position of the single status taxpayer at his best possible position in Canada. I admit that the exemption is the same, but the tax rates are certainly not and if, inadvertently, he was trying to give the impression that the single status taxpayer in Canada was better off than

he was in other countries, then I think he is wrong because one has to remember that in Canada the provinces have the right to levy income tax, and many of them do. The same is true of several states in the Uhited States which levy income taxes, and to compare individuals you must put them in the same relevant position. Unfortunately, the white paper engaged in some real flim-flam when it was comparing high rate individuals in the U.S. with low rate individuals in Canada.
With regard to the amounts, I would say that $1,500 is an arbitrary figure; $1,800 can be an arbitrary figure, just as $1,400 was an arbitrary figure. They bear no relationship at all to the cost of living. But then, when we consider the $2,850 and take a couple who are receiving their old age security, the taxpayer of the two gets an additional allowance of $650, which puts him in at $3,500, and with $100 general deduction, it means about $3,600 of income which would be completely tax exempt. To relate that to various poverty levels is also a very relevant question because $3,600 in Toronto or in Ottawa is certainly not $3,600 in some small centre in rural Ontario, rural Quebec or elsewhere in the country. These are all relative levels, and it does mean that a person with $3,600 in certain areas could be much better off than one living, say, in the centre of Toronto where I think his position would be absolutely impossible.
I think the parliamentary secretary might want to answer this question. In the light of the fact that three of the provinces, and there may be a fourth one, have lowered the age of majority to 18-and we know that this is going to be the trend in the next three or four years-why does the Income Tax Act make that break at the age of 21, as it does for children at page 278? At page 278, section 109 (l)(d) we find the following:
For each child or grandchild of the individual who, during the year, was wholly dependent upon him for support and was
(i)	under 21 years of age,
(ii)	21 years of age or over and dependent by reason of mental
or physical infirmity,
Why should the division not be now at the age of 18 in the case of mental or physical infirmity? This is more in conformity with the status of an adult. I assume the status of an adult is at the age of 21 in this statute because that was the dividing line between minority and majority. It seems to me that we will have to look into this in order to conform because provincial statutes relating to income tax, and other statutes under provincial jurisdiction will have some effect upon the status of a person as a taxpayer. Yet there remains this question of 21. The act makes another break at the age of 16. This is presumably the age of entry into high school, and yet so many children go to high school at a younger age than 16. I do not know why the age of 16 is used, but it seems to me that we could make the situation so much simpler by having one break at the age of 18. There are very few people who go into post secondary education who are younger than 18. The great majority of them do so after they have reached that age, and yet the break is at 16.
Perhaps there is an explanation that escapes me outside that of pure inertia and of not thinking about this particular point. However, it seems to me that there should be a straight break now at the age of 18, and that a person over the age of 18 should be considered as an adult because
October 25, 1971

almost half of the population of the country are considered as adults at that age.
Now, I should like to move to some comments with regard to section 110 dealing with some of the deductions that are permitted. First of all, let us take the case of medical expenses. One change that has been made which has not been noticed too much is that, whereas under the present act if an individual has a private health plan, any medical expenses paid by that health plan as a result of illness of the taxpayer or of the taxpayer's dependents in excess of 3 per cent of the taxpayer's income qualify him for the benefit of the medical expense allowance, the present act under section 110 does not do that. It restricts very severely the amount that may now be claimed. One cannot now claim that expenses that are paid under a private medical insurance plan. You can only claim the amount of the premium under the 3 per cent provision for medical expenses which might allow the taxpayer to qualify for the allowance. Frankly, this change provides no real relief whatsoever; in fact quite the contrary.
Of course, it is also known that in those provinces where the employer makes a contribution to an annual premium, say, in British Columbia, Alberta and Ontario, the contribution of the employer is added to the income of the individual, but because that is for medicare the individual cannot claim any of the medical expenses paid at so-called public cost to arrive at the 3 per cent allowance. I am not arguing whether there should or should not be a deduction for medical expenses that are paid by a public plan. But what I am saying is that I think it is highly inequitable if the employer makes any contribution whatsoever to all or part of the cost of a medical plan, that should not also, on the basis of the provisions relating to contributions to a private plan, be deemed to be an expense. Why add it if you are going to charge it to him as income? It should also be allowed as an expense in arriving at the 3 per cent allowance. As usual, the Crown is taking it both ways and I fail to see the justification for it. It is completely unfair.
The individual's own contributions do not entitle him to anything. If he pays half of the fee for medicare he gets nothing for that, no allowance. If his employer pays part of his medicare fee it is added to his income, and if he participates, as many people do, in supplementary medical care schemes, the only thing he can draw benefit from here is the premium, not the medical expenses, and that is a complete repudiation of the principle of medical expense allowances. Of course, it is bitterly criticized by a number of the organizations that have made representations to the government.


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


Marcel Joseph Aimé Lambert: Then, I will come back to this later.


Some hon. Members:: Continue.


Russell Clayton Honey: Is there unanimous consent for the hon. member to continue?


Some hon. Members:: Agreed.
Income Tax Act


Marcel Joseph Aimé Lambert: Thank you, Mr. Chairman, but I am prepared to let someone else intervene, and I shall return later. The hon. member for Grenville-Carle-ton has been anxiously waiting to speak. So, I will yield to him.


Russell Clayton Honey: Order. This might be an appropriate time to read to the committee the questions for the adjournment motion tonight. They are: the hon. member for Winnipeg North (Mr. Orlikow)-The Canadian Economy; the hon. member for Bellechasse (Mr. Lambert)- Atomic Energy; the hon. member for Selkirk (Mr. Rowland)-Regional Economic Expansion.


Mr. Blair:: Mr. Chairman, I would like to address myself to the question of medical expenses. There are people in this country who now find themselves discriminated against. These are people who live in Ontario, or Alberta, or other provinces where the provincial governments have determined that they will make none or only a minimal contribution to the medical premium which is payable by the citizens in those provinces. The result is that people in those provinces are now faced with what appears to them to be a condition of hardship and injustice. If they are fortunate enough to be employed by someone who, under a collective agreement or voluntarily, pays a part of their medical care premium, then that contribution made by their employer is added to their income. On the other hand, any payment they make themselves in respect of all or part of the premium is in no way deductible at any stage in the computation of income tax.
It is not deductible in the basic computation of income, nor is it included as an element of medical expenses, as is the case with premiums that are paid for private coverage. I would hope that the spokesmen for the government can comment on the difficult and somewhat unfair position in which residents of this province are placed as compared with residents of other provinces in regard to the operation of medical plans in Canada, bearing in mind that all these plans are supported by all people as taxpayers, and that the differential positions which Canadians experience under the plans are not the result of anything they have done, but rather a result of decisions by provincial governments over which they apparently have no control.
The second point I would like to raise about medical expenses has been put to me very forcefully by a family in my constituency. These people have the experience of having children who suffer from what are called, broadly speaking, learning disabilities. The word dyslexia applies as a description of this particular ailment, which is a very serious one. At the present time in this province whatever public institutions there may be for the treatment of this type of disability, they are not really adequate to cope with the demands on this family, nor I am informed with the demands on other families in my constituency that have the same type of problem.
These children are under doctors' care. Whatever is done with them is done as a result of medical advice and medical direction. But, because of some odd quirk in the interpretation of our laws, both provincial and federal, this particular family finds itself in a position which I think is as absurd as it is unjust. The parents are compelled to pay what to them is an enormous amount of

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money each month, something like $400 to $500, to maintain their children in a special institution so that they can receive the kind of treatment, plus training, which will enable them to become useful citizens. The health authorities of the province of Ontario have determined that this is not an expense which is covered under health insurance, and the tax authorities of the federal government have stated that this is not an expense which is deductible as a medical expense.
I am not going to attempt to go through the jurisprudence on this matter except to say that the citations contained in CCH and other tax texts are somewhat contradictory. I do not think we can leave a matter of this kind in any position where there is doubt as to the taxpayer's rights, or any doubt as to the taxpayer's capacity to do all that he may to improve the health of his family and to overcome what any reasonable person would consider to be a severe medical disability. I notice that there is some textual change, and I will not go into detail at this time, between the existing law and the law as proposed. I think it would be a wise thing for the government to give an assurance to this House and to people, whose children suffer from these special types of disabilities, that there will be recognition of these special circumstances and the treatment will be properly recognized as a medical expense.
The third point I wish to make about medical expenses is in regard to the restrictive wording of the present section 27 (1) (c) which as far as I can see is substantially carried forward in the proposed section 110 (1) (c). Again I have in mind a specific case which seems to indicate absurdity in the administration of the law.
Shortly after the last election, one of my constituents brought to my attention a difficulty which he encountered in his family. His wife had experienced a nervous breakdown, had been confined for some time to a mental institution and had finally been released. The conditions of release were that she should continue to receive outpatient psychiatric care and have proper provision for the maintenance of herself and her home by a competent person. The arrangements were made by her husband under the direction of her doctor. A great deal of expense was incurred in providing for what used to be called a practical nurse to look after this lady. When the time came to account for income tax-


Russell Clayton Honey: Order, please. I do not want to interfere with the work of the committee, but I think there may be some responsibility on the Chair to draw the committee's attention to the fact that it seems the hon. member is dealing with section 110, whereas the committee now has before it section 109.


An hon. Member:: Oh, no; they are together.


Russell Clayton Honey: If there was an order or understanding that they were to be dealt with together that was not clear to the Chair. If that is the understanding the Chair is very happy to have that advice. The hon. member for Grenville-Carleton.


Duncan Gordon Blair: Thank you, Mr. Chairman. I shall conclude in a minute.
This man found, in the end, that his expenses were disallowed because he had not employed a registered nurse or a certified nurse's aid. As I said, this seems to me to be an absurd administration of our laws. By following the doctor's advice he had been able to return his wife to reasonably good health, and a great deal of public money had been saved because she was not forced to remain in a hospital yet because of the technical wording of the statute, which would be the same if this act were passed as it is now, this type of beneficial medical expense was not allowed.
Mr. Chairman, I have raised these rather technical questions without notice to the parliamentary secretary because I thought if they were raised now some consideration could be given to a response. I am happy to yield now to my friend, the hon. member for Edmonton West.


Gérald Laniel: The hon. member for
Bellechasse.


Joseph Adrien Henri Lambert: Mr. Chairman, the House now has before it one of the most interesting clauses concerning personal income tax and exemptions prescribed by the act to allow people to keep as much as possible of their income to support their family decently.
The bill, particularly geared to personal income tax, has been attentively considered by labour organizations whose responsibility it is to defend the interests of their members. They have made their recommendations known to us and I believe it is our duty, at the present stage of consideration of the bill, to speak on behalf of those organizations and request, suggest that the government amend some clauses of the bill in order to take more specially into account the rights of individuals, primarily of those workers who do not receive high salaries and who therefore have to do some extra belt-tightening to keep within their budgets.
For example, I am thinking of a labourer who is single and who up to the passage of the new legislation was entitled to a basic exemption of $1,100, while this bill provides that it will be raised to $1,600. Now I consider the basic exemption of $1,600 as clearly insufficient due to the cost of living which keeps going up. In my opinion, a single person, whatever his age, should be granted a much higher basic exemption. I am also thinking of a 21 or 22-year old man who must earn his living and is also considering the possibility of establishing himself. If he is not given the opportunity of saving enough to fulfil his ambitions, he will be discouraged.
The same thing applies to married couples. The new provisions of clause 109 provide for a tax exemption of $2,850. This is obviously not enough if one takes into account the increase in the cost of living.
To come back to the basic exemption, either for married couples or for single people, representations are often made to us by mechanics, for example, who are working in garages and must necessarily buy tools and maintain them. The company which employs them can usually deduct the purchase of these tools as expenses and depreciate them according to a scale recognized by the
[Mr. Blair.)
October 25, 1971

department. This is not the case for workers. However, the act provides for deductions of employment expenses up to $150 a year. Mechanics are not rare who work in garages and own up to $2,000, $3,000 or $4,000 worth of tools that must be renewed periodically in order for them to accomplish their work in a suitable way.
It would be absolutely normal that those classes of workers be granted a basic exemption much greater in order to put them on a par with companies.
Thus it happens that many lumbermen have to replace frequently their equipment for their work and can deduct only the operating cost at the present time. Indeed it would be absolutely logical to allow them a greater basic exemption because it is with those tools that they earn their living.
In view of that situation, I would urge the Minister of Finance (Mr. Benson) and the government to consider particularly the two cases I have just mentioned, and I hope that Parliament will accept to amend some parts of clause 109, especially sub-clause (1) (a)(i).
Further to the representations I have just made, I shall move an amendment-if the Chair authorizes me to do so-which reads as follows:
That Bill C-259 be amended by deleting from subparagraph (i) of paragraph (a) of subclause (2) of clause 109 the figures "$1,500" and substituting therefor the figures "$2,500".


Gérald Laniel: The Chair must point out to the hon. member for Bellechasse that it finds it difficult to accept the amendment as moved. When a member moves an amendment he must naturally respect certain rules of which the main one is that of pertinence. The second one forbids an hon. member to move an amendment intended to increase a tax.
In fact, the amendment that must now be decided upon does not infringe either of those rules, on the contrary. Still, the Chair feels uneasy in that the amendment of the hon. member goes beyond the scope of the motion now before the House.
There is an important principle whereby only a minister of the Crown can introduce tax measures. In this case, it seems the hon. member is seeking to do indirectly by means of an amendment what he cannot do by means of the motion or a bill. Unless the hon. member has more specific arguments to submit in order to connvince the Chair or unless other hon. members would be interested in submitting opinions respecting the proposed amendment it will be difficult to accept it.
Nevertheless, for the guidance of this House I could read over the hon. member's amendment and invite comments from colleagues of the hon. member for Bellechasse as to the receivability of the amendment. So wihth-out submitting it to this House I will simply read the motion:
That Bill C-259 be amended by deleting from subparagraph (i) of paragraph (a) of subclause (2) of clause 109 the figures "$1,500" and substituting therefore the figures "$2,500".
Hon. members who wish to make whatever comments they deem relevant are invited to do so before I reach a decision on this amendment.


Joseph Adrien Henri Lambert: With due respect, Mr. Chairman, I realize that the amendment before us alters the
Income Tax Act
nature of the bill in terms of the allowable basic deductions. I did not then and I still do not understand now how the proposed amendment would increase government expenses. Actually, I wish to abide by the Standing Orders. I realize that only a minister of the Crown is entitled, according to the Standing Orders, to submit legislation entailing public expenditures, but in this instance the amendment only aims at avoiding too many expenses to taxpayers, which would of course deprive the government of some revenue. This is exactly the wording of the amendment I have submitted, that is to protect the taxpayer against exaggerated taxation. If the Standing Orders do not provide us with an opportunity of submitting amendments at this stage, I wonder how we will be able to consider the present bill.
We are going to scrutinize it, make comments, suggestions and so on, without however going any farther. The process which has been going on since the inception of the debate on this bill is somewhat unusual, but after consultations with authoritative agencies, we have concluded that it was in order to submit amendments without running counter to the Standing Orders.
This is why I still submit that the proposed amendment is not contrary to the Standing Orders.


Gérald Laniel: Order. Before I rule on the amendment now before the House, I might read Citation 265 from Beauchesne's Parliamentary Rules and Forms, page 221. Subsection 1 reads as follows:
No member other than a minister of the Crown may introduce a Bill for the reduction of duties. The government must take full responsibility for the taxation levied to provide the revenue. But the House enjoys complete freedom to make every representation possible to the Government with regard to the manner in which the ministers discharge this responsibility.
The important sentence is the following:
This duty the members may perform by moving amendments to reduce the taxes proposed by the Administration.
The Chair is led to believe that the hon. member, on the basis of this last sentence, may conclude that his amendment tends to reduce taxes. But if he considers his proposal carefully, he will see that there lies the difficulty, since his amendment does not reduce taxes for some taxpayers but proposes over and above to eliminate of a given number of taxpayers from the rolls. It is precisely this aspect of the amendment that the Chair cannot accept and that cannot be accepted in its present form according to our rules.
The hon. member may wonder how to amend this clause but the Chair must stick to the rules and, in my mind, there is no misunderstanding.
As for the extension of this amendment which, in my opinion, is tantamount to a substantive proposal which, besides possibly reducing the taxes, and certainly reducing them for a number of taxpayers by eliminating a great many of them from the tax rolls only the government can do that.
Therefore, in my opinion, the amendment before us is out of order.
Does the hon. member for Champlain rise to take part in the debate or to discuss the ruling?

October 25, 1971
Income Tax Act


Mr. Rene Matte:: I simply wish to discuss your comments, Mr. Chairman.


Gérald Laniel: I should like to point out to the hon. member, if he wishes to comment the Chair's ruling, that he cannot do so at this stage. The only alternative for him would be to challenge the ruling.


René Matte: Mr. Chairman, I believe the committee could get an explanation as to this assertion, namely that the removal from the tax rolls of a class of workers who would pay less tax goes against the standing order you just read. That is not very clear to me, and I wonder whether the amendment put forward by the hon. member for Bellechasse is not totally consistent with the standing order you read out to us.


Robert Jardine McCleave: Mr. Chairman, in my contribution earlier today, I raised a point concerning the matter of tax reform for. those individuals who live together but are not in the category of married persons as defined by the present legislation, as contemplated by the new legislation or dealt with in the taxation courts. I did not receive a response, either reasoned or otherwise, from the parliamentary secretary. Somebody has to speak for them and somebody has to get an answer. I am going back to the subject again.
There are two such categories of people involved. These may be people who are quite free to marry, both having single status, but who have decided they are not going to marry and simply live together. That is called a common-law marriage. The other category is comprised of men and women who decide to live together because either one or both are not free to marry. In the eyes of the law they are really a concubine and paramour, but the parlance of the times that applies to them is the phrase living together common-law. I think we should recognize the status of these people. I do not think our Income Tax Act is a statute of morality. If anyone thinks it is, he should examine the actions of the income tax collector. When he finds that someone is plying the trade or profession of prostitution, that woman's earnings are quickly taxed, despite the fact she earns them in an immoral way.
We are not enacting a statute of morality. What we are trying to do is bring tax reform, tax justice and tax equity to all Canadians. A man and woman who have not entered into the bonds of matrimony may be living together in a community. Perhaps they have come from some other part of the country where, either or both have had an unhappy marriage. It is unjust unless we accord to them the same tax exemptions as we do to those who have gone through orthodox marriage ceremonies. I do not see where there would be any great harm in adopting a position such as that. I do not think it would cause the income tax people any great difficulties. Heaven knows, they find out about these things. I have had people come to me after the income tax people established that they were not in fact married, and all hell broke loose on their heads and shoulders. It always burned me up when something like that happened.
I ask the parliamentary secretary to now give me an answer. Perhaps he is taking it up with his advisers. If I do not get an answer now, I shall be asking the parliamen-
[The Deputy Chairman.]
tary secretary the same question a good number of times. The question is simply this. Why is it not possible, and I cannot do it, for some draftsman to take section A and enlarge the definition of a married person because we are dealing with the equivalence of married people in the two categories I mentioned. I refer to those people who are free to marry but who, for some reason choose not to do so, but live together as man and wife. The relationship is that of concubine and paramour and, although not properly, is usually called common-law, marriage. The other situation is that in which one or the other cannot marry, but they live together as man and wife. Why cannot the exemption be extended to both these categories?


Patrick Morgan Mahoney: Mr. Chairman, I apologize to the hon. member. I did not intentionally omit responding to his question the last time. I covered a number of points. I ommitted reference to it accidentally.
The problem is one of administration, not in any strict sense of the word, but rather in the establishment of the common-law relationship to which the hon. member referred. I am sure the government agrees the taxing statute is not a place where moral sanctions are applied or moral rewards are handed out. In his comments, the hon. member at least intruded an element of morality to bring out the point. He referred to paramour and concubine. This presupposes that the couple are at least of the same sex, yet today that is not necessarily the situation that prevails. What are we to do about these things? How do you prove what is a common-law relationship? What is a common-law relationship that the tax assessor should take into account in deciding whether the marriage exemption should be granted? Is it a transitional relationship of a day or two or a week or two? What precisely is a common-law relationship to which the hon. member referred?
The hon. member distinguished two categories in this particular unchurched or unendorsed situation. One is where the couple are not, because of some other legal impediment, able to get married. In the other case he cited, the couple is free to marry, but do not do so. My reaction to that is very much like the reaction which we encountered in attempting to extend the small business incentive to unincorporated businesses. I am sorry we did not find a way to do it. On the other hand, the option of incorporation is open to most small businesses. Similarly, in this case, the option of matrimony is open to most taxpayers.


John Gilbert: What an option.


Marcel Joseph Aimé Lambert: Mr. Chairman, I want to resume my earlier remarks with regard to sections 109 and 110. There is one point I missed in section 109 that I would like to cover. If we look at the section dealing with dependents under personal exemptions, we find that some people are going to have an awful shock. For example, the old age supplement is no longer included for purposes of taxation. May I refer to the deductions that are permitted under section 110 at the top of page 286 of the bill:
(f) the amount of any supplement under the Old Age Security Act or of any similar payment under a law of a province, in
October 25, 1971

respect of which any amount has been included in computing the taxpayer's income for the year by virtue of clause 56(l)(a)(i)(A).
I may say that the Institute of Chartered Accountants of Canada have made the point that instead of using this alpha-numeric system it would have been far better to adopt the metric or decimal system of numbering paragraphs. I think that point is a good one and would have left the bill in far better shape. I am sure many people who have been trained as chartered accountants would adopt that suggestion of their professional society.
In any event, all of the income limitations of dependants operate to eliminate the allowance entirely when income reaches $1,600. Because the old age pension supplement is now included in a dependant's income, even though it is not taxable, a recipient on maximum supplement will not qualify as a dependant. Even though this money is not taxable but is deemed to be put in a special category, a dependant within the category prescribed by section 109- who is not a wife, that is-will not qualify as a dependant because the old age supplement will take him beyond the allowable amount. I think the parliamentary secretary should furnish an answer as to why this provision was made.
Reverting to section 110, under charitable donations we see a change in that the amount that has been allowed has gone from 10 per cent to 20 per cent of income. I think this is a very good move and will be generally applauded throughout the country. The organizations to which deductible donations may be made have been broadened in scope to include registered Canadian amateur athletic associations, though these must be of a national character. I think this will also bring us up against difficulties in interpretation; or, shall I say, some people will be terribly disappointed.
Although there has been an extension of charitable donations and individuals can benefit to the extent that the allowance has been increased from 10 per cent to 20 per cent of income, and although the gift tax is being eliminated, there is still one gate that has to be passed through that does not let off the gift scot free. I refer to the proposed capital gains tax. Even though a gift to a charitable organization may come within the 20 per cent level of income, if it falls within a category on which would be levied a capital gains tax then either the donor or even the recipient charitable organization would be liable for capital gains tax.
I think we should see to it that there is a general awareness of this provision. It has been represented directly to the government on behalf of charitable organizations that the provision will work to their detriment because under the capital gains tax provision a gift is deemed to be a sale and if there is an accretion in value it may be caught under that provision. I just want to make sure that that is understood.
There is one advantage of which I would have hoped the draftsmen of Bill C-259 would have availed themselves, and that is the elimination of subparagraphs (iii) to (xv) of section 110(l)(c). This was the old paragraph 27(l)(c) and some of its provisions. These provisions have become very awkward in that they are difficult to define and cause a great deal of difficulty in interpretation. It would have been preferable had the draftsmen followed the recommendation of the Canadian Institute of Chartered
Income Tax Act
Accountants and simply substituted for subparagraphs (iii) to (xv) inclusive the following provision: "(iii) For such expenses as may be prescribed by regulation". For example, subparagraph (xii) of section 110(l)(c) provides: for any device or equipment, not described in any other subparagraph of this paragraph, of a prescribed kind-
In other words, the provision allows for discretion if the device or equipment is prescribed by a physician, and it seems to me it would have been far better to take all the provisions detailed between pages 282 and the middle of page 284 into the regulatory field.
Having said that, within the same section I should like to turn to subparagraph (iv) which appears on page 282. It provides:
as remuneration for one full-time attendant upon, or for the fulltime care in a nursing home of, the taxpayer, his spouse or any such dependant who was throughout the whole of a 12 months' period ending in the taxation year necessarily confined by reason of illness, injury or affliction to a bed or a wheel chair-
At the present time there is difficulty in interpreting those words. Some assessment officers indicate that a taxpayer or a dependant must be confined to bed for a period of 12 months prior to entry into a nursing home if any nursing home expenses during that twelve months in the taxation year are to be claimed or allowed. I have heard another version in this regard, to the effect that there must be one entire 12-month period of confinement in the nursing home. Of course, I think that is wrong. I should like the parliamentary secretary to confirm what is meant by the language of this provision we are being asked to pass.
It seems to me that the logical interpretation of these words is that if a person is confined to bed or a wheel chair for a period of time and has spent some time in a nursing home, the total of which two periods is 12 months, that represents the 12-month period in a taxation year and is sufficient to qualify that person for an exemption of the expenses incurred.
Before I sit down I should like the parliamentary secretary to tell us whether there is a possibility of the government introducing further amendments after we pass these two sections. As the hon. member for Halifax-East Hants has asked, are there any changes to be made in addition to those forecast by the minister a week ago Thursday? If there are, I suggest we should leave these sections open. There is a strong possibility that we may be able to move to something else later this day, but I do not want to abandon these sections if there is to be an amendment.


Patrick Morgan Mahoney: Mr. Chairman, I think I can assure the hon. member that we have no further amendments which have not already been indicated or moved to sections 109 and 110. There are no further amendments of which notice has not been given.


Marcel Joseph Aimé Lambert: If there are no further amendments, any changes will come by way of another bill just as those introduced on the night of October 14?


Patrick Morgan Mahoney: I think any further amendments of that nature would be the subject of a further budgetary statement and other legislation involved.
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October 25, 1971
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Marcel Joseph Aimé Lambert: I find the last remark of the parliamentary secretary a little disconcerting. If the government has no further amendments, then the representations of hon. members are of no avail and we are just spitting into the wind. I had hoped we could persuade the government to make certain changes, some editorial but perhaps some in respect of the status of spouses and some in respect of child care expenses, because a certain category of spouse will be completely denied the benefits of the child care expense provisions. It is our hope that we might convince the government of the justice of that cause.


Patrick Morgan Mahoney: Mr. Chairman, in the first place it would be rather presumptuous of the government to assume that we have now heard all the representations of hon. members on the other side and are able to say we have in mind what additional amendments are to be proposed. Certainly the representations of hon. members opposite are being considered. I simply reiterate that at the present time the government has no further amendments it proposes to offer in respect of sections 109 and 110.


Mr. Rowland:: Mr. Chairman, in dealing with sections 109 and 110, which concern personal exemptions for income tax purposes, I wish to make two points. My first point relates to the general level of exemptions provided by the proposed legislation, in that they are not high enough, and the second is that the government in proposing this legislation should have gone to a tax credit system rather than continuing a tax exemptions system.
In keeping with the customary logic of this House, perhaps I should deal with the first point first, that is, the general levels of exemptions proposed in this bill. It will not take much time to go over this point because it was dealt with extensively by a number of members on second reading of the bill and during the general discussion on clause 1.
Perhaps at the outset I should say that section 109 (1) (h) is generally acceptable to us in the NDP. The section proposes that the deduction from income for elderly taxpayers 65 years of age and over be $650, with the guaranteed income supplement being exempt, whereas formerly the $500 additional exemption was available if the taxpayer was aged 70 or over. We consider that to be an improvement and we are especially pleased to note that it ends the anomaly of taxing pensioners on their income from the guaranteed income supplement, knowing they had to go through a means test to get it in the first place. This situation would have been laughable if it had not been so tragic in its consequences. The government said, on the one hand, that a pensioner could not live on less than $135 per month but, on the other hand, taxed a portion of that amount. We welcome the end of this situation when the legislation passes.
Section 109 (1) (d) deals with exemptions for wholly or partly dependent children. That section proposes that for each dependent child under 16, and children up to 21 years of age who are totally dependent by reason of infirmity or attending school or university, a deduction of $300 can be made. This deduction is reduced $1 for every $2 of a child's income over $1,000. Formerly the provision was that if the income was over $950, the excess could be added to the parents' tax. Section 109 (1) (d) (v) proposes

that for dependent children over 16 the deduction from income be $550, which is reduced by $1 for every $1 of the child's income over $1,050. The former provision was that a parent could deduct $550, and if the child's income was over $950 the excess might be added to the parents' tax.
The changes have not altered the exemptions in any substantial fashion. There is an air of unreality surrounding them. They bear no more relationship to the costs of rearing and educating a child than they did formerly. The new regulations may bring marginal relief to some families, but it is so marginal that one wonders why the government even bothered to undertake this somewhat more elaborate formula. As I said at the outset, I do not intend to go into the arguments extensively because it has been done time and time again. The point to be made is simply that the exemption provided for wholly or partially dependent children bears no relationship to the actual cost of maintaining these children.
Turning to personal exemptions, section 109 (1) (a) proposes that the deduction from income for a married couple be $2,850, increased from $2,000, and section 109 (1)
(c)	proposes that the deduction from income for a single person be $1,500, increased from $1,000. Personal exemptions should not be figures which are simply picked out of the air. They must relate to something, and surely that something is the amount of money it takes a Canadian to live on at a level which does not entail poverty.
The Economic Council of Canada has suggested that a single person in Canada earning less than approximately $2,000 a year is living below the poverty line, and that a married couple earning less than approximately $4,000 a year is living below the poverty line. Surely, then, $2,000 and $4,000 are the logical levels at which to fix personal exemptions so as to ensure that no one is forced to contribute to the general well-being of the community through taxes at the cost of being forced to live in poverty. I wish the government had given this factor more consideration in computing the level at which they would fix personal exemptions.
Another means of considering the adequacy of personal exemption levels is to compare them to increases in the cost of living. We find that between September, 1949, the last time personal exemptions were increased, and September of this year the cost of living for Canadians, in constant dollars, has risen by approximately 125 per cent, whereas the proposed increase in personal exemption is only approximately 42 per cent. There is an obvious disparity here.
Another way to look at it is to consider the annual average income of Canadians. In 1949 the personal exemption was fixed at $1,000 for a single person, and the average income was about $900. The personal exemption was considerably above the average income. Now the average income far exceeds the exemption. The other point to be made with regard to the proposed exemptions and the new rate schedules is that they result in greater savings in dollars for those with larger incomes. I might illustrate that by comparing the tax saving from the increased exemption which would be realized by people at different income levels.
October 25, 1971

With a gross income of $2,000, the tax saving from the increased exemption with the new rate schedule to a single taxpayer with no dependants would be $33. With a gross income of $4,000, it would be $160. At $6,000 the saving would be $177; at $8,000 it would be $195; at $15,000 it would be $258; at $50,000 it would be $364; and at $100,000 it would be $397. So the annual tax saving increases as a person's income increases. That is why we say we should have gone to a tax credit system. The parliamentary secretary said it would not be simple to implement. No one denies that. All that need be said in rebuttal, I submit, is that neither is a system of exemptions simple to implement and that the effort required to overcome difficulties in a system of tax credits, if greater, also has much greater pay-offs in terms of equity, in terms of the flexibility introduced into the tax system and in terms of offsetting the effects of somewhat regressive forms of taxation such as customs duties and sales taxes which bear almost equally on all Canadians.
Both the tax credit and the tax exemption are designed to recognize that a certain portion of an individual's income should be free of tax. The exemption specifically states the amount of income which should not be subject to tax. Under the present system it is $1,000 for a single taxpayer and in the proposed legislation it would be $1,500. But because we have in Canada what is technically called a progressive rate schedule, increases in exemptions generally benefit higher income earners, as the figures I cited a few moments ago illustrate.
The tax credit system does not state the amount of income that should be exempt but states an amount of tax that need not be paid, a set sum which can be deducted from a citizen's total tax bill, and thus gives each citizen the same monetary benefit. Thus, the tax credit would give greater relief to lower income groups, which surely is what a tax system should attempt to accomplish. The fact that the government has not gone to a system of tax credits in this legislation is but one more piece of evidence that this country is run in the interest of the upper income levels of the middle-class to the exclusion of benefits for the lower income groups.
Tp illustrate that point further, the same is true of the recently proposed 3 per cent reduction in income tax and the earlier removal of the 3 per cent surcharge. Both these measures have the effect of giving the greatest dollar relief to upper income earners and not lower income earners. By this process the government is attempting to generate greater activity in the economy. If greater benefit were given to the low income workers, the effect on the economy would be greatest because due to their income position they would spend virtually all their income. In the upper income groups, because they would save a portion of their money the immediate effect on the economy would probably be less.
Faced with difficulties in respect of the economy, the government came up with what amounts to a $1 billion bonanza for the upper income groups and corporations and at the same time argues that it is not able to implement a system of guaranteed annual income because such a system would cost $2 billion or $2.6 billion a year to operate, if the figures of the Economic Council of Canada are to be accepted.
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I venture to say that recent tax cuts together with the removal of the surcharge represent the largest portion of revenue necessary to implement a guaranteed annual income, if we accept the figures of the Economic Council of Canada, and that a guaranteed annual income would provide greater stimulation to the economy than would the tax cuts, despite that being their ostensible purpose. Similarly, a system of tax credits would generally benefit most greatly the lower income groups. That is the major reason we in the New Democratic Party argue the need for the implementation of such a system. Meaningful tax reform means meaningful redistribution of income, and the proposed changes in exemption levels simply will not accomplish that end. Redistribution of income is something to which government in this country must address itself in the very near future.


Gérald Laniel: Order, please. It being six o'clock, I now leave the chair until eight o'clock.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 8 p.m.
Russell Clayton Honey: Shall section 109 (1) carry?


Robert Jardine McCleave: Mr. Chairman, one is at a disadvantage when the only person one can preach to is out of the chamber. The parliamentary secretary is now returning, so I will make my point.
I have been pleading throughout the day for justice for a sizeable number of people who live together but are not married to each other. Each of these couples consists of two persons, and one is invariably a man and the other one is invariably a woman, despite some misunderstanding on the other side. Perhaps they do not tell things with the niceties of distinction that we do on this side. In any event, I suggested, and the parliamentary secretary agreed with me, that our taxing statute should not be a moral statute, that we are really not concerned with that here; we are concerned with fairness toward all. The parliamentary secretary, having agreed with me, said that people living together who are free to get married should get married. Who points the moral finger there and wags it about?
Regarding the other category of those who live together but are not free to marry each other, the parliamentary secretary said they would be few in number. There are estimates presented by welfare councils in Canada that up to 200,000 people are in that category, a group that would populate a city larger the Halifax and one a little smaller than that from which the parliamentary secretary comes. So we are dealing with sizeable numbers of Canadians. I suggest, again, that a formula could be reached so that they would receive exactly the same benefits, no more no less, than those of us who have gone through the marriage ceremony.
The parliamentary secretary also made the point that there might be some young Lothario who would take unto himself a different girl every year for purposes of income tax exemptions and relief. I thought that probably there
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October 25, 1971
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would not be people so bold, but perhaps there are. But then I said to myself: So what? What difference does it make if he supports a different woman every year of his life? If he is that kind of optimist, let him do it so long as he is not claiming two or more women for exemptions.


Some hon. Members:: Oh, oh!


Robert Jardine McCleave: I can hear the hooting and hollering starting, Mr. Chairman, because one tries to fight for a minority that cannot possibly represent itself in this chamber. It is then that the baying hounds over there must yap and have their fun. That will keep the debate going longer, gentlemen, because I will stay with this point until hell freezes over and until we get some kind of satisfactory answer from the government.


Some hon. Members:: Hear, hear!


Robert Jardine McCleave: What they are saying is that it would be a lot of work to check on some of these people, therefore let us not do it, let us see to it that they pay a disproportionate share of income tax because otherwise it would interfere with that great god that the Liberals worship- administrative efficiency. I say that that is also a weakness in their argument. But this whole exercise has also raised in the first few hours of the debate something that is very wrong with the section. We are being asked to pass one of the most important measures that any Parliament can pass and certainly the most important measure that this Parliament is being asked to pass, and that is a new Income Tax Act.
One would think that for that sort of occasion we would have someone here who is responsible to the House of Commons. But we have the parliamentary secretary. He is an estimable chap, but any suggestions that we make to him here and that we make to his officials-they are not the government, they are not the cabinet-they can slough off with a yes or a no, generally a no. That has been the performance so far today.
I say that is irresponsible. Because of the importance of this legislation the Minister of Finance should be in his seat for every moment of the debate, listening if possible but at least present so that we may ask questions and get proper answers instead of what we have received so far, a series of remarkably inept answers. I say this with all deference to the parliamentary secretary. I have respect for him, but after some of this stuff all I can say is that if he is passing on what his advisers tell him, he had better get new advisers; or if he is passing on what he himself knows, he had better get out and find out something about the domestic law of Canada.
I put the question again. I am asking as seriously and as responsibly as I can, on behalf of people not able to ask it themselves, that the definition of "married person" be broadened in section 109(a), line 2, so that the people I have mentioned, who are not married but who live together as man and wife, may have the benefit of the income tax legislation we are being asked to enact.


Mr. Godin:: Mr. Chairman, the following appeared in Le Devoir of December 27, 1968:

The Canadian Prime Minister, Mr. Pierre Elliott Trudeau, in his Christmas message to the people, asks them to co-operate with the government, during the coming year, in its efforts to reduce social inequalities.
"Our country," the Prime Minister stated, "is one of the most beautiful in the world, one of the most peaceful and one of the most affluent."
"But it has its problems and its difficulties. Some of our citizens do not partake as much as they should of the general welfare of the country. Some others do not enjoy the same freedoms and privileges as the majority of Canadians."
"It is therefore imperative," the message goes on, "to reduce those inequalities, and it is our intention to work relentlessly towards this end during the coming year."
"But to achieve those objectives," he added, "we need the cooperation of all citizens, we need their goodwill, which must always be stronger than any ill will, so that, together, we may ensure in a peaceful manner, the welfare of everyone and the progress of the whole country."
Mr. Chairman, those were very pious wishes expressed by the Prime Minister (Mr. Trudeau). In fact, he intended to reform and to cure what he thought was the cause of a certain uneasiness.
Judging from various reports and studies, we may wonder what was the result of the appeal launched by the Prime Minister with a view to levelling social inequalities and determining the extent of the co-operation of welfare recipients, of lower income groups, of businessmen, of industrialists who must close down their factories, of tradesmen who go bankrupt.
The call for co-operation from all Canadians went too far, in my opinion, since the unbalance we experience actually and which is labelled by experts under the terrifying name of inflation is in fact nothing but the unreasonable shifting of purchasing power in the hands of the various sectors of society. Indeed there is inflation in the upper echelons of society and deflation in the less favored ones.
From the Prime Minister down to the latest newborn this year, we are all governed by money requirements in order to meet our personal, familial and social needs.
We need just as much money to live as we need the air we breathe. Clause 109 of Bill C-259 now under study is somewhat disturbing, since it does not fully recognize human needs. In fact, clause 109 on page 277 of the bill reads:
(1) For the purpose of computing the taxable income of an individual for a taxation year, there may be deducted from his income for the year such of the following amounts as are applicable:
(a) in the case of an individual who, during the year, was a
married person who supported his spouse, an amount equal to
the aggregate of
(i)	$1,500, and
(ii)	$1,350 less the amount, if any, by which the spouse's income
for the year while married exceeds $250;
Mr. Chairman, at first sight, these proposals seem quite interesting, but they are clearly inadequate when we look at the consumer index for September 1971, for instance, which has reached 134.5 related to the basic year 1961.
If we take the year 1949 as the basic year, that is the year basic tax exemptions had been fixed, this index has now reached 174. As a matter of fact, the basic exemptions whose amount had been fixed in 1949 have never been reviewed, which leads us to believe that the workers
October 25, 1971

have really been forgotten by the governments that have succeeded one another until now, and we find that the proposed increase provided in clause 109 of Bill C-259 is much below the increase in consumer prices.
Indeed, in the case where single people are concerned the exemption will be increased from $1,000 to $1,500 and in the case of married people without children it will be increased from $2,000 to $2,850. Thus we have recuperated 24 per cent in the first case and 31 per cent in the second case.
Simultaneously, our national production has increased fourfold. The assets of our chartered banks have increased sixfold. The stocks and shares of the 800 largest Canadian corporations have increased seventeenfold. And the salaries of the members of this House have been multiplied by 4.
In view of such inequities it seems to me that we must find solutions in order to correct this situation. We must not only bring the exemptions up to a level which will allow total recovery, but go beyond that level if we really want to alleviate the tax burden of the small and average taxpayers.
We must keep in mind that so far the increase in the cost of living has affected taxpayers in the low income bracket more, since the items for which prices have increased most are essentials-that is, food, clothing, and housing.
Above all, we must remember, in reference to this bill- and particularly to clause 109-that the revenues of all levels of government from personal income tax have increased from 20.6 per cent in 1961 to 31.5 per cent in 1971, which represents an 11 per cent increase.
The Economic Council of Canada stated in its 1968 report that the poverty line was situated at $2,000 for single people, and $3,500 for married couples without children.
Now, those figures are all higher than the basic exemptions suggested by the Minister of Finance. So, to remedy the situation, and because I want to respond to the right hon. Prime Minister who said that they needed the cooperation of all the citizens, I bring in my contribution this evening by moving the following amendment:
That Bill C-259 be amended by deleting from subparagraph (ii) of paragraph (a) of subclause (1) of clause 109 the figure "$1,350" and substituting therefor the figure "$2,500".


Russell Clayton Honey: Order. Before I deal with the amendment I would observe that I understand the Chairman this afternoon had a similar amendment before him, although to a different part of the section, and he ruled it out of order. I would be pleased to hear argument from hon. members if they wish, although I have had an opportunity to discuss it with the occupant of the chair at that time. At this point, prima facie I would agree with his ruling, but I would not want to deprive hon. members of the opportunity to make submissions.


Joseph Adrien Henri Lambert: Mr. Chairman, I would like to make a few comments.
During the recess, I perused certain documents which lead me to believe that, according to the way the Standing Orders are interpreted in connection with moving of the amendment, there would not be any additional expenses
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entailed by the government nor any new taxes for the taxpayers.
Citation 265 of the 4th edition of Beauchesne's Parliamentary Rules and Forms has been quoted. It reads as follows:
No member other than a minister of the Crown may introduce a Bill for the reduction of duties. The government must take full responsibility for the taxation levied to provide the revenue. But the House enjoys complete freedom to make every representation possible to the Government with regard to the manner in which the ministers discharge this responsibility.
And it is added
This duty the members may perform by moving amendments to reduce the taxes proposed by the Administration.
Now, later the following can be read in comment 269:
-nor would any amendment to extend the imposition of a tax to persons enjoying an exemption therefrom be now permitted.
The objective here is not to extend taxes to another group, but to exempt certain people from a tax under Bill C-259.
I believe that the legislator sought, by way of that rule, to retain for the government the power to introduce fiscal legislation in Parliament.
Indeed, the matter was debated right here in the House of Commons on May 22, 1941 and the then Speaker delivered a ruling on an amendment brought forward on the occasion of the introduction of a bill seeking to increase the tax on gazoline to 3 cents. An hon. member had then presented an amendment tending to increase the tax to 4 cents. That was therefore a tax increase resulting from a private member's motion. The Speaker's ruling was put to the vote and upheld by the House, which is quite understandable to me.
Now, though I have made some quick research during recess, I could not find in our Standing Orders anything which forbids a member to expresse himself concretely in this House while introducing an amendment which would be such as to protect the taxpayers from an excessive tax burden.
In view of these circumstances, since we are considering the productive capacity of our vast country, and based on logical reasoning, it is possible for Canada to decrease the tax burden of certain categories of Canadians who, in our opinion, are overtaxed. So, we assume that we have the privilege to introduce an amendment for this purpose so as to urge this government to increase the basic exemption.
There, Mr. Chairman, are the few remarks that I wanted to bring to your attention before you make your decision.


Russell Clayton Honey: Order, please. If no other hon. members would like to assist the Chair, if hon. members would bear with me I think it might be helpful if I were to outline as briefly as I can the principles applicable to the procedural acceptability of this motion. I think I might be justified in doing that because of the remarks just made by the hon. member for Bellechasse. I appreciate that there is in his mind and in the minds of other hon. members some question about the basis for the procedural acceptability of this motion.

October 25, 1971
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The first consideration might be the rule of relevancy, and I would be of the opinion that the proposed amendment does not offend that rule. Second, there is the principle that no member may propose an amendment to increase taxation or extend its incidence. Again, I am of the opinion that the amendment now before the committee does not offend either aspect of the principle I have just stated. Indeed, the proposal before the Chair goes in the opposite direction in that it would have the effect not only of reducing that aspect of taxation, as the hon. member pointed out in his argument, but it would also restrict the incidence of the tax by eliminating taxation for a substantial number of persons who would be taxpayers under the proposal now found in the bill. On those first two principles I have no disagreement with hon. members who have argued that this motion is procedurally acceptable.
The third principle, however, that of the financial initiative of the Crown in relation to money and taxation proposals, gives the Chair some difficulty. I might, for example, ask hon. members who have argued either this afternoon or this evening whether this sort of motion is procedurally acceptable and whether they would suggest that as private members they could do something indirectly by means of an amendment such as this which they could not do directly by way of a bill. I would think the answer would be in the negative. I do not think it would be argued that a private member could amend, for example, the Income Tax Act by way of a bill.
It seems to me that it would matter little that the financial initiative of the government permits it to initiate a taxation proposal if it were then open to any member to propose, by way of amendment, a different substantive scheme of his own, and I think that is the situation the Chair has before it.
It seems to me that the proposition put forward by the hon. member for Portneuf does not amend the proposal put forward by the government it would, I suggest, supplant, rather than amend, the government's proposal. In effect, he would suspend the initiative of the Crown in taxation measures and thereby bring about a fundamental change in the financial procedures of this House. In his argument the hon. member referred to Beauchesne's Fourth Edition, citation 265. He made a very strong argument. However, it is important to distinguish between the matters which have been raised. Citation 265(1) of Beauchesne's Fourth Edition reads:
No member other than a minister of the Crown may introduce a bill for the reduction of duties. The government must take full responsibility for the taxation levied to provide the revenue. But the House enjoys complete freedom to make every representation possible to the government with regard to the manner in which the ministers discharge this responsibility. This duty the members may perform by moving amendments to reduce the taxes proposed by the administration.
As I understand the hon. member's argument, he is relying strongly on the words: "This duty the members may perform by moving amendments to reduce the taxes proposed by the administration." I would accept that citation as being binding upon the Chair and agree with that part of the hon. member's argument. If I may use an example, the hon. member would be free to move an
[The Chairman.]
amendment to reduce the rate of taxation from 10 per cent, say, to 9 per cent, if that would affect all taxpayers across the board.
If the hon. member could fit his proposal within that citation, the Chair, being bound by the citation, would have to accept it. However, I have to distinguish that situation from the motion. According to the motion, the hon. member is proposing that some taxpayers be relieved of the payment of taxes and this is where the fundamental difference comes in. According to the citation to which hon. members have referred and I have just read, it would be permissible for hon. members to reduce taxation across the board. That is what the citation says. By his motion the hon. member is proposing to reduce taxes for some Canadians, undoubtedly, and to eliminate taxation for others.
It seems to me that is the crux of the matter and on this distinction I have to base my decision. It would matter little that the government could initiate a taxation proposal if it were then open to any member to propose, by way of amendment, a substantive and overriding scheme of his own. With respect, I think that is what the hon. member has proposed. He is substituting a substantively different scheme for the scheme which is in the bill before the committee. I thank the hon. member for his very valuable argument; however, for the reasons I have given I must rule that the motion is not procedurally admissible.


John Gilbert: Mr. Chairman, the provisions increasing exemptions from $1,000 to $1,500 for single people and from $2,000 to $2,850 for married couples are among the most mean, niggardly, unfair, unjust and inequitable parts of this bill.


An hon. Member:: What about scandalous? That's a good word.


John Gilbert: There are other sections which could be described in the same way, Mr. Chairman. However, the section referred to applies to so many Canadians of the lower income brackets that I feel impelled to speak on their behalf. When one considers that the basic, single person exemption was set at $1,000 in 1949 and that 22 years later it is to be increased to $1,500, and when one takes into account the tremendous increase in the cost of living since 1949, is it any wonder that I call this provision mean, niggardly, unfair, unjust and inequitable?


An hon. Member:: Don't repeat all that again.


John Gilbert: Mr. Chairman, when I remember what Mr. Carter said about tax exemptions-he preferred tax credits to replace them-I submit that if Mr. Carter were present this evening he would ask us strongly and forcefully to implement his ideas. An exemption of $1,500 for a single person means that any person earning over $30 a week will be taxed. An exemption of $2,850 means that any married couple earning over $55 a week will be taxed. Any married man earning more than that will pay tax.
Mr. Chairman, we tested the Minister of Finance a few months ago after he said during a radio broadcast that a single man could live on $30 a week. The hon. member for Winnipeg North brought forward a motion asking the minister to live on that amount of money for a time and then report back to the House. Of course, the idea was
October 25, 1971

rejected because the minister and members on the Liberal side knew it was totally impossible for a single person to live on $30 a week. Yet when it comes to exemptions, that is what we do. As a result of these proposed changes, a single person earning over $30 a week will be taxed and a married person earning over $55 a week will be taxed.
One of the shortcomings of a democracy is that members on the government side must vote in support of government legislation. Try to picture the hon. member for Lanark-Renfrew-Carleton, a minister of the church, attempting to sell the principle in his riding of a $1,500 exemption for single persons. He would not succeed, Mr. Chairman. However, as a member of the Liberal party he is bound to support the government, to accept the proposal and to vote against any amendment which would increase the exemption.
Picture the hon. member for Windsor-Walkerville, who represents a workingman's riding, attempting to persuade the people of his area that the $1,500 single persons' exemption is acceptable. He could not do it. Yet because we live under a democratic system the hon. member, if he supports his party, will vote for that exemption. There ought to be a free vote on this section because there are on the Liberal side many members whose hearts must ache and who must cringe when they consider that the government is increasing personal exemptions from $1,000 to $1,500 for single people, and so on. I cannot imagine even the worst Liberal, so to speak, supporting this type of increased exemption.
I notice the hon. member for Scarborough West, who is now a parliamentary secretary, pointing his finger at me and probably saying, "No, John, you are wrong." I ask him to take this bill to his riding and ask his people whether an exemption level which was set at $1,000 in 1949 is acceptable at $1,500 in 1971. Is that exemption level acceptable to the people who voted for him in 1968? I am sure, knowing his honesty and fairness, that he would say, "Of course it is not." Yet he is bound by his party to vote for this provision.
The very least we should do is increase the personal exemption from $1,000 to $2,000 for single people and from $2,850 to $4,000 for married couples. What does this mean, Mr. Chairman? If we increase the exemption to $2,000 for a single person he will then have to pay income tax on income over $40 a week. A married person will have to pay tax on income over $80 a week. I ask Your Honour and the members of this House how a single person can live on $40 a week and a married couple can live on $80 a week in today's world. It just is not realistic when one takes into account the high rents and cost of living that we have today.
The Economic Council of Canada underlined to this government what it means to live below the poverty line. They said the minimum amount required for a single person in 1968 was $1,850. They would now say the minimum should be $2,000 for a single person. They said at that time a married couple would require at least $3,200. Now they would say they require $4,000. Yet this government wants a segment of Canada to live below the poverty line. They want to impose tax on a single person who earns more than $1,500, and $2,850 for a married couple.
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The member for Sault Ste. Marie comes from a workingman's family. He has done quite well in his profession. He was elected by the ordinary folk in that city. I am sure he feels ashamed this evening when discussing the exemptions the government has proposed. If he went back to his constituency and conducted a poll with regard to these exemptions, I am sure his people would object to them. I am surprised that the member for Sault Ste. Marie, who is a workingman's son and has worked himself, sits idly by, lets this section ride and will support the government on it.


Some hon. Members:: Shame!


John Gilbert: The Minister of National Health and Welfare has made speeches in the past few weeks with regard to the guaranteed annual income. At times he has attempted to protect the unemployed. I admire him for his courage because at this time in our welfare state, which in many ways has been created by the Liberal government and has caused much heartache and divisiveness in the country, he is trying to protect the unemployed. The minister comes from the city of Hamilton where many people are unemployed and many are earning very low incomes. How can he justify these miserably low exemptions of $1,500 for single people and $2,850 for married couples?
I hear a voice from the west, the member for St. Boniface. I am sure there are many French speaking people in his constituency. The province of Quebec also has high unemployment, poverty and many other problems. We are now attempting to straighten out those problems by giving this miserable, mean, despicable increase from $1,000 to $1,500 for single people and $2,000 to $2,850 for married couples. I am sure he is not very proud that he is not speaking for the French people in St. Boniface and the French people in the province of Quebec who have suffered unemployment and poverty as a result of this government's policies.


Russell Clayton Honey: Order. The hon. member for St. Boniface on a point of order.


Mr. Guay (St. Boniface):: I wish to bring to Your Honour's attention that I speak with a great deal of pride for all the people in my constituency.


An hon. Member:: You never speak.


Joseph-Phillippe Guay: They are well represented.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


John Gilbert: I am sure the hon. member for St. Boniface does not speak with any pride. He knows that in his constituency there is a tremendous amount of unemployment and poverty, yet he has the nerve to say that he speaks with pride.


Russell Clayton Honey: Order, please. The hon. member for St. Boniface is rising on a point of order.


Joseph-Phillippe Guay: I rise on a point of order, Mr. Chairman. This only shows that because we have an NDP

October 25, 1971
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government in Manitoba we have a lot of trouble; we do not get the policies that the people in my constituency would like.


Some hon. Members:: Hear, hear!


John Gilbert: Mr. Chairman, I really feel sorry for the member for St. Boniface. I suppose he is taking it hard that the New Democratic Party won in Manitoba and are bringing forth good policies.


Russell Clayton Honey: Order, please. I invite the member for Broadview to return to the section under discussion.


John Gilbert: Mr. Chairman, may I return to the exemptions and point out that as a result of the increase from $1,000 to $1,500 for single people, a person who earns $2,000 will pay $75 income tax. With an exemption of $1,000, he would have paid $109. The tax saving as a result of this increase is $34 a year, or 65 cents a week. When the government brought forth the June budget that was so magnanimous it said it was prepared to go to the country on these changes. When the people of Canada studied the proposals and realized that a person earning $2,000 a year would receive a saving of $34 a year, or 65 cents a week- hardly the price of a package of cigarettes-the government quietened down with regard to the exemptions.
I was really disturbed this afternoon when the hon. member for Bruce spoke.


An hon. Member:: You are always disturbed.


John Gilbert: He said if we increased the exemptions to $2,000 for single people and $4,000 for married couples, it would cost $500 million. The hon. member for Winnipeg North answered that argument with strength. I shall read the facts with regard to ways and means of obtaining moneys to take care of any increase in exemptions. If we changed over to a tax credit rather than a tax exemption system, we would have a saving of $1,140 million. The use of tax credits in place of dependency deductions would bring in another $250 million. Full inclusion of capital gains and income, rather than the proposed system of computing one half of net capital gains, would account for another $100 million. The elimination of dividend tax credits would net another $139.3 million, while the elimination of depletion allowances for natural resource industries-


Russell Clayton Honey: Order, please. The parliamentary secretary is rising on a point of order.


Patrick Morgan Mahoney: On a point of order, Mr. Chairman, would the hon. member identify the authority from which he is reading with such certainty?


John Gilbert: I cannot help but smile at the parliamentary secretary. This afternoon the member for Winnipeg North read it. He read it as evidence given by the Minister of Finance of Manitoba, which is backed up by research experts. He said he would prefer to accept the message from St. Paul than to accept the message from St. Pat. How true that is, because the message from St. Pat would certainly be coveted by those in his own city in view of the 'love he has for the oil companies. Certainly the message would be very twisted and turned if we accepted his.

I know it is very hard for the parliamentary secretary to accept this because he totally rejects the arguments put forward by the hon. member for Bruce. He probably gave the hon. member for Bruce the material regarding the $500 million, but we know what are the results of our own research and also the research done by the finance minister of Manitoba. The truth hurts, Mr. Chairman, and it certainly hurts the Liberals in mid-section.
If we were to eliminate depletion allowances for natural resource industries and the three-year exemption with no offsetting provisions, we would add another $224.6 million. If we were to limit capital cost allowances to actual wear and tear, revenues would be increased by $364.3 million. If we retained estate and gift taxes this would add another $65 million; and denial of convention and entertainment deductions would add another $5 million. Retaining maximum tax rates and increasing the pro-gressivity of the tax system would yield another $1,000 million. In total, Mr. Chairman, we would net $3,282.2 million.
The argument of the hon. member for Bruce is that we cannot increase the personal exemption for a single person from $1,500 to $2,000 and for a married couple from $2,850 to $4,000 because it will cost $500 million. According to the argument of the Minister of Finance of Manitoba, by taking certain steps we can increase revenue by $3,000 million. So is it any wonder that the poor parliamentary secretary attempts to laugh off the argument and to shake his head and say that it cannot be done? Is it any wonder that I am striking this evening at some of the Liberals who come from ridings heavily populated by the working people? If they were to go back to their ridings and ask these people whether they are satisfied with the increase from $1,000 to $1,500 and from $2,000 to $2,850 at a time of high unemployment and high cost of living, there would be a total rejection of these exemptions.
I say that exemptions of $2,000 for a single person and of $4,000 for a married couple are the very minimum that this government should bring forward. I am sure some members will shake off their lethargy and when the times comes to vote on the section they will be men of courage, men of concern, men of compassion and will vote for the ordinary folk in the community rather than for the rich, fat-cats that support their party.


Gilbert F. Rondeau: Mr. Chairman, I have the pleasure of saying a few words on clause 109 of the bill which concerns the vast majority of Canadian workers.
I am particularly concerned while studying this clause to note that the federal government always seems to be in agreement with the advice of those economists who are in favour of tax increases only. For example, when leading Canadian economists advocate tax cuts for all taxpayers, they are not listened to. Their recommendations seem not to be taken into account. The government apparently listens only to those who favour a continuous increase in taxes.
In Le Devoir of May 2, 1971, Canadian economists stated that:
Ottawa should reduce personal income tax and sales tax.
October 25, 1971

The government should reduce the personal income tax and the federal sales tax in order to stimulate productivity and slow down salary inflation, said economist Grant L. Reuber, Director of the Economics Department of Western University in London.
So, Mr. Chairman, here is an economist who demands tax reductions, but to whom the government, apparently, does not listen.
I continue with my quotation:
According to Mr. Reuber, the Bank of Canada has made Canada's economic problems more serious by going from one extreme to the other and by alternating between credit restrictions and capital flow into the banking system.
Further, Canadian taxes are traditionally high and American tax reductions could be used as a basis for radical changes in the tax system.
Here is an economist who is in favour of continued economic progress while at the same time asking for tax reductions. One tends to believe, when one is speaking to the government, when tax reductions are in question, that automatically they will entail a reduction in revenue for the government.
At this point, I should like to refer to a speech made on American television by a former president of the United States, and which was published in the "United States News Annual Report" of September 30, 1963.1 quote:

President Kennedy's address to the nation by radio and television, September 18,1963-
President's reasons for tax cuts-

If the then President of United States felt a tax cut in his country would be favourable to the Canadian as well as to the American economy as a whole, the same reasons prevail in 1971. These reasons which were put forward in the United States in 1963 might well be the same that would justify the Canadian government to cut taxes in 1971.

First: A tax cut means more jobs for American workers. More after-tax money means more buying power for consumers and investors-and this means more production and the jobs our nation needs. Merely to reduce unemployment to a more acceptable level in the next two and a half years, we must create more than 10,000 new jobs every day. We cannot effectively attack the problem of teenage crime and deliquency as long as so many of our young people are out of work. We cannot effectively solve the problem of racial injustice as long as unemployment is high. We cannot tackle the problem of automation when we are losing one million jobs every year to machines.
Second: A tax cut means new protection against another tragic recession. I do not say that a recession is inevitable without a tax cut, or impossible with one. But, excluding war years, we have had a recession on the average every 42 months since World War II-or every 44 months since World War I. And by next January, it will be 44 months since the last recession began. Recessions mean high unemployment and high budget deficits.
Mr. Chairman, when the federal government is on the point of showing a very high deficit, this points, as the President of United States stated in 1963, to an economic recession.

Of all kinds of waste, they are the worst. We need a tax cut to keep this present drive from running out of gas.
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And third: A tax cut means new markets for American business. American citizens will spend, as history shows us, an overwhelming percentage of the extra after-tax dollars left in their pockets; and this spending will broaden markets for businessmen, put idle machines to work, and require new machines and new factories to be built-
Fourth: A tax cut means higher family income and higher business profit and a balanced federal budget.

That is inconsistent with what the hon. members opposite have seemingly believed for generations, namely, that a tax cut means less income for the federal government. [English]
A tax cut means higher family income and higher business profit and a balanced federal budget. Every taxpayer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education and investments. Every businessman can keep a higher percentage of his profits in his cash register, or put it to work expanding or improving his business. And as the national income grows, the federal government will ultimately end up with more revenues.

This, Mr. Chairman, once more has not been understood by the government, I think.
I go on quoting:

Prosperity is the real way to balance our budget-

Mr. Chairman, prosperity is the only solution if we are to balance the budget.
I go on with the quotation:

Fifth and finally: A tax cut means new strength around the world for the American dollar and for freedom. A tax cut can help us balance our international accounts and end the outflow of gold by helping make the American economy more efficient and more productive and more competitive, by enabling our goods to compete with those who are developing foreign factories, and by making investments in America more attractive than investments abroad-
This nation needs a tax cut now-not a tax cut "if" and "when" but a tax cut now and for the future.

Mr. Chairman, those are the five reasons given by the president of the United States in 1963 to outline the economic policy to be followed in that country.


Mr. Jean-Charles Cantin (Louis-Hebert):: Mr. Chairman, I rise on a point of order.


An hon. Member:: The hon. member for Louis-Hebert wishes to be recognized.


Gérald Laniel: The hon. member is rising on a point of order.


Jean-Charles Cantin: I would like to direct a question to the hon. member who is speaking, Mr. Chairman.


An hon. Member:: Then it is not a point of order.


Gérald Laniel: Order. The hon. member knows that he cannot ask a question on the ground that it is a point of order. In any case he must previously ask the permission of the hon. member who has the floor.
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Does the hon. member permit a question?


Gilbert F. Rondeau: Certainly, Mr. Chairman, as long as it will not affect the time allotted to me.


Jean-Charles Cantin: The hon. member has quoted the views of an economist which apparently have been published in Canadian newspapers in May 1971 and in American newspapers in 1963. I would have preferred him to quote editorials published after the introduction of Bill C-259, that is after June 18, 1971, because that would be more enlightening for us. Indeed what has been said before that date may be quite different from what has been said afterwards.


Gilbert F. Rondeau: Mr. Chairman, if I wanted to answer that question, I would have to ask the hon. member several others because his question is so impenetrable that it is difficult to understand it.
Mr. Chairman, it seems to me that the data quoted in 1963 are quite the same as those that the economists have been quoting every day since the budget speech.
In fact, if we are to have a balanced budget, if we want our economy to remain alive, we need to have prosperity in Canada. Any intelligent man, any logical economist, favours prosperity in order to boost the economy and to allow the federal government to have a balanced budget- a great cause of worry for hon. members on the other side when we ask for tax reductions. This is precisely what the speaker before me did when he asked for a basic exemption of $3,000 for single people, and $5,000 for married couples. They think that the federal government would lose considerable revenues by granting such exemptions.
Considering we have thousands of unemployed in Canada and the economy is not progressing, the national treasury is losing very substantial revenues anyway.
Mr. Chairman, as the previous speaker said, today single Canadians will have to pay federal taxes the moment they earn a salary equivalent to $30 a week. For married people, the amount will be $57 a week. I am convinced those figures are totally illogical and unrealistic.
This is why we ask that the basic exemption be set at $3,000 for any single person and $5,000 for married persons.
Mr. Chairman, if we want to get our economy moving again, we must put an end to the inefficient administration of the country: we should avoid travelling the same financial and economic paths that have been trodden for more than 100 years in Canada. If we do not change our attitude in regard to the financial measures and the financial doctrine which the government, through the Minister of Finance (Mr. Benson), seems to apply and according to which those who are well off should be gradually dispossessed, we will end up with a society of dispossessed people.
If we want to eradicate unemployment, we should create prosperity. We must provide incentives to those who wish to invest in Canada. The only reason for investing is capital gain. With the current budget or the tax reform of the Minister of Finance, we are about to elimi-The Deputy Chairman.)
nate private initiative in Canada, and this is no way to improve our competitiveness since one of our present problems is being unable to sell our production on world markets. Our production has become too costly, taxes are too high and when the private sector adds up its production costs retail prices are too high. We cannot compete with foreign countries.
If we want to keep our present share of both domestic and foreign markets, it is an absolute necessity for us to leave the beaten track of present orthodox finance so as to enable the Canadian economy to expand, to produce what we can produce, as we have the needed skill, manpower, equipment, raw materials and natural resources. This country is extraordinarily rich but our economic system is outdated. The taxation system no longer meets the needs of private enterprise.
Should we wish to establish an economic system by means of which the government would own. everything, should we wish to establish a socialist system, we need only to keep on smothering those who would like to see this country become great and prosperous.
I am always dismayed to see our hon. friends opposite ready to tax further private enterprise in Canada, to tax further the small wage earner, the worker by limiting the basic exemption to $30 a week for single persons and to $57 a week for married people.
Not more than six months ago, we had the opportunity-in this House to vote on salary increases for members of Parliament. We did not bother then to determine whether or not those increases would create a deficit in the budget of the hon. Minister of Finance, nor where the Minister of Finance would find the money. There was no discussion, apart from the opposition coming from this corner of the House.
It seems to me that when we speak on behalf of the population as a whole, of the majority of workers who have to work hard to feed their families, it is absurd in 1971 to talk about a basic exemption of $1,500 for single persons and $2,850 for married couples.
Mr. Chairman, I therefore support what my hon. colleagues submitted by way of amendments, and I hope that the government-not before the next elections but very soon-will reconsider these facts and listen to economists who do not always advocate tax increases but increased prosperity for Canada, which might perhaps mean the same revenues for the federal Treasury.


Mrs. Maclnnis:: Mr. Chairman, this government reminds me of the farmer who had a horse. He had an idea one day that he could save money by taking away a handful of hay from the manger and that this would not make any difference to the horse. He decided the following day that if he took away two handfuls he would save more money in feeding the horse. He did this day after day, taking away one more handful each day. He was getting on very well. He was saving a nice pile of money. Unfortunately, the horse died.


An hon. Member:: Shame!


Donald MacInnis: This farmer was so busy looking at the savings he could make in scraping off a little bit of hay
October 25, 1971

every day from his horse that he did not look at the horse, and as a result ended up penny wise and pound foolish: he lost the horse at the end of the process. I do not consider the farmer was a particularly wise person, and I think this government is exceedingly unwise to do what it is doing with the low-income people of this country.
Evidently this government does not worry if someone says it is heartless and does not care. What worries the government is if it is told it is inefficient and not up on modern ways of technology and monetary success. I suggest that by going ahead and scraping and scraping away the livelihood of the low-income people who earn the wages and do the work in this country, the government is following a very foolish procedure indeed. Do not forget: the difference between the farmer's horse and the people on low income in this country is that the low wage earners are learning very slowly but surely that they are simply being robbed a little more, a little more and a little more.
I know people in my riding, and I am sure hon. members opposite know people in their constituencies, who are working for small wages, who are very self-respecting, who are very independent in their jobs, whose problems are increasing just as steadily as the burdens the government is placing on them in the way of increased taxation, who have children to feed and clothe and who must pay high rents. Remember, when the cost of food, clothing and rent steadily increases over a period, a few points here and a few points there, and the cost of living is going up steadily in this country, the low wage earners know this very well and feel it.
These people must have food and clothing. They have to pay as much for their bread, meat and other food items as do people like ourselves who took occasion to raise our own income because it was felt it was no longer adequate to buy food and clothing and to pay for the shelter and other things which Members of Parliament need. People who are earning low salaries and incomes have to pay the same amount for groceries as the rest of us. They have no way to prevent the landlord from continually raising the rent bit by bit by bit.
These are the people who see the opportunities they thought they had to send their young folk to school and college whittled away because the cost of living has not left them enough to carry on the education of their children. This is what is happening across the country. The people are beginning slowly, but very surely, to understand what is happening. I think this government received a nasty shock over the last few weeks when it discovered that the farmers in western Canada were not going to accept something they did not want and that the government could not tell them in fancy language that it knew far better what the farmers and farm organizations wanted. The people on the Prairies said they did not want it and were not going to take it. They were not going to be told it was better for them than what they wanted.
I warn the government that across the country there are thousands and thousands of families who know what they want and they are gradually reaching the point where they Will completely reject this government. What for? For complete unfairness and discrimination. They know very well that the government has allowed the higher wage and salary earners and large corporations in this country to get away with far less than their share of the
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tax burden, and that a far greater share has been loaded on the low wage earner and people with small incomes.
That gentleman of the cloth over there can smile all he likes. If he were following the teaching he was raised on he would know it is very bad to grind the faces of the poor and get after the poor widows, fatherless children, and so on. But since he has been on that side of the House he has forgotten all the teachings he had in his early youth.
I have just returned from my riding where I saw once again how hard people are trying to have faith in this Parliament and how much they are hoping it will give them an opportunity to make their own way in decency. I become angry because it seems so hopeless to get Members of Parliament on the other side to realize what they are doing to the wage earners in this country. Heaven alone knowws why they are doing it, because they have had enough warnings to realize that they cannot get away with it. There is no use their using the old excuse that they have to put these imposts on-


Gérald Laniel: Order, please. The hon. member for Hamilton-Wentworth is rising on a point of order.


Mr. Gibson:: May I say, with the greatest respect, Mr. Chairman, that the remarks of the hon. member are very interesting but I submit they are irrelevant. The type of address she is making would be relevant to the Throne Speech but not to the section under debate.


An hon. Member:: Get your foot out of your mouth and sit down.


Some hon. Members:: Oh, oh!


Gérald Laniel: Order, please. The Chair appreciates the remarks of the hon. member, but I was following closely the remarks of the hon. member for Vancouver-Kingsway and I have the impression that the hon. member intended to reach a conclusion relating to the exemption or to some other aspect of the section before the committee.
Is the hon. member for Peace River rising on a point of order?


Gerald William Baldwin: May I suggest that the hon. member for Hamilton-Wentworth might be next to give us his idea of a speech which is relevant?


Donald MacInnis: If anything were needed to prove the relevance of what I have just said, it is the point of order just raised over there. The very fact that the hon. member thinks that what I am saying is irrelevant proves why they are unwilling over there to raise the exemptions, and shows exactly the arrogance that goes before a fall. When the fall comes it will be mighty.


Some hon. Members:: Oh, oh!


Gérald Laniel: The hon. member should address herself to the Chair and then it might be easier for other hon. members to follow the debate.


Donald MacInnis: Yes, Mr. Chairman, I will speak to what is relevant whether or not these people think it is. My colleague, the hon. member for Broadview, has demol-
24372-12j

October 25, 1971
Income Tax Act
ished the excuse that they cannot give higher exemptions, by quoting the Carter report which states where these extra amounts could be found. If the taxation system of this government had been based on ability to pay, we would not have to ask the government to raise the exemptions to $2,000 for single people and $4,000 for married persons. The government would have done so, not out of compassion but because the economists who wrote the Carter report told them that that was the thing to do and that that was the way in which to run a sound economy.
I want to point out that with the cost of living rising as it is, it is perfectly ridiculous for us to be stuck with exemptions which have improved so little since the famous first exemption of $1,000, 22 years ago. Surely it is ridiculous that there is no relationship between the rising cost of living and the way in which the exemptions have been increased. I do not believe any study has been carried out or any correlation made between the exemptions and the rise in the cost of living. If so, we have certainly not heard about it from the government.
In my opinion, if this government had been doing the right thing we would not now have to plead for these exemptions. We would have had the government carrying the study to fruition, that is to a guaranteed income, and thus all Canadians would have an income on which they could live. An escalator clause could have been added to raise income in accordance with the cost of living and we would not be having to ask for these exemptions today.
I say to the government that the very least they can do now is try to make up for their glaring neglect in ensuring that people have an income on which they can exist, an income which should rise in accordance with the cost of living. The least they can do is to raise these exemptions to $2,000 for single people and $4,000 for married people, and even that is far from what is required today.
A scientific survey should be carried out as to how much it costs to live, and the taxation rates should be set in accordance with it. Those of us who are in this House sometimes feel that the big danger when people get into government is that they become so insulated and so remote that they do not know any more what people on lower incomes are thinking and how they are feeling. There are no people as blind as those who do not want to see, nor as deaf as those who do not want to hear.
I wish I could bring the collective voice of people on low incomes to sound out here in the House. Then hon. members on the other side could hear the opinion of the great majority of low income people across this country. Sometimes one has a great sense of frustration in trying to get this government to hear and to react in time. No doubt in time they will be brought to make changes, but it may be too late then for many families.
Remember this, Mr. Chairman, when we urge that exemptions be raised we urge for something else along with it. I know a great many families who are practically giving up hope because they have to exist on their present income. They feel they are being taxed to death, taxed to keep people on social assistance, taxed for roads, taxed for schools, taxed for everything. If these exemptions could be raised even to the amounts we are suggesting, it would put heart into a great many people who today feel they simply cannot carry on because the burden is too

crushing. I am not exaggerating; I am repeating what I am hearing and what you people would hear if you were not tied so tightly to the party discipline which makes you put wax in your ears and blinkers on your eyes.
I appeal to the backbench members, if there are some of you who do not have parliamentary secretaryships and who are not yet tainted with the virus of ambition. I urge you to listen to the people in your ridings. If you are afraid of speaking out in the House, do it behind the scenes. I appeal to you not to break down the will of people who are wage earners and who contribute to the taxation of this country in the measure they can. Do not make them bear burdens that do not belong to them. I wish that even at this late stage the parliamentary secretary would reconsider this section and try to achieve a little more fairness in it. Let him do so even from a selfish point of view. It would do far more to recoup the fortunes of the Liberal party than almost anything else.
I should not be giving him that kind of advice, and his party would have to do a great deal more to save themselves. But at least they should work in that direction. If they will not listen to reason, let them raise the exemptions for reasons of simple self-preservation because, believe me, if they go on acting in this way with regard to the low income people they will need all the self-preservation measures they can take.


Patrick Morgan Mahoney: Mr. Chairman, the hon. member for Winnipeg North Centre earlier today cited the Carter commission report as his authority for saying that a tax credit system was desirable in Canada. He said that the report recommended a tax credit system. The hon. member for Vancouver-Kingsway, who has just spoken, cited the Carter commission report as her authority for saying that it advocated greatly increased, exemptions. I think it would be useful at this point to remind the committee of just what the Carter commission did say in terms of the areas relevant to the provisions proposed in sections 109 and 110 of the bill before us.
In the first place, the Carter commission report did not entirely recommend a system of tax credits. As usual, the hon. member for Winnipeg North was about half right-


David Orlikow: That is half more than you are ever right.


Patrick Morgan Mahoney: -and that, of course, has an obverse side to it, which is rather typical. The Carter report did recommend a system of basic exemptions for single and married persons and for dependent children. The single rate that exists and is proposed under the current bill, according to the Carter recommendations would be replaced by two personal rate schedules, one for families, in accordance with the family unit concept of the commission, and the other for individuals. The basic exemption Carter proposed for individuals was $1,000, exactly as it is today, and not the increase to $1,500 that is proposed in this bill. The basic exemption for the family unit that Carter proposed was $2,100, not the $2,850 that is proposed in this bill.
Carter did not deal with exemptions for dependent children, moving instead to a tax credit system. He recommended that the tax credit for the first child be $100 and
October 25, 1971

for each additional child $60. He further recommended tax credits for working mothers, in the sum of $80 for a working mother with school age children and $200 for a working mother with pre-school children.
The present system of exemptions for close relatives other than dependent children or spouses was also to be replaced with a tax credit which was related to the expenditures made in support of such dependents. An individual or family unit would have a tax credit of $100 for each close relative to whom more than $1,000 had been given during the year for the support of that close relative. That tax credit would be scaled down depending on the degree of support given to the close relative.
Also, the Carter commission recommended, in respect of the areas dealt with in sections 109 and 110, that the special deduction from income of $500 for a taxpayer who has reached age 70 be terminated. Of course, the government in the current bill recommends that that special exemption be increased to $650 and be extended to taxpayers aged 65 and over. The commission also recommended that the special deduction of $500 for taxpayers who are blind, or confined to bed or a wheel-chair and who do not claim certain defined medical expenses, should be withdrawn. The government, in the present bill proposes that that $500 exemption be increased to $650.
There have been numerous other points raised during the debate today that I am sure I will have an opportunity later to deal with specifically. But in view of the increasing frequency of citations of the Carter commission report by spokesmen for the NDP, all of whom seem to be more than a little confused as to what the report actually recommended, I thought it would be worth while at this point to place on record those recommendations which are relevant to the sections under consideration.


Mr. Ritchie:: Mr. Chairman, I raise a small point on which I would like clarification from the parliamentary secretary. It concerns section 110 and payment for fulltime care of a taxpayer in a nursing home. The definition of a nursing home seems to be in doubt. My attention was directed to the case of a person over 100 years of age, who had a small pension from a son who had died, plus her old age pension. Apparently she was required to pay tax on this income even though at that advanced age she was pretty well receiving full-time attention in a nursing home.
I believe there may be a difficulty in connection with the definition of a nursing home due to the fact that provin-. cial authorities, under which nursing homes are licensed, differ in their definitions with respect to nursing homes, boarding homes and hostels. Perhaps a proper definition will be easier to arrive at as time goes on and provincial authorities enforce stricter licensing procedures. I should like the parliamentary secretary to comment on this point.


Robert Jardine McCleave: Mr. Chairman, I also wish to raise a point with the parliamentary secretary. It is technical one. Before I get into it perhaps I could add to the story that has been related to us by the hon. member for Vancouver-Kingsway about the farmer who kept putting less hay into the horse's manger until he suddenly found himself with a dead horse and, I suppose, some uneaten hay. Perhaps the moral of the story is that it does save a lot of wear and tear on mangers.
Income Tax Act
The parliamentary secretary listed the Carter commission recommendations, but I think hon. members should be reminded that there has been a considerable amount of inflation since those recommendations were made. The technical question I have arises out of section 109(l)(b)(ii)(B). This concerns the exemptions to be given for support of those who are "connected by blood relationship, marriage or adoption." I wonder if the parliamentary secretary's advisers could tell us what interpretation is intended to be made of this wording. The first part of my question deals with people who are connected by marriage. Does this include all step-relations, and does it include in-law relationships?
I would also point out to him that with a change of heart on the part of the government and the use of a phrase in this section about maintaining a self-contained domestic establishment, one could fit in all those unmarried couples living together in Canada and give them the benefit of the income tax reform. However, I do not expect the parliamentary secretary to answer that question tonight. I believe the minister will have to re-examine it. But I do ask the technical question about whether those connected by marriage include step-relations and in-laws, or just one and, if so, which one?


Gerald William Baldwin: May I add to the point made by my hon. friend and raise the question of adoption. I have had occasion to raise this matter once or twice earlier. I recognize that most provinces have adoption legislation, but I think it is still recognized that adoption by fact is a common-law means by which there can be established a relationship between a child and an adult. Are there any circumstances under which adoption by fact, within the meaning of this subsection, may be acceptable?


Patrick Morgan Mahoney: Mr. Chairman, I acknowledge to the hon. member for Halifax-East Hants that there has been considerable inflation since the Carter report was published. However, I seriously question whether this would have affected the recommendations that certain extended and increased exemptions be abolished. If they were to be reduced to zero for people aged 70 and over or, say, people confined to a wheel-chair, I cannot see how intervening inflation would affect that type of reduction.
On the specific recommendation, I refer the hon. member to section 251 (6) of the act which defines persons related by blood relationship, etc., for the purpose of the act. When he has examined that section, if he has further questions I shall endeavour to answer them.
I would refer the hon. member for Peace River to section 252 (1) (b) where it states that in the act words referring to the child of a taxpayer include:
a person who is wholly dependent on the taxpayer for support and of whom the taxpayer has, or immediately before such person attained the age of 21 years did have, in law or in fact, the custody and control,
I think that covers the de facto adoption to which he referred.


Mr. Saltsman:: Mr. Chairman, I should like to make some remarks in reply to those of the parliamentary secretary who appears to have been stunned by the point

October 25, 1971
Income Tax Act
made by my colleague, the hon. member for Broadview, about the oil companies.


Patrick Morgan Mahoney: Did he say something about that?


Max Saltsman: I am absolutely amazed at the position he took when he pointed out what the Carter commission recommended and what his government is doing. The assumption seems to be that this government has been generous to a fault in comparison with the Carter commission recommendations. That is about as dishonest an argument as I have ever heard in this House.
The central point of the Carter commission report was that equity between taxpayers be established, and the parliamentary secretary trots out the facts of the old age pension to show how much more generous his government is than Carter might have been. It is a totally misleading picture that he draws. He says nothing about the $225 million worth of taxes that we should be receiving from the resource industries, as recommended by Carter, and which we are not receiving. That would have gone a long way toward relieving old age pensioners of their burdens.
The exemption brought in by this government, which amounts to a few dollars for the old age pensioner, is not going to help them greatly. What is needed, and what was suggested in many of Carter's recommendations, is an increase in the old age pension. This is of more significance to the senior citizen than an exemption of a couple of dollars a year in the taxation system. The proposals attempt to make an essentially unfair system look better with the kind of cosmetic arrangement that the parliamentary secretary has suggested.
When discussing the Carter commission report it is grossly unfair to point to some of these areas without drawing the major conclusion made by the commission, that all taxpayers, all wage and salary earners including those in the middle-income bracket, would have their positions substantially improved and their tax substantially lowered if all the people who had been getting away without paying their fair share were included in the tax picture. There was not a word about that from the parliamentary secretary, and I think in all fairness to the debate he should have pointed that out.


Patrick Morgan Mahoney: Mr. Chairman-


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


Patrick Morgan Mahoney: On a point of order, Mr. Chairman, I must decline the hon. member's invitation to apologize for dealing with matters relative to sections 109 and 110.


An hon. Member:: What a contribution. How gracious.


An hon. Member:: That brings you back to the facts.


Max Saltsman: The parliamentary secretary's gracious attempt to decline from engaging in this debate on the basis of relevance is new. I have never known him to be concerned about relevance before and I do not know what his great concern is tonight. He certainly was not very relevant in the remarks he made a short while ago.


Patrick Morgan Mahoney: It is supposed to be relevant; it is in the headlines.


Mr. Reid:: You do not give him the opportunity to be relevant.


Max Saltsman: You are not very relevant in the backbenches either. Well, you probably are. It seems to be a very appropriate position for the hon. member for Kenora-Rai-ny River.
Mr. Chairman, one of the advantages of a system of tax credits rather than of exemptions is that it would indicate the true level of taxation in this country. One of the difficulties of our present system of using the exemption basis rather than the tax credit is that it makes our tax system look far more progressive than it is. Our tax system is not progressive. When you try to increase revenues, those who have the money cry about how heavily they are being taxed when in fact they are not.
My colleagues have done a good job of pointing out that the person in the upper income bracket receives far more advantage from a system of exemptions than the person in the lower income bracket. Yet the person in the upper bracket complains about his steep taxes and does not mention the advantages he receives. If we had tax credits we could in fact obtain the revenue which we are getting now. I am confining my remarks to this particular section, but it is necessary to point out, Mr. Chairman, that the whole tax system is riddled with this kind of inconsistency.
The marginal rate does not reflect the depletion allowances that people in the higher income brackets receive. It doees not reflect their after-tax income because of the advantage they get under the dividend tax rate. It does not reflect their after-tax income because capital gains are not included, and under the proposed bill will only be half included. There is a misleading picture when those with higher incomes can say they are being heavily taxed and in fact many of them are not paying as high a rate as the ordinary person with an income below $10,000.
The Carter commission pointed out that the lower and middle income groups of this country were bearing the chief burden of the cost of government and the cost of social services in this country, and that it was unfair because everyone should pay according to their ability. The parliamentary secretary prefers to ignore this fact and to point out the little things in the report that are pot-boilers, that would arouse some emotion. Admittedly, there are some things in that report about which we do not feel too happy. But Carter was suggesting, in the context of equity, the inclusion of all forms of income. We feel that should have been done.
On numerous occasions, Mr. Chairman, we have pointed out the importance of everyone paying their fair share because in a system such as ours there is no such thing as tax avoidance. One man's tax avoidance is the next man's tax burden. To the extent that people in the upper income bracket receive special benefits, whether from resource industries or capital gains, wage and salary earners are paying higher taxes than they should.
My colleagues have advocated an increase in the basic exemptions to $2,000 for a single person and $4,000 for a married man, and have indicated they would prefer a tax
October 25, 1971

credit system. However, it seems that the government is adamant on that point, so we are prepared to argue that at the very least we ought to increase these exemptions in order to be fairer to people in the lower income brackets. This argument is particularly cogent at this time when we are desperately trying to reduce the level of unemployment in Canada. The government itself acknowledges that we must take steps to increase consumer purchasing power. What better way of increasing consumer purchasing power is there than increasing the exemption levels of single and married people who are in the lower income brackets?
An hon. member said that it would cost half a billion dollars to grant these exemptions. The Minister of Finance, in his announcement of two weeks ago, indicated he was prepared to grant corporations tax reductions which would cost the treasury between $160 million and $175 million. Since there is no indication that any savings made at that level will filter down and stimulate the economy, would it not have been better if the Minister of Finance had granted increased income tax exemptions in order to stimulate the economy? I think most people will agree that that method would have stimulated the economy far more effectively at this time. That method of stimulation, I submit, is preferable to the method under which corporate taxes have been reduced.
I do not think we ought to be concerned so much about the government's being deprived of vast sums of revenue if exemptions are increased to the levels we suggest. We ought to be more concerned about transferring benefits that the government has given to certain sectors of industry to people who pay income tax and, particularly, to those at the lower end of the income scale.
I hope that those with thick heads on the government side of the House are listening to the points we are making. I hope hon. members over there feel some degree of sympathy for suggestions that we on this side of the House are making. I hope some people over there who may know what is going on will support the position the opposition is taking on increased exemption levels for Canadians. I hope they consider this matter both from the viewpoint of their party and of the taxpayer. Let them show fairness to those who have been denied fairness for too long. Let us move to stimulate the economy at this time when it so desperately needs stimulation.


Mr. Burton:: Mr. Chairman, in debating sections 109 and 110 of this bill we really have had to contend and grapple with two basic issues. One is the extent of relief from taxation which is to be afforded people through a variety of methods and how the division of that relief from taxation is to be brought about; in other words, how the dollars of exemption or credit, or whatever it is, are to be divided up. Second, we have had to deal with the establishment of a tax system that is capable of being adjusted and changed to take into account new economic circumstances and developments in our economy and society as a whole. Mr. Chairman, I think that this is at the heart of the debate because we are now discussing tax credits and tax exemptions.
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I was surprised at the intervention of the Parliamentary Secretary to the Minister of Finance. He seemed to suggest that Carter was not that hot on the idea of the tax credit system and that he came forward with it only in a half-baked way, so to speak. For the benefit of the parliamentary secretary and members of the committee, may I quote some of the comments made by the Carter commission on this particular subject. I intend to continue my remarks tomorrow, Mr. Chairman, and therefore I shall deal now with only one point. Dealing with the purpose of tax credits as against exemptions, Carter had this to say:
We believe that the primary purpose of the additional allowances for dependants, working wives, educational support, and so forth, is to reduce the tax burden on low income families whose ability to pay is most heavily affected by the additional non-discretionary expenses resulting from each of these circumstances. We therefore regard the use of tax credits as a more efficient means of achieving this objective. Accordingly, we have recommended the adoption of tax credits in place of exemptions to reflect the effect of family responsibilities upon ability to pay, and have used the tax revenue gained from this substitution both to increase the effective allowances to low income families and to reduce marginal tax rates below what they would otherwise be.
It seems to me that in this paragraph Mr. Carter set forth the principle clearly that you need a tax credit system if you are to bring about the type of relief that is envisaged when you bring in any form of exemption, credit or whatever it may be. On page 180 of volume 3 of the report which was published in 1966, some five years ago, Mr. Carter pointed out the differences between tax credits and exemptions. He said that the difference between tax credits and exemptions is simple. Of course, members of the other side of the House seem to have failed to grasp this fact. Mr. Carter went on to say:
A tax credit involves a reduction in taxes of a given amount, while an exemption grants a reduction in taxable income. The latter results in a tax reduction that increases with income. Because an exemption excludes from tax the last dollars of income received by a taxpayer, the value of an exemption depends upon the marginal rate applicable to the taxpayer. A tax credit, on the other hand, in effect exempts a given amount of the first dollars of a taxpayer's income. A tax credit thus affects all taxpayers in the same amount, while an exemption provides an allowance which increases in value as income increases . . . To put this in other terms, the revenue loss resulting from the use of exemptions is higher than from the use of credits, where credits and deductions achieve the same result for low income families.
The government failed to recognize or grasp that principle put forward by the Carter commission, and for that they should hang their heads in shame.
Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION

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

David Orlikow: Mr. Speaker, on October 15 I asked the Prime Minister (Mr. Trudeau) whether he would table an estimate as to the number of

October 25, 1971
Proceedings on Adjournment Motion
people who would be employed this coming winter as the result of the proposals made by the Minister of Finance (Mr. Benson) two weeks ago for dealing with the very heavy unemployment which we are facing. The Prime Minister, in his characteristic way, answered with one word, "No." I was not the least satisfied with that answer.
One cannot help realizing how serious the situation will be this coming winter. In September of this year, the last month for which figures are available, there were 434,000 people unemployed. That represents 7.1 per cent of the labour force, calculated on a seasonally adjusted rate. In September, 1967, the last September before this Prime Minister and the government were elected to run the country, there were 219,000 people unemployed. The seasonally adjusted rate was 4.1 per cent.
Ever since the Prime Minister and this government were elected, the rate of unemployment has risen sharply. This year, month by month the rate of unemployment is running approximately 10 per cent higher than the same period last year. In February, 1971, the worst month for unemployment, there were 675,000 people unemployed. A rough calculation of adding 10 per cent, which is a very conservative estimate because it does not take into account the American economic measures announced and instituted by President Nixon, indicates that approximately 750,000 people will be unemployed. The Minister of Industry, Trade and Commerce (Mr. Pepin) estimated that the effects of the Nixon economics, if implemented for a full year, will add 90,000 to the number of unemployed in Canada. If one takes half of that for February of this year, you get another 50,000 people unemployed. As I said on another occasion, the estimate I give is not one which I calculated; it is an estimate prepared by one of the most eminent economists in this country. We have a potential unemployment this February of 800,000 people.
The government announced a program of public works at the federal level through the provinces, municipalities and volunteer organizations. It announced it will spend between $450 million and $500 million. A few days ago the Minister of Agriculture (Mr. Olson) pointed out that $10 million is to be spent on upgrading agricultural exhibition buildings. He estimated that 1,000 jobs will be provided through the expenditure of that $10 million. In other words, the Minister of Agriculture estimated it will cost $10,000 to produce one job. By using the same calculation for the $450 million to $500 million which the government proposes to spend this winter, 45,000 to 50,000 jobs will be created. That is not good enough. We will still be left with 700,000 or more people unemployed this coming winter.
The Prime Minister has said on many occasions that the situation is getting better, the economy is improving and the rate of unemployment will be following, if not today, tomorrow, next week or next month. The people of Canada have a right to demand that the Prime Minister and the government say how many jobs will be produced this winter as a result of the program announced by the Minister of Finance, and how many unemployed there will be next winter. I know that economists in the Department of Manpower and Immigration, the Department of Labour and the Department of Finance have made these calculations. The Prime Minister and the government not

only have a responsibility but a duty to tell the people of Canada what kind of winter they face this year with regard to unemployment.


Mr. J. A. Jerome (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, as the hon. member well knows, predictions in any precise terms of the number of jobs created by a given program cannot be made with any degree of certainty. It is always possible, of course, to predict a certain rise or fall in employment in very general terms. Indeed, the Minister of Finance (Mr. Benson) in his presentation on October 14 indicated that, as he had forecast, there are now some 200,000 more jobs in the economy than there were a year ago.
The design of the current program is to stimulate employment opportunities for the great many new entrants into the labour force and, wherever possible, to protect from lay-offs those who are currently at work. Much of the current program involves tax cuts which are designed to increase consumer spending, thereby increasing the demand for goods and services. But how is it possible to predict accurately the number of people who will be protected from lay-offs as a result of these measures?
Similarly, with the balance of the program consisting of loans and grants to provinces, municipalities and associations, as well as massive housing construction programs and other programs associated with residential construction, the final number of jobs created no longer rests entirely with the government but, rather, depends upon the response of those to whom these programs are directed. There is, in addition, the multiplier effect of increased consumer spending and the indirect effect created thereby, because when the government spends sums of money, money is also enticed out of the savings repositories of associations, municipalities and individuals. Thus, how can we fairly delineate the exact amount of government responsibility for all these increased activities?
Accordingly, while the government has every expectation that the jobs stimulus of this program will be very dramatic, and while it may be possible later to ascribe a fairly exact ratio of jobs created or saved to dollars spent, it is regrettably impossible at this moment in time to give an accurate answer to the kind of question put forward by the hon. member.



ATOMIC ENERGY-RESUMPTION OF STUDY OF POSSIBLE ESTABLISHMENT OF HEAVY WATER PLANT AT MONTMAGNY

Joseph Adrien Henri Lambert: Mr. Speaker, tonight I should like to revert to a matter which I raised in a question I asked to the hon. Minister of Energy, Mines and Resources (Mr. Greene) on October 19, 1971, that is the possibility of establishing a heavy water plant in Montmagny.
In my question, I referred to the year 1966, but Hansard, by mistake, mentioned the year 1970. However, the year in question is actually 1966. My question appeared on the Order Paper in 1969.
Now, I have received on that matter a letter from the Montmagny Textile Union, which was sent in September. The letter reads as follows:
October 25, 1971

The Montmagny Syndicat du Textile wants to point out that the City of Montmagny was considered, in 1966, as the site of a heavy water plant to be built by Canadian General Electric.
Now, Mr. Speaker, on February 3, 1969, I put on the order paper the following question No. 1,307:
Did the government have a special survey made into the possibilities of locating a heavy water plant in Montmagny or its vicinity and, if so, what were the results of that study?
The following reply was given:
As far as Atomic Energy of Canada, Limited is concerned, no.
No such study was made.
Later on, that is on February 10, 1969, I asked the department for additional information. The deputy minister of Industry, Trade and Commerce answered my letter as follows:
This is the list of production facilities which are under construction or which are planned in Canada:
a)	Glace Bay (Nova Scotia). Yearly output: 400 tons. Operation
will begin in 1969.
b)	Tupper Point (Nova Scotia): Operation beginning in 1969.
c)	Douglas Point (Ontario): Operation beginning in 1972.
The construction cost of a heavy water plant with a yearly output of 400 tons is about $65 million. Deuterium of Canada Ltd. and the Canadian General Electric Ltd. have entered into contracts with Atomic Energy of Canada Ltd. for the sale of 5,000 tons of heavy water during a 12-year period. The production of the Douglas Point plant will be used by Ontario Hydro which seeks to increase its nuclear power production program.
If I can be of further help, do not hesitate to contact me.
Following this reply, I put on the order paper the following question:
1.	Has the Minister of Industry, Trade and Commerce already considered the possibility of establishing a heavy water plant in Montmagny?
2.	Has the Minister of Industry, Trade and Commerce ordered certain research work for this purpose and, if so, (a) what have been the results of this reasearch, (b) was the site found suitable for such a plant, (c) has the water required for such a plant been considered suitable for this purpose, (d) what is the approximate cost of the construction of a heavy water plant?
I got the following answer:
1.	The possibility of building a heavy water plant in Montmagny has not been considered.
2.	Not applicable.
Now, in a bulletin published by Quebec Hydro on July 25, 1966, it is stated:
The federal government, through the Department of Mines and Technical Surveys and the Atomic Energy Board of Canada had asked Canadian General Electric if they would be willing to build a heavy water plant in Canada, under certain conditions, one of the first ones being that this plant be located in one of the regions officially designated as "underdeveloped area".
-of which Montmagny was then a part.
Well, the study was made, and one paragraph of the bulletin reads as follows:
Canadian General Electric, urged on by the Atomic Energy Board of Canada, was compelled to set June 24 as the final date for registration.
-for the towns that wanted to apply for the building of the heavy water plant within their limits.
A study was conducted. Reference is made to a report in the bi-monthly review of Quebec Hydro. I am surprised to
Proceedings on Adjournment Motion learn in newspaper reports today that apparently the plant has been built in Nova Scotia at a cost of $120 million, that it has not yet produced any heavy water, that it is intended to hand it over to the government of Nova Scotia and that, in order to put it into operation, a further investment of $90 million would be needed.
In conclusion, I would like to have an explanation, not out of curiosity, but in order to satisfy the Montmagny population and authorities. I also wish to urge again the government to look into that question. The Montmagny plant closure will lead to the lay-off of several hundred workers. The installation of a heavy water plant would help fight unemployment that will soon prevail in Montmagny.
I hope the hon. minister and the government will take into consideration the facts I have mentioned, and if it is true that there has been a study, then there is something to go on. If there has been no study, the truth should be told and from there, all government levels will be able to work on a project to achieve the construction of a heavy water plant in Montmagny. That would be much appreciated not only by the people in Montmagny by also by the population of the whole area.


Mr. Marcel Prud'homme (Parliamentary Secretary to Minister of Manpower and Immigration):: Mr. Speaker, as far as the federal government is concerned, no study has been made in Canada in 1970 about Montmagny as a possible site for the establishment of a heavy water plant. There is no such plan at the present time, because there is no need for it.

Members will recall that a plant at Glace Bay, Nova Scotia, has not come into production and that in April, 1970, the Prime Minister (Mr. Trudeau) offered financial assistance amounting to some $40 million to the province of Nova Scotia toward rehabilitating the plant. The offer was not taken up and the months slipped by. Early in 1971 the federal government authorized AECL to undertake a study of the plant to see what in their judgment was involved in the rehabilitation of the Glace Bay plant. Just recently AECL has been asked by the federal government to enter discussions with Deuterium of Canada Limited and the premier of the province of Nova Scotia to determine whether grounds for an agreement could be reached regarding the terms of AECL rehabilitating the plant. The outcome of this initiative should be known in the near future.



REGIONAL ECONOMIC EXPANSION-IMPERIAL OIL CONSOLIDATION OF PRAIRIE OPERATIONS IN EDMONTON-CONSULTATION WITH MINISTER OF IMPLICATIONS

Douglas Charles Rowland: Mr. Speaker, on Thursday October 14 I asked the Minister of Regional Economic Expansion (Mr. Marchand) the following question:
May I ask the minister whether, prior to the recent decision by Imperial Oil to consolidate their prairie operations in Edmonton, or at any time since that decision was made, he has consulted with Imperial Oil to discuss the implications of such consolidation for regional economic disparity?

October 25, 1971
Proceedings on Adjournment Motion
The minister took the question as notice and replied the following Monday to the effect that there has been no consultation with Imperial Oil except that four months ago when the decision to locate at Edmonton had been made by Imperial Oil, Imperial Oil came to the Department of Regional Economic Expansion and asked them if any money was kicking around for such a development. The reply was in the negative, that Edmonton was not a designated region and that oil refineries did not qualify. I find it beyond belief that in the case at least of major economic decisions on the part of Canadian industry, consultation with DREE is not automatic.
The short-term economic effects of Imperial Oil's decision to shut down refineries at Calgary, Regina and Winnipeg in order to consolidate at Edmonton are imposing, but the potential long-term effects on the cities involved defy calculation. Yet there was no obligation on the part of Imperial Oil to consult nor, it would seem, did the minister or his department feel any need to make inquiries of Imperial Oil or to discuss with that company the possibility of locating its new facility in the slower growth areas of Winnipeg or Regina. If such consultations are not automatic, how can we ever hope to lessen regional economic disparities?
The parliamentary secretary to the minister, or whoever is replying on the minister's behalf, may say that the legislation does not make such demands. I say if it does not, it should. Otherwise DREE will never do much more than give grants to companies which have already made up their minds to locate or expand in a given area. It will simply act as a slush fund. It will never effect a major relocation of industry in this country, which is absolutely necessary if the regional economic disparities which exist in Canada are to be removed.
Indeed, the very procedures adopted by the department militate against its being able to have any major impact upon the structuring of our economy. A company cannot, for example, submit several possible locations for a plant to DREE for its consideration and weigh offers for each of the locations; it must submit a single location. Then if it is to know what is available in another area in any definitive way, it must reject the first offer from DREE and submit another plan. Thus, to a large extent companies must reach their decision without any meaningful assistance from DREE. Hence, it is not surprising that Imperial Oil approached DREE only after its decision was made.
In a television interview on this subject I argued that unless DREE has the power and the necessary procedures to exert a major influence on the decisions of industries about the location of their facilities, it will never effectively deal with the problem of raising up areas of slow economic growth. The minister said in reply on the same program that the people of Canada were not yet ready for government to tell private enterprise that it must locate a facility in Vancouver, in Halifax or in Winnipeg.
I am not sure that the people of the economically disadvantaged regions of this country are not ready to see the government engage in directive economic planning as opposed to indicative planning. I am certainly ready to try it, since indicative planning has done nothing to close economic gaps in this nation. In the five or six years

during which some attempts at indicative planning have been made, the gaps have actually widened.
But I am not even going so far as to ask the government that the department direct industry. I am simply asking the government to ensure that consultations take place; that the people know that if slow growth regions are to be overlooked by an industry, the government at least has made some effort to ensure that that region would not be overlooked. Surely such action is the least one could expect from a department supposedly dedicated to the removal of regional economic disparities even if, for some reason beyond my understanding, the government will not give that department the directive powers without which it can never accomplish its stated task.
Thus, I would ask again if the minister would consult with Imperial Oil to see if there is not some way to have its decision to locate in Edmonton reviewed and to have the slower growth areas of Regina and Winnipeg considered again. Moreover, I would ask the minister, if Imperial is to move out of Winnipeg despite any hoped for future efforts of DREE, to seek assurances that crude oil will continue to be supplied to the Shell Oil refinery in Winnipeg by the pipeline which is owned by a subsidiary of Imperial Oil and which now supplies both the Imperial refinery and the Shell refinery.
It would seem to me that if the Imperial refinery in Winnipeg is converted to a storage facility for finished products as projected, the pipeline might well be converted to carry only finished products, which might necessitate the closing of the Shell refinery by cutting off its crude. I hope the minister will seek assurances that this will not be the case.
Finally I want to make two comments with respect to the proposed consolidation, which are not strictly relevant to the matter under consideration but which should be heard. First, I think Imperial Oil should be commended for the fact that it gave its employees, the communities involved and the governments involved three years' notice of its eventual intentions. This has allowed the employees some time in which to seek alternative employment and the communities time in which to seek alternative employment and the communities time to plan and to adjust. It also allowed the governments, even if this one is seemingly unwilling to do so, time to get involved in the decision. That is commendable.
On the other hand, the means by which the employees were informed by Imperial Oil of the decision was absolutely reprehensible. Unless the men happened to be at work at the time the announcement was made, they found out their jobs were in jeopardy by reading it in the newspapers or hearing it on the radio. Men on another shift, on day off or on holiday were not given the courtesy of advance notice. Many men with 15, 20, 25 and even 35 years of loyal service to that company suffered the indignity of being informed of the jeopardy to their jobs by people unconnected with Imperial Oil, friends and relatives who happened to hear about it. That is unforgivable. As I said, that is beside the point but I think it should be noted.
The major points are: Will the minister consult again with Imperial Oil to see whether that decision cannot be changed and, if it cannot be changed, will the minister
October 25, 1971

seek assurances that Imperial's action will not ultimately result in the closing of the Shell Oil refinery in Winnipeg?


Marcel Prud'homme: Mr. Speaker, as the Minister of Regional Economic Expansion (Mr. Marc-hand) replied on October 18 last to a question put by the hon. member for Selkirk (Mr. Rowland), his only negotiat-
Proceedings on Adjournment Motion
ing power, in his capacity as minister, is to offer a grant to a plant locating in a designated area.
However, the minister has assured me that when an opportunity occurs, he will gladly pass on to the management of Imperial Oil the representations the hon. member for Selkirk has just made in the House.

At 10:25 p.m. the House adjourned, without question put, pursuant to Standing Order.

Tuesday. October 26, 1971