1971-09-20

ROUTINE PROCEEDINGS


Hon. E. J. Benson (Minister of Finance):: Mr. Speaker, I would like to make a brief report to the House on the meeting in London last Wednesday and Thursday of ministers and governors of the Group of Ten.
I wish to table copies in English and French of the communique issued by the Group of Ten and of my statement of the Canadian position.
This was the first opportunity for ministers to examine the world monetary situation in light of the program announced on August 15 by President Nixon to correct the very serious balance of payments deficit of the United States.
All ministers recognized that a fundamental disequilibrium exists in world payments and that action on a wide front will be necessary to deal with it. We have all come away from the meeting with a much clearer understanding of positions. All of us appreciate that difficult work lies ahead, and nobody expected overnight solutions. As far as I am aware, the world has never been faced by a financial and economic negotiation of such complexity and sensitivity. The plain fact is that differences of opinion have emerged among leading nations as to the order of priorities for the major policy adjustments that are necessary. It will take time for governments to decide on such actions in light of the positions of every other government. In the meantime important work will proceed in Working Party Three of the Economic Policy Committee of the Organization for Economic Co-operation and Development, as well as among the deputies of the Group of Ten. The ministers and governors will meet again on September 26 in Washington, in advance of the annual meeting of the International Monetary Fund.
In my remarks to the meeting as Minister of Finance of Canada I emphasized the urgency of the situation and the need to grapple positively with the issues involved. I stated frankly that the most important steps of the United States-the surcharge, the investment tax credit and the so-called DISC proposal-are protectionist in nature. They represent a departure from traditional American policies. I suggested that action is long overdue to dismantle protectionist policies on the part of Europe and Japan that have hindered the process of adjustment and that have too often been directed at U.S. products. I said that
immediate adjustments would be assisted if the U.S. could make a more precise statement of essential preconditions for the removal of the surcharge.
Canada recognizes that the payments position of the United States will be corrected, one way or another. We have suggested that the real issue is the way in which the correction will occur. We hope it will occur in an environment of continued economic expansion in the world. We hope it will not occur through an unravelling of the freer trade arrangements secured in the last quarter century. We must act together in constructive ways before such a pattern of restriction sets in.
No country has more at stake in these matters than Canada. We intend to participate actively and responsibly in these discussions and provide leadership wherever we can.


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I should like to welcome the Minister of Finance (Mr. Benson) back to Canada and to the House of Commons. There was a little concern that he might not be allowed to return, that his services might be required to deal with these financial and economic negotiations of such complexity and sensitivity.
I do not intend to speak at any length, Mr. Speaker. I think the minister will agree with me that we have already read in the press just about everything that he said in the House today. We understood that there were no solutions. We recognize, as he pointed out, that a good deal of time will be required to work out some of these difficulties. We understood, too, that there were fundamental differences of opinion among some of the important countries and blocs attending the conference. We agree that it would be helpful if the United States were to state its preconditions for the removal of the surcharge a little more precisely. However, I gather from the minister's statement that the United States is not yet prepared to do so.
The minister has confirmed the press reports of what he said at the meeting about the positions of other countries. We can agree with his expression of opinion about the protectionist aspect of the move taken by the United States. He also expressed his opinion about what the European Common Market and Japan should do. However, I think it would have been more helpful to the House and the country if the minister had told us what measures, if any, the other countries have suggested that Canada should take. This has not been disclosed and I suggest it is very important.
There were rumours, for example, that the IMF had suggested that we should peg our dollar well above that of the United States. The minister has not told us whether other countries, the United States, for example, are insisting that Canada should move in any particular direction.

September 20, 1971
Report on Group of Ten Meeting
He has not told us whether the European Common Market countries are taking any position as to the direction which Canada should take with regard to the Canadian dollar or other aspects of Canadian policy. The minister has simply told us what he suggested other countries should do. I suggest it is very important to Canadians, in considering our position and our difficulties, that we have what we have not yet had, a frank disclosure by the minister or the Prime Minister as to what pressures, if any, for a change in position have been directed against Canada and by what countries.	*


Mr. David Lewis (York South):: Mr. Speaker, there may well be a reason why the minister had to be so unrevealing in his statement. It may well be that the discussions which were held in private and the negotiations which will continue made it impossible for him to tell Parliament and the people of Canada anything at all. But I must say as one member of the House that I am becoming increasingly frustrated by these non-statements and generalizations that there were differences of opinion when everyone in the world knows that to be so, and these generalizations and platitudes about the need for corrections to take place in a state of economic expansion rather than contraction, with which everyone agrees. I have a feeling that if ministers cannot say more than that, if they cannot be more meaningful than that, perhaps the practice of making these reports ought to be abandoned, because the minister said nothing at all.
I and the people of Canada would like to know whether there was any indication from the Secretary of the Treasury of the United States that consideration is being given to the removal of the surcharge. We do not merely want to know what are the preconditions but are they going to remove it? I had hoped the minister would tell us whether he discussed with Mr. Connally Canada's appeal for the removal of the surcharge with respect to Canada, and whether he had any encouragement. I suspect, since he did not refer to it, that either he did not discuss it, which I find unimaginable, or he discussed it and did not get encouraging answers. If that is the case he ought to have told us.
What the minister has brought back to us is an admission that he refused to make sgme weeks ago, namely, that what Canada and the western world face is not a short-range problem but a long-range problem, that the various protectionist, or what I have called in the House reactionary, policies of the Nixon administration that are working against the western world, which is what they are doing, are not going to be of short duration and are not going to disappear. Neither the surcharge nor the tax credit nor the DISC program is going to disappear in a short time. Therefore it is important for the government and Parliament to consider some long-range economic adjustments to meet the evils and undoubted serious consequences of the American protectionist policy.
I think the minister's report underlines the inadequacy, almost the irrelevancy, of Bill C-262 which we debated here. The temporary measure that the government produced cannot really meet the position at all. I also suggest that the minister would do the country and Parliament a great deal more service if he would tell us what Canada and the Canadian government are preparing to do in

order to deal with the long-range economic problem that will get worse before it gets better, if it gets better, in less than a year or two. From my reading of the American temper at the moment, it is clear that Washington does not intend to abandon this protectionist role, that the policy of turning inward to deal with the problems of the United States is one that will be of long duration, that their determination to make the western world help to solve these problems is very strong, and that, therefore, we must look at some long-range solutions of our own and in unison with other countries if we can find a general policy.
Finally, I would hope that when speaking in Europe the minister pointed out to the United States, as I hope he will when he speaks again, that it is not only world trade by any means that is responsible for the American balance of payments problems but that their military commitments carry a major responsibility, and that reducing them is, perhaps, the way in which to help peace as well as the international economic security.


Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, I read very quickly but I listened very closely to the statement made by the Minister of Finance (Mr. Benson) in which he said the following:
So far as I am aware, the world has never been faced by a financial and economic negotiation of such complexity and sensitivity.
Mr. Speaker I am certainly not an expert in international problems. However, if we use the good common sense with which one should study the problems we now have in Canada and which do not seem to be different from those encountered by the United States and several other countries, it appears that countries, as a rule, are faced with overproduction and goods of all kinds and that each country is trying to protect its own domestic economy by resorting to the means taken by the United States on August 15, 1971.
In view of the circumstances, and even if those problems are considered very serious, I feel that if we were up against a world famine, we would probably be wiser and perhaps more capable of finding solutions. It would seem easier to me, judging from the discussions held by the Group of Ten.
Without resorting to "overnight solutions" as the Minister of Finance said a while ago, we must look into those problems more rapidly. We must not spend years doing it. Indeed, Canada should set the example: instead of retorting with statements which may only embroil matters, the government should enact a discount on prices, stimulate consumption of goods made in this country develop our Canadian economy. This would be an example for the United States where doubtless there are as in Canada, families whose needs are not being satisfied. Even though it is said that the Americans number 200 million and that theirs is a rich country, I have had the opportunity this summer of visiting certain regions of that country and to see there, just as in Canada, poor families in a rich country.
I feel that at the new meeting of the Group of Ten, the Minister of Finance will advocate, without prejudice to Canada, the application of a policy fit for human beings
September 20, 1971

who happen to be willing to reach the objective of production, by making all other people benefit from it.
In order to enable Canada and the United States to attain this objective, it will be necessary to steer off the beaten tracks, to adopt a new policy and, instead of overtaxing, to grant discounts leading to a decrease in prices and an increase in purchasing power.
In my view, unless different measures are taken, we shall see, as we did during the period from 1935 to 1940, economic rivalry between countries which can only lead to war.
* (2:20 p.m.)
I would not wish that we take the same means at this time because we would undoubtedly get the same results, which would be unfortunate. We are in peacetime and we have huge stocks of products manufactured by the population. Let us be wise enough, at least with our possibilities throughout the world, to transport that wealth to those who need it. Let us be wise enough to find the financial means to reach that goal.
That is my suggestion in answer to the statement of the Minister of Finance.



WITHHOLDING BY GOVERNMENT OF PAYMENTS UNDER TEMPORARY WHEAT RESERVES ACT-REQUEST FOR UNANIMOUS CONSENT TO MOVE MOTION UNDER S.O. 43

Mr. A. P. Gleave (Saskatoon-Biggar):: Mr. Speaker, I ask leave under Standing Order 43 to present a motion of urgent and pressing necessity. I move, seconded by the hon. member for Yorkton-Melville (Mr. Nystrom):
That, in the opinion of this House, the government should immediately pay to the Canadian Wheat Board the sums required by law to be paid, as specified in the Temporary Wheat Reserves Act of 1956.


Mr. Speaker:: The House has heard the motion proposed by the hon. member for Saskatoon-Biggar. Under the terms of Standing Order 43 this motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


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



QUESTIONS ON THE ORDER PAPER

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

Mr. Mather: Is consideration being given to pooling the services of Air Canada and CPA in the international flight field to offset the costs of the new larger aircraft and the operational losses entailed by the airlines?


Mr. Gerard Duquet (Parliamentary Secretary to Minister of Transport):: 1. No consideration is being given to the pooling of air services between Air Canada and CPA in the international flight field. However, some technical discussions between the carriers are being held with a view to exploring certain common problems of cost saving in the operation of new large aircraft.


CLASSIFICATION ADJUSTMENTS AS A RESULT OF LAST REPORT OF CLYNE COMMITTEE
Mr. Orlikow: 1.	How many classifications of public servants have had their salary ranges adjusted as a result of the last report of the Clyne Committee, as of June 1, 1971?
2.	What are the classifications?
3.	What were the adjustments?


Hon. C. M. Drury (President of the Treasury Board):: 1.
As of June 1, 1971, the following classifications had had their salary range adjusted as a result of the last report of the Clyne Committee.
2.	The classifications were Senior Executive Officers 1, 2, 3 and 4 (SX 1, 2, 3 and 4), Senior Executive Group, Executive Category, and Deputy Ministers 1, 2 and 3.
3.	The adjustments effective January 1, 1971, were: SX 1 Former range, from $20,000 to $25,000 (with increments in multiples of $250); new range, from $21,000 to $26,000 (with increments in multiples of $100). SX 2 Former range, from $22,000 to $27,000 (with increments in multiples of $250); new range, from $23,000 to $29,000 (with increments in multiples of $100). SX 3 Former range, from $24,000 to $30,000 (with increments in multiples of $250); new range, from $26,000 to $32,000 (with increments in multiples of $100). SX 4DM 1 Former range, from $29,000 to $35,000 (with increments in multiples of $250); new range, from $31,500 to $37,500 (with increments in multiples of $100). DM 2 Former range, from $35,000 to $39,000; new range, from $37,500 to $42,000. DM 3 Former range, from $39,000 to $42,000; new range, from $42,000 to $46,000.
Note: Senior Executive Officers and Deputy Ministers are paid on the basis of merit.


REPRESENTATIONS FROM SASKATCHEWAN ANTI-TUBERCULOSIS LEAGUE AS A RESULT OF INCREASED POSTAL RATES
Mr. McIntosh: 1.	Has the Postmaster General received representations concerning the problem encountered by the Saskatchewan Anti-Tuberculosis League as a result of the increased postal rates on third class matter applicable to the League's Christmas Seal Campaign and, if so (a) what where they (b) what action has been taken?
2.	Has the Minister given consideration to the effects of the increased postal rates on the Tuberculosis Prevention Program and, if so, what are such effects?
3.	Will the Minister give consideration to the proposal that the increased postal rates for third class matter not apply to voluntary associations whose program funds are raised by a mail appeal?

September 20, 1971
Order for Return


Hon. Jean-Pierre Cote (Postmaster General):: 1. A
request was received from the Saskatchewan Anti-Tuberculosis League that the increased third class postal rates not be applicable to voluntary associations whose program funds are raised by a mail appeal and in fact asked that a reduced third class rate be made applicable to such organizations. As we had received other similar requests the matter was already under study when this request was received.
2.	The Saskatchewan Anti-Tuberculosis League maintains that the adverse effects of increased postal rates will be to the detriment of their over-all program.
3.	By virtue of the powers vested in me by the Post Office Act, I could establish preferential postage rates for non-profitable charitable, humanitarian or voluntary organizations. Such measure would, however, be fraught with far reaching consequences extending beyond the scope of the Post Office. It would entail the setting of special postage rates based upon extraordinary welfare or social considerations; this would be tantamount to shifting the burden of foregone postal revenue to users of other classes of mail or to the general taxpayer. The question would have to be resolved as to how the Post Office could pass value judgment on the individual merits of particular charitable, humanitarian, welfare or voluntary organizations (of which there are some 35,000 registered with the Department of National Revenue as charitable institutions for income tax purposes) as opposed to organizations engaged in other worthwhile endeavours, without running the risk of being accused of discrimination. It would be impracticable and inequitable to set rates favouring a particular type, or types of organizations whose members may claim that their activities are of benefit to the public at large.


DEPARTMENT OF AGRICULTURE PUBLICATION &quot;THE LIGHTER&quot;
Mr. Mather: 1.	What is the annual cost of the Department of Agriculture's publication The Lighter?
2.	What consideration is being given to ceasing production of The Lighter, in view of the Department of National Health and Welfare's efforts to reduce tobacco induced diseases?


Hon. H. A. Olson (Minister of Agriculture):: 1. Cost for printing and typesetting annually for four issues, $3,480; cost of editorial services, etc., (departmental) approximately, $3,000; approximately per annum, $6,500.
2. No consideration is being given to discontinuing publication of The Lighter. This periodical does not promote the use of tobacco but conveys information to producers and the industry on current research to develop less hazardous tobacco products, a research objective quite consistent with the aims of the Department of National Health and Welfare.


QUESTION PASSED AS ORDER FOR RETURN
Mr. Brewin: 1. Does the government participate in the Arctic Institute of North America and, if so (a) what is the extent and purpose of its

participation (b) does it do so through the Department of National Defence or the Defence Research Board?
2.	Was access to the St. Elias Mountain Range in the Yukon granted to the United States military for research and study and, if so, what is the nature of the research and study carried on by the United States military?
3.	Have Canada and the United States undertaken joint military research in the Arctic and, if so (a) where and what is the nature of such military research (b) are any such joint research projects now under way and what is their purpose?
4.	Has research conducted in the Canadian Arctic over the past five years included research in chemical and biological warfare and, if so (a) by whom was such research conducted (b) was it under the supervision of the Canadian Armed Forces?
Return tabled.



ORAL QUESTION PERIOD


Robert Lorne Stanfield: should like to direct a question to the Prime Minister. Last Thursday the right hon. gentleman expressed some uncertainty about the need for immediate additional governmental measures to create jobs in the country. Now that he has had time for reflection and, indeed, for consultation within the government, I should like to ask him whether he has determined upon a course of action and when we may expect to see some action with regard to job creation?


Right Hon. P. E. Trudeau (Prime Minister):: I have nothing to add to what the Acting Prime Minister said on Friday-that the government is considering all forms of action and that an announcement will be made in due course if further action is decided upon.


Robert Lorne Stanfield: In order to give the context I should like to remind the Prime Minister of a statement he made on July 23: "The unemployment rate as a trend is falling and we are convinced our policies will lead to good results." I should like to ask the right hon. gentleman whether he still holds to that assessment of the unemployment trend, and what he means, in a word or two, by "good results".


Pierre Elliott Trudeau: As I indicated, on Thursday, I believe, the assessment still holds for all workers over 25. Indeed, I think it holds for workers over 20 years of age. The problem is with the teenage group which has entered the work force, or which has not left the work force after the summer period, at a vastly different rate from the past. This is the aspect of the problem with which we are concerning ourselves.


Robert Lorne Stanfield: I am sure the Prime Minister would be among the first to agree about the importance of young Canadians as well as of other Canadians. I should like to put to him a question I have frequently addressed to the Minister of Finance in connection with a recommendation made several times by the Economic Council of Canada.
September 20, 1971

Is the Prime Minister now prepared to have the government support the establishment of a short-term economic forecasting unit independent of the government but receiving government support? I ask this question in view of the very bad forecasting, indeed, the disastrous forecasting which has been forthcoming.
With respect, Mr. Speaker, that is the recommendation of the Economic Council of Canada, and certainly the forecasts are questionable. I ask the Prime Minister whether he is prepared to have the government carry out that recommendation?


Pierre Elliott Trudeau: I do not agree with the statement in the question that the forecasting was disastrous. I would admit that in the matter of statistics one cannot arrive at the utmost precision. However, I am not convinced that setting up a department to control a department which is already engaged in short-term forecasting alongside the Department of Finance and the Bank of Canada is necessary at this time.


David Lewis: May I ask the Prime Minister whether I understood one of his answers correctly-that the government feels no special measures are necessary with respect to unemployed people aged 25 years and over, that everything is going well for that group of unemployed and that the government is considering only the problem of teenage unemployment? Did I understand the Prime Minister to say that?


Pierre Elliott Trudeau: No, Mr. Speaker, the hon. member did not understand me correctly. What I said was that the forecasting we had and the budgetary measures we took were showing very positive effects as regards these other age groups, and that as regards these other age groups I saw no need at this time to announce further measures. But the figures released on Thursday did bring to light the new phenomenon of the drastic rise in unemployment of those registered as unemployed among the teenagers. That is what I answered to the Leader of the Opposition.



UNEMPLOYMENT-FURTHER BUDGETARY MEASURES TO DEAL WITH ECONOMIC SITUATION

David Lewis: Without accepting the Prime Minister's statement last week about what the statistics mean, a statement which I think is not accurate, I should like to ask the Minister of Finance whether he has any intention to bring in a budget or budgetary measures to deal with the economic situation?


Edgar John Benson: Mr. Speaker, this is a matter for decision by the government and of course it is under review. I should like to point out that the actual number of unemployed in the above 25 age group is 3.7 per cent among men and 2.7 per cent among women and has been declining since mid-1970.



GOVERNMENT GOALS RESPECTING EMPLOYMENT AND INFLATION

Mr. J. P. Nowlan (Annapolis Valley):: Mr. Speaker, my question is supplementary to those asked by the Leader of
Inquiries of the Ministry
the Opposition of the Prime Minister. Last Thursday I directed a question to the Prime Minister concerning whether the government had any goals or projections and the Prime Minister answered yes to part of that question. I should like to ask a very direct question today. In view of the fact that President Nixon did present some goals to Congress in his state of the union message last week, has the government any goals-I do not want to get into disagreement about projections-relating to employment and inflation and, if so, what are they?


Pierre Elliott Trudeau: Yes, Mr. Speaker, but they would be expressed in very general terms. We believe in a progressively expanding economy. We believe in the lowest possible rate of unemployment and, as the Leader of the Opposition now refers to, the idea of a just society.


Mr. Speaker:: Order, please. Again we have six or seven members rising on supplementaries. I would suggest to hon. members that we should try to limit supplementaries to individual members, go on to another subject and eventually, I hope, return to the original question. For the moment the hon. member for Annapolis Valley has a supplementary.


John Patrick (Pat) Nowlan: Mr. Speaker, reducing some of the general terms of the answer of the Prime Minister to something a little more specific, does the government have any goal with regard to the rate of inflation and/or the percentage of unemployment which are unacceptable, necessitating further government programs to alleviate either or both of these conditions?


Pierre Elliott Trudeau: Yes, Mr. Speaker. What we are aiming for is the slowest possible rate of employment-


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: -the slowest possible rate of inflation-


An hon. Member:: You were right the first time.


Pierre Elliott Trudeau: -with the highest possible employment.



UNEMPLOYMENT-FORECAST FOR COMING WINTER

Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, I have a supplementary for the Minister of Finance. In view of the confidence that has been expressed by the Minister of Finance in the House that unemployment will continue to decline and in view of the fact that the minister has at his disposal elaborate forecasting machinery, would he care to predict to the House the level of unemployment we may expect in September and in the coming winter months?


Edgar John Benson: No, Mr. Speaker.


Lorne Edmund Nystrom: Would the minister care to explain to the House why his unemployment forecasts are consistently wrong-


Mr. Speaker:: Order, please.

September 20, 1971
Inquiries of the Ministry



ESTABLISHMENT OF PRICE AND WAGE GUIDELINES TO CONTROL INFLATION

Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, I have a supplementary to the question asked by the hon. member for Annapolis Valley. Is the government now giving consideration to the establishment of price and wage guidelines with effective penalties to prevent non-compliance in order to try to control inflation which increased during the first eight months of the year at an annual rate of 6 per cent? If so, when does the government intend to announce such guidelines?


Pierre Elliott Trudeau: Mr, Speaker, I do not agree, as usual, with the figures quoted by the hon. member, but if he will look back he will see that we have been answering to the House for some time that we were considering this. As to an announcement, of course we would only announce it after the government had made up its mind.


George Harris Hees: Mr. Speaker, if the Prime Minister will check with Statistics Canada he will find that my figures are correct.


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


George Harris Hees: Yes. In view of the very serious and rapidly rising inflation, how long does the government intend to persist in its business as usual or do nothing attitude?


Mr. Speaker:: Order, please. That of course is debate. The Chair will recognize the hon. member for Gander-Twillingate on a supplementary and then the hon. member for Greenwood on a different subject, returning eventually to this subject after a number of other questions are asked.



GOVERNMENT POSITION RESPECTING UNEMPLOYED UNDER AGE 25-REMOVAL OF SALES TAX ON BUILDING MATERIALS TO STIMULATE HOUSING CONSTRUCTION

Mr. John Lundrigan (Gander-Twillingate):: Mr. Speaker, I have a question for the Prime Minister. In view of persistent statements on Thursday and again today that the government considers it has not lost the fight to create jobs because there are not as many unemployed in the age group above 25, has the government taken the conscious position that unemployed people who are under age 25 are not as important as those above age 25, and will we see in the government's program any policy which reflects this kind of thinking?


Pierre Elliott Trudeau: Mr. Speaker, the answer to the first part of the question is no. In respect of the second part, the hon. member will see any announcements if and when and they are made.


John Howard Lundrigan: Mr. Speaker, I have a supplementary. I wonder whether the Minister of Finance could indicate to the House whether he has received representations from Harold G. Shipp, president of the Housing and Urban Development Association of Canada, suggesting that there will be a very substantial increase in the cost of housing in the last quarter of 1971 and asking whether the minister will accept the positive suggestion that the 11 per

cent sales tax on building materials and other related taxation on housing be reassessed in order to try to stimulate growth in this particular area?


Edgar John Benson: Mr. Speaker, from the forecasts I have seen this is going to be the best housing year in Canada's history with housing starts over 225,000.



COMMUNICATIONS


Mr. Andrew Brewin (Greenwood):: Mr. Speaker, my question is for the Prime Minister. In view of the economic dislocation which will result from the shutdown of the operations of the Toronto Telegram and in view of the public interest in maintaining a competitive press in the metropolitan areas of Canada, will the Prime Minister get in touch with the Prime Minister of Ontario and the publisher of the Toronto Telegram with a view to seeing whether some plan can be worked out for the continued operation of the newspaper?


Pierre Elliott Trudeau: Mr. Speaker, of course the shutdown of the Telegram is of concern to those who are interested in seeing the pursuance of the policy of a free and vigorous press in this country, but I do not believe the suggestion of the hon. member is one I could take up because I understand the publisher himself has said he does not want any form of government intervention.


Francis Andrew Brewin: If that suggestion would not work, would the Prime Minister, in light of the expressed willingness of the employees of the Toronto Telegram to invest in the continued operation of this paper, suggest to the publisher that he should defer shutting down the operation until an effort is made to continue the operation by a co-operative including employees and readers of the newspaper?


Pierre Elliott Trudeau: Mr. Speaker, that is a different line of questioning. If it were necessary for me to serve as a go-between between the workers and their employer and if they have that confidence in me, I do not see any impossibility in following the suggestion, but I have had no request from the workers to put their point of view to the employer and it seems to me they are perfectly able to do that themselves.



CLOSING OF TORONTO &quot;TELEGRAM&quot;-INVESTIGATION OF ALLEGED BREACH OF COMBINES ACT

Mr. John Gilbert (Broadview):: Mr. Speaker, my question is directed to the Minister of Consumer and Corporate Affairs. Are the minister or his officials in receipt of a telegram from Robert Pryor, chairman of the Council of Toronto Newspaper Unions, with regard to the sale of the Toronto Telegram assets constituting a breach of the restrictive trade practices provisions of the Combines Inves-
September 20, 1971

tigation Act and, if so, is it the intention of the minister and his officials to investigate this matter?


Hon. Ron Basford (Minister of Consumer and Corporate Affairs):: Mr. Speaker, the wire I got was sent to my colleague, the Minister for External Affairs, who immediately referred it to me for attention, being the good member for Toronto that he is. In the normal course of events the Director of Investigation and Research under the Combines Investigation Act would examine the effects of a major development such as this in order to determine whether the provisions of the Combines Investigation Act were breached. This will be the case in these circumstances. I should point out that even if the Combines Investigation Act were violated in some way, that violation would hardly be of assistance to the newspaper in carrying on its business.


George Harris Hees: Mr. Speaker, I have a supplementary question for the Prime Minister. Does he not believe that the continuation of the third largest newspaper in this country is of sufficient importance for him or one of his ministers to get in touch with the publisher of the Toronto Telegram to determine whether something can be done to keep that newspaper going?


Mr. Speaker:: Order, please. I suggest that this is an argument rather than a question.


George Harris Hees: Mr. Speaker, if we cannot ask these important questions of the Prime Minister, then Parliament is at a loss-


Mr. Speaker:: Order, please. It seems to me that the hon. member finds ways to answer these very important questions.



REGIONAL ECONOMIC EXPANSION


Joseph Adrien Henri Lambert: Mr. Speaker, I have a question for the Minister of Regional Economic Expansion.
Has an application for a grant been filed with his Department by the Societe populaire des pates et papiers du Quebec which plans establishing a cardboard plant in Cabano but is now facing major financial problems? If so, what reply has been given to that company?


Hon. Jean Marchand (Minister of Regional Economic Expansion):: I shall inquire, Mr. Speaker, and report to the hon. member.
Inquiries of the Ministry



INCOME TAX


Mr. P. V. Noble (Grey-Simcoe):: Mr. Speaker, I should like to direct this question to the Minister of Finance. In view of the fact that sales of foreign-made tractors and other equipment in this country are rapidly increasing, will the government give consideration to authorizing a corporate income tax credit of 10 per cent of the value of made in Canada capital equipment purchased during the year as a stimulant to employment?


Edgar John Benson: Mr. Speaker, if we were considering any such announcement it would, of course, affect tax policy and would be made in the normal manner through a budget.



AMENDMENT OF BILL TO INCREASE EXEMPTIONS ALLOWED FOR CHILDREN

Mr. Steven E. Paproski (Edmonton Centre):: Mr. Speaker, my question is directed to the Prime Minister. In light of the FISP decision to take family allowances away from 1.4 million Canadian families, and in light of the government's acceptance that the costs of raising a family today have risen dramatically, which the Prime Minister will know soon, is the government going to amend its new tax bill to substantially increase child exemptions for all Canadian families?


Pierre Elliott Trudeau: No, Mr. Speaker.


Steve Eugene Paproski: Mr. Speaker, would the Prime Minister describe FISP as an example of the government's selective or sleight-of-hand humanitarianism?


Mr. Speaker:: Order, please.



EXTERNAL AFFAIRS


Mr. Frank Howard (Skeena):: Mr. Speaker, I should like to direct a question to the Secretary of State for External Affairs. Would he tell the House the extent to which Canada is exerting itself in pursuance of our sovereignty over Machias Seal Island which is apparently also being claimed by the United States? Can he explain what steps we are taking in that regard?


Hon. Mitchell Sharp (Secretary of State for External Affairs):: Mr. Speaker, we have always regarded this island as a Canadian island, and that continues to be our position.


Frank Howard: Am I to take it then that apart from that declaration the government is taking no deliberate action?

September 20, 1971
7978___________________________________
Inquiries of the Ministry


Mitchell William Sharp: Mr. Speaker, I can think of nothing stronger to say than that it is our island.


Frank Howard: Mr. Speaker, would the minister like to be as definite and forthright about that area off the Pacific coast in Dixon Entrance which is Canadian territory but which has been invaded from time to time by U.S. coastguard vessels?


Mitchell William Sharp: Yes, Mr. Speaker, we do regard that also as Canadian territory, but the United States does not accept our position.


UNITED NATIONS
Hon. D. S. Harkness (Calgary Centre):: Mr. Speaker, I have a question for the Secretary of State for External Affairs. In view of Mr. U Thant's statement that the United Nations is financially bankrupt, has the Canadian government any proposal to put before the General Assembly or the Security Council in order to get this organization in a more satisfactory financial situation?


Mitchell William Sharp: Mr. Speaker, you will recall that I made some proposals for economies in words as well as in expenses of the United Nations, and these have been acted on to some extent but not as far as we would like to have been. We hope this will be of some value, and of course we always pay our own contributions promptly, which is more than can be said for some countries.


Douglas Scott Harkness: Mr. Speaker, will the Canadian government put forward any resolution at the meetings of the United Nations in an attempt to get those nations which are in a deficit position as far as their payments are concerned to pay up?


Mitchell William Sharp: Yes, Mr. Speaker. We have been endeavouring to do this for a number of years but with indifferent success.


Mr. R. N. Thompson (Red Deer):: Mr. Speaker, my question is supplementary to the question regarding the statement of the Secretary General of the United Nations about the intolerable financial situation of the organization. Does the government intend, when Premier Kosygin is here next month, to bring up with him the matter of the unpaid dues owing by the U.S.S.R. to the United Nations?


Mitchell William Sharp: No, I would not think so, Mr. Speaker. We have other matters of at least as great urgency of a multilateral character and also bilateral relations between Canada and the Soviet Union to discuss. We have been pressing for a resolution of that question where we should, at the United Nations itself. There are more countries than the Soviet Union involved.


CANADIAN POSITION RESPECTING TYPE OF SECRETARY GENERAL REQUIRED
Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I have a supplementary question in relation to the United Nations. Perhaps it is more of a related than a supplementary question. Does the Canadian government subscribe to the position of a weak Secretary General as outlined yesterday over the Canadian Broadcasting Corporation by our ambassador to the United Nations?


Mitchell William Sharp: Mr. Speaker, I doubt very much that our ambassador would have said any such thing, but I can certainly say the government of Canada hopes that the successor to U Thant will be a strong and very imaginative man because the world needs a strong Secretary General at the United Nations.


INQUIRY OF THE MINISTRY
Steve Eugene Paproski: Mr. Speaker, in view of the fact the Prime Minister will be visiting Winnipeg before the Kosygin visit, and plans to speak to the Ukrainian-Canadian community of that area, would he have the hon. member for High Park proofread his speech so he will not again alienate the Ukrainian Canadians?


Mr. Speaker:: Order please. Is the hon. member rising on a question of privilege?


Mr. Deakon:: Yes, Mr. Speaker. I should like to thank the hon. member for Edmonton Centre for his kind and gratuitous remark. I can assure him I have not reached this esteemed position yet, but I would like to recommend to all Canadians, especially those of Ukrainian and other ethnic origins, that they should listen to the Prime Minister's speech as I am sure it will be interesting and informative.


Robert Lorne Stanfield: Mr. Speaker, speaking of the Prime Minister's speeches, I notice he has been making a study of the practices of businessmen among the ancient Phoenicians, and I was wondering whether this is the origin of the government's current economic theories and standards?


Mr. Speaker:: Order, please. May I suggest to hon. members that we should perhaps limit the number of supplementary questions. I make this as a suggestion to hon. members as we will be running short of time in a few minutes. Perhaps we should make an attempt to give as many members as possible an opportunity to ask questions.


ECONOMIC COUNCIL OF CANADA
Mr.  R. Gordon L. Fairweather@Fundy-Royal: Mr. Speaker, I should like to ask the Prime Minister when he

September 20, 1971

will announce the new head of the Economic Council of Canada?


Pierre Elliott Trudeau: Rather soon, Mr. Speaker.


AGRICULTURE
Hon. J. A. MacLean (Malpeque):: Mr. Speaker, I should like to direct a question to the Acting Minister of Agriculture. What action is the government taking in light of the statement by the Minister of Agriculture, found at page 7588 of Hansard, having regard to stabilizing the prices of certain agricultural products which are adversely affected either directly or indirectly by the United States surcharge, and I am thinking especially of such items as small fruits, including blueberries, and potatoes?


Hon. Otto E. Lang (Minister of Manpower and Immigration):: The Department of Agriculture is looking at the variety of products, product by product, in an effort to see what should be done in a variety of situations about the impact on the price of the Canadian producer.


REQUEST FOR ALLOCATION OF PORTION OF FUNDS UNDER EMPLOYMENT SUPPORT BILL TO PRODUCERS
Alfred Pullen Gleave: I should like to address a supplementary question to the Prime Minister. Has the government received representations from Mr. Turner, president of the Saskatchewan Wheat Pool, that a portion of the $80 million designed to assist those sectors of the economy affected by the U.S. import surcharge should be allocated for agricultural producers? If so, can he inform the House as to the nature of the government's reply?


Pierre Elliott Trudeau: Mr. Speaker, I did reply to a letter along these lines indicating that certain sectors of the agricultural community would benefit from their share of the $80 million when it had to do with agricultural products which were processed in some way. As to the others that would not qualify for any share of that amount, I repeated what the Minister of Agriculture had told the House, namely, that we would use existing legislation where possible and necessary to assist the agricultural sector of the economy.


Mr. Speaker:: The hon. member for Surrey-White Rock.


Alfred Pullen Gleave: I have a supplementary question.


Mr. Speaker:: I apologize to the hon. member for Surrey-White Rock but perhaps I might allow a supplementary question to the hon. member for Saskatoon-Biggar. Again I bring to the attention of hon. members that if we have three, four or more supplementary questions we will again run short of time.
Inquiries of the Ministry


Alfred Pullen Gleave: May I ask the Prime Minister whether in the Department of Agriculture or any other agency of the government there is in hand a definite program which will attempt to deal with various agricultural products as they are affected by the U.S. policy?


Pierre Elliott Trudeau: I will refer the question to the Minister of Agriculture and perhaps he can be invited by the hon. member to answer the question in the House.


Mr. Speaker:: The hon. member for Surrey-White Rock.


Mr. MacDonald (Egmont):: Mr. Speaker, I wish to rise on a point of order.


Mr. Speaker:: I am sorry; the hon. member for Surrey-White Rock has his difficulties today. Again I have to apologize to him, but the hon. member for Egmont is rising on a point of order.


David Samuel Horne MacDonald: Mr. Speaker, this is the second occasion on which the Prime Minister has indicated that the House will have to wait for the Minister of Agriculture. As the question involves many perishable products and the minister has been absent from the House for some days, would it not be possible for some member of the administration to answer these important questions so that the farmers of this country may know where they stand?


Mr. Speaker:: The hon. member for Surrey-White Rock.


COMMUNICATIONS
Mr. Barry Mather (Surrey-White Rock):: My question is for the Secretary of State. It is in connection with the impending shutdown of the Toronto Telegram. Would the minister be prepared to receive and consider representations from interested parties, including Members of Parliament, aimed at preventing a further concentration of public information in fewer and fewer hands, which will be the result of this closure?


Hon. Gerard Pelletier (Secretary of State):: Mr. Speaker, when representations are made to a federal department, I fail to see how the minister can possibly refuse to receive them.


SOCIAL SECURITY
Mr. Jack Marshall (Humber-St. George's-St. Barbe):: My
question is for the Minister of National Health and Welfare. Would the minister advise the House if and when he is going to make a statement with regard to the $15 million study of a guaranteed income development plan, outlining

September 20, 1971
Inquiries of the Ministry
comprehensively the terms of reference and the objectives?


Hon. John C. Munro (Minister of National Health and Welfare):: As I have already indicated, we are prepared to participate with the provinces-and the government has so indicated to them-in experimental guaranteed annual income projects. Manitoba has put forward a project that we have indicated we are prepared to look at, and I believe Ontario is considering one also.


Jack Marshall: In view of the answer given would the minister advise whether, since the government is making this study, the family income security legislation just introduced will meet the needs of the people, or does this study mean that it will not meet the needs of the poor people of Canada?


THE MINISTRY
Mr. J. M. Forrestall (Dartmouth-Halifax East):: I should like to come back to earlier questions on the economy. Because many of us are concerned about the Prime Minister's uncertainty regarding economic trends, is the Prime Minister prepared now to admit that he has some very serious doubts about the economic analyses put forward by the Minister of Finance and his department with respect to where we are and where we are going and, if he does, has he given any consideration to asking the Minister of Finance whether he would voluntarily step aside and let someone else take over that portfolio?


Mr. Speaker:: Order, please.


STUDIES OF HANDLING AND TRANSPORTATION
Mr. J. H. Horner (Crowfoot):: I should like to direct a question to the Minister of Manpower and Immigration who is in charge of the Canadian Wheat Board. Has the study on grain handling and transportation been completed and when can we expect him to make it public?


Otto Emil Lang: Certain parts of these studies have reached a stage at which discussions are going on in a confidential way with some of the companies most interested in them. No decision has been made yet about the date when the final form of the study may be available.


Mr. Jack Murta (Lisgar):: I should like to direct a supplementary question to the minister responsible for the Wheat Board. Does the report make any recommendations concerning the building of inland grain terminals on the Prairies for cleaning and processing grain in order to make the operation more efficient?


Otto Emil Lang: As has been indicated many times, the studies are very comprehensive and deal with a whole variety of possibilities, including the cost of the existing system. The basic object is to put the facts of the various choices before the producers so as to enable them to make a decision about the eventual system. The studies as such, therefore, do not make recommendations but set out facts and figures which will give some guidance to the people who will want to look at them.


REGIONAL ECONOMIC EXPANSION
Mr. Elmer MacKay (Central Nova):: I have a question for the Minister of Regional Economic Expansion. In view of the critical economic condition which besets the east shore of Nova Scotia, occasioned by the closure of the Scott Maritimes Pulp Mill, practically the community's only industry, can the minister tell us what steps, if any, are being taken to alleviate the situation?


Jean Marchand: I will inquire and report to the hon. member.


Mr. Muir:: Don't you know anything at all?


J. Michael Forrestall: My question is supplementary to an earlier one asked by my colleague from Nova Scotia, and I direct it to either the Minister of Regional Economic Expansion or the Prime Minister. I am very disturbed. By nature of the reply I wonder whether the implication is that the Premier of Nova Scotia has not been in touch personally with the Prime Minister or with the minister in connection with the situation at Sheet Harbour?


Mr. Speaker:: The hon. member for Kootenay West.


George Harris Hees: No answer, as usual.


J. Michael Forrestall: 
Jean Marchand: Mr. Speaker, the answer is the same. I think I am authorized to make sure of the facts before giving an answer. I will do that immediately and you will get the answer tomorrow.
September 20, 1971

Inquiries of the Ministry AGRICULTURE


CANADA ASSISTANCE PLAN
Mr. S. Perry Ryan (Spadina):: My question is addressed to the Prime Minister. Last Thursday the Prime Minister would not say what the government was going to do about reforming the Canadian Assistance Plan because he wanted to have an opportunity to discuss the whole matter with the provinces. Does this mean that the government is prepared to reform the Canada Assistance Plan and to pay out more money to the provinces this winter to help finance their added welfare costs?


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


Sylvester Perry Ryan: In light of the fact that Bill C-259 will not affect the economy immediately, is the government considering changing its legislative priorities and bringing forward tax cuts, FISP and CAP reforms now?


Pierre Elliott Trudeau: No, Mr. Speaker. The House knows that the taxation reform bill is the one which has great urgency and that we still want to keep it before the House as much as possible and get it through as soon as possible. But as the House leader has indicated, when that bill has been dealt with we hope there will be sufficient time to deal with other matters, including some that are suggested by the hon. member.




Mr. Randolph Harding (Kootenay West):: Mr. Speaker, I wish to direct a question to the Secretary of State for External Affairs. In view of the need for urgent and immediate action to stop the proposed nuclear test at Amchitka Island early in October, will the Secretary of State for External Affairs consider having the Canadian delegation at the United Nations present a resolution to the General Assembly calling for a halt to the proposed nuclear test by the United States at Amchitka Island?


Mitchell William Sharp: Mr. Speaker, I can assure the hon. gentleman and the House that the Canadian government will be pressing as hard as it can for the stopping of all tests of all kinds by the Soviet Union, by France, by China, and by the United States, including the Amchitka test which is the largest.


Randolph Harding: Mr. Speaker, will this request be made at the United Nations before the proposed test blast takes place early in October?


Mitchell William Sharp: I shall certainly be speaking before that date.


CORN-REQUEST FOR POLICY STATEMENT ON DECLINE IN MARKETS
Mr. H. W. Danforth (Kent-Essex):: Mr. Speaker, I wish to direct a question to the Acting Minister of Agriculture. When may we expect the Minister of Agriculture back in the House, and is the government prepared at this time to indicate its policy with regard to representations made on the very serious decline in corn markets in Canada?


Otto Emil Lang: Mr. Speaker, as I understand it, the Minister of Agriculture is busy with Japanese trade missions in western Canada and will be back in the House within a couple of days. I am not sure when he will make a statement on that particular item, but I will bring the hon. member's question to his attention.


Otto Emil Lang: On a point of order, Mr. Speaker, I wish to apologize to the House. Earlier I referred to the Minister of Agriculture meeting with Japanese trade missions at the present time. I understand now that those meetings are finished and that he is presently visiting important agricultural areas in Ontario.



BUSINESS OF THE HOUSE


Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I wish to direct a question to the government House leader. In view of the exchange earlier about House business, is it the intention of the government to complete consideration of all the business on the order paper before this session ends and does the government intend, before this session ends, to introduce any new legislative proposals?


Hon. Allan J. MacEachen (President of ihe Privy Council):: Mr. Speaker, I am not even equipped with short-range forecasting equipment, like the Minister of Finance.


Some hon. Members:: Oh, oh!


George Harris Hees: Thank heavens for that.


Allan Joseph MacEachen: I find it difficult to forecast even what will happen in the chamber. The answer will depend a good deal on what does happen here. With all that qualifying uncertainty, I would like to advise the hon. member that before ending this session we propose to try to clear off the order paper all the items that have advanced to the report stage. It is not planned at the moment to introduce any new legislation to be dealt with before the end of the session.
While I am on my feet, Mr. Speaker, maybe I could advise the House that in order to change the atmosphere I would like to announce that for tomorrow I will be calling Bill C-244.

September 20, 1971
7982_____________________________________
Inquiries of the Ministry



THE CANADIAN ECONOMY


John Howard Lundrigan: Mr. Speaker, I have a question for the right hon. Prime Minister, supplementary to earlier questions on the economy. May I ask the Prime Minister whether any special studies have been made regarding the economic problems expected in Canada this winter and, more importantly-Mr. Speaker, let me repeat my question. The Prime Minister cannot hear because of the excitement caused by the recent statement made by the House leader. May I ask the right hon. Prime Minister whether in fact any special studies have been made regarding the economic problems expected to face Canada this winter and, more importantly for the House and the country, whether we can expect any statement or any release of this kind of information to the public and the members of this House?


Pierre Elliott Trudeau: Mr. Speaker, I missed the final words but I think I got the gist of the question. The question has been asked before. If any announcement is to made it will be made in the House.


John Howard Lundrigan: Mr. Speaker, the Prime Minister certainly did not hear my question. Have there been any special studies made into expected economic problems facing the country this winter, and can we expect the release of these studies to the public?


Pierre Elliott Trudeau: No, Mr. Speaker.


John Howard Lundrigan: I rise on a question of privilege, Your Honour. As recorded at page 7946 of Hansard for Friday last, the Acting Prime Minister made a statement to the House which certainly cannot go unchallenged. His statement was in response to the same question I just raised about special studies and the release of this information to the Canadian public. In response to that same question, the Acting Prime Minister said:
-we are making a very special study of the kind of conditions that will prevail this winter. Whether these can be published, or whether it would be in the public interest to publish them, I am not quite sure.
And he continued with his answer. I think somebody has to challenge the two conflicting statements, the one by the Prime Minister today and the one by the Acting Prime Minister on Friday, to see in fact who is telling the truth to the Canadian people-


Mr. Speaker:: Order, please. As the hon. member well knows, and as I am sure all hon. members do, that is not a question of privilege. Debate as to facts or as to the accuracy of statements cannot be raised by way of a question of privilege, or else I fear we should spend all our time on questions of privilege. I suggest to the hon. member that this is essentially a point of debate rather than a question of privilege.


John Howard Lundrigan: If we cannot get factual statements from the opposite side of the House, we might as well cancel the question period altogether.


Mr. Speaker:: Order, please. I have indicated to the hon. member that I thought from a procedural standpoint the

matter could not be raised by way of a question of privilege. Hon. members know that this is a basic rule. I would think it comes up practically every day. When a question is asked the hon. member asking it may not think the answer is quite accurate, and he might get different information on another occasion. When hon. members think an answer is not entirely factual or cannot be reconciled with a statement made on another occasion, then I suggest to them that is good, fertile ground for debate, but not under the guise of privilege. Orders of the day.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Friday, September 17, consideration of the motion of Mr. Gray (for Mr. Benson) that Bill C-259, to amend the Income Tax Act and to make certain provisions and alterations in the statute law related to or consequent upon the amendments to that act, be read the second time and referred to the committee of the whole, and the amendment thereto of Mr. Lambert (Edmonton West) (p. 7763).
Mr. Doug Rowland (Selkirk):: Mr. Speaker, on Friday last the hon. member for Ottawa West (Mr. Francis) in his remarks recited a litany of the efforts made by the government of Canada over the past number of years in the area of tax reform. He drew to our attention that we first had the Carter Report-the Royal Commission on Taxation in Canada-then the government white paper on taxation, then rather vigorous public discussion, then the referral of the white paper to a committee of the other place and to a House of Commons committee, their reports, more representations from the public, explanations, alterations, and backtracking from the minister, advertising campaigns, letter writing campaigns, and now finally Bill C-259 before us in all the splendor of its 707 pages. No one can accuse the government of not having laboured on the matter of tax reform. They have produced an immense tome and many changes. However, from the point of view of reform as opposed to change, the government's labours have produced a mouse-a mouse in the form of a mountain, let it be said, but a mouse none the less.
It is only proper for me to admit frankly at the outset that some of the changes are beneficial, long overdue and highly welcome. For example, thousands of taxpayers in the lower income brackets, those families earning up to $3,500 a year, will no longer pay income tax. Old age pensioners, those living on widows' allowances, blind and disabled pensions, veterans who have no other income but their pensions, will benefit. The provision of a deduction of up to $150 for expenses incurred by a wage earner in the course of equipping himself for his employment represents an advance. Moreover, the implementation of a capital gains tax provides the government with a source of income which removes some of the potential burden of taxation from the shoulders of those who pay taxes on wages and salaries.
September 20, 1971

But all of these changes together mean neither meaningful reform nor equity when balanced against other features of the legislation. Take for example the first change which I mentioned, the virtual elimination of income tax for families earning $3,500 a year or less. This represents an improvement yes, but equity no, because the poverty level in this country has been determined by the Economic Council of Canada to be $4,000 for a family. It has been 28 years since the personal exemptions in the Income Tax Act have been revised upwards. Why, in the name of justice, did not the government raise the personal exemptions to $2,000 for an individual and $4,000 for a family? Individuals and families earning less than those figures are living in a state of deprivation in relation to the rest of society. How can anyone professing to be just, professing to be concerned with equity, demand the further reduction of such marginal incomes by the payment of taxes? Yet that is what this legislation is doing.
Where is the justice in limiting a wage earner to a maximum deduction of $150 a year for expenses legitimately incurred in the course of his work while, at the same time, business executives and self-employed persons are allowed virtually unlimited deductions for expenses incurred in the course of their work? Moreover, they are allowed to deduct those expenses under provisions which everyone knows are subject to massive abuse. Where is the justice? Where is the justice in taxing income obtained through capital gains at only half rates, income gained through windfalls, gifts and inheritance not at all and at the same time taxing income gained through wages and salaries at full rates? Where is the equity in a system which enables a single person earning $100,000 a year to pay $1,000 less in income tax and at the same time requires a single person earning $11,000 a year to pay $78 more? Where is the equity in a system which requires people whose incomes are below the poverty level, as set out by the Economic Council of Canada, of $2,000 for a single person and $4,000 for a married couple to pay income tax and which at the same time permits those who have accumulated large amounts of wealth to transfer their assets to relatives or friends without paying inheritance of gift tax at all?
I have been asking a series of rhetorical questions. Obviously, a law containing such provisions is completely barren of justice and equity. Not only is this bill barren in terms of equity and justice, but it is also sterile in terms of the kind of innovation and imagination that is required to stabilize the economy of this country, required to remove the economic disparities which exist among the various regions of this country, required to redistribute income in order to provide some measure of equality of opportunity, some measure of equality of condition for individual Canadians. It is sterile also in terms of ideas for developing economic institutions which conform to the changing system of values and social attitudes which are taking place.
Let me take those charges one by one. First, I have said that this bill will do little or nothing at all to introduce some stability into the Canadian economy, an economy now in a chronic state of inflation and unemployment. Obviously, neither of these two illnesses can be completely cured by the manipulation of our system of taxation. However, properly utilized the tax system can contribute
Income Tax Act
in a major way to controlling inflation and providing needed jobs. By placing manufacturing and service industries in an advantageous position in relation to other industries, the government could encourage the flow of investment capital toward those industries. Investment capital would make possible the rationalization and updating of existing manufacturing industries, thus enhancing the productivity of that sector of the economy and so reducing inflationary pressures. Moreover, it is the manufacturing and service industries which are, relatively speaking, labour-intensive. We need jobs, hundreds of thousands of them. They will be provided more quickly by encouraging the development of new and the expansion of existing manufacturing and service industries.
Instead of this, Bill C-259 continues the practice of the present tax system of taxing the profits of manufacturing industries at double, triple and quadruple the rates of the extractive industries-oil and mining-thus ensuring that the smart money will continue to flow in the direction of the extractive industries. The extractive industries, which are big users of capital and relatively small users of labour, keep most of their special privileges and their exceptional tax concessions under the terms of the present legislation, even though both the Carter commission and the government white paper advocated massive reductions in the special tax privileges accorded to the extractive industries.
Where is the sense in such an approach? Why encourage, at a time when the country is faced with chronic unemployment, the development of an industry which employs relatively small numbers of people at the expense-since there is only so much capital to go around-of the manufacturing sector of the economy which is labour-intensive? Why encourage the same rapid pace in development in a sector of the economy, the extractive industries, which has already developed an overcapacity in areas such as oil and gas, in gold, uranium and potash, thereby distorting our trade patterns and introducing problems for our economy which need not exist? Why, for example, are we rushing to develop and exploit oil and natural gas deposits in the north, before we have developed the technology which would ensure that the ecology of the area is not damaged when, at the same time, wells in the Prairie provinces are producing at as low as 40 per cent of their capacity? Bill C-259 perpetuates this situation and continues the distorted development of our economy. That is why I have said that the bill lacks the policies require to stabilize the economy.
I have also said that this bill will contribute little or nothing to the removal of regional economic disparities. One looks through it in vain, for example, to discover measures designed to reduce the possibility of provinces continuing the practice of competing for industry by the counter-productive method of seeing who can offer the most in the way of tax concessions-a game in which the poorer provinces are always the losers. That is an error of omission. An error of commission is the federal government's decision to withdraw from the field of estate and gift taxes instead of collecting that revenue and distributing it on the basis of an equalization formula. Again, the poorer provinces are the losers. Beyond that, what if one of the richer provinces decides not to impose gift taxes and succession duties? Even though the poorer provinces

September 20, 1971
Income Tax Act
desperately require that revenue, they might well be forced to follow suit in order to prevent the flow of money out of their economy.
I have said that this bill would not contribute in any meaningful way to the necessary redistribution of income if we are to provide real equality of opportunity for Canadians and some measure of equality of condition. The bill perpetuates many of the means whereby corporations and the rich avoid paying their fair share of taxation, thus shifting a disproportionate share of the burden for providing government revenues onto the shoulders of low and middle income taxpayers. The bill does not use corporate and personal income taxes or the capital gains tax to produce the additional revenue needed if provinces and municipalities are to be able to reduce their dependency on the inequitable and regressive property tax for the provision of education, health and welfare services. The bill does not even go so far as to provide the alternate sources of revenue to enable provinces to eliminate or even substantially reduce property taxes paid by pensioners and others on fixed incomes, taxes which are forcing many of these people out of their homes.
I submit that had the government been serious about more equitably distributing income in this country it would have abandoned tax deductions in favour of tax credits. The effect of a tax deduction is to reduce a taxpayer's taxable income and therefore to lower the highest marginal rate of tax he will pay. One of the basic purposes of a tax deduction is to give tax relief to lower income taxpayers. However, the actual result is to give greater benefits in terms of dollars to wealthier taxpayers. Let me illustrate this phenomenon by quoting from an article by Jack R. London which appeared in the Winnipeg Tribune. Mr. London uses these examples which follow in comparing tax credits as against deductions:
For instance, assume John Smith is a married but childless taxpayer earning $13,850 per year. Under the new legislation he will be allowed to deduct from his earnings, a marital allowance of $2,850. His taxable income (after the deduction) therefore will be $11,000. On the first $500 of that taxable income he will pay tax at the rate of 22 per cent. On the last $2,000, he will pay at the rate of 35 per cent, with varying rates in between. If he were not allowed the marital deduction, his taxable income would be the full $13,850 and the tax rate on his income between $11,000 and $13,850 would be 40 per cent.
In terms of tax savings the $2,850 marital deduction will be worth $1,180. In other words, that deduction allows John to keep $1,180 more of his income after tax than would otherwise be the case. One can easily calculate the amount of tax saving achieved by any taxpayer merely by multiplying his marginal rate (before taking the deduction) by the amount of the deduction allowed.
No one would quarrel with that result viewed only from John's perspective.
The inherent problem comes to light only when John's situation is compared to that of other taxpayers with lower incomes. For example, consider Peter Jones whose marital circumstances are identical to John's but whose income is only $5,000. Because Peter's income is lower than John's, his highest marginal tax rate is only 2V per cent. The same $2,850 marital deduction will save Peter only $770 compared to John's saving of $1,180. The reason for the $410 differential is that a tax deduction increases a taxpayer's tax saving as his marginal rate rises.
Mr. London went on to say in the same article:
A tax credit neatly avoids that trap. Since it is a fixed dollar saving which a taxpayer may deduct from his actual tax liability,
(Mr. Rowland.]
it is no more valuable to a wealthier than a poorer taxpayer. In fact, in terms of relative relief the opposite result occurs to an even greater degree than with a tax deduction.
John and Peter once again will illustrate. If the government decided that the amount of the tax credit should be, say, $300, then both John and Peter would be allowed to subtract that amount from their tax bills. Their dollar savings would be identical. However, since Peter's tax on his $5,000 income would be much lower than John's tax on his $13,580 income, Peter, in terms of percentages, would be saving more than John. In that case, the tax relief would be received where it was most needed.
By restricting the tax savings of higher income taxpayers in this way, the government then could make even larger tax concessions in the form of higher credits which would in turn be relatively more beneficial to those with lower incomes.
I apologize for reading at such length, Mr. Speaker, but I thought that article contained a concise and easily understood explanation of the reasons for tax credits and tax deductions. In reading it, I thought I might illustrate why the government could well adopt the tax credit technique in this legislation in an effort to introduce some equity into the system. That is the kind of imagination and innovation we had hoped to find in this bill. Unfortunately, it is dismally absent from it.
Finally, I have charged that this bill in no way encourages the development of economic institutions which will operate in accordance with the changing system of values and social attitudes of Canadians. Increasingly, younger Canadians especially are seeking methods of mutual selfhelp through co-operative endeavour to achieve individual goals; increasingly they are abandoning the ethic of cut-throat competition. One of the few economic institutions which fits into this new approach to life is the co-operative. Yet, not only does this legislation not encourage the development of the co-operative and credit union movements, it also inhibits their growth. Indeed, it actually threatens the life of many existing co-operative institutions.
Beyond their significance in relation to newly developing attitudes, the co-operatives have for many years been key institutions in the farming sector of our economy. It may very well be that without the co-operative enterprises such as the wheat pools, the western grain industry would be in the hands of American industrialists, just as is our oil industry. Until the introduction of this bill, co-operatives had been taxed at a minimum of 3 per cent on employed capital. Why this formula has been employed no one knows. One suspects that it was devised because co-ops kept only as much working capital as they required at any given moment. Earnings above their immediate capital needs were distributed to their participating patrons, usually in relation to the use they had made of the co-op facilities rather than in relation to the amount of capital the patron had invested. There was probably no other way for the Department of National Revenue to get at the co-ops except through levying a tax on the capital employed. One wonders why they felt moved to do so, since the participants pay full tax on dividends received and the co-ops pay full rates of tax on retained earnings. Nevertheless, a 3 per cent tax on capital employed was levied. Now, the government has decided to raise the tax on capital employed from a minimum of 3 per cent to a minimum of 5 per cent.
The probable effects of this move were set out very succinctly by my colleague, the hon. member for Sas-
September 20, 1971

Income Tax Act
katoon-Biggar (Mr. Gleave) during the budget debate of this past June. I do not think I can do any better than quote him in order to illustrate my point. My colleague said, as reported at page 7454 of Hansard:
For a reason known only to themselves, the government has decided to jump this tax from 3 per cent to 5 per cent. This will cause a severe dislocation in the allocation of earnings and investment within the cooperative movement. The decision as to how to reinvest money within the cooperative for the growth of the cooperative will be seriously affected by this new tax pattern. Decisions will have to be made that are not necessarily in the interests of the members of the cooperative, but in line with the taxation policies of the government.
He went on to quote the opinion given by a very prominent firm of auditors, as follows:
A preliminary review of these provisions indicate that the 5 per cent may only be reduced by interest paid to members as contrasted with dividends paid on shares held by members. These provisions would appear to severely limit the deduction of patronage as compared to the present system.
Then, the hon. member continued:
I am at a loss to understand why the government deliberately set its sights on a very small sector of the economy in terms of total capital invested, and people participating, to restrict through taxation the activity of cooperatives which are truly Canadian owned and have a policy to grow, develop and serve the people.
Similarly, the credit union societies of Canada fear the effects of this legislation upon them. I have received numerous letters from credit union societies in my constituency which deal with this point. I think it might be worth while reading a paragraph or two from a letter written to me by Arborg Credit Union Society Limited. It reads, in part:
Since the disclosure in June that credit unions will be very much affected by the tax reform legislation, we have been exceedingly concerned with the threat that the tax proposals constitute for credit unions. If enacted, Mr. Benson's proposals will severely undermine the definitive characteristics of credit unions and will surely place them at a disadvantage in the competitive business market.
It is our contention that Bill C-259 reveals a very basic misunderstanding of the nature of credit unions and hence projects a tax formula that is inequitable and entirely unacceptable.
Specifically, our concerns have to do with sections 125, 137, and 189 of the tax reform bill.
The representatives of this Credit Union go on to say that they have made their objections known to the Minister of Finance (Mr. Benson) in letters. Finally, they ask for assistance in obtaining a meeting between the Minister of Finance and the National Association of Canadian Credit Unions in order that he might hear their objections to the legislation. I have written to the Minister of Finance regarding this case. I hope he will grant these people the interview which they have requested.
I have gone over a number of points, Mr. Speaker, by which I have attempted to demonstrate that the tax changes before us really do not constitute tax reform, that they lack imagination and that they are based on a fundamentally false philosophy. In brief, Mr. Speaker, the tax system incorporated in this bill does not represent reform. It does not provide anything in the way of equity or any of the urgently required innovations in the structure of our economy. On that basis, there is no choice available to anyone truly committed to tax reform but to vote against this bill. That is what we on this side of the House intend to do.


Mr. Ambrose Hubert Peddle (Grand Falls-White Bay-Labrador):: Mr. Speaker, Bill C-259, introduced by the Minister of Finance (Mr. Benson), is entitled "An Act 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". It is a shame that Parliamentary procedures prevent the use of the author's name. "By Edgar G. Benson" would have quite a ring to it and would appeal to the readers. It is a pity that our procedure forbids a jacket such as you find on other best sellers, a jacket with a full colour-photo of the author and a brief biographical sketch. Surely, this five pound, 14 ounce, 707 page masterpiece is destined to become a national best seller. I will read the title again, "An Act 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". That title alone should cause thousands, if not millions, of Canadians to rush to Information Canada to purchase first edition copies.


Mr. KnoWles (Winnipeg North Centre):: Will the minister autograph them?


Ambrose Hubert Peddle: There should be a foreword by the Prime Minister (Mr. Trudeau) which could read something like this: "The Minister of Finance has my full support. I am willing to accept full credit for the popular proposals in this work, but I disclaim full or, in fact, any responsibility for those proposals which are unpopular." On the inside cover, there should be a simple little dedication: "The Minister of Finance dedicates this book to his colleague who has been his inspiration and who has helped so much in its production and writing."
To complete the picture, there should be testimonials from the country's leading newspapers and magazines. The testimonial from the Globe and Mail could read like this: "For Canadians, a startling new perspective, in language which clarifies nothing and confuses everything- the book which stupifies and bewilders lawyers and tax experts." The one from the Ottawa Journal could read: "Carries tax"-not sex like the paperbacks-"as far as it can go." From the Ottawa Citizen we might have: "Bill C-259 has everyone playing a guessing game about the real significance of its scandalous proposals. Heavy reading-to pick it up is to drop it after two minutes from sheer exhaustion, mental and physical." The one from the Montreal Gazette could read: "One of the most powerful political fantasies of our time. The perplexities of taxes have seldom been explored more subtly or with less meaning." It might be asked why I try to ridicule this bill. The answer is simple. It is ridiculous. It calls for and demands ridicule.
I just came down from my fifth floor office. I carried this bill with me, and I had to rest three times. There is no necessity for a bill of this size. I see no reason for it except that it is part of this government's general policy of confusion, trickery, subterfuge and blindfolding the devil in the dark. This is the attitude of this government. It is called participatory democracy, according to the slogan in 1968. The government said "Come join us; participate with us."

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Several months ago we were given a white paper which was fairly understandable. Even the laymen in Canada could understand the terrible proposals that were being made. There was almost a revolution against the proposals in the white paper. I suggest the government never really planned to introduce these proposals. It was the old shock treatment; hit them hard and when they object hit them half as hard and then they will think that everything is rosy. It is the same old story, government by crisis. The government promotes, encourages and develops crises in Canada, then does not have a clue how to deal with the crises they have helped to develop. Canadians are beginning to realize that this government talks in high gear but performs in low gear. Canadians were swept off their feet in 1968. They have been waiting since that time for this government to change gears.


John Patrick (Pat) Nowlan: It has been giving Canadians the gears.


Ambrose Hubert Peddle: I am not going to attempt to deal with any particular area of this 707 page monstrosity. To do so might convey, at least to my constituents, the idea that I understand what this is all about. I am not going to be so pompous as to pretend I understand what this is about when the lawyers and tax experts throughout the country say that they do not understand it. I am not going to even attempt to try.


Mr. Mahoney:: You are doing all right.


Ambrose Hubert Peddle: As a Canadian who has been watching the performance of this government which promised so much to the people of this country in the past three years, I cannot help but ask a very simple question. Canadians appreciate the promise in this monstrosity of larger exemptions for the lower income people. We appreciate the suggestion that there will be some relief to our older taxpayers. We do not understand the other several hundred pages that try to justify the other taxes that will be imposed to make up for the few little crumbs thrown out to the lower income and elderly people. Taxation is not a one way street. It implies a reasonable, responsible extraction of taxes from the people and it also must of necessity pay some attention to the reasonable, responsible distribution or disposition of the taxes so collected. No one can tell me that the passage of this bill has suddenly become urgent. It landed on our desks some time in September. Government supporters say: Treat this as urgent or the li million taxpayers who are to be dropped from the tax rolls won't get their goodies next year. It is an old story which the premier of Newfoundland has been using for years-if you want your half pint of ice cream you will have to gulp your seven gallons of cod liver oil first.
On Friday we heard from the hon. member for Ottawa West (Mr. Francis), the Liberal party whip. He spoke in his most honeyed tones. He was conciliatory. That is a most important quality in a whip; he has to be a master of conciliation. In his most honeyed tones he implored us not to delay the bill any longer-"What are you fellows up to, delaying this important measure? Get it out of here and into committee."


Some hon. Members:: Hear, hear!


Ambrose Hubert Peddle: What he was really saying was: Your debate on this subject embarrasses us. Get it out of here and into the obscurity of the committee, with half a dozen members sitting on it and maybe a small fraction of the press attending. This was what underlay the conciliatory message from the Liberal whip, and I don't blame him for trying, but it is not going to work.


Mr. Francis:: Mr. Speaker, I rise on a question of privilege. The hon. member has quoted me as saying I wanted the bill referred to committee on which a few obscure members would be serving. Does he not realize that this bill will be referred to a committee of the whole House to which every member belongs and requires a quorum of 20 members?


Ambrose Hubert Peddle: It is a very unsanitary thing, but the hon. member is putting words into my mouth. I did not say "obscure members". I said he wanted it referred to an obscure committee. As to the obscurity of the committee system, I say this to be quoted, it has no other effect but to destroy Parliament, generally speaking. Measures of importance to the country are taken from the chamber and shunted into semi-obscurity in some other part of Parliament Hill. They are subjected to the scrutiny of only a small fraction of hon. members.
The bill before us is called a reform package. Look at a dictionary and look up what "reform" means. The first definition is: "to make better by removing faults and defects"; the second definition is "by putting a stop to abuses and malpractices". Another is: "to abandon that which is evil and corrupt and return it to good state". This bill does none of those things. It does what it is designed to do-to further confuse the Canadian taxpayer.
As the beginning of sensible tax reform in this country, I would suggest that the 1} million people who are to be removed from the tax rolls should be removed without delay. It should have been done long ago. Members opposite should not wait until the eve of an election to do it. A proposal like that did not need to be part of these 707 pages before us; it could have been done in a simple bill. Was it necessary to include in this bill machinery for increasing exemptions to those in receipt of lower incomes? No. That is a bit of the ice cream you get with the cod liver oil.
Reasonable tax reform must include assurances that the money collected will be sensibly spent. I have not heard this mentioned. Nothing has been said about ending the extravagance and waste which is going on in this country. It seems to me we could support the exemptions, the little bit of relaxation which the bill provides for those on low incomes and for older citizens, by making a concerted effort to cut out some of this waste and extravagance of which we see so much evidence.
I will give hon. members some examples. Take Information Canada, the whole kit and caboodle. I would suggest that 50 per cent of what is spent on that is wasted. Take the story of the Bonaventure. Let us make sure there is no recurrence of that kind of thing, and save some of the taxpayers' money. What about the ridiculous Committee on Youth that cost only God knows how much and came up with God only knows what recommendations. The opportunities for Youth program was concerned with-


Steve Eugene Paproski: Opportunities for waste.
September 20, 1971


Ambrose Hubert Peddle: -sending symphony orchestras to Newfoundland outports to try to bring some culture to them. What kind of nonsense is this?


An hon. Member:: They don't want culture.


Ambrose Hubert Peddle: Obviously hon. members opposite do not know the meaning of culture. To some of those sitting over there, culture has to be crammed down our throats, it is something you pretend to understand when you don't. Where I come from we don't do that.


Some hon. Members:: Hear, hear.


Ambrose Hubert Peddle: Culture is something that we do or we don't have, and if we don't have it we don't go around pretending we do. Then, there was the Royal Commission on the Status of Women whose report has since been put in the dustbin. And think of all the waste and extravagance which must have resulted from the existence of the Department of Consumer and Corporate Affairs under a minister who concerns himself about the correct weight of a popsicle being on the label, making sure that a square inch of a sweater has the right number of yarns in it, and so on.


Patrick Morgan Mahoney: What bill are you on, now?


Ambrose Hubert Peddle: I am talking about government extravagance which seems to be an absolutely necessary part of any tax reform package. One communication went out from the minister's department telling consumers: If you have trouble with electrical appliances, make sure the plug is in. This is the kind of nonsense the country is paying millions of dollars to support. The administration has not touched the real problems of consumer relations, nor does it wish to do so. It is afraid because if it touches the real problems, some of the contributions to the party might dry up. So, they just natter away and try to convince the Canadian people they are here in their interests. This is great stuff.
Then, there is the commission to study the matter of a guaranteed annual income. If it goes the way of all other commissions, the commissioners probably will guarantee themselves an income for a limited time and that will be the end of it. I have no objection, but I think I would have to agree that the proposals made by this government during its three years, especially in the dying moments of its administration, are aimed at the majority of the taxpayers. I believe something is wrong when a government becomes preoccupied, from the day it comes into office, with winning the next election. I think that is wrong and I cannot buy it. I am not saying a government should not be political. I am saying, however, there should be some kind of a decent ratio between priorities and politics. At least some consideration should be given to the priorities of the country. If there should be a measure which would be good for 60 people this government would embrace it. The members of the government would all cheer and say "hear, hear, we have a good thing".
They could not care less if it should adversely and terribly affect another 40 people in this country representing a minority.
The attitude of the members of the government is "to hell with it" so long as they have a majority throughout.
Income Tax Act
This seems to be their object in life. I say there is something a little wrong with this attitude. I am not so naive as to suggest that a government should not be political. I have more sense than that. When everything else is put aside, and when from the day they are put in office they simply try to win the next election and the devil take the consequences, I say this is wrong. This is bad. This tax reform so-called appears in two official languages. The ordinary Canadian could not read the previous taxation bill but at least the experts could manage to pick it apart. But in this case we have been informed in no uncertain terms that even the experts and lawyers cannot make any sense of it. As I say, it is in two official languages, but I know from my own point of view that it just might as well be in Chinese or Arabic rather than in English because there is no way one can cope with it. No one understands it, not even the experts.


Patrick Morgan Mahoney: What part don't you understand?


Ambrose Hubert Peddle: The hon. member asks what I understand about it. I understand only a few tidbits picked out by his colleagues. There is to be an exemption for the lower income group and a little relaxation in respect of the older taxpayers. However, it should not take 707 pages to do this and such a bill should not be introduced on the eve of an election. It should have been introduced immediately by this government back in 1968. But, no; it is introduced now when there is a federal election on the horizon. I suggest that this time the people of Canada will recognize this for what it is. We have had a bill before us involving $80 millions in aid to industries which might be affected by the U.S.surcharge. We on this side of the House had to try hard to find an opportunity to make a comment on that bill because all hon. gentlemen across the way wanted to get credit for it. Finally, before an election, they wanted to project themselves a little. They had been quiet all along, but now they wanted to get in on some little thing about which there is not too much controversy. But they are avoiding this tax reform like the plague. It is difficult to get one of them to talk about it. All they do is suggest it be sent to the committee. They do not wish to talk about it because it is embarrassing.
In rising to speak, I followed a member of the New Democratic Party. Actually there should have been one or two Liberal members rise at that time, but they do not want to talk about it. This legislation has been introduced with great urgency. It was dumped on our desks on September 7 and we were told that if we did not get it out of the way by the end of the year one and a half million Canadians who are to be removed from the tax rolls would blame us. It should not require 707 pages in order to make some provision for the one and a half million people who would be concerned. This could have been done simply.
I shall close by repeating what was said by a gentleman who appeared on the T.V. program "Viewpoint". I do not know who the gentleman is, but I listen to common sense no matter from what source. He said:
Mr. Benson's tax reform bill is too bad to be patched up as it proceeds through Parliament. The only solution is to withdraw the Bill for re-writing. I know that everyone-the government especially-is anxious to be finally done with tax reform. Unless a few more months are spent re-drafting the Bill, however, Canadians are going to pay a terrible price for their impatience.

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I am not suggesting that the little tidbit for the lower income tax payer and the extra exemption for the old age taxpayers should be withheld. A very simple little bill could have been brought in to provide for that and there could have been little or no debate. In that way these people would have been provided for and the money to look after them could have been found by a little crackdown on some of the horrible waste and extravagance of which this government has been guilty right along the line.


Mr. Rene Matte (Champlain):: Mr. Speaker, the amendment moved by the hon. member for Edmonton West (Mr. Lambert) is fair and quite relevant. We are surely concerned about the economic prospects confronting Canada. We are also concerned about continuous unemployment and industrial'depression. We are also conscious of the fact that a real tax reform is essential.
Allow me moreover, Mr. Speaker, to point out once again how the Social Credit party of Canada is particularly aware of all those economic problems plaguing us. The existence of our party can precisely be explained because we suggest specific answers and realistic solutions which would solve those endless financial difficulties.
Why should we attempt, Mr. Speaker, to patch up, to mend, to try to cure without getting at the very cause of all those economic evils and frustations, that is the present economic and financial system? There is nothing surprising in the fact that we must change our mental attitudes which are deeply entrenched in a system that moulded us to the point that the system is no longer serving the people but the people are forced to kneel and crawl to satisfy the requirements of the system.
If we must reach the point where we have to alter the very principles that pervaded our mentality, we should not hesitate to do so because all solutions we could bring forward will never do anything as long as we do not get at the problem, at its very source, that is a complete and total reform of the economy.
Mr. Speaker, I do not want to take too much time. I know that hon. members are perfectly aware-and if not, at least they should have a pretty fair idea-of what we want, what we wish for, and in this extremely difficult period when we all strive to solve certain important problems existing in our country, it is to leave aside partisanship and concentrate objectively on the study of all solutions, even if they are suggested by opposition parties such as ours.
Mr. Speaker, there is a general outcry against the reform as proposed by the Minister of Finance (Mr. Benson) and with your permission, Sir, I would like to draw once again the attention of hon. members, like some of my colleagues have done previously, to the opposition expressed by caisses d'economie, caisses populaires and various similar co-operatives in Canada and particularly in Quebec, against certain clauses contained in Bill C-259. In order to prove the veracity of these protests which come from everywhere, I would like to read in full the last letter dated September 13, 1971, sent to me by the
(Mr. Peddle.]
employees' caisse d'economie of the Canadian International Paper in La Tuque, and I quote:
Mr. Rene Matte, M. P.,
Ottawa.
Dear Mr. Matte:
Re: TAXATION OF CAISSES D'ECONOMIE AS PROPOSED IN BILL C-259.
As you probably know, the caisses d'economie have made a tremendous contribution to Quebec's economy throughout the province. We think that the development of this movement illustrates the fact that Canadians believe in the efficiency and the worth of the caisses d'economie economic philosophy.
It was announced in June that the caisses d'economie would be greatly affected by the tax reform: we have since then been very concerned. Should it be passed, Mr. Benson's reform will ruin to a great extent the characteristic principles of the caisses d'economie and decrease their competitiveness in the financial market.
We feel Bill C-259 misunderstands the nature of the caisses d'economie and, because of this, it cannot set up a just and equitable tax formula.
We are particularly concerned about Sections 125, 137 and 189 of the proposed reform. We mentioned these details in our brief to the Minister of Finance presented in July. Among other important objections and amendments we listed the following:
1.	In Section 137, no provision is made to allow the deduction of dividends on social capital in calculating the taxable income. This is vital for all caisses d'economie and provincial branches. The shares in caisses d'economie are essentially savings deposits payable on demand. They are entirely different from shares in financial corporations.
2.	The bill should be amended so as to include investments in caisses d'economie in the "qualified investment" category, since investing funds to build up reserves which will bring about stability and revenues for the savings of members is an integral part of the caisses d'economie financial routine. The same application should be made for a similar paragraph in Section 189.
3.	The "total business limit" formula as applied to caisses d'economie in the proposed reform is not fair. The reserves of caisses d'economie as common property of all members cannot be divided among members under the form of eventual distributions. Section 125 should be defined especially for caisses d'economie and a special reference should be made for this purpose in Section 137.
4.	The definition of capital employed should be deleted from Section 137. We believe that this definition is not sensible since caisses d'economie do not give a competitive dividend, so that competitors should not get any part of this return since those members which receive it are already taxed.
Five other items are mentioned in the brief to the Minister of Finance. They too are important; they deal first of all with the question of restricting activity to one province only and then with the caisses d'economie that are entitled to accept classified deposits as ineligible investment and with the pertinent amendments.
It is of the utmost importance that the National Committee on Taxation meet with the Association nationale des caisses d'economie (ANEC) in order to clarify the amendments to the proposed revision which are necessary to the success of the movement.
On behalf of 2,500,000 members of the caisses d'economie of the province of Quebec, we thank you in advance for your co-operation.
Roger Marchand, Manager. Mr. Speaker, the reason why I read this letter is to show you that our people are very much interested in the laws considered in Parliament. They are deeply interested and here is the proof of it: they participate, indeed, by their comments and the amendments they suggest.
In short, Parliament is not anything else, and should not be anything else, but as far as possible the true reflection of the Canadian taxpayers' opinion. Then, it is not only
September 20, 1971

important, but essential that we agree to consider in the House in a very serious fashion the comments and suggestions made by various bodies and, in the light of these, the Minister of Finance could improve his voluminous Bill C-259, by dividing it into smaller parts, as some speakers have suggested, because this bill is far too thick, not only in content, but literally.
We should therefore ask ourselves, when considering a bill, whether we are legislating according to the interests and wishes of the taxpayers we represent or in order to carry out mere mathematical acrobatics and satisfy our intelligence.
Mr. Speaker, there is a principle involved: most Canadian institutions and individuals are concerned with the content of this reform and it should therefore be lingered over. We must absolutely reconsider the various proposals contained in the bill and that is why I support the amendment brought forward by the hon. member for Edmonton West, which merely calls for the House to decline to give second reading to a bill which does not provide sufficient stimulus to the economy of Canada with appropriate tax cuts and incentives, does not contain adequate tax exemptions and is not calculated to materially improve business and labour conditions in Canada now or in the foreseeable future.
For, Mr. Speaker, whenever we in this House pass legislation, it is essential that such legislative measures as we adopt be acceptable to the people of Canada, and, also, that they benefit the population of this country. Of course, it may happen that the benefits are not immediate, but we should always ascertain that any act passed by this House is really going to benefit all Canadians.
This, Mr. Speaker, is the reason why I think that the Minister of Finance should back down and set this famous bill aside for the present, for it should be completely reviewed, taking into account proposals and even amendments suggested by individual Canadians or institutions eager to co-operate with their member in order to make sure that a really progressive bill is introduced which would be advantageous for the whole country.


Mr.  R. Gordon L. Fairweather@Fundy-Royal: I want to discuss four aspects of the bill that are of concern to me at the moment. The first of these is the draftsmanship or the plain words aspect of the bill; second, the effect the bill will have on co-operative movements; third, the effect, should this bill pass in its present form, on farmers and fishermen; and lastly, what I might call the rather narrow outlook which the bill takes, if I may say so, of the whole matter of child care expenses.
I go at once to the subject matter of drafting and make a plea for clearness, for accuracy, and for brevity. I read recently of the rejoinder of a wise English judge when an expert medical witness was giving evidence at a trial. Finally, in frustration, he said something like this: "It is useless to go on giving complicated medical evidence because nobody will understand me". The judge replied: "We will understand if you use plain English". It seems to me that something of that philosophy should prevail in all legislative drafting.
Income Tax Act
The Income Tax Act, which is touted as an important element of the government's program of reform should, I suggest, be intelligible to most Canadians. Is it? I doubt that it is. A court said once that we ought not to be puzzled by such old scholastic questions as where a horse's tail begins and where it ceases. You are obliged to say at some time that this is a horse's tail. I am not sure whether within the ambit of the seven hundred odd pages in this bill anybody ever does say "this is, indeed, a horse's tail". I will not be drawn into a discussion of the other parts of the anatomy of a horse, Mr. Speaker, no matter what the temptation may be from those who call from my rear. But section 39 might be called a test section, the test being clarity, brevity and clearness. Here is what it says: I will try to read it in a straightforward manner. I do not want to miss any of the nuances or the elegances of language. It reads:
39. (1) For the purposes of this Act, (a) a taxpayer's capital gain for a taxation year from the disposition of any property is his gain for the year determined under this subdivision (to the extent of the amount thereof that would not, if section 3 were read without reference to the expression "other than a taxable capital gain from the disposition of a property" in paragraph (a) thereof and without reference to paragraph (b) thereof, be included in computing his income for the year or any other taxation year) from the disposition of any property of the taxpayer other than-
Then, there follow in draft form two and a half pages more of "notwithstandings", "whereases", and so on. But we are not through yet because we have to turn back to section 3. Section 3 only covers a page and a half which, in legislative drafting, is not really very bad, but it must be read as if it means the opposite to what it says. I fool you not, this is exactly the statement. By the way, section 40 carries on with two pages of general rules for the interpretation of section 39 which is to be read, as I say, in conjunction with section 3.
However, although it is easy to fall into this temptation, I will not make what could be called a hit and run attack on the drafters of the legislation for it has been said that what is commonly called the technical part of legislation is incomparably more difficult than what might be called the ethical or, in current language, the policy considerations. In other words, it is much easier to conceive firstly what would be useful law, than so to construct that same law that it may accomplish the design of the lawmaker. Another English judge said: "Nothing is so difficult as to construct acts of parliament properly and nothing so easy as to pull them to pieces". I do not think the debate will be helped by a pulling to pieces of this act just for the sake of having a pleasant afternoon's exercise in semantics.
The author of the "Complete Plain Words"-and here I do make a plea and I would hope that parliamentarians and senior civil servants would read the "Complete Plain Words"-I think was secretary to the British cabinet for some time, Sir Ernest Gowers. Whatever he was, he was a plainspoken man who had a love for the English language, and I think that if many of us read the book we would profit from it. We can see in the examples which this author uses some of the obscurantist phrases that creep into drafting, both of letters and our other exchanges with the public. But in "The Complete Plain Words" the author says:
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Drafting is more a science than an art; it lies in the province of mathematics rather than literature, and its practice needs long apprenticeship.
I pay this tribute to the draftsmen. I hope they served a long apprenticeship, but I am not very sure that this bill gives evidence that that apprenticeship, and the time they had to prepare the bill, were as long as they might have been.
Somebody else, when discussing the language of legislative draftsmanship said:
The lawyer, like the theologian, is faced with a number of texts that he regards as authoritative and that are supposed to settle any question that can conceivably arise. Each text was once drawn up by someone who presumably meant something by it; but once the document has left the author's hands it is the document that matters, not any unexpressed meaning that still remains in the author's mind.
I think that is the point my hon. friend was making a moment ago when he said that most of this bill is unintelligible to the general public.
For the lawyer, the words of the document are authoritative as words and there is no possibility of obtaining further information from the author, either because the author is dead or because of the rules of evidence precluding reference to him.
Perhaps some of the lawyers in this House hope, as I do, that this rather stupid rule of evidence, that precludes courts from using draftsmen and policy papers when considering what a statute means, will soon be changed. But that is another subject. No one can expect pretty writing from the legal draftsman, who has the duty to try to imagine every possible combination of circumstances to which his words might apply and every conceivable misinterpretation that might be put on them, and to take precautions accordingly. But the trouble with the income tax bill is that when passed it has application, despite its reformative element, to the vast majority of the people of this country, and I very sincerely suggest that it should be understood by those people to whom it is applied.
My plea is that the object of a draftsman is to be precise without being obscure. Surely, it is not too much to expect that a bill should be intelligible to those who debate it and have the ultimate responsibility for it? I suggest that there is a good deal of lulling of Canadians going on through the use of such phrases as "tax reform" and "improvement over the hodgepodge of the present tax law." These phrases are bandied about by people who have not the vaguest idea of the present income tax law or the new law that we are considering. It seems to me that it is all really quite unreal, something like a trick at Hallowe'en.
The three tests should be: will the new law be easier to interpret? Will the new law be simpler to administer? Will the taxpayer have to resort to more professional advice than ever before? I am perfectly certain that the government's bill fails on each of those three tests. It will not be easier to interpret. It will certainly be much more difficult to administer. And I have a very grave suspicion that there will be more professional help needed than ever before when one makes out one's income tax return and is sending a donation to the government of Canada.
The Institute of Chartered Accountants and the Canadian Bar Association have issued what can only be fairly called objective criticisms of the bill as a piece of drafts-

manship. They have drawn attention to obvious obscurities. I have not heard from anybody on the government side whether any attempts are being made to clear up these useful criticisms, objective and non-partisan. I want to know, are such attempts to be made or are we to proceed with consideration in Committee of the whole House despite the warning signals we have heard from these professional people?
I have one other comment to make on this aspect of the bill. Here I quote Mr. Robert Warner who on the CBC show "Viewpoint" on August 18 gave the example of clause 39, which I confess now I cribbed from him earlier in my speech. He said:
An example of the bill's tortuous wording is the section describing what a capital gain is. That section, No. 39, is about half a page long. As statutes go, that isn't too bad. However, after reading four lines, the reader is directed to turn back to section 3 and read in another page of type. If this were not bad enough, you are told at the same time to read section 3 as though it said the opposite of what it does say..
The explanation for this, I think, is that the draftsman, working under great pressure, took what to him was a helpful short cut. He probably understands what he was saying. But, for years afterwards, taxpayers, their advisers and judges will have to do these mental gymnastics a thousand times over. Little drafting short cuts like these are going to cost the country a great deal.
I know that many say that the tax experts are merely adding hypocrisy to their other sins by complaining. But we-
I assume Mr. Warner is in the category of an expert.
-are not so selfish and irresponsible as to believe that an economic bonanza for us is necessarily good for the country. None of us want to be the beneficiaries of a law which imposes a higher than necessary compliance cost on the rest of society. As Canadians we want the laws to be such that most people can understand and comply with them without the constant attendance of a professional adviser.
I sincerely believe that this is a very legitimate complaint about this huge and complex document.
I remind the House that a statute has been defined very simply. Mr. Speaker, you know this definition well. A statute is "the will of the legislature." I am not at all sure that the interpretation of that will is plain in its meaning. I think that is a fatal flaw in the legislation.
I now wish to deal with the proposed income tax changes as they affect co-operatives. I may say that the Official Opposition has been very much helped by the interest shown by government backbenchers in this aspect of the bill. I am sure the minister has heard both from my leader and others who have spoken, and also from his own supporters, with respect to these proposed changes.
In late August I myself had a very helpful meeting with representatives of Maritime Co-operative Services Ltd. of Moncton, and one of its supporting groups, the Sussex Co-operative. The latter has a paid up membership of 1,400 in my constituency. Representatives of the membership are understandably upset about the new legislation and, as a representative of an area where the co-operative movement has greatly benefited farmers and fishermen, I am glad to remind the minister and the House of the changes proposed and of some of the objections to them. The bill withdraws the three-years exemption for new co-operatives; the bill changes the definition of co-operative corporations; the bill radically alters the way in which members handle patronage dividends for income tax pur-
September 20, 1971

poses and changes the definition of capital employed so that there can no longer be a deduction allowed for unproductive assets, that is assets not required for purposes of the business.
The bill subjects shareholders to a tax on their share of the deemed dividend which would result if a co-operative redeemed or acquired any of its common shares or reduced its common stock. Under the existing act, shareholders of a co-operative are specifically exempt from tax under such circumstances.
The bill withdraws the present exemption from taxation of moneys received from provincial grants. I think this should be checked out with the departments responsible for the encouragement of co-operative movements for that aspect of the law, which is clearly property and civil rights, falls within the responsibility of provincial governments.
The plea I make today is for small co-operatives. The definitions of co-operatives should be redrawn so that a distinction can be made between big business co-operatives, which need little or no protection, and small cooperatives which public policy has long sought to encourage. There is a curious bit of irony about the changes that the government plans for the co-operative and credit union movements in that one of the senior members of cabinet, the President of the Privy Council (Mr. MacEac-hen) is a distinguished alumnus of and a former professor at the University of St. Francis Xavier. Of all universities in the country, this one had much to do with the development and evolution of the co-operative movement. The irony is that the Secretary of State for External Affairs (Mr. Sharp), through his CIDA program, the Columbo Plan and others, helps to bring students here from other countries in order to continue their education. St. Francis Xavier University receives many of these students and assists them to study the development of co-operatives and to translate the results of their studies into methods for helping developing countries. That is one aspect of a better policy but, on the other hand, the indigenous or national movement in Canada is being seriously frustrated by the government's so-called reform in this area.
I shall end this part of my speech, Mr. Speaker, by saying there is no doubt at all that it is the Members of Parliament who will hear, first hand, about the unease across the country felt by credit unions and co-operatives about this aspect of the government's bill. I hope the minister will yield to the pressures-and they are proper pressures-from those of us who see in the co-operative movement a self-help program worthy of every bit of encouragement.
Farmers and fishermen will be more heavily taxed under this bill than they are today. This flat assertion is not loosely tossed into the debate to try to win friends from the agricultural or fishing community. Rather I make the statement based upon the way the bill proposes to treat income gained from farming and fishing, bringing these vocations more into line with the tax treatment of other businesses. But are they like other businesses? What is the government's philosophy about the future of the small or family farm? This is no plea for some bucolic past when everything was fine down on the farm. Those
Income Tax Act
days are gone and I suppose most farmers are glad that they are. Rather it is a plea for the efficient yet small family unit which is operated not only as a way of making a living but which is a way of life. Is this act but one more weapon in the hands of the government to deal yet another blow to the individual farmer? Have the long range policy implications of this bill been thought through by officials of the Department of Agriculture and the Department of Regional Economic Expansion, to mention but two? Or is it specialist legislation considered in the antiseptic corridors and offices of the Departments of Finance and National Revenue?
One of the pleas made by the former minister of communications, the hon. member for Duvernay (Mr. Kier-ans), is a thoughtful criticism of the government evolution of policy. I think I paraphrase him correctly as saying power is developed in somewhat of an isolated manner, department by department, without any over-all concern about policy implications or how policy decisions will react in other departments. I believe that as far as the farmers and fishermen are concerned, the departments that should have had most to say about the policy implications of the tax changes were not very much part of the planning of this legislation. If this is not an accurate assessment of the situation I hope someone from the government side will set me right.
The last of the four points I wish to discuss today, Mr. Speaker, is child care expenses. Here, I think the relative committee did a workmanlike job. It is an example of what good sense often comes from parliamentary committees when they consider some abstract legislation. After all, Members of Parliament should be close to what might be called the real difficulties facing people in their daily lives. If I had the time, and if members cared, I could expand my remarks into a discourse about the Member of Parliament because I feel he becomes increasingly important as government becomes increasingly depersonalized and its policies dehumanized. But'nobody is interested in that on a Monday afternoon, Mr. Speaker, and this debate is on a more precise topic.
There is to be a deduction for child care expenses of up to $500 for each child under age 14, with a maximum of $2,000 per family. This is in addition to the general deduction for children as dependants and will normally be claimed by the mother. A deduction is to be permitted for expenses of caring for a child over age 14 and who is dependent because of mental or physical infirmity. I hope that deduction can be claimed whether the child is cared for in this country or in special schools in the United States or other countries. It is my understanding that this is not now the case, and it is a serious fault in the legislation. The deduction may be taken by the father if he is a widower, or divorced or separated. He may also take the deduction if the mother is incapable of caring for herself or children, or if she is confined for 14 days or more to a bed, wheelchair, hospital, mental hospital or prison. For such periods, the father's deduction is to be limited to a maximum of $15 per week for each child to a total of $60 per week, subject to the over-all limitations of $500 per child or $2,000 per family.
Qualified child care expenses include babysitting costs, day nursery care, and up to $15 a week, not exceeding $500 a year, toward lodging paid at schools and camps.
24319-17^

September 20, 1971
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Income Tax Act
Amounts paid to dependants of the taxpayer or to relatives under age 21 will not qualify. Receipts bearing the social insurance number of the individual who performed the services must be retained. Child care expense deductions cannot exceed two-thirds of the earned income of the parent making the deductions.
Now, Mr. Speaker, may I say this: I think this provision goes a long way but only part of a very important way in this whole field of child care, the working mother and so on. The Commons committee, as I said earlier, termed the child care deduction a major innovation of our tax system. It suggested that the relief be extended to cover the situation where there is a parent at home unable to care for the children because of permanent, mental or physical infirmity. This idea is incorporated in the legislation; I am glad it is, and I pay tribute to the draftsmen. It is incorporated along with other extensions to cover special situations. The bill permits a deduction for expenses of caring for a child over 14 years old who is dependent because of mental or physical infirmity. However, while this initiative is welcome by the House, I suggest that it can be considered as only going half way along the way, because it is only a half measure particularly in helping low income working women.
I come to the point quickly, Mr. Speaker, by saying that the exemptions are not large enough. Being in the form of exemptions rather than tax credits, they will be of relatively less value to the poor than to the well off. They do not consider possible increases in child care costs involved in demanding receipts from baby sitters. If anybody here has ever tried to get a receipt from a baby sitter, he must know whereof I speak. They do not in any way assist in improving day care facilities and costs, which, in effect, now largely exclude low income people.
The whole area of day care is very much in the public domain, yet we are tiptoeing around it as a national Parliament because some policy considerations may be thought to be of provincial responsibility. This is the ongoing Canadian minuet. Having said that it is the national government that has clear responsibility in the tax field, we ought to say that the matter of day care facilities and costs of operation in maintaining children in day care centres is clearly our responsibility. We should see to it that we look after this matter at this stage of the legislation.
I end where I began, with the plea for clarity and conciseness in the legislation. I expect the minister will be reviewing the wise criticisms of many hon. members about the unfair attitude this bill takes to the co-operative movement in Canada. I also suggest that the bill in no way considers the future of that distressed aspect of Canadian life, the small or family farm. Lastly, although the provisions for child care are innovative and helpful, I suggest with great sincerity that they do not go far enough to meet the realities of the present day, since such a large part of our working force consists of working mothers.


Mr. Herb Breau (Gloucester):: Mr. Speaker, my comments on second reading, or rather on the amendment

brought forward by the hon. member for Edmonton West (Mr. Lambert) will be very brief.
I do not want to delay the business of the House by repeating many things that have already been said, explaining at length approaches for fiscal reform and even less, like the hon. member for Edmonton West in his amendment, taking advantage of the opportunity to discuss economic policy in general. Economic policy is a specific thing and although it is related to a country's fiscal system I do not feel it should be used as a pretext for delaying our fiscal reform and discussing the economic problems we are facing. I do believe we can now carry out this reform since we are faced with economic problems. In fact steps likely to correct them can be taken.
Mr. Speaker, I merely wish to state that I am completely in agreement with the principle of the matter. I wholeheartedly approve the government's idea of opening a public debate on the white paper and of having the tax reform proposals examined by the House, by the Committee on Finance, Trade and Economic Affairs and by the Senate, and then of presenting a bill to the House. Obviously, by so doing, the government was much criticized and found itself in the rather embarrassing situation of having to defend its positions.
In any event, Mr. Speaker, I believe that this will not have been in vain, because, through the debate, the public learned much on the present taxation system, and I believe that, instead of always attacking the government's policy by opposing its proposals, it is preferable to inform the people.
I think that we have done something concrete since November 1969. In fact, Canadians have a better knowledge of the tax system, its consequences on their life and on the economic system in general.
Mr. Speaker, I only meant by these remarks to bring to the attention of the House, as other hon. members have done, a clause or philosophy contained in this bill which could be detrimental to the co-operatives and credit unions, and this, because I live in a predominantly rural area where co-operatives have played, as they still do, a very important role, especially in fisheries.
Co-operatives have played a role in the Maritimes. In my constituency, they have helped the people get through a depression, a disastrous economic and financial situation. But they still have much to do.
Evidently, I acknowledge and appreciate the fact that we live in a free enterprise system and I feel that such a system is the best for Canada, in our political and economic circumstances.
However, Mr. Speaker, that system has some gaps; in general, it has some deficiencies, because too often we are governed by efficiency in terms of statistics, in terms of production, in short, in general economic terms.
I am in agreement with this approach. Efficiency is sometimes necessary. When members of a society wish to lead a certain kind of life, we must recognize their right to do so and give them as much assistance as possible, particularly by way of the tax structure.
It is obvious that the operation of co-operatives and caisses populaires is outdated. The legislation on co-oper-
September 20, 1971

atives has not been reviewed since 1950, I think, after a royal commission studied the problem around 1945. It should be amended because in certain cases co-operatives have grown to be not only organizations grouping people with a certain goal or to improve the social or economic lot of their members, but also a threat to small private businesses.
Co-operatives should perhaps pay higher taxes. As for those which simply exist to meet a social or sociological need, they should have under our tax system the means to accumulate capital in order to achieve greater expansion. Were the proposals contained in the bill to be passed, it would be disastrous for co-operatives, particularly after seven, eight or ten years, because by increasing by from 3 to 5 per cent the employed part of the capital, that capital will accumulate from year to year in a strictly mathematical progression, and after a certain number of years, the co-operative will not have enough cash or liquid assets to meet its commitments to its members. Some co-operatives, large and small, would then disappear. I feel the cabinet has not really understood the implications of the proposal.
I therefore ask the House to amend the bill when it comes up before the committee of the whole to ensure that the tax system continues to allow co-operatives and caisses populaires to develop further.
In fact, Mr. Speaker, in the Maritimes, in my constituency especially, these co-operatives have sociological effects, and strictly with regard to efficiency, I think that without them Canada will lag behind and stand to lose. We realize today that society must look after the social condition of its citizen, their social education and give social assistance to those in need, so many programs helping the underprivileged and the poor. Many of these people live in rural regions and benefit from these co-operatives.
And what will happen if the bill now under consideration is passed? Society will have to look after these people through less efficient means than if we were to help co-operatives by tax abatements. So the income lost to the Treasury would be more efficiently spent than if attempts were made to solve social problems created by the disappearance of co-operatives. I think it would be more advantageous for the Treasury to sacrifice some revenues that would be of great benefit to the co-operatives.
The credit unions distribute their profits to their members. Profits are not their sole concern. In fact, they provide their members with economic advantages and they work in several other fields.
With regard to fishing, for instance, on the eve of the fishing season for some species, private companies are anxious to see what prices co-operatives will offer. Why, Mr. Speaker? Because in private enterprise, profit is the motivation. Private companies are less concerned with the social welfare of their members or people who sell them fish. It is quite normal to pay as little as possible to get the most for one's money. As a matter of fact, the system is so organized. But, on the other hand, co-operatives quite often give to a fisherman who is a co-operative member a much higher price. Therefore, companies must in turn pay more, which forces people at the end of the year to sell their fish and the consumer to pay a little more. Why? To pay for higher operating costs which affect no only the
Income Tax Act
unionized worker from a processing plant but also the fisherman whose only protection is the co-operative.
I felt that this bill would bring about the disappearance of co-operatives as well as harmful consequences for the economy and society; already the situation is very serious in my riding. And almost one third of the population is non productive in some designated areas. In fact, were co-operatives to disappear, the social and economic situation in my riding would become more critical.
Mr. Speaker, co-operatives are of prime importance in the Maritime provinces, especially in my riding. I hope, therefore, that the relevant sections will be examined by a committee of the whole House, and that the latter will amend these sections in order to provide a more effective and more equitable way for co-operatives to remain in operation.


Alfred Pullen Gleave: Mr. Speaker, I was very pleased to hear a government member say some of the things that need to be said with regard to the proposals in this bill for taxation of co-operatives. At the end of June, before we adjourned for the recess, there was almost a total silence on that side. I began to be amazed that a government had been elected in which there were not any members who were either aware of or concerned about the co-operative movement.
In this overall taxation proposal, there is a lack of concern for the disadvantaged in our economy. There is a lack of concern for those people and those organizations in our economy who find it difficult to gain new capital or retain capital for their operations. I think in terms of the co-operatives, in terms of the farmers, in terms of small businessmen. These groups will probably disappear if we continue present taxation policies. It is true there is provision for an increase in basic exemptions but the majority of wage earners, pensioners, salary-earners and small businessmen will, as far as I can make out, bear a disproportionate share of taxation. The measure before us is favourable to corporate business as far as tax rates and write-offs in certain categories are concerned. The government is sometimes charged with being devoted to creeping socialism. I do not think this is true at all. The government, as it appears from this tax bill, is devoting itself to the area of managed corporate capitalism in the hope that managed corporate capitalism, if left secure and not taxed too heavily, will be a source of prosperity for Canadians and a means of providing a satisfactory level of employment. I am assuming the government would like to see a satisfactory level of employment. Despite some of the things which have been done I cannot accept that it really does not give a damn.
This being so, the government must be following the general pattern we see here on the assumption that satisfactory employment will be created. From the look of these tax proposals, we must conclude that they expect satisfactory employment levels to follow from large-scale resource development. The fact that this has not happened up to now does not seem to faze them at all. It seems they believe that what has happened in the immediate past will not happen in the future. I do not know how

September 20, 1971
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Income Tax Act
they come to this conclusion because like actions usually produce like results unless there are exceptional circumstances, but that is the line taken in the proposals we are considering. The bill does not follow the Carter Commission idea that a buck is a buck, that taxation should be equal. I do not think it can properly be called tax reform in the sense that most people understand the word. Rather, it is a managed tax scheme designed to give advantage to those who already have most of the economic power and to those who will most rapidly develop Canada's basic resources, which means that those already in production in the smaller segments of the economy will find it increasingly difficult to survive.
One sees the same approach toward what the United States has done in applying a surtax. The government's response has been to provide for assistance to those manufacturers or processors who are sending more than 20 per cent of their products to the United States. For practical purposes this rules out most of the small entrepreneurs in Canada whose operations are designed primarily to serve the people in their own areas but who do, nevertheless, export some of their products and who will be caught by this surcharge. The government's approach to this question is not designed to help farmers as individuals. It might do something for those who are processing farm products, but the chances of this assistance trickling back to the farmer are remote.
I know that when it comes to workers' allowances for expenses, the government's approach is to specify a flat amount. Why not allow the workers the same privileges as are given to others and accept legitimate expenses as deductible, provided receipts can be produced to show that these expenses have actually been incurred? For example, the expenses of railroaders working away from home vary a great deal. I know of verified cases in my constituency where expenses have amounted to two or three times the figure mentioned here. We are not back in the days when a working man could walk to his job, or take a streetcar, and be there in 10 or 15 minutes. These are times in which a worker whose job folds may well have to drive to another area to find employment, such is the mobility of labour. He may be required to drive and maintain a vehicle which he otherwise would have no need to drive or maintain. But no recognition has been given to these factors. They have been ignored.
Then, there is the position of the co-operatives. I cannot make up my mind whether these proposals for taxing co-operatives were the result of stupidity or malice aforethought. I suppose we shall never know. We can only hope that as the bill goes through, the present provisions will be amended. Some have said: Let us express concern over the small co-ops but do not let us worry about the big ones. The hon. member for Edmonton West (Mr. Lambert), as reported in Hansard at page 7762, said:
We have had quite a reaction to this bill from the co-ops. I do not know what the House is going to decide, but it seems to me that the government has advanced its proposals after looking at some of the largest co-ops in the country, organizations which have lost their co-operative origins, that operate in the hundreds of millions of dollars class, their boards of directors being far removed from the ordinary members, in the same way as the boards of the biggest multinational corporations are far removed from the shareholders.
Then, he went on to say:
Unfortunately, the government's proposal gather up into the same net hundreds if not thousands, of small local co-operatives. I am speaking of co-operatives organized on a local self-help basis.
Perhaps some private business was feeling the pinch as a result of competition from these large co-operatives. Perhaps they persuaded the government to move to clip their wings. If this should be true, then I say again this displays an amazing amount of ignorance because this bill, with its taxation proposals for co-operatives, will make it extremely difficult not only for the small co-operatives but also the large co-operatives to operate. The time is and has been for some time when the large co-operative is extremely important. If we had not developed the large co-operatives which we have both in eastern and in western Canada, we could not operate effectively. Canadian Co-operative Implements Limited surely would not be able to finance the importation of machinery, the manufacturing of machinery and the distribution of machinery if this particular tax bill should go into effect.
We had an inquiry into the cost of farm machinery and found out that the costs were excessive, but we did not receive any clear cut recommendations concerning how this situation could be changed. The only competition that is and will be effective in the farm machinery field is from such a co-operative or from the smaller manufacturing industries we have in Canada. The only real competition which exists in the distribution of fuel oil to farmers in western Canada comes from the Federated Co-operative. I would not be surprised if in a few years it were the only refinery remaining in the province of Saskatchewan because it is owned by the people of Saskatchewan and they will keep it there. So, are we seriously thinking we will bring in this kind of taxation proposal which would cripple an organization which saves millions of dollars for its people? I cannot understand those who say that a small co-operative is a nice little business and we can safely pat it on the head, but when it gets into the multimillion dollar class it should quickly have its throat cut. How else could we have established a farmer-owned fertilizer plant in Calgary had we not had a co-operative which could raise the money required to establish the plant? How else could we have established a large grain terminal on the west coast had we not had a co-operative which could obtain membership earnings in order to put it there?
I have before me the submission to the Minister of Finance by the Co-operative Union of Canada in respect of sections 135 and 136. In their submission to the minister they say their purpose is to object to the continuation of a capital employed concept as a base to determine the extent to which patronage refunds may be paid by a co-operative. They were impelled to make this submission because the government decided that 3 per cent was not enough and intended to jump it to 5 per cent. This was an illogical method in the first place. In this legislation is a proposal for the taxation of co-operatives' annual earnings. Co-operatives have not objected to paying the tax on the profits they have. They have said in this submission "for non-member earnings, tax them as a corporation". What they are objecting to is the government dictating to them the manner in which they may distribute the patron-

September 20, 1971

age earnings from the earnings of the members and which belong to the members. Is it correct that the government should tell them what they can do and how much tax they will have to pay?
I do not think the people who made these proposals really know how co-operatives gather and maintain their equity or how it is paid out. Co-operatives have to pay out savings and reserves as their members retire or become old. If a member should cease farming, the standard practice in the Saskatchewan Pool, or in the Biggar Cooperative or in the co-operative at Swift Current or Saskatoon is that at that point in time they repay the shares, or in other words the savings that the member has in the co-operative. The submission made by the co-operative states that under this taxation proposal either one of two things will happen. Either the co-operatives will not be able to pay out the money to these people when they cease business or retire, or, if they pay it out, the co-operatives then will be starved for working capital. Is the objective of this proposal to starve the co-operatives in respect of working capital? As I say, what is it? Is it ignorance or what? We are exercised because we have a lot of money invested. Those of us who are members of the co-operatives and who have been officials of co-operatives know; for example, that in the Saskatchewan pool, the Alberta pool and I suppose in the Manitoba pool we are facing a rebuilding and reorganization program which will cost somebody a lot of money. This will not cost the government a lot of money. It is the farmers who will have to pay the shot.
I would expect the government to be concerned with keeping the co-operative movement strong. It is a purely Canadian organization in all its aspects. It is owned by Canadians. We have no difficulty in the co-operatives in respect of foreign capital. We do not consider it is even possible that a United States or indeed a British firm could come along and close down the co-operative refinery in Regina. This will not happen because we own it and want it there. It is quite possible that any time any corporation in Canada can close a particular refinery or indeed a fertilizer plant and say, since it is not making money, it is to be closed down. Or it could be a flour mill. We had an example a few years ago when if we had not had co-operative owned flour mills in western Canada, we would not have been able to deliver flour to China because the foreign-owned flour millers simply said they would not mill the flour.
I should think that a government which was at all concerned about Canadian ownership would be busying itself making very sure that co-operative institutions and commercial operations in Canada remained viable and strong. We find the very opposite. I do not know how many letters and submissions I have received from local co-operatives in western Canada, but I have received a great many from individual members, farmers and, indeed, city people who use these co-operatives both in my constituency and others. The only other two recent actions by the government as a result of which I received more letters was the stabilization bill and Bill C-176. Our people are greatly exercised by these tax proposals. They consider these proposals will put in jeopardy the co-operatives they have
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spent a great deal of time and money establishing. The only thing I can say to this government is that before it is too late it should change its basic approach.
Finally, let me say something to the government in respect of farmers. I think it was the hon. member for Fundy-Royal (Mr. Fairweather) who said a short while ago it was about time we recognized that the farmer was in a different position from the corporation. The farmer has more difficulty in respect of capital accumulation, and this applies to the small businessman, as well in transferring assets from one generation to another. There is no recognition of this fact in the government's approach. When this legislation comes into full effect it will make it more difficult for a farmer to purchase and maintain a line of machinery on his farm. This does not have to be so. If any real consideration were given to this matter a different approach could be taken.
If it is the government's decision to levy a capital gains tax, this could be done in such a way that it would not hamstring or hamper the ordinary farmer in doing business and maintaining an adequate capital structure. However, no consideration has been given to that aspect. It seems there is an idea in this country that we should be enamoured with corporate business because this is going to give us all the things we want in terms of growth and social satisfaction. We are beginning to find that this is not so.
There does not seem to be any urge to develop or take different approaches to meet the real needs of the people. We must meet these needs of the people whether they are in the cities, the towns or on farms, whether they are engaged in fisheries or anything else. We do not seem to be able to bring ourselves to the point of saying these people must come first and must be of over-riding concern. It seems this is impossible to achieve.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Laniel):: Order. It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Hillsborough (Mr. Macquarrie)-Pollution-Request for progress report on removal of sunken Irving Whale; the hon. member for Skeena (Mr. Howard)-External Affairs-U.S. claim to Machias Seal Island and coastguard invasion of waters in Dixon entrance-Canadian position.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Gray (for Mr. Benson) that Bill C-259, to amend the Income Tax Act and to make certain provisions and alterations in the statute law related to or consequent upon the
Income Tax Act
[Stage Direction]
September 20, 1971
amendments to that act, be read the second time and referred to the committee of the whole, and the amendment thereto of Mr. Lambert (Edmonton West) (p. 7763).
Mr. William Knowles (Norfolk-Haldimand):: Mr. Speaker, I rise to take part in this debate supporting the amendment, and I want to deal with one specific point only. I wish to espouse the cause of credit unions and co-operatives, which stand to be adversely affected by the provisions of the tax reform legislation. I make no apology for repeating this plea because I can think of no other sections of the proposed legislation which will be more harmful to the average citizen of Canada than these sections affecting the credit union and co-operative movements.
A credit union is a group of low income people each of whom as individuals was unable to amass sufficient capital to improve his standard of living. They had a common bond of union. Perhaps they belonged to the same parish, the same labour union or all lived in a small community. They pooled their resources to establish fairly substantial supplies of capital from which a member might obtain a loan to procure for himself the things he required to improve his economic position.
These loans were granted not because the individual had a lot of collateral, such as that demanded by banks and other lending institutions, but because of the man's character, his standing in the community, his integrity and the fact that he would, when circumstances permitted, repay the loan. Let me cite as an example, that small credit union in the town of Delhi. I attended a meeting of the directors of that small credit union and learned the story of a man whose name will remain anonymous unless it is required. He was a worker at a local tobacco factory in the town of Delhi. He tried to borrow money from the local bank and other lending institutions in order to set himself up as a small bricklaying contractor. He was refused because he did not have the necessary collateral. He did not own a home or have anything at all to put up in order to satisfy the bank he could repay the loan. He then joined the credit union in 1955 by depositing $5 for the purchase of a share. Then, on the basis of his credit standing, he was able to borrow a sufficient sum to obtain the tools and equipment necessary to set himself up as a small contractor. He borrowed on his character and an assignment of his income. Today, he is a successful businessman, a good community-minded man who owns his own home, trucks and other equipment, and employs a number of men in his business. This is an example of what the credit union movement is able to do in the way of assisting ordinary citizens of this country who find themselves in adverse economic circumstances.
The present tax reform measure, far from containing provisions to assist small credit unions to continue to provide these services, has a dangerous clause which, if implemented, could have the effect of forcing the small credit union to close its doors. This is one of the major reasons I join my colleagues in supporting the amendment before the House in the name of the hon. member for Edmonton West (Mr. Lambert). This amendment deplores the lack of understanding by the government of the plight of the ordinary citizen with less than adequate resources who is caught up in this conflicting economic force of inflation and unemployment. It is ironical to me
[The Acting Speaker (Mr. Laniel).]
that a government which purports to espouse the cause of the less fortunate is proposing tax legislation which contains sections which, if implemented, would destroy the very mechanism by which small business people have pulled themselves up by their bootstraps, and I refer to credit unions.
Perhaps at this point, so that hon. members and particularly the Minister of Finance (Mr. Benson) might have a better appreciation of what we are talking about, it would be in order to briefly review the history of the credit union movement. If we know where it had its beginning we might better understand it. It originated first of all in a famine-stricken area of southern Germany in the year 1849. There, the mayor of a small town in a depressed area of Germany, seeing the plight of the poor people, encouraged them to pool their resources. They did this and established sufficient small capital resources from which they could borrow and improve their positions.
The credit union movement in Canada had its origin in the year 1900. It was organized first by Alphonse Desjardins in Levis, Quebec. He was profoundly disturbed by the poor and the suffering in his own parish of that area. He talked with them, he encouraged them to get together and to do what they did in Germany-pool their small resources. It is interesting to note that Alphonse Desjardins was a reporter, a journalist, who later came to Ottawa to be a Hansard reporter in this House. By his encouragement of the people in his community he amassed a sum of $40,000 to aid the people of the area. He was the sole custodian of the fund. People in the community began to talk and said that he was misusing the funds, and so on. Therefore, on going to the premier of the province of Quebec he was able to get a charter drafted by means of which a suitable and proper constitution could be set up for the credit union movement. This, then, was the beginning of the movement in Quebec which, as the hon. member on the other side mentioned a short time ago, became what is today the Caisse Populaire organization in that province.
Today there has been a tremendous growth in the movement and credit unions have spread to the United States. It is interesting to note that Mr. Desjardins was requested by a prominent financier of the city of Boston to go there and explain to the poor sections of that city his plan. Credit unions then were formed in the United States and have grown there as they have in this country. I think it is interesting, also-people who are passing laws which will be detrimental to credit unions should know these things-that it was the credit union movement which first pioneered the principle of insuring loans to members. It was pooh-poohed by financial institutions of the day as being entirely unpractical, yet they have shown it to be workable, so much so that today many lending institutions have provided means by which a member can insure his loan so that the debt dies with the debtor, and his family and those left to carry on are not saddled with the debt which he was unable to repay by reason of death.
Many small credit unions are in existence today in this country as well as the large one, the Caisse Populaire to which I referred. The larger ones deserve encouragement and not discouragement by the government in order that
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they may continue the good work which they now do. I have, as have many members of all sides of this House, received letters from people who are members of credit unions expressing concern and fear of the possible effects of the reform legislation now before the House. I will read a section of a letter which is written from the heart. This is what the writer has to say, a member of the Delhi Ontario credit union to which I referred a short time ago:
We would like to express our displeasure of even the thought of taxing the so painfully established credit unions, who have rendered so far tremendous service to their members. Most executives are working voluntarily many, many hours to manage a self-help association. We are sure the federal government already derives a great deal of good, directly and indirectly, from credit union service. I am thinking in terms of education re merits of saving, forgiveness of debts when fatally hurt-it just happened here recently to one of our members again. Also getting people out of unforeseen trouble with dignity, even to loan money to pay our ever increasing taxes. Just ask any credit union committee member to learn more about that, or look into the history of credit unions. Are we members not already taxed for things we buy with money borrowed from the credit union? When no one else wants to help you, the credit union seems to give the chance and now you are asked to vote to tax them out of existence, at least the majority of the smaller ones. Why?
This, I think, is a simple plea from a member of the credit union movement for some humanity in the legislation now before the House, It is interesting to note what the Prime Minister (Mr. Trudeau) said to the credit union members on international credit union day earlier this year. Among other things, he said:
Credit unions have experienced enormous success because they encourage both regular savings and the wise use of credit. But even more important, credit unionism encourages self-help, mutual assistance, and personal involvement. In this sense credit unions are more than financial institutions, they are a positive social force within our communities.
To over 38 million members of the credit union movement in many countries of the world, I send my best wishes for continued growth and prosperity.
Those were fine words to assure credit union members that all would be well. The actions of the Minister of Finance belie the honeyed words of the Prime Minister. Something is wrong in this contradictory approach to this legislation. The specific fears which credit union members have are to be found in sections 127, 135 and 189 of the tax reform legislation. The credit union people tell me that they are about to experience a double form of taxation. The profit accrued from the pooling of resources of all its members still belongs to the members but they are leaving it in the co-op to be distributed as they see fit as tax dividends. Now the government is proposing to tax the pooled resources of the members. Then, when the members receive the profits of their organization in dividend tax credits they are forced to declare them on their income tax returns and are again taxed on the same money. This, they feel, is unfair double-taxation.
The government must distinguish between the economic aspect of the credit union movement which I have just covered and the humanitarian aspect referred to by the Prime Minister in his congratulatory message. Most important of all, I think we must remember that we are dealing with people-not figures, not dollars and cents, not mere statistics, but people and their condition of life. Credit union people have been able to improve the cultural aspect of their communities and themselves. They have
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been able to obtain the better things of life. To the people who were once caught up in abject despair, who had given up all chance of success, has been given a new outlook on life. People have been able to make a contribution to Canadian life rather than become a drag on society. They have become wage earners, not names on welfare rolls. I cannot say too strongly that this factor should be taken into consideration when we are studying the dollars and cents effect of this legislation on the credit union movement.
Now may I turn for a moment to the co-operatives and their plight, which is somewhat the same although not quite. In my own community we are served very well. The farmers in my area and other people who desire to use the services of the Norfolk Co-operative Company Limited, serving the people of Norfolk, Haldimand and counties, are served very well. This co-operative is independently managed by its own directors. It does not take orders from United Co-operatives of Ontario, an organization which helps to buy and supply them with the goods which they sell but does not control the decisions and the policymaking of that group.
It serves many hundreds of people in my area. It is one of the main reasons that the family farmer has been able to maintain himself in a society which today appears to be tending towards bigness in farming operations and in which the family farm is largely being ignored. This is something that cannot be allowed to happen, Mr. Speaker. The family farm provides a satisfying way of life for many people. The co-operative movement in my county and in many other areas across the country permits small farmers to live the kind of life they want to live.
The co-operatives are deeply concerned about the increase in the rate of tax on employable capital. Over the years the Equitable Tax Foundation has released a barrage of criticism against the co-op movement. These releases have landed on the desks of Members of Parliament. They are most unfair in their criticism of the co-op movement. The previous speaker, the hon. member for Saskatoon-Biggar (Mr. Gleave) dealt quite effectively with this aspect of the matter. It seems to me that the people in the Equitable Tax Foundation fear the competition of the co-ops. But, Mr. Speaker, the co-op is the governing influence, the levening influence that keeps prices within the reach of the ordinary person in our society. I fear that the drafters of this legislation have been listening too much to the Equitable Tax Foundation. In fact, one even wonders if that foundation helped draft some of it. To those people I would say, as I have said to hon. members here this afternoon, there is a distinct failure to consider the human aspects of the co-ops and the credit union movement.
The co-ops and the credit unions have one thing in common. They are held together by a common bond of association. They are designed to provide service to their members. They are self-help groups. The co-ops are selfsufficient. The Caisse Populaire movement is a good example of a co-op being able to stand on its own feet. But let us not forget that big as some co-ops are across this country of ours, they provide sustaining support for the small, local co-ops throughout the country. Without the assistance of the larger buying power of the big co-ops,
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the little ones would be in trouble. Let us take a hard look at what we are doing before we pass damaging taxation laws which will hurt these people. Let the government not forget that it has sponsored and encouraged the co-op movement among the Indian and Eskimo peoples of our country. Now we find this iniquitous piece of legislation which is going to damage that whole program.
There are other aspects of this bill that I would like to talk about, but I will not take time to do so at this point. However, before I conclude I wish to refer to student exemptions. It seems to me that a student who is attending a registered university or college should be completely exempt from taxation until he or she has completed the full course of education and taken a proper place in the work force of the country. It is difficult to understand a policy which provides student loans so that people may continue their post-secondary education and yet at the same time taxes those people on the summer earnings they have accumulated to try to maintain themselves in college. Something is wrong here, Mr. Speaker. The amount of tax revenue derived from such income, compared with the total tax revenue of this nation, would be a mere pittance. Let us give the students a break.
Not only is the economic aspect of it disheartening to the young person who works hard to earn money and then finds he must give part of it back to the government coffers, but it is also demoralizing to him. He is prompted to ask: What is the use of working? He is prompted to say: Let society keep me. Let them put me through college. I believe that taxation should not apply to students who are earning their own way through college. Such tax relief would give them some incentive.


Mr. Robert McCleave (Halifax-East Hants):: Mr. Speaker, I appreciate the opportunity to take part in this debate. It brings us closer to the end of this particular road, and perhaps not too soon, because if the debate on tax reform and all the documents which accompany that reform continues for even two more years we will have to build a 20-storey skyscraper in Ottawa to accommodate just the mere words, let alone the Members of Parliament who are being hemmed in their offices by what they are receiving in their daily mail.
The fight for tax reform started a considerable time back. I suppose the peaks of it were the decision by the Diefenbaker government to appoint the Carter royal commission and the other events with which most of us in this chamber are familiar, in particular the presentation of the white paper by the government, the studies made of it by the finance committee of this chamber, the finance committee of the other chamber and then the presentation of the budget.
I do not think that the presentation of the budget, for reasons I will go into briefly, was the end of the trail so far as tax reform is concerned. I say this because as some of us see it, in particular the last speaker with his eloquence about co-ops and credit unions and others who took part in the debate earlier, there are cases where we have to examine carefully the minutiae put before us in such cumbersome form by the Minister of Finance (Mr. Benson).
In dealing with the problem of what is a fair tax system we have to consider two or three questions. These are the

questions that I would ask myself: What social objectives do you consider? What do you do in taxation when you deal with those whose income earning may take place rather late in life? The last speaker mentioned those who go to university. I am thinking particularly of doctors. I know of doctors who have gone well into their twenty-seventh year, and some beyond their thirtieth year, in getting their education. I admit that certain economic advantages may come to them rather quickly and rather bountifully after that, but this should not make us indifferent to the fact that for many of them there has been a great deal of sacrifice over a long period of time.
But even before the doctors and people in the category-the long learners, if I may call them that-I put those who are under certain disadvantages in today's society, in particular the old people, those who are not able to earn, who are not really able to fight the inflation that has hit all of us, who come to the end of their days having given their all to Canada and who suddenly find there are new challenges which they are totally or partially unable to meet. If you are to have a fair tax system you must consider that old people deserve special consideration when you are making out the formula. Then there are those who are physically and mentally disabled. They have to be considered as well.
I would like to think that in making out the exemptions, which are the very heart of our tax system, we would pay more regard to the poverty level that our social scientists now talk about. I mention this because when you see exemptions continuing at a certain level for over a decade, particularly in the period of inflation since the end of World War II, you know that things do get out of joint. We also know that the people who save are least able to fight against inflation. I should like to see an income tax law eventually framed so that the poverty level would be the exemption rather than some arbitrary figure. In other words, I should like to see more flexibility, which the measure we are considering does not have. I shall have more to say about that matter when we get into the question of the exemptions provided in the bill, Mr. Speaker.
There are those with special responsibilities in the work force, such as women. This question has been well researched by the Royal Commission on the Status of Women, I admit, and they do not lack champions. However, one has to ask whether the formula contained in this proposed legislation is proper, or whether it should not be more generous and complete. Perhaps this is a matter of detail but it is important detail because the number of women taking part in the economic life of this nation will increase.
When one sits down to frame legislation, the economic objectives of taxation are important. As an example, there is large-scale exploration for oil in the province of Nova Scotia. It is known to be there and it has been brought up from subterranean sources, but so far there has been no public indication of how vast and exploitable these resources may be. It is something to find oil and to give an incentive to the companies that look for it, but it is something else to have that oil brought ashore and used in a commercial process.
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Mr. Speaker, I wish the hon. member for Mercier (Mr. Boulanger) would turn his voice the other way, toward the Secretary of State (Mr. Pelletier). I find their conversation distracting.
I think we should be asking ourselves if it is only a matter of finding something that can be squirrelled away by the oil companies and marked as part of the natural resources of oil in North America without doing anything about it. Should we not give exemptions and benefits to the companies that search for oil, ensuring that such benefit is available only if there is a use for the oil? I fear that we may establish beyond all reasonable doubt that there is oil in commercial quantities off the coast of Atlantic Canada but we will not in some way ensure that the oil is not exploited in such a way that we have a resource in Nova Scotia that perhaps we cannot use. That situation could be avoided by provision in the act that we are considering.
I should like to quote a submission made to the House of Commons Committee on Tax Reform by the Nova Scotia Voluntary Planning Board:
Many aspects of the proposals and of the projections remain implicit. The assumptions underlying the proposals are not given so that it is impossible to determine what kind of economic model is used as a basis. Is it a growth model and does the model incorporate a rate of inflation? Has analysis been undertaken of the effect of the proposed tax changes on the rate of saving in Canada, and, perhaps more importantly, on the inducement to invest? Is it known what effect the changes will have on initiative, entrepreneurship, and the willingness to work, particularly on the part of the entrepreneurial group?
Those questions have not been answered, Mr. Speaker, although they were presented some time ago by a responsible organization. At a time when we are in economic trouble, when we have to ask ourselves the purpose of our tax laws, when perhaps more than ever before we have to ask people to be prepared to invest and risk money without any guarantee that it will come back, to risk money for the sake of promoting development in Canada and providing jobs for Canadians, these are valid questions. The reasoned amendment presented by the hon. member for Edmonton West (Mr. Lambert), on which we will be voting shortly, commends itself because it asks these basic questions and says to the Minister of Finance, "You have not gone far enough. You should have been able to show us that this fancy package has the objective of increasing the Canadian economic potential."
The brief presented by the Nova Scotia Voluntary Planning Board continues:
If the proposals lead to a reduction in private saving-
And I think that will happen.
-owing to the incidence of taxes on decisions to work and to save, it will be necessary to resort to public saving and/or borrowing, or the attraction of more external funds to finance economic growth. When the private sector is acquiring liabilities and assets at a rapid rate there is prosperity,-
I suppose one could say, parenthetically, that this has been the case in the past.
-but when the public sector is required to acquire liabilities, there is an increase in public debt. The situation may become very confused owing to different attitudes toward public and private finance.
I think those are very valid questions and are as valid now as they were at that time.
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Mr. Speaker, it is close to six o'clock and my next thought cannot be unburdened in anything less than five minutes because it deals with the language of the proposal. May I suggest that it is now six o'clock?


The Acting Speaker (Mr. Laniel):: It being six o'clock, I do now leave the chair until eight o'clock tonight.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
Robert Jardine McCleave: Mr. Speaker, when I broke off my remarks just before the supper hour I had tried to express my feelings about one or two of the principles that ought to guide us in our quest for tax reform. Now I wish to carry my argument forward to a more specific field and deal with how that tax reform should be achieved.
I am a lawyer. Quite a number of members of this House are lawyers. Sometimes it is said that perhaps there are too many lawyers here. I always vigorously disagree with that contention. It is an old axiom of the law that everybody is presumed to know what the law is. Obviously, that must be a legal fiction because it could never be fact. Even if you read the many pages of the bill dealing with tax reform and knew what the law was, at the end of it all you still would not know the law in all its detail.
One of the complaints about the new legislation is that it will be very difficult for anyone to know what the law is. It is expressed in such cumbersome language that no one can read it and understand instantly what one's rights are. I think we should not forget that point when dealing with the bill. After all, the cumbersome language will lend itself to this difficulty: if we accept the draftsmanship of the Minister of Finance and his officials-and a lot of thought went into the drafting of the bill-and the legislation is proclaimed law, for a long time many people will be coming to the Department of National Revenue to find out exactly what rulings have been made on what the department and the government thought was the law. I can see a practical difficulty here, Mr. Speaker. That could be done for a considerable period and suddenly some bold soul could take this law before the courts. After winding its way through the lower courts of the land, the legislation could wind up before the Supreme Court of Canada and, bang, there could be a decision dead against any interpretation made by lower courts all down the line, as well as by the Department of National Revenue.
That is why I say that regard must be paid to drafting this bill in the best and clearest language. If it is not, the Department of National Revenue will find itself in difficulties and we in this chamber will find ourselves under a certain amount of opprobium for passing such a law. There may need to be a fair amount of fighting to achieve this clarity. I give the other side of the House warning that there may have to be a fight if we are to achieve what chartered accountants of Canada, bar associations and the like have said we must achieve. They have said that the proposed law is simply not expressed in clear enough terms; it must be clearer.

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I see I am running out of time, Mr. Speaker. I wanted to make several points but I shall have to abbreviate what I wanted to say. My first point deals with co-operatives. Several colleagues in the House have already dealt with this question and I shall not trespass on ground they have gone over. I should like to say something about Monseigneur Moses M. Coady, the man from the Margaree Valley of Nova Scotia. He was not the father of co-operatives, and no one should say that he was, yet he was the man who probably gave co-operatives their greatest impetus in Canada. If any Canadian, dead or alive, deserves sainthood, my personal vote as a Presbyterian would be for Moses M. Coady. The "M" may stand for Michael or Mathias, because like Harry S. Truman he did not have a middle name, being known as Moses M. Coady.
He was a Roman Catholic, a very distinguished person and fought for a considerable time for many rights. Between 1949 and 1959, when he died, he fought particularly for the co-op movement. Indeed, half the speeches he made in those years were on behalf of the co-op movement. His biography describes him as a man with a soul and with a bent for poetry and idealism. I think that is a fair description of the man. Many years ago he saw the great disaster of 1929 in terms described in the book "The Man from Margaree", edited and with commentary by Alexander F. Laidlaw, which are worth repeating before hon. members of the House:
The sorry situation of orthodox economists and financiers following the disastrous market crash of 1929 he likened to the helplessness of muskrats carried down the Margaree River in a great flood which ravaged the Valley in his boyhood. The muskrats had built their houses in the river bank according to instinct and the traditions of the breed, but that did not save them-they were swept away to destruction.
Dr. Laidlaw's account of Mr. Coady continues:
He urged people to breathe life and vigour into weak community organizations just as in his young days the farmers would bring sick lambs back to health and strength by feeding them milk from a bottle. Sometimes his recollections ran to fanciful and humorous pictures that strained the imagination of his audience. "When we were boys, they used to send us out cutting alders when there was nothing else to do on the farm. Before leaving for the woods, we'd get our axes so sharp you could shave a sleeping mouse with them without waking him up."
I hope that no one in this chamber who is engaged in tax reform is in the same picture as Moses M. Coady going forward to cut alders. In his middle years, if I may call them that, he was engaged in a great movement in Nova Scotia and, I think, in other parts of Canada. It was a countermovement against young people leaving farms. The first fight in that movement was in favour of adult education and, second, to get into the breech in respect of the value of co-operatives.
I wish to again quote briefly from Dr. Laidlaw's book on Dr. Coady. I should point out that Dr. Coady did not assemble a book in his life. He was a rather vigorous person, always on the go. He would write notes on parking tickets, if he ever came across such a thing, or on whatever else was available. He got his speeches across in very powerful rhetoric which was quite rare in Canada. He spoke about the basis of the American way of ownership. I presume that these words were in a speech he delivered,

as we say in Halifax, in the Boston state. This speech could well apply to Canada:
The fundamental idea of American democracy was ownership, a land where everybody was a lord, with no lords over him and no serfs under him. The family farm was your economic and social unit. Then came the industrial revolution and the city proletariat. As time went on, the industrial revolution had repercussions on democratic ownership in the country, and a new and terrible feudalism was thrown up. We now have the double proletariat of industrial centres and open country. We have lost the idea of the family farm and ownership, but we can bring it back again through economic co-operation. The co-operative system, whether it be in the country or in the city, is only an enlarged family where all are brothers and no one exploits his fellows. This technique could enable the people of America to repossess the country that their fathers once owned. In doing this, too, they would establish the foundation for social justice and charity and give us a new and peaceful world.
I do not think that is very radical. In a way, it is rather conservative. It is an assertion of people of very humble means getting together to pool their muscle, instinct, resources and what remained in their purses after they looked after their families and the like. It does more than that. These people want a co-operative movement for the simple reason that the more you consume, the more interest you have in the particular society. That is the basis of the co-operative movement in Nova Scotia. It is now being threatened by this new legislation.
The hon. member for Central Nova (Mr. MacKay) and I had an opportunity this summer to meet 70 members of Atlantic co-operatives in Truro, Nova Scotia. I think other members also met people belonging to co-operatives. We learned more about the co-operative movement than could be spelled out in a 30-minute or 40-minute speech. We intend to carry the fight through. One principle that has to be reasserted has been overlooked in presenting this legislation. If we do not strengthen the co-operatives and give them something to which they can look forward by means of this legislation, we are simply relegating people to economic slavery. I do not believe we should do that. Co-operatives are a special means by which people can assert their right to be an owner of something. This was the biggest criticism I heard of the legislation. People are going to be denied the right to be something, in face of the very large fellows.
This legislation simply asks that $5 million be put into the pot in return for several hundred thousand Canadians who feel they are being deprived of something. I realize that not all Canadians are co-operatively inclined, but a certain number are so inclined. I do not know the formula we must come up with when we get into the nitty-gritty of the legislation. I shall not try to deal with it now. However, we must do something to enable these Canadians to have their small share in something that is distinctively Canadian. We must be able to carry out the ideals of Dr. Coady.
If I have two minutes remaining, I would like to mention two thoughts in the field of housing and urban development. I wish to quote from a brief sent to the minister on September 1 by the Housing and Urban Development Association of Canada. This should be on the record. Although they make nine points, I simply wish to record two:
1. Large investors who would normally build for the rental market will divert funds from residential into commercial and industrial buildings.
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2. Investors wishing to build up estates for pension purposes will be prevented from carrying capital cost depreciation from a building costing up to $50,000 to a larger one and hence will be discouraged from any form of such investment.
My time has run out. I cannot deal with the complete picture in a 30 or 40 minute speech. I have mentioned some of the things I would like to see carried on. I had the advantage of being on the committee which dealt with taxation reform. We are so close in 90 per cent of the things that have been talked about for so many years that this should lead us on to see that the final 10 per cent of contentious matter is cleared up so that everyone will be reasonably happy. We should have something that will appeal to all Canadians.


Robert Norman Thompson: Mr. Speaker, on budget night last June I was reported in the press as having said it was a good budget. However, only half of what I said was reported. The complete statement should have read, "Compared to the white paper, this budget seems to be a good budget."


Patrick Morgan Mahoney: You are a little late for those remarks.


Robert Norman Thompson: I am not trying to correct myself; I am only trying to give an introductory statement to lead into my comments regarding the budget.
The white paper turned out to be nothing more than building up a straw man which the public tore down, viciously at times, in order to make the alternative which the Minister of Finance (Mr. Benson) has produced seem at least better than it was, even though it was bad. The Canadian Press probably summed up well the budget version of taxation reform when it stated the following on the day after the budget speech:
In essence, all the major features of the 1969 proposals that enraged the business community and aroused some provincial governments have been dropped or significantly moderated.
Certainly what was left, Mr. Speaker, could have been inserted into the normal budgeting procedure. This prompts me to make some comments on the usefulness of the bill as a measure of tax reform. There is a real question in my mind as to the effectiveness of the procedure the government decided to adopt. The white paper process cost millions of dollars directly and many more millions indirectly by virtue of the uncertainty and hesitancy it induced in the economy generally.
In light of what it has cost, the bill before us is a very poor buy. The effects of the white paper held us back to the extent that today we face unemployment at a higher level than for many years. The government's proposals as they relate to tax reform fail entirely to alter the pattern of federal tax activity; they merely try to give old ideas a new appearance. Nothing is done to ease the basic burden of taxation, nothing has been done in the field of tax sharing with the provinces or to ensure greater equity for taxpayers in the middle-income bracket. The poor are still taxed, and no attempt has been made to employ a tax credit rather than an exemption system to more effectively assist low-income Canadians.
It is easy to talk about taking 750,000 people off the income tax rolls. What we ought to realize is that the
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amount of income tax collected from these people is probably not sufficient to cover the cost of administering the collection of the tax involved. Nothing really has been done for the people on low incomes as far as tax reform is concerned.
There is another important aspect which the bill does not cover. It fails to simplify the language or improve the draftsmanship of the existing act. Supposedly there are a great many loopholes in the present legislation-certainly people have been able to avoid paying taxes which they should have paid. The complexity of the drafting of the bill before us is that ten loopholes are left for every one which has been closed. I am not an authority in this regard but I read what the experts in this field have to say, the members of the legal and accounting professions who work in this area, and this is exactly what they are saying.
Then, again, the bill fails to reform the basis of tax collection. Here is one of the most pressing areas of reform as it relates to the existing legislation. Many of those who are authorities in the taxation field have not yet arrived at a complete understanding of what this bill will mean to those they represent or to the economy in general. As far as public understanding goes, the bill is really a vacuum. I should like to quote from the text of a letter written by Mr. Thomas Ferguson, a tax accountant, in the August issue of Canadian Business:
Most people in the business world think this law is a great improvement over the white paper. Whether we are right or not may take years to learn. After all, we are still dealing with appeals about the interpretation of the 1948 law. This new tax reform bill will prove no easier to interpret, and without any question it will be much more difficult for the Department of National Revenue to administer.
More rewriting of the Income Tax Act is not too many years in the future.
It is not an easy thing, unfortunately, for the general public to interpret a technical, legislative document such as the huge bill before us. Many of the reforms contained in it may have some merit, or at least some people think so. The trouble is that so most people cannot understand what the bill is saying, partly because it is so huge, so complicated, and partly because it is so badly drafted as to be almost unreadable. Take, for example, clause 39 which deals with the capital gains tax. It is only half a page in length and seems to be very concise as statutes go. However, after he has read four lines the reader is directed to turn to clause 3 and read another page. At the same time he is required to read that clause as though it says the opposite of what it really does say.
None of us wants to be the beneficiary of a law which imposes a higher than necessary compliance cost on the rest of society. As Canadians, we want the laws to be such that most people can understand and comply with them without the constant attendance of a professional adviser. The bill presented to us will afford a heyday for tax consultants, lawyers and accountants simply because the public is not able to understand or cope with it.
Usually, the legislation we pass in this House affects relatively few of the population directly. If difficulties are raised, there are the judges, lawyers and other officials who manage to make the law work reasonably well most of the time. The irritation and expense occasioned by shortcomings in a statute do not present a major problem



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Income Tax Act
to the ordinary person, as a rule. But when these shortcomings exist in an income tax law the situation becomes very different. Virtually everyone in the country is directly affected, and affected continuously from year to year.
The complexities of capital gains taxation will affect many more people than does present income tax. Most of the burden of coping with this complexity will fall on taxpayers in business, rather than on salary and wage earners. Then, too, there is the question of the added expense. The cost of complying with the new tax law will, like other business costs, find its way into the prices of goods and services which we all buy. An income tax law should not be rushed on to the statute books; the consequences of errors and ambiguities are far too damaging. This is one of the first objections I have to the proposition before us.
I turn, now, to another aspect, that of inflation. Your Honour will recall the words spoken by the Prime Minister (Mr. Trudeau) last December when he proudly announced that inflation was licked and that he could, as a result, go on to deal with what he considers the No. 2 problem, namely, unemployment. It is strange indeed that after the employment situation has been used and manipulated by a deliberate depression of the economy, we find that not only has unemployment increased in our midst but inflation has not been licked either.
Just the other day when speaking in Port Hope the Prime Minister had to admit that inflation was rearing its ugly head again and presented the government with a much tougher problem than it had before. It is strange that some of those who advised the Prime Minister and who are responsible, as tax experts, fail to understand the situation as it exists today, not only in this country but in all western countries, which is that you can no longer manipulate the economy in such a way as to push down inflation without affecting the other aspect, unemployment.
It is time we realized that those theories which may have worked before World War II and in the more prosperous years thereafter have been replaced by a situation which requires something very different from before. If we are to come to grips with the problem of inflation we must gear our financial policies to consumption rather than to profits. This is the reason the present incentives given to industry are not really producing the jobs in the way they should. Quite the opposite is true. The government is giving subsidies to industry and inflation is going ahead faster than ever before.
So the Prime Minister was right when he admitted that he cannot do as was done before. He said we cannot slow down the economy again because it is already slowed down. The problem now is how to put more money into the economy and stop inflation. The Prime Minister went on to paint a very gloomy picture of what would occur if the government imposed compulsory controls. He said very clearly he was not in favour of compulsory controls on either wages or prices. It is one thing to speculate in a pre-election campaign in parts of the country, but it is another to come up with an economic policy which will face up to the problem of inflation and at the same time provide jobs for an expanding population.
(Mr. Thompson.]
It is interesting to note that one of the most severe and intelligent critics of the government's financial policies in this budget is the leader of the Liberal party of the province of Manitoba. Mr. Asper is rather alert in some of the things he says. I wish that instead of trying to build a party in Manitoba he would come down here and give some advice to the Prime Minister and the Minister of Finance, who are certainly in need of sound advice so far as monetary economic policies are concerned. Mr. Asper had this to say on June 19:
But the budget plan has a major failing. It suggests we can honestly finance the tax cuts and economic expansion by further deficits, financed by creating more public debt. This does nothing but postpone the day of reckoning. For over a decade now, Canada has financed its economic slowdown by spending more than it produces in revenues.
It is good to find someone who supports what I have been trying to say in this House for a long time. Let me read what he has to say with regard to the folly of this course of action:
The folly of this ought to have been learned in the lessons of the past few years, where, because of the massive federal deficits of earlier years, and the government borrowing needed to fill the annual hole, we have been suffering tight money, and worse, expensive money, because government has attracted the majority of loan moneys available, causing private borrowers to have more difficulty and more expensive access to money markets.
Government does nothing for the average Canadian taxpayer, when, with one hand it reduces his annual taxes by $200, while with the other it takes it away indirectly by forcing up the interest rate he must pay for a mortgage to enable him to buy a home.
Last Friday's budget speech indicates Ottawa is going to borrow $1.4 billion this year, and $2.4 billion next year. The federal deficit this year will be nearly $400 million, and next year, as if to compete with the years of Walter Gordon, the fiscal cavity will be $750 million, written in red.
The federal deficit no doubt will be more by the time the supplementary estimates are finalized. So I am disturbed by the economic policies which are bound up in an attempt to balance the budget through deficit financing. I might give the Minister of Finance a bit of advice. It is very simple. I think it came from my grandfather a long time ago. I wish more people on the government side would remember these few simple words: If your outgo is more than your income, then your upkeep will be your downfall. That is exactly what is happening in the government now.
Another aspect of the budget is simply that you cannot possibly bring in a federal budget without proper and complete consultation with the provincial governments. Taxation reform is not the sole prerogative of, nor does it affect only the federal government. It is imperative that the provincial governments and the federal government plan together. The question of estate taxes and gift taxes, as they have been deleted by this budget, is an ample example of this. I confess that getting rid of the estate tax seemed to me to be a good thing, but the problems the budget has produced for the provincial governments in the area of the proposal to delete estate taxes have been tremendous.
The government has failed to properly consult with or listen to the provincial governments. Whether or not it is the provincial, municipal or federal government which is involved, it is the same taxpayer who pays in every case. So it seems that in this area as well, because regional
September 20, 1971
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prosperity or regional economic growth is not of a universal pattern in this country due to the different regional characteristics, it is imperative that any tax reform at the federal level should involve full consultation with the provincial governments.
I should like also to refer briefly to estate and gift taxes. In this regard I would say the decision of the government to increase the allowable tax deductions for charitable giving to 20 per cent, compared to 10 per cent, is one commendable feature of the budget. Because we have organizations like CIDA which are set up to assist and co-operate with the private sector in so far as international development is concerned, it is only sound policy to increase the amount of the deduction. This applies not only to organizations like CIDA but to other private organizations, church and otherwise.
The question of government support of education at the private level is an election issue at this time. But apart from the basic argument in that controversy, the increase to 20 per cent gives people the opportunity to have tax deductible allowances made for contributions to that kind of education. This is a good thing. It is also good for the many organizations which operate on a charitable basis, represent the private sector and play a far more important role in the over-all aspect of our economy and way of life than we usually give them credit for. So having said that, the elimination of the federal estate and gift taxes as of December 31, 1971, might be a good thing if the legislation before us passes this House by that time. It was there to avoid double-taxation because a capital gains tax will now be in effect.
According to the legislation there is no tax on bequests as between spouses. The inheriting spouse acquires assets at their original cost to the other spouse and the tax is paid only when the inheriting spouse sells or transfers the assets by gift or bequest. Gifts between spouses, outright or through a trust, are tax free but subject to tax in the donor's hands upon sale of the assets as if the donor spouse had continued to own the assets.
In respect of the impact this has had upon the provinces, we find with some surprise-and I am sure the Minister of Finance was among us-that the provincial governments attacked this very severely. The Ontario Treasurer attacked the move as too hasty and said the estate and gift taxes should be phased out as the capital gains tax is phased in, instead of creating a gap between the two which the provinces are left to fill. It will lead to loss of revenue for the provinces and create inequalities in the tax system. Without disagreeing with the basic principle of eliminating this tax, he certainly differed very strongly as to how it should be implemented.
The finance ministers of the seven provinces which do not have succession duty machinery have stated they will not be able to develop such machinery by January 1, 1972, and will thus lose revenues and become a tax haven for those in Ontario, British Columbia and Quebec. Former Premier Robarts of Ontario blasted this decision as inconsistent with the principles of tax reform and as indicative of a federal government tax reform philosophy that is solely concerned with raising money for federal spending programs rather than with a more equitable situation in
Income Tax Act
so far as tax is concerned. Mr. Robarts said that the federal decision to eliminate death taxes puts provinces in the difficult position of having to maintain a tax on wealth until the capital gains tax matures. Far from reform, he suggested, this approach simply encourages and perhaps makes inevitable internal balkanization and tax competition between tax jurisdictions, surely what any program of true tax reform should try to avoid.
Behind all this is the simple fact that we are the most overgoverned people in practically the whole world. This is because of lack of co-ordinated tax policies among the three levels of government, because every dollar each one spends must come out of the same pocket-the taxpayer's. It would have been far more satisfactory, as far as the government is concerned, in relation to inflation, unemployment and the various problems which have now developed as a result of the DISC program of the United States and its surcharge on our exports there if the government had consulted, on the one hand, the provincial governments about the whole question of tax reform and, on the other hand, had realized that instead of bringing in tax reform, so-called, it is doing nothing but increasing the take as far as the final result is concerned. It should have cut taxes and given incentives to the consuming public.
It is an interesting suggestion that in addition to increasing deficits as far as the budget is concerned, the minister should have looked a little more closely at the increased take that will occur. The combination of increased federal income and higher deficits means that the minister plans to spend $1,224 million more this year than last year. This is more than $100 million per month in 1971 than in 1970. He has undertaken this massive program at a time when inflation so far in 1971 is running at an annual rate of more than 6 per cent and coming up quickly. At this rate, the drop in purchasing power will be more important to the average Canadian than the tax relief the minister holds out in this budget. The amount of money that is taken in by the tax collector, more than $100 million a month, represents a loss in purchasing power of the consumer to that extent. This pushes up inflation and makes it more difficult as far as the cost of living is concerned.
It is very interesting to note that a group of professors from the University of Toronto, speaking through Professor Thomas Wilson, when they testified before the Senate Committee on Finance earlier this year talked about the course the government was taking and said that the best means to accomplish an increase in jobs and control of inflation was to bring about a substantial tax cut. They told the Senate committee that the government's policy of cautious expansion was not enough to push the unemployment breakdown to a more desirable figure, such as the 5.5 per cent which they recommended.
They based their argument on a computer study of the economy. They told the Senators that the federal government should aim to reduce Canada's seasonally adjusted unemployment rate to a minimum of 5.5 per cent as fast as possible. They stressed the removal of the 3 per cent sales tax, which the budget does, but suggested this was not sufficient in itself and there had to be a further stimulant which could only come about through a reduction of corporate or of personal income taxes. They stated that taxes should be cut and that their preference was a
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Income Tax Act
cut in federal sales tax. I might add that this tax cut should be made in areas of the economy such as the sales tax on building materials and production machinery.
In addition to cutting taxes, the federal government should curb the growth of money supply to a rate consistent with stable economic growth and low inflation, instead of saying on one day it has to be reduced and interest rates increased, then turning around the next day and putting out a vast increase in the money supply without any real thought of what this sudden injection of money would do to the economy. If this new money supply had gone to the consuming public, the result would have been far different. The injection of extra money into the economy through incentives to industry, such as we have now, really does not relieve the case of the unemployed.
While I am sure there are many Canadians in the low-income bracket who are grateful that the exemption for tax has been raised from $1,000 to $1,500 for a single person and from $2,000 to $2,850 for a married couple, the fact remains that the benefits to be gained in this way do not really help the average wage earner.
Another aspect of the economy about which I am very concerned-I just mention this in closing-involves the area of people who do not earn enough to pay taxes. Many of these are not the unemployed or the people on welfare or unemployment insurance; they are the working poor. Every one of us in this House knows that in our constituencies we have people earning $60, $70, $80, $90 or even $100 a week with take-home pay of something less than $400 or even $300 a month. They are working regularly but cannot maintain a standard of living compatible with that which this country is able to provide, simply because their pay cheques cannot go around. This budget does nothing for the working poor. The Senate Committee on Poverty brought out the fact that there were nearly five million people in this category in Canada, and nothing is being done for them.
In light of the budget with which we are dealing, it seems the amendment to hoist the bill becomes all the more legitimate simply because the budget does not do what it states it is going to do. It really does not do anything to alleviate poverty where it is most crucial at present. Certainly it does not do anything to control inflation, stimulate the economy or bring about the increase in jobs which we so desperately need.
Mr. P. B. Rynard (Simcoe North):: Mr. Speaker, I congratulate hon. members who spoke earlier in this debate; I thought they brought out many useful points. After all, we are trying to arrive at a consensus of what is best for the Canadian people.
The drafting of this bill was particularly complex and complicated, far more so than it should have been. This tax reform bill that the Minister of Finance (Mr. Benson) brought to the House last June is a far cry from the regressive, destructive white paper proposals of a year and a half ago. Most people at least had time to get a long breath after hearing the final proposals in June. However, during those 18 months of uncertainty the economy rode under a cloud of fear, suspicion and uncertainty of what
(Mr. Thompson.]
might be the ultimate outcome of the finance minister's tax reform. It not only frightened people but discouraged corporate and individual effort. At that time the Minister of Finance stated that it was a fight between ordinary Canadians and big business. Thank goodness some of these measures were changed, for instead of having four million people below the poverty level we would now have ten million.
The Minister of Finance pictured himself as the great reformer, instead of the great destroyer. He stated that he felt this bill was so good that he wanted to display it to all at large to see, to study and to admire. We are mighty fortunate that they did see it. That is one good thing-they had a chance to look at it. The people across this country were stunned when the first proposals for tax reform were brought out. They reacted slowly as the meaning of these various proposals sank in. At first they just could not believe it.
When the people did react, they did so very definitely. Letter by letter poured in, and so many were there and so great was the objection that a special staff of accountants had to be hired to handle them. Special writers on taxation for the newspapers wrote about the destructive influence that would be experienced if the budget proposals were brought into being. Deputation after deputation made their views known. They made known the disaster that would follow if the white paper proposals were ever adopted. The House of Commons Finance Committee pointed out the errors in it; the Senate Finance Committee ditched it almost in its entirety.
Eternal optimist that he is-perhaps it is good to be optimistic sometimes-the Minister of Finance finally did see the hole in the doughnut. Napoleon's retreat from Moscow was nothing compared with the minister's retreat from the white paper on tax reform. On June 18 the minister made his famous retreat. When he was through, you could scarcely recognize the white paper which had been introduced with such fanfare just 18 months previously. It is a victory indeed for the people, it is a defeat for the government by the ordinary taxpayers of Canada, and it must have been a humbling experience for the minister and the government. It was a triumph for democracy.
It does indicate, perhaps, in our present way of thinking and in our careless or monopolistic way of doing things, that perhaps all major legislation should be given a waiting period to test public reaction. Members of the Official Opposition also deserve credit for the fight that was put up, and even some members of the Liberal party who dared voice an opinion.


An hon. Member:: Thank you.


Philip Bernard Rynard: I appreciate that. Do not imagine that the bill which the Minister of Finance brought in is a simple one. As a matter of fact, it is a very complex bill and the interpretation of the clauses is difficult and obscure. A high-ranking tax officer told me that it will be months before all ramifications of this bill are understood.


Patrick Morgan Mahoney: Don't believe it.


Philip Bernard Rynard: If the hon. gentleman from Calgary South (Mr. Mahoney) wants to speak, he can get up and do so. I
September 20, 1971

do not want his interruptions. I will try and answer any question he may have at the end of my speech.
Economists generally wander around in a jungle of words in which they cannot find any sound conclusions. One economist told me that the complexities of this bill frustrate him-and of course to the average tax paying Canadian it is an impossible monster. This situation is totally wrong. There is far too much bureaucracy, unintelligible to the average Canadian who can no longer understand his tax forms. They must be interpreted for him, and in many cases he signs a blank cheque. If he cannot afford an accountant, he is in a bad way and may find himself subject to tax penalties.
The government has made much of raising exemptions and taking some 750,000 taxpayers off the rolls. Taken on the basis of when all this started, back in 1948, it is not even justice to these people. To have kept pace in all fairness, the exemptions should have been higher. For example, the 1961 consumer dollar now purchases only 74 cents worth, and the 1948 consumer dollar purchased only 75 cents worth in 1961. So there we have a devaluation of over 50 per cent. This exemption gives little relief which is long overdue and which will be completely wiped out by inflation within a year or two. The lower and middle-income people will be made worse off than before by a ruthless taxing government.
To dwell on some of the problems which have been poorly handled, consider the taxing of sickness premiums paid by the unemployed under the new tax "reform." The government proposes to tax medicare premiums paid by the employer. This will affect three provinces-British Columbia, Alberta and Ontario. In Ontario this will amount to millions of dollars. What are they going to do about this? How do they propose to handle this situation? Will we be in another tax jungle? Apart from this there is another problem, the farm problem. I have here an article written by Mr. Knox in Farm and Country. He wrote:
The question now to be asked is whether he gives sufficient recognition to the special nature of farming-and whether he gives fair treatment to farmers compared with other tax paying groups.
The small investor collects in the form of investment income. He is to obtain the relief on the new dividend tax credits.
The wage earner collects his economic rewards in the form of earned income. He is to share the same or a lighter income tax load than before-
Of course, various taxpayers will be facing a variety of new taxes on their earnings, their enterprise, their savings and investments. But the farmer is the one who has to put all these economic eggs in one basket-and the one who will have to meet the capital gains tax head on-
When the figures are fully worked out they sho\v the so-called tax advantage to be mostly sleight of hand-and by the time inflation (and tax on inflation) is taken into account, it is not the capital gain but the farmer that Mr. Benson is sawing in half!
The farmer who makes the same economic gain as the wage earner, but makes it partly in income and partly in increases in the capital value of his farm, can be worse off.
This result comes about for two main reasons. First, because the farmer's "hidden" yearly capital accumulation does not obtain the full benefit of annual personal income tax exemptions. Secondly, because inflation gouges a huge bite out of the farmer's deferred capital gain while it only nibbles at the salary earner's income.
During his lifetime, then, the farmer has to get by on a much lower standard of living than the income-rich non-farmer. And at the end, his heirs inherit an illiquid farm estate and a whopping
Income Tax Act
lump sum bill to cover capital gains at death tax (and provincial death taxes).
Some people have suggested that by cutting the tax in half, Mr. Benson's revised capital tax system has saved the farmer's neck.
On closer analysis it may turn out to be a new form of "capital punishment" which will tighten a noose around it.
There is another point I would like to bring to your attention, Mr. Speaker: it concerns the credit unions. Usually a credit union is a small organization set up in a small community. Its main purpose is to serve the people in that community. Some people may have a few dollars to spare and they put them in the credit union. Other people who need a little money, borrow it from the credit union at a modest rate of interest. Now the government, through this new tax reform bill, proposes to hit these small organizations which have played a great part in saving the people of small communities from having to deal with the larger financial institutions at higher interest rates. This is a small community, enterprise, non-profit, with little or no expenses. Its sole purpose is to serve the people in the community. They must be left alone.
Looking back and being honest about it, I think most of us could say in all conscience that over the last three years we have witnessed mismanagement and failure by the government with regard to the economy. At the beginning of this year the Minister of Finance proclaimed that the worst of the unemployment situation was over. But from that time on unemployment rates increased, with the latest released just a few days ago showing an increase in August of .2 per cent, at a time when we should have expected the reverse.


Mr. Dinsdale:: That is King Canute in reverse.


Philip Bernard Rynard: Yes; and they cannot blame the American surtax for that result. Food and shelter costs rose 1 per cent in August, which is at an annual rate of 10 per cent. I am afraid we have not reached the worst yet. I am wondering what will happen when countries such as Japan, West Germany and Taiwan from which we import goods revalue their currencies to meet the American surtax. The result will be that we will have to pay more for the goods we import from those countries.
I also wonder about the cost of Canadian manufactured goods, a cost which is going up because of increased labour costs, in turn made necessary by increased taxes, but without any accompanying increase in production. Now we find we have more government interference, such as the new competition act. Taxes have to be increased to meet rising welfare costs and unemployment insurance costs. Indeed, the Minister of Manpower and Immigration (Mr. Lang) conceded the other day at a committee hearing that business was not investing in job-creating industry.
Almost all economists have been crying out over and over again for tax cuts. But the Prime Minister (Mr. Trudeau) has refused to listen. Like Ulysses, he has wax in his ears; he cannot hear the danger sirens. He does not have enough money to meet the ever expanding costs of unemployment and welfare. The Prime Minister has been in office for three years. During that time we have seen mounting unemployment, inflation and bad relations with the United States. Canada's relations with the United

September 20, 1971
Income Tax Act
States have hit a snag. The situation has gradually grown worse, with open hostility shown in speeches to the Americans by cabinet ministers, and even by the Prime Minister, ranging as far as from Denver to Moscow.
This is hardly a good neighbour policy, Mr. Speaker. It is certainly very ineffective in helping to sell our products and in getting due compensation for them, with the give and take that must dominate in the marketplace. It is indeed sorrowful to contemplate, considering that the United States has been our best customer in many ways, taking between 60 per cent and 70 per cent of our exports and owning about 55 per cent of all industry operating in Canada. It is all right to say that we will find markets elsewhere, after admitting that this takes time. How are we going to compete with countries which produce goods of comparable value and workmanship but with a lower labour cost than we have in Canada? This is a serious problem which faces Canadians who must be able to sell their goods in the export markets of the world.
If the government is not going to lower taxes, then it should at least take the sales tax off building materials. There is no reason for it now that the government is subsidizing housing. The sales tax was taken off drugs. Surely adequate shelter is an accepted "must."
Let me deal for a moment with unemployment figures in the province of Ontario. That province had the largest increase in unemployment of any province in July and August. For young people aged 25 and under the unemployment rate for July and August, seasonally adjusted and readjusted, was the highest ever. In July and August 28,000 women dropped out of the labour force. The length of time that people are unemployed is getting longer and longer. In August 106,000 Canadians had been looking for a job for six months or longer.
The whole story of this government is rising unemployment and rising prices. When 500,000 Canadians are out of work for a year, this means a loss, in round figures, to our gross national product of well over $3 billion. What country can afford that disaster? What does unemployment do to the fellow who really wants to work? It destroys him. This year in a large city in Canada I took a taxi when I was visiting the hospital there. The driver seemed to be a nice fellow and he unravelled an amazing story to me. Four years ago he had been working for $35,000 a year and living in a very elite, suburban area. About a year later he lost his job because business was shrinking and his company laid him off. He was one of the younger fellows in the firm.
Then he got a job with another firm and was earning about $25,000 a year. I should mention that he was a university graduate, and engineer. He held this second job until the company was amalgamated with another, and then he was out of work again. Finally, he took a job in a field removed from engineering at a salary of $10,000 a year. In the meantime he had lost his home, having depended on his big salary to keep it. Six months later he was out of the $10,000 a year job. He had a family of two children, and his wife was working too. Talking to that fellow one could note his sense of depression. I felt very sad when I got out of that taxi, so I gave him an extra tip. At first I thought driving a taxi must be a part-time job for him, but that was not the case. There is nothing wrong in being a taxi driver, but this fellow's deportment was

that of a man who had received a good education. He simply could not get work of the type to which he was accustomed, and so became a cab driver.
Now we have another example in the city of Toronto where the Toronto Telegram, one of the "big three" newspapers in that city, is being closed down. As a result, over 1,000 people will be looking for jobs and 10,000 more people will be affected. This will affect both the newsboy and the man who sells the papers. Then there are the people who drive transports to deliver the newspapers all over Ontario. The people operating newsstands and many other services are involved. There are maybe 10,000 more people affected. This is a calamity. Whether the unions or management were at fault in not being able to find a common denominator means nothing to the fellow who tomorrow loses his job-and I know a lot of them. A way out must be found. No group must be allowed to hurt others.
Things look very tough and I would say to the government that in their reforms something must be done about getting jobs-perhaps winter works programs. There should be consultation with the provincial premiers in this regard. My own province of Ontario, which is a key province, has experienced the worst unemployment ever. Something should be done to enlarge the scope of the Canada Assistance Act, to remove the 12 per cent sales tax on building materials, and so forth. Perhaps there could be better diplomacy when dealing with our trading partners.
The government should get the chip off its shoulders. Instead of making speeches which only irritate and annoy, the Minister of Finance should have been looking ahead and some months ago had the dollar pegged at a more satisfactory rate for trading. If he had used the velvet glove he might not have found himself in a floating market with competitors who can outsell us on world markets. Now we have to compete with countries taxed at half our rate of taxation.
This is a tremendous problem, Mr. Speaker. It is not easy to find solutions. However, the record of the government stands barefaced for the people to see, and it is one of mismanagement and mishandling of our affairs.


Mr. Len Marchand (Kamloops-Cariboo):: I do not propose to take much of the time of the House, Mr. Speaker. At this stage of the debate I hope we can get past the amendment we are dealing with so that Bill C-259 can receive second reading and we can proceed with its clause by clause analysis as soon as possible.
This is a very large and complicated bill. I do not have much sympathy for the lamenting of hon. members on the other side of this House. However, it was ever thus. I suppose we need only look at the existing tax bill and much of the other legislation that we deal with in this House to realize that by necessity some of it is very complicated. Perhaps in order to come up with a bill which could be more readily understood by the public we would have to get rid of some of the experts who draft the legislation, though I do not think that would be too practical in this country. If I had my "druthers", however, I should like to see a change in the whole approach to
September 20, 1971

money. Perhaps we could return to beads as the form of barter! I think my own economic power would be greatly enhanced in this way, Mr. Speaker.
My main purpose in rising tonight to participate in this debate is to join hon. members from both sides of the House in their pleas to the Minister of Finance (Mr. Benson) on behalf of credit unions and co-operatives. There have been some eloquent speeches in this regard and I do not want to go over ground already covered by a number of my colleagues. I think we all know the part that co-operatives have played in the life of Canada and the life of members of our constituencies. I think we all know, too, the part that credit unions have played in the life of Canada. However, I should like to take a few minutes to read excerpts from some of the correspondence that I have received on this subject. In a letter from the B.C. Central Credit Union, signed by Mr. R. A. Monru-fet, four points are put forward which indicate some of the concerns that credit unions have been bringing to my attention. These points are as follows:
(1)	There is no provision in Bill C-259 permitting a credit union to deduct as a business expense the dividend., it pays to a member on the money deposited by a member in credit union shares. The failure to provide for this provision would appear to result from failing to realize that credit union shares are a form of deposit and are not like the shares of a banking institution. The lack of this provision will most seriously affect the provincial central credit unions and the Canadian central credit union, which organizations were created to provide stability to Canadian credit unions.
(2)	Credit unions are concerned about the manner in which the provisions of section 125-reduced rate of tax-will be applied to them. Credit unions have suggested that their methods of operation be considered and provided for in this section.
(3)	There are serious limitations drafted into Bill C-259 restricting the investments of credit unions. It seems most unusual to provide for taxation to apply to an institution and at the same time by a taxation statute to restrict the manner in which it can operate.
(4)	Credit unions feel that the imposition of a capital employed formula on their methods of operation is punitive.
I think this sets the tone of the representations that many hon. members have been receiving from credit unions.


An hon. Member:: Do you agree with it or not?


Len Marchand: Here is a letter from the Shuswap Consumers' Co-operative Association, signed by Mr. A. Olson, president. I should like to read a few paragraphs which will indicate some of the concerns the co-operatives have about the tax bill which is before us for consideration. Mr. Olson writes:
Mr. Benson has presented a tax reform bill that I personally feel is duly unjust to co-operatives and credit unions and will eventually create a hardship upon these people oriented organizations.
Your government has seen fit to set up a department of consumer affairs to look after the interest of consumers. We in the cooperative and credit union movement have been doing this for years. Now you have decided that the savings we have been able to create for our members must be taxed before you give it back to the members .. .
We have tried to establish for our members and consumers the cost of retailing consumer needs. We do this as near as possible to cost and provide not only a guideline but do also stabilize the cost of consumer products within a given area.
I am at present a manager of a credit union, and also president of the board of directors of a consumer co-operative. In both of these organizations, there are no directors' fees, no high-cost director expenses; the people who serve of these boards are dedicated
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people, dedicated to the interests of consumers, interested in seeing that people get the best break in consumer purchases. Now you want to tax this effort.
The next letter is from the Canoe Co-operative Association. The gist of this letter was dealt with in some detail by my colleague the hon. member for Grenville-Carleton (Mr. Blair) in his remarks the other day. I shall read the closing paragraph of the letter to indicate some of their feelings:
On behalf of over 1,000 co-operative members in this area, we urge you to study our proposal and that of the co-operative delegation that visited Mr. Benson. The proposal as put forth by Mr. Benson could well mean the death of many co-operatives, not only in this province but right across Canada. Co-operatives are owned and controlled by the people in any community.
Mr. Speaker, judging by the performance of the Minister of Finance and the way he has listened to the people of Canada on matters concerning the white paper and taxation, I am confident that the plight of co-operatives and credit unions will receive every consideration.


Mr. Benjamin:: Is that a caucus secret?


Len Marchand: That is not a caucus secret; it is just the way I feel.


Leslie Gordon Benjamin: I wonder about the hon. member's confidence.


Len Marchand: I have confidence in the minister.


Some hon. Members:: Oh, oh!


Walter Gilbert Dinsdale: That is just blind confidence.


Len Marchand: I do not agree with the remarks of the hon. member for Simcoe North (Mr. Rynard) who a short while ago spoke about the white paper. We have been listening to the Canadian people. The government listened to the people after the white paper was introduced. After all this, hon. members on the other side said, "I would not trust that government one bit, because the white paper shows the kind of legislation you will be getting. They are going to shove this white paper down your throat; there is no consultation with the people at all. This is how it is going to be." Now that the government and the Minister of Finance have listened to the people, hon. members opposite are crying that we are backing off and that we are afraid of the white paper's approach. I do not agree with what they say. I am most proud to be a member of the government party, a party that has made this approach. It is a government that has considered and listened to the views of the people of Canada before bringing in legislation, particularly legislation of such a complex and far reaching nature as the bill before us.


Leslie Gordon Benjamin: Mr. Speaker, would the hon. member permit a question?


The Acting Speaker (Mr. Laniel):: The hon. member knows that he may only ask a question with the permission of the hon. member for Kamloops-Cariboo and if the hon. member agrees to answer.

September 20, 1971
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Len Marchand: Mr. Speaker, I will meet the hon. member outside.


Some hon. Members:: Oh, oh!


The Acting Speaker (Mr. Laniel):: Order, please. The Chair would like from the hon. member a clear indication whether he will accept a question.


Len Marchand: Mr. Speaker, if the hon. member has something to discuss, I will discuss the matter with him later.


Leslie Gordon Benjamin: It's just a question, Len.


The Acting Speaker (Mr. Laniel):: Order, please. The hon. member for Skeena (Mr. Howard).


Frank Howard: Mr. Speaker, I listened with great interest, of course, to my friend the hon. member for Kamloops-Cariboo (Mr. Marchand). We hear from him so seldom that it is all the more refreshing and interesting when he speaks. May I say to him through you, Mr. Speaker, that when I get letters from a credit union they are usually classified as "friendly reminders". Apropos the provisions of the bill relating to credit unions and co-operatives, those of us who have been members of credit union and co-operative movements, for some years are pleased to see that finally some of our views with regard to the damage that certain provisions of the bill will do to credit unions and co-operatives are getting through to some people in authority. Those of us in this House who have been supporters of the credit union and co-operative movements for many years welcome the support of the hon. member for Kamloops-Cariboo and others in his party on this particular matter. We hope that support will have some effect.


Mr. Whelan:: The credit unions and co-operatives were there long before you.


Frank Howard: Simply because I believe in something does not mean that I started it. I did not say that, and the hon. member knows it. In view of the hon. member's interjection the other day about being in favour of the Amchitka nuclear blast, I should have thought he would keep quiet.


An hon. Member:: He will not get to the Senate now.


Frank Howard: I hope that the representations of the hon. member for Kamloops-Cariboo and others will have a beneficial effect and that the damaging features of the legislation will be taken out of the bill. The interesting thing is that they should be in there in the first place. One wonders at the ignorance displayed by the Minister of Finance (Mr. Benson) and officials of his department in permitting such legislation to be drafted. Over the years they have listened to groups such as the Equitable Tax Foundation who wish to destroy the credit union movement. I hope that others who have received representations from the credit union and co-operative movements will be as proud of those representations as the hon. member for Kamloops-Cariboo is, and that they will stand up in the House and say so. More importantly, I hope that when these particular clauses come up for consideration
[The Acting Speaker (Mr. Laniel).]
they will vote against them. That is the key to it. It is not what we say that counts; it is what we do.
When we look at the entire bill I do not think we ought to consider it from the exclusive standpoint of taxes. I do not think that we should consider taxes merely in terms of what taxes are levied, how they are levied, whom they are levied upon and what the income of an individual is likely to be after tax has been paid. We should look at this matter in a larger sense. Perhaps more than any other piece of legislation introduced before this Parliament or, indeed, introduced before the previous Parliament, this bill reflects largely the economic attitudes of the government, that is to say, the economic attitudes of the Prime Minister (Mr. Trudeau) the Minister of Finance and, generally, of the whole Liberal party.
The economy will be affected by the imposition of these taxes. I do not say this unkindly, but I submit that in his younger years, and indeed in the last few years also, the Prime Minister spent a great deal of time travelling around the world and that therefore his concept of the world community and his feeling for situations in other nations are such as to make him a bit hazy and foggy when it comes to nationalism. His experiences make him somewhat foggy as to what should be done to preserve the position of Canada among the nations of the world. He does not know what we need to do to maintain our integrity as Canadians in Canada, what we must do in order to develop our own human resources so that we may have pride in ourselves as human beings, and what we must do in terms of legislative sanctions and objectives set by government so that the resources of the nation can be used to the full advantage of the people within the nation.
We must bear in mind that squandering or exploiting these resources without due concern for mankind is a rather narrow attitude to take. This history and the attitudes of the Prime Minister, I submit, show him to be more a continentalist than a nationalist. This makes him think more in terms of what the attitude of foreign owners will be toward Canada, as distinct from the attitude Canadians ought to have with respect to Canada.
Regretfully, other countries have had a growing involvement in the economy of Canada. Although this matter has been talked about at various times in the past, until three or four years ago there really was not strong public concern about it. There really was not a strong public interest in the matter, nor was there an awareness of the damage that could accrue to Canada if the growth of the foreign control of our economy were permitted to continue. In that sort of atmosphere one can reasonably expect a government to have a similar sort of attitude. When the public is not concerned about something, the government will not be concerned, because governments to a large extent operate as a result of reaction to pressures put upon them by people in the country.
There is a developing public awareness and tremendous concern among farmers, workers and small business people all across the nation about the damaging effects accruing to us from foreign domination of our economy. The government of Canada should realize the fact, be concerned about it and exhibit the degree of pride in Canada that is necessary. This is one of our problems. It
September 20, 1971

has been compounded. There is still a partiality on the part of the Minister of Finance, the government and the whole executive structure toward foreign investment, a partiality that other lands can do those things for us which the government feels we cannot do ourselves. It is that partiality that is injurious to us.
When we look at this situation in the context of what we would like to accomplish and what we should try to do, we must assess ourselves. What is the wealth of this nation apart from the people in it and their abilities and skills? What is the wealth of this or any other land? Surely it is not money in the traditional form, which the hon. member for Kamloops-Cariboo mentioned, or in the form we have today. Wealth cannot be measured in terms of money alone. It is true that if you have a lot of money you are wealthy and can get along well. However, in its basic sense the wealth of a nation is in its resources and what it can do with those resources to transform them into something useful. The greater amount of effort we as individuals put into transforming raw resources into something useful, whether in a mental or muscular way by the use of machinery and technology, the greater amount of wealth we create because we have added the component of work. This increases its value and consequently increases the wealth for us.
There has been a deliberate, conscious move on the part of government, federal and in some cases provincial, to export our raw materials either in a raw or near raw state. This was not by accident. We did not suddenly wake up one night to find this was happening to us. To use the classical phrase, we are the hewers of wood and drawers of water for other nations. This can be justified in an area where we are dealing with renewable resources such as timber where the potential wealth and volume of the resource and its productivity far outstrips our ability to consume. We can justify exporting a renewable resource such as timber in its raw state, as logs or semi-refined, because we are able to again grow trees on that spot for future generations. Some of that resource will still be there. If properly harvested, the resource will not diminish. We will be merely wiping out the evidence of overgrowth that exists.
By exporting non-renewable resources such as minerals we are doing ourselves a tremendous disservice. If we only employ miners to take the ore from underground mines or open pits and then export this ore, we are exporting the resource in its least valuable state. It has the least attachment to monetary value that we can place upon it. If the ore is run through a crusher and concentrator, we employ more men as well as increase its value. If it is run through a smelter, refiner or manufacturing process, the finished product increases in value to its maximum. More men are required, thereby increasing employment possibilities in this country.
When minerals are run through the mill in concentrate form, loaded on a boat and shipped to Japan, for the sake of argument, we are exporting job opportunities for Canadians. The government participates in this. It says it is a good thing. The government does this deliberately and consciously. I say it is a disservice to the Canadian people and our economy. I will use copper as an example. There are approximately 90 producing mines in Canada. Some operate in conjunction with a smelting system, some do
Income Tax Act
not. About 15 or 16 of these producing mines are in the province of British Columbia. Almost all the production in the province of British Columbia is shipped in concentrate form to Japan. There are another 20 or 25 relatively small mines in the rest of Canada that do likewise. That is about 7 per cent of the total.
Approximately 25 per cent of the copper production in Canada is exported in the form of concentrates. We are exporting job potential as well. British Columbia produces approximately 18 or 20 per cent of the copper in Canada. It is run through a mill in that province. The production, reserves and expected life of the known reserves is sufficient to warrant the establishment of a viable smelter without any hesitation or question. The resources are there. A smelting structure, refining process, extrusion plants and a whole range of manufacturing of copper to the finished product of wire, cable or in whatever medium it is required, could be established right now.
Because of the conscious, deliberate policies of the federal government endorsing the idea and issuing export permits for raw material, in conjunction with the deliberate policy of the provincial government of British Columbia, a criminal act has been committed in that province. At one time there was a requirement in the British Columbia mineral processing act that 50 per cent of the production of any mine be directed toward a future smelter. In other words, 50 per cent of the production was to be set aside, stockpiled or kept in reserve for the potential building of a smelter. Each mine was to set aside 50 per cent of its production. However, not too long ago the British Columbia government in its wisdom, and because of the great help it wants to exhibit to Japan, cut that figure to 12 i per cent. It in effect said to British Columbia that it is not interested in building a viable smelter in the copper industry.


An hon. Member:: The Liberals agree.


Frank Howard: Certainly they agree. Once the mining operations are finished, all that will remain will be a hole in the ground; the non-renewable resource will be gone. As a result of that policy, this nation is filled with holes, stokes and everything else. We must have a policy of what to do with our resources, a policy that will do something that will promote employment.
These remarks are relative to the tax bill. At the present time we have 6 per cent unemployment. I hesitate to guess what the figure will be this winter. I have heard figures, but it is damaging and shocking to guess what they are likely to be. Every day of the week some company is closing down. Workers are being laid off. These companies are going out of business because they are broke. The government feels that this is all right. It refuses to recognize our need to promote jobs in this country.
Look at the tax structure as it relates to mining operations. In 1968, out of 42 companies whose affairs were examined-companies engaged in metal mining operations as distinct from coal mining-it was found that taxes amounting to just over $45 million had been paid on profits of $497 million, a tax rate of little more than 9 per cent. Ask the person working for wages at the lowest

September 20, 1971
Income Tax Act
possible paid job that exists, the job at the very bottom of the tax scale, how much he pays in personal income tax. It is not 9 per cent. It is 18 per cent or something of that order. The President of the Treasury Board (Mr. Drury) tells me as an aside that it is 17 per cent. The worker pays that on an income way below poverty level, an income upon which a person could not possibly keep a family. Yet the rich mining industry which has exploited and seduced this nation and successive governments for many years pays tax at a rate of 9 per cent on its profits.
The wage earner is the only person who really pays his full share of taxation-because he has no choice. He goes to get his cheque on a Thursday and the paymaster has already taken out his chunk for the federal government. He has no opportunity to make deductions from it or to retain money for depreciation. It is snatched from him and he pays the whole 17 per cent or 25 per cent or whatever rate is applicable. The mining industry pays 9 per cent.
How did this happen? It happened partly because we allowed a three-year tax-free period in respect of mining operations. After a mill gets into a certain percentage of production, I think it is 80 per cent, a mining company does not pay a single cent of tax during the next three years. Do you know what they do? Anyone halfway familiar with the mining industry knows what happens. The mining companies spend the development period, the period when it should be stripping off the overburden and getting ready for production, stacking up high-grade ore so that when they set into operation they can pump it through quickly and sell it in large volume. Why? Because that is when their profits will be highest and their taxes nil.
One cannot even ask the government to say how the company is doing. The reply is, "We don't know." They are not required to file any returns. Once the companies get through the tax-free period they begin to pour money into maintenance that they skipped in previous years. They pour the money into replacement of machines which wore out during the three-year period, they pour it into other capital ventures and activities of the mining industry, mostly machinery repairs and the like, so they can deduct these amounts in their tax returns. They deduct these sums from their income in the years following the three-year tax-free period.
There are many mining operations which get away with murder-it is not a three-year tax-free period, but a four or five or six-year tax-free period, depending on how long they can stretch it out. There was one mining industry in British Columbia which operated a mine during the war. After the war it closed down. They had just reopened it again. Do you know what the company did? It simply sank a new shaft into the old workings and now it is back with the three-year tax-free period. I forget the figures, but this is why the hon. member for Duvernay (Mr. Kier-ans) was able to say the other night that the tax load on the individual wage earner, the farmer and the fisherman had gone up in percentage figures and that the tax load on industry had decreased. With the blessing of the government these companies were able to cheat the average worker and farmer of this country out of millions of dollars.


Charles Mills (Bud) Drury: What is happening to that situation?


Frank Howard: It is going to change. On June 18, as reported at page 6899 of Hansard, the Minister of Finance spoke as follows with respect to this tax-free period. First of all, he said it would be withdrawn at the end of 1973: Rake it in while you can, boys, because it will end on that date! Then he said:
In place of this incentive, assets related to a new mine will be eligible for accelerated depreciation. The cost of these assets may be written off against income from a new mine as quickly as the income will permit.
Once again, Mr. Speaker, we have exactly the same thing as the tax-free period. "As quickly as income will permit" assets will be written off. It is the same program. It will lead to high grading, cheating the average taxpayer out of millions of dollars. It is the same proposal, in other words.
Mr. Speaker, we are in great economic trouble. This tax bill was prepared by the Minister of Finance at a time when he was also very busy miscalculating the economy. He has been persistently inaccurate in his forecasts about the growth of the economy, persistently wrong in his predictions of what was going to happen to the unemployment figures. Last spring everything was going to be great, we were just round the corner. We have gone around seven or eight different corners since then, and unemployment still confronts us.
The very fact that the tax bill was presented to this House by a Minister of Finance who has proved his incompetence in dealing with the financial matters of this nation should prompt us to regard the tax proposals with suspicion. We are entitled to ask a very simple question: Is the government blind to the needs of Canadians, or does it not care about them? Does it really not see what is happening, or doesn't it give a damn? I think it is probably a combination of both; and our continuing economic subservience to foreign capital and to the United States is bound to cause us still greater difficulties. That, of course, has been the traditional characteristic of the Liberal party-not to think for itself; not to think for Canadians, certainly. Its tradition is to think of other lands and nations because, as the saying goes in the Liberal party and in the Prime Minister's lexicon of preferred conversation, "What is good for the United States is good for Canada."
If I could summarize, using the name of the Minister trf Finance as an acronym, perhaps we could put the tax bill and the budget, too, for that matter-this tax legislation- in a category of being the result of bungling, the promotion of economic disaster, niggardly in its concept and reflecting a great deal of stupidity, olivaceousness and nihility. Put those together and you have it.


Percy Verner Noble: Mr. Speaker, may I call it ten o'clock?


The Acting Speaker (Mr. Laniel):: Order, please. The hon. member may call it ten o'clock only with the unanimous consent of the House.


Some hon. Members:: Agreed.


Some hon. Members:: No.

September 20, 1971


The Acting Speaker (Mr. Laniel):: There is no agreement.


Percy Verner Noble: Mr. Speaker, when this government took office three years ago there was a mood of excitement and curiosity in the country at large. I am sure none of us were immune to that mood. Post-centennial Canada was to witness an apparent turning of ways. The Liberal party had materialized a new leadership, a new style, a whole new government, or so it seemed. There were new phrases in the air, "participatory democracy", "the just society", "co-operative federalism", "the new politics". Well, these were not really new phrases, they had been in currency for some time. The difference was that they were being used as techniques on the political platform and that gave them an aura of newness and mystery. And, of course, we were all curious to see how those phrases would be turned into action. And here we are, three years later, debating an amendment on a bill on tax reform, a bill that grew out of a white paper that had fumbled and failed at participatory democracy; a bill that cannot be described as reform because it does not aspire to a just society, it merely covers up for a few years some of the more glaring injustices that now exist; a bill that is so difficult to read and so secretive in its intentions that it smells of the rankest of the old politics; and a bill that flies in the face of even the least generous concept of co-operative federalism.
Since other members will be addressing themselves to many different aspects of these issues, I will confine my remarks tonight to the problem of federal-provincial relations. I do not mean to imply, of course, that these are separate issues; they all hang together as a cloak of this government's arrogance. But for the sake of emphasis I would like to highlight certain aspects that are of particular importance to the provinces.
With its assault on the nation's economy over the past three years the government has not only aggravated the condition of the provincial economies but has seriously constricted the provinces' ability to solve their problems. Every time the federal government puts its leaden foot on the economy the provinces must pay the cost through increased welfare payments. It is indeed shocking, therefore, that this bill gives so little deference to the provinces and the dire economic straits into which the government has thrown them.
The need to co-ordinate federal tax policy with provincial and municipal taxes is becoming increasingly urgent. The rate of municipal and provincial expenditures combined is growing at a much faster pace than that of the federal government. It is no longer good enough to dismiss flippantly the discrepancy between provincial revenues and expenditures by saying that the provinces can simply raise their own taxes to make up the difference.
In the first place, if this government is truly concerned with a more rational and just system of taxation, it must face the fact that all these taxes are ultimately coming from the same taxpayers. Second, apart from income tax, provincial revenue tends to come from far more regressive sources. Increasing sales and property taxes are extremely hard on those low-income groups the federal government is so piously pretending to help. Third, every time the government amends the federal structure of taxation, provincial revenues are immediately affected. It only makes good sense economically and politically to
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consult and co-operate with the provinces on the issue of taxation.
Why, then, has this government failed to do so? Perhaps the federal government does not mind having the provincial governments driven to the point of exasperation where they will have to set up their own independent tax systems. It would be a good election issue for the Liberal party which sees itself as the only vehicle of national unity. After allowing balkanization to take place as a result of its own callous neglect, it could argue to the Canadian electorate that it will put these provincial governments in their place. The former Premier of Ontario, John Robarts, has charged that the new legislation on tax reform shows no regard for the position of the provinces and municipalities in the total tax picture. He has called for a fully integrated and co-ordinated package of tax reforms and social security reforms.
Such a program would take time and care to accomplish. And it will take courage, not because the provinces are unwilling to negotiate but because the Minister of Finance (Mr. Benson) will have to reverse his position of stubborn pride in his past accomplishments. We in the opposition hope to give him every opportunity to adopt a more open-minded attitude. As the Leader of the Opposition (Mr. Stanfield) pointed out on September 14, the fiasco of the white paper originated in the peculiar stubbornness of the Minister of Finance.


The Acting Speaker (Mr. Laniel):: Is the minister rising on a point of order?


Charles Mills (Bud) Drury: Mr. Speaker, I have listened with a great deal of interest to the matter of federal-provincial problems. Since some of us will not be able to be here tomorrow I wonder whether we might have unanimous consent to allow the hon. gentleman to cut the last page off his speech and continue.


Stanley Howard Knowles: Mr. Speaker, on the same point of order may I point out that we will not be on this subject tomorrow, so the minister can come back in two or three days from now and hear the remainder of this speech.


Mr. Bell:: Mr. Speaker, I should like to point that out even though there might be a speech made from copious notes tonight, none of it matches the speech the parliamentary secretary made the other night. It was the worst garbage that has ever been brought in here.


The Acting Speaker (Mr. Laniel):: Order, please.


Walter Gilbert Dinsdale: It was all carefully written out, too.


Cyril Lloyd Francis: May we continue for a few minutes?


Some hon. Members:: No.


The Acting Speaker (Mr. Laniel):: There does not seem to be agreement.

September 20, 1971
Proceedings on Adjournment Motion



PROCEEDINGS ON ADJOURNMENT MOTION

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

["Mr. Speaker, the hon. member for Skeena (Mr. Howard), in his questions directed to the Secretary of State for External Affairs (Mr. Sharp) this afternoon and again tonight, has touched upon two problems which have caused great concern to the Canadian government, particularly because of the difficulties being encountered by Canadian fishermen.\nIn light of recent incidents in Dixon Entrance we have made it clear to the United States that the Canadian government does not accept their authority to interfere with Canadian fishing vessels operating in waters south of the A-B line. That line, of course, was fixed by the 1903 Alaska Boundary Award as the international boundary between Canada and the United States in Dixon Entrance.\nCanada has already established an exclusive Canadian fishing zone throughout the whole of Dixon Entrance and does not recognize any extension of the U.S. territorial sea and contiguous fishing zone south of the A-B line. While making Canada's position clear we have indicated our willingness in principle to hold talks with the United States authorities with a view to avoiding further incidents and achieving a satisfactory resolution of the Dixon Entrance problem.\nThe long-standing Canadian claim to sovereignty over Machias Seal Island is well founded and goes back to the construction of a lighthouse there in 1832. The Canadian government has also made its position clear to the United States in connection with this matter. It is hoped that a resolution of this problem can be achieved without incident and to the satisfaction of the hon. member.\nMotion agreed to and the House adjourned at 10.16 p.m.", 'Tuesday, September 21, 1971']
Mr. Heath Macquarrie (Hillsborough):: Mr. Speaker, I am very sorry that we did not have the opportunity of hearing further from my colleague. I know that those who are leaving the chamber disappointed will have to watch those who are coming in just to hear me.
Last Wednesday I asked the Minister of Transport (Mr. Jamieson) what progress was being made in an effort to get something done about raising the Irving Whale, the oil tanker which has been lying at the bottom of the Gulf of St. Lawrence for over a year. The minister indicated he would forward me a copy of the letter he had already sent to my colleague the hon. member for Egmont (Mr. MacDonald). Although I have not yet received a copy of that letter from the minister, I understand from my Island colleague that the said letter contains no information not already conveyed to the House, and that has not been an overwhelming amount.
It is hardly necessary for me to say again that this serious pollution threat is of great concern to all the people of Prince Edward Island. Last March, a long time ago, there were patches of solidified oil along the north shore of Prince Edward Island on our priceless and beautiful beaches. Happily, there were no great spills; but how long can we feel assurance that some substantial leakage may not occur? The situation is one where dependence upon good luck is not sufficient. The threat should and must be removed.
Last winter a member of the Prince Edward Island government, the Hon. Robert Schurman, was giving assurances that the Irving Whale would be removed before May 15 of 1971. This magic date has come and gone, but not the Irving Whale nor its polluting cargo. Then there were suggestions that removal would come in the fall after the close of Prince Edward Island's great tourist season, but last Wednesday the minister spoke of hurricanes in the east coast coming in the fall. Regrettably, some day soon, all too soon, he will be able to stand up and say snow and ice have come, along with other unhelpful gestures of nature.
One of the officials of the Department of Transport is quoted in a September 7 Canadian Press dispatch as saying he doubts whether the removal of the 1.1 million gallons of bunker oil will begin before next spring. If this is the case, we shall have another fall and winter of anxiety. The regional director of the marine section of the department, Mr. Weston, expressed doubt that the work could be carried out during the winter.
Since there are so many adverse weather conditions and so much of the year when circumstances are not propitious, is it not regrettable that the job was not done last spring? I do hope that a firm commitment will be given and that definite plans will be laid to remove this serious
(The Acting Speaker (Mr. Laniel).]
threat to our beaches and marine environment at the earliest possible date.
Little is now to be gained by deploring the opportunities which have been missed, although in dialectic and debate much can be said about this. The main trust should be toward early, effective action to cope with this serious and worrisome pollution threat. I am convinced that in respect of this matter, if no other, I am speaking for all the people of the province of Prince Edward Island.


Gérard Duquet: Mr. Speaker, in replying to the hon. member for Hillsborough (Mr. Macquarrie), the Minister of Transport (Mr. Jamieson) has asked me to express his assurance again that this potential pollution threat will be removed and that the removal operation will begin as soon as the circumstances permit.
Over the past months every effort has been made by the ministry of transport to gather all useful information about the vessel, its structure, its position on the ocean bottom, temperature factors and data about the Whale and her cargo which will be imperative in preparation for a successful salvage operation. The situation now is that the Whale or her cargo will be removed at the earliest possible moment. Prospective salvage tenderers who would have the capacity to handle this type of operation have been meeting over the past weeks with ministry of transport officials. A pre-tender meeting has been held and the tenderers have visited the area for an on-site inspection. Tenders are now being sought from these companies and the final decision will be made only after it is absolutely certain that the maximum amount of protection can be provided.
I know the hon. member is aware that the Atlantic region is experiencing unpredictable weather at this time, with hurricane conditions, and this is one reason why even greater emphasis is being placed on timing and the safety factor.



Frank Howard: Mr. Speaker, earlier today during the question period I asked the Secretary of State for External Affairs (Mr. Sharp) what position Canada took and what steps we are going to take with respect to Machias Seal Island at the mouth of the Bay of Fundy, and particularly with respect to Dixon Entrance on the Pacific coast.
The comments I want to make tonight relate to the situation at Dixon Entrance because that has been a pretty crucial one and one of harassment for Canadian fishermen for the last few months. To look at the situation in its context, in 1903 a tribunal headed by a sell-out artist from England, called Lord Alverstone, made a ruling with respect to the border between Canada and the U.S. demarcating British Columbia from Alaska. That border, in so far as it stretches out into the sea, did not cause any disagreement in 1903. The disagreement was about the area in the hinterland about which we are not concerned at the moment.
September 20, 1971

The border between Canada and the U.S. stretches in a westerly direction from an area close to the mainland out to a point, Cape Muzon, at the southern tip of one of the islands which are in fact in the state of Alaska. We all know that one side of a border of that nature belongs to one country and the other side belongs to the other. We have always considered the side south of that border to be Canadian and its side north to be American.
When I inquired of the Secretary of State for External Affairs today what action was being taken with respect to preserving our integrity and our sovereignty in that area, he said we have declared that it is Canadian waters but that the Americans do not agree. They certainly do not agree, and they have not agreed for some period of time this summer and even before that. I saw an American chart some years ago which showed the three-mile territorial sea of the U.S. extending three miles southward from the border itself. In other words, the Americans claimed that not only did their territory go up to the border between our two lands but it also extended three miles into Canada.
This is the attitude that coastguard vessels have in the Alaskan waters right now, because this year they have chased Canadian fishermen using Canadian registered fishing boats and fishing in Canadian waters. They have chased those boats in Canadian waters, undertook one arrest and have attempted other arrests and harassment of Canadians fishing in Canadian waters, which I think would be an act of war if it were to take place between two other countries which did not consider themselves to be as friendly as Canada and the U.S. But in all of this intrusion and invasion-not to the territorial waters of Canada but to the inland waters because they are inside our border-by American coastguards, their harassment and arrest of Canadian fishermen has gone almost unnoticed by the Canadian government.
We send protest notes to somebody in Washington about it, but when it comes to dealing in a really substantial way with the problem there is silence: not one solitary attempt is made to have any compensation paid to the halibut fishermen who have lost gear and who are being chased out of the area by Yankee coastguard vessels. These men have lost fishing time and have also lost their catches which were seized without any recompence to them. The only attempt is a bland note of some sort that we send to the United States saying, "Look here, we protest and we disagree with what you are doing." That is where matters stand now.
The Americans still claim that area as part of their territorial sea, as an extension of the United States into Canadian territory, and we do not do anything about it.
Proceedings on Adjournment Motion
Mr. Speaker, we have a navy. It does not seem to be doing anything worth while in other parts where it is operating. I would advocate in a positive way that we should put our navy on manoeuvres along that border to show the U.S. coastguard that we really mean business in determining what is Canadian territory.
Some 15 years or more ago the very small country of Iceland, which is largely dependent on fishing, extended its territorial seas to 12 miles off shore and stood up against the might of Great Britain in enforcing its action. This was an extension out into the high seas of territorial waters, from three miles to 12 miles off shore. Surely we have as much pride in our nation and in ourselves as the Icelanders had in their country. Here we are dealing with Canadian territory and an invasion of U.S. coastguard vessels into Canadian waters. I submit that for the Secretary of State for External Affairs and our government just to make a declaration that these are Canadian waters is simply not good enough.


Mr. Albert Bechard (Parliamentary Secretary to Minister of Justice):: Mr. Speaker, the hon. member for Skeena (Mr. Howard), in his questions directed to the Secretary of State for External Affairs (Mr. Sharp) this afternoon and again tonight, has touched upon two problems which have caused great concern to the Canadian government, particularly because of the difficulties being encountered by Canadian fishermen.
In light of recent incidents in Dixon Entrance we have made it clear to the United States that the Canadian government does not accept their authority to interfere with Canadian fishing vessels operating in waters south of the A-B line. That line, of course, was fixed by the 1903 Alaska Boundary Award as the international boundary between Canada and the United States in Dixon Entrance.
Canada has already established an exclusive Canadian fishing zone throughout the whole of Dixon Entrance and does not recognize any extension of the U.S. territorial sea and contiguous fishing zone south of the A-B line. While making Canada's position clear we have indicated our willingness in principle to hold talks with the United States authorities with a view to avoiding further incidents and achieving a satisfactory resolution of the Dixon Entrance problem.
The long-standing Canadian claim to sovereignty over Machias Seal Island is well founded and goes back to the construction of a lighthouse there in 1832. The Canadian government has also made its position clear to the United States in connection with this matter. It is hoped that a resolution of this problem can be achieved without incident and to the satisfaction of the hon. member.
Motion agreed to and the House adjourned at 10.16 p.m.

Tuesday, September 21, 1971