1971-10-13

QUESTIONS ON THE ORDER PAPER

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

Mr. Gilbert: 1.	What was the cost of preparing, printing and distributing of the Royal Commission Reports for 1970?
2.	What was the amount of revenue received from the sale of such published reports for 1970?


Mr. J. A. Jerome (Parliamentary Secretary to President of the Privy Council):: In so far as the Royal Commission on Bilingualism and Biculturalism, Pilotage, Status of Women in Canada, Farm Machinery, Indian Claims and the Commission of Enquiry into Mail Transport in Montreal are concerned, the answer is: 1. The cost of preparing Royal Commission reports during 1970 was $1,204,730. It should be noted that the work of royal commissions is normally directed at the preparation of their reports and as a consequence all of the expenses attributed to various commissions can be considered to be for this purpose. The printing cost of reports for royal commissions during 1970 was $15,153. The distribution cost for individual publications cannot be isolated from the general overhead.
2.	The amount of revenue received from the sale of Royal Commission Reports for 1970 was $75,707.


PUBLICATION GRANTS BY CITIZENSHIP BRANCH AND AGENCIES
Mr. Paproski: 1.	What grants, in what amounts, have been authorized since March 31, 1970, for publications through the department or agencies for which the Minister without Portfolio (Citizenship) has responsibility?
2.	What are the criteria for such grants?


Hon. Gerard Pelletier (Secretary of State):: Insofar as the Citizenship Development Branch of the Secretary of State is concerned: 1. (a) Ontario Self-Help Association, $1,000; (b) National Council of Women, $4,000; (c) Federation des Femmes du Quebec, $3,000; (d) Inter-University on Canadian Slavs, $3,000.
2. The Citizenship Branch of the Department of the Secretary of State awards grants to the above-mentioned organizations using the following objectives and criteria:
(a)	Objective: To increase and improve citizenship participation. Criteria: (i) It was impossible for the organization to carry out their project without financial assistance from the Department of the Secretary of State, (ii) The organization was able to continue to fulfil its other commitments. (iii) The organization's membership was representative of its constituency, (iv) The organization had the authority needed to carry out the project, (v) The organization had a clear plan of the project, (vi) The subject matter was of great importance and had applications beyond the project, (vii) The organization had competent project staff.
(b)	and (c) Objective: To increase and improve citizenship participation by encouraging group discussions and further research on the recommendations of the Report of the Royal Commission on the Status of Women. Also, to ensure citizens' participation in the feedback process to Government in regard to the implementation of the Royal Commission's recommendations. Criteria:	(Same as
above.)
(d) Objectives: To increase and improve citizenship participation. To encourage cultural diversification within a bilingual framework particularly following the publication of the fourth volume of the Royal Commission on Bilingualism and Biculturalism. Criteria:	(Same as
above.)


INFORMATION CANADA STUDIES
Mr. Comeau: Will Information Canada carry out studies of any areas this year and, if so (a) which ones (b) what is the aim of the investigations (c) what are the names and addresses of the persons employed on these projects (d) are they part-time or full-time employees (e) what is the estimated cost of each project?


Hon. Martin P. O'Connell (Minister of State):: Yes (I)
Communications research; (II) federal presence.
(I) Communications Research: (a) 1. Crowsnest Pass. 2. Sugar Beet Fields, Southern Alberta. 3. St. Boniface. 4. Riverdale (Toronto). 5. Sherbrooke. 6. Schefferville. 7. Labrador. 8. Gloucester County, New Brunswick. 9. Southern Nova Scotia, (b) The objective is basic communications research on the areas in which the public lacks information and the most effective means of supplying it. (c) 1. Paul Kane, Ottawa, Ontario; Wesley Hadikin, Edmonton, Alberta. 2. Rodney C. Zacharias, Winnipeg, Manitoba; Elizabeth Steele, Fredericton, New Brunswick.
3.	Richard Kozak, St. Boniface, Manitoba; John Campbell, Fredericton, New Brunswick. 4. John West, Riverdale, Ontario; Marianne Farkas, Don Mills, Ontario. 5. Michel Frenet, Montreal, Quebec. 6. Nigel Martin, Halifax Nova Scotia, Montreal, Quebec. 7. Laura Jackson, Rocky Mountain House, Alberta; Lawrence Jackson, Rocky Mountain House, Alberta. 8. Pierre Tremblay, Bathurst, New Bruns-

October 13, 1971
Questions
wick; Helen Sinclair, Toronto, Ontario. 9. Wayne Hutchison, Wolfville, Nova Scotia; Louise Normandeau, Montreal, Quebec, (d) They are all part-time contracted employees, (e) The estimated cost of each project is $7,000, including salaries for a three and a half month period.
(II) Federal Presence: (a) Quebec City and Vancouver, (b) The objective is to study physical aspects of communications with the public by the federal administration in each city, (c) Names: Quebec City, Charles Tod, Ottawa; Robert Masson, Quebec City. Vancouver, Douglas Young, Fredericton; Magdelena Leja, Vancouver, (d) Contract research or public servants working part-time, (e) Cost of each project is about $4,000.


PORT HOPK, ONTARIO-COSTS INCURRED BY ELDORADO NUCLEAR DIVISION TO ZIRCONIUM PRODUCTION
Mr. Hees: 1.	What was the total cost of construction, machinery, development and other costs incurred by Eldorado Nuclear Division for the production of zirconium metal billets at the new Port Hope, Ontario plant?
2.	Was this plant closed down in August, 1971 after only six months operation and, if so, for what reason?
3.	Was the zirconium produced ever sold and, if so, to whom and what happened to that market?
4.	Will this plant return to production and, if so, on what date?
5.	What costs are incurred while this plant remains idle?
6.	Are the zirconium metal billets produced at Port Hope unsaleable on the world market and, if so, for what reasons?
7.	Did the government survey this market before deciding to spend ten million dollars on construction and development cost?
8.	How did that market analysis change from the commencement of production in February 1971 until August 1971?


Hon. Otto E. Lang (Acting Minister of Energy, Mines and Resources):: Eldorado Nuclear Limited reports as follows: 1. $10,921,000.
2.	No; it was closed in April 1971 following 23 months' operation at varying levels .of production, for reasons outlined in 3.
3.	Some of the zirconium produced was sold to customers in Germany, Japan and in Canada for both domestic use and export. These sales were made under spot or short-term arrangements. One long-term contract was obtained to supply zirconium for use in nuclear power reactors operated by a provincial government-owned utility in Canada. However, the depressed price imposed upon Eldorado as a result of a dramatic price reduction offered by a U.S. producer which had previously supplied zirconium to this utility (as compared with the price paid to that producer by the utility prior to Eldorado's entry into the market) proved too low for Eldorado to economically fill the contract. Also the world-wide delay in the coming into service of nuclear power reactors has been a factor in the failure to acquire export markets.
4.	Zirconium production will be resumed as soon as contracts ensuring viable plant operation have been secured.
5.	Approximately $32,000 annually, excluding depreciation on idle plant.
6.	No; however, the possibility of sales would be enhanced if there were a Canadian rolling and fabricating
facility to bring the billets to a more readily marketed form.
7.	Yes.
8.	See answer to 3 above.


OPERATION LIFT
Mr. Mazankowski: 1.	How many people were on staff of the PFAA office, Department of Agriculture, Regina, prior to the introduction of "Operation Lift"?
2.	How many additional people were hired to carry out the administration of this program?
3.	What was the total salary for that staff during the fiscal years 1969-70, 1970-71 to date?
4.	Were additional funds provided for increased personnel to administer applications under the "Operation Lift" and forage payment programs and, if not, for what reasons?


Hon. H. A. Olson (Minister of Agriculture):: 1. Forty.
2. 1,008 (casuals) 222.0 man-years (1970-71); 36.6 man-years April 1 to August 31, 1971.
1969-	70
1970-	71 April 1, 1971-
August 31, 1971
4.Yes.
Casuals	PFAA Staff
Nil	$325,421
$899,794	$296,764
$ 78,100	$133,743


EMIGRATION OF SOVIET JEWS TO OTHER COUNTRIES
Mr. Brewin: Will the government use the opportunity of the visit to Canada of Premier Kosygin to discuss with him the plight of the Soviet Jewry?


Hon. Mitchell Sharp (Secretary of State for External Affairs):: The Government intends to pursue the enquiries made by the Prime Minister of Premier Kosygin last May concerning emigration of Soviet Jews to Israel or other countries of their choice and to raise again the question of the reunification of Soviet citizens of all ethnic origins with their relatives in Canada.


ADDITIONAL ARMED FORCES COSTS IN QUEBEC CRISIS
Mr. Robinson: What additional costs were incurred by the Department of National Defence over and above their normal pay, operating and maintenance costs for the operation of the Armed Forces in assisting civil authorities during the period October 12, 1970 to January 5,1971?


Hon. Donald S. Macdonald (Minister of National Defence):: Additional costs incurred in Quebec amounted to $2,109,337 and in the National Capital Area $597,764 for a total of $2,717,101.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. Dinsdale: 1. How much was expended by the Department of the Secretary of State by province and territory for training in each of the

October 13, 1971

following languages (a) English (b) French (c) Ukrainian (d) Italian (e) Polish (f) German (g) others, for the fiscal year 1970-71?
2. What expenditures are contemplated in each of these categories for the fiscal year 1971-72?
Return tabled.


INFESTATION OF SPRUCE BUD-WORM IN FORESTS OF NOVA SCOTIA
Mr. Coates: 1.	How extensive is the infestation of the spruce bud-worm in Cumberland-Colchester North and has it been determined how it reached Nova Scotia?
2.	Are other areas of woodlands in Nova Scotia also affected by the spruce bud-worm and, if so (a) what areas (b) what is the total acreage affected?
3.	(a) What actions are being taken to eradicate the problem of the spruce bud-worm (b) is the government involved and, if so, in what manner?
4.	Are any other similar types of insects affecting the forests of Nova Scotia and, if so (a) what are they (b) how dangerous are they (c) what actions are being taken to eradicate them?
Return tabled.


MANPOWER AND IMMIGRATION-DATA ON OCCUPATIONAL SHORTAGES
Mr. Blackburn: Has the Department of Manpower and Immigration been collecting data on occupational shortages and, if so (a) since what date (b) how often have these data been collected (c) what were the shortages in Canada and in the five regions for each of the pertinent periods to date in terms of totals and broad occupational classifications?
Return tabled.


STATUTES OF CANADA
Mr. McCleave: What statutes passed by the Parliament of Canada are in effect but have not been included in the Revised Statutes of Canada, apart from those known in the rules of the House of Commons as private bills?
Return tabled.



MOTIONS FOR PAPERS

James Alexander Jerome: Mr. Speaker, notice of motion for the production of papers No. 244 is acceptable to the government.



SEWAGE DISPOSAL STUDIES, MASSET, B.C.

[Stage Direction]
Motion No. 244-Mr. Howard (Skeena):
That an Order of the House do issue for a copy of the results of all studies conducted by the government or any agency or branch thereof since January 1, 1969 relating to sewage disposal and the effects thereof and including programs for sewage treatment plants at or near Masset, British Columbia.
Motion agreed to.
Inquiries of the Ministry
James Alexander Jerome: Mr. Speaker, I ask that the remaining notices of motions be allowed to stand.



ORAL QUESTION PERIOD


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, in view of the decline in the monthly cost of living index, which is not normal but nevertheless encouraging to see, I should like to ask the Prime Minister whether he has in mind any new initiatives at this time in regard to making another thrust to obtain some agreement or understanding in the matter of wage and price restraints?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, there is nothing that can be announced at this time. The Minister of Finance and myself have often said that we have this matter under review. We are encouraged, as is the Leader of the Opposition, by this decline. Although we would not say that we have licked inflation forever, we are encouraged by the movement, and if we do eventually have to take other decisions we will let them be known to the House.


Robert Lorne Stanfield: Mr. Speaker, it is encouraging to note that the Prime Minister now recognizes that inflation was licked for a very short time. In view of the apparent acceptance by leaders of organized labour in the United States of the restraint program announced by President Nixon, may I ask the Prime Minister specifically whether he is going to take any new initiatives to examine the possibilities of labour and management in Canada agreeing to some mutually satisfactory approach to restraints, particularly in view of the fact, as I say, that labour in the United States has now accepted that position?


Pierre Elliott Trudeau: I believe the House is aware of the fact that meetings have been scheduled, some of which have already taken place, between leaders of industry and the Minister of Industry, Trade and Commerce and between labour leaders and the Minister of Labour. These are some of the questions which are being discussed. It is impossible to state at this time that there is any agreement on a future course of procedure, but we are aware of the problem as put by the Leader of the Opposition.


Robert Lorne Stanfield: I have a further question, Mr. Speaker. The Prime Minister has referred to discussions. Is the Prime Minister putting before management on the one hand and labour on the other a specific proposal regarding counter-inflationary measures, measures of restraint, which the government is prepared to pursue at this time?


Pierre Elliott Trudeau: No, Mr. Speaker, not specific proposals at this time.
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October 13, 1971
Inquiries of the Ministry



UNITED STATES ECONOMIC MEASURES-GOVERNMENT PLAN TO CREATE JOBS

Hon. George Hees (Prince Edward-Hastings):: It is now
obvious that the Nixon economic program will have serious effects on the Canadian economy. Is the Prime Minister now prepared to announce the contingency program to stimulate the economy and provide more jobs which, as he indicated several weeks ago, he would be prepared to announce if it became evident that the situation was becoming serious?


Pierre Elliott Trudeau: I think the hon. member is right. It is obvious that the American measures are beginning to have effect here in spite of the legislation which has just been adopted by Parliament. As to an announcement, I can only tell the hon. member that it will be made very soon.


George Harris Hees: Has the Prime Minister any plans for improving the relationship between Canada and the United States, which all indications appear to show has deteriorated during the past 12 months?


Mr. Speaker:: Is the hon. member for Peace River rising on a supplementary question?


Mr. Baldwin:: Yes, Mr. Speaker.


George Harris Hees: On a point of order, Mr. Speaker, the Prime Minister was thinking the answer over and had risen about halfway to his feet. Can he not be allowed to answer?


Mr. Speaker:: The hon. member for Peace River.



REVIEW OF GOVERNMENT POLICY RESPECTING INDUSTRY

Gerald William Baldwin: In light of the changed situation in Canada causing an overriding necessity to stimulate the economy and provide substantially increased employment, is the government considering a review of its entire program dealing with industry generally, and in that connection has the government replied to the letter written to it by Mr. Filion, President of the Canadian Manufacturers' Association?


Pierre Elliott Trudeau: I have received several letters from leaders of industry. I do remember one from Mr. Filion to which I did reply. I must confess I am not clear in my own memory as to what particular representations Mr. Filion made in his letter. If the hon. member will refresh my memory, I might be able to be more helpful.


Gerald William Baldwin: I will be glad to send across to the Prime Minister a copy of the speech Mr. Filion made today, and perhaps the Prime Minister might like to comment on it later.


Mr. Speaker:: Order, please.



FAMILY INCOME SECURITY


Mr. David Lewis (York South):: I have a question for the Minister of National Health and Welfare. Can the minister inform the House whether discussions at the official level between Ottawa and Quebec regarding the co-ordinating of family allowance plans are still continuing or have been suspended?


Hon. John C. Munro (Minister of National Health and Welfare):: They are still continuing, Mr. Speaker.


David Lewis: In view of reports that serious difficulties have been encountered by the two levels of government and that disagreement is very strong between them, can the minister inform the House when the next meeting is scheduled and also what the basis of the disagreements may be?


John Carr Munro: Mr. Speaker, I would hope that the disagreements are not serious. I did note the comments of the Quebec Minister of Social Affairs. I am endeavouring now to check precisely what he did say, and what the meaning behind it was, as a basis for further discussion, but we have not gone through that procedure yet.


David Lewis: Just one more supplementary, Mr. Speaker, and I will be through. In view of the importance of this question not only to social security relations between the federal and Quebec governments but also to these relations throughout the country, would the minister undertake to make a statement to the House as to the progress of these discussions and what obstacles there are in the way of agreement on the proposals of Mr. Castonguay?


John Carr Munro: Mr. Speaker, I do not know whether a statement will be necessary, but as soon as we have had further discussions and delineated what the feeling is on both sides I would be pleased to endeavour to let the House know, in whatever manner seems practical.


David Lewis: Are any further meetings scheduled and, if so, for what date?


John Carr Munro: No, Mr. Speaker. No precise date has been set yet. I am just surmising that there will be further meetings.



CO-ORDINATION OF OTTAWA AND QUEBEC PLANS- SUGGESTED MEETING BETWEEN FEDERAL AND PROVINCIAL MINISTERS

Mr. Speaker:: Does the hon. member for Joliette wish to ask a supplementary?


Mr. Roch La Salle (Joliette):: Yes, Mr. Speaker, I would like to ask the hon. Minister of National Health and Welfare a supplementary question.
Since Quebec Health Minister Castonguay said at a press conference yesterday that the negociations failed and that only a meeting with the federal minister responsible could bring changes acceptable to Quebec, does the
October 13, 1971

minister intend to meet Mr. Castonguay and for what date could the meeting be arranged?


John Carr Munro: The government is considering that now, Mr. Speaker.


Mr. Speaker:: The hon. member for Annapolis Valley on a supplementary.



DOLLAR IMPACT OF NEW PROGRAM COMPARED WITH PRESENT FAMILY AND YOUTH ALLOWANCE PROGRAMS

Mr. J. P. Nowlan (Annapolis Valley):: Mr. Speaker, in order to confirm the far reaching implications of the FISP program, would the minister, either in a statement or by press release outside the House, give the country a comparison by region or province of the dollar impact of the FISP program in relation to the present family allowance and youth allowance programs, in view of the fact that this was omitted in the minister's original press release explaining the new program?


Mr. Speaker:: Order. The minister might be allowed to reply to the question although I am sure the hon. member would agree it is not supplementary to the question which was just asked by the hon. member for York South. As the question has been asked, perhaps the minister might be allowed to reply.


John Patrick (Pat) Nowlan: Mr. Speaker, I wonder if the minister understands the question. I requested this basic statistical information by letter over a week ago and I certainly thought, since we were talking about the implications of the plan as it affects Canada, that a comparison of the dollar impact by region or by province would help all Canadians understand the full implications of the plan.


John Carr Munro: Mr. Speaker, I will get out the hon. member's letter right away and endeavour to answer it to the best of my ability.


Robert Lorne Stanfield: On a supplementary-


Mr. Speaker:: Order, please. The Chair will recognize one last supplementary from the Leader of the Opposition and then recognize the hon. member for Temiscamingue.



CO-ORDINATION OF FEDERAL AND QUEBEC PLANS- BASIS OF DISAGREEMENT

Robert Lorne Stanfield: Mr. Speaker, I would like to ask the Minister of National Health and Welfare whether I understand him correctly. Is he saying he does not understand the points of difference between the representatives of the province of Quebec and his own government with regard to this subject? Is he saying he does not know what the differences are?


John Carr Munro: Mr. Speaker, that is not what I said. If the Leader of the Opposition was listening-


Robert Lorne Stanfield: I was listening.
Inquiries of the Ministry


John Carr Munro: -he would know I said I had read press reports of what the minister said. I am endeavouring to check on precisely what he did say. We have not had a complete report and I am endeavouring to find out what it is all about.



THE CANADIAN ECONOMY


Mr. Real Caouette (Temiscamingue):: Mr. Speaker, I should like to direct a question to the Prime Minister.
As everyone knows, when the United States sneeze Canada catches a cold. Is the government considering a comprehensive program in order to bring about domestic economic reforms which will enable us to develop our country without always being dependent on or in conflict with the United States? Does the government intend to initiate sweeping economic reforms to allow Canadians to live in their own way at home?


Pierre Elliott Trudeau: Obviously, the answer is yes, Mr. Speaker. The government has already introduced many legislative proposals in the House, including the one now under study. Our tax reform proposals include some whose object is to help Canada exercise greater control over its economy.



REGIONAL ECONOMIC EXPANSION


Mr. David MacDonald (Egmont):: Mr. Speaker, my question is directed to the Minister of Regional Economic Expansion. In view of the earlier criticisms by the Canadian Council on Rural Development and the criticism this week in the fifth annual review of the Atlantic economy published by APEC that the program under the Department of Regional Economic Expansion has not established any acceptable goals or targets or objectives, particularly those that might be jointly agreed to by the provinces, for the designated regions, I wonder what steps the minister or his department is taking to answer this obvious concern and problem that has been with the department since its formation some two years ago?


Hon. Jean Marchand (Minister of Regional Economic Expansion):: Mr. Speaker, there is only one premise that I accept, the one that APEC has published a report that I have not seen because they have not sent it to me.


Robert Lorne Stanfield: We will send it to you.


Jean Marchand: They have sent it to you? They have not sent it to me. I have not seen it so I have not read it. As far as the other premises are concerned, I do not accept them so I cannot answer.
24319-57J

October 13, 1971
Inquiries of the Ministry


Robert Lorne Stanfield: On a point of order-


Mr. Speaker:: The hon. member for Egmont on a supplementary.


Robert Lorne Stanfield: On a point of order, Mr. Speaker-


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


Robert Lorne Stanfield: On a point of order, Mr. Speaker, I can only assume, in view of the difficulties the government has in understanding communications, that APEC has not considered it worth while to send them the report.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. That is not a point of order. The hon. member for Egmont.


David Samuel Horne MacDonald: It was a good one though. Since the program lists at least one or two officials from the minister's department who will be participating in discussions relative to the recommendations of the council next Tuesday, I assume that the minister's department will have an opportunity to study these suggestions and has already studied the earlier recommendations of the Council on Rural Development to which I referred in my first question and which were made many months ago. Therefore I should like to ask the minister what steps he or his officials have taken to respond to the growing criticism and concern about the over-all effectiveness of the department?


Jean Marchand: Mr. Speaker, undoubtedly, all such recommendations and suggestions will be taken under consideration. I have already stated in the House that we do not believe that we are guided by the Holy Ghost and therefore cannot make mistakes. We have attempted to establish worthwhile programs for regional development. Various persons and organizations offer suggestions; we shall study them, but we should not be asked to respond before the reports reach us.


David Samuel Horne MacDonald: Mr. Speaker, certainly neither I nor anyone else has ever suggested that the minister's department is being advised by the Holy Ghost.


Jean Marchand: You are.


David Samuel Horne MacDonald: I should like that opportunity but so far it has not occurred. As a supplementary, Mr. Speaker, I wonder whether the minister could indicate what steps are being taken to examine further or to implement proposals concerning preoccupation with the development of an infrastructure in the Atlantic region and a greater opportunity for regional participation in the planning of future programs?


Jean Marchand: Mr. Speaker, as soon as we have the APEC report as well as other reports referred to by the hon. member, and when we have studied them, we shall certainly endeavour to improve our methods so as to

reach the objectives which we have set for ourselves. We have no pride to save; we merely want to help and it is possible that we find some shortcomings, but the hon. member can be sure that if we can correct them, we shall do so. However, we do not accept global condemnations which apply but to some particular cases and which have no bearing on any definite program.



JOBS CREATED UNDER REGIONAL DEVELOPMENT INCENTIVES ACT

Mr. David Orlikow (Winnipeg North):: I wonder if the minister could tell the House how many jobs have been created by his department under the terms of the Regional Development Incentives Act?


Mr. Speaker:: Order, please. The hon. member will appreciate that a question of that kind ought normally to be placed on the order paper. The hon. member for Annapolis Valley on a supplementary.



CONSIDERATION OF REPORT OF ATLANTIC


John Patrick (Pat) Nowlan: My question is supplementary to that asked by my colleague the hon. member for Egmont. I appreciate that the minister may have difficulty communicating with the Holy Ghost, but I do not intend to ask if he has read the APEC report which was just released or the report of the Canadian Council on Rural Development which was transmitted to him in July this year. What I should like to ask is whether he would make a statement in the House on the report of the Atlantic Development Council which has been in the hands of the minister since April, 1971, that report also having set out goals and targets for the Atlantic area, because we in the Atlantic area have interests to protect and we are not being protected by the sloppy answers of the minister?


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Gerald William Baldwin: Perhaps the Holy Ghost sent the minister a copy.


Mr. Speaker:: Order, please.


John Patrick (Pat) Nowlan: Because we have interests to protect, Mr. Speaker, I perhaps trespassed a little too far, but only because of the continuing non-answers by this minister to our questions.


Mr. Speaker:: Order, please. The latter part of the question perhaps was not entirely relevant, but the hon. member might allow the minister to reply to that part of his statement which was a question.


John Patrick (Pat) Nowlan: Perhaps the minister did not understand either the first or the second part of the question, and I should like to put it as clearly as I can. Has the minister yet considered the report of the Atlantic Development Council, which came to him in April of this year, setting out goals and targets and a whole concept of strategy for
October 13, 1971

Atlantic Canada development, and is he prepared to make a statement on that before he does any more bedtime reading?


Jean Marchand: In due time, I will surely make a statement in the House. For the time being, we are not ready to do so.


An hon. Member:: The Holy Ghost sent the report.


Mr. Speaker:: Order, please. We ought to go to another subject soon. The hon. member for Edmonton West.


John Patrick (Pat) Nowlan: I suggest that the minister has a little patronage set up in Montreal.


Jean Marchand: That is cheap.


John Patrick (Pat) Nowlan: The minister has set up an office in Montreal for purposes of patronage.


Jean Marchand: That is cheap, cheap.


John Patrick (Pat) Nowlan: The minister is known as Marchand, the patronage man.


An hon. Member:: He is the president of "Holy Ghost Incorporated".



SUGGESTED STUDY OF DEPARTMENTAL PROGRAMS BY ECONOMIC COUNCIL

Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, may I direct a supplementary question to the Minister of Regional Economic Expansion. Has he or have his colleagues in the government considered asking the Economic Council of Canada to make a study of the programs or the effect of the programs that his department has been putting into effect during the last two or three years, as directly authorized and referred to in the act setting up the Economic Council of Canada?


Jean Marchand: Mr. Speaker, officials of the department are reviewing the programs and constantly trying to consider their efficiency and their output. My department is not very old, Mr. Speaker, having been established a mere two and half years ago. We are endeavouring to find out whether we are achieving our aims and we would like to see the opposition make its contribution instead of trying to create trouble-


Mr. Speaker:: Order, please. The hon. member for Greenwood. I apologize to the hon. member for Greenwood. The hon. member for Temiscamingue wishes to raise a point of order.


David Réal Caouette: Mr. Speaker, I rise on a point of order.


Mr. Speaker:: Order. The hon. member for Temiscamingue on a point of order.
Inquiries of the Ministry


David Réal Caouette: Mr. Speaker, the Minister of Regional Economic Expansion has just accused the opposition of creating difficulties for the government. I should like to point out to the minister that, in Canada, it is the government, and not the opposition, that is creating difficulties for everyone.


Mr. Speaker:: Order, please. The hon. member for Greenwood.



ADMINISTRATION OF JUSTICE


Mr. Andrew Brewin (Greenwood):: Mr. Speaker, my question is addressed to the Minister of Justice. In light of reports of police wiretapping against trade union members engaged in a legal strike, will he review Bill C-252 to make sure that it effectively prohibits such police actions and, if not, will he propose the necessary amendments?


Hon. John N. Turner (Minister of Justice):: Mr. Speaker, that will be one of the matters we shall want to deal with when the legislation reaches the Standing Committee on Justice and Legal Affairs.


Francis Andrew Brewin: Mr. Speaker, would the minister consult with the provincial Attorneys General in order that they may collaborate in putting to an end this objectionable form of industrial espionage?


John Napier Turner: Mr. Speaker, I would think that at this stage under the present law the responsibility is theirs.


Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, may I direct a question to the Minister of Justice. In light of the questions just asked about wiretapping and his answers, is he now prepared to accept the recommendation of the Standing Committee on Justice and Legal Affairs that before wiretapping takes place a judge's order ought to be obtained, instead of leaving this matter in the hands of political people such as the Attorney General of Canada?


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


John Napier Turner: Mr. Speaker-


Mr. Speaker:: Order, please.


John Napier Turner: On a point of order, Mr. Speaker.


Mr. Speaker:: Is the Minister of Justice rising on a point of order? I suggest that as the question was asked it is not in order.


John Napier Turner: The point of order arises from the fact there is legislation before the House in the

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Inquiries of the Ministry
form of a bill and if the hon. member had read it he would know that is just what we provided for.



INQUIRY OF THE MINISTRY

Mr. Rene Matte (Champlain):: Mr. Speaker, I wish to direct a question to the Secretary of State for External Affairs.
Has the government paid any living expenses to the FLQ members in Cuba, at least until they can earn a living?


Mr. Speaker:: Order, please. The hon. member for Fundy-Royal.


Mr. Fairweather:: I am deferring to the Secretary of State for External Affairs, Mr. Speaker.


Mr. Speaker:: Is the minister rising on a point of order?


Mitchell William Sharp: It is probably a point of order, Mr. Speaker, since you seem to have ruled out of order the question asked by the hon. member. I would think it important that this question should be answered and not left uncertain.


Mr. Speaker:: If a question is ruled out of order and the minister thinks, either on a point of order or a question of privilege, that it should be answered, the minister should make his point on that basis. However, if a question is ruled out of order by the Chair, it is certainly not sufficient for a minister to rise and say that in his view there should be a reply to the question.


Mitchell William Sharp: On the point of order, Mr. Speaker, perhaps I did not express myself too clearly. I was not sure whether Your Honour was ruling the question out of order.


John Patrick (Pat) Nowlan: No wonder Washington has trouble.



PRESENCE OF MINISTER OR PARLIAMENTARY


Mr.  R. Gordon L. Fairweather@Fundy-Royal: I have a question for the Prime Minister embodying a reasonable request about the operation of the House and value returned for dollars spent. Now that there are 27 parliamentary secretaries to share the load, in a manner of speaking, will the right hon. gentleman consider an arrangement whereby either a minister or his parliamentary secretary is here at all times during the question period and during debates?


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: I will consider that question, Mr. Speaker. The need for further parliamentary secretaries is to assist the minister in the House and in parliamentary committees if the minister is tied up with departmental or cabinet affairs. If it is conceivable to

work out a timetable by which ministers will be represented in the House every day, I will obviously bring that forward, but I have some doubt whether it is possible.


George Harris Hees: A supplementary question. As no more than the seven senior ministers in the government are busy enough to require parliamentary secretaries, is the government setting up a committee to figure out what in the world the other 20 are going to do all day?


Mr. Speaker:: Order, please. The question as asked is not in order.



BIRTH CONTROL-GRANTS TO MUNICIPALITIES AND VOLUNTARY ORGANIZATIONS

Mrs. Grace Maclnnis (Vancouver-Kingsway):: My question is for the Minister of National Health and Welfare. In view of the grant by his department of $25,000 to Serena, an organization using birth control methods with a 24 per cent failure rate-


Some hon. Members:: Oh, oh!


Gerald William Baldwin: That's like Benson's budget.


Winona Grace MacInnis: -will the minister say whether similar grants will be available to municipalities and voluntary bodies-


Some hon. Members:: Oh, oh!


Winona Grace MacInnis: -using methods with proven lower failure rates?


John Carr Munro: Without accepting the premise of the hon. member's question, Mr. Speaker, I should like to advise her that there already is a cost-sharing arrangement with the provinces under the Canada Assistance Plan for many types of family planning services, and some of this must inevitably filter down to the municipalities.


Winona Grace MacInnis: Apart from the Family Planning Association of Canada, have any other direct grants been made to organizations using modern birth control methods?


Mr. Speaker:: Order, please. I think that question should be placed on the order paper or considered at the time of adjournment.


Winona Grace MacInnis: Ten o'clock.



ACTION TO EXPAND POISON CONTROL CENTRES

Mr. P. B. Rynard (Simcoe North):: My question is for the
Minister of National Health and Welfare. In view of the fact that a federal study into accidental and deliberate poisonings has reported that Canada's poison control centres are having little success in fighting accidental and deliberate poisonings, is the Minister of National Health and Welfare giving consideration to introducing new mea-
October 13, 1971

sures and assisting in expanding poison control centres in light of this report?


John Carr Munro: I will look into the matter further, Mr. Speaker, and report to the hon. member.



CAPE BRETON DEVELOPMENT CORPORATION


Mr. Robert Muir (Cape Breton-The Sydneys):: I have a question for the Minister of Regional Economic Expansion. Is the minister in a position today to reply to my question of some days ago regarding the necessity and possibility of more funds being made available soon to the Cape Breton Development Corporation?


Jean Marchand: Mr. Speaker, the corporation's last annual report showed that by the end of 1970 most of its initial capital had been spent or committed and by the end of this year there will be very little left. The corporation's future capital plans are now being prepared and will be reflected when next year's estimates are submitted to Parliament.



REGIONAL ECONOMIC EXPANSION


Mr. Robert C. Coates (Cumberland-Colchester North):: My question is for the Prime Minister. In view of the sensitivity on the part of the Minister of Regional Economic Expansion and his officials with regard to criticisms about the programs that-


Mr. Speaker:: Order, please. Will the hon. member resume his seat. The hon. member should ask the question. Certainly the way it is premised would tend to indicate that it would not be in order. The hon. member should ask the question directly.


Robert Carman Coates: I had to substantiate what I was going to request of the Prime Minister, Mr. Speaker. I will do it now. In view of this, will the Prime Minister give consideration to having some of the officials in his office carry out an independent examination of the success or failure of DREE and indicate what programs should be altered in order to make it a more successful operation as far as the fight against regional economic disparity is concerned?


Pierre Elliott Trudeau: Mr. Speaker, I will gladly discuss with the President of the Treasury Board whether I should further enlarge my staff to carry out this investigation.


George Harris Hees: A supplementary question.
Inquiries of the Ministry


Mr. Speaker:: Order, please. The hon. member for Yorkton-Melville.



WELFARE


Mr. Lome Nystrom (Yorkton-Melville):: My question is for the Minister of National Health and Welfare. In answer to a question on September 30 the minister told the House he would investigate an incident in Cornwall involving a refusal to give welfare payments to people with long hair to see whether tRis violated the letter or spirit of the Canada Assistance Plan. Did the minister make this investigation and, if so, can he report to the House at this time?


John Carr Munro: The matter was looked into, Mr. Speaker. I forget the details of the results of the investigation. I will look into it and report to the hon. member.



FISHERIES


Mr. Heath Macquarrie (Hillsborough):: I should like to direct a question to the Minister of Fisheries. In the wake of last week's conference over which the minister presided, is the government now giving serious consideration to asserting Canada's jurisdiction over the continental shelf in so far as fisheries management is concerned and, if so, when may an announcement be expected?


Hon. Jack Davis (Minister of Fisheries):: Mr. Speaker, our primary concern is for sound conservation out over our continental shelf, and we require the co-operation of other nations to bring that about.



CRIMINAL CODE


Mr. Henry Latulippe (Compton):: Mr. Speaker, I have a question for the Minister of Justice.
Would he indicate to the House what approach he intends to take in connection with capital punishment? Will he see to it that the law on capital punishment will be enforced in the case of the police officer who has just been slain?


Mr. Speaker:: The hon. member will agree that the question as it stands is out of order.

October 13, 1971
Inquiries of the Ministry



FURTHER ACTION ON STABILIZATION BILL FOLLOWING PAYMENTS TO WHEAT BOARD UNDER TEMPORARY WHEAT RESERVES ACT

Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, I wish to ask the minister responsible for the Wheat Board whether a cheque has gone out to the Wheat Board today, whether it is for $38 million or $62 million and whether, in light of the fact that Bill C-244 still remains on the order paper, he intends to proceed with consultations immediately so that further action may be taken during the present session of Parliament?


An hon. Member:: Wouldn't you like that?


Otto Emil Lang: A cheque in the amount of $62.1 million has been paid to the Canadian Wheat Board and, of course, in due course, after making appropriate calculations, the Wheat Board will be paying a much smaller amount to the farmers.


Stanley James Korchinski: May I ask the minister to answer the second part of my question? Will he be holding consultations immediately, or does he intend to let that bill die on the order paper?


Mr. Jack McIntosh (Swift Current-Maple Creek):: My supplementary arises from the minister's statement that the sum of approximately $62 million has been paid to the Canadian Wheat Board, money which in reality was owed to the farmers who participated in the pool of that year. What was the significance of his remark that only a portion of this money would be paid to the producers?


Otto Emil Lang: This has been explained to the House any number of times in recent weeks. A portion of the amount is allocated to the 1969-70 pool, and only that portion will be allocated to producers and received by them at this point in time. The question of whether any other amount allocated to future pools will ever reach the farmers depends on many circumstances, for example, the total state of the pools, circumstances about which we cannot know at this time.



LIFT PROGRAM-AUTHORIZATION FOR REPAYMENT REQUESTS TO FARMERS-LEGAL ACTION

Mr. A. P. Gleave (Saskatoon-Biggar):: In view of the fact that a number of requests have gone out to individual farmers from Mr. Riddell, the director of PFAA, seeking repayment of part of the amounts paid to farmers under the Lift program, can the minister inform the House whether this was done under his direction or on the initiative of the director of PFAA?


Otto Emil Lang: Any recovery is certainly limited only to amounts which may have been paid in circumstances where there was no entitlement to the payment. As I understand it,

this is a required procedure and one of which the Auditor General earnestly approves.


Mr. Speaker:: Order, please. I bring to the attention of hon. members that there are only about five minutes left before the end of the question period and apparently there are three or four supplementaries on this subject, which might bring us to the end of the time available.


Alfred Pullen Gleave: Further to my earlier question, can the minister inform the House whether any legal action has been taken against individual farmers in an attempt to enforce repayment of part of the Lift payments, or whether any legal action is contemplated by himself or by his department?


Otto Emil Lang: I do not know of any such specific action at this point but, of course, if moneys are properly owed to the Crown as having been paid on an erroneous basis, legal proceedings might well follow.



CASH ADVANCE PROGRAM-WHEAT BOARD DEMAND FOR ADDITIONAL PAYMENTS BY FARMERS

Hon. W. G. Dinsdale (Brandon-Souris):: My supplementary refers to the cash advance program in connection with which a similar difficulty has been encountered by reason of the Wheat Board demanding additional payments from farmers. Is the minister aware of this problem, and has he taken action to correct it?


Otto Emil Lang: The problem is in no way related to what we have been considering, just as the legislation is in no way related to it. Some difficulty has arisen as a result of farmers and, indeed, some elevator agents, thinking that cash advances could be made at a rate other than the rate prescribed for such advances, and that repayments could likewise be made at a different rate. The law in fact requires a specific rate with respect to advances and repayments. Where this misunderstanding has arisen there has, of course, been some difficulty.



NATIONAL DEFENCE


Mr. Robert Simpson (Churchill):: Mr. Speaker, I have a question for the Minister of National Defence. In his absence I will direct it to the Prime Minister. It arises out of one of the recommendations made to the federal government in the report of the Committee on Youth, the recommendation that federal funding of cadet movements should cease. Can the Prime Minister say whether the government is considering any retrograde step of this nature or whether there is anything to report to the House on this question?


Mr. Speaker:: Again, the hon. member's question as asked is not in order. It invites the Prime Minister to indicate whether the government will proceed with a
October 13, 1971

retrograde step. This is argument, and a question should not be asked in those terms.


Robert Simpson: I will rephrase the question. Has the Prime Minister anything to report to the House with regard to the specific recommendation in the report of the Committee on Youth to which I have referred?


Pierre Elliott Trudeau: No, Mr. Speaker. As the Secretary of State told the House, we are looking at the report and studying specific aspects of the recommendations it contains, but there is nothing we can tell the House at this time.



MANPOWER


Mr. A. D. Hales (Wellington):: Mr. Speaker, I should like to direct my question to the Minister of Manpower and Immigration. On September 23 I addressed a question to him with regard to the skyrocketing cost of welfare in the country and what co-ordination was being established between manpower offices and welfare offices. The minister indicated that he would like to report fully to the House on this matter. I wonder if he is now in a position to do so.


Otto Emil Lang: I do not think I would be permitted to make what might be called a full report to the House at this point, but I will be glad to discuss the matter with the hon. member.



PAYMENTS BY GOVERNMENT UNDER TEMPORARY WHEAT RESERVES ACT SINCE JULY 31, 1971

Mr. Arnold Peters (Temiskaming):: I have a question for the Minister of Finance. In view of events which took place yesterday, is it now the hon. gentleman's intention to make the monthly payments to the Canadian Wheat Board as required by law under the Temporary Wheat Reserves Act, and has he done so up to date?


Hon. E. J. Benson (Minister of Finance):: As far as I
know, the only payment which has been made up to this point is the $62.1 million. I will look into the other matter.


William Arnold Peters: My inquiry was concerned not with the 1969-70 payment but with the payments which have fallen due on a monthly basis under the terms of the Temporary Wheat Reserves Act since July 31 of this year.


Edgar John Benson: That is what I offered to look into.



CITIZENSHIP


Mr. W. C. Scott (Victoria-Haliburton):: Mr. Speaker, my question is directed to the Minister of State responsible
Inquiries of the Ministry
for citizenship. It has to do with a report appearing in the Globe and Mail to the effect that a citizenship court was held in a beer parlour. I should like to ask the minister whether permission was granted by his department for a citizenship court to be held in such a location?


Abram Ernest Epp: I will take that question as notice, Mr. Speaker.



FEDERAL-PROVINCIAL CONFERENCE INCLUSION OF CONSTRUCTION POLICY ON AGENDA OF FORTHCOMING MEETING

Mr. Robert McCleave (Halifax-East Hants):: Mr. Speaker, my question is directed to the Prime Minister. Will an item having to do with the construction policies of the federal and provincial governments as a means of creating employment appear on the agenda of the meeting of first ministers?


Pierre Elliott Trudeau: I cannot guarantee that construction will be on the agenda, but certainly the total package of measures with which we can proceed, including construction, will be on the agenda. It might not be detailed, but certainly it is a subject upon which governments will be free to speak.


David Lewis: The Prime Minister has referred to this program on a number of occasions, including today. In view of the importance of this program being available as soon as possible, can the right hon. gentleman inform the House now whether we may expect an announcement within the next day or so or whether it will be some weeks hence?


An hon. Member:: Very soon.


Pierre Elliott Trudeau: As was just said on this side of the House, I said "very soon". It will not be some weeks hence.


David Lewis: You said "very soon" two weeks ago.


Pierre Elliott Trudeau: No, I did not. I said "soon" two weeks ago.



CROWN CORPORATIONS


Mr. Lincoln M. Alexander (Hamilton West):: Mr. Speaker, I wish to direct a question to the Minister of Supply and Services who is looking after the situation in Sarnia in connection with Polymer. I wonder whether he has anything to report to the House on any solutions he may have in mind?


Hon. lames Richardson (Minister of Supply and Services):: I have very little to report apart from what I told the House a day or two ago. I talked with the president of Polymer this morning and he advised me that no further reductions in the work force are contemplated, at least at the present time.

October 13, 1971
Inquiries of the Ministry


Lincoln MacCauley Alexander: In light of the fact there have been many complaints about the economic justification for these layoffs and about the lack of proper notice, is the minister looking into this whole area to find the reasoning behind the lay-offs in order that he can report to the House by way of a statement?


James Armstrong Richardson: Yes, Mr. Speaker, I have been in very close touch with management. The over-all position is that there are very serious difficulties in the whole petrochemical industry. The company has been faced with reduced sales, lower prices because of competition and rising costs. It is against this background that the reduction in the work force has been necessary.


Lincoln MacCauley Alexander: Mr. Speaker, in view of the fact the minister has put his finger on the problems in respect of the petrochemical industry, is he prepared to give the House any solutions he has in mind in the form of recommendations to the Prime Minister and the government as to how we can alleviate this very difficult and growing situation in Canada?


Mr. Speaker:: I suggest to the minister that if he is going to reply to this further supplementary question he should do so briefly because it seems to me that the question as asked would invite a rather lengthy answer which normally should be made on motions. The minister might reply briefly.


James Armstrong Richardson: Mr. Speaker, I will not reply further at this time except to say that the government's action in bringing in the employment support bill is helpful to Polymer in the present circumstances.


Lincoln MacCauley Alexander: Never mind that-over and above that?



CANADA DEVELOPMENT CORPORATION


Robert Lorne Stanfield: Mr. Speaker, I should like to ask a question of the Minister of Finance relating to the appointment of the principal officers of the Canada Development Corporation. A couple of weeks ago the minister promised that an announcement would be made very soon. When does "very soon" become "now"?


Edgar John Benson: Very, very soon, Mr. Speaker.



CONSUMER AFFAIRS


Mr. Barry Mather (Surrey):: Mr. Speaker, I have a question for the Minister of Transport. Is his department aware of the situation reported from Detroit today involv-
(Mr. Richardson.]
ing an estimated seven million Chevrolet cars, 1965 to 1969 models and the rusting of frames which has caused engine mounting failure-rusting such as we experience in the national capital from time to time-with the threat that many thousands of these cars will be recalled, and can he say whether his department will look into this with a view to protecting the Canadian consumer?


Hon. Donald C. Jamieson (Minister of Transport):: Mr. Speaker, I thank the hon. member for giving me notice, but I only received it after coming into the chamber and there has not been time to make a check. I will give him an answer tomorrow or the next day.


Mr. Speaker:: Orders of the day.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Tuesday, October 12, consideration in committee on Bill C-259, to amend the Income Tax Act and to make certain provisions and alterations in the statute law related to or consequential upon the amendments to that act-Mr. Benson-Mr. Honey in the chair.
Marcel Joseph Aimé Lambert: Mr. Chairman, I rise on a point of order. I did not want to interrupt the minister's statement and that is why I am taking this opportunity of suggesting that we should decide now how we are to proceed with the committee study of this bill and how votes will be taken. Your Honour will appreciate that the bill contains over 700 pages, and clause 1 in effect repeals practically the whole of the Income Tax Act. The bill contains some 500 pages of more than 200 paragraphs relating to the new act. I think we must determine how we should handle this legislation because clause 1 cannot be relegated to the end in the way we have proceeded on other occasions. Clause 1 in effect repeals six parts of the present Income Tax Act and puts the whole act on the table.
My suggestion is that we have a preliminary round of general discussion, to be followed by a discussion of the clauses and a vote on the clauses by number. I suggest we vote on the clauses by number rather than deferring votes, because of their many interrelationships. Many clauses are consequential upon others, so much so that it would be farcical to defer a vote and expect, either by agreement or on division, to carry another clause which is consequential upon that clause still outstanding. For that reason I propose we deal with the clauses in orderly sequence, to avoid what may become a terribly complicated procedure.


Edgar John Benson: Mr. Chairman, on the point of order raised, I am not averse to the suggestion of the hon. member. As he suggested, I think we might start with a general round of speeches, and after a discussion between myself and other interested parties regarding the handling of clauses and subclauses we could take the vote. I fully agree that a method must be found to deal with this matter because of the number of varying principles involved, some of which

are involved in parts of clause 1 and some of which are involved in other parts of the bill.
Clause 1 in effect involves the entire Income Tax Act, and if it is agreeable I would suggest we hold further discussions as to the method of breaking it down. I am in agreement generally that we should break it down because of the number of clauses involved.


Mr. Knowles (Winnipeg North Centre):: Mr. Chairman, apparently it will not be necessary to take part in an extensive argument at this point, as I thought might be the case, because there seems to be general agreement between the Minister of Finance and the hon. member for Edmonton West. I share their views. The gentlemen at the table have no doubt been puzzling over this bill and are aware of the fact that clause 1 is 596 pages in length and about 2i inches thick. It looks much like the telephone book of the city of London, England. It includes about 257 clauses in respect of a new act and the number of subclauses must be legion several times over. In fact, what we will have before us, when you call clause 1, is a proposed new Income Tax Act.
I realize that one might find precedents for the proposition that technically what is before us is just clause 1 of the bill, and therefore we should debate the whole thing all at once and vote on it all at once. But surely this is a case where common sense ought to prevail. After all, how could the rule of relevance be applied to the 596 pages of clause 1?
I therefore suggest that we first of all agree to have a general discussion, and then at some agreed point we decide that the general discussion has been concluded and we then proceed to deal with the 257 clauses of the new Income Tax Act which will be enacted by clause 1 of Bill C-259. I agree with the Minister of Finance that the details of this agreement can be arrived at by discussion through the usual channels, but I think it will be useful if it is now understood that this common sense procedure is to be adopted.


The Chairman:: The Chair has no difficulty in agreeing that we would not want to proceed by calling clause 1 and proceeding to deal with it in its entirety. I gather there is general agreement that there is to be a round of discussion. The hon. member for Edmonton West used that terminology, as did the minister, and the Chair would like clarification of that point. Do hon. members mean by that, only one speaker from each party?


Marcel Joseph Aimé Lambert: No.


Russell Clayton Honey: Then it is agreed that there will be a general discussion on clause 1 and that during this interval the leaders of the parties will discuss the procedure we might adopt following that general discussion. If that is the general understanding, the Chair will recognize the Minister of Finance.


Edgar John Benson: Mr. Chairman, at the start of the committee's consideration of Bill C-259 I should like to discuss briefly amendments the government is ready to make at this time. With the permission of the committee I will today table substantially all the amendments that the
Income Tax Act
government plans for clause 1, which covers the majority of the tax reforms.
This procedure is intended to allow hon. members time to study the amendments in advance of their formal introduction by the government. The government is in the process of completing several amendments it will propose to the remaining clauses and I intend to table them as soon as possible. Aside from these, there may be further amendments the government will wish to propose as a result of representations which have been received only recently and which are still under consideration. Most amendments can be left for discussion later, but there are two areas of change I will describe because of the attention the issue has received so far during the debate.
Both inside and outside the House the proposed tax treatment of co-operatives and credit unions has received a good deal of discussion. Under the bill as drafted, patronage dividends and interest rebates cannot reduce the income of a co-operative or a credit union below 5 per cent of members' capital employed. The government amendment would provide that patronage dividends could not reduce income, after interest to members, below the lesser of, first, 5 per cent of members' capital employed as proposed in the bill and, second, one-third of the income before patronage dividends but after interest to members. This amendment will ease the impact of the new rules on co-ops and credit unions, particularly in years of low earnings.
In addition, the increase in tax resulting from the limitation on the deduction of patronage dividends and interest rebates will be phased-in over ten years by collecting one-tenth of the increase in the first year, two-tenths in the second year, and so on. This amendment will give credit unions and co-operatives time to adjust to the new rules. This phase-in will be included in the amendments to part III relating to the transitional rules. In addition, the government will propose an amendment to clarify that for credit unions interest on share capital is deductible.
Furthermore, we are proposing some amendments relating to the computation of the opening reserves of a credit union to more appropriately bridge the transition from exempt to taxable status. Representations have been made that credit unions cannot take full advantage of the small business incentive because of provincial reserve requirements. The government is continuing to give consideration to what change in the bill is appropriate to accommodate this special problem and I expect to be able to table next week an amendment dealing with this problem.
I would also like to refer to an amendment the government will propose with respect to the classification of shares of certain investment corporations as foreign property, within the meaning of section 206 as set forth in clause 1 of the bill. Investment corporations, as defined in section 130 in clause 1 of the bill, are special status corporations which, like mutual fund corporations and mutual fund trusts, are public investment vehicles for which substantial conduit treatment is provided by special rules in the bill.
To put investment corporations on a more equal footing with mutual fund corporations and mutual fund trusts, one of the amendments which I have tabled today will
24319-58J

October 13, 1971
Income Tax Act
provide that shares of an investment corporation purchased by a taxpayer after today will be classified as "foreign property", except as prescribed by regulation. Generally speaking, the operation of the "foreign property" rules as they relate to investment corporations will be effected on the same basis as that prescribed for Canadian mutual funds and pooled funds in the press release which I issued on June 30, 1971, regarding this matter, except that today will be the effective date.
In addition to this change regarding investment corporations, I would like to announce at this time an amendment the government will propose to clause 65 in part III of the bill that will be of importance to registered retirement savings plan trusts that have contractual investment plans with investment corporations, mutual fund corporations, mutual fund trusts or trust company pooled funds whose shares or units will be classified as "foreign property" under the new rules. In order to give these trusts more time to rearrange their contractual plan commitments, this amendment will provide that any such shares or units acquired by a registered retirement savings plan trust before 1974 will, subject to specified limits, be deemed to be "foreign property" acquired by the trust before June 19, 1971.
The rules in subdivision (i) relating to the taxation of passive income-that is, foreign accrual property income-are complex. The complexity is inevitable if the provisions are to be both effective in curtailing abuse and yet fair to those multinational corporations based in Canada which carry on extensive operations in other countries. The government's objective is to achieve a fair balance between these two sometimes competing objectives. We recognize the importance of consulting with those Canadians with overseas investments in striking the appropriate balance.
To provide an opportunity for this consultation to take place, Bill C-259 already provides that the passive income provisions will not take effect on January 1, 1972. Clause 35(3) of the transitional provisions, page 659, provides that the passive income rules will apply only for those taxation years of foreign affiliates that commence after 1972.
We have already received a number of presentations relating to the passive income provisions and it seems clear that some changes to the law in this area should be made before the provisions take effect. However, we have concluded that it would be premature to introduce changes at this time before all representations have been received and given the study they require. Most of the amendments I am tabling are technical, while a few are largely of a relieving nature to overcome potential hardship cases. All are the result of my officials reviewing the bill following submissions by organizations and individuals who have given the bill careful scrutiny since it received first reading at the end of the budget debate.
The Canadian Institute of Chartered Accountants, the Canadian Bar Association, the Canadian Tax Foundation and the Canadian Chamber of Commerce, as well as many other organizations and individuals, have spent a great deal of time and effort in reviewing the bill. I have been particularly impressed with the fact that most of the submissions have not merely focused attention on potential hardship cases but have also indicated instances where amendments are necessary to prevent tax avoid-

ance schemes. The submissions of these organizations and individuals have been valuable. In the main, the amendments are in response to these submissions.
Throughout the debate we have heard a good deal about the complexity of the bill. Bill C-259 is complex, so is the present act. As practitioners gain familiarity with the new system, the issue of complexity will abate. For the average taxpayer the complexity issue has no relevance. Wage earners will continue to complete reasonably simple tax returns. The more complicated provisions of the bill, those involving the corporate tax regime and the provisions dealing with capital gains transactions, are of principal concern to the business community. A complex tax system is nothing more than a reflection of a complex, commercial world.
Much of the complexity in this bill is to relieve taxation. For example, the decision to tax capital gains at only half rates requires much more complicated provisions than if capital gains were treated in the same way as ordinary income. Similarly, certain capital gains-for example, the gain on principal residences-are exempt. These exemptions cause complexity. In addition, while other transactions are not exempt, the tax arising on the transaction is deferred. By this I am referring to amalgamations and certain other types of corporate reorganizations where the relieving provisions require complex rules. The decision to reduce the burden of the double taxation of corporate income necessitates rather complex rules concerning refunds at the corporate level.
Because the bill introduces new concepts there was a need to avoid a retroactive impact. The belief that the bill should not be retroactive resulted in complex transitional rules all of which are designed to prevent the taxation of previous accrued gains and income. The bill appears more complex than it would otherwise be because it also represents a restructuring of the old Income Tax Act. As persons become more familiar with the restructuring, the renumbering, the design and symmetry of the bill will become more apparent and more familiar and be recognized as a desirable objective.
To facilitate hon. members' consideration of the bill I would like to speak for a moment about its structure. There are four parts. Part 1 contains amendments to the present Income Tax Act. It is the basic tax reform bill. Part II consists of proposed changes to other acts that are related to the amendments contained in part 1 of the bill. Part III deals with the coming into force and application of the amendments contained in part I. It sets forth special transitional rules that would apply until such time as the new law becomes fully operative. In addition, this part contains special rules that would apply in the case of certain taxpayers having taxation years not coinciding with the calendar years. Part III is given the short title of "Income Tax Application Rules, 1971." Part IV contains amendments to the present Income Tax Act which are to become effective in 1971.
Part I of the bill repeals all but a few sections of the present Income Tax Act and substitutes new sections. The new sections include many completely new provisions such as those providing for the taxation of capital gains and new deductions. But there are also many instances
October 13, 1971

where the present law is not changed in substance, although the numbering and cross-references will be different than at present.
The explanatory notes opposite page 1 of the bill state that where a particular section, subsection or paragraph contained in the text of the provisions set forth in part I of the bill makes no change in the present law, or makes no change except for necessary alterations in cross-references or for minor alterations in wording or arrangement that are not intended to affect the substance of the present law, the explanatory note opposite the particular section, subsection or paragraph refers only to the corresponding provision of the present law without further elaboration.
Where a particular section, subsection or paragraph continues an existing provision in the present law but makes changes that are intended to affect its substance, the existing provision is identified in the explanatory notes but is marked as "modified".
A totally new provision, or a provision that has been altered in such a manner that there is no readily identifiable corresponding provision in the present law, is marked in the explanatory notes as "new".
Although the amendments to the present Income Tax Act contained in part I of the bill replace almost all the provisions of the present Income Tax Act, the bill does not completely repeal the present act and introduce a new income tax act. The decision to amend the present Income Tax Act rather than to repeal it was made because of the arrangements with the provinces for collection of provincial income taxes. The provincial acts and the collection agreements refer to the present Income Tax Act.
In discussing the provisions in Bill C-259 it will be necessary to refer to parts I, II, III or IV of the bill. At various places it will be necessary to refer to parts of the Income Tax Act which are, of course, quite different. Because the amendments to the present Income Tax Act would replace most of that act, some publications have used the expression "old law" and "new law". The bill itself in the transitional provisions in part III refers to "former act" and "amended act" and also to "old law" and "new law".
Of course there cannot be "old law" and "new law" or a "former act" or "amended act" until Parliament has acted upon Bill C-259, but members may wish to use the term "old law" to refer to the Income Tax Act as it read before any of the amendments contained in Bill C-259, and the term "new law" to refer to the Income Tax Act as it would read after enactment of Bill C-259.
It will be noted that the portion of the bill in quotation marks starting with the heading, "Part I-Income Tax", and ending at line 31 on page 596, are all amendments to the present Income Tax Act. Thus, clause I of the bill starts on page 1 and continues to page 596. Clause 2 of the bill starts on page 596 and succeeding clauses are found in parts II, III and IV of the bill.
It has been suggested that I might file the proposed amendments which the government will make to the bill as we move through it. With your permission, Mr. Chairman, I would request that the committee rise, report progress and ask permission to sit later this day so that I may table these amendments.
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Russell Clayton Honey: Shall the Committee rise, report progress and request leave to sit again later this day?


Some hon. Members:: Agreed.
Progress reported.


Edgar John Benson: Mr. Speaker, with permission of the House I should like to table the proposed amendments to the income tax bill C-259 which is presently before the House and I would suggest that they be printed as an appendix to today's Hansard so that they may be readily available to all hon. members.


Mr. Deputy Speaker:: The Chair wishes to make a suggestion. The minister has suggested that the amendments appear as an appendix to Hansard. The Chair will make a suggestion .solely for the consideration of hon. members, particularly in view of the procedure of printing motions on the order paper at the report stage. Perhaps hon. members would consider whether it would not be easier if that procedure were followed, and then as each particular clause or paragraph was disposed of it could be dropped. This is merely a suggestion.


Marcel Joseph Aimé Lambert: Mr. Speaker, I would suggest that it is the wrong place as an appendix to Hansard, because they are not related to any particular document that has previously appeared in Hansard. If they should be amended, they would be much easier to handle perhaps if they were either on the notice page on the order paper, which is a document for circulation in this chamber, or as part of Votes and Proceedings as a matter of record.
I put this suggestion forward with the thought of getting these documents within a reasonable time tomorrow. I think that adding them to Hansard would place a considerable burden on the preparation and printing of tomorrow's Hansard. Mr. Speaker, I shall have something further to say once we get this question settled.


Stanley Howard Knowles: Mr. Speaker, I should like to agree with the suggestion that these amendments be printed as an appendix to today's Votes and Proceedings. Several suggestions have been made but I come down in favour of that one. I suggest that they should not be likened to report stage amendments, which are the amendments that appear on the notice paper that is attached to the order paper.
I also make the point that these amendments are numerous. If they are to appear on the notice paper and then be reprinted day after day, I suggest that this is a bit of waste in which we do not need to indulge. I suggest that they be made an appendix to today's Votes and Proceedings and that an extra supply of today's Votes and Proceedings be printed so that all hon. members will have copies to refer to when we need them.


Edgar John Benson: Mr. Speaker, that proposal is quite agreeable to me.


Marcel Joseph Aimé Lambert: Mr. Speaker, I wish to rise on a point of order at this time, consequent on the minister's tabling these amendments. Hon. members who would now be expected to participate in the discussion-I

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know that many will be basing their remarks on the amendments that have been put forward by the minister-have not had an opportunity of seeing those amendments. It is my suggestion that because of the complexity of the amendments, together with the complexity of a 700-page bill-and when the amendments are printed it will take two or three hours to fold them into the text of the bill-the government and members of the House would accomplish much more if the minister agreed that we adjourn further discussion at this stage until, say, Monday. This would give everyone concerned a proper opportunity of studying the effect of these amendments.
In the interval, after looking at the order paper, I suggest there is considerable legislation of a high priority which the government on a number of occasions has indicated that it wishes to have passed. We could profitably spend the balance of the week on those items. In this connection I am thinking of the item relating to the committee on statutory instruments, and Bill S-9, the Copyright Act. Without even looking at the order paper, I know there are many other items with which the House could occupy itself. I think the minister and all hon. members wish to have a tolerably intelligent discussion on the tax bill, and unless we know what these amendments are it would be impossible to carry on.
There is another point I would like to raise, Mr. Speaker. We want the assurance of the minister at this time that all of his amendments are in conformity with the resolution as amended by the curative motion passed by the House the other day-in other words, this would be appendix A as modified by the amendments contained in the errata sheet to Bill C-259-that any of the amendments now made do not go beyond the terms of the motion and of Bill C-259. As a classic example, if we are now proposing to change the level of exemptions for dependent children, I think we would have to have special procedures.
The minister will have to give that undertaking so that appropriate procedures will be followed. It might be necessary to introduce a new bill to cover this type of amendment. We need an assurance, with respect to any amendment of substance, that it falls within those terms. We do not want to go through the procedure of another curative motion.


Edgar John Benson: Mr. Speaker, in dealing with the question of House business, this is a matter for negotiation between House leaders and is not for me to decide. I think that hon. members opposite in the past 12 days of debate on the bill have indicated that they have a good deal to say, even without having seen the amendments, which are mainly of a technical nature.


Marcel Joseph Aimé Lambert: Except on co-ops.


Edgar John Benson: With respect to ruling upon the appropriateness of amendments, it is not my duty to do this but, rather, the duty of the Chair as I present the amendments one by one. I am not putting myself in the position of the Speaker. It is the Speaker's duty to decide whether an amendment falls within the context of the resolution, and I respectfully leave this question to him.


Gerald William Baldwin: Mr. Speaker, I apprehend what the minister has said. I understand his feeling about this matter,
(Mr. Lambert (Edmonton West).]
but we must look at it from the viewpoint of the members-and I like to think I speak for the members in this House, including those on the other side.


Some hon. Members:: Oh, oh!


Gerald William Baldwin: Mr. Speaker, I withdraw any intention I had to speak for members on the other side. First we had appendix A, then we had the bill and now we have a large list of amendments being filed. The minister indicated, when he opened his remarks on clause 1, that other amendments were being considered. We look away into the horizon and we see amendment after amendment after amendment coming forward.


Edgar John Benson: Have you got any?


Gerald William Baldwin: We have lots of amendments. Our approach to the bill is based on what we know of it. It is a difficult enough bill for any ordinary Member of Parliament to consider, to say nothing of the poor, harassed taxpayer. Our approach to this matter must be conditioned by the final version of the bill. Some of us have struggled, sweated and slaved to try to familiarize ourselves, to at least a limited extent within our competence, with what the bill means. Now we are told it is going to be changed. The minister says they are technical changes. From my experience with the minister's department, technical changes may be exceedingly important changes.
Of course, the minister can force us to go ahead with the bill; the government calls the shot on House business. But the speeches that some of us would like to make on clause 1 will to an extent be conditioned by what appears in the small print of these amendments. I say that as kindly as I can to the minister. I realize his problem.
When we get to the end of this study the bill may be hardly recognizable when compared with its original form. But apart from that, there are a number of items on the order paper crying aloud for attention. Surely the minister would not concede too much in agreeing to a limited amount of time to study the amendments. We will work this out between the House leaders, I hope, and decide how long we should take to familiarize ourselves with the amendments and at the same time proceed with other legislative items which the government must have considered important otherwise it would not have placed them on the order paper.


Edgar John Benson: Mr. Speaker, the order of business has been called for today. We will proceed with the order of business. I know how able the honorable member is in dealing with the government House leader, and I assume he would immediately rise from his place and meet with the House leader if he felt so strongly about proceeding with other items.


Gerald William Baldwin: Mr. Speaker, why should I do that when the minister says we will proceed with the business as outlined?


Edgar John Benson: I said, for today.


Marcel Joseph Aimé Lambert: I must protest most vehemently to the minister.


Some hon. Members:: Oh, oh!
October 13, 1971


Marcel Joseph Aimé Lambert: Hon. members opposite are sitting under a blanket of ignorance. They have not opened up the bill to really study it. They have not looked at these amendments. The mere putting of the two together will take more than half a day for persons who are used to doing this type of thing, let alone for other hon. members. Hon. members opposite can sit and smirk all they want, but what I am interested in is an intelligent discussion of the bill. I am not making this suggestion merely out of a desire to postpone consideration of the bill; I just want to go ahead with an intelligent discussion of it.


Mr. Osier:: You have had ten days already.


Mr. Horner:: There goes the wheat germ kid.


Marcel Joseph Aimé Lambert: We know the superior member from Winnipeg South Centre (Mr. Osier)-when he opens his mouth he shows us the vacant space between his ears, that is all. In so far as this bill is concerned and the technical provisions therein, I say with all courtesy-I have suggested this to the minister already-that this is the wrong way to go about it. We hope some of the government members will participate in this debate and will not act like rubber stamps or baa'ing sheep with regard to it, because they have not been briefed more than anybody else. We know that the Committee on Finance, Trade and Economic Affairs is also considering familiarization programs in respect of the bill. I am making the suggestion in order to be helpful and not merely to be-


Mr. Blair:: I rise on a question of privilege, Mr. Speaker.


Mr. Deputy Speaker:: Order, please, the hon. member rises on a question of privilege.


Duncan Gordon Blair: Mr. Speaker, the hon. member for Edmonton West (Mr. Lambert) and myself are old friends. I am sure I misunderstood the purport of his remarks. I think it is offensive to the rules of the House for any hon. member to suggest, as he appeared to a minute ago, that members on this side of the House have any need to familiarize themselves-


An hon. Member:: He is right.


Duncan Gordon Blair: -with this bill and that we are not prepared to take an intelligent part in the debate.


Lincoln MacCauley Alexander: Where are your senior members?


Duncan Gordon Blair: I shall deal with the hon. member for Hamilton West (Mr. Alexander) at a later stage. All I have suggested, Mr. Speaker, is that many members of this House have a deep and abiding interest in the question of taxation in all its facets. I am sure the hon. member for Edmonton West, who is going to take a leading role in this debate, would not wish to get it off on the wrong tack by suggesting that he and his colleagues are the only ones who are interested and who have studied the bill.


Marcel Joseph Aimé Lambert: There are poles on the fence line behind you.


Mr. Deputy Speaker:: Order, please. The Chair has before it a point of order, and the hon. member who has
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just resumed his seat raised a question of privilege. I think the matter of preparedness for debate and willingness to debate is generally a matter of argument or opinion among hon. members on both sides of the House. Before the Chair recognizes other hon. members I think I should ask the House whether the Minister of Finance (Mr. Benson) has leave to table the amendments and that they be printed as an appendix to today's Votes and Proceedings. Is it agreed?


Some hon. Members:: Agreed.


Stanley Howard Knowles: Mr. Speaker, now that we have agreed to that, may I say a brief word on two other points that have been raised by the hon. member for Edmonton West (Mr. Lambert). First with respect to the question of what we do tomorrow, I think it might be best to have that matter referred to a meeting of the House leaders and it can be argued there. I expect there is no objection to spending the rest of today on a general discussion of clause 1.
With respect to the question raised by the hon. member for Edmonton West of whether the Minister of Finance (Mr. Benson) can give the assurance that all the amendments he has tabled today are within the terms of the curative motion that we passed a while ago, I suggest, with respect to my good friend who sits near me, that I would not be satisfied just for the minister to tell me that his amendments are all in order. That is for the House to decide either itself or through a decision of the Chair.
It is a good thing that the hon. member raised this point. I would not want it to be assumed that because the Minister of Finance is permitted to table these resolutions today, they are automatically in order. It may be a job for the Chair and the table to go over them-they will know this bill by heart, whether the rest of us do or not-or it may be a question of our having to examine those amendments which we feel are out of order, as we come to them. They may establish some interesting precedents. Indeed, if the minister is able to go beyond the terms of what we have already agreed to as constituted in the resolution, maybe some of us who are private members will be able to do the same thing.


Eldon Mattison Woolliams: I agree with the hon. member for Edmonton West (Mr. Lambert) Mr. Speaker. As I understand it, there are close to 100 amendments and some are very substantial. Debate will either be serious wherein we perform, as the hon. member for Grenville-Carleton (Mr. Blair) says, a deep and abiding role, or it will be a farce. This is not an ordinary group of amendments changing a few adverbs and prepositions: as I understand it, they are substantial amendments.
When it is just a question of printing, surely Your Honour has the power to order how it shall be done. I have not a copy of the amendments, though perhaps our spokesman has one. There is a copy on the other side of the chamber, but we do not have the amendments and I cannot see how we can proceed with this debate without them. If we do, it will become a farce.
Surely we can go on to some other business today. Surely the Minister of Finance (Mr. Benson) can be reasonable. I think that with a little consideration he and his parliamentary secretary could bring on other business.

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The House leaders could then meet and solve the problem, rather than getting into a procedural argument now. In my time in the House I have never seen anything like this, 100 amendments being proposed to a bill of 707 pages and the House asked to take an intelligent view of them this afternoon. It would turn this whole debate into a complete farce. If that is the kind of debate the Minister of Finance is entertaining, members on this side have a different view.


Edgar John Benson: It might be difficult for the hon. member to take an intelligent view in any circumstances, Mr. Speaker. We have tabled these amendments at the request of the opposition, rather than introducing them one amendment at a time as we proceed through the bill. In order to facilitate matters, we have introduced them all at once. There was no compulsion to do this; we have done it in order to be co-operative, and now we are hearing complaints.


Robert Lorne Stanfield: Mr. Speaker, I do not rise to discuss the respective intelligence of the hon. member for Calgary North (Mr. Woolliams) and the Minister of Finance (Mr. Benson), though I would be happy to do so at another time. However, I do not think this is the place to do it, and I hardly think it is the place for the Minister of Finance to do it either. He says he is doing this as a favour. Mr. Speaker, he has introduced a great number of amendments-


Marcel Joseph Aimé Lambert: Ninety-five.


Robert Lorne Stanfield: -to a very complex bill, amendments which as far as we know have a significant bearing on the bill. Why does he insist on being-excuse the word-so bull-headed in proceeding with the matter this afternoon rather than giving members of the House an opportunity to examine the amendments he has in mind? We should have an opportunity to see if the amendments change the bill significantly, to see to what extent they are technical, as he says they are, and to what extent they are substantial, as I expect a number of them will turn out to be. If the minister wants to proceed, he has his troops on that side of the House and he can go ahead-if that is the way he wants to pass tax legislation in this country, Mr. Speaker.


An hon. Member:: Arrogant.


Mr. Drury:: Mr. Speaker, I do not think we need upset ourselves too much. Obviously, for the balance of today everyone is prepared to deal with the tax bill and it would be inefficient and unsatisfactory at this juncture to switch to another item. It is my understanding that the first 17 pages of the bill are not affected by the amendments. If the traditional practice had been observed, of introducing amendments when the clause to be amended is reached, we would have proceeded today with the first 17 pages before any amendment was called. I suggest that perhaps it would be useful if we were to proceed at least through the first 17 pages before putting the amendments, and thus not waste our time.


Mr. Deputy Speaker:: Order, please. With reference to the suggestion of the President of the Treasury Board

(Mr. Drury), hon. members may recall that there was general agreement earlier that there would be what was described as a first round of debate with the House in committee of the whole. Such a suggestion was made by the hon. member for Winnipeg North Centre (Mr. Knowles) and I think it was generally agreed to by the Minister of Finance (Mr. Benson) and by the hon. member for Edmonton West (Mr. Lambert); then possibly for the remainder of the day a general discussion could proceed and in the interval the House leaders could meet and take up the question raised by hon. members. Is it the wish of hon. members that we proceed on that basis?


Some hon. Members:: Agreed.


Gerald William Baldwin: On division.
The House resumed consideration in committee of Bill C-259, to amend the Income Tax Act and to make certain provisions and alterations in the statute law related to or consequential upon the amendments to that act-Mr. Benson-Mr. Honey in the chair.


Mr. Nesbitt:: Mr. Chairman, as the minister himself said a few moments ago, the whole of this tax bill is very complex and some of it is vague. The minister's remarks have been substantiated by tax lawyers and tax experts from one end of the country to the other. Most of these gentlemen who are learned in the subject have not yet found the answers to all the cross-references in the bill. One of the effects of this has been the continuation of uncertainty in the business community, an uncertainty which has led to lack of business expansion. Everybody is marking time because everybody wants to find out what some of the clauses of the bill mean. That may be made evident during the discussions at our committee stage. Until people find out what certain clauses mean, there will be a standstill in business expansion.
This afternoon the minister brought in 95 amendments and suggested that most of them are very technical. Perhaps they are. But he said that some of them are substantive, particularly those dealing with co-operatives and credit unions. Since there are more credit unions, per capita, in my constituency than in any other constituency in Canada, I, for one, no doubt along with many other hon. members on all sides of the House, am keenly interested in what will be the effects of such amendments.
I want to make a substantial part of my remarks this afternoon about credit unions and the originally proposed tax changes concerning credit unions. I am glad the minister has decided to make some changes for the better and I am sure that hon. members on all sides of the House will agree with me. The minister has come under quite a bit of pressure in this regard and he may have guessed that he would come under much more pressure in this House if he did not make changes with respect to the taxing of credit unions. However, we are still very much in the dark. I do not have a copy of the amendments and none of my colleagues, except the financial spokesman of our party, has a copy of them.
Although I carefully listened to the minister, and although the proposed changes may be helpful, I submit that before we can make really appropriate remarks about the changes they will have to be examined carefully by senior, experienced officials of the credit union move-
October 13, 1971

ment across Canada. On the basis of a few moments hearsay it is pretty difficult for anybody, even for some backbenchers of the government party, to discuss these matters intelligently.
There are a number of items, of course, which we should like to discuss in detail. Perhaps I could deal with some of them briefly in passing. I refer to such matters as the increased tax rates on small businesses, which the minister mentioned previously and the proposed capital cost allowance which will affect the housing industry in Canada and agriculture because of the basic herd system changes. Perhaps some of the amendments deal with these matters. They are important, Mr. Chairman. However, since we will have an opportunity, I suppose, to speak again, because we are in committee of the whole, perhaps some of the matters which we should like to speak on this afternoon could be left until the appropriate clauses are discussed.
I repeat that I am glad to see that the minister has voluntarily made changes for the better with respect to the taxation of credit unions. I know that a great many of my colleagues thought-perhaps not all-that the original proposals were unfair. Myself and a good many members on all sides of the House were entirely opposed to the original changes regarding the tax on credit unions. They were inequitable and crude and struck a death blow at an institution that has done much to help ordinary people help themselves. As most hon. members no doubt know, most of the work done by credit union members is voluntary. The credit unions have taken many innocent victims out of the hands of the loan sharks. They have a great place in Canadian society and I am glad the minister has to some degree recognized this fact. We shall better understand the amendments after we have had a chance to study the newly proposed tax changes with respect to credit unions.
Notwithstanding any technical or substantive changes the minister may have made in this bill, the legislation as proposed still ignores one thing-the principle of growth as it relates to the budget. Of course, a budget can do a number of things. It can promote equity in our society. That, I understand, is what the minister's budget purports to do. This is very important. In the main, proposals such as exempting people in the lower income brackets from income tax are very commendable. We all agree with them. Nevertheless, budgets are supposed to do other things as well as making our society more equitable. They are supposed to raise money. These provisions will certainly raise a great deal more money. Nobody knows quite how much more. Some people estimate that the government will raise about $100 million more, others that it will raise between $500 million and $600 million more. We are not told what this money is for. Perhaps it is for more staff for the Prime Minister or for the ministry-who knows? In any event, we need an explanation as to where this money will go. Some people think this extra money will be spent in different regions of our country. We shall have to wait and see.
A budget is also supposed to promote growth in the economy. Some people put it much more simply; they say that instead of dividing one small melon into smaller and smaller pieces for everybody, it might be better to make the melon grow so that everybody can have a little more.
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That aspect of the budget, namely, the incentive for growth in the economy, in business, has been almost completely ignored. Only the equity principle seems to prevail.
In this regard it is clear that the London School of Economics and its patron saint, the late Lord Keynes, apparently have had a tremendous influence on our Department of Finance. I studied economics at two institutions during the 1930s and know that the "in" thing was to accept the Keynesian view that the equity principle was of overriding virtue. That may have been true of society in England in the 1930s because growth in that economy was not the paramount thing. The U.K. economy at that time was stagnant and any change in it would have been a change for the better. Unfortunately, some people who have been trained in a certain school of economics accept the principles of that school as dogma, no matter what changes may occur as to time and place. At present the gross national product of Canada is lagging far behind that of other industrialized countries. At the same time, our country has enormous resources and great room for expansion.
Canada should be wanting an expansionist economy. Instead of that, we are not treated to anything but the principles of equity. In other words, we are keeping the small melon and dividing it into smaller and smaller pieces, instead of making the melon grow bigger or having two or three melons. There is nothing like that in the budget. If the government were wise it would ask some of its financial advisers to shake themselves out of the principles of equity. You cannot ignore something that is absolutely essential. The government should tell them to take off Lord Keynes' mantle and the mantle of the London School of Economics generally and do a little rethinking. If they cannot do that, the government had better get rid of them.
I cannot help making a passing comment with regard to the policies apparently promoted by colleagues to my left, the members of the New Democratic Party. The white paper proposals eventually came out after modifications which are involved in this tax bill. As I understand it, the present financial spokesman for that group stated that the only thing wrong was that they did not go far enough.


David Orlikow: Hear, hear!


Wallace Bickford (Wally) Nesbitt: I am glad to hear one of the members of that party say, "Hear, hear". I thought it may have been the financial critic. It was very much like the remarks made the other day by the Ontario leader of the New Democratic Party. If he had his way the pulp and paper mills would be taxed right out of business. How that would help unemployment, I do not know.


David Orlikow: When did he say that?


Wallace Bickford (Wally) Nesbitt: I heard that the other morning on a paid radio advertisement for the New Democratic Party. He said his party would greatly increase taxes on corporations, the pulp and paper industry in particular. If any industry in Canada is on the ropes today, it is that one. There are a great many reasons, some of which cannot be controlled. That is hardly a sensible thing. If you kill the goose that lays the golden egg, or plow the field in which

October 13, 1971
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the melons are growing, you will not have much of an economy.
Business incentives are particularly important because of the continuous rise in unemployment and the inflation we have suffered over the last few years. It is even more important today than a month ago because of the United States surtax on the importation of many of our products. Because of this surtax the present tax bill, even with the amendments, is outdated and unrealistic. It is almost like reading a document of the Medes and Persians.
The minister would be very wise to withdraw this bill. He should have his experts go over it in light of the American actions. This government does not seem to have much affect on the United States and apparently has not been very successful in getting the surtax removed. The government should withdraw the bill until it knows what they are doing or what arrangements they can make with the United States, or deal with parts of it that are not directly affected by the surtax. In any event, it becomes more and more important every day to do something to stimulate our economy. Otherwise more and more plants will close every day. Not only that, but more incentives are needed to encourage Canadians to invest in Canadian equity securities.
The problem of foreign investment in Canada is a very serious one. Many people talk about it and are against it, usually for the wrong reasons. But there are some pretty cogent reasons for Canadians to be worried about foreign investment in this country. In these proposals the minister has at least done one good thing. He has no longer made it more favourable for American investors to purchase Canadian concerns. That anomaly has been removed in the minister's proposals. Despite this very favourable change, in most cases it is still better for Canadians and Canadian corporations to invest in safe Canadian securities, namely, bonds or in United States equity stocks. You can get a higher rate of return because of the growth aspect of American securities.
If there ever was a time in the history of our country when something should be done to promote Canadian ownership and participation in our equity securities, it is now. Everyone is concerned about the rate of foreign investment, not only by the United States but by other countries.
We have these tax proposals and the new amendments. There does not seem to be anything to radically improve the situation. There is one improvement which I have noted. I will not go into the details of the clause, but it is still more advantageous for the average Canadian and many Canadian companies to invest in United States securities because they will get a better return from them as a result of the present tax proposals.
There is another matter to which I wish to refer. Economic problems in Canada have been aggravated by the United States surtax. There is no question about that. Nevertheless, the government-the Prime Minister in particular-are now trying to blame the United States for all our problems. This is nonsense. The problems are economic. They have been steadily growing in Canada over the past two or three years. Not all the blame can be placed on the government; there are other outside sources, such as world conditions and the like. However,

many of the problems we have today, such as inflation and high unemployment, can be laid directly on the doorstep of the government and nobody else.
It is true that the government receives its economic advice from the Department of Finance and elsewhere. It goes into some of the Keynesian philosophy on the business cycle. Things are different now. The Minister of Finance and the Prime Minister are the captains of the ship. If things go wrong, they must accept the blame. Suddenly trying to put the blame on the United States for everything that has happened is utter nonsense.
One of the reasons we have had trouble with the United States is the attitude of this government. This has been apparent on numerous occasions without any rhyme, reason or cause. There may be something very deep down in the mind of the Prime Minister-who knows? However, it seems that the Prime Minister in particular, and the cabinet in general have gone out of their way to aggravate, annoy and antagonize the United States, our principal ally and trading partner. I will give some examples of this. During his recent visit to the Soviet Union, the Prime Minister blithely stated that we wanted to get closer to the Soviet Union because of the military threat to Canada from the United States. The daily anti-American barrage from the Canadian Broadcasting Corporation reaches large parts of the United States. In the United States that corporation is generally regarded as being government controlled. We know that nothing like that ever happens, but that is what takes place.
A number of cabinet ministers are either warning and welcoming the United States. There is the Minister of Energy, Mines and Resources, who I am sorry is not here today. I hope he is recovering from his illness. The Secretary of State for External Affairs is also leading the American attack by making offensive, tough speeches in the United States. The Minister of Indian Affairs and Northern Development and the Minister of Industry, Trade and Commerce welcome them. It is no small wonder that people in the United States wonder where in the h- we are going. Two ministers say one thing and two apparently equally prominent ministers say the opposite.
Toronto is the one place in Canada that probably does not need much foreign capital because it already has plenty of it. The former liberal finance minister, Walter Gordon, a group of Toronto University professors and others who manage to get a lot of publicity, talk about United States investment in Canada. In some cases they have pretty good arguments, but many are for the wrong reasons.
Then there is our defence policy. Although this is not economic, it affects the American attitude. There are also our cuts in NATO expenditures and our defence attitude toward the United States. Then there is our China policy at the United Nations. As I recall it, in the course of the last election the Secretary of State for External Affairs said it would certainly achieve nothing to have Taiwan expelled from the United Nations. But the tune has changed now. We used to hear about British or American domination of our foreign policy. Nowadays it is dominated by Red China, because apparently'nothing we do goes without their say-so. Unless we agree with all China's conditions we shall not get their approval. I think it would
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be a very good thing to recognize Red China at the United Nations, but I do not see what is accomplished by excluding Taiwan.


An hon. Member:: A bogus country.


Wallace Bickford (Wally) Nesbitt: Somebody said it is a bogus country. It is not the government of Mainland China, but certainly it is a de facto country. Speaking about bogus nations at the United Nations, what about the Ukrainian Soviet Socialist Republic, or Byelorussia? One of the delegates at the United Nations told me that their foreign office consisted of one room in a grocery store in Minsk. Where we see evidence of this type of double-standard of morality at the United Nations, some of the pious platitudes we hear from certain quarters of this House and elsewhere become a little disgusting. I suppose that if Taiwan, by some miracle, became a Communist country, we should not hear that sort of thing; there would be impassioned claims that it was entitled to a seat.


Russell Clayton Honey: Order. The Chair has so far been able to follow the hon. member, but perhaps the thread of relevancy is a little thin. I would ask the hon. member to turn to the bill before us.


Wallace Bickford (Wally) Nesbitt: I thank Your Honour for bringing the matter to my attention. I was merely referring to the government's China policy at the United Nations and suggesting that perhaps it was not pleasing the United States administration. The government has apparently gone out of its way to antagonize the United States. The matters at issue are not of great importance to this country. People on the government side are pulling feathers out of the eagle's tail for the hell of it, so to speak, and the result is that now, when some Americans feel that tough economic rules have become necessary, they do not listen with a very open ear to objections from this country, as they might have done in other circumstances.
A week or two ago a number of Congressmen visited this country. One of them was reported to have said, "You people don't want to co-operate with us any more; you want to go your own way. Why, then, are you running around asking for special favours from us?" I do not think that is the attitude they should take, but one cannot blame many Americans for feeling this way, bearing in mind all the occasions upon which this government has gone out of its way to antagonize the United States.
Whether we like it or not, we are tied to the Americans and we must make an attempt to bring about a general reconciliation with that country before we can hope to get at least the surtax removed. For a long time we have been taking pot-shots at the United States. Now they are starting to do the same thing to us. It is like the situation in Europe before the First World War-countries drifting aimlessly into a major war. There is no question here of a military war, but we are drifting toward an economic war which is unthinkable, and we must do something about it.


Mr. Saltsman:: Mr. Chairman, like most members of this House I like to think of myself as a humanitarian. When I look up into the press gallery and see that great array with arms on chin, I wonder how much attention is being paid to this debate, to the amendments which came in
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today and to the fact that in so much of this discussion we have been concerned about details which by and large do not reflect the aspirations of the ordinary people of Canada and do not really deal with their interests in any direct way.
The other day I was talking to one of my constituents. He was asking me about the income tax changes. I said there were over 700 pages in the bill. His reaction was, "All for little me? Do you mean I am so terribly complicated that my affairs, the money I make, the less than $6,000 I earn, the few deductions I am allowed for my children, require over 700 pages of legislation?" The answer, of course, is obvious. Scarcely anything in this legislation deals with the affairs of the ordinary people of this country. Virtually the entire legislation is taken up with attempts to deal with the shenanigans of business and the way in which business affairs are arranged, or with the affairs of the wealthy and the management of their estates.
Rather than attempt to bring in a simpler taxation system which would deal in an equitable way with the affairs of all our taxpayers, we have chosen to accept the continuance of an inequitable system, codifying it again and going through complex gyrations in order to accommodate particular interests and, possibly, to make its impact somewhat less onerous.
This is the situation with which we are dealing. To realize this fact one has only to consider the evidence given before the committee which was set up to consider this subject. Where were the representatives of the multitudes of Canadians, appearing to state their case in favour of tax reform? Mr. Chairman, virtually the entire proceedings were taken up by the special pleadings of representatives of those in Canada who have always had it made. Representatives of every major industry, every major interest, appeared, with few exceptions, to put forward their case. They were perfectly entitled to do so. I am not saying they should not have appeared or that they should not have been heard. But their presence was indicative of the tax system as it exists. If we were concerned with the affairs of the ordinary person, our taxation system could be greatly simplified-the bill could run to 50 pages and still be more than adequate.
But this is not the point of view we have adopted. We are continuing to take the attitude that business knows best and that the role of government is to accommodate itself to the business system, making sure that none of the structures which have been built up in the business world are altered in any significant way. I believe this approach is wrong. Not that I think business is wrong: I believe there is a legitimate place for business, as there is for many of the things which are done in our society. But the majority of the people in a democracy-and, after all, in a democracy they are supposed to get some consideration- are being ignored. The debate in this House is irrelevant for that reason.
The kind of subjects we shall be talking about, the type of housekeeping amendments which have been introduced, probably do not affect more than 1 per cent of the population. Perhaps with the exception of the changes in the situation of the credit unions, nothing of any significance is taking place as far as the basic preoccupations of the people are concerned. It is not technical matters which

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are important in this context, but ideas requiring political judgment, value judgments, in an attempt to ensure that as far as possible our tax system is based on equity. I hope that as this debate proceeds we can focus attention on the detail which emerges from our clause by clause study in such a way as to show that the present tax system is grossly unfair.
When I look at this bill I think of the way members of this House feel and the feelings of the people I represent. I am sure this reflects the feelings of the majority of the people in Canada. The wage and salary earners of this country look at the proposed tax system represented by Bill C-259 with a view of what it will do for them. It will do precious little for them. It does include a long overdue increase in exemptions, but this does little more than put us back into the position of 12 or 14 years ago. It does not solve some of the problems that exist.
We in this party have pointed out on many occasions that our wage and salary earners are being grossly discriminated against. An individual who derives his income in the form of dividends or returns on capital investment is in a preferred position. The wage earner has to pay tax on his entire income. The wage earner is not only discriminated against because he must pay tax on his entire income; he is discriminated against to the extent that someone else does not pay his full share. These individuals have to pay a higher share because others are required to pay a lower share. This system is destroying the economy of our country.
We are in a critical period in respect of trade and the discriminatory practices recently imposed by the United States. We do not blame the United States for what is essentially a problem in respect of our own economy. If we want to see the problem clearly we have only to look at our old tax system and the continuation of its provisions in Bill C-259. Throughout the history of Canada our tax system has been devised to stimulate the export of raw materials. It has been designed to provide concessions in the way of depletion allowances and tax holidays for new mines. The mining industry pays only a fraction of the tax it should pay and only a fraction of what is being paid by the manufacturing industries in this country. As a result we are inducing people to go into this industry to a greater extent than the normal market forces would dictate, certainly to a greater extent than any sensible or national policy would indicate.
We are faced with a situation in which we are exporting raw materials and importing manufactured goods. When we attempt to export manufactured goods, our greatest exporting customer, representing more than 70 per cent of our export market, says it does not want them and takes discriminatory measures. That market will accept our raw materials and is very glad to do so. It is also happy that we continue a tax system which encourages the export of raw materials. The effect of this policy is to provide an enormous bonus to U.S. residents and the U.S. government. Canada is a very good source of cheap raw materials and profits for foreign investment.
We might think this was not the situation a few years ago, but that is not the case. One might think that among the amendments suggested by the government we would

find one to remove the exemptions and the depletion allowances granted resource industries. Such an amendment would have indicated clearly to everyone that Canada no longer intends to continue being a source of raw materials for another country.
In the report of the Science Council of Canada it is stated in startling terms that Canada cannot be both things, a manufacturing country and a developer of raw materials. We must make a choice. This government in its tax bill has made a choice. We are to be an exporter of raw materials. This is the reason we got into the present mess. I am surprised there is not an amendment to wipe out the concessions to resource industries. We in this party intend to take a very strong position in urging the government to realize that this nation is being destroyed by its tax policies. The government should realize that the economy of this country is being frustrated by the continuation of special privileges to the mining and oil industries.
My remarks have been reasonably brief and I conclude on this point. As has been pointed out by many members of this House, the bill before us seems to be more concerned with a minority of people in this country who are engaged in business. We are taking part in an elaborate charade to satisfy this small, vested interest which has been receiving concessions over the years. It is time we paid more attention to the problems of the vast majority of Canadians.


René Matte: Mr. Chairman, I want to speak now on behalf of all my fellow citizens who are just as puzzled as we are by the lengthy bill we are to study clause by clause today.
Mr. Chairman, I feel there is a fundamental principle we should stop to consider. It is sometimes advisable and often even urgent to make changes, but this should not be done merely for the sake of change. I fail to see why, in the prevailing economic chaos, facing the tremendous problems that come up in the fiscal field, there should be such irrational haste to bring about massive changes at one fell swoop.
If the study has really been made in depth before bringing in these changes, we certainly would not be witnessing this situation where the government itself does not understand the techniques and changes involved in its own bill. Suffice it to consider the great number of amendments that the minister himself has just tabled to prove this point as well as the large number of errors that have to be corrected.
It is obvious, Mr. Chairman, that the government hastened to make these changes as a result of the economic chaos that we are experiencing. It seems that the government has taken this action because of the need for it, because elections are coming, in order to throw something in the eyes of the people to fascinate them. But, since the odd provisions of this bill that could really help some of our fellow citizens are submerged under all kinds of other items which will bring in with one hand what has been given out by the other, therefore, we must admit that the minister is throwing dust in our eyes.
The whole solution to Canadian tax problems proposed in Bill C-259 is inappropriate. That is why several of the
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previous speakers pointed it out. This hew omnibus bill of an economic nature is a mistake, as was the first one, in the sense that members cannot vote on the whole contents of the bill. There are in it good provisions from which we would like the population to benefit, but it also contains provisions unworthy of any consideration which revolt many Canadians.
Some provisions aim at destroying economic organizations. None the less, we shall be asked to vote on the whole thing. If we vote for it, several sectors of society will blame us for having accepted, for instance, that savings and mutual funds be taxed as credit unions, and if we vote against it, those who would benefit from a more appropriate tax exemption will say that we voted against them.
In my view, Mr. Chairman, that is what I call an unfair tactic, to compel us to remain puzzled in the presence of an abundance of tax amendments that are submitted in an off-hand manner.
So, Mr. Chairman, I believe some order should have prevailed. One or more bills should have been introduced immediately to deal with the most urgent problems. The measures of benefit to the low-income groups, the millions of Canadians whose income is not sufficient to give them the minimum of comfort to which they should normally be entitled, especially in a rich country like Canada, should have been introduced first of all. Consequently, this economic omnibus bill could have been passed in sections. In this way, hon. members could have followed the dictates of their conscience and there could have been some control over each one of the changes proposed in this bill.
If we always let ourselves get mired in such legislative proposals, Mr. Chairman, we are accepting a second principle which is false, that Parliament can always try later to correct the errors we are making today. For my part, I believe that we should today take the time to pass legislation of which the scope is known, not only for the time being, but at least for a reasonable period of time.
And yet, I am sure that such a bill, with the clauses that it contains, will pretty soon compel this Parliament to come back to these same subjects. All the more because what is needed is not only small changes about various tax items, but a genuine comprehensive reform of the whole economic system under which we struggle along.
So, I think that instead of wasting time burdening us with this bill, the government should have taken that time to consider seriously the economic and fiscal proposals which would truly bring about a far reaching, if not final, solution.
Mr. Chairman, the members of the Social Credit party are always ready to assist the government in its investigations and studies, in order to find effective remedies to apply to our entire tax system. This is why we are sorry to see Parliament waste valuable time trying to make some changes, while we would have every opportunity to deal with real causes and take proper remedial steps.
All manufacturers, businessmen and those more especially interested in our economic development, will, as a result of the coming into effect of this new legislation, also
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waste time, because to complete their income tax returns, they will need a lot of skill in their operations, daily, monthly or yearly. They will constantly wonder to what extent they are working for themselves or for their fellow citizens, knowing that under such a law they are forced to work first and foremost for the government.
Mr. Chairman, that is an extraordinary weakness: it will undermine the interest of our industrialists, their zest and dynamism, so that before long the problem we had tried to solve will have grown worse once again and we will have to reform the tax system.
That is why, Mr. Chairman, I wished to speak early in the debate, and express what the people in my riding and the rest of Quebec, as well as Canada as a whole, think of the bill before the House.


Mr. Marcel Roy (Laval):: Mr. Chairman, a point of order.
The hon. member was saying a moment ago that he represented the opinion of Quebec. I think that I have a bit of advice for him. I strongly urge him to limit himself to his own point of view, because in the course of his remarks, which I intently followed, he has completely overlooked to mention that 750,000 low-income taxpayers will be exempt from taxation, and that more than 1,250,000 will benefit from tax deductions under the new tax bill.


René Matte: Mr. Chairman, I believe that the hon. member has been very attentive, but he must have had a lapse at one point or another because I did say that the bill contained some very good provisions for the people and that I would then feel inclined to vote in favour of such reforms. Unfortunately, it also contains provisions which run counter to the interests of Canada and against which I have to vote. This is precisely why I showed that this bill would have been better divided into several bills, Then I would have been able to shout "yes" to the things I just mentioned to my hon. colleague.


Mr. Murta:: Mr. Chairman, I would like to briefly touch upon five aspects of the tax legislation which I think are pertinent to my riding as well as to a great many ridings in western Canada. These areas are the estate and gift taxes which have an effect on the provinces, the farmers as they will be treated under the tax legislation, the cooperatives and the tax reforms with respect to them, which have been touched upon by a good many speakers, and the credit unions as the tax legislation may affect them. I am happy that the amendments were tabled today. Perhaps some of the topics about which I will be talking will have been dealt with in the amendments. In any event, I feel that my views and criticisms of this legislation are justified.
In my view and that of most interested Canadians, the tax bill is a wholly incomplete and inadequate reform of our tax system. The process has cost millions of dollars directly, and far more in terms of the uncertainty and hesitancy in the economy at this time. For what it has cost, this tax bill with its amendments, with which we will be dealing later this week or the first part of next week, has been a very poor buy. I believe that the tax legislation

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as brought out fails completely to reform federal tax activities. I think it fails to reform tax sharing and integration with the provinces and it fails to provide greater equity for middle income taxpayers. It continues to tax the poor and it fails to apply a tax credit rather than exemption systems to assist more effectively low income Canadians. It fails to simplify the language and draftsmanship of taxation. No attempt is made to reform tax collection under this legislation.
In dealing with the estate and gift tax as I see it, the decision of the federal government to get out of estate and gift taxes entirely as of December 31, 1971, has been strongly criticized as irresponsible and unfair to the provinces, a danger to orderly taxing Canada and another act in favour of the privileged at the expense of middle income Canadians.


Mr. Mahoney:: That is the position of the government of Manitoba. Is it that of the Conservatives also?


Jack Burnett Murta: The proposal means an immediate loss of provincial revenues and further tax competition between the provinces. Last year the federal government paid out $60.4 million as their share of the federal estate tax. Seven of the provinces receive from Ottawa 75 per cent of this tax when collected. Ontario, Quebec and British Columbia have their own succession duties. The removal of this source of revenue for seven provinces will be detrimental to all provinces, and all the provinces are complaining.
The former Premier of Ontario, Mr. John Robarts, has said that the federal decision to eliminate death taxes puts the provinces in the difficult position of having to maintain a tax on wealth until the capital gains tax system matures. He said:
Far from reform, this approach simply encourages and perhaps makes inevitable internal balkanization and tax competition between competing tax jurisdictions-surely just what any program of true reform should be trying to avoid.
At the finance ministers' conference in June and at the premiers' conference in July, the provinces appealed to the federal government to amend this proposal to remove estate and gift taxes on December 31, 1971. So far, the Minister of Finance has refused. I say "so far" because I have not had a chance to see the amendments. The effect on the provinces is that the validity and success of this tax reform bill is very much compromised by the lack of comprehension and co-operation of governments toward the tax problems and functions of the provinces. The government has, I believe, failed to introduce a tax reform measure that integrates the taxing functions and resources of the three levels of government. Also, it has reduced rather than expanded the taxing base of the provinces. Thirdly, it has put in doubt provincial revenues for the next five years.
The Canadian Manufacturers Association expressed its alarm about the lack of provincial co-ordination involved in the tax act in its August 26, 1971, brief as follows:
The effect of the proposed corporate and personal income tax rates depends greatly on the action which the provinces may take. With respect to personal income taxes, the impact on the individual which has been calculated and shown in the tables in the summary of 1971 tax reform legislation depends on the provinces imposing a tax of 30 per cent of federal tax. The proposed reduction in corporation income tax rates depends on the provinces not

changing their corporation income tax rates. The intended 33 1/3 per cent tax credit with respect to dividends from taxable Canadian corporations will only be given full effect if the provinces adopt a corresponding credit.
Some of the provinces have expressed concern about the proposed elimination of federal estate and gift taxes on January 1, 1972. They have indicated that this proposal will not only create inequities between the taxation of existing wealth accumulations and future wealth accumulations but will thrust the burden of readjustment, if provincial revenue loss is to be avoided, entirely onto the provinces.
All these factors require co-ordination of federal and provincial tax policies and make an assessment of the economic impact of the proposed legislation difficult. At the same time, we are concerned that the intention of the Ontario government to give tax credits for provincial sales tax and municipal taxes and not to provide the 15 per cent additional capital cost allowance introduced by the federal government in its December, 1970, budget, are indicative of a trend toward separate provincial tax administrations and policies. Such a trend is, we think, most undesirable and we urge the federal government to co-ordinate tax policy and administration with the provinces.
An area I would like to deal with at some length is the way the taxation proposals will affect farmers and agricultural producers not only of western Canada but of all Canada. Farmers and fishermen will continue to calculate income on a cash basis and retain special averaging provisions. The basic herd and straight line depreciation provisions have been phased out. Livestock farmers will be able to establish basic herds as of December 31, 1971, but no additions may be made to the basic herds after that date. When livestock is sold after December 31, the farmer may consider the sale as being out of the basic herd or the other herd, but the legislation requires that the sale reduces the basic herd when the total livestock on hand is less than the remaining total of the basic herd itself.
Straight line depreciation will continue to be available for assets acquired before the new system starts. Depreciation will be calculated on a diminishing balance system for assets acquired after December 31, 1971. Assets depreciated on a straight line basis subsequently sold for more than the original cost on valuation day will be considered to be a capital gain.
What this means in common terminology is that if a farmer traded in a John Deer tractor that was fully depreciated, on a new model, under today's system if his tractor were valued by the dealer as being worth $7,000 trade-in, this amount would be considered as income and subject to capital gains tax. The farmer would then pay his going rate of income tax of 50 per cent on $7,000, which in this case, depending on the farmer's income, would amount to at least another $700 tax.
Capital gains tax will also affect the land value of farms. In the budget the minister trades a capital gains tax for the estate tax. At present any farm land valued at less than $100,000 is free of estate tax. Under a capital gains tax, if the land increases in value from valuation day onward a farmer pays his going rate of income tax of 50 per cent on the increased value. He then has the privilege of averaging out his income over five years. However, this will still affect many farmers throughout Canada, particularly farmers in Saskatchewan and Alberta where 75 per cent of the estate tax was paid back to the state by those provinces. It will also affect many small farm hold-
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ings in the Maritime provinces, and possibly also in Quebec.
Today, if the farmer sees a chance to sell his farm at a profit, as long as he can convince the tax department that he is not in the real estate business any capital gain he may receive is completely tax free. Throughout a farmer's lifetime he may change his farm three or four times, preferably at a profit. Now, with the price of land going up the way it has over the past 20 years, on every one of those occasions he will have to pay a capital gains tax.
These are some of the salient facts which convince me that the budget does little for the agricultural industry. It is also particularly detrimental to co-operatives and hobby farmers and is of no real benefit under the change in the partnership, capital cost allowances for many of the father and son and brother combinations within the agricultural industry. In my opinion, the most detrimental and devastating feature of the budget with respect to the agricultural industry is the capital gains tax. I believe that for western Canada it is a discriminatory tax and I say that we from western Canada should in no way allow this kind of tax to be placed on our holdings.
Another area I would like to touch on briefly is that of co-operatives and how they are affected by this tax reform legislation. I understand this matter has been covered by a good many hon. members but I would like to touch on it briefly. From letters received and interviews granted, we know that co-operatives are very disturbed by the provisions of clause 135 which retain the requirement that prior to the payment of any patronage refunds, income must be allocated to the capital of co-operatives on the basis of a fixed percentage of "capital employed by the taxpayer at the commencement of the taxation year." This has the effect of severely interfering with the freedom and ability of co-operatives to distribute their earnings as patronage refunds. This required allocation is based on the assumption that co-operatives must have corporate income, although in fact they may not have because the same is regarded as properly payable by the co-ops to their members as patronage refunds.
Co-operatives find the allocation of income to capital unreasonable and illogical and view the "capital employed" concept as a form of discriminatory treatment with no similar provision appearing in the proposed tax act affecting other methods of doing business. Co-operatives have pointed out that with the removal of the exemption from taxation of the income of a newly incorporated co-operative for the first three years of its operation, and with the proposed "capital employed" formula contained in clause 135, which has the effect of reducing patronage refunds, it would be most difficult for new co-operatives to be incorporated to service the needs of their members.
The amendments to the Income Tax Act as they affect credit unions are somewhat similar to those with respect to co-ops. They will be taxed in a manner similar to co-operatives in that a deduction will be allowed in computing income for payments made to members pursuant to "allocations in proportion to borrowing." To qualify for deductions these amounts must be paid in the year or within 12 months of the end of the year. The deduction of these payments may not reduce the corporation's taxable income below the amount by which 5 per cent of members' capital employed exceeds amounts paid by the cor-
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poration to its members in respect of the members' shares.
I believe the legislation should be amended so that distinctions can be made between big business co-operatives, which need little or no protection, and small credit unions which need, and often deserve, help or encouragement because they exist to fulfil a need not filled by private enterprise institutions.
This is a rather broad outline of the areas of particular interest to me as they pertain to a good many people not only in western Canada but across the country. I hope that among the 95 amendments which the minister tabled this afternoon there will be some that touch on the points I have raised and clarify them in the minds of many Canadians who are waiting to see exactly what will come out of this taxation legislation.


Mr. Burton:: Mr. Chairman, at the outset of my remarks I should like to make particular reference to two areas of concern and interest to me, the question of taxation of co-operatives and of credit unions. I am in the very happy position of being able to commend the government on one score on the basis of the amendments tabled by the minister today. It would appear to me from first examination of the amendment to clause 137 of the bill that the representations by the credit unions have been taken into account in the proposals now presented by the minister. It appears that in fact it will be possible for a credit union to deduct interest or dividends paid on shares from its taxable income. If our interpretation of what is contained in the bill is correct, I am prepared to commend the government for making this change.
It also appears that the government has taken into account some of the concerns of credit unions about the method of computing allowable reserves. At this moment I am not in a position to comment on whether their representations have adequately been taken into account, but since there are changes in the amendments tabled this afternoon I have some hope that this is the case.
With respect to the taxation of co-operatives I am not in as happy a position, at first glance at least. It would appear that some concession has been made to the representations of the co-operative movement, that some allowance has been made in respect of the very real problems pointed out in the submissions made to the Minister of Finance and to members of all parties in this House.
From my first reading of the proposals presented this afternoon it would appear that co-operatives are to be given an alternative. They can either use the 5 per cent "capital employed" formula set out in Bill C-259 or they can use one-third of taxable income as determined on an ordinary corporation basis. It is very difficult to judge the matter at this time-


Patrick Morgan Mahoney: I rise on a point of order, Mr. Chairman.


The Deputy Chairman:: Order, please. The Parliamentary Secretary to the Minister of Finance is rising on a point of order.


Patrick Morgan Mahoney: Mr. Chairman, I think the hon. member would appreciate the information that it is not an alterna-

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tive; it is in fact that they will be taxed on the lesser of 5 per cent of capital employed or one-third of profits. It automatically operates in their favour; there is no election.


John Stratford Burton: I appreciate the point made by the parliamentary secretary, Mr. Chairman. Certainly a co-operative would take whichever option operated best for it. Two options are open and, of course, the amendment states that the taxable amount would be the lesser of those two options as spelled out. It would appear that one option provides for the 5 per cent of capital employed formula as contained in the original bill, and the other would be one-third of the amount of taxable income that might be determined in the ordinary way.
It is very difficult to pass judgment on this change and to see what impact or benefit it will have on co-operatives until detailed study has been given to it. I should like to make a few preliminary comments, however. First of all, I note that the government has left the "capital employed" concept in the bill. Thus it would appear that the government has some rationale for this concept. They feel it is a suitable basis for determining taxation of co-operative organizations. But I think it was pointed out many times during the debate on second reading, Mr. Chairman, that it was very difficult to determine the rationale.
What is the concept of "capital employed"? What sense does it make? It would appear that the government took no heed of the representations, because they have left the "capital employed" concept in the bill while providing another alternative to co-operatives. I think it was pointed out in some of the submissions by the co-operatives that there really is no suitable rationale that would justify the use of the "capital employed" concept, but it has been left in the bill. The 5 per cent figure also has been left in the bill. Hon. members know that up to the present the figure has been 3 per cent of capital employed to be used as a basis in determining taxable income.
I believe this has been in the Income Tax Act since 1946 when certain amendments were passed which affected co-operatives. The figure was changed from 3 per cent to 7 per cent in the white paper, but it was pointed out that this was disastrous for most co-operatives. It now appears that there has been a compromise and the figure in the bill, which remains in the amendment tabled this afternoon, is 5 per cent of capital employed.
Mr. Chairman, I fail to see what rationale there is in the 5 per cent figure. The only rationale that I can think of is that it is half way between 3 per cent and 7 per cent. If the government finds that it can justify that sort of compromise position and defend it, then of course that is what they will have to try to do. However, it does not make sense to me.
Similarly, I suggest that we must look at the long-run implications of the option which has been provided to co-operatives, namely, that one-third of the amount calculated as taxable income would be subject to taxation. It is difficult to determine the rationale for that one-third figure. I am not sure what it is and I am not sure that the minister dealt with it in his remarks this afternoon. If he did, then I did not understand. We are told there is to be a complex phasing-in rule as well, which we will have to study before passing judgment.
[Mr. Mahoney.J
I do not understand why the government could not accept the very simple proposition put forward by the co-operative movement. They suggested that patronage dividends as they applied to the dividend paid out by production co-operatives, which amounts to about 95 per cent of the total dividends paid out, should be taxable in the hands of the recipient at his marginal rate of tax. This means that a member of a co-operative will be taxed on the reward he obtains as a result of patronizing his own organization and making use of the services which he helped establish. Apparently this suggestion was rejected by the government, as were other suggestions which I think would have taken into account the objections raised regarding the tax position of co-operatives.
The parliamentary secretary will be aware that a withholding tax will be imposed on patronage dividends no matter whether the dividend was paid out in cash. So long as it is credited to the member of the co-operative, he will be subject to the withholding tax payment and can deal with it from there in his personal income tax return, as is the case at present with respect to other types of payments which are taxable in the hands of the recipient. For example, a lump sum payment to an individual where he receives a refund of pension contributions is subject to a withholding tax of 10 per cent and is subject to a special tax rate in the hands of the recipient. That 10 per cent is withheld at the time the money is paid out to the recipient.
There is also a proposal that co-operatives be taxed on their undistributed earnings, that is, the earnings which are retained by them, and also on earnings derived as a result of business with those who are not members of the co-operative. There is no question about such earnings being subject to taxation. It seems to me, Mr. Chairman, that this was a very reasonable set of proposals. On initial examination I am disappointed that the government did not see fit to accept those recommendations and adopt what I think was the sensible approach suggested by the co-operative movement.
There are other areas of concern regarding the bill. We shall deal with those when discussing the individual clauses. Of course, I am concerned about the impact that tax changes will have on agriculture and on farming, and we are particularly concerned about the way in which the taxation of capital gains will apply to farms. This, of course, is a complex subject. I do not propose to deal with it at present, except to note that farmers, as all hon. members no doubt are aware, are in a very special and unique position in terms of the type of operation they undertake, the economics of their position and the underlying realities which apply to their operations. These factors must be taken into account in any system in which capital gains are to be taxed.
There are other areas of concern as well. Some of them have been alluded to. I am referring to the proposed changes with regard to basic herds and to the depreciation of farm equipment and farm assets. We shall have to consider these in greater detail when we come to the appropriate clauses of the bill.
This afternoon as we move toward the clause by clause consideration of the bill I wish to make a few general comments. I note that as we are examining this bill in
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committee of the whole Canada faces an economic crisis. It seems to me that taxation policy cannot be divorced or separated from the over-all economic position and problem which Canada faces. There has been extensive debate in the House about developments which have taken place; they have affected Canada seriously. We are all aware that the annoucement made by President Nixon on August 15, as well as his second announcement made earlier this week regarding the new policy of the United States, shows that the United States is following a new road with respect to its economic policies. This will have very serious consequences and implications for Canada. Canada and the United States are close neighbours, geographically speaking, and we have also been very close in the economic sense. That situation has been brought about and intensified as a result of economic policies followed by the present government and governments in past years. They have allowed our economy to become integrated and tied in with the American economy.
It has been argued many times that this has been to Canada's benefit and that we need capital that has been brought in from the United States in order to provide the level of economic development and expansion we want in this country. At the same time, it must be noted in all honesty that there was a serious gap in Canadian policy because we failed to develop our own capability for savings which are so necessary for capital investment and development. We did not develop our own capacities for the development and expansion of our economy and we did not develop the types of policies which were needed in that regard.
Of course, there have been taxation features which have influenced and affected this course of development in our history. We now face a new situation and the assumptions underlying the government's economic policies over the past number of years have been shown to be false. The fact is that when it came to the crunch, the United States, as might be expected, acted in its own best interests; that is, it acted in its own interest on the basis of judgments made by those who hold political power in that country. They decided what is best for their country. We do not yet know the consequences and implications of that course for Canada. We have been left to thresh about in the dark. The Prime Minister has made statements saying that he does not think the United States is really aware of all the implications that its new policy developments hold for Canada.
It was really sad hearing the Prime Minister make statements like that about a new policy development arising in the United States, especially since it has been contended for a long time that there has always existed a close relationship between Canada and the United States in many fields. We now find, Mr. Chairman, that the government's assumptions concerning these economic policies were false.
In developing its economic policy over the past year or so at least, the government assumed, among other things, that there would be a significant upturn in the United States economy either late this year or early in 1972. It was assumed that this upturn in the United States economy would bring significant "slop over'' benefits for Canada and that they had to be taken into account in determining economic policy in this country. That
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assumption has been shown to be false and the premises on which the government developed its economic policies have been totally shattered.
The government is now threshing about wildly and is trying to find new economic policies for dealing with some of our immediate short-run problems, particularly in view of the upcoming election which probably will take place during the coming year, and for dealing with our long-term problems. It seeks to find a long-term policy for Canada that will be effective in terms of our economic development. The Canadian people have been left very much in the lurch. We have a serious unemployment problem and the government has been slow in coming up with new policies to deal with this situation.
I think it is very necessary to consider appropriate tax cuts if we are to stimulate the economy. I also think that we must focus afresh on and give new consideration to the concept of the Canada Development Corporation. It must be made into a significant instrument of public policy in order to bring about the type of development that will serve Canada's interests in the long run. The government does not seem to be able to tell us at present where it is going with its long-run economic policies and just what are its short-run economic policies. Taxation policy plays an important role in this picture, both with respect to long-run and short-run economic policies. The government has given no answers. We do not know what road it is following. I do not think the government itself knows.
At the same time, we in this House are expected to deal with a taxation bill which the government is parading as a brand new approach to taxation. It is being paraded as the culmination of the government's efforts to reform the income tax system in Canada. It is very difficult for hon. members to pass adequate judgment on the government's policy as demonstrated in the tax bill before us because there seems to be an absence, or vacuum with respect to other areas of economic policy.
I appreciate that this is a most difficult problem for the government. They must sit there and do the best they can because they are determined to complete consideration of the tax bill before the end of the year in order that they can parade this piece of legislation before the electorate when the people go to the polls in the next federal election. Of course, the government will try to make out that this legislation is a significant measure of tax reform for which all Canadians should be thankful and, in particular, for which they should thank the Liberal government. While I can appreciate that government members will do their best to paint such a picture, I think the facts show otherwise. While there has been a certain amount of tidying up-


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


Some hon. Members:: Carry on.


Gérald Laniel: Is there unanimous consent for the hon. member to continue?


Some hon. Members:: Agreed.


Some hon. Members:: No.

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Gérald Laniel: Some hon. members have said no.


Eldon Mattison Woolliams: Mr. Chairman, I am glad to see the member for Calgary South in his new position. I did not intend to mention him because members from the city of Calgary-and we have had them from Calgary South from time to time-as Tennyson said, come and go. This is one of the burdens he will have to bear at the next election.
I would be derelict in my duty if I did not point out at the outset that what has really happened, and I thought it would happen, is that we have received a large, complex bill of 707 pages and almost 100 amendments. To be able to deal with it in a cogent manner, we should have been given the amendments some days or weeks ago, as a matter of courtesy. The government must have had them.
I say to the member for Calgary South that when his party was in the opposition, if we had tried this with even one amendment the Liberal party would not have allowed it. They were very astute people in opposition. I always gave them credit for that. They were masters of filibuster and procedure. This debate would not have gone on. If I had time I would try to convince the group here that this debate should not be going on. This really shows the arrogance of the government. They are saying, "It does not matter what the opposition says. We will let them make a few little speeches on the first clause of the bill." The member for Calgary South has been here since the rules were changed. He can never understand or appreciate what Committee of the Whole House is all about. He said, "Let them make a few pretty little speeches."
I would be derelict in my duty if I did not bring to the attention of the House and the country that this legislation is going to be rammed through. I have here an editorial from the Ottawa Citizen which is usually quite friendly toward the government. It is entitled "Speed action on the tax bill". I imagine the editor must have been coached a little by the government. No matter what is in this tax bill, the government is going to ram it through. They want it speeded through without much thought.
I make a prediction. Maybe when the member for Calgary South or other members of the government are back practising law or accounting, they will realize that what is being rammed through today is a legal monstrosity. This is what the Bar Association of Canada says. I have never held myself out as an expert on taxes. I do not think there are any such experts in the House. The tax experts have said this is a most complex bill. Maybe Browning correctly summed up the situation when asked about a poem of his. He was asked what it meant. He looked at it and said, "When I wrote that, only God and I understood it. As I think about it now after the months have gone by, only God understands it." That is probably what we are debating right now.
I want to come to grips with one subject that concerns me immediately, that is, relations between the federal government and the provinces as far as this tax bill is concerned. This is a monumental document. I do not know what is in the 100 or so amendments. If there were an examination, even with the great brilliance of the minister and his parliamentary secretary they would not be able to pass it. I am glad to see one officer of the depart-
(The Deputy Chairma.]
ment present who might be able to shed some light on this matter.
With regard to the provinces, accrued gains on capital assets will be taxable at death. Federal estate and gift taxes will be abolished as at December 31, 1971, to avoid double-taxation of such gains. There is no tax on bequests between spouses. The inheriting spouse acquires assets at their original cost to the other spouse. Tax is paid only when the inheriting spouse sells or transfers the asset by gift or bequest. Gifts between spouses, outright or through a trust, are tax free.
The decision of the federal government to get out of estate and gift taxes entirely as of December 31, 1971, has been strongly criticized, not because the provinces are against the abolition of the estate tax but because of the manner in which it is now being done. It has been strongly criticized as irresponsible and unfair to the provinces, a danger to orderly taxation in Canada and another act in favour of the privileged at the expense of middle income Canadians.
What does this proposal suggest? I come from the province of Alberta where there was an agreement between the federal government and the province that 75 per cent of the estate tax was to be returned to the provincial treasury. We had the estate tax abatement act. The former government of Alberta passed a provincial law so that the money was refunded to the estate and therefore benefited the beneficiaries. It was refreshing to hear the member for Regina East talk about the economy. That was done in Alberta for one reason, to help put Canadian capital into the hands of Canadians, particularly Albertans. It was not done to help the rich, the middle-class, or rob the poor but to create a capital pool in order to have a buoyant economy and full employment in the province of Alberta. I believe that today that province has less than 3 per cent unemployment. It has been said, and I believe it is correct, that at the moment we are one of the most buoyant economies. I hope it will last even with this government.
I have heard great academics. I do not know how they were able to become so categorized. I know some of their grades when they were in school. They prize themselves on being academics. They talk about foreign investment, although you do not hear too much about it now. I will have something to say about that in my concluding remarks.
As I see it, the enigma of foreign investment is with those people who talk about it. My friends to the left are rather great at that. They say that Canadians must invest in their own economy. The financial critic of the New Democratic Party seemed to be on all fours with the other socialist party in this country, the Liberals. They say they are going to take money from Canadians who have money to invest. This is the enigma: they say we cannot have foreign investment. How will western Canada end up? It and every other part of Canada will be an alkaline slue. That is what is so important.
I come back to the point about the abolition of capital gains and estate taxes. The proposal means an economic loss of provincial revenues and further tax competition among the provinces. Last year the federal government paid out $60.4 million as their share of the federal estate tax. Seven of the provinces receive from Ottawa 75 per
October 13, 1971

cent of this tax when collected. Ontario, Quebec and British Columbia have their own succession duties. The removal of this source of revenue from the provinces will be detrimental. This bill will cost those provinces of Canada which had an arrangement with the federal government $60.4 million.
Take a look at this red book, the explanation book. It is like the funny papers. I like the cover of that book. I said that in the debate on the white paper. It leads one to think they are helping our millions of taxpayers, countless numbers, at least. I see hon. members opposite applauding. But what really happens? As soon as you erode the provincial treasuries, provinces are obliged to raise taxes from any other source available to them. In most cases the source chosen involves a sales tax.
We in Alberta are the only province where there is no sales tax in force. What will happen when we lose our share of the $60 million? Eventually we shall have to find money from another source, a sales tax or some other tax. That tax will fall on the same people the government pretends to be concerned about, those whom the bill before us would relieve from taxation. All this document does is shift the burden from the federal government to the provincial governments. This document is starving the provinces. That is the first point I wish to make.


Mr. Gibson:: Speak up.


Eldon Mattison Woolliams: Oh, that's all right. I can always rely on the choir on the backbenches opposite. They have only scratched the surface on this bill, yet they say, "Great. Ram it through. We are all part of this great Liberal machine."


Mr. Guay (St. Boniface):: This is the first time you are concerned. They have a Conservative government in Alberta.


Eldon Mattison Woolliams: I will let them speak for themselves. The Ontario treasurer took the view that the federal administration had been too hasty. It was argued that the estate and gift taxes should be phased out as the capital gains tax was phased in. I should have thought the government would have come before the House today and declared, "We have made a deal with the provinces. We made a deal before we rammed this legislation through."
In summary, I say this new tax legislation is merely shifting the burden for collecting taxes from the federal government to provincial governments. Increased taxation will fall on those for whom the government professes a special concern, those in the low income brackets. Moreover, of course, any benefit of the small concession connected with personal income tax has already been cancelled out by inflation, something which has partly, at least, been brought about by the government itself.
I wish to deal now with the provisions of this bill as they affect small business. Take this same red book. This is what it says at page 35. It reads very well:
A reformed low rate of corporate tax is retained as a small business incentive; the rate is 25 per cent on the first $50,000 of business income of Canadian-controlled private corporations.
Income Tax Act
What the tax bill promises to do is to increase the taxable income allowance from $35,000 to $50,000 and increase the rate of taxation from 21 per cent to 25 per cent. But they raised the gross net income. That sounds good on the face of it, but see what really happens.


Joseph-Phillippe Guay: What on earth is "gross net income"?


Eldon Mattison Woolliams: This is what happens. The maximum amount for which a deduction can be made in any one year is $50,000. This $50,000 is the corporation's business limit. In addition, there is a cumulative limit which, in the simplest situation, amounts to $400,000 of taxable income earned after 1971. In other words, to make it simple, if a corporation shows a taxable profit of $50,000 for eight years it would then have enjoyed the benefit in its growth of a 25 per cent rate on the first $50,000, but the moment it hits a total gross of $400,000 in those eight years, on goes the tax the same as on large corporations.
What do I say about that? This provision is supposed to help small business. Many farmers and ranchers are incorporated. What happens? As soon as a group of people get together in a private corporation, form a company and produce a gross capital of $400,000, then on comes the 50 per cent tax or that rate which applies to foreign corporations and the public corporations of Canada. But this will not be found in the red book. Oh no, because they are trying to sell the candy. There are two things you can pick out when you are debating the economic situation.
I say, therefore, the provinces will be starved of their revenue and small business will be discouraged from expanding because the moment a company expands, builds up a business to assist the Canadian economy on the basis of Canadian investment, along comes the high corporate tax. There is a dishonesty you find at the outset.
Mr. Chairman, the tax policy of any government is the policy through which you effect the kind of taxes and the rate of taxes which are necessary, and whether you have capital gains tax and how it applies to the incomes and various branches is one means by which this or any other government controls the economy.
I would say we have seen a deterioration in the relations between Canada and the United States. I want to say something about that because this debate will be lengthy, on a complex situation. I question whether even members of this House comprehend what effect this bill will have on the economy of Canada, yet it is being brought in at a time when we not only have trouble with the United States on the question of the surtax but also on account of the dollar which was floating so that it was more than equal to the United States dollar. The argument and the debate which has gone on over the years about taxation has had a tremendous effect on the economy of this country, a depressing effect. In fact, I asked Bryce and another adviser at the committee which was studying the white paper, and they said there were many deals which would have helped Canadians and given jobs to Canadians which have not crystallized because of the fear of what was in the white paper. This was the fear hanging over the heads of Canadians. If there is any question about that- and I said this to the hon. member for Calgary South-I shall read it into the record next time I speak, because we

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have only 20 minutes. I have referred to it on other occasions.
When we talk about our economy, we should have had brought in by the government some policy of control that would deal with what I call the most serious difficulty this country has encountered since 1929. Right now our relationship with the United States has deteriorated to such a level that one has to ask oneself how this deterioration set in. Was it partly because of the tax bill? Was it partly because of the white paper? Was it partly because of the statement in reference to NATO? We have never negotiated with our friends. This Prime Minister said we will reduce our forces in NATO without any discussion with the United States. He has also taken a hard line in respect of NORAD. That is why our position has deteriorated.


Patrick Morgan Mahoney: Tell us what Diefenbaker said to Kennedy.


Eldon Mattison Woolliams: This Prime Minister went to the U.S.S.R. and said, and I quote from a transcript of a press conference given in Moscow on May 20, 1971:
As is well known, Canada is not only a good friend and neighbour of the United States of America, but also its ally in NATO and NORAD, and Canada has increasingly found it important to diversify its channels of communication because of the overpowering presence of the United States of America-[DOT]
The Prime Minister admits that we are friends of the United States in respect of NATO and NORAD and that we are in a joint partnership in respect of our financial resources, but he goes on to admit that we have never negotiated at any time-


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


Some hon. Members:: Continue.


Gérald Laniel: Does the hon. member have unanimous consent?


Some hon. Members:: Agreed.


Eldon Mattison Woolliams: Mr. Chairman, I will be as brief as possible. The transcript of the Prime Minister's press conference reads:
-Canada has increasingly found it important to diversify its channels of communication because of the overpowering presence of the United States of America and that is reflected in a growing consciousness amongst Canadians of the danger to our national identity from a cultural, economic and perhaps even military point of view.
I could quote from other speeches but I will refrain from doing so at this time because I can speak again in 20 minutes. I appreciate the graciousness of hon. members of the committee in allowing me to conclude this point. We have insulted the United States as far as NATO and NORAD are concerned. Our Prime Minister was in a communist country and talked about military importance so far as it affected Canada and the United States. We have insulted the United States in every way. This is the only Prime Minister in my lifetime who has not been able to go to the United States and negotiate with the President. He refuses to write letters or call him on the telephone. And now we are dealing with the serious matter of taxation at a time when our economy is being disrupted.
Let me make a prediction before I sit down. When this winter is over-


Patrick Morgan Mahoney: Tell us what Diefenbaker said.


Eldon Mattison Woolliams: I know this is getting to the hon. member for Calgary South, but these are the things he will have to defend on a platform when he goes back to Calgary.
This is the only Prime Minister who has never been able to negotiate with the President of the United States. We are now faced with a 10 per cent surcharge against industry. This has a tremendous effect on the industrial might of the province of Ontario. If this policy is continued by the government there will be one million people unemployed in our country this winter.


An hon. Member:: That's what you wish and hope.


Eldon Mattison Woolliams: The Liberals say that is what I wish and hope, but if they listened to what I have said in the past 20 minutes they would realize that this is the time to bring in a policy to do something for the people of Canada and prevent what I would call the danger of a great depression.


Mr. Gerard Laprise:: Mr. Chairman, before we further pursue the debate, I should, in turn, like to say a few words concerning one portion of the lengthy bill we will be debating over the next months. I expressly say "the next months" since I expect the study of this bill, almost four inches thick, as well as the bundle of amendments that go with it, to take a very long time.
The very fact that Bill C-259 was accompanied by several pages of errata led me to presume an intention to have the legislation adopted in haste.
It led me to believe that I was not alone in entertaining the view that the government study was far from complete, and of this we had proof today when the Minister of Finance (Mr. Benson) himself brought forward his bundle of amendments to alter most of the clauses of the bill.
Mr. Chairman, when the minister made public Bill C-259, the latter was far from being ready for study and from having the assent of the government and probably of the other members of the Cabinet, since when we are about to examine this bill, clause by clause, the government itself introduces amendments.
Every time we have had to consider bills amending tax laws or budgets, I have been fearful. I fear such bills because amendments to the Income Tax Act have always been detrimental to Canadian taxpayers. They have always further deprived the worker, the farmer, the labourer, in short, the one most in need of his income.
Regardless of the level of taxation, it is always the small wage earner and the consumer who bear the brunt of it.


Mr. Bechard:: That is why a million workers will not pay any income tax.


Gérard Laprise: Mr. Chairman, the statement made by the hon. member for Bonaventure-Iles-de-la-Madeleine (Mr. Bechard) is altogether false. The hon. member for Laval
(Mr. Woolliams.J
October 13, 1971

(Mr. Roy) has said a short while ago, following the speech of my colleague for Champlain (Mr. Matte), that 750,000 workers-that is also what the Minister of Finance has said-would be exempted from taxation, under the new bill.
Mr. Chairman, this means that 750,000 workers will be too poor to pay taxes, whereas according to studies made by university professors, labour unions and other persons show that one third of Canadian people live on the threshold of poverty. In spite of this, the minister has the nerve to come here and say that he is glad that 750,000 of these people will not earn enough money to pay income tax. This means that they will have earned the income, the salary of starving people. Such is the government policy and the effect of the just society. Taxpayers do not want to be taxed beyond their ability to pay. We would all like to be tax exempt.
I have in hand some newspaper reports dealing with the matter. In 1964, we could read the following headlines: Farmers demanding basic tax exemption.
President of Imperial Oil once more speaks against tax system unfair to oil industry.
Beer industry would be too highly taxed, according to Brewery Association.
Insurance companies do not want to be taxed.
CFU wants immediate readjustment of land tax.
Every day and every week, we hear from associations, companies or groups of citizens asking tax exemptions to the government.


Joseph-Phillippe Guay: Mr. Chairman, the hon. member speaks in every way like the hon. member for Compton (Mr. Latulippe). I would urge him to be more careful.


Gérard Laprise: I am ashamed not of my colleague, the hon. member for Compton, but rather of the attitude adopted by my friends, the government members, towards the Canadian people.
When we study the report on public accounts in Canada, especially those for 1971 which has just been distributed, we see in subsection 2.10 a table giving the revenue and expenditures of the government. According to the data for 1970-71, direct income taxes amounted to $7,576,000,000, based on preliminary estimates. Indirect taxes amounted -to $4,083,000,000 and direct corporate taxes to $2,120,000,000.
Everyone knows that companies have the privilege of including their taxes in their production costs, so that in fact the consumers are paying those taxes for them.
Those figures indicate that $13,779,000,000 are paid more or less directly by Canadian workers.
In paragraph 3.2 of the same report, another chart shows the rate of increase in taxes since 1967. It can be seen that in 1967, 30 per cent of taxes came from the income tax of individuals, while in 1968 that proportion rose to 31 per cent, and in 1969, to 33 per cent, where it remained in 1970, only to rise again in 1971 up to 37 per cent. In the same period, corporate income tax was 19 per cent in 1967, 18 per cent in 1968, 20 per cent in 1969 and 21 per cent in 1970, but decreased to 17 per cent in 1971.
Income Tax Act
While the income tax of individuals rose from 30 to 37 per cent from 1967 to 1971, corporate income tax decreased from 19 per cent in 1967 to 17 per cent in 1971.
When we hear about equity or totalitarianism and when certain people try to distribute wealth in Canada in the manner required by those who advocate it, it is obvious that they do not and never will meet their objectives.
We, in the Social Credit, believe in free enterprise in Canada and in a tax system consistent with this freedom. We also believe that our tax system should be equitable and non-discriminatory. The purpose of a tax system should not be to finance government expenditures but to take money where there is too much of it or to prevent unbalance in any economic area. In my opinion, the purpose of a tax system is to withdraw money when and where there is too much of it.
But today, the government is boasting however apprehensively in presenting Bill C-259 that it will increase the basic income tax exemption in such a manner that 750,000 people will no longer pay taxes.
Well, as I said at the outset of my remarks, there will be too many people who will not earn enough money to provide for their family's needs. Perhaps they would be happy to earn enough to pay a little income tax.


Albert Béchard: If they did pay any. It is not as bad as that, because they will not pay any.


Gérard Laprise: But where the government deceives the people Mr. Chairman, is in the indirect taxation area: excise tax, tax on the production of manufactured products. The 750,000 people who will not pay direct taxation will have to pay indirect taxation; they will have to pay tax on manufactured products whenever they buy things that their income allows them to buy. That is where lies the injustice of our taxation system, which tries to get money where there is none or not enough.
I have here invoices to prove what I am saying, Mr. Chairman.
Since the tax system in this country amounts to double taxation, it is not surprising to see the government continuously introducing proposals to fight inflation, and that fight is always lost before it starts because the government is not aiming at the right place.
I have here two bills from lumber firms. One is for 488 feet of 2x4s at $58 per 1,000 feet, which amounts to $28.30, and the other for 228 feet of 1x6s, and that amounts to $15.50, for a grand total of $43.80. Then comes in the 11 per cent federal tax on all wood sold. On top of that, you have to add the 8 per cent provincial tax. The Quebec provincial tax is added to the federal tax.
One must not be surprised to see that the people are infuriated at such a tax system and no longer want it. That is where lies the injustice, the government taxes indirectly the Canadian consumers when they go out to buy.
An arduous fight is raging between the three levels, of government, each wishing to get a significant share of the income of the Canadian people. If the federal government really wants to improve its administration, relieve the population and provide it with a better chance of living

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decently, let it act favourably not only toward a small group of privileged people, but also toward the 750,000 people whose income is considered quite insufficient to meet the needs of their families.
Then, it must reply to objections or requests made by people other than politicians. Not long ago, one could read in the dailies this statement from Mr. Frank E. Case, president of the Montreal Trust, and I quote:
Up to now, the economy has shown few signs of recovery despite the many provisional solutions put forward by various government organizations. I for one believe that a tax reduction would have been much more beneficial.
The government is trying to make us believe that this reform will result in lower taxes, whereas the federal civil servants tell us that within five years this reform will have boosted tax proceeds by $600 million, and whereas the Ontario civil servants, with the help of an electronic computer, now forecast an increase in federal tax proceeds of the order of one billion dollars. Whether the result be $600 million or $1 billion, it means that this tax reform is nothing but a stirring of the same mixture which will amount to heavier taxes for the Canadian workers.
And Mr. Case added:
-what was needed to reverse the situation was not an increase in public spending or new capital investments, but rather a new impulse to the purchasing power.
This is the opposite of what the government intends to do in his tax proposals, that is to extort $600 million or $1 billion from the Canadian taxpayers. On the contrary, if the government actually wanted to restart the economy, it would proceed by injecting it with additional purchasing power.
I have on hand another testimony, that of Mr. Grant L. Reuber, an economist and director of the Department of Economics at London's Western University. This is what
he had to say in an article published in Le Devoir in May 1971, and I quote:
This is why the government should persue a "moderately expansionist tax policy", promote expenditures which would stimulate the demand for goods and services thus helping to create employment.
This could be achieved by lowering personal income tax and federal sales taxes levied on manufactured goods.
It should be noted that Mr. Reuber has not asked that non-taxable income be increased, but rather that federal taxes levied on manufactured goods be reduced.
These are the comments of people who have studied the problem and whose authority is unquestionable. During this debate which as far as I can see, will be protracted, we will have the opportunity of carefully studying each clause together with the consequences of this tax reform. We think that we shall have to submit numerous proposals to amend this bill.


An hon. Member:: Six o'clock.


John (Jack) Henry Horner: Mr. Chairman, I hear the parliamentary secretary suggesting that I call it six o'clock. I am perfectly prepared to do that if it is the wish of the committee. There seems to be some unanimity in this regard. May I call it six o'clock, Mr. Chairman?


Gérald Laniel: This can be done only by unanimous agreement. Does the committee agree to call it six o'clock?


Some hon. Members:: Agreed.


Gérald Laniel: It being six o'clock, it is my duty to rise, report progress and request leave to sit again at the next sitting of the House.
Progress reported.
At 5.57 p.m. the House adjourned, without question put, pursuant to Standing Order.

Thursday, October 14, 1971