1971-11-23

ROUTINE PROCEEDINGS


[Stage Direction]
Fifth report of Standing Committee on Miscellaneous Estimates, in the two official languages-Mr. Leblanc (Laurier).
[Editor's Note: For text of above report, see today's Votes and Proceedings.]


Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, pursuant to Standing Order 43 I wish to present a motion on a question of urgent and pressing necessity. The urgency and necessity of consideration and action now flow from the calamitous and scandalous inadequacy of facilities and confusion surrounding the operation of the port of Vancouver by the National Harbours Board. The unprecedented volume of both exports and imports so vital to the survival of the Canadian economy has been seriously impeded by a lack of dock capacity, by delays of many months by the government in naming directors to the National Harbours Board, and in the constituting of the Port of Vancouver Authority, and other factors within control of government. I therefore move, seconded by the hon. member for Spadina (Mr. Ryan):
That the whole question of the administration and facilities of the ports of Canada, the administration of the National Harbours Board and the direction thereof by the government, particularly the Minister of Transport and his officials, be now referred to the Standing Committee on Transport and Communications for examination and report, including recommendations to this House.


Mr. Speaker:: The motion proposed by the hon. member for Edmonton West comes under the terms of Standing Order 43 and requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


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



POST OFFICE


Hon. Jean-Pierre Cote (Postmaster General):: Mr. Speaker, I wish to announce that the Post Office Department intends to implement a major change in its transportation services in a number of urban centres across Canada.
The intent of the Post Office is to integrate urban mail transportation services in major areas of Canada in order to help stabilize mail transportation in these centres whose continued operation is essential to the maintenance of a national postal network.
The proposed integration means that the Post Office will undertake the intra-urban mail transportation previously carried out by private contractors.
In announcing this major change, Mr. Speaker, I would like to point out that among the major postal administrations of the world, Canada is the only country which does not now have integrated transportation services in its urban centres.
The decision to implement an integration of urban mail transportation services comes after a series of studies by the Post Office Department. As a result of these studies, integration was successfully undertaken in sections of Montreal and Vancouver as early as 1967.
As a further consideration, Mr. Speaker, in 1968 section 31 of the Post Office Act was revised. This revision provided that following the invitation to tender, no contract should be entered into for a term of more than five years. At that time the department knew it would eventually integrate all its major urban transportation services. The Vancouver and Montreal experiments of 1967 were undertaken to test the feasibility of this course of action.
In order to carry out integration of these services, the Post Office will require personnel, vehicles and support equipment. All those full-time contractors' employees who are working in functions related to postal work will be offered positions with the Post Office. The Post Office is conscious of its obligation to these men and is most desirous that they will elect to enter the Public Service. Many of these workers, after providing service to the Post Office for so many years, already regard the Post Office as their real employer. The Canadian public, too, has come to regard them as Post Office employees.
The unions representing these employees have been consulted and they are co-operating with the department in implementing this program.
As far as vehicles and equipment are conerned, the Post Office will offer to buy the material that the contractor now uses to provide his services.

November 23, 1971
Mail Transportation Services
Two criteria were used to define the centres that would qualify for inclusion in the program. Both criteria are based on mail volumes and are:
1.	Those centres which account for 1 per cent or more of the national total of originating first class mail, or
2.	Those centres which account for 10 per cent or more of the total of a postal region's originating volume.
These criteria define the cities and areas that are vital to the postal system in national terms. Not only are they important in their own right as major centres, but many of them are main in-transit or transfer points for the movement of mail originating elsewhere.
Application of the national and regional criteria result in the inclusion of the following metropolitan cities in the program:	Vancouver, Victoria, Edmonton, Calgary,
Regina, Saskatoon, Winnipeg, London, Metro Toronto, Hamilton, Windsor, Kitchener-Waterloo, Ottawa-Hull, Metro Montreal, Quebec City, Saint John, New Brunswick, Moncton, Halifax-Dartmouth, St. John's Newfoundland. Of these 19 cities, four-Montreal, Quebec City, Windsor and part of Vancouver-are already wholly or partially integrated. The 15 new centres include satellite postal operations in urban communities adjacent to metropolitan areas. The total number of urban centres to be brought into the program, therefore, will be 42.
The integration program is planned to be completed by the end of 1972. Discussions with the contractors concerned regarding the dates of integration of individual services are starting immediately.
As the integration program is mainly aimed at the stabilization of key centres of the national mail network, it is not the intention of the Post Office to integrate those mail transportation services provided to rural or semi-rural areas, or between cities.
I believe that this move will help to bring a greater degree of stability to a most important element of Canada's mail system and as such constitutes a major step forward in the development of an increasingly reliable mail service.


Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, this is one of a series of announcements that have been made by the Post Office Department since 1968. I listened very carefully to the Postmaster General (Mr. Cote), and once again I find that this proposed change is being made in the interests of efficiency and better mail service in Canada. The minister was kind enough to supply me with a copy of his statement, and I note that the change is designed to stabilize mail transportation within the major centres of Canada.
It goes without saying that the sort of stability we want with respect to intracity mail transportation matters-I am sure the Postmaster General will agree with me-is not the sort of situation portrayed by the Lapalme drivers parading daily on Parliament Hill. I have followed the changes made by the Post Office Department in recent years, and the difficulty has been that with every change costs have gone up and services have gone down. The result is that the public are unhappy, the employees are

unhappy, and I am sure the Postmaster General is also very unhappy.
Those who listened to the noon broadcast of the CBC news today once again heard an expression of unhappiness and discontent from the public in the form of a protest by an advertising executive who is so unhappy about the postal service that he is going to take action against the department to recover the costs he has incurred in getting the sort of service he used to have before the announcement of assured mail delivery which the Postmaster General informed us was going to expedite the mails and which this gentleman, speaking through the CBC news, has referred to as a fraud and a disaster. I was also interested to note that he also urged the Minister of Consumer and Corporate Affairs (Mr. Basford) to investigate the Post Office Department to see if it is guilty of misleading advertising. Every time these changes are made there is a great spate of publicity and propaganda indicating an upward and onward trend whereas following the implementation of the changes we find that the quality of service spirals downward and only the costs of the service are onward and upward.
I think it is not a prejudiced viewpoint to express the opinion that every change announced by the Postmaster General and his predecessor, who was more of a disaster than the present incumbent of that post, has created confusion in postal services. This means that every change is not necessarily progress. I suggest to the Postmaster General that if he is really going to restore the confidence of the public in the postal service he must restore the morale of the postal employees. They make daily contact with the public and it is largely through the esprit de corps manifested by the postman on the walk, the postal employee at the wicket, the private contractor who in the past carried out the function that is now going to be handed over to direct postal employees, that the public's confidence in the Post Office Department is going to be restored. I was pleased to note on page two of the announcement that the Postmaster General emphasizes the fact that all full-time contractor employees engaged in functions related to postal work will be offered positions in the Post Office.
I think the hon. gentleman will agree that before the current labour difficulties which are harassing the postal service are resolved, before the morale of the employees is restored, before the confidence of the public is restored, there must be engendered in the postal employees-and there is now going to be a larger number directly involved-that spirit that used to be described in this poetic language: "Neither sleet, nor hail, nor rain, nor other vicissitude will deter them from their appointed task."


Mr. David Lewis (York South):: Mr. Speaker, it is obvious that the suggestion made by the Post Office Department is an important one and that theoretically at least it is an important advance that should assist in making the Post Office much more efficient. We all know in this House that the present Postmaster General (Mr. Cote) is making a very earnest attempt to improve the situation in his department.


Some hon. Members:: Hear, hear!
November 23, 1971	COMMONS DEBATES________________________________9801


David Lewis: But I say without any intention of offending the Postmaster General that so far the evidence of that improvement is not overwhelming.


Some hon. Members:: Hear, hear!


David Lewis: The proposal which is made is obviously a necessary one but whether it will be a good one will depend entirely on the way it is brought into effect. The experience we have had in the Post Office so far is that labour relations in that department have been a shambles for some years and that the Post Office has not yet got rid of the paternalism, indeed, the patronage, from which it has suffered for so many years.
The Postmaster General says that the department consulted the unions representing the employees of private contractors. May I say to him with all the kindness I can that an assurance like that does not reassure me at all. I should like to know exactly what kind of consultation took place, when it took place, whether the unions concerned were in fact given an opportunity to express their opinions as to how the proposal might be implemented, or whether the consultation in this case has been the same as in every other case, namely, that they were informed that something was going to be done. I emphasize that, Mr. Speaker, not out of any desire to be critical but out of a vivid memory of what happened in Montreal and out of the fact that we are still plagued with the results of incompetence and lack of simple human decency in the way in which the Lapalme situation in that city was handled. If better relations are not established, if the unions now concerned in this work having been given real consultation instead of phony consultation, then we may well have some difficulties in the future.
May I finally say to the Postmaster General that I was astonished, indeed, outraged this morning when I learned from officers of the Canadian Union of Postal Employees, a union that now represents some of the people involved in working for private contractors, that it was not even informed that this change was coming, let alone consulted, and that they are meeting with his deputy or someone in his department at 2.30 this afternoon when for the first time they will be told of this program that the minister has announced. That not only astounds me, Mr. Speaker, but makes me fearful about the way in which this thing is being handled, because not only is this union already in negotiation with the department or with the Treasury Board but it represents some of these people. Therefore, when the minister said that all the unions representing these people have been consulted, obviously he was not right. One of the unions, and perhaps the most important so far as the Post Office Department is concerned, was not even informed, let alone consulted. They are particularly worried about the matter because this announcement comes only weeks before negotiations are to begin in January between the Canadian Union of Postal Workers and the Post Office Department. They are concerned as to whom they will be negotiating for in this area and about the kind of confusion that may result in the negotiations.
In short, obviously the scheme announced is desirable, but we in our party will wait to see whether this Postmaster General will, unlike his predecessor, handle relations with the employees concerned in a human and decent way, in a modern labour relations way, and not in the
Mail Transportation Services
oldfashioned way in which his department so far has functioned. I hope he succeeds. If he does, we will be glad to congratulate him. However, if he carries on as his predecessor carried on, not only every member of the House but every Canadian will be sure to condemn him and his department for inefficient, incompetent and, indeed, inhuman relationships.


Mr. Real Caouette (Temiscamingue):: Mr. Speaker, the Postmaster General (Mr. Cote) has just announced that in the most important parts of the country, the department intends to integrate urban mail transportation services into the public service. He added that the measure would stabilize mail transportation.
If the new policy is implemented, I am convinced it will improve mail transportation services throughout Canada because they now present weaknesses. For instance, I noticed yesterday that the dailies from western provinces such as Alberta, and particularly those from Calgary, were not yet in the reading room of the House of Commons.
Mail from British Columbia often takes from 10 to 12 days to reach us in Ottawa. I hope the new policy of the Post Office Department will improve mail service by speeding it a little.
As a result of the new policy announced by the minister who tells us that he has consulted the unions interested in the transport of Canadian mail, I wonder like the hon. member for York South (Mr. Lewis) if the minister did indeed meet with all the unions concerned.
I also wonder whether that new policy was brought about by the Lapalme boys who are still demonstrating on Parliament Hill.
They have not yet been integrated into the Civil Service because there is a conflict between the government and the CNTU. Has the minister met with CNTU officials to solve the problem of the Lapalme boys? The department should find gainful employment for those who will thus be dismissed from private enterprise.
Mr. Speaker, we all hope that the Postmaster General will come to an agreement with the representatives of the workers, and even with the former employees of G. Lapalme Inc. I would not want us, for instance, to attach greater importance to the CNTU than to the workers.
If the object of this new policy is to increase the standard of living, the security of the individual who works or will work for the Post Office Department, regardless of what union he belongs to, I welcome it. Indeed, I hope the government will adopt measures to favour the individual and not some of the Canadian unions. Let that be understood.
I hope this new policy will encourage greater respect for the human being rather than favour the abstract organization we see at work across Canada.
At any rate, I am satisfied that the Postmaster General is anxious to improve the postal service in Canada. He is also eager that the employees involved get all the necessary consideration from the Post Office Department so that they have gainful employment which will guarantee their security.
November 23, 1971
Inquiries of the Ministry



INDIAN AFFAIRS


Mr. Frank Howard (Skeena):: Mr. Speaker, pursuant to Standing Order 43 I seek the unanimous consent of the House to move a motion of urgent and pressing necessity involving the widening gulf between the Indian people in Alberta and the government, the solution to which will require statesmanship on the part of the Minister of Indian Affairs and Northern Development (Mr. Chretien) and not intransigence. I therefore ask leave to move, seconded by the hon. member for Comox-Alberni (Mr. Barnett):
That this House hereby gives its leave, pursuant to Standing Order 5, to the hon. member for Saint-Maurice in his capacity as Minister of Indian Affairs and Northern Development in order that he may proceed to Alberta to meet with the Indian people there, and we express the hope that such meetings will result in a favourable resolution of the problems confronting the Indian people.


Mr. Speaker:: Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: The motion cannot be put.



ORAL QUESTION PERIOD


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I wish to direct a question to the Minister of Indian Affairs and Northern Development who I understand has promised to tell all today. Will the minister inform the House why the government has not proceeded with its intention to establish jointly a five-year renewable financing program for the support of native cultural and educational centres, particularly in view of the fact that the Indian Association of Alberta has spent approximately $160,000 on such a project since April 1, 1970, and also in view of the fact the Alberta project was number one on the government's list?


Hon. Jean Chretien (Minister of Indian Affairs and Northern Development):: Mr. Speaker, we have been studying that problem for years. We have tried to grant more money to the Indian associations of Canada; that new program referred to by the hon. Leader of the Opposition is presently under study. When government policy has been decided on, I will be happy to announce it to the House.


Mr. Nielsen:: Now answer the question.


Robert Lorne Stanfield: Mr. Speaker, the minister has not answered the question. I specifically ask why a meeting of the interdepartmental committee on Indian and Eskimo affairs, called to consider the recommendations of the standing subcommittee on the Alberta proposal, was cancelled? It was designed to deal specifically with the ques-tioh of cultural and educational centres. Why was the meeting cancelled? Why is it not now being held?


Joseph Jacques Jean Chrétien: Mr. Speaker, I do not sit on that committee, so I do not know if the sittings have been cancelled. I can tell the hon. member that we have been discussing this subject for months with the officials of the Department of the Secretary of State and with the representatives of various Indian organizations in Canada but no conclusion has been reached yet.



INDIAN ASSOCIATION OF ALBERTA PROPOSALS FOR RECREATION PROGRAM-LACK OF APPROVAL BY TREASURY BOARD

Robert Lorne Stanfield: have a question for either the Minister of Indian Affairs and Northern Development or the President of the Treasury Board. It relates to the program submitted by the Indian Association of Alberta concerning funds for recreational programs, particularly the Indian sports Olympics program-


An hon. Member:: Come on!


Robert Lorne Stanfield: I am imitating the Prime Minister when I stumble.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: I ask either minister why the proposals submitted by the association as long ago as January have not yet been approved by Treasury Board?


Joseph Jacques Jean Chrétien: Mr. Speaker, obviously we receive, every day, hundreds of requests for more funds, from all sorts of people. The House may be interested to know that, at the time of my appointment as minister, no funds were available for the Indian Association of Alberta. Now, in 1969-70 we allotted $176,000 to those Indians and in 1970-71 we granted them $795,000. I am proud of that accomplishment, Mr. Speaker.


Mr. Speaker:: Order please. The Chair will recognize the Leader of the Opposition on a further supplementary and then the hon. member for Skeena.


An hon. Member:: Make it good.


Robert Lorne Stanfield: It is hard to make it better with the answers I am getting, Mr. Speaker. If the minister is so

November 23, 1971

earnest in his efforts to co-operate with the Indian Association of Alberta, why has he not proceeded with the programs, particularly in the area of native educational institutions? Why has he not proceeded with the program that was authorized by the government? The minister has yet to give the House any explanation of why he has not proceeded with this program.


Joseph Jacques Jean Chrétien: Mr. Speaker, I have stated that we are constantly striving to put new programs into effect. That is a very worthwhile idea and we shall consider it. Furthermore, we want to promote the development of cultural centres for the Indians, as we do for other Canadians. But I must say that the said program is not yet ready.


Frank Howard: I have a supplementary question. Is the minister aware of a telegram that was sent to the President of the Treasury Board, the Minister of National Health and Welfare and Mr. M. Lalonde, Secretary to the Prime Minister, in October of this year in which the Indian Association of Alberta expressed concern about the delay in approving their recreational budget and their inability to take part in the National Health and Welfare fitness and amateur sport program? Is the minister aware of that and is he aware of the response by Mr. Lalonde which was inflammatory, offensive and added to the gulf of communication between these people and the department?


Joseph Jacques Jean Chrétien: Mr. Speaker, I am not aware of the communication to which the hon. member is referring. The program involved comes under my colleague the Minister of National Health and Welfare and the application, indeed like any application, is now being processed by the government. If an announcement is warranted, it will be made in due course.


Frank Howard: I have one supplementary, Mr. Speaker.


Mr. Speaker:: Order please. The Chair will recognize the hon. member for Skeena. Hon. members will notice that there are now five, six or more members wishing to ask supplementaries. I ask the co-operation of the House to go on with another subject in a few moments. For the time being, the hon. member for Skeena has the floor.


Frank Howard: Can the minister explain why in August he and his department completely abandoned and pulled back from all programs involving Indian people with the exception of those relating to community development?


Mr. Speaker:: Order, please. I would think that question is debate. Is the minister rising on a question of privilege?


Joseph Jacques Jean Chrétien: Yes, Mr. Speaker. The hon. member for Skeena is not being fair. I point out that $29 million is being spent in Alberta, including what is being spent by other departments-


Mr. Speaker:: Order, please. When the question was asked I suggested that it was debate and not in order.
Inquiries of the Ministry
There is certainly no question of privilege. That is further debate.



SETTLEMENT OF ALBERTA SCHOOL DISPUTE AS PREREQUISITE FOR ESTABLISHMENT OF CULTURAL-EDUCATIONAL CENTRES

Mr. Paul Yewchuk (Athabasca):: My supplementary is directed to the Minister of Indian Affairs and Northern Development. Has the co-operation of the Indian Association of Alberta in settling the school dispute in northeastern Alberta become a necessary requirement for the initiation of the July decision to establish Indian cultural-educational centres and, if not, what is holding up this program?


Joseph Jacques Jean Chrétien: Mr. Speaker, the two parts of this question are totally unrelated, and I already indicated earlier today why the program is not ready yet.



ALBERTA-REQUEST FOR INVESTIGATION OF PROBLEMS BY MISCELLANEOUS ESTIMATES COMMITTEE

Mr. G. W. Baldwin (Peace River):: I wish to ask the hon. member for Laurier, the chairman of the Standing Committee on Miscellaneous Estimates, which is now dealing with supplementary estimates covering this particular subject matter, whether he will bring before the committee at once a motion calling upon the minister, Mr. Marc Lalonde and Mr. Harold Cardinal to appear before the committee so that a full examination and discussion can be held on this matter to see where the truth lies?


Joseph Jacques Jean Chrétien: If I may direct myself to this question, Mr. Speaker, I personally would be very happy if the members of the Standing Committee on Indian Affairs and Northern Development would care to look into the matter. I have nothing at all to hide.


Mr. Speaker:: Order. I have to seek the co-operation of hon. members. We have expended about ten minutes on this one subject. If hon. members think the whole question period should be spent on this one subject, then some of our colleagues will be disappointed. For the moment the hon. member for Peace River rises on a point of order.


Gerald William Baldwin: On a point of order, in the hope that we might get rid of this contentious matter I would ask unanimous consent to revert to motions in order that I might make a request for the unanimous consent of the House to move a motion-


Mr. Speaker:: Order, please.


Mr. Trudeau:: Use one of the opposition days.



CULTURAL-EDUCATIONAL CENTRES-INVESTIGATION OF LEAKING OF CABINET DOCUMENT

Erik Nielsen: May I ask the Prime Minister whether the RCMP have been called in to investigate the

November 23, 1971
Inquiries of the Ministry
leakage of the cabinet document dealing with the subject of Indian cultural-educational centres and which was produced on national television?


Pierre Elliott Trudeau: I said yesterday that this matter was being looked into. That is all I intend to say at this time.


Erik Nielsen: My question was specific. Have the RCMP been called in to investigate this particular leak?


Pierre Elliott Trudeau: At this stage I am asking the departmental people to look into the leak. We are more concerned with the moral implications of people taking into their own hands a decision to make public documents which it is their duty to protect.



REQUEST FOR STATEMENT ON PROMOTION AND SALE OF AGRICULTURAL PRODUCTS IN EXPORT MARKETS

Mr. A. P. Gleave (Saskatoon-Biggar):: May I direct a question to the Parliamentary Secretary to the Minister of Industry, Trade and Commerce as the minister is not in the chamber today. Having regard to the statement by the provincial Ministers of Agriculture calling for the formation of a national agricultural export development corporation, will the minister respond to the implied criticism of the government's export marketing policy make a statement on motions in the near future concerning the program his department is prepared to undertake for the promotion and sale of Canadian agricultural products in export markets?


Mr. Bruce Howard (Parliamentary Secretary to Minister of Industry. Trade and Commerce):: I would be glad to take notice of the hon. member's suggestion and draw it to the attention of the minister when he returns.


Alfred Pullen Gleave: Is the parliamentary secretary also prepared to find out whether the minister would agree to appear before the Standing Committee on Agriculture to outline the programs and objectives of his department in relation to the export marketing of Canadian agricultural products?



REVISED STABILIZATION POLICY-ACCEPTANCE OF PROVINCIAL GOVERNMENT PROPOSALS

Mr. Speaker:: The hon. member for Assiniboia.


Some hon. Members:: Hear, hear!


Mr. William Knight (Assiniboia):: Thank you, Mr. Speaker. Since the minister in charge of the Wheat Board has announced that a revised grain stabilization policy will be introduced into the House, can the Prime Minister or the Minister of Agriculture tell us whether it is the intention of the federal government to accept in principle the

proposals of the ten provincial governments as presented to the outlook conference on November 22?


Hon. H. A. Olson (Minister of Agriculture):: Mr. Speaker, the proposal contained in that document was brought to our attention only yesterday. As the hon. member knows, the minister responsible for the Wheat Board is out of the country on important business and it seems to me he should at least have an opportunity to look at it before making comment.


David Réal Caouette: They will ask the minister not to come back.


Some hon. Members:: Oh, oh!



DESIGNATION OF PLACE FOR NEWFOUNDLAND AT AGRICULTURAL OUTLOOK CONFERENCE

Mr. John Lundrigan (Gander-Twillingate):: Mr. Speaker, my question is supplementary to the one to which the Minister of Agriculture replied a few moments ago. It has to do with the outlook for agriculture conference presently being held. At the beginning of yesterday's meetings was there a place set out for Newfoundland clearly designated in the same way as places were designated for the other provinces? If not, why not?


Horace Andrew (Bud) Olson: I think it was. I can recollect seeing the Deputy Minister of Agriculture occupying one of those seats.


John Howard Lundrigan: I asked the minister whether the province of Newfoundland was designated formally, as were the other nine provinces, by proper designation at the table at yesterday's meetings?


Horace Andrew (Bud) Olson: I cannot recall off the top of my head. If it was not, it ought to have been and I will check into it.



POST OFFICE


David Réal Caouette: Mr. Speaker, my question is directed to the Postmaster General.
Further to the department's announcement of new policies today, can the minister tell us whether the CNTU has been consulted and also whether the ex-employees of G. Lapalme Inc. will be guaranteed employment with the Post Office in Montreal under the new policy?


Joseph Julien Jean-Pierre Côté: Mr. Speaker, the CNTU was not consulted since it represents none of the groups of employees to be involved in the program.


David Réal Caouette: Mr. Speaker, I have a supplementary for the Postmaster General.
Is he considering a review of the situation of the "Lapalme boys" in order to make jobs available to them with the department in the city of Montreal?
November 23, 1971


Joseph Julien Jean-Pierre Côté: Mr. Speaker, that offer was made to them as far back as last April, and they rejected it. Since then, we have invited the former employees of G. Lapalme Inc. to join the Public Service, and if our offer is accepted, we will give the matter new consideration.



GOVERNMENT ADMINISTRATION


Erik Nielsen: Mr. Speaker, I should like to ask the Prime Minister whether the investigation into the leakage of the Gray report has yet produced any results, and whether the RCMP have been called in to investigate the leakage of that document?


Pierre Elliott Trudeau: We will let the House know in due course, if we have found any results.


Erik Nielsen: The second part of the question asked whether the RCMP had been called in to investigate not only the leakage of the draft but also of the cabinet document.


Pierre Elliott Trudeau: We are conducting the investigation in the best way possible.


Erik Nielsen: Mr. Speaker, surely the House is entitled to know whether the RCMP have been called in to investigate this serious leak. The question was answered previously with respect to the leakage of another document.



INVESTIGATION OF LEAKING OF GRAY REPORT FROM CABINET-PUBLICATION OF RESULTS

Mr. Lincoln M. Alexander (Hamilton West):: Mr. Speaker, perhaps I am getting into this a little late. Most of my questions have been answered, but I wonder whether the Prime Minister can give the House the assurance that the investigation being carried on now regarding the leakage of the Gray report will at least be publicized?


Pierre Elliott Trudeau: Maybe the investigation will be leaked, Mr. Speaker.


Lincoln MacCauley Alexander: On a point of order, Mr. Speaker.


Mr. Speaker:: Order, please. The hon. member is rising on a point of order. Hon. members will appreciate that we have had a number of supplementary questions on the same subject and we will be running short of time. The hon. member for Hamilton West is rising on a point of order, I believe.


Lincoln MacCauley Alexander: Yes, Mr. Speaker. Perhaps I was a little confused in asking the Prime Minister the question, but because of the seriousness of the matter I had hoped that he would give a credible answer. All I am asking him is whether the results of the investigation will be made public and, if not, why not?
Inquiries of the Ministry


Pierre Elliott Trudeau: Mr. Speaker, if the hon. member wants a serious answer to this he should reflect that the government's position is one of having hundreds of thousands of documents every year which are circulated among various people in the government service, and we cannot possibly have a policeman on each document or on each person who has access to a document. We take a serious view of these leaks not so much because of the harm they can do the government-I do not think anything has happened or will happen to the government because of them-but because, as I said a moment ago, of the moral aspect of the question involved. If individuals in the Public Service, egged on by the opposition in many cases-


Some hon. Members:: Oh, oh!


An hon. Member:: How do you know it is the Public Service?


Mr. Bell:: Whom are you trying to protect?


Some hon. Members:: Oh, oh!


Lincoln MacCauley Alexander: Carry on, Mr. Prime Minister.


Pierre Elliott Trudeau: Thank you very much.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. May we have order.


Mr. Ricard:: That is a very low insinuation.


Pierre Elliott Trudeau: If individuals throughout the Public Service decide to take justice into their own hands and set themselves above those elected to represent the people, I think this is a very serious thing for the country, not for the government.


Some hon. Members:: Hear, hear!


An hon. Member:: How do you like that?


J.-H.-Théogène Ricard: St. Boniface, shut your big, tin mouth.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. The Leader of the Opposition has the floor.


Robert Lorne Stanfield: Mr. Speaker, a moment ago the Prime Minister used the expression "egged on by the opposition" in relation to the misuse, improper release or leakage of public documents. I ask him through you, Mr. Speaker, either to qualify that statement or withdraw it. As it now stands, it constitutes an imputation that myself or other members of the opposition have egged on members of the Public Service to do a highly improper and illegal act. I do not think, with all respect, sir, that is the kind of imputation the Prime Minister of this country, even when he is trying to be a clown, should make in this House.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. The hon. member for Cape Breton-East Richmond wishes to rise on a point of order.


Some hon. Members:: Oh, oh!

November 23, 1971
Inquiries of the Ministry


An hon. Member:: Here we go again.


Mr. Maclnnis:: Mr. Speaker, my point of order arises from the statement made by the Prime Minister which would indicate that the leak has been traced to the Public Service in that he has reported that the opposition egged on civil servants to release such a document. If he has reached the point in his inquiry where the leak has been traced to the Public Service, he owes it to the House to explain who that public servant is. I suspect it was someone in his own department.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please.


Lincoln MacCauley Alexander: I have a supplementary question.


Mr. Speaker:: Order, please. I suggest to hon. members that perhaps we should try again to continue with the question period. The Chair might recognize the hon. member for Skeena.


Pierre Elliott Trudeau: I rise on the point of order.


Mr. Speaker:: Order, please. I understand the right hon. Prime Minister is rising on the point of order.


Pierre Elliott Trudeau: I apologize, Mr. Speaker, but I understood the Leader of the Opposition to have gained the floor on a point of order.


Gerald William Baldwin: It was a question of privilege.


Pierre Elliott Trudeau: If it is a question of privilege may I comment on that same question?


Mr. Speaker:: Order, please. My understanding was that the Leader of the Opposition had gained the floor for the purpose of asking a question. It might have been a question of privilege or a point of order and that is why I allowed the Leader of the Opposition to make his point, which I believe he has made.


Gerald William Baldwin: Mr. Speaker, I rise on the point of order Your Honour has raised. The Leader of the Opposition rose on a question of privilege and asekd the Prime Minister either to qualify his statement, which was a direct implication against members of the opposition, which could mean this party or the parties to my left, or withdraw it. I think he should either do one or the other, and Your Honour, with great deference, should request him either to qualify it or withdraw it.


Mr. Speaker:: Order, please. The hon. member cannot be serious in that suggestion. I suggest to him that he is asking another member of the House to withdraw an accusation or a charge. Charges are made by hon. members every day in the course of debate. Those charges are not always well-founded. Charges are made by one hon. member against another hon. member which are not always supported. It is not within the competence of the Chair to ask an hon. member to withdraw a charge he has made, whether or not it is right, whether or not it is founded on fact. This has nothing to do with procedure and, with respect, I suggest it is not for the Chair to invite

or force an hon. member to withdraw a charge he has made against other members.
I appreciate that this is a valid point of order and I allowed the Leader of the Opposition to make this point. If the right hon. Prime Minister wishes to speak to the point of order in response to the Leader of the Opposition, or to the question of privilege, certainly he will be recognized for that purpose.


Pierre Elliott Trudeau: Thank you, Mr. Speaker.


Gerald William Baldwin: This constitutes a criminal act under the Official Secrets Act. It constitutes a criminal conspiracy allegation against members of the opposition.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. The Chair has recognized the right hon. Prime Minister.


Pierre Elliott Trudeau: I am very happy to hear the Leader of the Opposition applauded by his whole party.


Thomas Miller Bell: Order!
Some hon Members: Oh, oh!


Thomas Miller Bell: What has that got to do with it?


Pierre Elliott Trudeau: I am very happy-


Mr. Muir:: Some of your party are not applauding you, fellow.


Pierre Elliott Trudeau: I am glad to hear him express-


Robert Muir: Some of your members are not applauding you, especially Hellyer and some others.


Pierre Elliott Trudeau: Have you had a drink?


Some hon. Members:: Oh, oh!


J.-H.-Théogène Ricard: Be a man!


Mr. Speaker:: Order, please.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. With great respect I suggest to hon. members on both sides of the House that this is not appropriate and proper behaviour for the House of Commons.


Some hon. Members:: Withdraw!


Mr. Speaker:: Order, please. I really think hon. members should perhaps try for the moment to move on to another subject.


J.-H.-Théogène Ricard: Are you proud of that remark?


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. I recognize the hon. member for Skeena.


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


Mr. Speaker:: The hon. member for Cape Breton-The Sydneys is rising on a question of privilege. I apologize to him.
November 23, 1971


Robert Muir: I apologize to you, Sir.


Some hon. Members:: Oh, oh!


Robert Muir: You are not shouting me down today. As I have said on other occasions, the right hon. member who is supposedly the Prime Minister of this country reached this chamber in the same manner as the rest of us. If he is not man enough to take heckling in this House-


An hon. Member:: You can't take it yourself.


Robert Muir: -and becomes childish and petulant and then sits down and sulks, throwing insults across the way, making the suggestion, sir, that someone has been drinking-


Some hon. Members:: Oh, oh!


Robert Muir: -or something along those lines, I think he should be brought to order and brought to task in the same way as any other member of this House of Commons. He has no right to cast reflections on the activity or conduct of any member of this House of Commons. If he is trying to destroy me as a member of this House-


Some hon. Members:: Oh, oh!


An hon. Member:: You are doing it to yourself.


Robert Muir: I have plenty of time, Mr. Speaker, and I refuse to be howled down by the jackals opposite. I suggest, sir, honourable sir-


Some hon. Members:: Hear, hear!


Robert Muir: -that you-


An hon. Member:: Sit down while you are ahead.


Robert Muir: I have a right, sir-


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. The hon. member has the floor. I suggest to hon. members that the hon. member who has the floor should be given an opportunity to state his point. Hon. members have a duty to co-operate with one another and with the Chair to try to make this place a reasonable place for debate. For the moment, the hon. member has the floor and he should be allowed to state his point.


Robert Muir: Thank you, Mr. Speaker. I am glad you are able to bring members to your right into line. I should like, sir, to ask you, in all common decency, to ask this member to withdraw the statement he made. I am completely serious and honest about this, Mr. Speaker. I am not going to have my character besmirched by that over there.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Robert Muir: I am not going to. My people in Cape Breton-The Sydneys know my record and my background. I do not have to be slurred by something said over there by
Inquiries of the Ministry
someone who is supposed to lead this country with decency and respect. I ask for withdrawal, Sir.


Some hon. Members:: Hear, hear!


Mr. Speaker:: The hon. member has very forcefully, and I think with reason, made his point on a question of privilege. I am not too sure whether I heard the words pronounced of which he complains, but certainly no hon. member in this House has the right to make a suggestion about another hon. member which would tend to affect his character. I am quite sure no hon. member or no right hon. member would want to do this. I certainly will hear the explanation by the right hon. Prime Minister if he has said words to the effect suggested by the hon. member for Cape Breton-The Sydneys. Certainly, I am sure the Prime Minister would want to indicate that he did not want in any way to affect the character of the hon. member.


Some hon. Members:: Withdraw.


Pierre Elliott Trudeau: Mr. Speaker, I am in your hands on this. After I was trying to gain the floor to answer the question of the Leader of the Opposition, I was met by constant heckling from the hon. member in particular and rather than do as he suggested, sit down and sulk, I asked him if he had had a drink. If this is something which offends him, and if he is known as a drinking man, I wish to withdraw this.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


Some hon. Members:: Withdraw!


Mr. Speaker:: Order. The right hon. gentleman has said he is in the hands of the Chair. Of course, all hon. members have in this regard to follow the advice and guidance of the Chair. I would think it would be much simpler if the right hon. gentleman, having given his explanation, would simply indicate that he withdraws any imputation in relation to the hon. member, and then we will try to continue.


Pierre Elliott Trudeau: Mr. Speaker, I understand the gentleman is a teetotaler and therefore in anything I might have said along those lines I certainly wish to say there was no implication of bad conduct on his part. I will sit down, Mr. Speaker. Is that not sufficient?


Robert Muir: Mr. Speaker, I thank the right hon. gentleman for his reply and for his apology. It is a serious matter. I have talked to him privately and he knows the situation. I thank him for his apology.


Some hon. Members:: Hear, hear!


Mr. Speaker:: I suggest the incident be closed on a note of charity. I think this is very becoming. The hon. member for Skeena.



PENITENTIARIES


Frank Howard: Mr. Speaker, I wonder if I might direct a question to the Solicitor General. Has he

November 23, 1971
Inquiries of the Ministry
yet received the report of the commission of inquiry headed by Mr. Swackhamer in respect of the riot and other events at Kingston earlier in the year? If so, can he tell us when he will be making it public? If he has not received it, can he give us any indication when he expects to receive it?


Hon. Jean-Pierre Goyer (Solicitor General):: No, Mr. Speaker, I have not received this report yet, and unfortunately I do not know when it will be handed to me.
*
*



FEDERAL-PROVINCIAL RELATIONS DISAGREEMENT BETWEEN OTTAWA AND QUEBEC RESPECTING FINANCIAL ARRANGEMENTS-REQUEST FOR JOINT COMMUNIQUE

Mr. Rene Matte (Champlain):: Mr. Speaker, I should like to put a question to the Prime Minister.
In view of the obviously contradictory attitudes of the Quebec Premier and the Prime Minister of Canada concerning the course that they want to set for various administrations, from the social and economic points of view, does the Prime Minister intend to prepare a joint communique with his colleague-I was going to say his pupil-Mr. Bourassa so as to inform the House and the people on the actual situation which exists now between Quebec and Ottawa?


Pierre Elliott Trudeau: Mr. Speaker, I did understand the question, except for the essential part of it. This would be a communique on what? The hon. member might perhaps repeat his question. I did not understand too well. What is the point in litigation?


René Matte: In order to clarify my question directed to the Prime Minister, I would merely like to add, Mr. Speaker, that it has to do with the different positions taken by the Premier of Quebec and the Prime Minister of Canada with respect to tax arrangements, from the points of view of social affairs administration and the Regional Economic Expansion Department, since different interpretations have been given by the Premier of Quebec.



HOUSING


Mr. S. Perry Ryan (Spadina):: Mr. Speaker, in the absence of the Minister of State for Urban Affairs who is responsible for Central Mortgage and Housing Corporation I put this question to the Prime Minister. As Main Square, a 1,078 suite, high-rise complex in Toronto was altered from a private development to a CMHC innovative housing development with disastrous effects on planning and schooling in two metro boroughs, will the Prime Minister assure the House that he will insist upon proper CMHC consultation and planning before it embarks on similar ventures?


Mr. David Weatherhead (Parliamentary Secretary to Minister of State for Urban Affairs):: Mr. Speaker, Main Square in Toronto is a project of over 1,000 housing units under the innovative housing program, over 500 of which will be low rental income units. The dispute at present appears to be between the Board of Education of Toronto and the Toronto City Council as to whether the board has made enough input into their planning procedures. But I think there are only about 72 schoolchildren involved in this project, and the allegation that a new school is required for these 72 children is somewhat ridiculous.



MAIN SQUARE, TORONTO-CMHC POLICY REGARDING GRANTS TO AMERICAN DEVELOPERS

Sylvester Perry Ryan: I would ask the parliamentary secretary whether it continues to be government policy to permit CMHC to give a capital handout of almost $14 million to American developers, such as Victoria Wood Development Corporation Limited in the Main Square case, without any capital contribution from such American developers?


David Bennington Weatherhead: There was a $1 million contribution by the developers in question, namely, in holding the 75-year lease. But I would say to the hon. member that we would be happy to discuss this at the time of adjournment if he wishes to do so.


Mr. Speaker:: Order, please. The hon. member has now given an explanation and time is running out.


Pierre Elliott Trudeau: Mr. Speaker, I really cannot do what the hon. member suggests, that is write a joint communique. Premier Bourassa is opting for regional expansion. Apparently, he did not say what the press has attributed to him. The matter is settled. He has been misquoted, he did not say what the opposition suggests he said on the grounds of some reports.
If he now wants to say something else, it should be made clear.



MAIN SQUARE, TORONTO-REQUEST FOR STATEMENT BY MINISTER

Mr. Andrew Brewin (Greenwood):: In view of the various problems that have arisen in respect of the Main Square development, will the parliamentary secretary suggest to the Minister of State for Urban Affairs that he make a statement in the House about the development of this project?


David Bennington Weatherhead: I will be happy to answer any further questions at this time, but I will certainly relay the request to the Minister.

November 23, 1971



LIFT PROGRAM-REQUEST FOR EXPLANATION OF ERRORS REQUIRING REPAYMENTS BY FARMERS

Mr. Jack Murta (Lisgar):: My question is for the Minister of Agriculture and is in connection with the payments under the Lift program. Will the government give a full explanation to the western farmers of the mistakes which occurred that require the government to request such extensive adjustments of the Lift payments?


Horace Andrew (Bud) Olson: I do not
believe that we will reveal the contents of individual files to the public. It is standard practice in all departments that confidential or personal information respecting the operation of an individual farm is not made public. But I will certainly give the hon. member an undertaking that we will give some explanation of the nature of the disagreements. As I said in the House some time ago, most of it is caused by the fact that the figures in the application do not correspond with either the photographs or other evidence as to what the actual acreage was.



PROPOSAL BY PROVINCIAL MEMBERS OF AGRICULTURE RESPECTING ESTABLISHMENT OF COMMITTEE ON FEED GRAIN MARKETING

Jack Burnett Murta: I should like to ask the Minister of Agriculture a supplementary question regarding the agricultural policy that has been discussed by the provinces in the last few days. Since the provincial ministers have asked for the immediate establishment of a committee composed of representatives of the federal government, the Wheat Board, the Livestock Feed Board and the provincial governments on a national feed grain marketing board-


Mr. Speaker:: Order, please. Will the hon. member ask the question? We are running short of time and the question seems to be rather long.


Jack Burnett Murta: I am coming to the end of my question, Mr. Speaker. In view of the recommendation that these various groups be represented on the board and should report back to the government within three months, is the government going to consider this recommendation from the provinces?


Horace Andrew (Bud) Olson: We had a
meeting yesterday afternoon with all the ministers, we had another meeting from 8.30 to 1 p.m. today and we are meeting again at 4.30. I can advise the hon. member that there are a number of matters under consideration, but we have not yet reached a detailed discussion of that particular proposal.



INDIAN AFFAIRS


David Lewis: I have a question for the Minister of Indian Affairs and Northern Development
Inquiries of the Ministry
arising out of a serious and shameful statement made the other day by a provincial judge in Ontario, Judge Collins of Sudbury, with regard to the Indian people of this province and country. I appreciate the fact that Judge Collins is under provincial jurisdiction. I want to ask the minister whether he has made representations to the Attorney General of Ontario critical of this shameful remark by the judge and perhaps requesting that the judge be fired for treating citizens coming before him in that way?


Joseph Jacques Jean Chrétien: Mr. Speaker, I agree with the hon. member in saying that if the remarks imputed to the judge are those he made they are totally unacceptable, and I shall inquire to find out what steps I must take under such circumstances. Only, I would not want to ascribe to him-


Mr. Speaker:: Order, please. The hon. member for Lambton-Kent.


David Lewis: I have a supplementary question, Mr. Speaker.


Mr. Speaker:: We are running short of time. Perhaps the hon. member for Lambton-Kent might allow the Chair to recognize the hon. member for York South on a supplementary question, following which the Chair will recognize the hon. member for Lambton-Kent.


David Lewis: In view of the fact that the statement by Judge Collins was made a few days ago, may I ask the minister whether the department has started an investigation, or is the matter just being considered now? Will the minister inform the House eventually what steps he is taking, if any?


Joseph Jacques Jean Chrétien: Mr. Speaker, I will be pleased to inform the House and the hon. member of the steps we will take in this case.



ESTABLISHMENT OF COMMITTEE ON FEED GRAIN MARKETING

Mr. Mac T. McCutcheon (Lambton-Kent):: My question is for the Minister of Agriculture. Is it the government's intention to establish a committee composed of representatives of the federal government, the Wheat Board, the Livestock Feed Board and the provincial governments regarding national feed grain marketing?


Horace Andrew (Bud) Olson: That is essentially the same question as was asked by the hon. member for Lisgar a minute ago. I think the same answer is applicable.
9810

November 23, 1971
Inquiries of the Ministry



THE CANADIAN ECONOMY


Mr. Maurice Foster(Algoma):: My question is directed to the Parliamentary Secretary to the Minister of Industry, Trade and Commerce. Have any grants been approved yet by the Employment Support Board for companies adversely affected by the U.S. 10 per cent surcharge, and can the parliamentary secretary say what time span companies can expect to elapse for the processing of applications from the day an application is received until a decision is made by the board?


Bruce Andrew Thomas Howard: About 186 applications have been received thus far involving some 9,000 or more employees. The normal time span varies from a few days to two or three weeks.



ADMINISTRATION OF JUSTICE


Mr. A. D. Alkenbrack (Frontenac-Lennox and Addington):: My question is directed to the Solicitor General who I believe has some authority over the National Parole Board. It pertains to the permissive society now flourishing in Canada. Can the Solicitor General explain to me and to the House why the parole board is granting parole to the convicted criminal kidnappers in the notorious Nelles case in 1969, after only one-sixth of their sentences have been served, while the same parole board will not grant the return of a driving licence to a penitent constituent of mine?


Some hon. Members:: Oh, oh!


Almonte Douglas Alkenbrack: They laugh on the government
benches, but this is a serious matter. The same parole board will not grant the return of a driving licence to a penitent constituent of mine who has served more than half his licence deprival sentence for impaired driving. Could he answer that question?


Jean-Pierre Goyer: Mr. Speaker, I am not in a position to comment on the points raised by the hon. member, but he knows very well that the National Parole Board is an independent body, according to Parliament's decision. On the other hand, the hon. member should know that the Senate has decided to examine the policy and procedures of the National Parole Board. We shall co-operate with the Senate and we shall also-


Almonte Douglas Alkenbrack: Mr. Speaker-


Mr. Speaker:: Order, please. I suggest to the hon. member that perhaps we might go on to the next question. From a procedural standpoint, it seems to me that the hon. member's question is objectionable. I appreciate the fact that he is submitting an argument in support of a proposition. In this respect, perhaps he might consider that the representation has been made.


Almonte Douglas Alkenbrack: I want to put justice in perspective in this case. May we debate this at ten o'clock, Mr. Speaker?



REGIONAL ECONOMIC EXPANSION


Mr. Doug Rowland (Selkirk):: My question is for the right hon. Prime Minister. It refers to a document which, I hasten to add, is not secret. It is called "Maintenant Quebec". The document states that the federal government has spent or allocated some $270 million in Quebec City and the immediate area. I am not saying the money is not needed, but I want to ask the Prime Minister if he will give his assurance to the House that similar amounts per capita are being spent in other designated areas of Quebec and the rest of Canada which are not directly represented by the Minister of Regional Economic Expansion?


Pierre Elliott Trudeau: Much more, Mr. Speaker.
5fC *	>|t



AGRICULTURE


Mr. Roland Godin (Portneuf):: Mr. Speaker, I should like to put a question to the Minister of Agriculture.
Has he examined the representations made by potato growers from Portneuf, Montmorency and Champlain who, as a result of excessive humidity last autumn, lost 50 to 60 per cent of their crop? If so, could the minister tell me what steps he intends to take in order to help those producers solve their financial problems?


Horace Andrew (Bud) Olson: Mr. Speaker, I have had some representation in a general way. I have not had specific complaints or requests for assistance from the producers involved.


Mr. Speaker:: Order, please. I apologize to hon. members who have not been called today but they have been noted. I have taken into account that there were questions of privilege and points of order and to that extent I have extended the question period to try to allow as many hon. members as possible to ask questions. I have tried to note those who have not been successful today, and I will try to give them priority tomorrow. Orders of the day.
November 23, 1971



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Monday, November 22, consideration in committee of Bill C-259, to amend the Income Tax Act and to make certain provisions and alterations in the statute law related to or consequential upon the amendments to that act-Mr. Benson-Mr. Laniel in the chair.
The Deputy Chairman:: In accordance with the statement of the Parliamentary Secretary to the President of the Privy Council, as recorded at page 9777 of Hansard of November 22, 1971, the committee will now proceed to consideration of Sections 21, 25, 46 to 48 inclusive, 59, 64 to 66 inclusive, 87 and 124, all dealing with mining and petroleum.
On clause 1-section 21: Cost of borrowed money.


Gérald Laniel: Shall section 21 carry?


Erik Nielsen: Mr. Chairman, I have already set down some of the views I have with respect to the mining industry in the debate on the general provisions of Bill C-259. I have spoken of the harmful effects of the legislation on prospectors, who will virtually be put out of business. I have also spoken of the restrictions that are being imposed, not only by Bill C-259 but by other restrictive legislation before the House, and of the disastrous effect that these restrictions will have on the growth of this industry. I want to approach an analysis of those sections of the bill in a general way, from the point of view of what is desirable in this country, and how we should be treating this industry, indeed any industry.
However, I intend to confine my remarks to the mining industry. Others on this side of the chamber will be speaking on the measure as it affects coal and timber resources, and yet others will be speaking of the manner in which the oil and gas industries will be affected. As I say, I want to confine my remarks generally to the hardrock mining industry. I want to approach the subject by suggesting at the outset to the government that what it should be doing, instead of applying suffocating restrictions, is providing incentives for the industrial growth of the country, and in particular of the mining industry.
Under existing legislation, tax treatment of the mining industry is contained essentially in the income tax regulations, and it now appears that this concept is to be carried forward in Bill C-259. This is one of the major criticisms that the industry has of this manner of dealing with its taxation. There is no way that the industry, dependant essentially upon large amounts of risk capital, can plan sufficiently far ahead-in some cases it has to plan five to seven years ahead-with any accuracy if the rules of the game are going to be changed half way through the planning period, or indeed month by month as is possible if this whole operation is going to be covered by regulations made by Governor in Council.
I make specific reference to section 65 of the bill, which is found on page 155, where the following is set forth between lines 22 and 27:
Income Tax Act
There may be deducted in computing a taxpayer's income for a taxation year such amount as an allowance in respect of an oil or gas well, mineral resource or timber limit, if any, as is allowed to the taxpayer by regulation.
There is the power to tax. Another criticism can be made with respect to that kind of regulation, namely, that the power to tax is the power of Parliament, and that is where it should reside. But this section of the bill would give that power to the Governor in Council. It seems to me that that is the ultimate in the weakening of the power of this place, passing the power to tax over to the Governor in Council.
In order to achieve a new tax treatment quite similar to the old one, namely, that tax treatment of the mining industry is to be contained in subsequently prescribed regulations, the government has seen fit to issue occasionally its general intentions. These intentions have been released in the form of vague, poorly phrased proposed regulations. Furthermore, it may be shown that the spirit and intent of certain of these proposed regulations seem to change with each new issue of them.
Specific reference is made here to proposals made by the Minister of Finance in August, 1970, on the subject of eligible expenditures to earn depletion. At that time it was proposed to expand these eligible expenditures to include, first, the cost of new facilities located in Canada to process mineral ores to the prime metal stage and, second, certain expenditures in connection with a major expansion of an existing Canadian mine.
On July 6 of this year the Department of Finance issued further proposed regulations to apply to the mining and petroleum industries. Included in these new regulations were a series of proposals that, as they now stand, are not only ambiguous but contradictory to those of August, 1970. This is another example of the changes proposed for the act introduced by the Minister of Finance, followed by a second batch of proposed changes and a third batch of proposed changes. The same thing is happening with the proposed regulations that are being issued, all of which is causing extreme difficulty, if not making it impossible for the mining industry to make any plans at all based on the so-called proposed regulations.
Such changing attitudes by the government in its proposed tax regulations have contributed in no small measure to an unsettled business climate in Canada's mining community. Specific reference is made here to a submission by Noranda Mines Ltd. to the Standing Senate Committee on Banking, Trade and Commerce. I am sorry I do not have the page number, but the committee report reads:
Noranda has undertaken a $120 million program of expansion in the province of Quebec, relying on our understanding of the Minister of Finance's announcement of August, 1970 that all of these expenditures would be eligible to earn depletion. Based on the spirit and intent of that announcement, there is no conceivable reason why all of these expenditures should not earn depletion. Now we find that $40 million of these expenditures will not qualify.
This submission by Noranda Mines continues:
We were led to believe that the announcement of August, 1970 was specifically designed to encourage developments of this type. Had we not believed that all of the expenditures involved would have earned depletion, the project would probably not have proceeded, at least on its present scale. Changes in the intent of the
9812

November 23, 1971
Income Tax Act
August, 1970 announcement at this stage are clearly inequitable, to put it mildly.
Not only are the changing attitudes of government toward certain sectors of the economy inequitable, but it is becoming more apparent that the government is also becoming increasingly restrictive. Specific reference is made here to the restrictive attitude of the government toward the natural resource industry in general, and toward the mining industry in particular. Subject to further clarification it now appears that the proposed tax regulations will have the effect of withdrawing exemptions for prospectors, and I have mentioned that; replacing the three-year tax-free period for new mines after 1973 by accelerated depreciation rates on some assets of that new mine; earning a depletion allowance of $1 for every $3 of certain expenditures. This elimination of the three-year tax exemption period for new mines, particularly in the northern regions of the country, is going to have an absolutely devastating effect, not only on the exploration and search for new mineral deposits but also on the bringing into production of new mines. In addition, the regulations will discontinue shareholders' depletion allowances. Obviously, such measures are restrictive and if implemented, could seriously hinder the orderly expansion of one of our most important industries, the mining industry.
At a time when the government is showing more manifestations of its restrictive policies, as in the field of foreign ownership, serious consideration must be given to the effect such restrictive policies will have on the ability of the individual Canadian to invest and participate in the growth of our domestic natural resources. Specific reference is made here to the existence of drilling funds. I have mentioned this on a prior occasion in debate as an example of how the United States policy toward investment funds is actually hindering the development of Canadian resources, because Canadian investment dollars find it a good deal more attractive to find their way into the United States and come back here by way of investment capital rather than being put directly into investments at home.
American tax laws favour the use of essentially private capital for these drilling funds in a risk-taking venture, such as oil or gas exploration, by granting certain incentives to individuals willing to take such risks. These drilling funds were discussed in some detail by me in this House on October 18 of this year. How much better it would be to gain more control over our own resources by attracting more Canadian investment dollars in our resource development industries, and by providing incentives at home at least equivalent to those being provided by the United States government to their investors, than to take restrictive measures in the hope that those measures will be the be-all and end-all of repatriating our resource industries.
The point to be made at this time is that rather than adopt a restrictive policy toward ownership and development of resources in this country, much more consideration must be given to policies that further individual initiative and reduce state interference and control to a minimum. Quite obviously, one means of achieving such a policy of individual initiative is to establish tax incentives comparable to those in the United States that encourage an individual to invest more private risk capital in Cana-
[Mr. Nielsen.J
da's natural resources. The influx of large amounts of such domestic capital into Canada's resource industries will provide an opportunity that will allow concerned Canadians to express their feelings about foreign control of these resources in a more positive manner than could ever be achieved by the main recommendation of the Gray report, that is, the setting up some sort of screening process to direct the inflow of investment capital in this country.
The principles of tax incentives as against tax restrictions can be applied to a wide field. It has already been indicated that tax incentives for individuals to invest in Canada's natural resources are a suitable means of providing an avenue for greater individual participation in the growth and development of our economy. One further area that relates to tax incentives and the mining industry must be mentioned. This area is the field of environmental control and pollution abatement by the mining industry.
The latest Department of Finance news release on tax reform proposals for the mining industry referred to certain allowable assets eligible for accelerated depletion under regulations not yet published. Although the list of eligible expenditures included buildings, mining machinery, social capital and such items, no mention was made of the cost of pollution abatement equipment necessary to meet industry emission standards. Surely, this is one incentive that the government should be holding out to this industry in order to meet the increasing threat of pollution.
In summary, it may be said that although the principle of tax treatment by regulations prescribed subsequent to enactment of Bill C-259 allows some flexibility, particular caution must be exercised at this time that these proposed new regulations remain consistent and in the best interest of the country. If indeed the government intends to proceed in this fashion on the matter of writing the requirements into acts so that the mining industry knows where it stands and we must have regulations, then I submit these must be consistent and in the best interests of Canada. It has already been shown that since the first public appearance of the proposed new tax regulations both the spirit and intent of certain of these regulations have changed. How many more regulations are there to come and how will these differ from those presently proposed?
Of equal or perhaps greater importance is to assess the new tax proposals and to evaluate their potential contribution to the socio-economic interests of Canada. It is apparent that the present government intentions are to further restrict development and ownership at a time when serious consideration must be given to an incentive tax program. To this end, it is now proposed that rather than adopt restrictive measures, tax incentives be made available to achieve the following objectives. We must first strengthen the domestic mining industry to the extent that it is able to compete with international concerns. It is not so important to look at any tax advantages the domestic mining industry may have relative to other domestic industries, but to see what disadvantages the domestic industry has relative to international concerns. If the government does not think that is important, let us
November 23, 1971

analyse for a moment the burgeoning development of mineral industries in countries like Australia.
Second, we must provide a climate that encourages individual initiative and risk capital investment in domestic natural resources. A comparable scheme to the American drilling funds must be actively considered in the broader context of Canada's mining industry. Third, we must provide tax incentives for environmentally conscious industry. Serious consideration should be given to including costs of pollution abatement equipment in the list of expenditures eligible for accelerated depreciation.
Others on this side will deal with the specifics of these and other proposals, with specific parts of the resource industries of the country and the effect that this tax reform bill will have on them. In a very general way, I have tried to point out to the government that what we require for the development of this country is an incentive approach rather than a restrictive approach.


Mr. Saltsman:: Mr. Chairman, there has been much discussion in this country about incentives for mining industries. At the moment, it appears that all the representations made to the government about removing the great advantages that have been given to the resource industries of Canada have met with little success. The government has ducked its responsibilities. It has backed away from its original position, and has backed away from recommendations in the Carter commission report to the effect that the resource industries should be treated in relatively the same way as our other industries are treated, and that special concessions given to those resource industries over the years have been inequitable and unfair. I submit that those advantages have been positively damaging to the economic future of this country. We have paid out money to destroy our own economy. We have given tax concessions and received little in return.
I realize that the provinces of this country which almost totally depend on resource development will find the proposition I am putting before Your Honour difficult to accept. I can imagine hon. members saying, "It is fine for the hon. member for Waterloo to say that. He comes from an industrialized area of Canada. It is fine for him to be an advocate of the manufacturing industries, but where does his position leave, say, British Columbia, Alberta or the Yukon? I admit that there are difficulties connected with the position I am adopting.
On the other hand, I think we should discuss these matters frankly. Quite often debates in this House on the merits of resource industries as against those of manufacturing industries take on the appearance of a civil war. Often those debates transcend party lines, support for one or other of the propositions being put forward being divided along provincial lines rather than along party lines. That is understandable. However, the position we face is serious. Unless we can resolve this problem and stop seeing ourselves as a country of fractious segments, there will not be a country called Canada. We shall not be able to develop effective trade policies, and we shall not be able to develop an effective tax system. We must find some way to resolve this particular difficulty.
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I hope hon. members listening to me will give me the benefit of the doubt when I say that I am speaking not only for Ontario and for the highly industrialized parts of the country, but I am speaking for all Canada. I am very much concerned about what is taking place. Canada is being excluded from virtually every major market for manufactured goods in the world. The same applies in many cases to our agricultural products. The United Kingdom, which has long been a traditional market for us, will adopt many of the restrictive measures of the European Economic Community. Many difficulties are in store there for our grain farmers. The United States is becoming increasingly protectionist. I feel that this United States sentiment will not disappear quickly. Notwithstanding the possible removal of the 10 per cent surcharge in the near future, the protectionist sentiment of the United States will increase. That country is looking inward. I do not think that the United States has embarked on these measures merely because the Prime Minister of Canada invited the premier of Russia and president of Yugoslavia to this country. That is what some hon. members have suggested, and I do not believe it. These United States moves were on the books long before these visits took place.
Surely, hon. members are not suggesting that Canada should not try to maintain relations with other countries of the world and that we should not make an effort to resolve many international difficulties that we, a member of the world community, face. When we look at Japan, what do we see? There is a market in Japan for our raw materials and some of our foodstuffs, but there is no market for our manufactured goods. When we look at the American position, what do we see? It has become clear, I think, that the United States wants from Canada raw materials and energy supplies, and no more than that. I am sure that some people in Alberta will applaud that. They will say, "This is great for Alberta." No doubt some people in British Columbia say, "We are shipping coal to Japan, and that is great for British Columbia." There is only one problem connected with this, Mr. Chairman. If we pursue a policy of exporting only raw materials and of encouraging, through our tax system, this kind of export, we shall in the end have opted out of nationhood. There will be no future for us as a country and we might as well realize it.
We could argue that in terms of coal, iron ore and oil, we have at the moment a position of considerable advantage so far as the United States is concerned. As I say, we could argue that and say that simply by increasing exports from primary industries we would increase the per capita income of Canadians. There is only one big "if" in all this. If we do that, we will not be able to maintain a population of 22 million people. We will have to cut back on our population sharply and export our people, as Ireland did many years ago. There is no way that we can sustain the present population in Canada and accommodate in employment the number of people presently in the labour force if, in future, we emphasize the export of our raw materials. The raw material industries are capital intensive industries. They are not large employers of labour. According to figures I have seen, the raw material industries employ about 150,000 people. They provide about 150,000 jobs out of a total of more than 3,500,000

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jobs in the country as a whole. That shows how serious the problem is. We must decide whether we are to be exporters of raw materials or the manufacturers of goods and providers of services.
When we were starting out as a new country and did not have our present population or infrastructure, we had to depend on what was traditionally called a fish and fur economy. What else could we do but export our resources, resources such as timber and minerals? Today, however, the choices open to us are different. Actually, we do not have a choice if we wish to maintain our population. The idea of depopulating Canada is-well, it is unthinkable. It is not acceptable and I do not know how it could be done. That is to say, I do not know how one could say to the young people of this country, "There is no future for you here; all we are doing is exporting raw materials. That is what we are encouraging through our tax system. You had better find yourself another country in which to live." I say this with the utmost seriousness. At the same time I say to those hon. members who come from resource rich provinces, "I understand your position; yet you must also understand the awful dilemma facing this country."
I would never suggest for a moment that we should cut back on the present rate of production in the mineral industry. That is not what I am suggesting, nor is any member of my party, I think, suggesting that. We are suggesting that we should look to the future and not encourage the export of raw materials from Canada either directly or indirectly through the tax system, as at present. We should instead find a way of saying to the resource provinces "We will meet your grievances. We understand your needs. We understand that this will have some effect on your future development, therefore, we will have an overall industrial policy for Canada that will compensate you for some of the development that may be forgone by you. Where that is not possible, we will at least have a provision for sharing the rewards of industry and resource development equally on a per capita basis to stop this constant civil war, this schizophrenia that exists within the boundaries of this country and which will ultimately destroy this country unless we find a way of resolving it."
I realize that some of what I say sounds a little dramatic. I do not wish to sound dramatic. This is something about which I feel very strongly and something which has been too long neglected. The kind of debate we are having today has often been turned into one of the east versus the west, as though we were enemies and not part of the same community and commonwealth. Therefore, in my remarks today I propose to examine some of the mythology-perhaps I should not say "mythology" because some members may take exception to that. I wish to examine some of the things-we have always believed about the resource industry and its value to Canada as a whole. I want to see to what extent that concept really bears examination and to what extent it really has validity for a country that has a choice of becoming a manufacturing nation or continuing to be what is often called the greatest underdeveloped country in the world.

I wish to quote some words of Mr. Ralph Nader who is visiting Canada. This statement is reported in the Ottawa Citizen for Saturday, November 20, and is a direct quote:
"As long as you are an extractive super-colony, and as long as decisions affecting U.S. investment in Canada swirl around U.S. considerations, the Canadian interest will come out second best."
Those remarks were made by an American. He said other things along the same line. A few weeks ago another American visited Canada on a mission for a group of businessmen in the United States. He made the following remark which was reported in the November 17 edition of the Globe and Mail:
"If I were a Canadian-which I sometimes wish I were-I would be less concerned over the temporary surcharge and more concerned over your exports of raw materials to the United States. It is not fair for Americans to use up Canadian resources faster than Canadians use their own."
This statement in the Globe and Mail is attributed to Mr. C. F. Hachmeister. We have a lot of resources in this country. I am not trying to denigrate for a moment the scope of our resources. However, regardless of that scope, they are still finite. There is a limit. In a number of years, we could remove them all. We could go further afield into more expensive and more difficult extractive areas, but what happens when the resources give out? What are we left with? What does this country do for an encore when it has exhausted its resources? We must not forget that as vast as the resources of Canada are, the insatiable appetite of Japan and the United States will consume them at such a clip as to leave us aghast.
In the early days, we thought that pollution was no problem. We said "Look at our beautiful rivers and waterways. Look how fast they flow to the oceans and lakes. What are a few bits of dirt?" We learned to regret that position. The smokestack in the city was a sign of progress and satisfaction. We are now in danger of destroying ourselves because of the close proximity of those smokestacks. The dye, slag and chemicals pouring into our rivers were considered signs of progress. We were wrong. We were wrong when we cut down certain areas of our forests and did not replace these areas with tree cover. Who thought it would be a mistake to take trees out of a country like Canada that had so many trees? As rich in resources as we appear to be, and as infinite as these resources may appear at the moment, they have a limit. If we do not husband them carefully and decide on their allocation, we will not have any resources. We will not survive, except perhaps as some northern slum of the United States.
An interesting item appeared in the October 29 edition of the Globe and Mail. It is an example of the kettle calling the pot black. The item deals with the Canadian Petroleum Association and reads:
-the mining industry will carry a 21 per cent collective tax burden while the petroleum industry will shoulder a levy of 36 per cent after 1976 when the legislation comes into force.
This is absolutely shocking. Imagine the mining industry getting away with paying only a 21 per cent tax while the dear old petroleum industry has to pay 36 per cent. It is shocking to both sides. At the moment, some estimates indicate that the oil industry is only paying a 6 per cent tax on its profits and the mining industry is only paying 13 per cent. It can be seen how seriously we are disadvantag-
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ing those industries and how unfair we are vis-a-vis the mining industry versus the oil industry. Nevertheless, I wonder how much sympathy we should allow ourselves to have when we consider that every other industry in Canada is paying the full tax, around 50 per cent, and in many instances providing far more employment than either the mining or oil industry.
It is not fair to those industries that are paying their full share of taxes to continue that practice, while the resource industries receive special privileges. Any kind of special privilege in society, whether it be a special privilege for one individual in contrast to another or one industry in comparison to another, arouses resentment. It does not increase the feeling of co-operation in society or the sense of belonging to the same society. There is a cause for grievance and division. So it should be. We like to think of ourselves as a fair society and a fair country. However, as long as we have tax laws on the books that treat one group of investors more favourably, for no good reason, than another group of investors, it is going to be difficult to maintain any kind of pride in the degree of equity that exists in Canada.
Another argument that is often used is that because other countries grant concessions to mining industries, most of the capital that goes into the mining industry, or for that matter the oil industry, is specific capital. I grant that the people in the mining business are in the mining business. They are not likely to go into the foam rubber business. If you do not provide the same kind of opportunities and the same kind of concessions in Canada they might get in Nigeria or Chile they will go elsewhere in the world, although they may have some reason to regret a decision to go to Chile as they may if they decided to develop mines in Ireland. Of course, these companies are helping to bring about this kind of talk. The distinguished hon. member for Yukon made that argument in his remarks a few minutes ago.
Unless we are prepared to give them the same benefits here in Canada they will go elsewhere, but this presupposes a number of things; that resources in Canada are equivalent to resources elsewhere, and therefore we have to give exactly the same concessions. In many cases our resources are richer and by giving the same concessions we are augmenting the profits of the companies. If they do not get what they want in the way of decent taxes and concessions they may not act in the national interest, perhaps not deliberately but because the activity of the company does not conform with our long-term outlook and planning. That being the case, why would we want them anyway?
There is considerable evidence to indicate that because we have been so generous in our tax system in respect of resource development, we have attracted much more money into these industries than even the market system would justify. The kind of argument advanced by the hon. member a moment ago cannot be justified in a free enterprise system or even in a social democratic system. A social democrat is more inclined to believe in planning and looking ahead to the future. He believes the people should have a greater say in determining their own destiny instead of leaving this to impersonal market forces.
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The social democrat is appalled at the idea that concessions should be given which frustrate the long-term objectives of the nation.


Gérald Laniel: Order. I regret to interrupt the hon. member, but I must do so in order to inform him that his time has expired.


Mr. Knowles (Winnipeg North Centre):: Carry on.


Gérald Laniel: Does the committee consent to the hon. member continuing?


Some hon. Members:: Agreed.


Mr. McBride:: For one minute.


Max Saltsman: Thank you, Mr. Chairman. I note the generosity extended to me has been somewhat tempered by a time limit of one minute, and I shall try to respect that.


Stanley Howard Knowles: He didn't mean it.


Murray Arndell McBride: I did so.


Max Saltsman: My concluding point is that in no philosophical system could we really justify a distortion of our tax system in order to bring more mining activity to Canada. After all, the people working on the Barber commission were not social democrats. Those people believe in a free enterprise system and their argument is that by providing these exaggerated benefits we have hurt ourselves and distorted the proper functioning of our economic system.
I hope to have an opportunity to say a few words later on in this debate. Let me conclude with those arguments and by expressing my appreciation to hon. members for the extended time they have permitted me.


Mr. MacKay:: Mr. Chairman, at the outset I should like to say that my remarks will be confined to section 65. I should like to say a few words with specific emphasis on the timber industry and coal mining. At the outset, I should like to comment briefly on the remarks of the hon. member for Waterloo. I found much in his very fine address with which I can agree. I should like to say, however, that with regard to the natural resource industries it is a fair comment that perhaps one should remember when one is tampering with industries of this magnitude, and accusing them of having special privileges, at least by reference, that it is upon this very important sector of the economy that we must depend to receive the impetus this country needs for its continued progress and development. Certainly, academics cannot provide it nor, with respect, can civil servants or politicians. There is a question as to whether those in the service industries can provide the necessary expertise to generate wealth and create prosperity. When one considers this country has always been primarily dependent on the success of these primary industries, I think perhaps in some cases at least, there is a case to be made for making sure that if they do not have any special privileges, these resource industries are handled with great care.
As far as the timber industry is concerned, I do not intend to say very much but, for the record, I think in

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considering the effects of section 65 on the timber industry the government has already recognized to some extent that other natural resource industries such as mining, oil and gas, require certain earned depletion allowances and expenses. If they made those concessions, as rightly they should, on a comparable basis for the pulp and paper industry this would have an equal effect. It would then be equitable and logical to consider giving this industry a system of earned depletion comparable to some of the depletion allowances which exist in respect of other natural resource industries.
For example, I think a depreciation allowance on antipollution equipment necessary to meet new emission standards would be worth while. It would make good sense, as well as good ecological practice, for pulp companies to improve their facilities with the very latest equipment. I think significant mill expansions at this time might be questioned. However, in so far as market conditions permit, there should be some concessions made there. As anyone knows who has worked on certain logging projects, there are some primitive conditions. Among the expenditures eligible for allowances would be social costs relating to the installation of roads, camps and other facilities for the employees.
It is with the coal mining industry that my thoughts are this afternoon. This is a very important industry, not only to Canada but to my province and to my constituency. It would appear that the national coal industry is fairly healthy. It may even be said to be in a "turnabout" position, and it might even be said it will expand rapidly during this decade. In 1969, for example, domestic coal production from all provinces was something over 10 million tons, and at the present time it is greater than that. In 1970 it was 16.6 million tons, up about 55 per cent. I see the parliamentary secretary smiling. Perhaps he doubts the efficacy of our research department, but according to the information I have this year's production will be over 20 million tons.
As far as the eastern coal industry is concerned, we do not have the benefits of long-term contracts with Japanese purchasers. As everyone knows, our coal industry is in serious trouble. This is because the government in its wisdom has decided to permit United States coal, from states like Pennsylvania and Kentucky, to come into the largest domestic market in this country, namely Ontario. This is possible now because, as a result of the Kennedy Round, the duty is off this coal. At the same time the government has seen fit to drop, to a large extent if not in fact entirely, the subsidy payments which permit transportation costs to be kept within reasonable limits in order that the maritime coal industry can compete in Ontario. As an example, the latest figures show that the production of coal in the Maritimes is down sharply. It would appear this is a result of a deliberate federal policy to stabilize maritime coal production at what could be said to be the subsistence level.
For example, New Brunswick coal production declined by 43 per cent in 1970. In Nova Scotia, coal production declined by 19 per cent as compared with 1969, from 2,621,000 tons to 2,122,000 tons. In the west, British Columbia's production increased by 280 per cent; the
[Mr. MacKay.J
increase amounted to 132 per cent in Alberta, and in Saskatchewan it was 89 per cent. There are certainly reasons for this. With all deference to western coal, it is of a much lower quality than the coal of Nova Scotia and eastern Canada generally. It is sub-bituminous. In fact, the so-called red coal of Saskatchewan is not much better than peat in terms of thermal efficiency. By contrast, Nova Scotian coal is almost up to the anthracite level in qualify and is in great demand when it is available. The drastic decline in our coal production came about, as I understand it, because of the removal of the subvention payment made by the federal government in respect of transportation costs.
Returning to the specific difficulties which the mining industry will encounter and relating them to section 65, it seems to me the key to this situation is that we cannot treat coal in the same way as other minerals are treated. For example, when we talk about exploration costs we must realize that most of the areas in Canada where coal exists have been known for many years, and there is really not much by way of exploration costs that the mines can write off. This is not, of course, the situation in which the nickel and copper mining industries find themselves. Again, the provisions with respect to earned depletion allowances are impracticable for maritime coal producers, simply because, as I understand it, in order to qualify they are obliged to increase their production, or increase their capacity to produce. But under present conditions it is hardly likely, as statistics show, that they will be able to do so. In fact, instead of production increasing by the necessary 25 per cent in order to qualify, in all likelihood production will decline still further unless drastic steps are taken.
At the present time coal producers enjoy certain advantages in the same way as do gold producers. Under the regulations now in force, gold producers benefit from a depletion rate amounting to 40 per cent of production profits or $4 an ounce, whichever is greater. The comparable figure with regard to coal is 10 cents a ton. Under the new tax proposals, as I understand them, effective January 1, 1972 these special rates will be replaced by earned depletion allowances identical to those available to other producers of minerals. I suggest this is a wrong approach because it is unrealistic as far as coal is concerned. It would seem to me that the intention of the federal government toward coal mining in Nova Scotia is to allow the smaller mines to operate without assistance until they are forced to shut down. I would point out that the unemployment resulting from such a course would affect about 5,000 miners at least, not to mention their families.
I have recent correspondence from the Minister of Energy, Mines and Resources concerning the McBean coal mine in Thorburn. From this correspondence it is clearly evident that the government has no interest in modernizing this mine or taking constructive steps to increase its productivity by starting a new working level. In fact, it appears that the government is content merely to phase this mine out. This is a serious matter. Where there used to be literally thousands of miners working in Pictou County, for example, there are now only a few hundred, and when the McBean Colliery is closed, as now it appears certain to be, and the Drummond Mine in
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Westville, the only other existing mine, ceases production, there will not be one place in Pictou County where coal is obtained, though millions of tons are available. A day will come, Mr. Chairman, when Canada will need the coal which is available in the East River Valley of Pictou County, as it will need the coal which is available in the rest of Nova Scotia. It will then be a case of starting from scratch, working with untrained personnel, very likely under emergency conditions.
One of the major provincial problems facing the operators of coalfields, at least in Nova Scotia, is that though the reserves are abundant, mining techniques are antiquated. In the west, on the other hand, coal is being produced by using the most modern machinery in conjunction with open pit mining. Leaving aside the question of the ecological damage which is done by strip mining, productivity and efficiency are certainly greater than can be expected from underground mining, even though, as I say, the quality of the coal produced in the west is not as good. Unless the government realizes that the mining industry does require special attention, particularly in Nova Scotia, we shall lose this industry completely. This may well result in another Glace Bay dilemma such as arises when one supports a marginal operation without attempting to improve it.
At a time when Canada's domestic market is using increasing quantities of imported coal, some initiative must be shown by the government so as to de-emphasize dependence on countries abroad and encourage domestic production and the development of mines, for the enrichment of the nation as a whole. I do not wish to get into a discussion about the merits of what Devco is doing in Cape Breton. It is not my field. However, it seems to me that the operation has not been a resounding success and that unless more attention is paid to the real needs of the coal industry conditions will soon be so bad that we might as well forget about it in eastern Canada. In western Canada there have at least been interesting concepts, such as the unit train. I suppose this development has been the result of a co-ordinated effort between provincial and federal government departments. I know of no such concepts having been introduced in eastern Canada, although one might think from the superior quality of coal in eastern Canada that a scheme of this kind would be particularly worth implementing.
In conclusion, it appears to me that coal, as I said before, should not be treated as just another mineral. It has special problems arising from its location, the difficulty of obtaining trained labour and the cost of transporting it to market, not to mention the effect of foreign competition, mostly from the United States. Any stable industrial economy needs an industrial base. Coal will be essential in the future if we are to make the best use of our primary resources. If we are to have cheap hydro-power available in Nova Scotia, coal will still be needed to help operate thermal generating plants. Coal is required in connection with our steel industry in eastern Canada.
The federal government should make immediate efforts to modernize our mines so that they can ultimately become viable. If we do not single out the coal mining industry as requiring some help, particularly in certain regions, we shall lose the industry, though the time will come when the demand for coal will justify the moneys
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which would, could and should be spent at this point, quite apart from the benefits in employment and resulting social benefits. You will never find a better group of men than the coalminers. They work hard. They risk their lives and all they want is a chance to earn an honest living and produce benefits for this country. So far, they have done so with notable success. It should be a shame to lose this vital part of our economic life through unwillingness to make concessions to this industry, particularly in Nova Scotia.


Mr. Barnett:: My hon. friend from Waterloo was unduly sensitive, it appeared to me, because he happens to represent a constituency in a manufacturing area in a part of the country which members from the far west sometimes refer to as the wicked east. As a member who spent all his life in the two westernmost provinces of Canada, who spent at least ten years of his life in a mining community and who has developing mines in his own constituency, I thought it might be useful if I participated for a few minutes in this debate to indicate my complete support for the approach to this whole matter as presented by the hon. member for Waterloo. Anyone who has lived in the atmosphere of a mining town and anyone who understands how completely dependent on a mining economy a particular area is-and the Yukon territory is a particular example-readily understands the concern of an hon. member such as the hon. member for Yukon, and indeed all of the members who have a high level of activity in their part of the country for the income tax law as it relates to that industry.
I should like to make clear, however, that it is a matter of regret to me that in this bill the government has rejected the approach suggested by the Carter commission. The Carter commission, as I recall its recommendations in summary, suggested, in thinking of the long-term situation in this country and of the future in particular, as well as its wealth in the form of non-renewable resources, that we should consider the timing and degree of our exploration and exploitation rather than have that exploration and exploitation left to the whims and fancies of the people actually engaged in the mining industry, or to the short term world market conditions which might prevail in respect of the salability of any particular metal at any given time. As the hon. member for Waterloo suggested, I feel it is important that we think in the longer term. Some of us from time to time have had an opportunity to travel within the boundaries of our great neighbour to the south. We have seen rather vivid examples of what has resulted within the boundaries of that country because of the traditional method of exploitation of non-renewable resources. Some of us suggest that while we still have time in Canada we should begin to think about the whole question of the manner in which these precious substances are drawn from the ground and our approach to that operation.
The lure of wealth, of course, has been at the root of the whole philosophy of mining as it has developed on this continent, stemming I suppose primarily so far as the whole western part of the continent is concerned, from the days of the great gold rushes. At that time men from all corners of the globe, some of the keenest, most adven-
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turous, strong-minded and able bodied men, were drawn to the search for a precious metal. As a result of this situation, there emerged a whole pattern of attitudes and law. This, I believe, has been carried forward to this day and is fostered by the application of the kind of income tax laws we have had and will continue to have if the proposals in this bill pass in their present form.
We are all well aware of the fact that the mining industry, its associations and organizations, continually over the years have bombarded us with argumentation concerning the necessity for the special spurs that are needed to enable them to go out and find new mines. I suggest that even from the most practical point of view that argumentation becomes less valid as time goes on, partly because of the development of new technology, partly because the approach to the development of a new mine becomes increasingly a matter of scientific appraisal of the natural resources and their potential. As a result, when a decision is made to commit money for the development of a mine there is much more likelehood that the mine will, in fact, bring returns to the investors. I am speaking now about the serious type of mining, the type of mining that is carried on to draw wealth from the ground rather than the type of mining in which promoters are more interested in mining the more gullible members of the general public through the stock exchanges of the country.
I have a very basic disquiet about the way in which we are moving in this whole process. I feel this is something which requires a considered approach at the national level. Unless and until a new philosophy is enunciated in Parliament which would change our approach to tax laws, I believe it is virtually impossible for any particular area of the country to do anything but go along with the process of developing resources from a purely local point of view, even though that development may result in rather limited benefits. There is the example of a large mining corporation in my constituency which is just getting into production. In fact in the next month I believe they expect the first shipment of ore to leave the mine. This is a tremendous mining enterprise. The concentrators are designed to mill something like 33,000 tons of ore a day. With the already established reserves, there is a life expectancy for that mine of 25 years at that rate of mining. In the particular area in which it is located it will have a real impact upon the viability of the community. The particular community affected will probably double in size. Many of the amenities which can be had only in a community of reasonable size will result because this mine is coming into production.
As the member representing that area I certainly have not objected to the development of that particular mine in that particular location. It would be foolish for me to do so. It would be silly of me to suggest that this mine not be developed at that particular place when I know the general policy of the country is that such mines are to be developed wherever any particular mining company might decide it has the opportunity to do so. The fact remains that 25 years is not a very long time in the history of a country. The children of the people who will be working that mine will be reaching the point at which they will be presumably looking for productive work at about the time when the projected life of the mine expires.

This, of course, raises the kind of question that was raised by the hon. member for Waterloo, namely, what happens to the children of the current generation of miners at that mine? At the end of 25 years there will be a big hole in the ground and, under the current mining laws of the province of B.C., that kind of open mining operation will have to be completed in such a way that there will be at least some degree of restoration of the landscape. One proposal was that there be a new lake there, about half a mile wide and two or more miles long, that it be landscaped around the edge, and that a new recreation area be created. As it happens, on Vancouver Island there are a number of lakes already in existence. Of course, the same is true of many parts of Canada. Recreation areas are very nice, but even though one may be able to enjoy an inexpensive holiday in a recreation area of that kind, it is rather necessary that there be an economic base for the people who may want to use the recreation facilities from time to time. So the ore from that hole goes across the Pacific Ocean, the profits from the operation go across the border to the south, and in 25 years we will have a nice new lake in Canada. In the meantime, of course, incomes will have been provided for 400 or 500 people for 25 years. I suppose that this is not something to be sneezed at.
Those of us who live in the midst of this sort of thing have perhaps more cause to be concerned about it than have members who live in manufacturing centres, such as the hon. member for Waterloo. In the national interest we may or may not need the development and export of the ore from that particular mine at this time. But the result of the approach we are taking in our income tax law is to continue to encourage this helter-skelter, haphazard development of the extractive industries. This type of development I suggest-and I would like to emphasize this point because I do not think the hon. member for Waterloo made this quite clear in his speech when he spoke about resource industries-is in an entirely different category from that of renewable resources, whether that relates to products from the farms or the products of the forest. This latter type of activity will go on without any special or direct kind of encouragement such as, for example, has been provided for the extractive industries like the mining and petroleum industries.
All we are saying-and, as I understand, all that Mr. Carter said in his report-is that these extractive industries should be treated for income tax purposes on the same basis as all other industrial enterprises. If it was deemed to be in the national interest to accelerate the extraction of petroleum, of copper or of iron ore at any given time, we should do it directly above the table so that we know how much it is costing us. In this way we could tell whether this kind of expenditure was or was not in the national interest. As matters stand, the only way we can really come to grips with this matter is to discuss it indirectly when the Income Tax Act is opened up from time to time. I suggest that this is not the best way to approach this matter. I suggest that despite the kind of briefs we sometimes get-and they certainly come from organizations in my province, and the B.C.-Yukon Chamber of Mines makes the position clear to us from time to time-I am convinced that if these special provisions were to be
November 23, 1971

abolished it would not mean the end of the mining industry in Canada.
I am convinced that where there is a viable market for a mining commodity, that commodity will be produced because we know we have the natural resources to enable us to do so. Let the market be the yardstick as to whether or not we are going to have an increase in copper exports, just as it is in connection with the development of the pulp and paper industry in this country. If we find that the economic situation in that particular field is in a state of decline, if there is tangible evidence that it is necessary to accelerate the exploration for new sources of this kind of raw material, then let this Parliament decide that it is in the national interest to do it at a particular time and let Parliament appropriate the money for it to be done.


Some hon. Members:: Hear, hear!


Thomas Speakman Barnett: This, among other things, would bring a new rationale into the kind of thinking which prevails in the mining industry in this country. It would put an end to the everlasting beseeching and begging for more and more special concessions with which we are assailed by the mining interests today, and have been yesterday and the day before that. They would know that they could produce the minerals that were needed. They would know that if there was a real need, and it was in the national interest to open up new resources in new areas or to start more intensive exploration in already known mineral zones, they could present a straightforward case to the government, and that Parliament would be prepared to give it the kind of consideration it deserved. But as long as we continue this basic approach that is still being carried forward in this so-called tax reform law we will be besieged, and so will the Minister of Finance, for a little more and a little more. Frankly, I am very disappointed that the Minister of Finance and the government were not able to see the logic of the position that was put before the people of Canada and this parliament by the Royal Commission on Taxation.


Walter Gilbert Dinsdale: The subject matter that is before the House today in this long continuing debate on Bill C-259 will, I am sure, have a sympathetic ear from the parliamentary secretary to the Minister of Finance who has been guiding the debate for most of its period in the House. Recently he was very disturbed in this House at the impact of the latest decision by the National Energy Board with respect to the curtailment of the export of oil and gas resources, and of gas in particular. I do not think it is necessary to belabour the point to convince the hon. gentleman that what is contemplated in the sections of this bill with respect to the resource industry in terms of tax reform is not in the best interests of that industry.
This afternoon I would like to point out that the sections of the bill which we are debating have the same basic weakness that we found in other parts of the bill. I think the assessment of this debate given in editorial comment by the Financial Times of November 22 is worth quoting to underscore the basic objection that members of the Official Opposition have raised to most of the sections of the bill. Certainly it applies to the sections covering the
Income Tax Act
resource development industry. The editorial reads in part:
In one way, Mr. Benson has a point. It really does not matter whether the MPs debate every clause of the bill. As delegates to the Canadian Tax Foundation conference sadly noted, the MPs are completely out of their depth in trying to debate or to understand the bill.
After several months of intensive effort, the most expert of the tax experts are only slightly less baffled than they were at the beginning.
The attitude of the Tax Foundation members . . .is one of fatalism and resignation. The tax changes are coming. Let them come. Somehow, we will muddle through.
The immediate result will be something akin to chaos. As it stands, the bill is a no man's land of ambiguities, obfuscations, and ill-defined intentions, entirely surrounded by uncertainty. It is going to take months and years of working experience to find out how the new system actually works, and what inequities it embodies.
I do not want to be too specific with reference to the bill, but I do want to spend a few moments pointing out to the government that obviously it is not aware of what it is doing to certain important segments of Canada's resource industry in the reforms contemplated by the bill. As I have also already indicated, the protests by the parliamentary secretary with reference to the petroleum industry are indicative that he is in sympathy with this viewpoint.
I want to discuss the impact that the bill will have on the continuing development of the Canadian north. The Canadian north includes, in particular, the Yukon Territory and the Northwest Territories. It also includes the northern parts of the prairie provinces, of Ontario and Quebec, all of which form part of the Great Canadian Shield. The immediate effect of this bill will be to slow down the encouraging development that has been taking place in this whole area.
Even at this stage of anticipation when the shadow of implementation is hovering over the business community, when the threat of implementation becomes more real with each passing day, there is a hesitancy, and uncertainty in the market, all of which is reflected in the daily stock market reports. If the government proceeds to implement the bill in its present terms the impact on the north will be devastating. I make this point because the minister in charge of northern development has already revealed the thinking of the government on these matters through his action on Bill C-187 which was designed to bring about certain reforms, as he called them, in mineral development in the Yukon Territory.
The hon. member for Yukon, and other members on this side of the House who have been closely associated with northern development, took a strong stand against Bill C-187, with the result that the minister made a statement recently in the Yukon saying he will not be proceeding with the bill. He realizes he did not consult closely enough on it, and was not fully aware of the serious impact it would have on the development of minerals in the Yukon. Bill C-187 now lies in a state of limbo. In the light of the minister's comments, I imagine that it will remain there, or that if it re-appears it will be in greatly amended form along the lines recommended by spokesmen for the Official Opposition.
24372-62^

November 23, 1971
Income Tax Act
In this regard, I do not understand the attitude of members to my left concerning the impact that this bill will have on northern development. Recently the leader of the NDP said that the best solution for northern minerals was to freeze development and keep them in reserve. I have listened to the two spokesmen for that party who have spoken in this debate thus far, and while they did not go to quite that extent, the implication is that we should preserve, reserve and conserve non-renewable resources of the north for the benefit of future generations. Imagine what would happen if that were applied in the case of Thompson, Manitoba, which is represented by the former minister of highways of the province of Manitoba. Resource development by the International Nickel Company of Canada at Thompson has had a tremendous impact on the whole economy of Manitoba.
When I was minister of northern affairs, we used to have a slogan that I think is apropos at this juncture of our discussion. It went something like this, "Woe unto them who sit on their frozen assets." This is the policy that NDP spokesmen have been recommending this afternoon, and it is not only the NDP group who have made this statement. The government party has been what might be termed "Johnnies come lately" in the whole process of northern development. This can be illustrated by the reservations they had with respect to development of the Pine Point railway. This made possible the development of the lead-zinc mine at Pine Point and has largely been the basis of the great upsurge in resource development in the Great Slave lake area of the Northwest Territories. Yellowknife, the capital of the Northwest Territories, has become a modern metropolis through the impact of this one resource development. It would never have taken place had not the government of the hon. member for Prince Albert taken the risk which has always been typical of great development on the Canadian frontier, a risk taken over strong protestations of the then Liberal opposition, against the completion of the railway into the Pine Point community.
The same applies to oil exploration in the Canadian north. It was a small group of domestic minors-and I might add that is m-i-n-o-r-s as opposed to the foreign majors in the oil industry-who in 1960-61 gathered together sufficient capital to make it possible for Canadians to carry out the first oil exploration in the high Arctic at Winter Harbour on Melville Island in 1961. That was entirely a Canadian effort and is one of the great epics in Canadian resource and frontier development. This group was headed by Dome Petroleum under the leadership of Jack Gallagher, a Canadian active in the oil industry in Calgary who I am sure the parliamentary secretary knows intimately, and made possible by the vision and skill and pioneering spirit of another Calgarian, a comparatively young man named Peter Bawden who took in his drilling crew and drilled the initial well. I think the hon. parliamentary secretary will have good reason to become more familiar with Mr. Bawden as we move forward into the inevitable confrontation of democratic politics in the forthcoming election.
Nothing should be done to discourage this type of initiative, Mr. Chairman, and this is precisely the point made

by the hon. member for the Yukon. He wants incentives for Canadian participation in resource development to be expanded so that by getting more Canadians involved in the process we can repatriate ownership of our resource industry by positive means rather than the negative means of a screening process or some such measure. It was because the Canadian government of 1957-63 introduced regulations which gave some preference to Canadian exploration companies in operations in the high Arctic that we got that first pioneering oil venture. It was a very simple process. If a discovery was made the regulations ensured that Canadians had a chance to participate and to manage the enterprise.
Mr. Chairman, the parliamentary secretary is thoroughly conversant with these matters and is just as concerned as hon. members on this side of the House about their harmful effect on resource development in Canada, so why does he not take the necessary initiative and amend the act? We have had hundreds of amendments already. The tax reform bill could be amended in such a way that it would encourage rather than discourage Canadian participation in the development of our northern resources in particular but our resources in all parts of Canada.
The hon. member for Galt went to great pains to point out that he was not speaking against the best interests of the western provinces-


Mr. Orlikow:: He was not?


Walter Gilbert Dinsdale: -with reference to the policy that he was enunciating. As I listened I was persuaded that Shakespeare had some relevancy here-"Thou dost protest too much"-


Stanley Howard Knowles: He is the
member for Waterloo.


Walter Gilbert Dinsdale: Waterloo-that is very appropriate. He was protesting too much because he went on to enunciate precisely the thesis he was repudiating.


Mr. Gilbert:: You did not understand.


Walter Gilbert Dinsdale: I hope the hon. member for Broadview will listen carefully, because obviously he does not understand either. He was enunciating the thesis that the so-called underdeveloped parts of Canada, the parts that are underpopulated and lack political impact in Ottawa because of that very fact, are being governed through Ottawa as if they were a colony of Ontario or Quebec. This is exactly the thesis propounded by the hon. member for Waterloo this afternoon. He even quoted that great American defender of the consumer, Ralph Nader. I am surprised that someone from his party would quote an American source because of their attitude toward our friends to the south, but Mr. Nader was quoted by the hon. member for Waterloo as saying-


Erik Nielsen: Capital is from Waterloo.


Walter Gilbert Dinsdale: -that Canada must not become the extractive colony of the United States. I would paraphrase that statement and say that the west and the north must not become extractive colonies of Ontario and Quebec.
November 23, 1971


Thomas Speakman Barnett: That is what we are now. That is the problem. That is what we are trying to get away from.


Walter Gilbert Dinsdale: That is the thesis that my friend from Waterloo was supporting. He also made a great deal of the fact that we are exporting most of our resources to the United States. I should like to point out to him that recently Japan has become a great market for the minerals of the Yukon territory. Were it not for the opening of this market in the early part of the sixties there would be no new Imperial Mine operating just outside Whitehorse, nor would there be the Anvil Mine which has been of great benefit to the Yukon Territory and has given employment to the Indian population by bringing the mineral from the mine to the railhead and trans-shipping it across to the open port and on to Japan.


The Chairman:: I regret to interrupt the hon. member. I must do so to advise him and the committee that his time has expired.


Some hon. Members:: Carry on.


Russell Clayton Honey: The hon. member may carry on if there is unanimous consent of the committee. Is there such consent?


Some hon. Members:: Agreed.


Walter Gilbert Dinsdale: Thank you for your courtesy, Mr. Chairman. I shall be very brief because I was just coming to a conclusion. We are concerned about what will happen to the Canadian resource industry when these resources have become exhausted. By the same token, Mr. Chairman-and the hon. member for Waterloo made much about this point-we are part of a world economy and of a world market. We must consider our international responsibilities. What will happen to Japan and its teeming millions if these resources are not available to the people of Japan? The hon. member was contradictory in his argument in that sense, in one breath preaching international brotherhood and in the other supporting the thesis that we must sit on our frozen resources until such time as we can use them for the maximum benefit of Canada exclusively.


Erik Nielsen: Frozen assets?


Walter Gilbert Dinsdale: I mentioned frozen resources. I have already made that point.


An hon. Member:: Is that the Salvation Army position? Shame.


Walter Gilbert Dinsdale: I think that is a very good position for someone in that category to espouse; namely, that we should take seriously our responsibilities for brotherhood internationally as well as domestically.


John Gilbert: Who said anything about frozen assets?


Erik Nielsen: At least the hon. member was not being hypocritical.


Walter Gilbert Dinsdale: Mr. Chairman, I say, now that these interjections have concluded, that I will leave this in the hands of the parliamentary secretary. He is fully conversant
Income Tax Act
with the subject. I trust he will take the necessary action to bring about equity and fair treatment for all parts of Canada, and that not only the central part of Canada will be so treated.


Russell Clayton Honey: Order, please. Before recognizing the hon. member for Winnipeg North it is my duty, pursuant to Standing Order 40, to inform the Committee that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Winnipeg North Centre-Pensions-Old age security-Inquiry as to increase and lowering of eligible age; the hon. member for St. John's East-Regional Economic Expansion-Re-evaluation of policies in light of criticisms; the hon. member for Vancouver-Kingsway-Health-Family planning conference-Request for publicity campaign because of increase in illegitimate births.


David Orlikow: Mr. Chairman, this afternoon we heard a number of speeches by hon. members of the official opposition. The hon. member for Yukon spoke, as did the hon. member for Brandon-Souris. They were critical of the government's income tax bill, arguing that it will reduce or eliminate incentives which have been given in the past to the mining, oil and gas industries and that this will lead to a cutback in the development of those industries with consequent, deleterious effects for this country. The proposals in this tax reform bill affecting the mining, oil and gas industries do not in any real way do what members of the Official Opposition have charged. Actually, if there is one thing that is obvious, it is that these proposals continue the special tax concessions which in the last 25 years have been available to the mining and petroleum industries. These concessions were unjustified because the industries in question are, for the most part, foreign owned and capital intensive. They make use of a relatively small amount of labour. By asking for further concessions for these industries the Conservative party, in my mind, is betraying the real interests of the Canadian people. It seemed to me that the Conservative opposition wanted the government to make further concessions in this area. It has proposed that present concessions be continued.
The hon. member for Brandon-Souris chided my colleague, the hon. member for Waterloo. Although the hon. member for Waterloo had said that he did not want to see any conflict between our provinces, between the west and the east, his position, according to the hon. member for Brandon-Souris, was essential pro-Ontario, a position which is inimical to the western provinces. I say to the hon. member for Brandon-Souris that, in adopting our position, we do so in the full knowledge of what we are doing. We are adopting the same position which the NDP government of Manitoba has adopted since being elected. Let me put on record, for the benefit of the hon. member for Brandon-Souris, what the Minister of Finance of the province of Manitoba said in his budget speech on April 30, 1970. Talking about the white paper which this government had produced on tax reform, the white paper which, in a watered down version, is being implemented in the tax proposals before this committee, that Minister of Finance said:
Our main objection is that-contrary to the Carter Commission recommendations-the federal proposals are more concerned to

November 23, 1971
Income Tax Act
tax according to how money is earned rather than according to how much. This is contrary to "ability to pay" as a basis for taxation-
The proposals do not meaningfully redistribute income beyond the present structure. The biggest saving for a low-income person-$127 for a married man with two children and $4,000 a year. But if you were to earn over $50,000-there are actually provisions for reduction in tax. At $100,000 the reduction is $5,423-
Then the minister went on to say this about depletion allowances:
Depletion allowances and other resource industry incentives, etc., are still going to operate-these may well be wrong in principle-whatever the basis for computing them.
Then, he went on to say:
we-
Meaning the government of Manitoba,
-support the objective of making resource development in Canada more responsive to the particular needs of Canadian communities and citizens. This is not a passing comment. We seek tax proposals aimed to achieve greater responsibility to the community for enterprise deriving its main profits from the resources which belong to the people. The first major resource taxation concept to be questioned is that involved in depletion allowances. Why, for example, should only the private investor be compensated for depletion of resources and not the people and communities to whom the resources belong? Far greater concern should be given to the workers and communities who come to depend on the resource industries for their opportunities. It is they who will be the real losers through the depletion of natural resources. If firms continue to receive depletion allowances in any form, it is essential that such compensation be shared with workers and dependent communities.
I ask the hon. member for Brandon-Souris to remember who took the losses when the uranium mines at Elliot Lake closed down because there was no longer a market for uranium. It was not the companies, which had earlier written off their investment'. It was the workers who purchased homes at Elliot Lake. It was the government of Canada which, through Central Mortgage and Housing, had invested money in homes and it was the provincial government of Ontario which had built schools, roads and provided all the other services. The industry got off scot-free; the people paid through the nose. That is what the hon. member for Brandon-Souris wants to continue and to extend.


An hon. Member:: Shame.


David Orlikow: We are not alone in our position on this matter. Before the present Minister of Finance ever became a cabinet minister he made some useful and interesting speeches in the House. I wish he would take part of an evening off to read some of the speeches he made while he was still a leading member of the opposition. I am talking about 1962, the year of which this afternoon's question period reminded me. It had that kind of spirit. I wish to quote two paragraphs from a speech which the present Minister of Finance made on November 9, 1962. He dealt with the policy of the then Conservative government as it affected the oil and gas companies. He said:
I can think of no other industry (oil and gas) in Canada in this favourable position.
I would think the next thing to consider is, who is going to benefit from these tax concessions contained in resolutions 6 to 10? Foreign control and ownership of this industry has been
increasing and this legislation, I submit, will do nothing to discourage foreign ownership and encourage Canadian ownership.


An hon. Member:: He was right.


David Orlikow: In the same speech, he said:
We must, Mr. Chairman, find ways-and the next Liberal government will find ways-of returning the control of our natural wealth to Canadians while, at the same time, assuring foreign investors that they will be fairly treated by our government.
That speech could have been made by the hon. member for Waterloo. In fact, it has been made by him. The only difference is that when the present Minister of Finance moved from this side of the chamber to the other, he forgot everything he said before he became a member of the government. He immediately proceeded to continue the policies which had been implemented, not by the Conservative government which he helped to replace, but by former Liberal governments in 1947, 1948 and 1949.
To show that the position we are taking is not based purely on political partisanship, I wish to quote briefly from a couple of editorials which appeared in a newspaper which is not far removed from the Liberal party and its policies. This editorial, entitled "Oil men don't need tax gifts from Canada", appeared in the March 1, 1967 edition of the Toronto Star. I quote:
The commission-
That is the Carter commission.
-proposes to take away two cosy privileges enjoyed by these industries at the expense of the ordinary taxpayer-depletion allowances and the three-year tax exemption for new mines.-
The three-year tax exemption applies also, to mines. A mining company enjoys an exemption for the first three years on income earned from a mine newly brought into production.-
The special favors enjoyed by the two industries are extremely expensive. In 1964, it is estimated, they cost the federal treasury more than $150 million. This is about the equivalent of the government's combined spending in 1965-66 on the Canadian Broadcasting Corporation, the Central Housing and Mortgage Corporation, and grants to universities.
Does this government propose to change that situation through this legislation? Not really. They changed the format of the concessions, but the concessions remain essentially the same.
I wish to quote from an editorial which appeared in the December 11, 1967, edition of the Toronto Star. It is entitled "Mines should pay fair tax share". I quote:
How can Finance Minister Mitchell Sharp justify his decision to dig new tax revenue out of the ordinary wage earner while continuing to provide special tax privileges to big business-notably the mining industry?
The Carter Royal Commission on. Taxation found that mining, along with the insurance and petroleum industries, was a potentially rich source of tax revenue that had long been enjoying unnecessary exemptions.-
The Carter Commission considered these exemptions unjustifiable. It recommended that the depletion allowances be eliminated immediately, and that the other privileges be phased out over a period of five years.
That seems to be squarely in line with what the Minister of Finance said in 1962 before he became the Minister of Finance. However, we have had no action by the government. Without a doubt, the most important speech made on taxation in recent years, and I believe in giving credit where credit is due, was the speech made by the hon. member for Duvernay. This is the speech which led to his

November 23, 1971

resignation. He did not just put on the record a theoretical argument. This is the same argument I am trying to make, but he did it much better than I.


Mr. Mahoney:: Why don't you just file it at this time instead of reading it again?


David Orlikow: I suppose the reason the parliamentary secretary makes that stupid interjection whenever I quote from this speech is that he is embarrassed. When I make this kind of speech, I can be written off as a radical, a socialist and a person who never had to meet a payroll. All those things are true. However, when the hon. member for Duvernay makes that speech, he speaks as a professor of economics, a very successful businessman, the former president of the Montreal Stock Exchange, a former and one of the most effective ministers of revenue that any government in the province of Quebec ever had. The only difficulties the hon. member for Duvernay ever had were those which followed the terrible mistake he made when he decided to enter federal politics as a Liberal. From that time until he quit the cabinet, he made mistakes. The reason the parliamentary secretary always makes that idiotic interjection when I quote from this speech is that it embarrasses him. He knows that a lot of people who are still afraid and still worry about the New Democratic Party, will pay attention to an argument put forward by a man with the stature of the hon. member for Duvernay.
I remind the parliamentary secretary that when the member for Duvernay made that speech to the 300 academic, government, business and labour economists attending the meeting of the Canadian Economics Association, he was greeted with a standing ovation which the newspaper people who reported the proceedings said had never happened in the history of that organization. It may be that the hon. member for Duvernay was wrong, and that his argument could be shot full of holes. If this is so, I would like someone who knows a little more about economics than the Parliamentary Secretary to the Minister of Finance, and that is not very difficult, to reply to that speech. I am sure the Canadian Economics Association would be more than happy to invite the Prime Minister or the Minister of Finance to their next annual meeting. While they may not be economists, they can get the assistance of the best economic advisors in Canada. They can get some help in writing their speeches.
I am sure the Canadian Economics Association would be happy to have one of those exalted gentlemen appear before them and rebut the speech made by the hon. member for Duvernay. That has not been done here or anywhere else in this country. The reason is that essentially the government has no answer. The best defence then is silence, except, of course, for the stupid interjections by the parliamentary secretary. The tables produced by the hon. member for Duvernay in his speech were taken from government reports. If they are wrong, I am sure the officials will quickly pass a note to the hon. member for Calgary South telling him they are incorrect. They go to the heart of the question we are discussing today.
In his speech, the hon. member for Duvernay used the table which is entitled "A Comparison of Book Profit Before Taxes and Taxable Income by Selected Indus-
Income Tax Act
tries". It covers the years 1965 to 1968, the latter being the last year for which figures are available. The table is arranged in three columns showing, respectively, the type of industry concerned, the taxable income received by that industry and the percentage of profits which were really taxed. For example, the retail trade earned book profits of $1,620 million. Its taxable income was $1,445 million. It paid tax, therefore, on 90 per cent of its profits. The wholesale trade earned profits of $2,066 million Taxable income amounted to $1,802 million. It paid taxes on 87 per cent of its taxable income. The construction industry earned book profits of $993 million, on $643 million of which it paid taxes, that is to say, on 65 per cent. The manufacturing industry showed profits of $12,745 million and paid taxes on $8,052 million; in other words, on 63 per cent of its profits.
Now, let us consider the industries we are discussing today. The metal mining industry showed profits of $1,707 million. Its taxable income was $222 million. In other words, it paid taxes on 13 per cent of its profits.


An hon. Member:: Shame.


David Orlikow: The mineral fuel industry showed book profits of $795 million and paid taxes on $45 million, or 5.7 per cent of its book profits. Other mining enterprises showed profits of $374 million and paid taxes on $120 million, that is, at a rate of 32 per cent.
Members of the official opposition have been telling us this afternoon that these industries should continue to receive the concessions they have so far enjoyed. Indeed, they argue they should be given even greater concessions. Mr. Chairman, I do not care whether the government of Canada or the government of any of the provinces is a Liberal government or a Conservative government or a Social Credit government or an NDP government, it would still be obliged to collect taxes to meet the cost of the services it provides to its citizens. This is a simple matter. If one industry or another does not pay its fair share of the taxes, then other industries will be called upon to pay more than their fair share. When the hon. member for Yukon says we should continue to make concessions provided to the metal mines, which pay tax on only 13 per cent of their profits, or to the mineral fuels industry which pays tax on only 5.7 per cent of its profits, he is telling us, in effect, that the taxes which the construction industry, the manufacturing industry and the retail trade must pay ought to be increased, or that the personal income tax of those who live in Montreal, Toronto, Winnipeg, Vancouver, and, indeed, the Yukon, must be increased to pay the taxes which those industries were permitted to escape paying. This may suit the hon. member for Yukon, Mr. Chairman, but it does not suit the members of the New Democratic Party. What he is suggesting is that we continue a system of taxing the poor to benefit the rich. He is advocating socialism for the rich, capitalism for the poor. That certainly does not suit me or members of my party.
I wish there were time in which to continue to put on record in detail the arguments advanced by the hon. member for Duvernay in his speech. I shall end by stressing once again the major points he raised. We can adopt a system of taxation which is mutual, which treats all industry equally, which collects the same rate of tax from every

November 23, 1971
Income Tax Act
business, allows the same concession and opportunities to write off depreciation and other expenses or we can establish a system which, because we wish to achieve certain objectives, favours one type of industry as against another. The point which the hon. member made so effectively was that in a country such as Canada, where the rate of unemployment is the highest in the western world, a country where unemployment has run at a seasonally adjusted rate of more than 6 per cent in every month for the last 17 months, we should surely be encouraging those industries which employ people.


John Gilbert: Incentives.


David Orlikow: Precisely. Incentives for industries which employ people. And those are the manufacturing industries.


Erik Nielsen: What about the ripple effect?


Russell Clayton Honey: Order. I must interrupt the hon. member to advise him that his time has expired.


Mr. Rose:: Continue.


Russell Clayton Honey: The hon. member may continue if there is unanimous consent.
There is no such consent.


Erik Nielsen: On a point of order, Mr. Chairman, I did not hear any hon. member say no. It has been the practice during this debate to permit members to continue speaking if they wish to do so.


An hon. Member:: I thought it was one of his own hon. friends.


Russell Clayton Honey: The hon. member for Yukon has raised a point of order. The Chair asked whether there was unanimous consent. With respect, it is not for the hon. member to hear. It is for the Chair to hear and I can tell the hon. member I heard the word "No" quite distinctly. Thus, under the rules, I cannot permit the hon. member to continue.


Mr. Peddle:: Mr. Chairman, in view of the fact I am following the hon. member I want to make it clear that I did not say "No." I will have difficulty using up my allotted time.
I agree with the editorial referred to by the hon. member for Brandon-Souris. Very few Members of Parliament are really qualified to discuss this tax measure. Most hon. members are out of their depth when they attempt to discuss this 51-pound bill. I doubt if any other country in the civilized world has ever put forward a measure which weighs so much or was so complicated. I want to deal with it very superficially; I am not going into detail because I feel if I did so I would not know what I was talking about, as suggested in the editorial. The parliamentary secretary must be given credit for doing an excellent job. At least he pretends he knows what is going on and looks as if he knows. There is an award given in Hollywood for which I have no doubt the hon. member will be nominated next year. I believe it is called the Emmy award.
(Mr. Orlikow.]
For all practical purposes the majority of mining activity in the province of Newfoundland is located in my constituency of Grand Falls-White Bay-Labrador. I use the federal name rather than the federal-provincial nomenclature. I refer to it as Newfoundland rather than the province of Newfoundland and Labrador. Federally it is the province of Newfoundland, which includes Labrador. We have in my riding the iron ore operations at Buchans which has been going on for several decades, providing a decent living for several thousand people. Close by we have the mining operation at Gullbridge, the mining operation in the Green Bay area, the tremendous Iron Ore Company of Canada operation and Wabush Mines in Labrador west.
The Iron Ore Company of Canada is going ahead with a big development. Present expansion plans at Labrador city, which is the location of the Iron Ore Company's operations, will double the present capacity of about 15 million tons. This will amount to 16 million tons of pellets, 10 million tons of concentrates and 5 million tons of raw ore.
Three or four miles away we have Wabush Mines Limited. In February of this year the company put the damper on an expansion plan amounting to some $140 million because of, to quote Mr. Griffith, chairman of Stelco, the unfavourable tax climate and other things. It seems to me very strange that the Department of Regional Economic Expansion has embarked on a program of pouring millions of dollars into various industries, some of which in my opinion are so harebrained that they do not have a chance in the world of succeeding.
The government has put up 20 per cent or 30 per cent of the capital cost of some of these ventures in the hope they will provide jobs at a cost of $1,000, $2,000, $3,000, $4,000 or $5,000 each. On the other hand, we have a situation like Wabush Mines where the company has poured hundreds of millions of dollars into the operation and is now contemplating a big expansion but cannot go ahead with it because of the general tax climate. When this postponement became public knowledge the Minister of Finance very glibly said the company had not come to him for assistance. He said if they did so, he would be glad to talk to them but they had not made representations so we would have to wait.
I do not think that is good enough. The Iron Ore Company of Canada is operating largely with United States capital, and a good deal of the capital of Wabush Mines is U.S., but I cannot go along with this attitude of the government. I cannot go along with the idea that we can afford the luxury of telling the United States, Germany, France or other countries that we are masters of our own destiny and do not want their money. I feel so strongly about it that I would call this attitude irresponsible. Every time I hear this suggestion it reminds me of the story about the flea crawling up the elephant's back, intent on rape.


Gerald William Baldwin: You mean the mouse.


Ambrose Hubert Peddle: Perhaps it was a mouse, but with a flea it would be more dramatic and even more difficult. Seriously, I cannot go along with that suggestion because I have seen the conditions which exist in certain parts of the country. While Ontario may have reached its apex, along
November 23, 1971

with parts of the west, in Newfoundland we have not reached the luxurious position of being able to turn down capital or take it only on our own terms. I think it was the president of Industrial Acceptance who said some months ago that a dollar knows no nationality or, if you want, a buck is a buck. I find it hard to sit quietly and listen to these suggestions of irresponsible people who think we can control our own destiny.
I wonder how much foreign investment these people have already discouraged as a result of such irresponsible remarks. How many firms, groups and consortiums have wanted to invest in Canada but because of this kind of talk and fears as to the crazy laws this crazy government might pass have not taken a chance? This can be compared to the situation which still exists in Quebec because of the threat of separation. This threat has discouraged all kinds of investment in that province; no one there will deny that. Such idle, irresponsible talk has created this problem in Quebec.
The Department of Regional Economic Expansion has had to use funds designed for less affluent areas of the country to entice back to Quebec some of the industries the province has lost. They have used these funds throughout the province, but also in the city of Montreal. This is a very serious situation. I cannot buy the suggestion that this country of 20 million people does not want U.S. or other foreign investment.
At this point I am speaking specifically about the area of Labrador, in the province of Newfoundland, and my riding of Grand Falls-White Bay-Labrador. Here we have an area of some 110,000 square miles. Common sense tells us that Labrador City, Wabush and other areas were developed because of United States investment in projects such as the air force base which we are thankful is in our province.
Then there is a swing of people along the coast of Labrador who live in semi-primitive conditions. When I go into this area I see the difference between the conditions on the coast of Labrador and those in the ultra-modern towns of Wabush and Labrador City, where they have every amenity apart from a road to get out. They have a good airline, golf courses, curling rinks and decent, well heated homes.


Mr. Thomas (Moncton):: And good bars.


Ambrose Hubert Peddle: And good bars, if you like. I do not care where the investment comes from. People in Ontario, part of the west and parts of Quebec may say they do not want any foreign investment, but I can say from experience that we want this investment and we do not give a damn where it comes from. A buck is a buck. We have a huge territory in Labrador. As I have said, I cannot go into the specifics of this bill because I would not know what I was talking about. However, with this huge territory and its riches in ores, common sense indicates that this government owes it to the people of Canada and to people of our province to provide every possible incentive to see that the territory is developed and not discouraged.
As I mentioned earlier, there is the example of Wabush Mines which abandoned its development plans involving
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some $140 million, which would have meant so much to the area. They were hung up on the government's indecision and on the threat of this terrible white paper. The parliamentary secretary is yawning.


Patrick Morgan Mahoney: Believe me, it is cumulative.


Ambrose Hubert Peddle: I can appreciate that. The problem as I and the majority of people of Canada see it is that this has been a government of confrontation. It seems the government has wanted to confront everybody with a white paper which staggers them so that they do not know whether they are coming or going. There would seem to be an attitude of hit the Catholics, hit the Protestants, hit the French, hit the English and everybody with the threat of the white paper.


Patrick Morgan Mahoney: On a point of order, Mr. Chairman, would the hon. member care to clarify his "hit the Catholics, hit the Protestants" statement?


Ambrose Hubert Peddle: I do not think the parliamentary secretary should be so sensitive. It is a figure of speech. I could have said hit the Russians and every other organized group with a white paper that would stun them. I say this is a cowardly way to govern, and the parliamentary secretary knows this. A government that is elected by the people should have the intestinal fortitude to govern without trying to cover every track they make politically. The government should be prepared to introduce tax changes which would encourage investment. It should do this on its own initiative and not after meetings with labour and businessmen of the country, and other types of cowardly actions.
Cowardice is what this is, and the signs are that the Canadian people are catching on to this. I think the parliamentary secretary knows this, despite my belief that he is doing a good job of bearing up under the pressure of this debate, although I doubt whether he knows very much more about the tax bill than I do.


Gerald William Baldwin: Mr. Chairman, I concur with the last remarks of my hon. friend. Never did one poor, lone parliamentary secretary do such a reasonable job with so little to work on. I think he should be congratulated for that, especially when he has to push back-benchers to one side as they raise unruly heads of revolt against this bill. I think the parliamentary secretary is not doing a bad job under the circumstances.
I have a particular interest in this issue. I agree with what has been said on this side of the House, with a sharp distinction between my colleagues and any hon. friends to the left, including the hon. member for Winnipeg North when he spoke about poverty on one hand and wealth and industry on the other. Of course, that is the result of a mixed economy. We have a mixed economy, part of which is represented by individual incentive. Obviously, the part which is poverty stricken is that which is represented by the socialist aspect of the economy.
This is borne out by the fact that when we were dealing in this House a number of years ago with the question of developing the mining areas of the north and were seeking a policy, members of the government party-who were then members of the Official Opposition-strengthened by members of the New Democratic Party struggled

November 23, 1971
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desperately against the attempt by the government to successfully develop these mining areas. When we attempted to bring wealth into the north it was the Liberal Party, aided by their kissing cousins, the New Democratic Party, which did all it could to stop the construction of the Pine Point railway which led not only to the development of the mining area but to incidental progress.
This is the point I want to make. I went into the north country well over 42 years ago. After seeing what the government is doing here, I sometimes think I should have stayed there. In any event, we knew there were resources. We talk about gas and oil. In 1920, 1921 and 1922 an attempt was made, using the tax laws as they then were, to develop the oil and gas resources which were within 40 or 50 miles of the town of Peace River. A few years before I arrived there a program had been launched by Imperial Oil and other local companies. There was no interest and no possibility of securing from eastern Canada the kind of capital that was required at that time. There was some local capital and know-how but it was completely inadequate because the people who had the capital in the central part of Canada said they would have nothing to do with the program. This stands as mute testimony of the abortive attempt to develop 50 years ago the gas and oil resources of that area-wells which had been capped and wells which had been running in tar for some time.
Going up and down the river, as I did for many years, travelling 300 or 400 miles into the north, I saw evidence that there must be an attractive policy with regard to our tax laws in order to maintain the steady flow of capital required to promote these resources. If we had waited for the Liberal government and the money which they were able to mobilize, nothing would have happened in the development of the mineral, gas and oil resources of northern Canada.
Not only what happens there, but the incidental effects are important. I spoke about the Pine Point mine which was opened up under a very acceptable agreement reached between the government of the right hon. member for Prince Albert, the mining companies, the railroads and other people who were interested in developing the north and seeking out resources. People were prepared, when they saw evidence that a suitable climate was to be provided by the government under the tax laws and the agreements which were entered into-transportation agreements and those involving the construction of the railroad-to undertake this development.
This brings me to what the hon. member for Duvernay said, namely, let us cut out all expenditures for the development of our natural resources and concentrate on manufacturing and on what he calls the labour-intensive industries. I do not dismiss this, but I say to members of the committee that we no longer have the labour-intensive industries which we had some years ago. If this country is to remain competitive with regard to its manufacturing and industrial resources, it must do so on the basis of automation, economy through scientific improvement and the means we use to develop our manufacturing industries.
One need only examine the statistics of the Department of Regional Economic Expansion to note the millions of dollars which have been spent. I will not go into the question of where they were spent-I would not be allowed to do so even if I wanted to-but it obviously takes a tremendous amount of money today compared with 20 or 30 years ago to develop jobs in the manufacturing industry, which apparently the hon. member for Duvernay is contemplating. That situation no longer applies. When you develop a natural resource such as gas, oil or minerals, there are incidental and ancillary effects which have a great impact upon our economy.
There is a farm just across the river from the town of Peace River. There is a hill there. When I first went to that country over 40 years ago I could stand on top of this hill, and look down and see no development. Just a few years before I arrived there, people were crossing the river by ferry. There was no highway to Edmonton. There was a railroad but only one train a week. There was no means of transportation to go north except boat to Hudson Bay. There were boats which went north during the brief navigation period in the summer. But after the benevolent policies of the Conservative government of the right hon. member for Prince Albert-


Some hon. Members:: Hear, hear!


Gerald William Baldwin: -with the tax benefits which were available and the first-class agreements which were entered into-the hon. member for Brandon-Souris was then minister of northern affairs and did a great deal of work in this connection-immediately we saw not only the development of the mine at Pine Point but other incidental growth. Logging camps were established, mills developed, highways were built, bridges were built. Today I can go to the same hill, look down, and six miles away I see a modern airport at which jets can land. Because of the development of the gas and oil industry in the north, more planes are landing and taking off than at any other comparable place on the North American continent.
I see bridges built and highways going north. I see highways travelling into the north, and I see a railroad. From this hill I see where the railroad branches off and trains go into the Northwest Territories. These are things which lead to growth and to the employment of people as well as to the development of the great northern parts of our country.
I can hear the parliamentary secretary sighing. He may have heard all this before but it is about time someone on that side of the House listened and believed, because are the things which lead to the development and growth of the north, which is required-not the stultifying, limited sort of development-arising from the tax proposals which this bill envisages with relation to the gas and oil industry; not the kind of policies which this government envisages with regard to the development and flow of capital into this country.
I say to you, Mr. Chairman, and to members of the committee that there is no one simple, magic formula which effectively deals with this problem. It needs a continuing influx of capital under conditions which must be acceptable to the people of Canada. It needs tax laws and a tax climate which will persuade people to invest in development. Too often in our tax laws we punish the

November 23, 1971

worthy, those whose efforts lead to growth, and we reward unduly the unworthy. These are matters which we must consider if we are to have tax laws and a tax climate which will lead to the development of the country, in particular that part of the country which I know well.
May I call it six o'clock, Mr. Chairman?


Russell Clayton Honey: It being six o'clock, I do now leave the chair, to resume the same at 8 p.m.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 8 p.m.
Russell Clayton Honey: Shall section 21 carry?


Mr. Woolliams:: Mr. Chairman, I think I should put on record that the proposals affecting resource industries as they appear in Bill C-259 are substantially similar to those outlined in the white paper and as modified by the letter sent by the Minister of Finance on August 26, 1970, to the provincial ministers of finance.
The bill does go somewhat further in that it provides for the deduction of foreign exploration and development expenditures on a limited basis, an expanded qualification of mining assets eligible for a tax write-off and an extension of the 25 per cent depreciation allowance until 1976. Although these modifications of the white paper proposals may not appear to be very significant, they should be considered in light of the over-all fundamental changes proposed for the treatment of corporations and shareholders generally. As in the case of international taxation, the bill relies heavily on regulations which cannot be issued formally until the bill is enacted.
One of the great criticisms with respect to the resource industry is that most of the tax law governing it is imposed by regulation. In Parliament we have enacted statutes with provisions for the establishment of regulations. Parliament gives a wide ranging stamp of approval to certain principles and then cabinet writes the regulations. Therefore, so far as this debate is concerned it is difficult to determine what the law will be affecting resource industries because most of it is unwritten law and unwritten law is the most dangerous because such law can be changed at any time without Parliament's approval or knowledge.
Having said that I would like to point out that resource industries mean a lot to western Canada. The expansion of those industries, whether they be petroleum, coal or other mines, depends on the system of taxation governing them. By way of introduction, it is rather interesting to look at some of the history of the philosophy that prevails in western Canada. The Calgary Herald is the main newspaper in Calgary. It has the biggest circulation, along with the The Albertan.


Erik Nielsen: It is the organ of truth.


Eldon Mattison Woolliams: That may well be so. It had this to say in 1867, and it is as true today as it was then:
The fisheries are a valuable property.
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Then it went on to deal with trade with the United States, as follows:
Anything consistent with reason we are willing to grant to our neighbours; but it is rather hard to threaten to cut us off from the American continent simply because we are not prepared to yield them equal rights in a source of wealth which, on their own admission, belongs exclusively to us.
That may be too narrow a regional position, but it seems to me as I listen to debates in this House that we in Parliament are divided not so much by parties as by regions. I think that is quite true. If you listen to somebody from western Canada, they speak as a westerner and about the resources they have. The following appears at page 98:
In 1896 the Calgary Herald noted with approval that a candidate had said "let a man be either a Liberal or a Conservative, he must be a northwest man first"-
They use the term "northwest" when they mean a westerner.
-"and for party afterwards." . .. "Country before party."
This country is still divided basically by regions rather than political parties. We must have an amalgamation of interests across the board and such union creates political parties. Those interests, representing various regions, form the national purpose which makes this Parliament function.
As I said earlier, the health and growth of the economy of western Canada depends on the tax picture. The first anomaly that I notice in all the rules and regulations that have been and will be laid down is that some people think we can cut off foreign investment, that we can have a screening system. I have here a copy of the Herbert Gray report, whether legitimate or illegitimate-though nobody denied it during the question period.


Erik Nielsen: It is a bastard.


Eldon Mattison Woolliams: The selective approach of this screening process determines how control of investment will be exercised-where it is going, to whom it is going, how it is going and when it is going to be made. A screening method, of course, is totally inadequate and irresponsible as far as western Canada is concerned.
The decision made a few days ago by the National Energy Board of Canada with reference to the export of natural gas to the United States has to be mentioned in this debate. It is rather interesting to read what the president of an oil company had to say on this matter. I know some who look with scepticism at presidents of oil companies-


An hon. Member:: Right.


Eldon Mattison Woolliams: You say "Right", but I do not want to get into an argument with you. I do not look with scepticism at any organization, whether union or corporate. As I have said before, corporations are healthy, and when they operate in a tax climate that gives them help we can have some degree of full development and full employment. That should be the aim. The president of Imperial Oil Limited, Mr. J. A. Armstrong, is quoted in an article in
November 23, 1971

Income Tax Act
the Winnipeg Free Press of Tuesday, November 23, 1971, as follows:
-warned Monday of serious political and economic effects if Canadians submit to the "myth" that Canada's oil and natural gas should not be exported to the United States, but preserved for domestic use.
J. A. Armstrong called the revenue effects of a decision not to export "disastrous". He plegged the immediate revenue loss at over $11 billion a year and said it would hit both the Canadian petroleum industry and the governments which are the royalty owners.
Naturally, in the west we are interested in royalties. When Mr. Douglas, the former leader of the NDP, was Premier of Saskatchewan he realized then, as Premier Schreyer realizes now, that foreign capital is needed for the development of resources and for full employment. Mr. Douglas said that, and Mr. Schreyer made it very clear on television the other night. But I do not want to digress, Mr. Chairman. The article continues:
The political effects would arise from a reminder that the United States supplied Canada with petroleum until the mid-fifties and on an emergency basis after the closure of the Suez Canal.
The worst consequence of a decision not to export Canadian resources would be the effect on investment spending. Mr. Armstrong said. "The investment spending by private industry would dry up completely and there is no conceivable set of conditions or incentives that government could provide that would prevent this from happening."
Mr. Armstrong said that Canada has two options-to develop or to stagnate its petroleum industry. He called a decision to sit back and refuse to export resources and concentrate on production for the domestic market a vote for stagnation.
"With the world's largest growing market for petroleum energy at our doorstep and with the great potential for crude and natural gas development in the frontiers, it would be a catastrophe if Canada does not capitalize on this unique opportunity not only to strengthen its economy but to assure itself of a plentiful and secure supply of oil and gas in a very uncertain world," he said.
The National Energy Board Friday turned down applications to export some 2.66 trillion cubic feet of natural gas to the United States.
I pause there, Mr. Chairman. Prior to these applications coming before the National Energy Board they were examined by the Alberta Conservation Board. The decision of the National Energy Board questions whether we have enough natural gas to meet Canada's domestic and industrial needs forseeable for the future. In the Borden report our proven reserves were estimated at 23 trillion cubic feet. According to the National Energy Board we do not have that kind of reserve, and if this is so then the way to get the reserve is through development. The way to encourage development is by an attractive tax climate. The reserves are there in the ground.
That leads me to a few more quotations from the remarks of the president of Imperial Oil. Commenting on the board's decision, Mr. Armstrong said:
-there is a difference of opinion in Canada as to the surplus of natural gas in the immediate future.
I agree with the Prime Minister on a point of law. If the National Energy Board makes an affirmative decision, the cabinet can approve or negate it. That is sound law, and in that regard the Prime Minister stands on all fours with the National Energy Board Act. However, if the decision is negative, the cabinet may not be able to change it. The only recourse is appeal to the Supreme Court of Canada under section 18 of the National Energy Board

Act on a question of law or a question of jurisdiction, which does not help us in this field.
At the moment we are debating the tax bill, whether we are going to get development and what kind of tax climate we will have in light of the fact that the National Energy Board turned down applications to export natural gas worth $11 billion each year. That is half a billion dollars more than the new budget for the whole of Canada.
Having, in my opinion, quoted the law correctly the Prime Minister should now take two decisions. First, the government should ask the National Energy Board to review its decision. In the event that the board maintains its decision, the government should review the tax climate of this nation, because it is stagnating development in our country and that is why we have unemployment to the degree that now exists. I want to be very positive and that is why I make these suggestions.
Second, since the act does not permit the cabinet to review decisions which negative or turn down applications, I hope the government will bring the members of that board before the Standing Committee on Energy, Mines and Resources so that parliamentarians may examine them. Their decision came as a shock to western Canada and should be shocking to all Canadians. We want to determine on what basis they estimated reserves and if they think that, given the tax climate which is being discussed in this debate, reserves will increase.
I hope the members of the board will be called before the committee. I should like the privilege of cross-examining the chairman of the board and its members. If anyone says that would be an unusual procedure, I say hogwash. On previous occasions when the standing committee has asked for it, those gentlemen have appeared before the committee. I have often recommended in committee and to the government that the staff of the board be increased to a level that is commensurate with the board's responsibilities under the National Energy Board Act.
In light of the tax climate being created today and the resulting uncertainty, I recommend, first, that the government ask the National Energy Board to review its decision. It should bear in mind the revenue that can be generated in Canada as a result of developments within the industry. I am speaking of benefits which will come from tertiary industries and from exports.
I recommend, second, that the gentlemen of the board be called before the standing committee so the committee may examine them and find out exactly why they decided to veto the decision of the Conservation Board of Alberta. When we have heard the evidence we can say whether that decision should stand or fall. To me, coming from western Canada, the board's decision is shocking. The royalties from this industry which flow to provincial governments of western Canada, and the revenues that indirectly flow into the coffers of the federal government, are substantial. Therefore, when legislating new tax laws we must be very careful.
I now continue quoting what Mr. Armstrong is reported to have said, according to the Winnipeg Free Press:
"The United States only takes our reserves for security because we're close. One or two more tankers from the Persian Gulf to the U.S. market and we're out," he answered.
November 23, 1971

By 1980, he estimated that Canada would be supplying about 4 to 5 per cent of U.S. demand for oil and gas.
We went to bed, so to speak with one-eighth of the world's supply of coal in Alberta. All the arguments that my friends to the left raised in this debate were raised years ago. They sound wonderful on the hustings, but they are no good for employment. They are beautiful for winning votes, but no good for the economy of the country or the economic well-being of the average man. We went to bed in the twenties and the thirties with our coal; and who in Alberta or anywhere else in Canada now wants to go to bed with our natural gas? I continue quoting:
Mr. Armstrong estimated capital requirements of the developing Canadian petroleum resources in the next decade at $25 to $30 billion.
The article refers to $25 to $30 billion. That sounds like a lot of money. A capital gains tax is to be introduced through this bill and, while it sounds good on paper, it will rob the average Canadian of any incentive to invest in resources. That is the anomaly of it. It may be funny; my expression of going to bed with our gas. I think it is funny and I said some time ago that it was funny. One sometimes has to show how funny a thing is in order to demonstrate how tragic it is.
Having said in my opening remarks that the regulations I am talking about are similar in nature to those contemplated in the white paper, let me show what the great experts said in committee. I am about to read excerpts taken from official report No. 33 of the Standing Committee on Finance, Trade and Economic Affairs. These proceedings took place on April 16, 1970, at 3.40 in the afternoon. I should like to put some questions and answers on the record because my hon. friend opposite from Calgary felt that the answers were not as suggested in another debate. Actually, we were debating another section of the bill. I directed my first question to Mr. Bryce, the economic adviser to the Prime Minister. I asked, "Did you assist in the drafting of the proposals." Mr. Bryce answered: Normally the government does not reveal who did what within it, but it is well known that Mr. Brown and I did assist in drafting these proposals.


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


Some hon. Members:: Carry on.


Gérald Laniel: Does the committee agree unanimously to the hon. member continuing?


Some hon. Members:: Agreed.


Eldon Mattison Woolliams: I appreciate the committee's courtesy, Mr. Chairman. I will not be unduly lengthy. I can speak again after an interval. My party has asked me to place on record a few facts which are important to western Canada and to Canada as a whole. My next question was: Does the white paper proposal on taxation abolish the distinction between capital gains and income, and treat capital gains as ordinary taxable income?
Let me digress for a moment. The United States and Great Britain have capital gains taxes. Farmers I was talking to the other night in Manitoba were shocked to hear that any capital gains they made would be added to their income and that half those gains would be taxed at
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ordinary income tax rates. Yet here we are dealing with the resource industry. Surely we want to encourage economic development. How will that development come about if you say to investors in resource industries, "We will take the cream off the top of the milk in the can and all you will have left "is skim milk". And then you are asked to make butter. Out of what?
That is how ridiculous this law is and that is what it will do to our resource industries. I know that my friends to the left say that the white paper did not go far enough. They found out exactly how far the white paper went only when its proposals affected the Saskatchewan Wheat Pool. They did not think they would lose any rural seats in Saskatchewan.


An hon. Member:: But we have just won a seat.


Eldon Mattison Woolliams: Sometimes it takes a little time for the correct facts to be known. The rest of my question was as follows:
For example; if a person has a taxable income of earned $10,000 from wages, and earns $10,000 on the stock market, what is the rate of tax on $10,000 capital gains?
Mr. Brown answered:
Half of it will bear the progressive rate as if that gain was a taxable income today.
In other words, one half of the capital gain will be taxed at progressive income tax rates. The provisions of the white paper basically have been incorporated in Bill C-259, so that when you talk about the white paper you are talking about Bill C-259. I then asked whether the capital gain would not be added to taxable income in that year. Mr. Brown answered, "Yes, sir." Actually, I asked the following:
An ordinary landholder who bought some land, then sold it and in that taxable year, whatever year it might be, he made $10,000.1 am asking you, under the ordinary rules, would not that capital gain be added to his taxable income in that one year?
Mr. Brown answered, "Yes, sir." I then asked:
Yes, so basically, although you have mentioned some exceptions and I am prepared to determine those in a few moments, what the chartered accountant of one of the national firms said is true, that the distinction between capital gains and income will be virtually abolished because in many cases-I have given you two or three illustrations, but I am sure you could give me more than I have given you because you are far more knowledgeable in this field-it will merely be added to the taxable income and become taxable in that year. Is that correct?
Mr. Brown answered, "Yes, it is." Mr. Chairman, I want to drive this point home because it is important to farmers and to those investing in the resource industries. Half of any capital gain is to be included in income and will be taxed at progressive income tax rates. What are those progressive rates? They are not 25 per cent or less, as in the United States or Great Britain. They run as high as 61 per cent in Canada, a new country. And then some Members of Parliament say we do not need foreign investment! That is the anomaly I see under this tax bill.
How can hon. members, no matter on which side of the House they sit, believe that we do not need foreign investment? We are going to ask Canadians to invest in their industry and at the same time tax them on capital gains at

November 23, 1971
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the rate of 61 per cent for those in the top tax bracket. If that is not an anomaly we have never had one in politics. That is why there is stagnation today in the development of our mines and resources and it will stagnate even more.
The National Energy Board has taken the position that we do not have the reserves. I want to read the report about reserves. That is a matter of opinion, not evidence. Opinion evidence must be given different weight than real evidence. How can you encourage further development of the natural gas and petroleum industries if you do not have a tax climate whereby people will invest their money? I quote:
Is the difference then between the United States and Great Britain's capital gains tax that they, the United States, have special rates on capital gains and rates on taxable income in the ordinary way. Is that not correct?
I asked further questions as follows:


Mr. Brown:: In his answer he agreed with me pointing out that the tax in some cases is 25 per cent and some cases would be 27.5 per cent with a surtax. He also added that some of the states also have an additional tax in addition to the federal tax.


Eldon Mattison Woolliams: I will deal with the exception in a moment, because I am well aware that it could go up to 80 per cent under certain circumstances for a period of years. But, forgetting that exception, the maximum Canadian rate could be as high as 50 per cent.


James Elisha Brown: Yes, sir.


Eldon Mattison Woolliams: And that is considerably higher than the United States and Great Britain at the present time.


James Elisha Brown: I think that as a rate that is true, sir.
I put this to the parliamentary secretary. With a new country, a country developing its mines, petroleum, natural gas and all its industries-which is the very foundation of our economic growth and the growth of employment possibilities which will take people off the breadlines and get them working-you need investment in those resources. Without it, you have stagnation. With stagnation, you have unemployment. With high taxation like this you will continue to have unemployment until it becomes something you must learn to live with. There is no solution to this kind of problem.


An hon. Member:: The NDP have it.


Eldon Mattison Woolliams: I read what the Premier of Manitoba said, as follows:
If I cannot get investment from any other source, I will get it from the United States.
It depends on where you are sitting and whether you are wooing votes or have the responsibility of running a province or country.


Some hon. Members:: Hear, hear!


Patrick Morgan Mahoney: I'll buy that.


Max Saltsman: Would the hon. member permit a question?


Eldon Mattison Woolliams: Certainly. I always like questions.


Max Saltsman: I would like to ask a question related to investment and unemployment. The hon. member said that one of the reasons we have such a high level of unemployment is that we are not encouraging investment. My recollection is that in 1960, 1961 and 1962, when the

hon. member's party had some responsibility for governing this country, we had a rate of unemployment of something over 10 per cent. At that time we had far greater incentives to investment in Canada: we had a dollar that was rising rapidly. How does the hon. member relate that to unemployment?


Eldon Mattison Woolliams: We took office in 1956. I do not want to get into a side issue. I am not here to defend, but I shall answer. I am not here to defend what happened to Mackenzie King, Bennett, Diefenbaker, or anybody else. I am debating a tax bill and what in my opinion is sound economics. But I can answer the question. The hon. member knows as well as I do that when we took office in 1956 there was unemployment.


An hon. Member:: 1957.


Eldon Mattison Woolliams: Yes, 1957. But 1956 was the beginning. There was unemployment in the United States as well as in Canada. Mr. Sharp and Mr. Winters both admitted on the election platform that unemployment had dropped to lower than 6 per cent by 1962 because of the programs put into effect by the Diefenbaker government.


Some hon. Members:: Hear, hear!


Eldon Mattison Woolliams: I am not going to get into side issues. That is when the boom started. If the hon. member for Waterloo wants to go back 20 or 30 years I would ask him, why did Clarence Fines, the CCF provincial treasurer, leave Saskatchewan with approximately $3 million? I do not know. Answer that one. Why did some become very rich? They were socialists and were preaching that religion across the land. I could ask other questions but nobody has a monopoly on political morality in this House. I again quote:
Mr. Bryce, thinking of the questions that I have put and the answers Mr. Brown had made to those questions, it is possible under the white paper that for a period Canadians could pay as high as 80 per cent capital gains tax under certain circumstances. I will give you an example, if there is any question about that.
I gave him an example. Mr. Bryce replied:
Oh, on certain transactions, in the first year of the new system as proposed, yes.
For two years we debated the white paper. For two years investment and business in this country were threatened. They were threatened until this bill was introduced. Now the rate is up to 61 per cent. We were threatened with a tax on capital gains, on investment of possibly 80 per cent. In light of the atmosphere since this government took office, scaring away development, investment and exploration, how can our economy not be stagnated at this time?
If the National Energy Board says we do not have enough resources, I do not agree with them. But they have the jurisdiction. As a parliamentarian, I have only the right to criticize. I want them to appear before the committee so I can hear their evidence. If there are not the reserves, the answer is to put capital and men to work. You cannot have prosperity and economic development when you are stagnating industry by taking away Canadian capital. The government says it can do things better. It says it will handle the money. That is the record of what took place in committee.
November 23, 1971

Under our tax law, much of the tax treatment of the oil industry is contained in regulations. It appears that this concept is carried forward in Bill C-259. The concept that I have read from the white paper has been carried into the resource industry, although the government has seen fit to issue a series of vague proposed regulations since the white paper of November 7, 1969. Most of the regulations proposed by the oil industry were included in a news release by the Department of Finance on July 6 of this year. These regulations are permissible-this is referred to in sections 65 and 66 of Bill C-259-but they are not included in the bill. It is the intention to evaluate these proposed regulations with full understanding; however, they are likely to be changed. Obviously, anticipation of such changing regulations has contributed in some measure to the present instability in our business community.
Before making an assessment of the proposed tax regulations, it may be appropriate at this point to discuss some aspects of Canada's present energy position-I have already discussed certain of these aspects-and consider the manner in which a restrictive tax treatment can greatly influence Canada's future position. At a time when more and more Canadians are concerned with the future of Canadian independence, little is being done by the government to encourage the investment of private risk capital to develop our resource frontiers. That, basically, is the weakness of the tax policy presented to us. Particular reference is made to the existence of drilling funds which under United States tax laws favour the use of essentially private capital in a risk-taking venture, such as oil or gas explorations, by granting certain incentives to individuals willing to take such risks.
My next recommendation is this: Our tax laws in relation to the resource industries should offer far more incentives that the United States system because we are competing against the United States capital. If we can create a better atmosphere we could hope to attract Canadian investment in Canadian industry on a larger scale. The end would be achieved not by regulation but by the individual initiative. This is one of the factors which should have been considered when this bill was in preparation, particularly with regard to competition in the resource industry. Remember, when we are dealing with a resource industry we are dealing with an international industry. I have heard people say it is a terrible thing that it should be international. But of course it is international. It is international because oil, natural gas and minerals are found almost everywhere in the world. The companies concerned must operate in various countries in order to remain in a competitive position and be able to pay a fair wage to their employees and provide a fair standard of working conditions.
Through a fair system of tax write-offs and depletion allowances, United States tax laws have created a means by which individual Americans can participate not only in the development of domestic resource frontiers but also in the development of Canadian resources. If Canadians are concerned about the influence of foreign control over some of our industries, then establishment of Canadian tax laws providing parity incentives for private risk capi-
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tal is a necessary prerequisite to give Canadians the opportunity to invest in their own resources.
We should make Canadian industry fully competitive. We talk about foreign investment but we refuse to give the same competitive shake to Canadians. What kind of law is this? What kind of economic system is that? When you read just one side of the story it sounds good. Thank goodness that in justice, whether it is economic or judicial justice, there are two sides to every story. Quite obviously, a fair competitive basis with comparable tax incentives for Canadians is a much better means of giving Canadians the opportunity to gain or preserve control of their resource industries than the presently proposed screening mechanism of the government.
Let us look at this proposed screening mechanism, a description of which is to be found at page 21 of "The Canadian Forum"-the leak! This is a government of many leaks. In my submission it is one big leak after another. The Secretary of State for External Affairs should be called the chief of many leaks. The following is what it said about the screening process:
A screening process could be the least protectionist and hence the least costly of the possible policy alternatives because of its flexibility. It could, in fact, contribute to the efficiency of the Canadian economy. It could seek to reverse procurement decisions which were based on arbitrary and non-economic factors which contribute neither to the welfare of the particular Canadian firm nor to the country as a whole.
I pause here. Would any provincial or federal government in existence in the forties, before Leduc No. 1 was brought in by Imperial Oil to give us the first major oilfield in Alberta, have agreed to put money into that project? Here I agree with the Prime Minister. I have already quoted the Prime Minister twice tonight with approval, something which is rare for me. The right hon. gentleman said this country was run by a group of experts and not by parliamentarians elected by the Canadian people. Well, I do not want a bunch of bureaucrats determining whether a well should be drilled for natural gas or petroleum, because I do not trust their judgment. In the field of incentive, people take risks, sink mines, drill shafts and create economic growth which brings jobs for men and women. That is what incentive is about.


Some hon. Members:: Hear, hear!


Eldon Mattison Woolliams: At a time when we are talking about unemployment every day, the government is considering setting up a system of selection to determine through a government agency or somebody in the public service where, when and in what manner funds should be invested. I think the history of western Canada might have shown very little development if policies of this kind had been decided in some office in an ivory tower. I think the parliamentary secretary would agree with me, because I read some remarks he made recently relative to the export of gas. This is why I say we are divided in this House by regions, on occasion, rather than by narrow, party politics. I read further:
In those cases where procurement from the parent is in the best interests of the firm but not necessarily in the best interests of the long-term economic development of Canada, a screening process could bargain for the location of the next expansion in Canada in cases where this is economic.

November 23, 1971
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Does any hon. member believe for one moment that the Sudbury mines would have been found by bureaucrats sitting in an ivory tower? Do they really believe there would today be an oil and gas industry in Alberta if decisions had been left to some bureaucrat? I do not believe so. It was only in the field of competition, through the interplay of action, knowledge and investment that the growth of this country took place right from the Mari-times to Victoria. Development has gone on in this country on such a scale in the last hundred years as to be unrivalled anywhere except perhaps in the United States.


An hon. Member:: And where did it get us?


Eldon Mattison Woolliams: I don't know where it got you. But I do not want to get off target. I shall not listen to a lot of nonsense.


An hon. Member:: We are having to.


Eldon Mattison Woolliams: Everybody has a right to take part in this debate. I have only spoken once, and I felt I should enter into the discussion at this point. If hon. members disagree with me, I shall be happy to listen to them carefully.


An hon. Member:: We shall do that.


Stanley Howard Knowles: We just don't believe it.


Eldon Mattison Woolliams: It continues:
The new production facilities in Canada could serve, for example, the Canadian and European markets with the MNE acting as a channel for Canadian exports to European subsidiaries. The extent to which the screening process can secure this type of investment for Canada will depend upon many factors including the costs of production, access to foreign markets, transportation costs, etc.
All the factors will be put through a computer. But the information fed into a computer is only as good as the knowledge that goes with it. Does anyone imagine we could have achieved our present economic growth had the suggested screening method been in operation? I recall the days when Mr. Pearson criticized my right hon. friend from Prince Albert during the years he was Prime Minister for taking initiative in the development of the north. Let us suppose Mr. Pearson had still been in the public service and had been given the job of deciding whether or not any development in the north should take place. All we would ever have up there would be igloos. And if we had taken that kind of advice, the CPR would never have been built. The Grits said it would never pay for the cost of the axle grease.
Whenever we get rules and regulations and people interpreting them, we should look out because expansion is likely to be nil. That is what is wrong with this tax bill. That is why I refer to the tax bill and its link with screening and regulation. We have reached a point in this country where we have an NDP government, because the Prime Minister and two of his henchmen sitting over there walked out of that party because of a deal, went over to the government party and took office as NDP members under the name of Liberals. That is what we have.


Some hon. Members:: Hear, hear!


Eldon Mattison Woolliams: It does not make any economic sense to have this screening process that apparently seeks to ensure, for the Canadian supplier, an opportunity to compete for supply contracts. But that is what we are linked with in the tax bill. This bill is an unwritten book of regulations. When the regulations are written, unless they are leaked to us they are hidden laws. That is the only way we find out about them, because we cannot pry answers from the government.
A glance at the proposed tax amendments and regulations of Bill C-259 immediately raises the question, what are these measures intended to achieve in the energy sector of our economy? Let me deal with Canadian energy policy as it fits into taxation. Predictions for the remainder of this decade are that the demand for minerals and energy resources will accelerate at an unprecedented rate. By 1980 the United States will consume over 80 per cent of the world's mineral and energy resources. That figure is based on what an economist says. Canada, through its proximity and close affiliation to United States markets, must formulate a Canadian resource policy. Perhaps it is time we had a national resource policy, but such policy must attract Canadian companies to develop our own resources for Canadians.
I do not know what is meant by a continental energy policy but I have always maintained that this was dangerous. Deals have been worked out, like the national oil policy, whereby we permit the eastern market, divided by the Ottawa Valley, to obtain crude oil from other countries provided we can serve the northwestern United States market. We started off by supplying that market with 250,000 barrels of crude per day, with a target of 800,000 barrels per day. We managed to achieve the goal of 800,000 barrels per day, and even the Minister of Energy, Mines and Resources admits that. If a decision arrived at is such that in the near future central Canada needs more natural gas and energy than was estimated, then let us get on the job and build pipelines to bring it here. Let us survey central Canada to find out whether more energy is needed. If more energy is needed, .let us obtain signed purchase contracts so that western Canada can then properly assess the need. The need could properly be assessed by the National Energy Board and the Alberta Conservation Board. In any event, let us make an assessment now of our energy requirements.


An hon. Member:: You can take gas to the Maritimes.


Eldon Mattison Woolliams: Yes, we could take gas to the Maritimes. In order to have the kind of vitality we need in the industry, we must have a tax atmosphere which encourages investment, and we must have markets. I say, let us build the pipelines to the eastern market. If we are to be nationalists in respect of one area, we must be nationalists across the board. We have pools of natural gas and petroleum in Alberta and it may be that policies can be worked out to supply eastern markets. This is a field for the experts, not for parliamentarians. But if we are to have a national policy we must work out some deals. If we are to keep our gas in the ground waiting for something to happen somewhere else, then surely we have a right to build a pipeline and market crude petroleum and crude natural gas in the Montreal area. In this way we could keep the western economy healthy.
November 23, 1971_______________COMMONS DEBATES________________________________9833
I have made several recommendations not only in respect of taxation but in respect of markets. In relation to this question it is interesting to read what was written recently in a Winnipeg paper:
Government economists as soothsayers have a very mixed reputation. We have been, throughout our history, a capital-short nation. It was rather generally assumed, until recently, that for purposes of development-which is very important to national unity-we needed all the savings we could get, both domestic and foreign. The revised view evidently is that, in the domestic sense, we are much stronger than we assumed and that foreign capital, although it should not necessarily be excluded, is something to be feared and screened and regulated. It is at Canada's door pressing to get in and the role of a protective government must be to admit it only on prescribed conditions. In similar fashion, we screen immigrants lest subversives or insufficiently close relatives gain access to the country.
But the the economists may be at fault in their readings of the signs and portents. In a brief submitted last week to the Ontario securities commission, two brokerage firms made two points rather forcefully. The first was that Canadian demand for both debt and equity capital will increase significantly in the next decade. The second was that the United States, far from attempting to force investment upon us, may be more disposed to end the privileged exemption from the interest equalization tax which Canadian issues have enjoyed since 1963 and from other restrictions on direct foreign investment imposed in 1968 on U.S. firms. If these propositions are sound, the government has brought itself to the present somewhat embarrassing situation by tackling the wrong problem in the wrong way at the wrong time.
I will deal with another subject later, but those are my final words at this time. We are tackling the bill at the wrong time, and we are doing so at the expense of development, when we have high unemployment and a high cost of living. We have economic stagnation and a problem with the United States in respect of the surtax. We have a floating dollar which is just about at par with the U.S. dollar. We are putting our industry at a great disadvantage.
If we are to have full employment in this country we must have expansion. It does not take an economist to figure that out. To get expansion we must have investment in the resource industry. This industry needs large amounts of capital in order to find the resources and get them to the market. You can only obtain the capital with which to find the resources if you have a tax climate which encourages Canadians to invest in their own resources.
In addition, Canadians should have a better deal in the tax world than foreign investors in Canada. Under this bill they are put at a great disadvantage. This is shown by the questions and answers I read. This bill should go back to the drafting board. I have seen fights in caucus. I have never been in cabinet, but I assume the same fights go on there. This may be a fight between interests in one region and those in others, or interests in one group. But if we can succeed in what we must do we will attain expansion and full employment.


David Réal Caouette: Mr. Chairman, I listened very attentively to the remarks of the hon. member who has just resumed his seat, the hon. member for Calgary North (Mr. Wool-liams), to the effect that Bill C-259 certainly does not promote individual initiative nor private enterprise. This
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bill results naturally from the white paper tabled several months ago already and which did not seem to please the Canadian taxpayers as a whole. Whether the matter under consideration be section 21 or any other provision of this bill, we are faced with a tax reform which consists of taking away from those who have in order to try to give a little to those who have less. And by applying that policy, I suggest that we will surely come to a situation whereby more and more will have nothing and fewer and fewer will have something.
And if the government wonders why Canadians are hesitant to invest in new industries or in secondary industries, or to increase their production, it is simply because they are not interested in wasting their time for the pleasure of paying taxes.
We are complaining that, in the mining sector, for example, companies have to shut down because they are taxed too heavily. We have typical examples of this situation in northwestern Quebec. There are other examples in northeastern Ontario and in the Sudbury area.
Everywhere, in every area, people are disgusted, discouraged, and they cannot be blamed indeed.
We, of the Social Credit, have asked for many years that the income tax be reduced, and the ensuing decrease in income compensated by new credits created by the Bank of Canada. Of course, some find this amusing, and we keep on asking the Americans to come and invest here. We are surprised to see that they are increasingly embarrassed to invest in Canada because taxes are too high. In fact, some American companies now say they are willing to go back to the United States, and to sell from there their products to Canada, for it will cost them less to produce over there.
Mr. Chairman, I do not believe any of us can work miracles. One thing is sure, though: we hear more and more people say that we should take over the control of our national economy; more and more members of the NDP, of the Progressive Conservative party, and even of the Liberal party say: Let us take back the control of our economy. At the same time, the Prime Minister of Canada (M. Trudeau) says that 60 or 70 per cent of our economy is in the hands of Americans. Why? Because such a system was set up. The saints in Heaven or Brother Andre did not suggest that we ask the Americans for permission to develop our natural resources. And let us make no bones about it, because our Canadian companies, the Quebec, Ottawa or Manitoba governments go and beg in the United States for funds to develop hydro-electric projects. Manitoba and Quebec, for example, have borrowed $50 and $75 million respectively. The premiers of those two provinces do not come back from the United States with a bag full of American dollars. They come back with figures and promissory notes for the reimbursement to the United States of $75 million by Quebec and $50 million by Manitoba.
Mr. Chairman, the Americans do not base their $75 million on their wealth, but on the development of our resources. This is why, we say: Why are those figures written by Americans when they could have been written by the Bank of Canada? Those then would be figures that belonged to us and not to others, and that is the only way to regain control of our economy.

November 23, 1971
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Yesterday, I heard the Quebec Premier, Mr. Bourassa, state that the James Bay development, which will cost $6 billion, will permit us to finally become masters of our economic destiny. Where shall we find those $6 billion? Mr. Bourassa gives the answer: In the United States. If the Americans finance the James Bay development, to whom will it belong? To us or to American financiers? We will still be in the same hole!
So, I ask those who have drafted Bill C-259: If the Americans can write those figures for the development of James Bay which belongs to us, why is Mr. Rasminsky not able to write some? Does he lack knowledge? Can he not add? Can he not state clearly that we can make the figures agree with the development of our natural resources? It is not a question of writing any figures, as the hon. member for Papineau (Mr. Ouellet) takes pleasure in repeating throughout the province of Quebec, but figures based on something real, that is the development of our natural resources.
Mr. Chairman, we have been discussing this famous tax bill for months. We consider it by groups of clauses, in order to take a little money from some to try and give it to others. About 80 per cent of everything that will be collected will be used to pay a larger bureaucracy, one that will keep us still more ignorant, and this, because we do not want to tackle the root of the problem. We stagnate, we procrastinate in the present system, and here in this House, members spend their time repeating speeches, quoting figures, when the legislation aims simply at confiscating private property and destroying personal initiative.
Mr. Chairman, with regard to personal income tax, the government said it could not afford to set the exemption at $5,000 for married people and at $3,000 for single persons.
Recently, the Senate Committee on Poverty published a report which may be related to Bill C-259, since its aim is to eradicate poverty in Canada and to provide a guaranteed annual income. For 35 years we have been calling this the vital minimum. Senator Croll just found out that we must come to that. The Prime Minister believes that a guaranteed annual income makes sense but that we cannot afford it. The hon. member for Papineau and the Minister of National Health and Welfare repeat the same thing: We cannot afford to do it, it would cost too much!
Mr. Chairman, should a war break out tomorrow, the question of millions or billions of dollars would be put aside. We would get into it to the limit of our physical capabilities. Financing would be available to the extent of our possibilities. We would not ask ourselves: Can we afford it? We would be told instead: This is an emergency!
Mr. Chairman, the present situation is one of emergency since terrorism is closing in and revolutionaries are disrupting the country. In fact, when we witness complete dissatisfaction at all levels of society, I say we are in a situation of national emergency.
We say that, in this country, everything that is physically feasible should be financially possible through the use of our financial institution par excellence, the Bank of Canada. That does not mean we should nationalize the

chartered banks. Not at all! Let them operate with private enterprise. But the government should take its responsibilities with regard to the public sector of our national economy.
What did the provinces, municipalities and school boards talk about when they met with the Prime Minister last week? What matters were discussed? Did they talk about the constitution? No! The Constitution is something like moving fine amendments, like talking literature to a poor chap who is dying of hunger! He does not listen too carefully, because he is not interested in literature or sweet nothings. When he is hungry, he wants to work and to earn a decent living.
What were the provinces talking about? Bill C-259. Even if they do not say it too often, all provinces face the same problem: lack of money. And the federal government shows up with a bill of some 725 pages to inform us that it has no more money than the provinces.
Thus, as the conference came to an end after three days, the representatives of the provinces went home, thinking: We had three days of discussions and we will meet again in three or six months. What for? In order to say: we still have no money. Let Ottawa give us some. Let them tax Canadians and give us what the money collected. All the provinces are asking for a better distribution of public funds in every field.
Mr. Chairman, we have have those federal-provincial conferences for ten or twelve years, but they did not solve anything because the federal government has the last word when it comes to credit and currency. The Constitution gives the federal government complete jurisdiction-through Parliament, of course-over matters of currency and credit, and this is why we say to the Minister of Finance (Mr. Benson), to the Prime Minister, to the government and to its members that the public sector of our economy-provinces, municipalities, school boards, and so on-should be financed through interest-free loans granted by the Bank of Canada. Provinces, municipalities and school boards would then have a chance to be more creative and to promote private enterprise and individual initiative.
I do not think, Mr. Chairman, that the bill will solve anything, even if it is carried unanimously. It does not contain any solution. We have to prevent this outdated system from exploiting us as it is doing at present.
A while ago, I mentioned a $75 million loan obtained by the Quebec government from the United States only a few weeks ago at the interest rate of 91 per cent over 25 years. Over 25 years, we shall have paid $225 million in interest only and still owe $75 million.
Now, on exactly the same day the Quebec government borrowed in the United States, Mr. Paul Gerin-Lajoie, representing the federal government in the underdeveloped countries assistance program, was in India and granted that country a $40 million interest-free loan, refundable after 60 years. However, 60 years hence, the Prime Minister will be 113 years old, which means that he will no longer be here.
Mr. Chairman, again I am in favour of assistance to foreign countries, but if we are in a position to provide interest-free loans to India, why can we not also provide
November 23, 1971

interest-free loans to the city of Hull or to the provinces of Manitoba, Quebec and Saskatchewan?
More recently, we granted Yugoslavia a $140 million loan I believe, for a hydroelectric project or for setting up a TV broadcasting system. Apparently we can afford that. In fact, a foreign visitor to Canada never goes back home without a generous loan from the federal government.
As for the provinces, they have to go back empty-handed, not richer than they were before. And we call this a Canadian government for the Canadian people.
Mr. Chairman, I am not surprised to see the government's popularity going down in western Canada, where I was last week. I am not surprised to see the government loosing seats in by-elections as we have seen recently. I am not surprised either to find the people thoroughly disgusted, because there is nothing to offer except taxation bills to take away from those who have very little to give to those who have nothing.
Mr. Chairman, we will not go very far this way. I said earlier that we are in a national emergency situation and this is true. Nobody is happy. The students, the fathers and mothers, the handicapped, the pensioners, the senior citizens, the private businessmen are not happy. I am receiving many letters from business executives who complain that the government is eroding their profits and is compelling them to borrow money at exceedingly high interest rates to keep on operating. I said earlier that the province of Quebec is paying an interest rate of 9? per cent to the United States; the Bank of Canada has just cut its rate down to 41 per cent. I recently asked the Minister of Finance why the provinces should not be allowed to borrow from the Bank of Canada at 43 per cent instead of having to borrow from the United States at 91 per cent. The minister replied that such was the consensus. We must accept things as they are. Under the law the Bank of Canada has the right to make loans to the provinces, but only for a period not exceeding six months whereas New York financiers may make loans for 25, 40 or 50 years. All we would have to do would be to replace the words "six months" in the Bank of Canada Act by 25, 30, 35 or 40 years. That is the only thing to do. The Minister of Finance knows that but he has not got the courage to take his responsibilities, to so instruct the Bank of Canada. He knows the government has the power to instruct the Bank of Canada. Mr. Rasminsky also knows it quite well.
Mr. Chairman I am nearly through on the subject. Instead of introducing a bill of that nature and saying that we cannot afford to establish a social security system in Canada, let us try to see if Canada can produce enough to meet the needs of its population. This year the national output will total $90 billion and the national income will total $65 billion. How can we logically buy a production of $90 billion with an income of $65 billion? Ask the Minister of Finance or any economist in Canada. There is a difference of $25 billion between the production of Canada and its income when the stores, the factories and the warehouses are overflowing with all sorts of products. There is overproduction and we still hear people talking about increasing our production when we do not even have time to deal with the problem of distributing our wealth. The only way of achieving better distribution of our wealth in
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Canada is to increase the purchasing power of the consumer by distributing a national dividend, as advocated by the Creditistes, and through a guaranteed minimum income, as was recently suggested by Senator Croll who only touched on the problem now facing Canada. When we are in a position to guarantee economic security, social security to the population as a whole then we will have fewer terrorists, revolutionaries, bomb blasts and disputes.
We have a solution, Mr. Chairman. In concluding my comments on Bill C-259,1 would state that even if we were to spend six months debating this legislation, it would not improve the economic situation of Canada nor would it generate a single new industry. On the contrary, existing industries are being driven out and prevented from expanding because people are being discouraged. And when someone is discouraged, nothing could entice him to take risks. It is precisely because nobody wants to take risks anymore that the government is taking away from us whatever we have. By avoiding risks, industries remain stagnant thus creating unemployment.
The unemployed are complaining. Even if new legislation provides increased unemployment benefits, the problem will not be solved. One or two years hence, we will still be facing the same situation because we will not have really come to grips with the problem.
The Creditistes have a suggestisn to offer. It matters very little whether the government considers it or not. One thing is certain which is that the Canadiin people are about to accept that solution to their greater advantage.


Mr. Burton:: Mr. Chairman, I think members of this committee should be fully cognizant of the fact that when we are dealing with matters such as those presently before us we are dealing with national policy. We are determining what will happen to Canada and what kind of nation we will be in the future. Make no mistake about that, Mr. Chairman. I think no member of this House should be under any illusion in that respect. The policies we adopt as a result of this tax bill will influence the future of Canada. They will have a distinct effect upon what Canadians and other people do in Canada.
Earlier this evening the hon. member for Calgary North referred to action taken by governments in Saskatchewan and Manitoba, governments of the same political persuasion as my party. He pointed out that a former Premier of Saskatchewan, the hon. member for Nanaimo-Cowichan-The Islands, had to take action to encourage oil development in that province. That is quite correct, Mr. Chairman. His government had to encourage oil development in Saskatchewan because of the framework within which national policies were operating. Under those national policies, agriculture-the basic industry of western Canada-was being ignored. Provincial services were being pinched and squeezed at every twist and turn. The cost of transportation in the west was constantly rising. All this was putting Saskatchewan and other prairie provinces in a real economic bind.
Under those national policies, secondary industry development was encouraged to remain away from western Canada. Those policies were structured in such a way that western Canada did not benefit from the development of

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secondary industry. The government of Saskatchewan had to move to secure a piece of the action, to bring about the type of development that was so badly needed. I think it did a much better job than was being done at that time in other parts of Canada. It protected the people's interests. It devised new means of ensuring that the people of the province would get a fair return on their resources.
In particular the CCF government introduced the feature of the net royalty lease which resulted in oil companies large and small having an opportunity to get into the development picture. This also helped Canadian companies such as Co-op Refineries to take part in the oil game; and I may say that Canadian companies have not been able to play the same sort of role in other provinces. Here I refer to Alberta.
This is the type of policy we must follow in order to ensure that our people get a fair shake. But that policy was promptly cancelled by the Liberal government which took office in Saskatchewan in 1964. That government was more interested in getting a quick buck from the sale of leases or of particular parcels of land. Now I am happy to see that the new NDP government in the province of Saskatchewan is once again bringing into effect the net oil royalty lease program.
The hon. member for Calgary North also referred to statements made by the Premier of Manitoba. I listened to those statements when watching television. I point out that the Premier made it quite clear that if he had a choice between no development, between no investment and foreign investment, then in carrying out his responsibilities as Premier of the province he had no alternative but to ensure that there would be some degree of development by encouraging whatever foreign investment was necessary.
I think the hon. member for Calgary North and others who take a similar line of argument have missed the basic point-that responsibility rests here in Ottawa, in this Parliament, to ensure that there is an adequate national policy that will bring about the degree of development that we need and in a way that will work in the best interests of the Canadian people. We have a responsibility to ensure that that kind of development policy is carried out. We have never had an adequate development policy from either Liberal or Conservative governments.
When we look at the proposals placed before us in this bill concerning the basic resource industries of mining and petroleum, what do we find? We find special concessions. We find special deals that are available to no other sector of the Canadian economy. I ask the government, Mr. Chairman, to give me one example of how the proposals contained in this bill serve the principle of equity. Is there any degree of equity in the proposals concerning mining and petroleum? I suggest there is not. I predict that the Liberal government will rue the day they allow this bill to pass with the type of concessions contained in it. The people of Canada will realize what a sham this so-called tax reform legislation is.


Some hon. Members:: Hear, hear!


John Stratford Burton: The fact is, Mr. Chairman, that this bill is a gigantic giveaway, a sellout, handout of Canadian

resources and Canadian wealth. Let us compare what is being done for the giant oil companies and giant mining companies on the one hand, while on the other people interested in co-operatives and credit unions have to scramble in order to maintain any semblance of justice in their treatment under the proposed legislation. We debated this matter last week and I do not intend to go into it again now.
We have here a good example of the priorities of the Liberal government. They are prepared to give concessions and handouts to large corporations and cartels, but when it comes to an organization that is attempting to help people and where people are attempting to help themselves we find the government putting the squeeze on. What sort of justice is this? It will not produce the new, just society we heard so much about. Furthermore, when discussing the concessions contained in Bill C-259 as they affect basic resource industry, we must see how they influence economic development in Canada. I suggest they produce very serious and bad distortions of our economic development. I think we should keep this in mind.
In his remarks the hon. member for Calgary North said that if we ensure that there is good deal for the mining and petroleum companies, that will bring new jobs and new development and help to produce full employment. I believe I quote the sense of his statement correctly. But, Mr. Chairman, I suggest to the committee through you that more people in Canada are affected by the well-being and welfare of the co-operative and credit union movements in this country than are affected by the activities of the mining and petroleum industries.
Just where are the government's priorities going at the present time? We need to use some sense when discussing these points. When this type of development is encouraged, jobs will be created and there will be some economic activity-but this is really not the rationale. The question we must consider is whether it is the best type of development, whether it is the best use of the resources, whether it is the best investment and whether it is doing the best possible job for Canada. I suggest that the type of priorities the Liberal government will give to those industries in this legislation will not produce the best possible results for Canadians.
If I understand some statements correctly, there are people who would like to see an even better bill as it affects the mining and petroleum industries. Mr. Chairman, they have had certain concessions made to them as embodied in this legislation and in statements made from time to time by the Minister of Finance which extend the present situation until 1976. At the same time, there are suggestions that the tax system is stifling development in the basic resource industries in Canada. What more do they want? The only thing I can suggest is that they want the entire country. I am not prepared to see that happen.
When deciding on our tax policy and our development policy we will have to decide on certain priorities. We will have to decide if the structure of our tax system and development policy will be carried out in a way that will produce the best possible development for Canada. The Carter report which was tabled in 1966 came out in favour of the principle of tax neutrality; in other words, that the tax system should be structured in such a way as not to
November 23, 1971

encourage or favour one type of development against another. That is really a classic capitalistic approach to taxation, but obviously the government has rejected it, particularly with regard to the treatment of the mining and petroleum industries.
We must decide whether this is the best type of priority to give Canadian development and if it is the best way to serve the interests of the Canadian people. I have yet to hear a defence from the government to the effect that this is the best way to serve our interests.
We also need to look at the nature of the industries benefiting from some of the concessions allowed in this legislation. Most industries are foreign-owned; I think this is recognized and acknowledged. As a matter of fact, the hon. member for Calgary North earlier this evening made reference to the fact that the petroleum industry is largely international in nature. That is known to all of us. What makes me rather sad is that people seem to be prepared to accept this type of structure and even further distortion of that structure. They are prepared to accept this international structure and the fact that people outside Canada will determine what is best for us and what sort of development will be carried out in this country.
This is what our national debate is about at the present time. Are we going to allow this situation to continue? Is this the type of Canada we want? I suggest that in the area of basic resource industries we must come to grips with the question. Recognizing what the situation is on an international scale, there are some things that Canada can do. Why is the Canadian government not setting up some form of consortium to deal with the entire complex of energy resources and the development of those resources from the production of the raw material to the finished products?
I think we have some of the necessary elements within the structure of government that would enable the government, through a properly established Canada Development Corporation, to take a lead in this field. Why is it not possible through Panarctic Oils, through Northern Transportation Company, through the Northern Power Commission and industrial complexes such as Polymer to set up an energy complex that could serve the industries of Canada and be a model for the world? It would put us in the forefront of industrial development.
There are other things we can do. We can work with the co-operative movement. It has a well established oil refinery in the city of Regina which is a source of pride to the people of my riding and to Saskatchewan. We have some oil activity by the co-operative movement in western Canada. There are many groups in many areas with whom the government could initiate and encourage effort in development. There are other groups which could take part in national development. I suggest that is the type of thing we should encourage if we are to see a rational development of resources in this country and change the direction of development so that it serves the interests of the Canadian people first, rather than the interests of foreign shareholders.
We must also recognize that some of the industries which benefit from these concessions create only a low level of employment; the ratio of employment to invest-
* Income Tax Act
ment is very low. This fact must be kept in mind when deciding our priorities in respect of development policy. It is clear that tax policies as embodied in Bill C-259 encouraged this type of development in Canada rather than other types of development which would be of greater benefit to the Canadian people. Therefore, there must be some change in emphasis.
We must bear in mind that the international companies to which I referred earlier operate only from self-interest. We have such companies in western Canada. Companies like Imperial Oil have carried on exploration and development activities in Alberta, Saskatchewan and, to a degree, in Manitoba. What happened with regard to these companies? They employed different crews for different jobs. They employed management people, office people, service people, and so on, in each of those provinces.
Then the companies decided to centralize their operations. First, they were going to centralize their operations in Edmonton or Calgary. Of course, certain people in western Canada said they were doing this because of the socialist government of Saskatchewan, or for any number of different reasons of that sort. Yet when the change of government took place in Saskatchewan in 1964, when a Liberal government took office and embraced the philosophy of private enterprise in all its forms, the exodus continued: the oil companies kept pulling out of Saskatchewan and moving their offices to Edmonton and Calgary.


Mr. Guay (St. Boniface):: That was because of the NDP government.


John Stratford Burton: If my hon. friend had been listening he would have heard me say that this happened during the regime of the Liberal government in Saskatchewan. The hon. member should take note of what happened after the Liberal government took office. Apparently everything was fine; yet, some of these companies moved, as I say, to Edmonton and Calgary, the homeland of free, private enterprise. But what is happening now? In many cases they are moving from Edmonton and Calgary to Toronto. They are moving some of their facilities out of the west altogether. They are serving their own corporate interests first, second and last. It does not matter to them whether they are helping or hurting the areas from which they have taken their resources as long as they get their profit from the enterprise.
We see another example of this when we examine the actions of Imperial Oil in western Canada in centralizing its refining operation entirely in Edmonton and closing down operations in Calgary, Regina and Winnipeg. In each of the three prairie provinces refineries will be closed. That company does not think of the welfare and well-being of the community or province in which it enjoyed privileges and benefits over the years. It is thinking solely of its own corporate interest. I suggest that the day is long past when we can allow this sort of situation to continue.


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


An hon. Member:: Continue.

November 23, 1971
Income Tax Act


Russell Clayton Honey: The hon. member may continue only if he has the unanimous consent of the committee. Is there cjUch consent?


Some hon. Members:: Agreed.


An hon. Member:: No.


Russell Clayton Honey: There is not consent.


Joseph-Phillippe Guay: I agree, Mr. Chairman.


John Stratford Burton: Thank you, Mr. Chairman. I have a few more remarks to make.


Russell Clayton Honey: Order, please. The Chair asked if there was unanimous consent for the hon. member to continue and determined that there was not consent.


Stanley Howard Knowles: The hon.
member concerned changed his mind.


Russell Clayton Honey: The hon. member for Churchill.


An hon. Member:: Who said "No"?


Joseph-Phillippe Guay: I did not say "No".


Mr. Simpson:: Mr. Chairman, we have heard diverse views this evening on the type of consideration that should be given under the Canadian tax structure to developers of our resource industries. I was interested to hear the views of the hon. member for Regina East who tried to compare the benefits accruing to Canadians from the mining industry with the benefits accruing to them from co-operatives and credit unions.
Many members of the committee, myself included, spoke the other evening when the committee was considering the tax structure and proposals affecting co-operatives and credit unions. Those who spoke were justified in defending credit unions and co-operatives and in opposing the measures affecting those organizations which the government wishes to incorporate in this tax bill. I point out to the hon. member for Regina East that when he talks about people deriving benefits from credit unions and co-operatives he is referring to a great number of people, but the benefits which credit unions and co-operatives make available are comparatively small. On the other hand, he ought to take note of the fact that the mining industry of Canada employs directly about 150,000 people.
Of course, we must bear in mind that that is not the total extent of tht industry's impact on employment in Canada since for every employee in the mining industry there are seven or eight who work in other parts of Canada in industries associated with that industry. Their employment is assured because of the operation of our mines. So we are really talking about 150,000 people who are directly employed in the mining industry of Canada, and when we consider the over-all effect of that industry on the economy we are talking of approximately one million people employed in industries which depend directly on mining.
Before I deal further with how the tax structure affects the mining industry I should like to show briefly how some of the tax changes proposed by the government affect directly one of the most important elements of the Canadian mining industry's economy. I am talking about
[The Chairman.]
the person who is responsible for the establishment of mines in Canada, the original prospector. The Canadian mining industry is our most important industry, accounting for more than 40 per cent of our export dollars, with well over 25 Canadian communities being entirely dependent upon it.
It would be hard to conceive a Canadian economy without the financial contribution of mining companies such as Bay Mining and Smelting Company, International Nickel Company of Canada, Sherritt Gordon Mines, Consolidated Mining and Smelting, Noranda, Falconbridge, etc. In trying to assess the effects of the proposed tax changes upon this industry one may well start at the very beginning of it all, the prospector. Who among us, except the present government, would begrudge the original prospector and his courageous grubstakers the tax free earnings for which they may very seldom, if ever, qualify?
As has been mentioned during this debate, the prospector's work is arduous and demanding. Although the prospector can take full credit for the original discovery of all our operating mines, very seldom does he experience a big strike. It is a retrograde step to take incentive from the prospector. I suggest to the government that the prospector and his grubstakers need more incentive, not less.
It is safe to say that if it had not been for the prospector and the willingness of such concerns as the mining companies which I have mentioned, the Hudson Bay Mining and Smelting Company, Sherritt Gordon and International Nickel, to invest hundreds of millions of dollars in their findings, northern Manitoba would still be a sleeping wilderness. I might add that a substantial amount of the capital invested in this area was from foreign sources which some people in this House so roundly castigate.
The mining industry presents quite special characteristics and risks, many of which are unlike those encountered in other industries. Mining is concerned with a nonrenewable resource and the success or failure of mining operations depends entirely on the inherent unpredictability of ore bodies. Furthermore, the establishment of a producing mine frequently entails the complete build-up of new infrastructures, particularly in the more remote areas. Thompson, Manitoba, is a good example. In the year 1961 the population of Thompson was about 1,300. In 1963, just two years later, the population of this rapidly growing town had increased to approximately 7,000. The present population of Thompson is estimated at 23,000.
It is expected, justifiably, that the population will surpass 25,000 within the next few years. Here we see the development of an area which 11 years ago was nothing but forest, bush and rock. It is now one of the most modern cities in Canada. In a period of 11 years, the population has increased to 23,000. Can we imagine the number of families who have been dependent upon the mine for their livelihood?
I can also speak of the city of Flin Flon, Manitoba, where I have resided for a number of years. Tens of thousands of wage earners have raised their families in this town and have made it their home. They have found that it has a very fine atmosphere in which to raise a family. All this has come about through private investment and, to a large extent, foreign investment in Canada.
November 23, 1971

I am sure all members agree it would be a very fine situation if Canadians could come up with a system whereby most of our resource industries could be financed through Canadian investment. This government has come forward with a number of suggestions which have proven to be of no avail. No one has yet come up with the answer for which Canadians are looking. I am sure that everyone will agree that it would be a wonderful situation if we could arrive at that. However, we must face reality. If we are to have development in Canada, particularly of the resource industries, we must look for investment from wherever we can get it.
As the hon. member for Calgary South said, we hear a great deal of criticism from members of the NDP. They are continually saying that this is not the thing for Canadian industry. However, where do they go to get capital when it is necessary to float loans for the province of Manitoba, and I suppose, now, the province of Saskatchewan? The first place they go is across the border, the United States. This again proves that if the money that is needed is not available in Canada, we must face reality and turn to where it is available and people are ready and willing to invest in our country. As I said before, if we can come up with satisfactory measures whereby Canadian capital assumes far greater control over our industries, particularly our resource industries, we will all be very happy to see that day.
With regard to the development of our country, I am sure we all agree that if it had not been for private enterprise and initiative our resource industries would not have been developed. Canada would have been much more backward than it is today.


Some hon. Members:: Hear, hear!
Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Stanley Howard Knowles: Mr. Speaker, on Monday, November 8, during the question period I addressed a question to the Minister of National Health and Welfare (Mr. Munro) concerning the Old Age Security Act. In particular, I reminded the minister that during the debate on that act last December he made the statement several times that the basic amount of the pension was not necessarily frozen at $80 a month but could be increased by Parliament at any time. On the basis of that assertion, as recorded at page 9409, of Hansard, I put my question to the minister in these words:
-is the minister, in view of the needs of our pensioners, now considering an increase in that basic amount?
The reply of the Minister of National Health and Welfare was at least clear and direct. It was in these words:
Proceedings on Adjournment Motion
"Not at this time, Mr. Speaker." So I put to the minister a supplementary question in these terms:
Then is the minister considering the lowering of the eligible age for those who are prepared to retire from the labour market?
And the reply was as follows:
Mr. Speaker, as we indicated, I believe in our white paper on income security, we see this as a future trend. In terms of immediate action the government does not have any plans at this time.
My question was thus in two parts. On the one hand it asked for action to increase the basic amount of the pension paid under the Old Age Security Act, which at the moment is $80 a month; on the other hand, it asked for a new departure, namely, the lowering of the age at which a person might receive old age security benefits on the understanding that such a person would withdraw from the labour market.
I posted this two-part question for a "late show," Mr. Speaker, because it seemed to me that both parts of it are extremely important. Although we may not get finality by way of an answer in a "late show" period I believe this is one of the areas we ought to keep alive until we win. I assert as strongly as I can that the amount of the old age pension must not be left at $80. One of the reasons I feel pensions should be increased at this time is to offset a suggestion made in a report from the other place to the effect that old age security benefits might be wiped out and replaced by another program suggested in that report. It seems to me that the universal nature of old age security provisions is still one of the best things we have established in this Parliament and I believe the government should underwrite that good piece of legislation by increasing the amount, and that it should do so very soon.
The other part of the question is, I submit, of equal importance. The minister referred to future trends. The day will come when retirement at an earlier age will be a fact in our society. In light of today's unemployment among young people I believe we should start that day now. I suggest, therefore, as clearly as I can, that both old age security and benefits under the Canada Pension Plan should be made available at age 60 to those who are prepared to withdraw from the labour market. This is a test which we apply in certain other instances. In other words, other income which people receive should not interfere with getting these pensions earlier. I suggest it makes sound common sense to establish the principle that people who are prepared to withdraw from the labour market at 60 should get both their old age security benefits and their Canada Pension Plan payments, for both of which individual Canadians are now paying under our tax laws and under the terms of the Canada Pension Plan.
So I present these two ideas in the form of this two-part question again tonight, hoping there will be some ray of hope forthcoming from the government side-that the day will soon come when the amount of the old age security pension will be increased and when the eligible age will be lowered at least on the terms I have suggested.


Mr. John Roberts (Parliamentary Secretary to Minister of Regional Economic Expansion):: Mr. Speaker, there is certainly one statement of the hon. member with which we can agree wholeheartedly. It is that there is generally no finality to questions on the "late show." The answer to this question will be no exception to the general principle.

November 23, 1971
Proceedings on Adjournment Motion
Sometimes the hon. member reminds me of one of the characters from Dickens-I think it was Oliver Twist- who when asked what he wanted kept saying, "More".


Stanley Howard Knowles: Hear, hear!


John (Moody) Roberts: We all admire the tenacity, irritating as it sometimes may be to those on government benches, with which the hon. member pursues his interest in old age pensioners. I wish to assure him-perhaps this is the ray of hope for which he asks-that many of us on this side of the House share his concern for the plight of these people. Many of us here are working hard both before and behind the scenes to increase the benefits to which we believe they are legitimately entitled. It is for that reason, no doubt, that the level of payments under Canadian old age pension arrangements is extremely high. Indeed, I believe I am correct in saying it is the highest in the world. We are concerned about protection of our senior citizens.
The hon. member raised questions about the application of universal demogrants. The question here always relates to the necessary costs of these very desirable benefits. I am sure we all in our hearts would like to see these implemented but, of course, governments must always weigh the benefits in relation to costs. I assure the hon. member that the government will continue to consider, as I am sure all hon. members of the House will, the very complex questions he has raised with sympathy and interest.


Stanley Howard Knowles: You are better than the minister.



RKGIONAL ECONOMIC EXPANSION-RE-EVALUATION OF POLICIES IN LIGHT OF CRITICISMS.

Mr. lames A. McGrath (St. John's East):: Mr. Speaker, on November 22 I directed a question to the Minister of Regional Economic Expansion (Mr. Marchand) in respect of a statement reported in the press to have been made by the Prime Minister of Quebec to the effect that the government's regional economic expansion policies were having no effect in that province.
The answer I received from the minister was that he had checked with the Prime Minister of Quebec that very day and he had denied having made such a statement. My question was prompted by a story which appeared in the Globe and Mail of Friday, November 19. I quote from it as follows:
Noting that Prime Minister Pierre Trudeau had campaigned on the platform of combating regional inequalities, the premier said: "Regional disparities . . . have not yet been affected by federal policies after 31 years of power."	[DOT]
The question originally arose from a story which came from the Quebec City bureau of Canadian Press. It was a consequence of a story which appeared in the French newspaper Le Soleil, a Quebec City daily. There is no question in my mind that the government of Quebec is unhappy with the policies of this government in respect of regional development, or that this story was carried by Canadian Press in the Globe and Mail, in the Saturday edition of the Montreal Gazette and the Quebec City daily Le Soleil.
There is no doubt in my mind that the Premier made such a statement, because I have checked my sources and the story is on electronic tape and was covered by Canadian Press and Le Soleil. My question was not directly as a result of what the Premier of Quebec is reported to have said, although it would be warranted on the basis of that fact alone. This is merely another of a series of criticisms levelled at this government's regional economic expansion policies.
The Prime Minister of Quebec was merely echoing statements which had been made by the Atlantic Provinces Economic Council at a general meeting in the city of Fredericton last October and levelled similar criticisms at the regional economic expansion policies of the government. The first report of the Atlantic Development Council stated, in effect, that the government was lacking an effective strategy on regional development for the Atlantic provinces.
This, I might add, is one of the agencies charged by statute with advising the minister on regional economic policies for the Atlantic provinces. There were also reports by the Canadian Council of Rural Development, which is another agency charged by law with advising the minister on regional economic policies. In addition, there was evidence presented to the Standing Committee on Regional Economic Expansion.
All this evidence indicates that there is general dissatisfaction in the country, not with the principle of regional economic expansion but with the way in which this government is going about it. The policy is overly centralized; it lacks an over-all strategy and does not pay any regard to regional peculiarities or regional differences. For example, the Atlantic Provinces Economic Council in its fifth annual report suggested that the department was overly centralized and that there should be, in fact, an assistant deputy minister and staff stationed in the Atlantic provinces to pay attention to the peculiar interests of the Atlantic provinces.
But overriding all these criticisms is the fact that regional development policies within the government's framework are ineffective because government fiscal and monetary policies render them ineffective and they are at cross-purposes with one another. Consequently, today we have a situation developing in this country where there is unanimous disapproval of the policies of the government in attempting to combat regional disparities. This, I believe, is the main problem facing this country.
The program established by the government is overly centralized and does not pay any attention to the advice of the agencies which are charged by statute with the responsibility of rendering advice to the government. The department does not consult regional bodies or municipalities. In my view it does not consult the provinces in conceiving and executing its policies. The result is we have substantial sums from the federal budget going into a program to combat regional disparities which is not very effective.
When we consider that the Prime Minister of Quebec did make the charge-his comments are on record with Canadian Press and Le Soleil on electronic tape-that the policies of the government in the last 3 J years have had no

November 23, 1971

effect in the province of Quebec, and that over 50 per cent of federal funds allocated by Parliament for regional development has gone into that province, we have some idea of the seriousness of these charges. That is what prompted my question.


John (Moody) Roberts: I welcome the remarks of the hon. member for St. John's East (Mr. McGrath), particularly that part which, as he said at the beginning, was essentially intended to be constructive. He raised two questions. The first is the question as to what in fact the premier of Quebec did say.
There appears to be a certain conflict between the newspaper evidence which he cited and what the minister reported the Premier of Quebec said. I suggest, however, that that is not the important question. Upon occasion journalists make slips of the pen and on occasion politicians make slips of the tongue. I myself have even been known on occasion to make a slip of the tongue. But really the issue is not what the Premier said but whether in fact the programs are working effectively in the province of Quebec and in the Maritimes.
I submit that if one visits Quebec and sees some of the work that has been done under the programs of the department, one can see that there has been a successful resolution to many of the efforts of the department. I would say that that is true also in the Atlantic provinces, although in my new position I have not yet had the opportunity to visit that area. However, I hope to visit it tomorrow if it becomes sufficiently free from fog so that the plane can land.


James Aloysius McGrath: Shame.


John (Moody) Roberts: Since the hon. member is here, there is hope it would not be as fogbound as it might have been.


James Aloysius McGrath: Only Ottawa is fogbound.


John (Moody) Roberts: According to my telephone conversations, St. John's is fogbound as well. I find it difficult to understand, the hon. member being here.
There have been criticisms of the department and we welcome them. It gives us a chance to reassess the program which is now in its third year. As the minister has often said, the time spent on this program in terms of successful efforts can only be judged over a 15-year period. No one has ever contended that the efforts of the department will solve problems overnight, like a magic wand, or even in the space of two or three years resolve the problems of regional disparity which have faced this country for over a century. But I am convinced that the various reports which we have received from the Atlantic Development Council and from APEC have been helpful.
We certainly do not agree with all the criticisms levelled against the government. Nor, I would suggest, have these bodies, as the hon. member contends, always unanimously opposed the government's program. For instance, interesting statements have been made in support of the program by representatives of the city of St. John's at the APEC conference. There has been some support and some opposition to what the department is doing. We hope to take into account those criticisms which are constructive, which will enable us to improve programs which we
Proceedings on Adjournment Motion
offer, and to continue what has already proved successful in the area of regional development.



HEALTH-FAMILY PLANNING CONFERENCE-REQUEST FOR PUBLICITY CAMPAIGNS BECAUSE OF INCREASE IN ILLEGITIMATE BIRTHS

Winona Grace MacInnis: As I
indicated the other day, I welcome the minister's announcement that a National Family Planning Conference is to be held in February of next year. Also, I was glad to hear his answer to my question asking which organizations would be invited to participate. I understand that just about every organization of a voluntary nature, in the private area, of which we are aware has in the past shown interest in this subject. The Minister's speech in Halifax last Friday to the annual meeting of the Family Planning Federation of Canada gives further hope of government action, promising as it did to ask Parliament, probably next month, for additional manpower and money for family planning purposes. It is indeed welcome news.
However, I am pursuing the matter further tonight because I am deeply concerned about the need for swift and far reaching action in the matter of family planning. Figures issued by the minister's department last September are a frightening forecast of the future we can expect if we fail to initiate vigorous action without delay. In the 20 years before 1959 the illegitimate birth rate in Canada fluctuated between 3.8 per cent and 4 per cent of live births, except for the war years when it rose fractionally. But in 1959 it started a steady climb year by year until it reached 9.2 per cent of live births in 1969. Almost one-tenth of Canadian babies born in 1969 were illegitimate. To whom were they born? More then three-quarters of them were born to girls and women between the ages of 15 and 24.
One thinks of the effect on these mothers, many of them teenagers. One thinks of the effect on these unwanted babies, some handed over to institutions, some battered in common law marriages, some developing into delinquents and criminals and, of course, some finding good foster homes. One thinks of the cost to the community, not only in taxes but in the tragic lowering of security and citizenship standards. One thinks of all these things and agrees with the sober words of the report that this illegitimacy figure "indicates the great need for an educational program in family planning that would begin at the elementary school level."
Who is to initiate such a program? Obviously its implementation will require the co-operation of all levels of government as well as voluntary associations. But the responsibility for initiating the program is clearly that of the federal government. The report of the Royal Commission on the Status of Women has a number of excellent recommendations, including the one "that birth control information be available to everyone." Further, it recommends that "the Department of National Health and Welfare (a) prepare and offer birth control information free of charge to provincial and territorial authorities, associations, organizations and individuals and (b) give financial

November 23, 1971
Proceedings on Adjournment Motion
assistance through national health grants and national welfare grants to train health and welfare workers in family planning techniques."
As far as I am aware the department has thus far given financial assistance to only two family planning organizations, in the total amount of $125,000. Such an amount is only a start. Of course, it will be costly to bring birth control information and help to the people of Canada. We are getting a late start. After all, birth control was a criminal offence in this country between 1892 and 1969- three-quarters of a fast changing century. We must make up for a lot of lost time.
A government that could find $9 million to finance the B and B Commission and nearly $3 i million to finance the Prices and Incomes Commission could surely manage to find comparable revenues to help women avoid compulsory pregnancy, to prevent the arrival in the world of unwanted babies and to cut down the great numbers of abortions, legal and illegal, that will continue to swell until people get the information and the contraceptives that will enable them to plan, space and limit their families.


Mr. Gerard Duquet (Parliamentary Secretary to the Minister of Transport):: Mr. Chairman, for the third time in a few weeks the hon. member for Vancouver-Kingsway (Mrs. Maclnnis) has brought up family planning. We know her deep concern with that issue. However, it seems quite strange to us that the hon. member should seem unaware of the activities of the Department of National Health and Welfare in that field, since she is constantly bringing up the matter. The government has a family planning program which has been described many times right here in the House.
The conference to which the hon. member referred in her question of November 17 is to group close to 250 delegates here in Ottawa next February. These delegates will be representing provincial groups, health and welfare groups, volunteer organizations and citizens' groups, all dedicated to the cause of family planning. This national conference-the first of its kind-will afford an excellent
opportunity for delegates to exchange their experiences. Among other things, the conference will deal with the training of personnel in that field, the needs for research as well as information. It will review the various existing programs so as to better direct the development of future programs.
On November 19, the Minister of National Health and Welfare (Mr. Munro) made an important speech at the annual meeting of the Canadian Federation of Family Planning, in Halifax. He said, among other things, that this conference would be an excellent opportunity for participants to consider the place that family planning should occupy in a broader context of training for family life. The report that the Vanier Institute of the Family published in April 1971 indicated that only 31 per cent of schools being surveyed proposed some kind of training for family life. However, a survey made by the Canadian Press and published in October 1971 points to constant progress in this field over the past three or four years. The method and content vary considerably from one school to the next; courses, seldom compulsory, are often optional or extra-curricular. The subject is generally part of a course on hygiene, integrated into lessons on domestic orientation. They give outlines of the biology of reproduction and a complete course on the growth and maturation process, family relationships and responsibilities, and tensions which are felt inside the family and the community. According to the report by the Vanier Institute of the Family, educators are mainly concerned with training teachers and inserting free time periods in the programs. This raises the question of the responsibility for the education for family life in our schools, and that of the practice of this education.
School boards, conscious of the importance of this matter, develop at an ever increasing rate these programs which are now part of the curriculum. It is to be hoped that these programs of training for family life will become more and more popular and constitute at least a partial solution to the tragic problem of illegitimate births.

Motion agreed to and the House adjourned at 10.27 p.m.

Wednesday, November 24, 1971.