1971-10-19

ROUTINE PROCEEDINGS


[Stage Direction]
Fifth report of Standing Committee on Miscellaneous Private Bills and Standing Orders, in the two official languages-Mr, Forget (Saint-Michel).
[Editor's Note: For text of above report, see today's Votes and Proceedings.]


Hon. Marcel Lambert (Edmonton West):: Mr, Speaker, my question is for the Minister of Industry, Trade and Commerce. This last week end the minister, speaking to the Canadian Export Association, indicated the possibility of some dramatic new government moves to strengthen the economy. In anticipation that this was based on something serious, I wonder whether the minister could share his knowledge with the House and tell us just what these moves might be?


Hon. lean-Luc Pepin (Minister of Industry, Trade and Commerce):: Mr. Speaker, I did my very best to indicate that I was not announcing any particular move, that the government was reviewing the situation and might have further difficult decisions to make. I went out of my way to say that I was not announcing anything dramatic at that moment, but the sort of thing I had in mind was all through my speech. I hope hon. members have read it. I also indicated that we were reviewing the general adjustment program to find ways and means to contribute more to the rationalization and modernization process, especially in some sectors of industry which have not yet reached their full productive capability.


Marcel Joseph Aimé Lambert: On the particular point of the minister's reference to the rationalization of industry is he, in saying what he did, suggesting that the government is in full agreement with the comment of the
Science Council of Canada that Canada had no industrial strategy and therefore this was perhaps one of the main reasons for some economic weakness in the country.


Jean-Luc Pepin: Mr. Speaker, I pointed out to the Canadian Export Association that this was not right. I was the first one to say that there were improvements to be made, but to say the government has no industrial strategy is far from the truth.


Marcel Joseph Aimé Lambert: Further to the speech-


Mr. Speaker:: Order, please. The hon. member wants to ask a further supplementary. He prefaces it by saying "further to the speech." The hon. member knows better than I that it is difficult during the question period to go over the details of a speech made outside the House. I, of course, exercised some latitude in allowing the question and the supplementary. Perhaps the question might be asked directly rather than by reference to a speech by the minister.


Marcel Joseph Aimé Lambert: I hope I have not made too much reference to the speech, Mr. Speaker. With regard to the minister's views on mergers and rationalizations and the view that the government might have to take some positive action in this regard, is the minister suggesting that the government, including the Minister of Consumer and Corporate Affairs, will be moving into forced rationalizations, mergers and combinations of Canadian industry and business?


Jean-Luc Pepin: Mr. Speaker, I think the position of the government on mergers is very clear. We are in favour of mergers when they can be reconciled with the competition policy. Strangely enough, at the moment we have a situation in which a number of business associations are saying that the bill on competition tries to prevent mergers and yet at the same time we have associations, for example, the pulp and paper group, writing to us and asking us to by all means implement this bill as fast as possible because they have a number of mergers they would like to bring about which they cannot do under the present law.



UNITED STATES IMPORT SURTAX-NEGOTIATIONS BETWEEN CANADIAN AND UNITED STATES GOVERNMENTS RESPECTING REMOVAL

Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: also wish to direct a question to the Minister of Industry, Trade and Commerce. In view of the fact that the United States Secretary of the Treasury, John Connally, has stated that the United States is conducting both bilateral and multilateral negotiations with a view to the removal

October 19, 1971
Inquiries of the Ministry
of the 10 per cent surcharge on imports, and in view of the fact that apparently an agreement has been reached between the governments of the United States and West Germany for the removal of the 10 per cent surcharge, may I ask what negotiations are being conducted between the government of Canada and the government of the United States? Are they presently going on and by whom are they being conducted?


Jean-Luc Pepin: Mr. Speaker, the removal of the surcharge for West Germany is entirely news to me. I will check on it and find out whether it is true. With regard to Canada-United States discussions on the so-called irritants, the last time we were in Washington, and after that in discussions between American and Canadian officials, it was indicated to us that at the moment the Americans were reviewing the list of their irritants. I understood very clearly that the Americans would be in touch with us after they completed their preparatory work. We in Canada are doing the same. On a number of occasions in the House the Prime Minister, the Secretary of State for External Affairs, and myself have stated we are willing to enter into negotiations on these so-called irritants with the United States as soon as they are ready.


Thomas Clement (Tommy) Douglas: In view of the fact that the governments of other countries, notably Japan and West Germany, have been carrying on bilateral discussions, am I to understand from the minister's statement that at the present time no discussions are going on with the American government at any level? If that is correct, may I ask the minister when it is planned to resume discussions on this very important matter?


Jean-Luc Pepin: My simple understanding of these matters is that the Americans probably considered their irritants with Japan and Germany to be more urgent to resolve than their irritants with Canada.



UNITED STATES IMPORT SURTAX-INQUIRY AS TO UNITED STATES REQUEST TO DISCUSS TIRES AND SNOWMOBILES UNDER AUTO PACT

Mr. Gordon Ritchie (Dauphin):: I have a supplementary question for the Minister of Industry, Trade and Commerce. Has the United States government indicated that it wishes to discuss the problem of tires and snowmobiles under the Canada-United States auto pact?


Jean-Luc Pepin: No, Mr. Speaker, not to my knowledge anyway.



POSSIBLE UNITED STATES BAN ON IMPORT OF CANADIAN SUGAR AND URANIUM

Thomas Clement (Tommy) Douglas: have a further supplementary question for the minister. In the speech he made at Montebello the hon. gentleman indicated that the United States might ban the shipment of Canadian sugar and uranium to that country. May I ask whether such an intention has been communicated to

him by the government of the United States and, if so, how imminent is such action?


Jean-Luc Pepin: That was not in my speech, Mr. Speaker. I was ad-libbing at the time. I was saying that in the past few days the Americans have announced that there was at least a possibility of the continuation of the embargo on the export of uranium from Canada to the United States, and also with relation to confectionery products-certain types of sugared goods-some limitations of their export from Canada to the United States. What I said with regard to sugar applies only to confectionery products going to the United States from Canada.



UNITED STATES IMPORT SURTAX-NEGOTIATIONS BETWEEN CANADA AND UNITED STATES RESPECTING REMOVAL

Mr. Eldon M. Woolliams (Calgary North):: I have listened very carefully to the minister's answers. Are we to take it that there are really no negotiations going on between Canada and the United States at the present time and that there will be none until the United States says to Canada: You may now negotiate with us? Is that really what the minister is telling the House?


Jean-Luc Pepin: That is my understanding. There is nothing wrong in that. The United States administration has told us they are preparing a list of their irritants and their case in support of their claims. For our part, we have said we have a list of our own to introduce. When it suits their purpose, when it is convenient to them to do so, we have indicated we are very keen, very willing, to enter into negotiations with them. As I said a moment ago, it seems to me obvious that the negotiations which the Americans have just been conducting with the Japanese on the subject of textiles for example must have had priority over discussions concerning the irritants they have with respect to Canada.


Mr. Speaker:: Order, please. We shall return to this subject again-the hon. member for Saskatoon-Biggar, in particular, has a supplementary to ask-but the Chair will now recognize the hon. member for Temiscamingue.



SUGGESTED INCREASE IN ASSISTANCE TO PRIVATE MEMBERS OF PARLIAMENT-REMUNERATION OF RESEARCH STAFF

Mr. Real Caouette (Temiscamingue):: Mr. Speaker, I should like to put a question to the President of the Treasury Board.
A few days ago, the hon. member for Winnipeg North Centre (Mr. Knowles) asked the President of the Treasury Board whether the government was considering the possibility of granting additional assistance to hon. members and the President of the Treasury Board answered that he would reply in a few days. Is the minister now in a
October 19, 1971

position to tell us whether the government really intends to assist hon. members and to increase the amounts earmarked for researchers for the various political parties?


Hon. C. M. Drury (President of the Treasury Board):: Mr. Speaker, the hon. member knows quite well that the matter comes under the House of Commons rather than the Treasury Board.
I answered that I was willing to hand over the matter to the committee the House had entrusted it to, but that, to date, there is no satisfactory solution to the problem.


David Réal Caouette: Mr. Speaker, I have a supplementary.
Can the minister tell us when the commissioners of Internal Economy will meet to reach a decision that is advantageous for Parliament?


M. Speaker:: Order. I believe the Chair should now remind the hon. member that his supplementary should normally be addressed to the Chair, which has taken note of it.


David Réal Caouette: On a point of order, Mr. Speaker.
I admit that I should address myself to the Chair at this stage, but if the Chair or the Commissioners of Internal Economy do not have the necessary funds, my question is therefore in order and I can ask the fund administrator if he is ready to or if-


Mr. Speaker:: Order, please.



THE CANADIAN ECONOMY


Mr. A. P. Gleave (Saskatoon-Biggar):: Mr. Speaker, may I ask the Minister of Industry, Trade and Commerce whether the House is to understand that, despite the severe dislocations the United States surcharge has caused in the Canadian economy, the United States up to this point has not indicated, either in general or in particular, what action it requires the Canadian government to take so that normal trading relations can be resumed?


Jean-Luc Pepin: The United States government has not indicated such, Mr. Speaker.


Mr. Speaker:: Order, please. I will recognize a few sup-plementaries but hon. members will appreciate that we are still on the first question after nearly 15 minutes of questioning, so there should not be too many supplemen-taries. For the moment the Chair will see the hon. member for Peace River and then the hon. member for Halifax-East Hants.


Mr. G. W. Baldwin (Peace River):: Mr. Speaker, the minister indicated that he and the government were contemplating doing something either dramatic or useful. Will
Inquiries of the Ministry
the minister discuss with his colleague the Minister of Finance and with the Prime Minister and hope that they will do something useful for a change?


Mr. Speaker:: Order, please. The hon. member for Halifax-East Hants.



UNITED STATES IMPORT SURTAX-PROTECTION OF PROVINCIALLY ASSISTED INDUSTRIES AGAINST POSSIBLE U.S. DISCRIMINATORY ACTION

Mr. Robert McCleave (Halifax-East Hants):: Mr. Speaker, I have a supplementary question for the minister. Will the minister assure us that in preparing Canada's position, as he indicated to the hon. member for Calgary North was being done, Canada will fight any stand taken by the United States that seeks to discriminate against such provincially assisted industries as Michelin?


Mr. Speaker:: The hon. member for Dartmouth-Halifax East.


Robert Jardine McCleave: Mr. Speaker, I think the minister said yes but it would be nice to have it on the record.


Jean-Luc Pepin: We will prepare our case as well as we can, Mr. Speaker.



NATIONAL DEFENCE


Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, having got a "yes" answer from the Minister of Industry, Trade and Commerce, perhaps the Minister of National Defence would answer a question for me respecting his present position regarding cadet training programs across the country and the recommendation that they be dropped?


Hon. Donald S. Macdonald (Minister of National Defence):: Yes, Mr. Speaker. I can confirm here statements I have made outside the House, as well as in the white paper, that the recommendation of the committee on youth in this regard will not be accepted.


Some hon. Members:: Hear, hear!


Donald Stovel Macdonald: Quite the contrary; we will try to find all possible resources to further assist the cadet movement.


J. Michael Forrestall: Mr. Speaker, I am sure that thousands of Canadians will appreciate that statement. Is the minister in a good enough mood this afternoon to give the same assurance in regard to military colleges?


Donald Stovel Macdonald: Exactly the same answer, Mr. Speaker.


Some hon. Members:: Hear, hear!

October 19, 1971
Inquiries of the Ministry INDUSTRY



MICHELIN TIRE PLANT-REPORTED UNITED STATES OBJECTION TO GOVERNMENT INVOLVEMENT AS UNFAIR TRADE ADVANTAGE-CANADIAN POSITION

Mr. Lloyd R. Crouse (South Shore):: Mr. Speaker, I also wish to direct a question to the Minister of Industry, Trade and Commerce. It has been reported that the United States treasury department has initiated a study of the Michelin tire plant and whether the involvement of the government constitutes an unfair trade advantage. Is the government going to make a clear statement on this issue to the United States treasury department and, if so, when?


Jean-Luc Pepin: Mr. Speaker, the decision of the government on Michelin is a well known one and will be incorporated in the Order in Council when the plant begins production. There has been no turning back from that position and it remains government policy.


Lloyd Roseville Crouse: Would the government be prepared to halt further talks on the auto pact if any action against Michelin were taken?


Jean-Luc Pepin: I do not see the relationship between the two subjects but-


Mr. Speaker:: Order, please. I think the question as asked is hypothetical.



VETERANS AFFAIRS


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a question to the Minister of Veterans Affairs. On September 9 I asked the minister if the government would take the necessary steps so that war veterans allowance recipients who are in receipt of the guaranteed income supplement would not have their allowances cut back but would get the full benefit of the increase of $2.70 a month in the pension and supplement which is to come into effect in January. The minister said the matter was being looked into and would be considered with the usual sympathy. Can the minister say whether the appropriate Order in Council has been passed or other appropriate action has yet been taken?


Hon. Jean-Eudes Dube (Minister of Veterans Affairs):: Mr. Speaker, it is not correct to assume that this will take place on January 1. It will be at the commencement of the next fiscal year, the first day of April. This matter will be decided long before that time. It is not decided now.



THE CANADIAN ECONOMY


Hon. D. S. Harkness (Calgary Centre):: Mr. Speaker, I wish to direct a question to the Minister of Industry, Trade and Commerce. In view of the increasing anxiety in Canada about the DISC legislation now before the United States senate, has the government made any diplomatic representations to the United States in regard to the undesirable effects it would have, or has the government taken any multilateral diplomatic action to persuade the United States not to proceed with this type of program?


Jean-Luc Pepin: Mr. Speaker, we have made all possible representations on that subject, first when the DISC program was introduced in Congress for the first time a couple of years ago, and we have repeated those representations more recently when it was introduced again. Our position on DISC, which is that it is contrary to GATT, is very well known by the United States administration and by Congressmen too.


Douglas Scott Harkness: Is the government preparing any tax measures or any other measures which will enable Canadian industry to meet the DISC threat if this program is actually put into operation by the United States?


Jean-Luc Pepin: Mr. Speaker, that will be known in due course. I do not think it would be normal for us to do these things before these bills actually become United States law. As we have seen, they have been substantially amended during the process of being debated in committee of Congress. This bill is now in the full Congress, and what is there may not be what comes out.


Douglas Scott Harkness: Do I understand that the government has made no contingency plans whatsoever to meet this very serious threat?


Jean-Luc Pepin: Mr. Speaker, I was rebuked a moment ago for saying we have other things in reserve. Now I cannot walk both sides of the fence. If my hon. friend says we have no contingency plans, I point out that the Prime Minister has said on a number of occasions that we have.



MEETING OF MINISTER OF INDUSTRY, TRADE AND COMMERCE WITH BUSINESSMEN AND UNION REPRESENTATIVES

Mr. Roch La Salle (Joliette):: Mr. Speaker, my question is for the Minister of Industry, Trade and Commerce.
I was happy to learn last week that a meeting was scheduled to which the Minister of Industry, Trade and Commerce, the Minister of Labour, trade union representatives and some businessmen would participate.
I would like to ask the minister if this meeting was held and if a price and wage freeze policy was discussed with the trade unions. In the negative, when will this meeting take place and will the above mentioned subjects be discussed?
October 19, 1971


Jean-Luc Pepin: As far as I am concerned, the last meeting I had was with the members of the Advisory Council of the Department of Industry, Trade and Commerce, and the government competition policy and the new Labour Code were the subject matters of these discussions. Businessmen have made certain points which have been discussed by the Minister of Consumer and Corporate Affairs and the Deputy Minister of Labour.


Roch La Salle: I have a supplementary, Mr. Speaker.
I would like to ask the minister whether he anticipates to meet with labour representatives in order to discuss the prevailing economic difficulties.


Jean-Luc Pepin: Not insofar as I am concerned, Mr. Speaker, but I presume that the Minister of Labour has already done so or will be able to do it.



CROWN CORPORATIONS


Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I wish to direct a question to the Acting Prime Minister. Yesterday I put a question to the right hon. Prime Minister concerning the lay-off of 250 employees of Polymer Corporation with only 24 hours' notice, and the Prime Minister indicated that he would reply to the question today. I wonder whether the Acting Prime Minister has the reply?


Charles Mills (Bud) Drury: No, Mr. Speaker, I have no reply on his behalf.


Wallace Bickford (Wally) Nesbitt: Could the Acting Prime Minister indicate whether any of his colleagues who are here might have a reply? I see one minister rising.


Hon. lames Richardson (Minister of Supply and Services):: In reply, Mr. Speaker, I would like to point out to the hon. member that no employees received less than four weeks severance pay, and several received much longer periods of severance pay depending on their seniority. The question of one day's notice is really not relevant because by giving longer notice management could have had the employees standing around in the plant with nothing to do. It was far better both from the management and the employees' point of view that once there was no further work for them they have the opportunity to get out and find other jobs. Of those who were laid off last month 37 out of the total of 65 have already found new employment.


Wallace Bickford (Wally) Nesbitt: I take it from the minister's rather circuitous answer that the 250 men were in fact laid off on 24 hours' notice?


James Armstrong Richardson: No, Mr. Speaker. Some have not received notice. The company announced several weeks ago that there could be a reduction in the work force as
Inquiries of the Ministry
large as 250, but it has not yet been found necessary to reduce the work force by that number. I might say that very strong representations have been made to me by the hon. member for Sarnia-Lambton and I have a long report from him which has been very helpful.


Wallace Bickford (Wally) Nesbitt: A further supplementary-


Mr. Speaker:: Order, please. We will be running short of time very soon. The hon. member for Oxford may have a further supplementary and then the Chair will recognize the hon. member for Wellington.


Wallace Bickford (Wally) Nesbitt: Would the minister on behalf of the government undertake to see, if employees are dismissed in other Crown corporations, that appropriate notice is given so that no improper example will be set for industry in general by the actions of the government?


James Armstrong Richardson: I think the hon. member has to distinguish between notice and severance pay.


Mr. Speaker:: Order, please. It seems to me we are reaching the area of debate at this point. I shall now recognize the hon. member for Wellington.



POLYMER-REASON FOR LAY-OFF OF EMPLOYEES

Mr. A. D. Hales (Wellington):: Mr. Speaker, my supplementary is to the Minister of Supply and Services. Was this lay-off in fact due to Polymer having lost their prime contract with Goodyear Tire and Rubber Company which purchased its supplies from Japan?


James Armstrong Richardson: No, Mr. Speaker, not directly. I replied earlier in the House that this was a management decision but it was based on difficult markets and not related just to the Goodyear market. The company has been successful in retaining a large part of the Goodyear business.



ATOMIC ENERGY


Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, I should like to ask the Minister of State for Science and Technology to inform the House whether or not the government is conducting any studies concerning the technological and economic feasibility of rehabilitating the disastrous Deuterium heavy water plant at Glace Bay, Nova Scotia?


Hon. Alastair Gillespie (Minister oi State for Science and Technology):: Mr. Speaker, this is a question which I think might perhaps be more properly answered by the Minister of Energy, Mines and Resources.


Lorne Edmund Nystrom: If the Acting Minister of Energy, Mines and Resources is in the House today perhaps he would answer.

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Jean-Luc Pepin: If I might answer the question, Mr. Speaker, the situation is quite simple. The government has authorized Atomic Energy of Canada to negotiate with Deuterium of Canada and with the government of Nova Scotia a solution that might lead to the rehabilitation of the plant.



POSSIBLE REGULATORY AGENCY TO MONITOR AND RESPOND TO UNITED STATES DISC PROGRAM

Mr. S. Perry Ryan (Spadina):: Mr. Speaker, my question is directed to the Minister of Industry, Trade and Commerce. Has the government planned a regulatory agency to monitor and respond to the DISC threat?


Jean-Luc Pepin: Not yet, Mr. Speaker.



AIR TRANSPORT


Mr. Georges Valade (Sainte-Marie):: Mr. Speaker, I wanted to direct a question to the Minister of Transport, but in his absence, I shall address it to the President of the Treasury Board.
As Acting Prime Minister, would he tell us if he has read the statement made recently by the Quebec Minister of Education to the effect that only 5 per cent of Canadian airline pilots, including those of Air Canada, are Frenchspeaking? Does the minister intend to correct this and what policy does he intend to announce in order to allow French-speaking pilots a larger share of the jobs?


Charles Mills (Bud) Drury: Mr. Speaker, I have no personal knowledge of this matter, but I am prepared to make inquiries.


Georges-J. Valade: I have a supplementary, Mr. Speaker. As this was published in a newspaper-


Mr. Speaker:: I am sorry to have to interrupt the hon. member, but the Minister of Industry, Trade and Commerce has risen on a question of privilege.



POSSIBLE REGULATORY AGENCY TO MONITOR AND RESPOND TO UNITED STATES DISC PROGRAM

Jean-Luc Pepin: I do not know if this is a question of privilege, Mr. Speaker, but I wish to correct my previous answer. I was asked if the government had established a
(Mr. Nystrom.]
monitoring system for DISC in particular. I should have said the monitoring system we have applies to the surcharge, investment credit program and the DISC program.



AIR TRANSPORT


Mr. Speaker:: Does the hon. member for Sainte-Marie wish to ask a supplementary?


Georges-J. Valade: Yes, Mr. Speaker. I would like to ask the President of the Treasury Board a supplementary question. If it is established that only 5 per cent of Canadian airlines pilots are French-speaking, does the minister intend to make a statement and bring about corrective measures to the situation so that Francophone Canadians be allowed their share in air transport-


Mr. Speaker:: The hon. member will admit that his question is hypothetical. I do not think it can be asked in those terms.


Georges-J. Valade: Mr. Speaker, I would like to ask another supplementary to the President of the Treasury Board.
In the inquiry suggested by my colleague, could the minister make sure that over 5 per cent of French Canadians have the required knowledge and skill for this kind of work?


Charles Mills (Bud) Drury: Mr. Speaker, I think this is still an assumption I cannot accept without making an inquiry, but like the hon. member for Yukon I believe the main criterion is passenger safety.


Mr. Erik Nielsen (Yukon):: Mr. Speaker, with regard to the question just raised by the hon. member, can the minister assure the House and the country at large that the paramount criterion for the employment of any pilot by major airlines or other airlines in the country will continue to be skill and capability rather than any other criteria and will he convey the government's policy in that regard to the national and other airlines?


Charles Mills (Bud) Drury: I do not think the government would have difficulty in agreeing that the sine qua non for employment would be skill and safety precautions.



ATOMIC ENERGY


Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, I have a question for the hon. Minister of Energy, Mines and Resources. In view of his absence due to illness, I shall
October 19, 1971

address it to his Parliamentary Secretary and, should he be unable to reply, the hon. Minister of Industry, Trade and Commerce might be able to do so.
The question, concerning the possibility of establishing a heavy water plant in Montmagny, was placed on the Order Paper in 1969 and the reply given was that no such study had been carried out.
In view of the existing controversy, I should like to ask the following question: Was a special study effectively carried out in 1970 concerning the establishment of a heavy water plant in Montmagny?


Mr. Speaker:: I am under the impression that the question as formulated should normally be placed on the Order Paper. The hon. member is asking whether a given action was taken last year by the government. I feel a question so phrased is normally placed on the Order Paper. Should the matter be urgent, could the hon. member perhaps so inform the Chair so that it might be discussed on the adjournment motion.


Joseph Adrien Henri Lambert: Mr. Speaker, as you suggest, I inform you that I wish to raise this question at the time of adjournment, since it is very urgent.



ADMINISTRATION OF JUSTICE


Mr. Albert Bechard (Parliamentary Secretary to Minister of Justice):: Mr. Speaker, I should like to answer a question addressed to the Minister of Justice the other day by the hon. member for Calgary North and the hon. member for Yukon concerning marijuana. With regard to the growing of marijuana at the Experimental Farm in Ottawa and the experiment being conducted at the University of Calgary-I assume the hon. member was referring to that university-it is my information that both these experiments are being carried out under the authority-


Mr. Speaker:: Order, please. I regret to have to interrupt the hon. parliamentary secretary.

The hon. member for Yukon is rising on a point of order.


Erik Nielsen: On a point of order, Mr. Speaker, we all want to hear the statement of the parliamentary secretary, but my recollection of yesterday's events is that my friend from Calgary North asked a question, I asked a supplementary question, and we got our answers from the minister. We are all interested to hear the answer from the parliamentary secretary, but I suggest we should go back to motions to do so.


Mr. Speaker:: If the parliamentary secretary wishes to give a short reply in the question period he can, of course,
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do so. I have no way of knowing the extent of the statement or answer he wishes to give. If it is extensive there is no question that the hon. member for Yukon has a good point and that the parliamentary secretary should seek leave to return to motions. If the parliamentary secretary proceeds to make a long reply, I will invite him to return to motions. Is it agreed that we return to motions?


Some hon. Members:: Agreed.


Mr. Speaker:: The parliamentary secretary is not seeking leave to return to motions.



POLLUTION


Mrs. Grace Maclnnis (Vancouver-Kingsway):: I have a question for the Minister of the Environment. I should like to return to the question I asked on September 29 about the Science Council's recommendation a year ago of a joint study by Ottawa and British Columbia of the uses of the whole environment in the Strait of Georgia and nearby waters. Has the minister entered into negotiations with the province of British Columbia for such a study?


Hon. Jack Davis (Minister of the Environment):: I have had a number of discussions with the relevant ministers of the British Columbia government in this connection and I am hopeful that within the next few weeks we will be able to reach a formal understanding in this connection.


Mr. David Anderson (Esquimalt-Saanich):: May I ask the
minister whether or not these discussions included the area up river, namely, the Moran Dam area on the Fraser River?


John (Jack) Davis: No, Mr. Speaker. Essentially the areas concerned are the Strait of Georgia and the lower reaches of the Fraser River.


Thomas Clement (Tommy) Douglas: May I ask the minister whether the discussions with the British Columbia government include any canvassing of the possibility of establishing a marine park in Georgia Strait?


John (Jack) Davis: Yes, Mr. Speaker.



THE CANADIAN ECONOMY


J. Michael Forrestall: My question is directed to the Acting Prime Minister, although I should like to ask the Minister of Finance to give a 10 per cent pay raise to the forces today. Since 1948 successive Liberal and Conservative governments have been com-

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Inquiries of the Ministry
mitted to the objective of full employment. Can the Acting Prime Minister indicate whether the billion dollar program announced recently is part of an over-all strategy to that end?


Charles Mills (Bud) Drury: As the Minister of Finance has indicated, this is part of an over-all strategy in order to improve substantially the unemployment situation in Canada.


Gerald William Baldwin: Will you have another budget next month?



FAMILY INCOME SECURITY


Hon. Martial Asselin (Charlevoix):: Mr. Speaker, in the absence of the Minister of National Health and Welfare, I will direct my question to his Parliamentary Secretary.
The Quebec Minister of Social Affairs recently announced that discussions with the federal government concerning the family income security plan had come to a standstill, and had even been broken. Can the Parliamentary Secretary tell us whether the Minister of National Health and Welfare intends to change his family income security plan in order to reconcile it with the needs of the province of Quebec?


Mr. Andre Ouellet (Parliamentary Secretary to Minister of National Health and Welfare):: Mr. Speaker, the discussions are not at a standstill, quite the contrary. The Minister of National Health and Welfare will be in the House tomorrow. He may be in a position to answer the hon. member's question more at length.



ROYAL CANADIAN MOUNTED POLICE


Erik Nielsen: May I direct a question to the Solicitor General. Five or six days ago I asked him whether any members of the RCMP had volunteered or had been instructed or permitted to participate in the tests which are being undertaken by universities concerning the non-medical use of marijuana. He said at that time that he would make inquiries. Is he now ready to reply?


Hon. Jean-Pierre Goyer (Solicitor General):: Yes, Mr. Speaker, and the answer is no.


Mr. Douglas A. Hogarth (New Westminster):: My supplementary question is for the Minister of Justice or, in his absence, his parliamentary secretary. Under what authority is marijuana being grown in Canada by the Department of National Health and Welfare and certain experiments being carried out in the city of Calgary in this connection?


Mr. Speaker:: Order, please. It seems to me the hon. member is asking a question which has already been asked.



CORPORATE AFFAIRS


Hon. J. A. MacLean (Malpeque):: I should like to direct a question to the Minister of Consumer and Corporate Affairs. Is his department taking any action to require foreign companies which market automobiles in Canada to make their expenditures on marketing and advertising in Canada? I ask this question in light of the fact it is reported that several of these companies are moving their advertising and planning offices as well as their advertising contracts from Canada to the United States.


Hon. Ron Basford (Minister of Consumer and Corporate Affairs):: There is no law, nor, I suspect, should there be one, regulating where people should buy advertising. This is a free society in which people are surely entitled to spend their money where they wish.



FISHERIES


Mr. Thomas S. Barnett (Comox-Alberni):: I have a question for the Minister of Fisheries concerning the first auction under the buy-back program in British Columbia. In view of reports that a substantial number of the vessels sold at this auction went to American interests at fire sale prices to go into competitive fishery, is the minister either considering cancelling this program or at least ensuring that in future sales no vessels will go into a fishery competitive with the Canadian fishery on the west coast?


John (Jack) Davis: The hon. member is referring to a program for the retirement of commercial salmon fishing boats on the west coast. A number have been sold to citizens of the United States and other countries and they will be used mainly for recreational purposes. Boats over five tons are not permitted to participate in the commercial fishery of the United States by United States law. In any case the over-all agreement on the division of the salmon catch on the west coast between Canada and the United States preclude the use of these vessels to Canada's disadvantage.

October 19, 1971



FINANCE


Eldon Mattison Woolliams: I have a question for the parliamentary secretary to the Minister of Finance. He may want to take it as notice. Has his department, which looks after student loans, placed in the hands of financial collection agencies the collection of moneys lent to students who are in arrears on repayment, are unemployed and unable to pay but have been instructed through an unusual letter that they must pay forthwith or action will be taken?


Mr. P. M. Mahoney (Parliamentary Secretary to Minister of Finance):: I will have to take the precise question as notice. However, in general it is only after the banks have exhausted the usual collection procedures and the government has been called upon to make good on the guarantee that the Department of Finance is directly concerned with recovering the money. Accordingly, any such instance would be a default of long standing.



FISHERIES


Mr. Doug Rowland (Selkirk):: My question is for the
Minister of the Environment in his capacity as Minister of Fisheries. Has the minister refused to participate on a dollar for dollar basis with the government of Manitoba in an income support and job retraining plan for Lake Winnipeg fishermen forced out of work as a result of the lake being partially closed to fishing because of pollution?


John (Jack) Davis: The short answer is that my department is concerned with the development of an economic fishery and is not engaged in contructing an income support program for this segment of the Canadian population.


Douglas Charles Rowland: Has the minister received representations to this effect from the government of Manitoba, and if the minister's department is not directly concerned has he rerouted them to the appropriate departments for their consideration, and is active consideration being given by the government of Canada to these plans?


John (Jack) Davis: No, Mr. Speaker. The government of Manitoba has been in touch with the Department of Indian Affairs and Northern Development, the Department of Manpower and Immigration and the Department of Regional Economic Expansion in this connection.


Mr. Speaker:: Orders of the day.
Income Tax Act



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Monday, October 18, 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.
Mr. McQuaid:: I do not propose, Mr. Chairman, to speak at any great length at this stage of the proceedings, although I shall be speaking from time to time as various clauses of the bill are to be studied. I rise at this time to make a special plea on behalf of those citizens of Canada who find themselves in the lower income bracket but who are taxed. Before doing that, however, I should like to point out again how very complicated the bill is with which this Parliament is faced. Last evening the hon. member for Wellington placed a section of the bill on the record as an example of the complicated language which it contains and there are many such illustrations. I should like to place another section on the record and ask the minister, his deputy or some competent person to give an explanation of it.
I refer to section 87 subsection (2) (y). Section 87 has 34 subsections running from (a) to (z) and then the alphabet is repeated with subsections (aa), (bb) etc. Let me read this subsection:
(y) for the purpose of computing the cumulative deduction account (within the meaning assigned by subsection 125(6) of the new corporation at the end of a taxation year immediately preceding its first taxation year or at the end of any subsequent taxation year there shall be added to the amount determined under paragraph 125(6)(b) from which the aggregate of the amounts referred to in subparagraphs (iii) to (v) thereof is to be subtracted, the aggregate of amounts each of which is an amount in respect of a predecessor corporation, equal to the amount that would have been the predecessor corporation's cumulative deduction account immediately before the amalgamation if paragraph 125(6)(b) had been read without reference to subparagraph (v) thereof;
This is only one illustration, but there are many such sections throughout this proposed bill which I suggest will make it virtually impossible for the ordinary taxpayer to prepare his own income tax return in future. If the chartered accountants and lawyers are ever able to understand this bill themselves, they are going to have a bonanza because the ordinary taxpayer will not be able to understand it. I plead with the minister, with the government and with the officials who drafted the bill to take it back and try to draft it in language that the ordinary taxpayer can understand because he is the one who will be affected by it. As I said before, I should like to make a special plea to the government for some consideration for those people who may find themselves in a taxable bracket, yet whose income is very low by ordinary standards.
I give the government credit for having increased the exemption for single persons to $1,500 and for married people to $2,850. This is actually the first change of any significance that has been made since 1949, but I seriously

October 19, 1971
Income Tax Act
suggest that it does not go far enough inasmuch as it does not afford sufficient relief to those people whose taxable income is very, very low. The increase in the exemption does not begin to reflect the erosion in the dollar since 1949. The fault does not lie with the present government, but these changes should have been made progressively over the years as the purchasing power of the dollar declined. In this way substantial relief would have been given to the taxpayer.
The Economic Council of Canada has said that the minimum amount that a married man requires in order to get along today is $3,000. This figure was apparently arrived at after a very careful review of today's cost of living. I suggest, Mr. Chairman, that the basic exemption for a married man should be $3,000 rather than $2,850 and for the single person it should be $1,900. These figures would be more in line with the recommendation of the Economic Council of Canada. However, I suggest that there should be a higher exemption for people in the lower income bracket. The $3,000 exemption is fine for a man who is making $12,000, $15,000 or $20,000 a year but the man in, say, the $8,000 range should have a higher basic exemption.
I suggest that the married man whose income is less than $8,000 should have an exemption of $5,000. This would give consideration to the fact that a man is trying to support himself and his family on that income. Why can this man's basic exemption not be more than that of the man earning $12,000, $15,000 or $20,000 a year? Is there anything unreasonable about that? It is giving relief to the man who may be taxable according to the present law but whose income is, ordinarily speaking, comparatively low. I suggest some such formula should be adopted by the government. If a married man's net income is less than $8,000 he should be given a basic exemption of at least $5,000.
The same thing applies to the single person. The basic exemption of the single man whose annual net income is, say, $5,000 should be higher than the exemption of the single man earning $12,000, $15,000 or $20,000. I suggest that the basic exemption of the single man whose net income is in the $5,000 range ought to be $3,500. I cannot see any particular reason why some formula like that could not be worked out. I am sure it could be worked out and, if worked out, it would give much needed relief. Let me tell you, Mr. Chairman, that I speak from experience. I have prepared every year, I suppose, a couple of hundred income tax returns for various clients. Although some of these people have taxable incomes, I can assure you that it is a real hardship for them to pay even small amounts of taxes. It is hard for these people to pay what, to us, probably looks like a very small amount of tax, yet to them it is a large amount of money. I think it is only fair that additional relief be given to these people. I plead with the government to consider my suggestions before the bill is finally passed.
I realize that it is not in order for anybody on this side of the House to suggest an amendment with regard to this matter, because such amendment would interfere with the revenues of the country. However, I plead with hon. members on the other side of the House to give consideration
(Mr. McQuaid.]
to changes along the lines I have suggested, so that taxpayers who may earn a taxable income but who find themselves in the lower income brackets, will be given additional consideration and additional relief. That would not entail a very great loss of revenue for the government of Canada.


An hon. Member:: How much?


Melvin James McQuaid: An hon. member asks, how much. I have not made that calculation, but it is not a killing amount.


An hon. Member:: It would cost over $1 billion.


Melvin James McQuaid: It might cost over $1 billion. Yet, the other day the government thought nothing of spending more than $1 billion in order to provide relief in the current situation. The people I have talked about need this relief, and consideration should be given to them. They are hard-working Canadian citizens doing their best to raise their families as good Canadian citizens. Every encouragement ought to be given to them. If a married man's income is below $8,000 a year, I assure you that no matter in which part of Canada he lives, he will have a difficult time making ends meet. Often he cannot make ends meet.
As proof of that you need only look at the number of loans which have been put out by the various finance companies of Canada, at interest rates of 24 per cent. These companies are only in business because these people must borrow to make ends meet. It would be most worth-while, and very much appreciated by the Canadian taxpayer, if the government would consider giving additional relief to these people. I am confident that those in the higher income brackets will not take exception to this and will be only too glad to pay their share of taxes if they feel that undue hardship is not being imposed upon those who are less fortunate in the amount they earn.
There is another matter that I think ought to be considered, and that is the exemptions which are presently allowed for dependent children. The present exemption, of course, is $300 for a child under 16 and $550, I believe, for a child over 16. Under the new bill this $300 exemption is to be reduced, as I understand it, by $1 for every $2 of the dependent's income in excess of $1,000. There $550 exemption, as I understand it, will be reduced by $1 for each dollar by which the dependent's income exceeds $1,050, I believe. I suggest seriously that it is virtually impossible, given today's way of living, to raise a child under 16 for $300 a year. I challenge any member of this House to tell me that he can support a child under 16 and give that child the education which he or she naturally requires on $300 a year. I challenge any member of the House to tell me that he does that in his own home. It just cannot be done, Mr. Chairman; we know it and the government knows it. I, therefore, suggest it is only fair that some additional relief be given in this direction.
The same applies to the child of over 16, because $550 is far from sufficient to clothe, feed and educate a child who is over 16. It just cannot be done. Again, I plead with the government to give additional consideration to these children and additional consideration to the parents of these children who are doing their best, as I said before, to bring up their families as good Canadian citizens. Why cannot that exemption be raised a little? The present
October 19, 1971

exemption level has been in effect for quite some time. The erosion of the dollar has had its effect; and if $300 was enough five or ten years ago, it certainly is not enough today. I, therefore, ask the government, before it finally asks this House to approve the bill, to give serious consideration to these two matters, the matter of increasing basic exemptions for married and single people whose incomes are in the low brackets and the matter of increasing exemptions for dependent children. Additional consideration ought to be given to people who are trying to raise families, and the government ought to increase dependent children exemption levels to levels which are more in line with the actual cost of educating, feeding and clothing a child today.


Joseph Adrien Henri Lambert: Mr. Chairman, when I spoke at the second reading stage, of this bill, I said that I intended to further my analysis of the bill as far as the taxpayers, the corporations and the proposed measures are concerned.
Yesterday morning, on my way to Ottawa from Mont-magny, I was listening on the radio to a program during which people are invited to express their views on various matters. Yesterday's topic was: What do you think about the income tax reduction proposed last week by the government when a public works program was announced in order to reduce unemployment in Canada? Most listeners who answered the question seemed totally or partially unaware of the exact nature of the problem.
This leads me to say that unfortunately not enough information is given to the population. They may sometimes discuss problems and bills in which they are directly interested but the impact of which they cannot grasp completely. Now, to my mind, it is increasingly urgent that our taxes be levied in such a way as to relieve the individual and the family and allow the worker to benefit from reductions now denied him but allowed corporations.
The problem is extremely serious and is now being studied by the workers, through their professional organizations; that is why I am drawing it to the attention of the government.
I should also like to prove, with the help of a table published when the Minister of Finance (Mr. Benson) brought down his 1971-72 budget, that progressively individuals are contributing more and more, through income tax, to government expenditures, while corporations are correspondingly paying less. In short, the evil has just been displaced.
Government revenues at the federal, provincial and municipal levels during the financial year 1960-61 amounted to some $9,700 million and in 1970-71 to $28,500 million. The taxpayers' share for the payment of the above-mentioned government expenditures was $2 billion in 1960-61 and $9 billion in 1970-71 with respective percentages of 20.6 per cent and 31.5 per cent. Consequently, in 10 years, the total share of government revenues from personal income tax has increased by almost 11 per cent.
Income Tax Act
Another provision of Bill C-259 authorizes taxpayers to deduct from their income amounts received from their employers as travelling expenses. Now, all hon. members are not aware of the problems which sometimes occur and it is advisable to remind the minister that some abuses are committed in that field at the workers' expense.
What will happen when employers, as is the case now, alas, give for an employee an address other than his real one, so as to officially put him closer to his work and thus deprive him of the compensation under the terms of the law, be it provincial or federal, so that it is the employer who will cash in the compensation instead of the employee. Consequently, I suggest that a closer supervision be exercised in this area, so that abuses may be reported.
Mr. Chairman, other elements of personal income have or will become taxable under this legislation, such as benefits from income maintenance insurance plans to which the employer has contributed and adult training allowances. At the present time, under existing regulations, a person who is being retrained and who receives a weekly allowance does not have to mention it in his income tax return; under the new act he will have to do so, even if this allowance is sometimes the only income he has to provide for his family. That will therefore worsen his financial situation instead of improving it.
That provision applies also to allowances received under the Textile and Clothing Board Act. In fact, that paragraph is especially hard on workers who are liable to become unemployed, especially in Montmagny or in other Canadian localities where the textile industry is gradually reducing the number of its employees. Now, it happens that a board provided compensation which becomes taxable under the new legislation, just like unemployment insurance benefits, scholarships over the $500 deducible for income tax purposes.
The tax cut announced by the Minister of Finance last week is 3 per cent on personal income. This is definitely insufficient, I think, even if the minister said that it will take 750,000 Canadians off the tax rolls effective July 1, 1971. Now, when this figure was mentioned in the House, an hon. member from the government side said loudly: Well, there is a million people who will be exempted.
In my opinion, the government should not be happy that 750,000 Canadians are too poor to pay income tax. It means that too many single Canadians earn less than $1,500 and too many married ones less than $2,850. Is it conceivable that those two categories of people can live on as little as $1,500 and $2,850?
We are told we are going too far when we suggest to raise basic exemptions to $3,000 for single people and $5,000 for married people. But let us seriously consider the matter. Could we, members of Parliament, live in our circle or the one to which we confine those people, with $1,500 or $2,850 a year? Those amounts are clearly not enough and, in a few moments, I shall indicate how we could close the gap in order to allow the government to assume its responsibilities in all areas, with the required funds available to it.

October 19, 1971
Income Tax Act
I should also want to illustrate the real situation of the consumers, the workers of Canada in relation to prices they now have to pay and those prevailing 20 or 22 years ago, according to a scale showing the gradual increase in the cost of living.
Thus, the consumer price index, in June 1971, was 135.0 in relation to the basic year 1961. The converted consumer price index for all items based on 1949 was 174.4.
It must be noted that the food and housing sectors, which are key sectors affecting every citizen, and especially those in the lower income bracket, show an index above the 135.0 average, that is 135.9 and 137.5 respectively, according to the Statistics Canada daily bulletin dated September 16, 1971. Those are government figures.
When establishing an index for the personal income tax basic exemptions, we find that this index has obviously remained at 100.0 for the last 20 years, since the amount of basic exemptions has not changed during that period. Compared to what we find in the proposed bill, this index would become 150.0 for single taxpayers and 142.5 for married couples.
Therefore, this index is at a much lower level than the consumer prices index. The compensation, if we can talk of compensation, is therefore only partial and inadequate, taking into account the galloping growth of the cost of living and the frantic increase of almost all indices having a direct incidence on the low income taxpayers.
Moreover the proposed basic exemptions put us far below the poverty levels set by the Economic Council of Canada in Chapter 6 of its Fifth Annual Review entitled "The Challenge of Growth and Change". One should take into account that those definitions are not absolute ones but approximations based on available data. These estimates have been compiled by Statistics Canada.
Two sets of figures can be arrived at. You can consider as poor all people who spend 70 per cent or more of their income on food, clothing and housing. In this case, the level would be at $1,500 for single people and at $2,500 for families of two.
You can also consider as poor all people who spend 60 per cent of their income on food, clothing and housing. In that case, Mr. Chairman, the level would be at $2,000 a year for single people and at $3,500 for families of two or for married couples without children.
In the first case you could consider 30 per cent of the Canadian people as poor and in the second case more than 40 per cent. Apparently the government took into account only the first calculation in setting up the new basic exemption rates. It should be noted that it represents a very moderate and conservative poverty level.
It is said, at page 103 of the Fifth Annual Review of the Economic Council of Canada-I quote:
Poverty in Canada is real. Its numbers are not in the thousands, but the millions. There is more of it than our society can tolerate, more than our economy can afford, and far more than existing measures and efforts can cope with. Its persistence, at a time when the bulk of Canadians enjoy one of the highest standards of living in the world, is a disgrace.

Then at page 104 there is this very interesting statement:
To feel poverty is, among other things, to feel oneself an unwilling outsider-a virtual nonparticipant in the society in which one lives. The problem of poverty in developed industrial societies is increasingly viewed not as a sheer lack of essentials to sustain life, but as an insufficient access to certain goods, services, and conditions of life which are available to everyone else and have come to be accepted as basic to a decent, minimum standard of living.
I cannot speak at great length at this stage as time goes quickly, but let us consider this and see whether it would not be possible to improve conditions further so that more Canadians could have access to that natural wealth available to us and that everyone may enjoy easy circumstances, and I do not mean to become a millionnaire.
According to the Minister of Finance, a good taxation system should respond to a country's economic and social needs. It should relieve the lower income taxpayer whose tax burden is too heavy on account of the cumulative effect of income taxes, sales tax and property tax at all levels of government. People in the low income bracket bear too great a share of the taxation burden.
And the figures I quoted prove it. There was no change in the basic exemptions for more than 20 years. There was nevertheless a substantial increase in the provincial and federal sales tax. The government sees the increase in exemptions from $1,000 to $1,500 and from $2,000 to $2,850 as the most general and basic measure to grant tax relief.
Having shown that individuals are more heavily taxed in 1971 than they were in 1970, I quoted figures that are available to hon. members and the Minister of Finance, who is being invited to amend this bill so as to allow the small wage earners to enjoy larger exemptions and, consequently, a decent living.
However, to have the necessary money to administer the public sector and provide the services people expect, the government will have to find that money somewhere. This is why, seasonably and unseasonably, faithful to the mandate I got from my electors in Bellechasse, I feel it my duty to again tell the government that a thorough monetary reform is essential to put the Canadian dollar at the service of Canadian people.
Mr. Chairman, I am well aware that the government could issue savings bonds for its own financing but, for instance, if I agree with the idea suggested a few weeks ago on the CBC network by a Bank of Canada official to the effect that Canadian taxpayers benefit from the issue of bonds by the government in that the taxpayers may get interest on the savings they want to use to buy government bonds, he should have added that all government bonds bought by chartered banks are used by them as reserves which permit them, under the law, to create new credit by multiplying by fourteen-if they want to-the total amount of the government bonds, which means that a $1,000 bond may be used to create new credit amounting to $14,000 and on which chartered banks can collect interest.
As for such interest, it is paid by Canadians and that is why we want this financing system to be changed so as to relieve the Treasury of this burden-interest paid to these banks which are exploiting Canadian credit to their benefit. That is what Mr. Edison had to say on this question. I would like to quote his words on bonds and currency.
October 19, 1971

If this country can issue a one dollar bond, it can issue a one dollar bill. A note is as good as a bill. The difference between them is that the bond allows the holder to collect twice the amount of the bond and an additional 20 per cent-
That was some time ago. Today, he would say 14 times instead of twice.
I continue:
-whereas the bill does not profit anybody except those who contribute to the basis of its value.
It is nonsense to say that this country can issue $30 million in bonds, but not $30 million in bills. They both constitute a promise to pay, but one fattens the money lender and the other helps the public.
The credit standing of a government is based on the people. Why then is the public denied the benefit of its own prime credit standing by having a currency unburdened with interest-instead of bankers benefiting from the people's credit through interestbearing bonds?
If the government were to adopt the policy of increasing the national assets instead of helping feed those who collect interests (the national debt consists entirely of service charges), you would witness an era of progress and prosperity in this country which otherwise will never materialize.
Mr. Chairman, I think that this great thinker had thoroughly studied the system before voicing such a sensible opinion on our monetary system and showing what the government could do in order to obtain the funds required to serve the community well.


The Deputy Chairman:: Order! I regret to interrupt the hon. member but his time has now expired.


Mr. Skoreyko:: Mr. Chairman, I am delighted to take part in the discussion of this bill this afternoon, particularly since the bill is in committee of the whole. As you know, I am probably one of the strongest advocates in the House of Commons for a return to this traditional system of having bills reviewed by the entire House rather than a powerless committee. When members of the Liberal party have had an opportunity to read and to study representations made to the committee of the whole on the bill before us, I am sure that they will recommend in caucus to their leader that there be a return in the near future to some of the traditional rules that make Parliament so meaningful.
May I make one other point before I comment on Bill C-259? Under the new rules I find it somewhat frustrating that, in the absolutely sincere desire of the Speaker to accommodate as many members on this side of the House as possible and to allow them to ask questions in a limited one hour question period, what the Speaker is really doing, unintentionally, is preventing certain members from pursuing very serious questions. What I am saying is no reflection at all upon the Speaker himself who, as I say, is absolutely sincere in his desire to protect the rights of members; but in the exercise of this desire some of us are denied the opportunity of pursuing to the end serious questions during a one hour question period. Again may I say I hope that the members on the Liberal side of the House will recommend to the leader of their party the restoration of procedures and traditions that should be followed in the institution that I know to be Parliament.
Income Tax Act
In discussing the bill before the committee, I must say I do not know what a Member of Parliament must do to convince the Minister of Finance that by the actions he has taken since assuming his office some years ago he has done very little to ingratiate himself to the Canadian people. He has presented so many mini-budgets since the introduction of the white paper that Bill C-259 will be completely emasculated before it becomes law. I think that in the government's mad desire to cover up its bungling of the economy generally, and as a result of its total loss of communications with our allies across the border, the United States, the Minister of Finance is trying to repair the damage done by bad policies by presenting mini-budgets.
Over the last several months the members of this party have made certain strong recommendations to the minister. We suggested some months ago that the government substantially reduce personal taxes, that the government substantially reduce corporate taxes, thus giving some degree of incentive for expansion. Both of these recommendations were accepted last week, and we now have a meagre 3 per cent reduction in personal income tax and a 7 per cent reduction in corporate tax. To me, Mr. Chairman, this action represents an act of total and complete frustration; it is too little, too late.
Earlier in the year we strongly suggested to the government that we should return to some of the programs implemented in the early 1960's, such as the winter works program. The reports and information that have come across my desk indicate that the Minister of Finance, and certainly the leader of the Liberal party, the Prime Minister of Canada, would not consider a program like this because it was a Tory program of the early 1960's. There is some semblance of a winter works program in the offing now. I notice that in the last few days delegations from various provincial governments have been in Ottawa asking for relief, for some clarification of existing policy so as to determine whether or not they will qualify for benefits under the announced program and, if so, when someone in Ottawa will let them know how and when to act.
I think that the problem we in western Canada in particular encounter is that we have to contend with weather that is much more severe than the weather in eastern Canada. I am sure that the Parliamentary Secretary to the Minister of Finance knows the type of conditions in which we in western Canada have to work.


Patrick Morgan Mahoney: The weather in Calgary is not nearly so severe as the weather in Ottawa.


William Skoreyko: It is as far as homebuilding and construction generally are concerned. We have asked for an injection of funds in the area of land acquisition. We have asked for an injection of funds into the housebuilding industry in general. Some time ago, it was announced that assistance for low cost housing would be entertained by the government, and we were told that the government would look at any development that would create homes for the needy. Recently an application from Edmonton arrived on the desk of the minister responsible for housing. The applicant was requesting the minister to consider making funds available, through Central Mortgage and

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Income Tax Act
Housing Corporation or whatever was the responsible body, for the development of a mobile homes park. When I contacted the minister's office there was some suggestion that there might be legislation under which such a program could conceivably be covered, but in the end the answer I was given was to the effect that no such program existed and therefore nothing could be done for the applicant concerned. Very fortunately for the city of Edmonton, the party in question was able to obtain money privately. The development is now going ahead and providing 900 badly needed homes in the area at a cost that people can afford.
We have already asked the government seriously to consider removing discriminatory legislation that prevents commercial developments in certain cities across Canada taking advantage of the depreciation allowance write-off provision. When that legislation was brought in, to all intents and purposes, it was supposed to be a temporary measure, first for one year, and then for two years. Surely, it is now time that the government considered putting Vancouver, Calgary and Edmonton on an equal footing with Montreal and the other major cities of the country.
The other day when I spoke in support of the amendment proposed by the hon. member for Edmonton West I dealt at some length with the proposals in Bill C-259 having to do with incentives to the oil industry in western Canada. I pointed out that the companies participating in activities in the Mackenzie delta will require vast sums of money in the near future in order to continue development there. As the parliamentary secretary well knows, I pointed out that our companies can operate within a fair and reasonable tax structure, if given desired tax benefits equal to those provided for foreign competitors. I pointed out that in order for our people to reap the benefits of this kind of development, our companies must have a tax structure in Canada that would enable them to generate and attract vast sums of money as capital for this kind of venture.
I pointed out that the government should be looking seriously at offshore exploration. This kind of development has interested the United States government for many years. On CBC television only a week ago there was a lengthy documentary dealing with the potential resources under the waters off North America. It is not inconceivable that within the next ten, 15 or 20 years the prime suppliers of our oil needs in North America will be those companies that are drilling in the waters of the Pacific and the Atlantic off our mainland. I suggest that implementation of Bill C-259 as presently proposed will continue to favour those elements in the tax structure which lead to foreign domination of Canada's oil industry. At a time when public concern favours nationalism in this area, some serious changes are warranted that at least would provide parity incentives for Canadian investors in the oil and gas industries.
Perhaps the only solution to this problem is that tax laws in Canada should provide some basis for at least fair competition with foreign concerns. This objective could be achieved in one of two ways-providing a shelter for Canadian companies or changing the tax laws to provide
(Mr. Skoreyko.]
a true incentive for Canadians to participate in risk ventures which lead ultimately to its development of our own resources, regardless of the tax position of these industries relative to other industries in Canada.
Bill C-259 is a bulky document. I think that the way in which the government has approached tax reform as a whole is cumbersome and unyielding. It has adopted an unprecedented approach to tax reform proposals. First, we had that well known white paper, and then an invitation by the government for Canadians to participate in discussing that document. Over and over and over again, we heard contradictory statements from the Minister of Finance, attempting to clarify some of the confusion that arose therefrom. Is it not ironic that the government could spend $44,000 to put out a document known as "The Proposals for Tax Reform," and then spend $190,000 to answer the criticism arising therefrom? Then it came out with another document that probably cost equally as much, called "Summary of 1971 Tax Reform Legislation," which is not even related to the first one.
I want to put on record the views of the Canadian Council for Fair Taxation as found in their publication, Guardian, with respect to the white paper on taxation. This is what they have to say about this "disturbing socialist document," and I quote:
It is a little difficult to understand a man such as Mr. Benson who is recently reported by the press as saying "I didn't go to university to benefit society generally." We believe you, Mr. Benson, and this raises the question-just who is supposed to benefit from your activities in government? Most responsible people would like to think that their efforts benefit society as a whole, but possibly Mr. Benson is primarily interested in benefiting a small group of radical theoreticians in Ottawa who believe that it is their God-given duty to turn Canada into a socialist state.
It is doubtful that many Liberal M. P.'s are any more delighted with the white paper proposals than are their opposite numbers in the Conservative party. The fact is that these proposals are now Pierre Elliott Trudeau's proposals. This was made abundantly clear on March 4 when he spoke in defence of the proposals in Toronto's Royal York Hotel during a fund raising dinner of the Toronto and District Liberal Association.
At one point in his speech he said "We have deliberately provoked a public discussion, with all its political risks, so that Canadians will have an opportunity to make constructive suggestions and the government will be able to improve its proposals."


Mr. Deachman:: On a point of order, Mr. Chairman, I wonder if the hon. gentleman would be willing to identify what he is reading from, the date of it, and the author, so that we would know the source of that material?


William Skoreyko: Mr. Chairman, I cannot help it if the honourable whip is asleep. I said I was quoting from Guardian of April, 1970. If he had been paying attention he would have known that.


Grant Deachman: What Guardian is that? Is it the Manchester Guardian?


Mr. Noble:: A guardian angel.


Gérald Laniel: Order. The hon. member is entitled to ask for identification of the document, but the hon. member for Edmonton East has said that, to his satisfaction, he identified the document.
October 19, 1971


William Skoreyko: I am not reading from the guardian that has been protecting the whip's political future. Now, going back to the point at which I was interrupted, I quote:
At one point in his speech he said "We have deliberately provoked a public discussion, with all its political risks, so that Canadians will have an opportunity to make constructive suggestions and the government will be able to improve its proposals."
Well, they have improved them, Mr. Chairman. They have improved them thoroughly. As I pointed out a minute ago, there is no relationship between the two documents. These two documents are not even cousins. I continue to quote:
In the next breath, Mr. Trudeau is quoted as saying the paper is too complex for anyone to be for it or against it. Why publish proposals if they are too complex for Canadians to understand? Why encourage discussion and then turn around and try to intimidate opponents of the proposals, as he did at the dinner, by saying that his government will not be "bullied or blackmailed by hysterical charges or threats."
That kind of language is not new to us. We have listened to it since 1968. We hope the Prime Minister, the Minister of Finance and others in the Liberal party will be able to justify that kind of language at the next election. I pointed out earlier that Bill C-259 is so thoroughly complicated that in my discussions I find that chartered accountants- certainly I am not one-and lawyers who purport to be tax experts all say the same thing in the end. They find this legislation very difficult to interpret. Indeed, they find the bill extremely difficult to translate into everyday language so that everyone can understand it. If I were to speak about all the anomalies in this bill I would be here quite late in the afternoon.
What are some of the anomalies? First of all, it is unique. I thought for once the government would be sensitive to the individual who has to provide himself with certain tools of his trade or profession in order to be able to earn a living. The government of Canada has allowed $150 for the replacement of those very essential tools. I suggest there are not very many votes in that kind of legislation. Mr. Chairman, I see you are about to catch my eye.


Gérald Laniel: Order, the hon. member's time has expired.
tTranslation]


Mr. Fortin:: Mr. Chairman, it is my duty in my capacity as member for Lotbiniere to speak on this matter since it gives rise to a genuine interest on the part of my fellow citizens.
Before dealing with the main subject, I would like first of all to mention two points. In the first place, our society cannot tolerate a poverty level as high as that which is prevailing now. As my colleague from Bellechasse (Mr. Lambert) was saying, the victims of poverty are no longer numbered in thousands, but in millions. The state of dependence of those underprivileged persons is frustrating and disheartening. They see no hope in the future. Furthermore, the most expensive things for them are housing, food and clothing, in view of the uncontrollable increase in the cost of living and despite the fight of this government against inflation.
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It is therefore my duty, as member for Lotbiniere, to speak out in this House and to say on behalf of my fellow citizens that this situation is totally unacceptable and shameful to Canadians, and to demand a sweeping monetary reform in order to have in this country more justice, humanity and fairness.
Mr. Chairman the study of Bill C-259 casts a shadow over the whole federal administration because it cannot, under the present administrative concepts, exist without the taxation system. In fact, sufficient revenues must be assured to the federal government in order to assist its administration and projects while giving, through a revamped, updated and more equitable tax system, more justice to the Canadian taxpayers.
Governmental objectives may be commendable but it does not necessarily follow that they are reached by the present tax proposals.
The main estimates give a good idea of the expenditures forecast by the government. For the fiscal year beginning April 1, 1971 and ending March 31, 1972, the government has forecast expenditures totalling $14,352 million, that is approximately $660 per capita. Consequently, to cover at least partly these foreseeable expenditures, the federal government must collect an average of $660 from each Canadian citizen, whatever his age or revenue.
However, as all Canadians do not pay income tax, some of them do not earn enough to do so, only a certain number of Canadians bear the brunt of taxes. In fact, Mr. Chairman, children, people without income, mothers who slave away at home but do not gain any earnings, do nothing to fill the coffers of the state. On the other hand, the redistribution of government expenditures, per capita, represents, as I said, the amount of $660; this means that the tax burden is increasing for a decreasing number od Canadians, since fewer and fewer of them earn enough to pay income tax according to the scales drawn up.
For instance, the Minister of Finance (Mr. Benson) himself plans to exempt 750,000 Canadians of taxes; this means that, as time goes by, the burden which grows increasingly heavier in proportion to rising governmental expenditures is re-apportioned among an increasingly restricted number of Canadian citizens.
Needless to say that no taxpayer can be compelled to pay taxes if he has not a sufficient income to do so. Whatever one may think, we must not necessarily rejoice because there are fewer and fewer Canadian taxpayers, since it means that they are penniless, therefore entirely dependent on governments for the necessities of life or minimum means of living. In other words, poverty continues to grow even if governments are increasing programs, studies, projects and slogans such as that about the just society which never came true.
All those individuals who do not assume their tax burden are effectively excluded from the economic life and consequently, do not take part in production. They are increasingly helpless as far as consumption is concerned, that is they do not have the necessary means to satisfy their legitimate consumer needs. Indeed, if on account of old age, youth, studies or physical or mental condition a person has no income, this means that he is

October 19, 1971
Income Tax Act
unable to satisfy his minimum requirements. Thence the main duty of the authorities of this country, at every level, is to set up the required programs to enable these persons to participate in the economic life of the country, to get their rightful share of the national production, that is to be able to play their role as consumers in a worthy and satisfactory manner.
And that, Mr. Chairman, can only be done through a tax exemption. But we must go further and ensure social security to all Canadians. And, one must admit that present programs, both federal and provincial, are not only insufficient but also often provocative and humiliating at all times. In fact, the administration of such programs is by itself extremely costly. The largest part of the funds available for social security are systematically eaten up by administrative costs, the payment of the staff whose output, in general and very often, is not equal to 20 per cent of what it could be. The thousands of investigators who travel through our ridings to find the one case where assistance could be refused must be paid.
That is where we stand with these many investigations, all equally ridiculous and embarrassing for their victims. Help cannot be given without an investigation which often looks like provocation, blackmail or intimidation.
A government official-1 did not talk like that before becoming a member of Parliament, as I was not sure of it, but I can say it now-is a man who protects his job and future; he does not serve the public. The pencil is a fine tool not to be manipulated with the feet.
Anyhow, there are still good officials and I readily admit it but they are drowned in the diversity and complexity of programs, in the number of cases submitted and in their wish to get promotions. The frightening number of officials costs a mint of money. It goes without saying that government expenditures in that area-and everybody will agree with me-will go on increasing but the problem will never be really solved.
Let us consider for one moment the fact that on each tax dollar paid by a Canadian taxpayer, more than 25 per cent-or 25 cents-is spent to finance the health and social welfare programs. That item is the largest of the budget and it will continue to increase because Canadians have always less income to enable them to contribute to the tax system by paying personal income tax. Has social welfare become Canada's main industry?
When we are told that a new tax table will help lower the level of poverty in Canada, it is all completely false, it is misleading our citizens, because if the government agrees to deprive itself of one source of income by granting exemptions to a number of Canadians, it is because it cannot do otherwise. As a matter of fact, these people having almost no income are no longer able to pay tax. The government is not doing them any favour by granting them an exemption; it only recognizes their poverty.
This brings me to the second point of my remarks. Those who pay and will continue to pay the greater share of income tax under this tax reform will be, as the Minister of Finance said himself, those in the middle class, that is those whose income is between $7,500 and $12,000 a year. They are the ones who will suffer most from this tax reform. Those people will pay for those who are exempted and they will not get more services from governments in

return. By increasing their tax burden, the government will continue to discourage their personal initiative, their interest in earning more, in progressing and, in the end, they will become the next group of poor. Tomorrow, we shall be asked as members of Parliament to examine government measures to assist them. In fact, government programs now in effect apply to only two groups. They are first designed for rich people whose progress we are furthering through innumerable grants to business for investment or employment purposes, and vote-getting, if possible. On the other hand, government assistance goes to the very poor that we keep on making poorer since government programs do not suffice even to guarantee them a minimum, the major part of funds being swallowed up by administration costs.
Thus big businesses depend on social economic assistance and the poorest are on plain social assistance. Whichever it is the one in between pays. The intermediary class falls between two chairs. The corner shopkeeper, the small employer, the workman, the farmer, those who move heaven and earth to make a living, bring up their families as decently as possible and remain the least bit independent pay for the rich, the haves and also for the have-nots, those who have nothing, who are in poverty. And it is precisely that class which, according to the new tax tables will be most heavily taxed on income.
Just what does the government want? That is the great question.
The debate on fiscal reform raises again the question of the government's general administration and its guiding principles. The following conclusions should therefore not come as a surprise: First of all, poverty continues to increase in Canada at a staggering rate. Secondly, increasingly more Canadians are directly dependent on public handouts to make a pretense of living. Thirdly, increasingly fewer Canadians are producing. One needs only to look at the number of unemployed, non-producers and therefore earning no income to realize it. Fourthly, fewer and fewer Canadians are able to adequately enjoy consumer goods, that is to say that their basic needs are never met because of unsufficient resources. Fifthly, the various programs aimed at creating jobs and bringing social relief are finally no more than poultices on a wooden leg and one must be blind to ignore that.
By the way, even this government realizes that, because it announced last week that more than a billion dollar would be put not into circulation but at the disposal of Canadian industries in order to create jobs and to fight poverty. This shows how this government failed to solve that problem. Therefore we only can find the solution in a thorough monetary reform essentially aimed at the individuals in order to give them financial security, whoever they may be, without affecting their personal freedom.
To do that, we must base such thorough monetary reform on the fact that every Canadian has to fulfil his role as a fullfledged consumer when he is excluded from the process of production without being responsible for it. Only in this way shall we succeed in solving the basic problem-which can be expressed in the following paradox: how can poverty be so great in such a rich country?
October 19, 1971

This is why I fail to see how the proposed tax reform is going to help solve the economic problem of Canada. This tax reform is mere window-dressing. We just go round in circles within a system which, in the last resort, systematically creates poverty instead of checking it.
I will therefore request that rather than complex tax reform which will solve nothing, thorough monetary reform be effected which will ensure healthy, normal development for every Canadian, regardless of language, race, religion or wealth.


Mr. Faulkner:: Mr. Chairman, I will speak briefly in this clause by clause discussion because, as the committee knows, the discussion on clause 1 allows for a rather wide ranging debate. I will be very specific. I said at second reading stage of this debate that I felt there should be no unnecessary delay. I felt that was the case because there had been so much discussion in the country on tax reform. I felt it was only fair to Canadian citizens and businesses and all those participating in the economy that the ground rules under which they will be operating be decided upon by Parliament as soon as possible.
I have also expressed my broad support for the measures before us. In the past I have argued strongly on behalf of higher exemptions, particularly for senior citizens. They are in this bill. There are a number of other provisions which we on this side of the House have argued for and they are in this bill and should be approved.
The only reason I am speaking at this time, Mr. Chairman, is as a result of a very interesting and important meeting which I had in my constituency last week with members of the Peterborough Credit Union movement. The meeting was convened by the members and what struck me most about it was the reasonable tone and the reasonable approach of all the people there. They made no attempt to vilify the government; they never called into question the intentions of the government, but simply placed their case before me, outlining the implications of this bill to their credit unions. I was so impressed by the high mindedness and reasonableness of their representations that I felt I would like to make their case before this committee to the Parliamentary Secretary to the Minister of Finance and to the Minister of Finance himself.
Mr. Chairman, in this debate other hon. members have alluded to expressions of concern from credit unions, co-operatives, and representatives of the Caisse Populaire about the implications of the provisions in this bill. A week or so ago amendments were tabled by the minister which seriously alter the impact of the original provisions of the bill. I think these amendments are a move towards meeting the objections and anxieties expressed by the representatives of the credit unions. In my discussions with the representatives of the credit unions in Peterborough, they agreed.
I think it is important when constituents make their objections and fears known that this House, either in its capacity as the House of Commons or in committee of the whole, deal with such expressions of concern. I should like to read short excerpts from one or two letters to indicate the sort of comment I have been receiving. Here
Income Tax Act
is part of a letter from a lady residing on Harvey Street in Peterborough:
Credit unions have been in Canada for 50 years and I have been a member for over 35 years.
This volunteer organization has been of great benefit to me when banks would not help me.
There are many citizens in Peterborough who have had the same experience as I have had. When this number is multiplied by every area in Canada the number of citizens helped would reach the millions.
This is an expression from a lady at Lakefield, Ontario, the area in which I am a resident:
Being a worker in the credit union, I am in position to see the help it has been to people who may not have received from other sources, it has been a great help to me at various times.
The point being made in both these letters, and the one I am about to read, is that credit unions have been of immense help to a wide variety of citizens who have found that other financial institutions were not available to help them. They have helped the people largely through selfhelp operation and, in turn, they have performed a service to the country which other financial institutions failed to do. I think it is important that this be recognized.
Here is a letter from Mr. Phillip Day, one of the leading figures in the credit union movement in the Peterborough area. He writes:
I am writing this letter out of concern for the fate of our credit unions. As you are probably well aware, the credit union movement has provided an invaluable service to the millions over the years who have needed financial assistance, financial assistance at reasonable and moral rates of interest.
I think that is an extremely important point.
There are credit unions and credit unions, Mr. Chairman. There are large credit unions with large reserves, credit unions operating in some provinces which compare in practically every respect to banking institutions. One would be hard pressed to say that they should not bear the same tax load as other financial institutions. The Minister of Finance has to deal with the law as it applies in all parts of the country. We cannot have laws applying to different provinces. The minister has to take into consideration the fact that there are large and extremely affluent credit unions which in many instances should probably be dealt with in the same way as banks. However, there are other credit unions, and a number are in my constituency, which are small, parish credit unions, entirely operated by volunteers which serve the people of the parish in a way that no other financial institution has been prepared to do up to the present time. One parish credit union has written to me, as have a number of its members.
I should like to read a brief excerpt from a letter written by the secretary to St. Paul's (Lakefield) Parish Credit Union Limited. This covers several points made in other letters which I shall not read, and it reads as follows:
Most credit unions are formed by groups of people with very limited financial resources but by combining their resources were able to help each other within their community, parish or industry, depending upon the limits of their bond of association.
In the case of St. Paul's (Lakefield) Parish Credit Union-it was formed about 17 years ago by 20 interested but impoverished

October 19, 1971
Income Tax Act
people. We worked together, saved together, pooled our limited resources to help each other, worked and served without remuneration for the benefit of group as we were able and thus helped our community as well as ourselves.
Policies, decisions and election of officers are run in a democratic manner on the basis of one member, one vote.
Seventeen years ago many people were caught in a vicious poverty cycle. Unable to borrow money to buy a house they were condemned to rent at every increasing rental fees without hope of reprieve, or unable to borrow funds to start a small business or to become self-employed, they were forced to keep working at whatever was available just to keep from falling more deeply into poverty.
If you will recall, banks at that time were unwilling to loan money unless secured by bonds or other like collateral. Thus if a man had to borrow, he was forced to deal with the loan sharks of finance companies who charged very high rates of interest (over 20 per cent), and in addition had hidden or penalty charges with which they snared the unwary borrower.
Credit unions gave the average man the chance to better himself by encouraging him to save whatever he was able and for which he was able to earn a reasonable return of 3 per cent to 6 per cent. In addition he could borrow money for any useful purpose at a reasonable rate of interest (1 per cent per month on the unpaid balance). The loan being covered by life and disability insurance.
Mr. Chairman, this letter expresses very succinctly, in part, the history of a small credit union in a small parish in a small village in central Ontario, namely, Lakefield. It expresses a history which has been repeated time and time again in various parts of this country. It expresses the service that credit unions of this kind have given to people who were denied comparable services at comparable rates by other financial institutions.


Mr. Alexander:: When did you find that out?


James Hugh Faulkner: If the hon. member for Hamilton West will bear with me, he will learn something from this speech. I know there are credit unions in Hamilton. We have heard a great deal from him on other subjects and now he should develop the same capacity for listening as he has developed for speaking.
I said I wanted to be brief, Mr. Chairman. I am simply making this intervention because these matters were raised at the meeting I had with credit union representatives in Peterborough. At the end of the meeting a resolution which had originally been put forward by the Ontario Credit Union League Limited was agreed to. They felt that if the government could see fit to accept this proposal it would help the small credit unions considerably. I am putting it forward, having outlined the background to the Parliamentary Secretary to the Minister of Finance and to the Minister of Finance himself. I ask them earnestly and sincerely to consider this proposal and to see if they cannot accommodate the desires of the people with whom I met the other night. I will simply read the proposal:
(4:20 p.m.)
That credit unions which, within 90 days of the end of the fiscal year, distribute sufficient earnings, after providing for the statutory transfer to the guarantee fund, to reduce their undivided earnings to an amount not in excess of 5 per cent of their net income (after the required transfer to the guarantee fund) for the fiscal year shall be exempt from tax.
This proposal, it was felt, would protect the small parish credit union and would protect those credit unions which

distribute money to members which, as we know, is taxed at the personal level. This proposal was put to me seriously and sincerely. It is a proposal which I now commend to the government. I ask the government to consider it carefully and see if it cannot be incorporated in the bill. I have talked to the Minister of Finance and have talked to the parliamentary secretary. They are compassionate, generous men and, I am sure, if they can possibly accommodate my constituents, they will.


Lincoln MacCauley Alexander: And what does the parliamentary secretary say? Is it yes or no?


Lorne Edmund Nystrom: Mr. Chairman, first may I commend the hon. member for Peterborough for bringing forward the case of the credit unions in his constituency.


Lincoln MacCauley Alexander: He was showing compassion.


Lorne Edmund Nystrom: I hope that we can get agreement in this House about the type of amendments that will be moved relating to credit unions and co-operatives. I know that last week the Minister of Finance introduced a number of amendments relating to credit unions, and I know that some of those amendments go in the direction that credit unions want. Nevertheless, co-operatives and co-operative union people of Canada are still unhappy about the lack of real consideration which has been given to the co-operative movement. The hon. member for Peterborough suggested in his speech that there are many people on this side of the House who, like myself, want to see the tax bill as proposed amended to take into account many of the suggestions made by the co-operatives and credit unions of this country. I know that many members of the Conservative party and of the Social Credit party feel the same way; so, perhaps we ought to convince-


Lincoln MacCauley Alexander: The parliamentary secretary.


Lorne Edmund Nystrom: -the parliamentary secretary and the Minister of Finance.


Lincoln MacCauley Alexander: The parliamentary secretary is the one whom we must convince.


Lorne Edmund Nystrom: Seriously, we must try to convince the Minister of Finance to bring in more amendments to this tax bill. Since a number of people on both sides of the House agree on the types of amendments needed in this area, let us bring them forward.


Patrick Morgan Mahoney: At the rate we are going, we will never have the chance.


Lorne Edmund Nystrom: Let us show the people that there is participatory democracy at work in this country. Let us listen to the grass roots opinion. We can arrive at a consensus.
Since I come from Saskatchewan, the co-operative movement is particularly important to me. I have always been an active and ardent supporter of credit unions, co-operatives and wheat pools. In the 1930's many farmers and working people of my province faced difficult economic conditions. First, they could not grow the grain because of the drought, and even if they managed to grow something they could not sell their produce. They had to fight the grain exchange in Winnipeg and the many other
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agencies that they found overpowering. Many people saw in co-operatives their only means of defence, and that is how this idea spread across the province of Saskatchewan.
Today you can go to almost any small town or village in my province and find a co-operative store. That store is run and directed by local members who are residents of the community. You will also find that in many small towns and villages in my province there is a credit union where local people deposit their money and borrow money that is needed to keep a business, farm or household going. The grain growers of the province got together and formed the wheat pools. As I said, all these organizations form an important and integral part of rural life, indeed, of all life, in Saskatchewan. I do not want to see this way of life threatened. I think it is valuable and should be preserved.
Really, the basic philosophy behind a co-operative is different from that behind a corporate business enterprise. The purpose of the co-operative is very much different from the purpose of the huge multi-national corporation or of any other corporation in the country. For example, the money made by credit unions and co-operatives is not really a profit. Any surplus earned by the co-operative represents savings for the advantage of the members. The co-operative, therefore, does not really earn an income in the way that other corporations or business enterprises earn an income. The money that co-operatives or credit unions make as profit, if you want to call it that, is paid out in turn to the members in the form of dividends. Of course, this money is taxed at the personal level after it is in the hands of the individual members. The very philosophy of the co-operative is that one member shall have one vote. Co-operatives have arisen because people of a community have got together, regardless of financial background, and formed an institution with which to help themselves. This is the type of thing we ought to be encouraging and not discouraging in Canada.
There are many co-operatives, credit unions and other co-operative institutions in my constituency. I have received literally dozens of letters from them. I could follow the example of the hon. member for Peterborough and read several letters from older people who have been in the co-operative and credit union movements for many years. I could read several letters from managers from various credit unions and co-operatives who are expressing concern about the effects of the tax bill; however, I will not do that at this time. I shall simply read part of one letter that I received the other day from the general manager of the Yorkton Credit Union, one of the largest credit unions in our part of Saskatchewan. To show hon. members how well accepted and widely used this institution is, may I quote one or two sentences from the letter, as follows:
We are writing to you as the representative of this constituency in the House of Commons in Ottawa in connection with the new tax provisions now before Parliament. This credit union is made up of 5,932 members-
That, Mr. Chairman, shows that nearly 6,000 people in one community belong to one credit union. As the hon. member for Peterborough said, many of these people could not get the financial assistance they need from
Income Tax Act
private banks or private financial institutions, and therefore they make use of their credit union.
I realize that some of the amendments which have been introduced go a long way towards satisfying some of the wishes of the credit union movement. As I said before, I hope the minister and the parliamentary secretary will display the same attitude towards the co-operatives.
I think all members of the House received a letter the other day, dated October 15, 1971, from the Co-operative Union of Canada. That letter is very important and I should like to read part of it this afternoon. It is addressed to all members of the House of Commons and reads: Gentlemen:
Since we wrote to you on September 20th, the government has introduced amendments to Section 135 of Bill C-259 relating to the taxation of co-operatives.
Co-operatives wish to advise you that these amendments do not meet the objections of co-operatives.
Co-operatives insist that the fundamental distinctions in their nature be respected by the taxation statute. These distinctions are:-
I think it is important to note the distinctions between co-operatives and private corporations. I continue quoting:
(a)	the co-operative provides primarily a self-help service required by its members.
(b)	the co-operative distributes its earnings to its members in proportion to member business.
(c)	the co-operative raises and "services" its equity capital by revolving the same in relation to the use of the co-operative by its members.
(d)	the capital contributed by a member of the co-operative is to provide himself with services and not to produce a return on investment.
These are some of the things that we must keep in mind when considering the legislation that is before us. There are a number of other things I could say in relation to co-operatives and credit unions. I am sure the Parliamentary Secretary to the Minister of Finance, that congenial soul, will take these suggestions very seriously. I am sure he now understands the objections of co-operatives right across Canada.
As I have said before to the parliamentary secretary, these cooperatives are very much a part of life in Saskatchewan, particularly in the small communities. We all know about the rural urban shift. Last year the population in the province of Saskatchewan dropped by over 30,000. One of the things that makes a rural community viable is a co-operative or a credit union. If we do anything to impede that development, we add to the rapid exit of people from rural Canada to the urban centres. This is of real concern to many Canadians. We should not try to expedite that trend in any way, shape or form through the taxation system. We should be doing exactly the reverse, trying to help people stay and find jobs in rural areas.
I want to make a few general comments on the tax bill before us. It is a very big and comprehensive bill containing over 700 pages, but it does not represent real tax reform. I was surprised and perhaps even amused by the remarks of the member for Edmonton East. He complained about the tax bill being a very socialistic measure. I do not know how anyone in his right mind could take these comments even a little bit seriously. This is exactly what the bill is not because it protects the status quo in

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this country. It continues many of the inequities we have had in our tax system for many years.
In 1962, the Diefenbaker government appointed a royal commission to study taxation which was known as the Carter Commission on Taxation. This commission stated that Canada has one of the most unfair tax systems of any country in the world, and that we should do something to remedy it as rapidly as possible. It referred to the hundreds of millions of dollars that are escaping taxation in this country. The reference was to many of the oil companies and extractive industries that each year receive a beautiful tax holiday from the people of Canada. The hon. member for Duvernay, who left the Liberal cabinet a short while ago, made many speeches on this topic. It is about time we started taking him and other economists very seriously with regard to what we are doing to our economy.
Why do we continue to give tax holidays, extra benefits and concessions to many of the large extractive and resource corporations in this country? They do not provide many jobs. As everyone knows, we are exporting jobs by following this type of policy, a situation which would be changed to a large degree if we changed our taxation system to make these corporations pay their fair share of taxation in relation to everyone else in the economy. This is one of the more serious gaps in this huge tax reform bill. I believe these corporations should be paying their fair share of the taxes. If they did, they would be making a greater contribution to Canada and its economy.
We have a 7.1 per cent rate of unemployment in Canada. One reason for this situation is that a large part of our economy is foreign owned. We are a branch plant economy. When things go wrong in the United States, naturally the branch plants here close down. In order that the United States may protect itself, it must make things difficult here. It is like a tree that is in trouble. If something happens to a tree, it is the branch that dies first, not the trunk. Those are things we should be considering on a long-term basis instead of the little reforms contained in this tax bill. This would be one way of having full employment in Canada. It is something we will have to do.
Another point I want to make is that the tax bill before us, as it is constituted, is not based on the principle of equity. We still have a great deal of inequity in our tax system, and this bill will not change that. In the special budget announcement made the other day, we were told that corporate taxes will be lowered by 7 per cent for the next year and a half and personal income tax by 3 per cent of the tax payable. Here again we see the inequity in our tax system. The 3 per cent reduction in income tax is also regressive, not progressive, taxation. It helps the person earning $30,000, $40,00 or $50,000, as well as Members of Parliament, more than it helps the vast majority of Canadian people. These are the types of things we should be getting away from. Many people on the extreme right of the political spectrum say that if we do this, we will discourage initiative. But they forget that very few people in this country have that type of money.
In this type of legislation, we are protecting only a privileged few. According to the Dominion Bureau of Statistics, over 90 per cent of the people in this country do
(Mr. Nystrom.]
not own any stocks or bonds and do not collect any money from the stock market. Of those who do, many do not collect very much. If we reformed the taxation system, we would be encouraging the vast number of Canadian people who are ordinary citizens. In turn, we would be stimulating the economy and giving the ordinary person a fair chance. We would be encouraging his initiative rather than that of some director of a multinational corporation who is probably sitting in New York or Chicago. This is the direction in which we should be going.
Let us not get carried away by the hysterical fear of socialism held by some of the extremists in the Conservative party. Let us look at it in a sensible way. If we redistribute wealth and power in this country, the ordinary worker, farmer and small businessman can play a meaningful role in the economy of this country. That is not being done today. Let us not kid or fool ourselves. The gap between the rich and the poor is the same today as it was 20 years ago. It is only necessary to look at the Senate report on poverty to ascertain this fact. It pointed out that the top 20 per cent of the Canadian people earned 40 per cent of the income in this country and the bottom 20 per cent earned 7 per cent. It has been this way for the past 20 or 30 years.


An hon. Member:: That was in 1961.


Lorne Edmund Nystrom: That was in 1961. Those figures are relevant up to, and including, 1968 and 1969. This government has not done anything significant to change the fundamental structure of taxation and power in this country. It is those things we should be doing immediately.
In conclusion, I wish to again encourage the parliamentary secretary to bring in more amendments concerning co-operatives. We have a consensus on that. At least we can get that far on the tax bill now before us. We should forget some of our old hang-ups about protecting and giving gifts to multinational corporations, and begin helping the ordinary Joe in Canada. We can do it. If we do, we will have a much more viable economy and country in which to live.


The Chairman:: Order. Before I recognize the hon. member for Grey-Simcoe, I might be permitted to read the details of the proceedings for the adjournment debate this evening.
Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: The hon. member for Halifax-East Hants (Mr. McCleave)-Royal Canadian Mounted Police-Use of informers-Repudiation of statements by Robert Eadie and father; the hon. member for Selkirk (Mr. Rowland)- Taxation-Succession duties and gift taxes-Proposed
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federal abandonment-Reply to provincial requests for delay; the hon. member for Dartmouth-Halifax East (Mr. Forrestall)-Regional Economic Expansion-Inquiry as to signing of agreements with Nova Scotia.

[DOT]	(4:40 p.m.)



BUSINESS OF THE HOUSE


Hon. Allan J. MacEachen (President of the Privy Council):: Mr. Speaker, on a point of order, I felt hon. members might wish to be aware that we propose to call an opposition day for Thursday. I thought it would be a good idea to announce this information to the House.


Stanley Howard Knowles: You did very well, speaking from this side of the chamber.
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INCOME TAX ACT

[Stage Direction]
The House resumed consideration in committee of Bill C-259, to amend the Income Tax Act and to make certain provisions and alterations in the statute law related to or consequential upon the amendments to that act-Mr. Benson-Mr. Honey in the chair.
Percy Verner Noble: Mr. Chairman, in speaking to Bill C-259 I intend, first of all, to make a few preliminary observations. When this government took office three years ago there was a mood of excitement and curiosity in the country at large. I am sure none of us were immune to that mood. Post-Centennial Canada was to witness an apparent turning of ways. In the Liberal party a new leadership had materialized, a new style, a whole new government. Or so it seemed. There were new phrases in the air-participatory democracy, the just society, cooperative federalism, the new politics. Well, these weren't really new phrases, they had been in current use for some time. The difference was that they were being used as techniques on the political platform, and this gave them an aura of newness and mystery. Of course, we were all curious to see how those phrases would be turned into action. And here we are, Mr. Chairman, three years later, debating a bill on tax reform, a bill which grew out of a white paper which showed that the government had fumbled and failed in its attempt at participatory democracy. This bill cannot be described as reform because it does not aspire to a just society, it merely covers up for a few years some of the more glaring injustices which now exist. It is a bill so difficult to read and so secretive in its intentions that it smells of the rankest of the old politics. It is a bill which flies in the face of even the least generous concept of co-operative federalism.
Since other members of the committee will be addressing themselves to many different aspects of these issues, I shall confine my remarks this afternoon to the subject of federal-provincial relations. Of course, I do not mean to imply that these are separate issues-they all hang together as a cloak of this government's arrogance. But for the
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sake of emphasis, I would like to highlight certain aspects that are of particular importance to the provinces.
With its assault on the nation's economy over the past three years, the government has not only aggravated the condition of the provincial economies, but has seriously constricted their ability to solve their problems. Every time the federal government puts its leaden foot on the economy the provinces must pay the cost through increased welfare payments. It is indeed shocking, therefore, that this bill should give so little deference to the provinces and the dire economic straits into which the government has thrown them.
The need to co-ordinate federal tax policy with provincial and municipal taxes is becoming increasingly urgent. The rate of municipal and provincial expenditures combined is growing at a much faster pace than those of the federal government. It is no longer good enough to dismiss flippantly the discrepancy between provincial revenues and expenditures by saying that the provinces can simply raise their own taxes to make up the difference.
In the first place, if this government is truly concerned with a more rational and just system of taxation, it must face the fact that all taxes ultimately come from the same taxpayers. In the second place, apart from income tax, provincial revenue is raised from far more regressive sources. Increased sales and property taxes fall heavily on those low income groups the federal government so piously pretends to help. In the third place, every time the government amends the federal structure of taxation, provincial revenues are immediately affected. It makes only good sense, economically and politically, to consult with the provinces and co-operate with them on the issue of taxation. Why, then, Mr. Chairman, has the government failed to do so?
Perhaps the federal government is not concerned about driving the provincial governments to the point of exasperation at which they will have to set up their own independent tax systems. It would be a good election issue for the Liberal party which sees itself as the only vehicle of national unity. After allowing balkanization to take place as a result of its own callous neglect, it could argue before the Canadian electorate that it would put the provincial governments in their places.
The former premier of Ontario, John Robarts, has charged that the new legislation on tax reform shows no regard for the position of the provinces and municipalities in the total tax picture. He has called for a fully integrated and co-ordinated package of tax reforms and social security reforms. Such a program would take time and care to accomplish. It would also take courage, not because the provinces are unwilling to negotiate, but because the Minister of Finance would have to reverse his attitude of stubborn pride in his past accomplishments. We in the Official Opposition hope to give him every opportunity to adopt a more open-minded attitude.
As the Leader of the Opposition pointed out on September 14, the fiasco of the white paper originated in the peculiar stubbornness of the Minister of Finance in refusing to change his mind. We urge him not to repeat that error. Quebec's minister of revenue has asked the federal government for more time in which to refine the Quebec provincial tax system before the federal proposals
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become law. The Province of Ontario has asked for a system of tax credits to replace the current system of exemptions and expenses. We in the opposition have also called for the introduction of tax credits. They would be of far greater assistance to the low income taxpayer than the increased exemptions the government proposes. Furthermore, if the government were willing to negotiate with the provinces on this issue, a way could be found to integrate these tax credits with provincial taxes. This would have the humane and rational effect of reducing the regressive nature of provincial taxes. Ideally, a low income taxpayer should be able to apply his unused tax credits to his property taxes, for example, and obtain a refund therefrom.
We are not asking that such a program be introduced immediately. All we are asking is that the federal government finally acknowledge that the individual taxpayer is a unity; he is not split up into three parts, each of which takes on a different economic personality depending upon which government he is dealing with. A willingness to delay this bill and negotiate with the provinces in the entire field of taxation would be such an acknowledgement.
I remarked earlier, Mr. Chairman, that provincial revenues are closely linked to federal tax policy. To ignore this fact is to be irresponsible. Yet the Minister of Finance has gone ahead and thrown the provinces into a quandary over the abolition of the estate taxes and left them with the worry of how to replace the revenues they had received through the abatement program. Since the provinces of Alberta and Saskatchewan have attempted to become tax havens for the wealthy by returning their portion of the abatement to the estate we can applaud the Minister of Finance for justly seeking to neutralize these attempts. The replacing of the estate tax with the uniform capital gains tax will effectively remove these anomalies in time.
The criticism we have to offer is levelled at the inimitable method which the Minister of Finance employs. If the tax reform bill is passed on January 1, 1972 we shall witness an even more unequal death tax jungle than now exists. This will come about, not because the minister lacked good intention, but because he lacked good common sense. At the present time only the three provinces of British Columbia, Ontario and Quebec have their own succession or estate tax laws. After January 1, 1972, these three will be the only provinces collecting death duties and, in order to avoid double taxation and prevent a flight of wealth from their jurisdictions, they will probably have to repeal their laws. In the meantime, the Province of Manitoba, for example, can become a tax haven for the wealthy of Ontario. I am sure our colleagues in opposition, the members of the NDP, will assure us that the province of Manitoba has no desire to become a tax haven for the wealthy.
In addition to these anomalies which will follow in the wake of the Finance Minister's stroll through the jungle of estate tax reform, the provinces are to be handed the burden of finding revenues to replace their losses over the five years while the capital gains tax matures. Manitoba's finance minister has estimated that his province will lose up to $50 million in revenue during this period. This may

seem like peanuts to the federal government, which is frequently inclined to spend such sums of money in trivial ways, but it will represent a serious blow to Manitobans who are already so heavily taxed. Again, it is not good enough for the government to wash their hands of the consequences of their own legislation. It is not good enough to simply say that the provinces will have to do the best they can and face up to their own freedom to be responsible for their own taxing and spending. Tying another knot in the financial straitjacket the provinces are in and calling it freedom is the ultimate in irresponsibility.
(4:50 p.m.)
Since the government has for the past two years so loudly and repetitiously proclaimed itself to be on the side of equity, it is incredible to find in this bill so blatant a discrimination against the taxpayers of the three provinces of British Columbia, Alberta and Ontario. I am referring here to the proposal in the bill to include and tax as income those contributions made by an employer on behalf of his employees to a public medical care plan. The taxpayers of those provinces will now be penalized for living where they do, while the taxpayers of other provinces will escape extra taxation because their medicare expenses come out of general revenue. Even more unfairly, while the taxpayer must claim his employer's contributions as income, he will not be allowed to deduct his own contributions as expenses. So the government is going to cut the deck both ways.
To try and imagine the decision making process behind this proposal is mind-boggling. The government may try and defend the proposal by arguing that these wealthy provinces can well afford to pay the extra taxes which they claim will net an additional return of $90 million, $58 million of which will come from Ontario alone. Yet the most elementary common sense will tell you that a person earning $5,000 in Ontario is no wealthier than a person earning $5,000 in Quebec. And if there are people earning $10,000 in Alberta, they are individually no better off than the fewer individuals in that wage bracket in Saskatchewan.
But even the present government cannot be so slow-witted as not to appreciate that. It is possible that they have taken a philosophic position on the issue of medicare premiums and hope to force those provinces to abandon them. In the strange reasoning behind such an attitude, the taxpayer would not direct his annoyance at the federal government for artificially raising his income, but would direct it at the provincial government that has a system of premiums. Well, only an election can bear out such a proposition. It is interesting to note, incidentally, that if the government are opposed to the imposition of premiums on philosophic grounds, they did not allow their principles to interfere with the active assistance given by the finance minister's parliamentary secretary to the Social Credit League of Alberta in the past provincial election-one of the political parties and governments which has introduced a system of medicare premiums.
Regardless of what one's feelings are on the issue of medicare premiums, it is unwise and unfair to reduce the serious problem of tax reform to the level of political gamemanship with the provinces. And this is precisely
October 19, 1971

what this proposal will do. It is time the government rose to a new level of maturity in its relationship with the provinces. The first step in this direction would be to delay the introduction of the tax reform legislation now proposed. We urge the government to sit down with the provinces and work out a rational system of taxation that adopts as its first premise the fact that all jurisdictions obtain their revenues from the same taxpayers.
Four years ago the Ontario committee on taxation recommended such negotiations, and I quote their proposal:
We agree that the income base on which provincial taxes apply should be set by the federal government and that major responsibility for broad stabilization policy rests with that government. But it does not follow that the provinces should be deprived of a significant voice in the determination of the tax base and in stabilization policy, and we are convinced that consultation between the federal and provincial governments should take place prior to the implementation of any proposed income tax amendments. In particular, we believe that unilateral changes by the federal government in the common base of the personal income tax cannot be justified, for they directly affect the yield of the tax to the provinces.
Without resorting to the euphoric language that characterized the election of 1968, we seriously feel that a new attitude of co-operation is called for. Should the government continue to neglect the stakes the provinces have in the federal tax system, those jurisdictions may increasingly be forced to find their own independent economic paths. The strains upon confederation would be increased and unnecessarily so. The federal government must not allow this to happen by default. It should assume a role of active responsibility by delaying this bill and calling the province together as soon as possible.


Erik Nielsen: Mr. Chairman, before discussing the other aspects of Bill C-259 that affect the mining industry, I want to direct the attention of the committee to the specific problem northerners have in meeting the cost of living in the north and the weight of taxation that is added to that cost. The government has recognized the principle that since it costs more for its employees to live in the north, it should therefore compensate them by providing a northern living allowance or isolated post allowance. For various points throughout the north, a formula has been devised and the northern allowance set over and above the regular salary for a single man, with an even higher allowance for a married man. Recently there was a cut in the northern allowance to which strenuous objection was taken by the civil service organizations, but to no avail. Notwithstanding the fact that costs across the board have risen, the government none the less decided to reduce the northern allowances.
My point is that the government has adopted the principle with respect to its own employees that, in addition to the ordinary salary paid the employees, which is in line with salaries paid to non-government employees in the work force, it has seen fit to pay an amount to compensate them for the increased cost of living in northern areas. If this be the case, and if this is a proper principle upon which to act, then surely the same kind of reasoning should prevail with regard to non-governmental employees who live in the north. If I am correct in that reasoning, then surely the only approach that can be taken to these employees is to give them different tax treatment from those in the south.
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I know that this matter has been brought up on many occasions in the past, but has been dismissed by the argument that tax treatment for all Canadians must be the same, regardless of whether they come from our most easterly city of St. John's, Newfoundland or our most westerly city of Whitehorse in the Yukon. Nevertheless I think it timely to make the further plea, that the government once again reconsider its stand and that it provide an incentive for Canadians to settle in our north.
I had the good fortune to travel with the Minister of Indian Affairs and Northern Development on a journey to Australia to compare conditions affecting not only the aboriginal peoples in that country but also industrial development, particularly in the resource field, with conditions in our work. I was impressed by the approach that the Australian government had taken in its Northern Territory, and I know that others who accompanied the minister on that occasion were equally impressed, particularly the hon. member for Northwest Territories. Not only does the Australian government provide an incentive to its employees to serve in the Northern Territory; It also provides the same kind of incentive to non-government employees to establish themselves and to settle in the Northern Territory of Australia. They provide those incentives by means of tax incentives. It works, and there is no reason why it should not work in Canada. The Australian government provides incentives in the way of tax cuts to non-government employees who reside in its northern territories for precisely the same reasons that exist in our northern territories. Fuel costs more; light costs more; freight rates are higher; food costs are higher. Virtually everything that is consumed in Canada's northern territories must be freighted in from what we call the outside.
It might interest hon. members to know that an average fuel bill during the winter months-contrast this with the price paid in Ontario-for a tight home and for a modest sized home runs anywhere from $30 to $50 a month. It might also interest hon. members to know that the monthly light bill for an average family in a modest home is anywhere between $20 and $25 a month. I ask you to contrast those costs with the costs that have to be met by residents in this province, or for that matter anywhere else in Canada except perhaps the far northern areas of Quebec, Newfoundland, Labrador and the like.
The freight rates that are applicable to food and other consumer items coming up from Vancouver or Edmonton, and indeed from the eastern part of the country, have to be regarded in terms of Whitehorse being the most westerly city in Canada. From Vancouver goods must travel 1,500 miles up the west coast, and from Edmonton must travel 1,300 miles and more into the interior of the Yukon by highway. This is one of the reasons why costs are higher in the Yukon. This is one of the reasons why the government, in order to compensate its employees, adds to ordinary salaries an isolated post allowance. You can imagine what those freight rates do to the cost of food and other consumer items.
Another factor in our tax system that really skyrockets the cost of living in our northern territories is the 11 per cent sales tax on building materials. This tax is odious enough and onerous enough in the southern sections of the country, putting restrictions on new construction

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which would create higher employment. The abolition of the sales tax has been advocated over and over again by the Leader of the Opposition and by all of us on this side of the chamber. But when one adds that 11 per cent sales tax on building materials to the cost of a stick of lumber, or one pound of insulation, or a bag of cement that has to travel from our southern areas all the way to Whitehorse, Dawson, Inuvik, Yellowknife, or wherever else it is destined for in the north, it just places costs away beyond reasonableness. I do not think hon. members realize that building costs in the north generally are 20 per cent to 30 per cent higher than they are in any other community in Canada.
Yet there is still this almost pathological resistance to a recognition of the principle that the same kind of treatment should be afforded to all citizens of the north, and not just to government employees. I suggest it is time that the government cease discriminating against the ordinary citizen of the north and give him the same treatment as it gives to its own employees. I was expecting, and I still expect, the hon. member for Northwest Territories to take up the torch in this debate on this subject. I do not think that there has been any time in which I have been resident in the Yukon-for some 20 years now-when the people up there have not made representations to the effect that the government should encourage the permanent settlement of Canada's northern areas. One of the ways in which that could be accomplished would be by providing tax incentives for Canadians to settle the north. The argument might be made, "Well, you had the opportunity when your government was in power to do just that." I am not making any excuses for it not happening when the country was governed by the party of which I am a member. I still think it is a good idea. I did then. I failed to sell it then, but there is no reason why the principle cannot be sold now.
Passing to mining once again, there were one or two matters which I omitted from my remarks yesterday with respect to the prospector, and I am going to cure that omission in due course. But for the moment I want to discuss the effect of the proposals in the bill before us, when taken together with the other legislation now pending in this Parliament, on the mining industry generally. I have spoken of costs so far as they affect the individual living in the north. The individuals in the north have many occupations. Among those are truckers who haul mining products, and drive transport with respect to the operations of producing mines. There are explorers. There are prospectors. There are miners. People are engaged in virtually every occupation in connection with exploration, development and production of mine products.
The mining companies themselves, which are becoming fewer, have the same kind of costs to meet, and more so than their counterparts in the south. In order for a mine product in the Yukon or Northwest Territories to be competitive with the product of its counterpart in the southern areas of Canada it must be a significantly higher grade product. One can imagine that if that assertion be correct, and I submit that it is, the number of new mines that could be brought into production of relatively lower grade product if only they could compete with southern mining products. The reason they cannot compete is the fantastic

cost of finding a mine, developing a mine, bringing it into production, and transporting its product into the southern and world markets. In order for a product in these northern areas to be competitive at all, the grade of the product has to be so much superior to that in the southern areas, thus making it economically feasible to develop a producing mine. I say this by way of background to illustrate that every single cost that is added to the process of exploration, to the process of development, to the process of bringing in a producing mine in the Yukon, simply makes the product of that mine less competitive with its southern counterpart.
It can be put another way. The more costs which are added to mining operations in the Yukon, the less value will be its proven assets or reserves, so that eventually given a certain grade of mine product, which is economic at the moment, there is a point at which, as costs are added, the ore becomes uneconomic and the mine must close. These costs can be added by taxation or by poor management. They can have the same effect as a fall in the market price of the mineral that that particular mine is producing. They can be added by increased royalties and by labour costs. There are several ways. But the most significant manner in which costs are added to mining operations is through royalties and taxation. In the last three to four years in the Yukon, five new mines have gone into production and in the last year and a half to two years all but one of those mines have ceased producing. One of the four which has ceased producing is now carrying on further exploration work and is refinancing, but the other three are gone because the value of the ore pinched out, as well as other things such as increased costs. I am not suggesting for a moment it was these taxation measures which brought about those closures, but I am suggesting that other current legislation before this House, taken together with the threat of the white paper proposals for taxation, certainly had a bearing on those closures.
(5:10 p.m.)
If the proposals in respect of the elimination of the three-year tax exemption period and if the proposals with regard to earned depletion go on as proposed in Bill C-259, the costs attendant upon those two changes will be in themselves sufficient to eliminate the several possibilities of new mines. I cannot state instances. The effect of these proposals is simply to raise the level of the value of the ore that has to be found before a new mine can come into production. I am not making this case on behalf of the mining industry, as some might charge me with doing, but am making it on the basis that the mining industry is one of the most important industries in our economy today. It is the third largest mining industry in the world, second only to the United States and the Soviet Union. The mining industry in the 100 years in which we have been a nation has had a spectacular growth because of the incentives that have been provided to encourage that growth. All of a sudden these incentives are to be removed by Bill C-259. I said a moment ago I was not making this plea on behalf of the mining industry. I say now I am making it on behalf of Canada as a whole. Canada cannot afford to so inhibit one of its most important industries as to diminish the immensely significant contribution that industry has made to the over-all nation-
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al economic fabric. I charge this government with doing just that.
I said a moment ago that I would come back to the subject of prospectors and I shall do so now. Many Canadians, both in the mining industry and outside, know of the traditional prospector who spends much of his life in the bush seeking ore deposits. In the Yukon the practice, as I am sure it is in the Northwest Territories, is for a prospector to hole up in the winter, find employment, and earn enough money so that he can spend the next prospecting season searching for what he hopes will be the mother lode. These men often do not have the kind of education many people have. They are single and sometimes are real strangers to the southern society. Yet prospectors have been one of the most important groups of indidivuals that have contributed to the growth and expansion of our economy. The last time I spoke on this subject I said that in the last 100 years some 240 mines were discovered in Canada. Most of those were discovered by those intrepid individuals who follow this life style I have just described.


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


Mr. Horner:: Mr. Speaker, in rising to take part in the debate in committee on Bill C-259, one is immediately impressed once again by the size of the bill and the importance of it.


Patrick Morgan Mahoney: About four pounds.


John (Jack) Henry Horner: The hon. member for Calgary South suggests to me that it weighs four pounds. I would rather concern myself with the economic weight of the bill than its physical weight. The economic weight is indeed a millstone around the necks of many people in view of its damage to the Canadian economy today. I cannot help but quote from the Vancouver newspaper The Province of October 16. Under the heading "There was a crystal ball . . ." the article reads:
Two years ago the Economic Council of Canada, which was assigned responsibility for warning of the economic shoals ahead, offered the view that this country had gone as far as it should in the war on inflation. Further fiscal and monetary restraints, the Council declared, could raise unemployment and slow the economy with only marginal effects on the rate of price increases and costs. What did the government do then?
Two years ago Mr. Benson was budgeting for a $250 million surplus in order to soak up inflation. The Bank of Canada was promoting a policy of tight money and high interest rates. Dr. John Young, chairman of the then new Prices and Incomes Commission was warning that fiscal and monetary screws might have to be tightened further if voluntary restrain failed to halt inflation.
What's happening now? Mr. Benson is budgeting for a billion dollar deficit to cover the cost of the most massive single injection ever made by a Canadian government to stimulate the economy.
So we have all this following the very clear warning by the Economic Council of Canada concerning the economic pitfalls which might well lie ahead. The article continues:
In its 1969 summation the Economic Council was surprisingly prophetic. If Canada persisted in its tough fiscal and monetary policy through that fall the country would run the risk of a severe
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recession in 1970. And once the economy turned sour, the Council added, it probably would not be revived quickly by any set of policies.
The author of the article suggests, "Mr. Benson please note". Well, everybody knows that Mr. Benson did not note and that the Prime Minister did not note. He said that in spite of the 6 per cent rate of unemployment we are to continue our fight against inflation. Today I believe many economists recognize that the fact we did curtail the expansion of our economy too much between 1968 and 1970 brought on a great deal more unemployment than was necessary. Many economists admit this now, and even some people in government circles are quietly suggesting that they erred throughout that particular period. The question readily poses itself: what is the solution today?
Let us suppose, for example, that the economists are right and the economy was turned off too much in 1968 to 1970. What does that leave us with today, and how do we bring ourselves out of it? We heard the budgetary statement made by the Minister of Finance last Thursday evening in which he proclaimed that it was the government's intention to turn loose $1,070 million into the economy within the next short period and that this would start the economy rolling again. How does this bill, which results from the budget of June 1971, compare with the minister's budgetary statement? Does it conflict with it or does it agree with it? This is what members of the House of Commons should ask themselves. We have had the budget of 1971, the budgetary statement of last week and the surtax imposed by the United States.
It seems to me that Bill C-259 conflicts with the budgetary statement, which only goes to prove that we are thoroughly tied to the North American market and therefore should gauge our actions by the situation in the U.S. Perhaps there is no easy solution to the problem confronting Canada. The budgetary statement of last week, the June budget of this year and the American surtax present a most serious challenge to the Canadian government and the Canadian people, but to ignore the facts only demonstrates an unwillingness on the part of the government to face the facts.
The inflationary pressures between 1965 and 1970 were obvious to everyone. They were also obvious to the government. As I stated in my opening remarks, the government turned the screws too sharply on inflation between 1968 and 1970. What factors contributed to inflation in that period? One only has to look at the statistics reported in the Bank of Canada's annual report of 1970. Labour costs increased 77 per cent from 1965 to 1970. Farm costs decreased by 2 per cent, and business stayed exactly even. Indirect taxes increased by 13.8 per cent, and other components increased by 11.2 per cent. These are facts that should be obvious to everyone. Labour income has increased out of line with any increase in productivity. In fact, it has increased 30 per cent faster.
The reason I mention the increase in labour income is that it is a key factor in inflation. This is why President Nixon has brought in wage and price controls in the United States. One of the most surprising aspects of President Nixon's wage and price controls in the U.S. is the fact that, by and large, labour unions have accepted wage controls. They have done so because basically they know that wages have outstripped productivity. We have done nicely in the last 20 years. We have made substantial gains in productivity through the advent of technological
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advances. But in recent years our productivity has not kept up with our wage increases. In fact, the 1970 annual report of the Bank of Canada suggests that wage increases have outstripped productivity by 90 per cent. When prices have to rise to accommodate the excess, and when markets do not absorb the price increase brought about by the greater cost of productivity, there must be a cut back in production. This is really what is happening in Canada.
The gigantic increase in costs has failed to be absorbed by an increase in productivity, thus bringing about a situation in which the market was unable to absorb the price increases in the commodity. One result of this was a cut back in production, bringing about greater unemployment which no one in our society welcomes or likes. Newspapers throughout all of Canada in the last six months-and one could compile a file of those newspaper reports-have reported cut backs in various plants all the way from General Motors, that the big, sinful giant which is dominating the Canadian economy-if one wished to paint that type of picture of General Motors-to Polymer, the Canadian government owned corporation. All of them have cut back production because the market has been unable to absorb the increased cost of their products.
What does the bill before Parliament do? I think there are a number of steps we should be taking, but I do not believe the government is inclined to take them. I think the first step should be to restore confidence in the nation, confidence in the business community that this nation has the wherewithal to compete with the United States, Japan, West Germany and the European Common Market, to put our products on the markets of the western world and to sell them.
Bill C-259 does not provide the business community with sufficient confidence to re-invest. The minister in his budgetary statement said that corporations would be given a 7 per cent reduction in their tax and that private individuals would be given a 3 per cent reduction in their income tax. As reported in today's paper, a 3 per cent reduction for a single individual earning $6,000 a year is only $12. That is not too much. The person who will be $12 richer because of that 3 per cent reduction is not going to go out and create employment for too many people. The person earning $50,000 a year will save only $314 as a result of the 3 per cent reduction. This is not much to encourage confidence within the business community, and encouragement is what is needed to get the masses who are unemployed back into the labour force to contribute to the development of this country.
We must consider some of the more basic costs. The other night in a speech on the budgetary papers I said that we should withdraw the competition bill and the labour code amendments suggested by the Minister of Labour. We must go further than that and demonstrate clearly that money creates employment within Canada. I recall that the Minister of Regional Economic Expansion said in this House that up until the fall of 1970 his department had created 16,000 jobs at a cost of "X" million dollars. This worked out to something like $5,000 per job and did not take into account the contribution of private industry. Under the regional expansion program it took an investment of nearly $6,000 to create a job. Let us suppose that is one-fifth of the capital investment required to create (Mr. Horner.]
one job. This means that $30,000 would be required. Let us suppose it could be done more cheaply, say for half; it would still require a capital investment of $15,000 to create one job. Let us say that 500,000 people are out of work. If we multiply $15,000 by 500,000 we get an idea of the kind of investment that is required. I suggest that the Minister of Finance and his parliamentary secretary should look at the facts.
Money is not coming into Canada; it is leaving. Provincial governments and municipalities are not going abroad to borrow. We must ask ourselves if the federal government should be discouraging foreign investment in this country. I am not discussing who should control foreign investment because as a Canadian I believe that we should, but it should be brought into this country to help create trade. But how should we do this, Mr. Chairman? Is Bill C-259 the answer? In my opinion, it is not.
In my opinion, Bill C-259 should be divided in order to give the lower income groups the benefits which may be derived under it. It should be recognized that although inflation is a problem, unemployment is a greater problem. How can these two problems be resolved? Now that the United States has put a freeze on wages, Canada should announce an intention to peg its dollar at 95 cents. This would instill confidence within the business community. If this policy were announced, the immediate result might be an influx of money. To offset this, along with pegging the dollar at 95 cents there should be the announcement of an intention to freeze prices and wages in Canada as long as our major trading partner keeps the same freeze in its country.
The hon. member for Trinity suggested that a wage freeze should be imposed upon unions and prices in this country. If this were done without pegging the dollar, there would be an immediate tendency to force up the value of our dollar. I suggest that it should be stated unequivocally that it is our intention to peg the dollar at 95 cents and to establish a board to impose wage and price controls. In that way the business community would regain confidence and people would be back to work. Part of this bill, not all of it, should be discarded. There should be a tax reduction for the lower income groups and a reconsideration of the capital gains tax and the other measures which increase taxes throughout Canada.


Gérald Laniel: Order, please. The time allotted to the hon. member has expired. Is the committee ready for the question?


Some hon. Members:: No.


Gérald Laniel: The hon. member for Dauphin.


William Gordon Ritchie: Mr. Chairman, in view of the far reaching ramifications of Bill C-259, dealing with an over-all revamping of our tax structure, one area that has received little attention is the section dealing with international income. The recent action of the United States government in imposing a 10 per cent surcharge on imports, their avowed aim with DISC and their employment reduction tax to increase industry in that country, coupled with the impending expansion of the European Common Market with the probability of further trade restrictions,
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leads me to believe that this bill should receive serious consideration.
All these things may well cause serious distortions in our economy. We saw evidence of this in the government rushing through $80 million worth of aid to Canadian exporters who might be hurt by the surcharge. These measures may conceivably cause complete disruption of trade for Canadian exporters. Time will tell-but there is probably little Canada can do in the immediate future to influence the international situation.
As far as the long-term situation is concerned, the most serious of the United States moves could be the DISC proposals-the Domestic International Sales Corporation. This proposal, which is at the moment going through the United States legislative process, would encourage United States manufacturers to produce goods at home rather than import them from branch plants abroad such as in Canada. If Canada is not in a position to implement offsetting measures immediately, there could be an immediate diversion of production from Canadian to American plants. In the long run there could be a more devastating effect on the Canadian economy, that of new factory and plant expansion which is today in the planning stage in both countries reverting to the United States.
James McAvity, President of the Canadian Export Association, in Montebello yesterday, according to the Globe and Mail report of today, also warned of the dangers of the DISC proposals and said the Canadian government had given little consideration to the matter. He said the Canadian Export Association had suggested that the government plan offsetting measures now and postpone certain tax changes. He called for the federal government to reassess the tax changes in light of changes in the world trading economy and Canada's position in it. He had this to say:
Even now, the position is that Ottawa will take steps if and when the DISC is adopted but meanwhile the tax reform must stand.
In light of the drastic changes in the trade and economic situation in the world around us, it seems incredible that the government is stubbornly pressing legislation which was designed to fit circumstances prevailing a year or two ago, and is so clearly not appropriate to the situation existing today
In a speech before the Toronto Board of Trade, Mr. William MacDonald, Toronto tax lawyer, is reported to have made similar criticisms. In his speech to the Toronto Board of Trade, Mr. MacDonald said Canada is moving in the opposite direction from the United States when it comes to creating new international trading markets. The new tax proposals would make Canadian companies liable to rates of taxation on foreign profits that are the same as those on domestic profits, while in the United States the DISC proposals would reduce domestic taxes to the levels of income taxes in the countries where United States goods are forced to compete. It would appear that as a result of tax reforms it will be prohibitive for Canadians to compete. At least two companies have so far moved their operations out of the country, he said.
He went on to lay the blame at the feet of the federal government, suggested that the federal government was not particularly interested in the private sector and compared the federal government to the French General Staff in the First World War. The General Staff had developed a plan for an offensive before the beginning of the war and was unwilling to abandon it even in the face of
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greatly altered circumstances. The government seems intent on adopting similar attitudes toward tax changes: they must go through at all costs.
In this legislation there are provisions that are restrictive to multinational corporations and come at a time when Canada could possibly benefit from a growing isolationist sentiment in the United States. We must remember that multinational corporations are with us-they are here, for good or for bad.
Mr. MacDonald concluded his remarks by suggesting that the complex tax changes be delayed until the end of 1972 to permit ample time for assessment, training and a smoother transitional period. In the international field, he rejected the approach outlined in the tax reform bill with regard to restricting any changes to stop the diversion of income from Canada which is not related to business activities abroad. He went on to speak about a very important aspect of the economy that we must consider very seriously and said:
The fact that Canada is an open economy, not by choice but by necessity, means we must, above all, travel light so that we can adapt to the changing winds of fortune coming from the outside and over which we have little control.
The trouble with recent policies is that they threaten to weigh us down into immobility.
There are in the new tax bill major changes which affect non-residents. First, the tax bill proposes that nonresidents should be subjected to a tax computed on capital gains realized on the sale of certain Canadian properties. I do not think that provision was included previously. Second, there would be a change in the treatment of discounts earned by non-residents on debentures, notes and the like. Third, after 1975 the normal rate of Canadian withholding tax on investment and passive income to non-residents would be increased to 25 per cent if the non-resident lives in the country with which Canada does not have a tax treaty. Also, provisions exempting certain interest payments from withholding would be withdrawn.
Fourth, certain pension payments would be subject to a withholding tax. Fifth, the special branch tax levied on non-resident corporations-the tax that in principle is in place of the normal withholding tax on dividends paid by resident corporations to non-residents-would be extended to corporations that are resident in Canada but do not meet the qualification of a "Canadian corporation". Sixth, after 1975 this tax would be increased to 25 per cent and the same increase in rate would be levied from non-resident insurance companies.
In assessing the proposed changes affecting non-residents, it will be seen that the major changes under these provisions are the increased withholding tax rates, the taxation of specific capital gains relating to Canadian property and the taxation of several types of Canadian source income which were previous exempt. Even though many of these changes do not take effect until 1976, many of the proposals may be considered detrimental to the residents of other countries as, for instance, the proposed capital gains tax.
This would indicate that the renegotiation of existing tax treaties will not be easy since in the early 1970s we will be occupied with the great monetary problems the world is facing before the economic situation settles down. After

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1975 the general withholding rate will be increased from 15 per cent to 25 per cent. In general, this thrust in the new tax bill would seem to make investment in Canada considerably less attractive than in the past.
There seems to be excessive rigidity in the section dealing with pension payments to individuals. Under the present act, many payments of a deferred income nature are not subject to non-residents withholding tax except in the case of old age security pensions, social assistance payments made on a means test basis, and the first $1,290 of Canada or Quebec Pension Plan payments. The new bill makes all such payments subject to the non-resident withholding tax rules, that is, to 15 per cent after 1972 and 25 per cent after 1975.
The withholding tax will be broadened to include Canada and Quebec Pension Plan payments in excess of $1,290 per annum, retiring allowances, supplementary unemployment benefit plan payments, registered retirement savings plan payments and deferred profit-sharing plan payments as well as income averaging annuity contract payments and the income portion of other annuity payments. If the non-resident wishes, he may elect to be treated as if he were resident in Canada in respect of all of these payments with the exception of the last two. In that case he will add to his Canadian business and employment income all the payments previously referred to, and compute his Canadian tax payable as if he were a resident of Canada and as if the amount arrived at were his total income. If the tax withheld is 15 per cent or 25 per cent, as the case may be, and exceeds the tax so computed, he could obtain a refund of the excess. The election must be made on an annual basis.
The presumed rationale of this proposal is that most of these payments originated from funds the contributions to which were tax-deductible and, as a consequence, Canada should collect some tax when they are paid. The old age security pension, at $960 plus the first $1,290 under the Canada Pension Plan totals $2,250, which just about equals the single person exemption. This amount would not have been taxable even where the individual was resident elsewhere. These proposals, again, are subject to the renegotiation of treaties with the country in which the pensioner resides and, as already suggested, there is likely to be some hard bargaining in these matters. Whatever is withheld at source in Canada is likely to be eligible for foreign tax credit abroad to the disadvantage of the foreign treasury.
(5:50 p.m.)
This provision will seemingly render more difficult the retiring of our elderly, particularly in countries where there are no tax treaties of significance. Because of the nature of our climate, many people for health reasons must seek a milder climate, with these restrictions. Many of them are of very limited income. It seems that we will be working a hardship on many people who can ill afford it. Presumably, these people will be subject to tax in the country in which they reside, so that if there is no tax treaty real hardship can result.
Regarding the treatment of investments by Canadian taxpayers and the shares of non-resident corporations that can be described as foreign affiliates, the proposed legislation considerably narrows the option because after

1975 the dividends received by a Canadian corporation from a non-resident corporation in which it holds more than 25 per cent of the dividend shares are deductible in computing taxable income. The proposed new laws also provide that after 1975 only dividends from foreign affiliates in countries with whom Canada has new tax treaties will be deductible in computing tax income.
It appears that at a time when the United States is moving to encourage its production and investment, Bill C-259 is tending to have the opposite effect by increasing the rate of withholding tax on investment and passive income to non-residents to 25 per cent although we will need more savings and investments to replace the gap that will be left by the United States' programs. It seems that Canada is attempting to pressure many countries to establish tax treaties; but the chances of this occurring do not seem to be great, considering the present unsettled state of the world.
Some of the thrust of the proposed legislation seems to be designed to provide tax havens from being effective. This is to be commended, but in some respects it may well be a rigid and cumbersome act. In general, the tax proposals in so far as international income is concerned seem to be directed at reducing the outflow of Canadian capital and inflow of foreign capital. It is doubtful if this is the road that we should be journeying on in the 1970s when, presumably, capital will be in short supply.
We must provide a great many jobs for our people. We must provide for those who were born during the 1950s when there was a high rate of birth. We will need all the opportunities and capital we can get to provide jobs for these people in the 1970s. Perhaps after 1980 we can look to a period when job production will not need to be so great, but I suggest the section of the tax reform bill dealing with international income is unnecessarily restrictive. It runs counter to what the Americans are doing. At this time we should be more expansive in our economy and encourage industry to take part in the international financial field.


Marcel Joseph Aimé Lambert: Mr. Chairman, it is always nice to see in the House the hon. member for Bonaventure-Iles de la Madeleine (Mr. Bechard), whose only task seems to be to say: Agreed ... let's have it-


Albert Béchard: -At the right time.


Marcel Joseph Aimé Lambert: Sure, at the right time. The hon. member has not yet spoken.
Mr. Chairman, with the consent of the House, I would very much appreciate taking advantage of the dinner hour to nurse a bad cold.
So may I call it six o'clock-


Gérald Laniel: Is that agreed?


Some hon. Members:: Agreed.


Gérald Laniel: It being six o'clock, I do now leave the Chair to resume same at eight o'clock.
At six o'clock the committee took recess.
October 19, 1971



COMMONS DEBATES AFTER RECESS

[Stage Direction]
The committee resumed at 8 p.m.
Marcel Joseph Aimé Lambert: Mr. Chairman, I hope I shall have the consideration of the committee tonight. I guarantee I shall not long inflict myself on hon. members. I managed to pick up a western breed of cold germ this weekend and I am afraid it is more virile than I am normally.
I am taking part in the debate in committee at this late stage of the general discussion for a number of reasons. First, I was aware that some amendments would be put down, but never was I prepared for the flood of 95 amendments which we had last Wednesday afternoon. Some people might ask, "What does it matter that we should have 95 amendments?" I don't know; but it took until Friday morning to get those amendments into printed form, and since that time it has taken one very experienced girl until four o'clock this afternoon, in working hours, to cut out and insert into Bill C-259 the amendments in the appropriate places and index the text of the bill. If hon. members feel they are competent to understand this text, know their way around it without having the amendments inserted and without an index, I can only say they are taking the bill on a basis of pure, blind faith. Even some of the amendments have errors in them, as we have noticed. For this reason nothing can be taken on the basis of faith or trust.
Then there is a question which is present in the minds of everyone: How much of the bill is actually being rewritten at the present time? There was, in effect, an attempt to rewrite it in part on Thursday evening when the minister went through the exercise of making a statement which amounted to a mini-budget. This means another bill is making yet further amendments to the present act. And, of course, we have not yet touched the Customs Tariff and the Excise Tax Act amendments to the budget of last June. Now we are being asked to ram this thing through. There are suggestions of an allotment of time with respect to committee stage and perhaps to the other stages in order that the bill may go through. But hon. members opposite do not even know what they are getting. They know there are further substantive amendments to come.


Mr. Gibson:: Surely that is what one would expect in a tax bill, a bill proposing tax reform.


Marcel Joseph Aimé Lambert: So you are ramming it through?


Colin David Gibson: No, we are not ramming it through.


Marcel Joseph Aimé Lambert: The idea of ramming legislation through is ever present. Every time someone over there sees two people on this side rise to make a speech, they say "filibuster".


Colin David Gibson: Let's get on with it right now.


Marcel Joseph Aimé Lambert: I wish the hon. member for Hamilton-Wentworth would get to his feet and make a sensible presentation from time to time. I will refer to him in due course.
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Colin David Gibson: On a point of order, Mr. Chairman, if we could get on to deal with the substance of the bill I suggest we could move much more expeditiously, instead of making procedural criticism.


Marcel Joseph Aimé Lambert: I can deal with that insignificant remark, Mr. Chairman.


Gérald Laniel: Order, please. I merely want to say that what we heard was not a point of order but a matter of debate.


Mr. Thomas (Moncton):: He doesn't know the difference.


Marcel Joseph Aimé Lambert: True; the hon. member doesn't know the difference between a point of order and a matter of debate any more than he knows how to distinguish substance from detail in this bill.
This afternoon my hon. friend from Dauphin made reference to a speech delivered by Mr. William MacDonald, a prominent Toronto tax lawyer. He quoted at length from this speech. The point he made is one which should be on the record because hon. members opposite would otherwise pay no attention to it. One of the things that struck me was that the government is going ahead with its tax plan in much the same way as if it were proceeding with an elaborate military plan of some bygone era.
While circumstances have changed a great deal, the government is still trying to put through the same tax changes. It is very apparent that this is so because circumstances in the period between last year, when we had the white paper, and this spring, when Bill C-259 was being drafted and considered by the government, altered a great deal because of economic conditions. The Minister of Finance himself admitted that the circumstances had changed by his complete about-face between his June budget and the statement he made the other night. The circumstances changed as a result of the action taken by the United States government. I would invite hon. members to read some of the commentators who know a good deal about the situation in Canada. For example, I am sure they read John Meyer who writes in the Montreal Gazette and other newspapers.
This bill is a rewriting of the white paper. I have a briefcase full of briefs from the Canadian Manufacturers Association, the Bar Association, from chartered accountants and any number of worth-while bodies that have made very pertinent and telling commentaries about the language of or difficulties seen in the clauses of this bill. Yet as this great machine here rolls on, we are expected to grind out these clauses one by one. They are already being rewritten and I am willing to bet that we will see another sheaf of editorial amendments as this bill is considered.
On second reading we were asked to approve a certain bill, yet it is still being changed. The reason it is being changed is that the government was not aware of what it was preparing in Bill C-259. It had not the slightest idea of the effect of a good number of the provisions. Thus we have witnessed an event this year that has no predecessor in Canadian history. The hon. member for Peterborough can nod his head sagely, but he has not the slightest conception of this bill or the slightest conception of just what will happen as a result of its provisions.

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James Hugh Faulkner: Let the hon. member put his own position, not mine.


Marcel Joseph Aimé Lambert: We will put our position, and we will put it time and time again. In view of the changes that have been made in the nature and philosophy of this measure, we are going to get objections from the United States. We have already had many objections from Canadians. For instance, take the case of foreign investment in retirement trust funds. There is supposed to be a certain minimum ceiling on foreign investment. We are getting a lot of static from foreign countries in regard to this restriction. Canadian objectors are getting nowhere, so we will see whether foreign objectors have more clout. A list has already been produced on behalf of the United States government, which incidentally seems to have more authenticity than hon. members opposite credited to it.
Another point is that certain continuing rights and provisions in this bill are subject to renegotiation in regard to tax treatment. Given the present climate of relations between, for instance, Canada and the United States, between which two countries there is a most important tax treaty in existence, surely no member of this House is naive enough to think that this treaty will not have to be renegotiated, under the terms of this bill, in order to give equality to Canadians. Do hon. members opposite think that these negotiations will be successful within the next five or ten years?
In the interval, of course, Canadian investors and businessmen are going to take it in the neck. The same situation prevails in our relations with Great Britain. There was a conference this summer attended by some noted Canadians, including the former Prime Minister of the Liberal party and authorities from Great Britain in government and in business, which discussed the level of relations between Canada and the United Kingdom, two countries where once again effective tax treaties must be maintained. Yet we are doing many things to foreign investors in this bill.


James Hugh Faulkner: What things?


Marcel Joseph Aimé Lambert: We are reducing returns on foreign investments. We are making conditions much worse for foreign investors in this country. There may also be found a good deal of economic nationalism in this bill. Small companies' proposals are replete with economic nationalism of a kind to which there will be a great deal of objection from Canadians and foreigners alike. Therefore, is this the best time for the negotiation of tax treaties, when we look for certain advantages?


James Hugh Faulkner: Pure fantasy.


Marcel Joseph Aimé Lambert: At a time when the Canadian economy requires more incentives, greater encouragement to production and to savings, what is the government doing? It is imposing a greater tax burden on production on the savings of Canadians. That is the net result of Bill C-259.
Another part of the bill that I suggest will cause a great deal of difficulty is this. Simply passing the bill in this House and in the other place and putting it on the statute

books will not make effective its provisions. One aspect of this bill, from the white paper on, has been totally neglected by the government. It has been brushed aside, or swept under the carpet, if I may use another simile, because the government does not like the difficulties it foresees. I refer to co-ordination and co-operation with the provinces. I should like to put on the record what the Canadian Manufacturers Association had to say in their brief in this respect. I think they put the position quite well. They said:
The effect of the proposed corporate and personal income tax rates depends greatly on the action which the provinces may take.
I pause to say that the hon. member for Peterborough is one of those who deludes himself that everything should conform to the federal point of view; that if the federal government shall speak, the provinces shall follow.


James Hugh Faulkner: The CMA is not the spokesman of the provinces.


Marcel Joseph Aimé Lambert: The members of the CMA are the ones who will suffer the effects of the federal government's attitude to these tax changes; that is the point. It is the meat in the sandwich which is protesting now. I invite the hon. member from Peterborough to talk with certain provincial treasurers-not only the one in the province of Ontario but others-and learn their attitude toward these tax changes.
(8:20 p.m.)


James Hugh Faulkner: Let us hear from them.


Marcel Joseph Aimé Lambert: We have.


James Hugh Faulkner: Not through the CMA.


Marcel Joseph Aimé Lambert: I am also talking about businessmen who will suffer from these changes. We hear from the provinces, at least the government does, but it never publishes the results of these conferences with the provinces on these points. I think they are to meet within the next few weeks. I suppose the hon. member would want us to have the bill passed by that time, then the provinces could comment on the nature of the changes. That is just how stupid the whole thing is. I continue with my quotation:
With respect to personal income taxes, the impact on the individual which has been calculated and shown in the tables in the Summary of 1971 Tax Reform Legislation depends on the provinces imposing a tax of 30 per cent of federal tax. The proposed reduction in corporation income tax rates depends on the provinces not changing their corporation income tax rates. The intended 33 193 per cent tax credit with respect to dividends from taxable Canadian corporations will only be given full effect if the provinces adopt a corresponding credit.
In other words, that would require action by ten different legislatures. We have not heard that they intend to do so.
Some of the provinces have expressed concern about the proposed elimination of federal estate and gift taxes on January 1, 1972.
Manitoba is one of them.
They have indicated that this proposal will not only create inequities between the taxation of existing wealth accumulations and future wealth accumulations, but will thrust the burden of
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readjustment, if provincial revenue loss is to be avoided, entirely on to the provinces.
All these factors require co-ordination of federal and provincial tax policies and make an assessment of the economic impact of the proposed legislation difficult. At the same time, we are concerned that the intention of the Ontario government to give tax credits for provincial sales tax and municipal taxes and not to provide the 15 per cent additional capital cost allowance introduced by the federal government in its December, 1970, budget, are indicative of a trend towards separate provincial tax administrations and policies. Such a trend is, we think, most undesirable and we urge the federal government to co-ordinate tax policy and administration with the provinces.
That is basically the point I wish to make, that the government has failed to take into account co-ordination and simplicity of administration of a major tax act in co-operation with the provinces. There is one further point I wish to refer to but I can defer that until another occasion because I have just about reached the time allotted to me.


Some hon. Members:: Carry on.


Marcel Joseph Aimé Lambert: I will make just one point if I have the permission of hon. members. It is in reference to a particular clause.


Gérald Laniel: Order, please. It might be preferable to clarify the situation. It seems that hon. members are agreeable to allowing the hon. member to complete his remarks. Is this agreed?


Some hon. Members:: Agreed.


Marcel Joseph Aimé Lambert: Thank you, Mr. Chairman, and through you I thank members of the committee. I think the parliamentary secretary has an idea of what I wish to say. I want to highlight one of the difficulties that has arisen in trying to close the door to a tax haven through clause 146(l)(g) dealing with the type of investments that may be permitted in retirement savings trust funds. We know that in the past it was wide open and that terrible abuses could be created-in fact, almost by individuals walking down the street into a trust company, entering into a trust agreement to deposit $2,500, then turning around, cross-borrowing and each walking out with $2,500. We have heard of trust funds set up for the benefit of race horses and to maintain professional equipment for a doctor or a dentist. All of this was possible for those who were ingenious enough to go and do it, and it benefited them in a way that should not have been so.
In his attempts to close the door, the Minister of Finance has gone too far. His proposal will effectively wipe out the method whereby organizations such as the B.C. Teachers Federation set up a supplementary retirement savings plan. This applies to other groups of individuals as well. I know of one group in the province of Alberta which set up a co-operative retirement savings fund plan where all the funds are not channelled to their personal benefit but, by reason of being an investment co-operative on a pro rata share basis, in a period of three years they have been able to put $600,000 into housing construction, particularly where the conventional sources of lending do not normally go. Where banks, insurance companies and even CMHC refuse to go, these people are prepared to put up money-
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perhaps at a slightly higher rate of interest-and in so doing they fulfil a social need.
It was the same way with the B.C. Teachers Federation retirement savings plan under which designated portions of these supplementary savings plans are turned over to a trustee, who then advances the money against notes of an affiliated credit union, which then turns around and invests the money in housing for teachers. The whole system has grown up in the period since 1951 to the point where their assets now exceed $37 million.
One of the main features about it is that the funds have been able to provide housing for teachers in outlying places. Teachers have been able to get credit facilities. This extends throughout British Columbia, and now the regulations have been changed so that the plan will cover teachers from the province of Alberta, in particular teachers who may have about ten years service to go and whose original retirement plans were predicated on much lower salaries. Now that they have much higher salaries they are able to divert savings into supplementary pension plans.
If the bill as now designed will not permit these notes from the credit union to be an acceptable form of investment for the retirement savings plan, unless the minister is able to assure us that under the regulations they can be designated as an appropriate investment the whole plan is in complete jeopardy. I would make a special plea to the minister, through his parliamentary secretary, to consider the representations that have been made so that this very worth-while plan will not be scuppered because it was caught in a net that was cast much wider than had been anticipated. Again, Mr. Chairman, thank hon. members for giving me extra time to put that point on record.


Mr. Cullen:: Mr. Chairman, it was interesting to hear some of the comments made by the hon. member for Edmonton West, who seemed to suggest that there was a lack of knowledge about this bill on the part of members on this side of the chamber. I would suggest to the hon. member that he is incorrect in this assumption and that some of the better ideas and recommendations have in fact come from the government benches.
(8:30 p.m.)
I would not expect that each individual member of this party would be as well versed on each and every clause of the bill as the hon. member for Edmonton West, because he has a particular responsibility in this field. It seems to me, however, that he is carrying the weight of the world on his shoulders and might take a lesson from this party. He should do some organizing and get some people to speak on the subject of credit unions and on other subjects, rather than feel he has to cover each individual subject himself.
The hon. member states that changes have been made to this bill. I would be the first to concede that and to welcome it. I would think further changes will in fact be made because the government has indicated it is not rigid, is not inflexible and is prepared to listen and to make changes where changes are warranted.


Some hon. Members:: Oh, oh!

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Gerald William Baldwin: It is a good thing you are not under oath when you say that.


Jack Sydney George (Bud) Cullen: The hon. member indicated there is more truth than fiction in the newspaper reporting. I am happy he is not running the country because I would hate to think he would react to every newspaper article, develop government policy in answer to newspaper articles and then go to a foreign government and say, "We do not know what your official position is, but we are reacting to the leak in a particular paper because we have no other source of contact." If that is the way the opposition would run the country, thank heaven they do not have that responsibility.
Much has been made about the fact that this is a complicated bill and that changes have been made. I suggest, with the greatest respect, that if the hon. member for Edmonton West would consider this matter for a couple of weeks and then come forward with all the changes he would like to see made, if we accepted them we would have the credit unions, the bankers, the Bar Association and others all telling us what was wrong with the hon. member's bill. Listening to the hon. member one would think he had the idea that tax legislation can be done in this way: Tell us what you make, tell us what you spend, tell us what you have left, and send it in.
If the hon. member wants to read some complicated tax legislation I would refer him to the Ontario succession duty act which was supposed to be revised in 1970. There is no easy or uncomplicated way to draw up tax legislation. No one knows that better than the hon. member for Edmonton West. In the Ontario legislation there is a short-form mortgages bill and a long-form mortgages bill, and then they spend a fortune explaining what they mean in each piece of legislation. It is extremely complicated.
Speaking for myself, I should much prefer to get on with the clause by clause study of this bill. I take exception to the suggestion that we are trying to ram something through. How does one do that? I wish I knew how to do it in respect of legislation as complicated as this. I think we should deal with the clauses which are important and then apply a time allocation to our considerations. I suggest to the hon. member for Edmonton West that through his practice in court he knows that time limits are placed on speeches and cross-examination even when dealing with the lives of individuals.
It would be one thing if we had all the time in the world to discuss this legislation, but we do not have that. If the hon. member for Peace River does not stop interjecting, perhaps it would be a good thing to have a time allocation.


Gerald William Baldwin: You will have lots of time after the next election.


Jack Sydney George (Bud) Cullen: Mr. Chairman, I think by now, after second reading stage and now on the clause by clause study of the bill, particularly clause 1, we have gone through the usual process which seems to be ritualistic around here. The cabinet minister highlights that which is good in the bill, opposition spokesmen criticize that which they think is bad, and then we have a series of addresses from each side of the House in what has become the usual channel. The only people who seem to have broken away from that

channel-and more power and credit to them-are the hon. member for Kamloops-Cariboo, the hon. member for Gloucester and, this afternoon, the hon. member for Peterborough with his brilliant speech.
We are endeavouring to be as objective as possible in this most partisan of places. One of the most thought provoking addresses-certainly the best we have heard on credit unions-was delivered, when we were discussing an amendment proposed by the hon. member for Edmonton West, by the hon. member for Norfolk-Haldimand. I would commend the re-reading of his address to the Minister of Finance, particularly with respect to the comments he made about co-operatives and credit unions, as well as caisses populaires.


Gerald William Baldwin: Read it to me. I never heard it.


Jack Sydney George (Bud) Cullen: I am not surprised that the hon. member for Peace River did not hear it; he is too busy interjecting to listen. Similarly, I felt that the Minister of National Revenue and the Parliamentary Secretary to the Minister of Finance admirably put the position of the government insofar as this bill is concerned. The minister stressed that which is positive, and the parliamentary secretary answered some of the criticisms from the other side, at least those which he thought warranted comment.
In my opinion, the white paper approach to legislation is good government but I am not certain it is good politics. The government member faced with a white paper, particularly the backbencher, must endeavour to explain without defending the recommendations of the government and at the same time point out to any audience he may be addressing, "Here are some of the suggestions the government has to make. I would like to hear your comments before the legislation is drafted".
All through the debate on the white paper we heard that the government was rigid, that it was committed to the white paper approach and that any changes would be mere tokenism. The rug was somewhat pulled out from under the opposition when the changes made were, not mere tokenism but changes which gave effect to recommendations made by the public at large and by representatives of various groups who addressed the Standing Committee on Finance, Trade and Economic Affairs. Effect was also given to recommendations made in the committee's reports. This having been done, the opposition party, finding that government members advance the correct approach that should be taken to white papers and have thereby regained credibility with the population, now find themselves in the difficult position of trying to convince the Canadian public that the government backed down or backed away from the white paper.
It is for this reason I feel the white paper approach is in fact good government, because it does give the people an opportunity to have their say and to participate. In respect of whether or not it is good politics, I still need some convincing-because if we stick to the provisions of a white paper then the government is being rigid, and if changes are made then the position is taken that the government is backing away. It is almost impossible to win that kind of argument on a political platform.
Be that as it may, I am frankly more interested in good government than politics and I commend the Minister of
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Finance for his approach to this particular problem of letting the people who are knowledgeable have their say. It is for this reason I am participating in the debate. Recognizing that the Minister of Finance listened to representation from so many people in respect of his white paper and made major changes in the approach suggested in that document, I am hoping he will once again listen to the people of the credit unions and co-operatives, because in my opinion the credit union case that is being made in the reports, briefs, correspondence and telephone calls is a good one. In fact, it is an excellent one.


Gerald William Baldwin: How are you going to vote on it?


Jack Sydney George (Bud) Cullen: Wait and see. The credit unions are concerned with people, and not with profit. Their strongest argument is the fact that they speak on behalf of and out of consideration for their members. Credit unions are self-help organizations. The Prime Minister himself, in commending credit unions across Canada, said in part:
But even more important credit unionism encourages self-help, mutual assistance and personal involvement.
I say "Hear, hear" to that because it accurately sets forth my opinion of credit unions. In the past too many people, when dealing with government, have had a tendency not to write but to throw up their hands and say, "What's the use?" This minister and the government have encouraged people in the belief that their ideas are considered, their correspondence is read, and where changes can be made they are made.
(8:40 p.m.)
Sometimes decisions are made which are contrary to views expressed in a letter, but I am satisfied that these letters do receive consideration from all Members of Parliament. I want to quote from three letters from my constituents which I think typify the credit union approach. The first is from Mr. B. J. Kane, president of the Dow Chemical, Sarnia, Employees Credit Union. He says in part in his letter to me:
We sincerely hope you are aware of the basic principles of credit unions and their self-help philosophy which enables a group of people-


Gerald William Baldwin: Why don't you table the letter?


Jack Sydney George (Bud) Cullen: I continue reading the letter:
-restricted by a close bond of association, to obtain a better standard of living. This is accomplished by their own efforts within their own ranks and produces better citizens-
This is the part I like:
-who do not have to call on outside agencies to help in time of need. Surely, this aspect alone benefits the general public by removing the necessity of obtaining aid through tax supported government departments.
Mr. Ed Odell, treasurer-manager of the Moore Credit Union Limited says in one paragraph of a letter to me:
Twenty-four credit unions in Lambton county were organized for service to their members, not for profit. They are simply vehicles by which their members of a catholic parish, the employees of an industry or the residents of some small community like Forest, Port Lamton or Corunna, help each other by bringing together these people with a little money to save for those needing temporary financial assistance. Moore Credit Union is not seeking profit but brings together working people needing credit
Income Tax Act
and working people who have savings to pool with their neighbour or brother employees. Our members who do receive a modest dividend or earnings on their share savings already pay tax on such income, to tax these same earnings in the form of income from the operation of the credit union is, in our view, a double taxation and should not be passed into law in Canada.
I think the hon. member for Peterborough made a good point this afternoon when he indicated that there are credit unions and credit unions, and some of them are certainly larger than the type referred to by Mr. Odell. I should like to refer to another part of his letter where he writes:
In Lambton county, including Sarnia, there are only seven out of the twenty four credit unions with anything like an office open for daily business. There are three Catholic parish credit unions in Sarnia who are very small and are run on volunteer help as are the other fourteen to bring the total to twenty four. One credit union formed over a year to help the employees of a particular group of offices in Sarnia is struggling along with a volunteer secretary-treasurer and a board of directors.
He makes the point that these are community-minded people. Mr. John Kedwell, president of the Imperial Oil Employees, Sarnia, Credit Union Limited said the following in his usual succinct and honest way:
It has always been our belief that credit unions should not be taxed-
This is probably the crux, that credit unions should not be taxed and, if they have to be taxed, to what degree? Mr. Kedwell, in taking this position with regard to credit unions, takes the obvious stand on their behalf and says that credit unions should not be taxed-
-since they are non-profit, non-public and member-owned operated by groups of people attempting to meet their own credit needs at reasonable cost-
I have read excerpts from these letters because in my opinion these are people speaking out to government. These are community-minded people, as they have so often tried to stress, people who deserve a tax break because of the services they perform on behalf of fellow human beings.
Just as the Minister of Finance made substantial changes in his white paper-and as is demonstrated by the fact that he brought down a substantial number of amendments-it is my hope that the minister will look very carefully at the sections affecting credit unions and particularly at the comments the hon. member for Peterborough made this afternoon. I am satisfied that the people of Canada have had an opportunity to have their say. Now we have the law before us. I say, let us get on with the clause by clause study and let us give the benefit to the people who will get the benefit under this marvellous piece of tax legislation.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


Gerald William Baldwin: Mr. Chairman, would the hon. member answer a question? In light of the hon. member's apparent dissatisfaction with the present clauses with regard to the taxing of co-operatives and credit unions, and in light of the fact that it is likely that if we ever get a chance to move on, amendments will be offered from this side of the House in this regard, will the hon. member indicate

October 19, 1971
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whether he will support amendments which will be put forward with respect to this particular clause, provided hon. members opposite stop talking, so we can move that far?


Some hon. Members:: Oh, oh!


Jack Sydney George (Bud) Cullen: When I was making my address in support of this marvellous piece of legislation the only interjections I heard were from the opposite side. If amendments you will be proposing are as weak as the interjections, I will not be able to support them.


Some hon. Members:: Hear, hear!


Mr. Rondeau:: Mr. Chairman, before considering this bill clause by clause, I should like to speak to it as a whole.
I realize that on the government's side, they would like to see this bill passed in a hurry, as was indicated by the preceding speaker. But when we consider the importance and consequences of this bill, it is only right to take all the time required to make a detailed study of it, for the protection of the people in general.
Unlike my colleagues, I do not have time to show how extremely complex this bill is. The Minister of Finance (Mr. Benson), to whom I would readily confer a degree as tax-collector emeritus, the best that Canada has ever had, has brought forward a very confuse, dark and unpopular legislation, as we have been able to realize for the past two years.
This bill is confusing since all Canadian financial experts, and particularly accountants, cannot make anything, or almost, out of it. In the briefs submitted, this has been shown to us and we have been made to realize this quite often.
Once more, the government showed that it could not leave the beaten track of the taxation system we have known, and this is why the government and its consultants find it difficult to suggest something other than moving around the taxes or the individuals taxed to a larger or lesser degree.
Mr. Chairman, here I only wish to recall, as an example, what the president of the Canadian Bank of Commerce said on December 9, 1969, about the white paper, and I quote:
The economic consequences of the proposals made in the white paper, as well as of the principles on which they are based, represent a threat for the economy and the people of Canada.
Now, Mr. Chairman, I do believe that such criticism is more than serious.

Mr. A. Gordon Archibald, president of the Canadian Chamber of Commerce, had this to say on September 17, 1971:
.50 p.m.)
-businessmen have been "severely tested and almost strangled in the jungle of government regulations-"
"Many businessmen will want out, and business will cease to attract new, young talent."


Mr. Chairman, one businessman said that this new Bill C-259 "is a disturbing socialist document".
What is more obvious, I believe, is that the government had asked the Senate Committee on Poverty to inquire on poverty in Canada. Now, on June 22, 1971, four of the committee members, four economists appointed by the government, had to resign because they could not produce a report according to what they thought and believed good for Canada as a whole. I should like to quote from an article entitled "The Canadian economic system tolerates and even creates poverty", published in the June 22, 1971 edition of La Presse. It said:
The Canadian economic system not only tolerates poverty, but creates it, maintains it and makes the problem even worse.
Such was the statement made by the four economists, Peter Penz, Brian Hill, Bill Cameron and Ian Adams who resigned from the Senate Committee on Poverty in April, because they disagreed with the committee chairman, Senator David Croll. That was understandable; the committee report was not to hurt the government. Those members said the following:
We resigned because the chairman-would not accept a candid evaluation of our society, said the four outgoing members in Last Post's last edition.
What he really wanted was a doleful discussion on what it means to be poor-
For a long time already, hon. members have deplored poverty in Canada and complained about the great number of poor people. But when it comes to adopting measures to achieve tax reform in order to help the poor, the government or the establishment, must not get hurt. There is no getting away from the beaten track, the orthodox economic principles that date back 200 years.
I quote further on:
-an indignant denunciation of the inequities of the present welfare system, followed by an argument in favour of a guaranteed annual income.
And above all, he did not want the people to know why they were poor.
They did not want the four members of the Special Senate Committee on Poverty to tell the Canadian people and Parliament why Canadians are poor. In fact, they had been appointed to determine the degree of poverty in Canada, and its reasons. When the members of this Senate committee tried to determine the reasons of this poverty, they had to resign so as not to hurt the government. I resume the quotation:
Besides, this is why social reforms have always been in adequate and have always come too late in this country.
It is not the Creditistes who say that social reforms are inadequate and come too late. The economists and the experts chosen by the party in power, members of a Senate committee, have come to the conclusion advocated by the Creditistes since 1935.
And I quote again:
The four resigning members of the Senate Committee on Poverty consider that poverty is built in the Canadian economic system, is aggravated by government policies and is not in the least hindered by welfare, housing, legal and medical programs.
October 19, 1971

About 40 per cent of the total income is shared among 20 per cent of the population, so that the gap between the rich and the poor is getting wider and wider all the time.
Mr. Chairman, we have been saying for years that the gap between the rich and the poor is still broadening. We are advocating a solution to raise the standard of living of the poor without reducing that of the rich whereas the socialists want to reduce the standard of living of the rich and give the impression that more will be distributed to the poor when all socialist countries of the world have socialized, nationalized, taxed without giving more to those who wanted more. Here is what the four economists are still repeating, and I quote:
In fighting inflation-
-and this what the present government has done-
-at the expense of employment the government, according to them, has made heavier the burden of the poor who are earning low wages and who are always first to be fired and last to be hired.
It seems to me that it would be time to listen to the Creditistes because we have succeeded in convincing the government economists even before we could convince the members opposite.
I also have here a document which I think is extremely important and which is from one of the greatest prime ministers of the free world, Sir Winston Churchill who had this to say:

Sir Winston Churchill had more than an inkling of what was, and is, wrong when giving his Romanes Lecture-"Parliamentary Government and the Economic Problem"-at Oxford, on June 19, 1930. He said: "The classical doctrines of economics have for nearly a century found their citadels in the treasury and the Bank of England . .. Whatever we may think about those doctrines ... we can clearly see that they do not correspond to what is going on now ... It is certain that the economic problem with which we are now confronted is not adequately solved, indeed is not solved at all, by the teachings of the textbooks, however grand may be their logic, however illustrious may be their authors . ..
If the doctrines of the old economists no longer serve for the purposes of our society, they must be replaced by a new body of doctrine-
Beyond our immediate difficulty lies the root problem of modern world economics; namely, the strange discordance between the consuming and producing power . . . Who would have though that it would be easier to produce by toil and skill all the most necessary or desirable commodities than it is to find consumers for them? Who would have thought that cheap and abundant supplies of all the basic commodities should find the science and civilization of the world unable to utilize them? Have all our triumphs of research and organization bequathed us only a new punishment-the curse of plenty? Are we really to believe that no better adjustment can be made between supply and demand? Yet the fact remains that every attempt has so far failed. Many various attempts have been made, from the extremes of communism in Russia to the extremes of capitalism in the United States. They include every form of fiscal policy and currency policy, But all have failed, and we have advanced little further in this quest than in barbaric times. Surely it is this mysterious crack and fissure at the basis of all our arrangements and apparatus upon which the keenest minds throughout the world should be concentrated. Lasting fame and great advantage would attend the nation which first secured the prize . ..
Economic problems, unlike political issues, cannot be solved by any expression, however vehement, of the national will, but only by taking the right action. You cannot cure cancer by a majority. What is wanted is a remedy. Everyone knows what the people wish. They wish for more prosperity. How to get it? That is the grim question . ..
Income Tax Act
Parliament is upon its trial, and if it continues to show itself incapable of offering sincere and effective guidance at this juncture, our parliamentary institutions, so admirable in the political sphere, may well fall under a far reaching condemnation.

And today we see Churchill's prediction coming true. Parliament "put upon its trial" has failed to resolve the "discordance between our producing and consuming power", with the result that it has become the object of the ridicule and hostility of the persons whom it is supposed to serve.

Mr. Chairman, I could also quote statements by three American presidents. Moreover, in 1935, at a time when the Social Credit party had assumed power in Alberta, a former prime minister of Canada who wanted to secure the support of Social Creditors, particularly in Alberta and Saskatchewan, said the following, and I quote:

Once a nation parts with the control of its currency and credit, it matters not who makes the nation's laws. Usury, once in control, will wreck any nation. Until the control of the issue of currency and credit is restored to Government, and recognized as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and democracy is idle and futile.

Mr. Chairman, these words were uttered 36 years ago. In his tax reform, the best Canadian "taxman", in reforming the country's finances, has only caused taxes to change places, and this is the reason why Social Credit members in this House are not only opposed to Bill C-259, but are equally shocked to see that whenever the government wishes to get money out of Canadian pockets, he resorts to a bill of more than 700 pages.
On the other hand, when it comes to helping those who have stood in defence of Canada, as for example the war veterans, a 4-page bill is deemed sufficient. But to pump money out, destroy private enterprise in Canada, or threaten it further, a 700-page bill is needed. To help those who fought for our country in times of war, those we told to go fight for Christianity and civilization, a 4-page bill was enough. To reward those who financed the war, who did not go to the front, who only had to line up figures in their bank accounts, and lend money to the federal government to increase our debts by several billions of dollars, a 700-page bill is introduced.
Mr. Chairman, we will have the opportunity of coming back to those clauses of the bill; we will take all the time needed to perform our duty in this House, to represent not the world of finance but the Canadian people who deserve better than a bill drawn up by experts with a view to gradually but totally dispossessing them.
Mr. Chairman, I should also like to read part of the communist program. I quote:

The Communist Manifesto by Karl Marx was first published in English in 1850. This was long before we had such a thing as income tax. It was also before the days of the central bank, with its long tentacles of control. In chapter 11 of this very revealing book, its author is discussing methods by which the whole world can be

October 19, 1971
Income Tax Act
brought under communism. I quote from page 152 as follows:
These measures will of course be different in different countries.
Nevertheless, in the most advanced countries, the following will be pretty generally applicable.
1.	Abolition of property in land and application of all rents of
land to public purposes.
2.	A heavy progressive or graduated income tax.
3.	Abolition of all right of inheritance . ..
6. Centralization of the means of communication and transport in the hands of the state.
These are only the first four of Karl Marx's ten important points but they are sufficient for our purposes at this time. Look at point No. 2-"A heavy progressive or graduated income tax." Now let us compare it with part of paragraph 1, section 9, of the Benson white paper which reads as follows:
This concept of "ability to pay"-


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


Some hon. Members:: Continue.


Gérald Laniel: Is it the pleasure of the House to allow the hon. member for Shefford to continue his remarks?


Some hon. Members:: No.


Some hon. Members:: Yes.


Gérald Laniel: There does not seem to be unanimous consent.


Gilbert F. Rondeau: Mr. Chairman, do I have the unanimous consent of the House, yes or no?


Gérald Laniel: Order, please. The Chair is powerless to determine who gives consent and who does not; the Chair heard nays. So there is no unanimous consent and I have to recognize the hon. member for Saint-Hya-cinthe (Mr. Ricard).
.10 p.m.)


Mr. Ricard:: Mr. Chairman, I would have liked my colleague from Shefford (Mr. Rondeau) to enjoy the same privileges which were granted to other members, and it is unfortunate to see the "nays" coming from the government side.
Mr. Chairman, although I only want to speak briefly on the measure now before us, I feel duty bound to make some comments on behalf of my constituents.
It is difficult, Mr. Chairman, to speak about the bill under consideration without first saying a few words about the white paper introduced by the Minister of Finance (Mr. Benson).
We remember that when the Minister of Finance tabled his white paper, there was nothing more perfect, everything had been fully looked into, and it was going to solve all income tax problems.
The opposition undertook a thorough study of that white paper. We voiced our opposition and refuted the objections of the government members. We were accused
(Mr. Rondeau.]
of taking too long, of filibustering. We were blamed for all possible and imaginable ills.
Finally, the minister realized that we were right because protests began to flow from all sides of the House at once. Financial exports, accountants, lawyers, in short everybody gathered to let the minister know that his proposal was entirely inacceptable and that it ought to be seriously reviewed. The minister was finally forced to see the light and do over again, though still most imperfectly, the work already started.
We now have before us Bill C-259. When this measure was introduced, it was something perfect which had to pass then and there because it had been hatched by a Liberal government. According to our friends across the way, a liberal government simply cannot make mistakes.
We have begun our consideration of this legislative proposal which no one understands, and we have raised objections. The public in general has done the same and, following a committee study, the Minister himself has proposed a hundred amendments or so.
So, Mr. Chairman, even if we are accused of extending the debate, we, of the official opposition, are only doing our duty when we raise objections or when we propose amendments to a bill. We do it to fulfil our duty to our electors. We want them and the Canadian people to have good laws that are very easy to understand and easy to apply.
But it seems, Mr. Chairman, that we are dealing with a government unable to take a clear and firm position that anyone can understand. Apparently, proposals must contain loopholes for certain classes of people. It is so much more satisfactory to bring in something good, something understandable, something simple that the government should, I think, apply itself to it and follow the advice of those who are close to the people.
If the government acts in this way, it is because it lost touch with the people. It has no longer any contact-


Gilbert F. Rondeau: It never had any.


J.-H.-Théogène Ricard: -my friend from Shefford says that it never had any and I think he is rather right. But more and more it is losing touch with the people. No wonder then that most of our laws are enacted so as to benefit as much as possible the "big" ones and to injure the "little" ones or average Canadians. There are so many indirect taxes that the low income Canadian .can hardly make ends meet at the end of the year.
For many months, many years even, we have been urging the government to bring about the partial or total removal of the 11 per cent tax on building materials. It is known that when the building trade slows down many Canadian workmen are deprived of their livelihood. It is often said that activity in the building trade is a sign of prosperity. Well, the 11 per cent tax is now a hindrance to construction and the government would do well to take the best interest of the people into consideration and remove this 11 per cent tax as speedily as possible.
Mr. Chairman, under the minister's new proposals, it is those earning $7,000 to $12,000 a year who will be carrying the burden of the new fiscal system. If there is a segment of our population deserving of the government's attention,
October 19, 1971

it is certainly the citizens earning from $7,000 to $12,000 a year. The government should be far more generous towards that class of society, and grant them even greater exemptions. Under the present tax system, the general public harbour a continual feeling of despondency which affects initiative on the part of small and middle businessmen and manufacturers.
Instead of racking his brains in order to find ways to tax small and middle industries, the Minister of Finance would do better to think up means of making available to those industries, which have already played a very important part in the economic life of this country, low interest loans which would allow them to continue their contribution to the economic life of our country.
Canada needs good workmen, good farmers, and also good businessmen and good manufacturers in order for its economy to expand rather than deteriorate as it is doing at present.
Everybody knows that last year the number of bankruptcies increased dramatically, and the debts which caused those bankruptcies are at present 50 per cent higher than in 1970.
Mr. Chairman, if that does not show that the economic health of our country is threatened, I do not see what other sign could be found. It was funny to hear the Minister of Finance last Thursday night tell us that we have a strong economy and that he expected continued progress. That caused laughter not only in the House but also outside. To be convinced, Mr. Chairman, one only has to look at the quotations on the stock exchange. This indicates very clearly what the economic life is like at the present time, and the stock market is a true reflection of what is happening in Canada.
(9:20 p.m.)
Mr. Chairman, I was greatly surprised to hear this afternoon my good friend the hon. member for Peterborough (Mr. Faulkner) state that, at last, he had discovered there were in Canada caisses populaires and credit unions. For months, we tried to convince the government that it should give special consideration to caisses populaires and credit unions, because these two types of financial institutions had rendered great services to this country. While the large financial institutions were refusing workers the loans they needed to build a house of their own, the caisses populaires and credit unions have done the utmost to accommodate the people in the lower income bracket, so much so that one can see in all Canadian cities at least one sector that has been developed through the loans granted by the credit unions or caisses populaires.
So I would ask my friend the hon. member for Peterborough to put forward the views of those people who have rendered immense services to the population and to make the Minister of Finance understand that he has an obligation-although I doubt that he could do it-to avoid taking measures that would sink those Canadian financial institutions that have done so much and that still have so much to do.
Mr. Chairman, I received letters from co-operatives but I will dispense with reading them. I would also like to join with those that have appealed to this House in favour of the caisses populaires so they will receive the treatment
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they deserve and be allowed to continue helping low wage earners.
In concluding my remarks, I would also like to ask for more generous personal exemptions for those who are the foundation of our society, labourers, farm hands, and workers in general, for they are in the final analysis the big taxpayers in the country. They deserve special attention. I also wish the government would finally accept the obvious and recognize that our demands are not made only on our behalf but on that of all Canadians.


André-Gilles Fortin: Mr. Chairman, not very long ago, the federal government published a booklet prepared by the Treasury Board and entitled: "How Your Tax Dollar Is Spent". This booklet was based on the government's estimates for the fiscal year 1971-72. Needless to say that this question is topical today, since we are discussing Bill C-259 on tax reform. People are complaining-justifiably enough-that they are being taxed more and more heavily. One should ask oneself what the government is doing with the taxes it collects.
On every taxpayer's dollar, the government spends 25 cents on health and welfare programs and 14 cents on economic development and "support". Given the fact that this government is as much interested in encouraging big business as in achieving the economic development of the country, it earmarks 14 cents of every tax dollar for the national debt and service 13 cents to defray national defence. Nobody knows whom we are fighting or whom we are defending and why, but anyway, it costs 13 cents of every tax dollar in peace time. Transfer payments to provinces cost 9 cents of every tax dollar whilst 7 cents are spent on transport and communications, 6 cents on internal overhead, 4 cents on general government services, 4 cents on education assistance, 2 cents on culture and recreation and 2 cents on external affairs, which makes a total of $1.
This is how the federal government is spending the taxpayers' money.
This is leading to several conclusions and, among others, that the major government item in the budget is health.
Confronted with the continued increase in unemployment and inflation, the government announced last week, through the Minister of Finance, a reduction in individual and corporate taxes. This is another government move, apart from the tax reform, to fight inflation and unemployment.
The House will remember that since 1968, each time the Minister of Finance tabled a budget, he claimed that the measures he was introducing would either decrease unemployment or eliminate inflation. But since every endeavour led to failure, the Minister of Finance again rose and smiled and introduced a new budget, saying that he would increase the grants here and there, only to awake shortly afterwards with another budget designed to compensate for previous failures.
And now even though recent Bill C-259 has not yet been enacted, the Minister of Finance wants it to be amended. I understand for not only this bill in its present form is far from acceptable but the co-operatives, for instance, even

Income Tax Act
with the amendment proposed by the Minister of Finance, will be no better off than before.
Mr. Chairman, this shows way that the bill before the House will not solve the present problem, since the minister himself agrees to lower personal income tax by 3 per cent and corporate income tax by 7 per cent.
Mr. Chairman, that is an example of what I call administrative manipulation of our fellow citizens' tax, which really amounts to nothing, an aspect which I did not have time to deal with this afternoon. That is why I wish to speak once more.
I should like to emphasize that the government has two sources of financing: the taxpayers' money, increasing from year to year, and the loans raised in foreign countries. That is how the government finance their administrative expenditures, according to their own priorities.
Now it has been proven that taxes keep on rising from year to year. The government may say that is normal since their expenditures also increase. But as the Canadian taxpayers are unable to fill in, with their income and taxes, all the public administrative expenditures, the government for the past ten, twenty, even a hundred years, let us say since 1967 at least, has had to borrow money abroad in order to finance this country, which means, if I quote the title of the publication "How your tax dollar is spent", that we come to the following result:
(9:30 p.m.)
Canada's public debt amounted to $38 billion in October, 1970, and the Minister of Finance has forecast new government borrowings of $1.9 billion in 1971-72 to cover an anticipated $600 million deficit in the fiscal year, and a $1.3 billion net cash requirement for non-budgetary investments such as housing, transportation, and loans to developing countries.
Incidentally, it must be noted that the government admits that the money it lends to foreign countries at a low interest rate is money it has borrowed itself from other countries at a high rate. Anyway, that is not the question. In fact, at this time, the government anticipates a $600 million deficit and will have to borrow $1,900 million. That deficit has to be made up one way or another. The government borrows from other countries.
On the other hand, they say that they will borrow from those sources $1,900 million to pay non-budgetary expenses. Both amounts come to more than $1,900 million, plus $600 million, which means that we now arrive at $2.5 billion. These are debts, borrowings made this year for the 1971-72 fiscal year.
According to last week's estimates, this debt will be increased by almost $1 billion. We now have almost $3 billion. The debt amounted already to $38 billion. The service of the public debt, that is interest and capital payments on the public debt, will cost $1,995 billion in 1971-72, or, in other words, 14 cents on each dollar paid to the federal government. That is what is said in this government pamphlet.
Mr. Chairman, I say this is pure demagogy in a certain way. This is a monumental joke. This is the way we are administered. On the one hand, Canadian taxpayers are in debt up to their eyes and overtaxed, and on the other
IMr. Fortin.]
hand, the government increases its expenditures. Borrowings are increased so that in order to pay the interest on its debts, the government falls back on the taxpayer, increases the income tax to pay for those borrowings and the interest, which means that at the present time, excluding the two and one half billion dollars deficit predicted, we lose 14 cents on every tax dollar.
There then, Mr. Chairman, is the overwhelming proof that the income of Canadians, on the whole, is burdened by the public debt accumulated by successive governments, liberal as well as conservative. This proves that the most inflationary factor is the progressive indebtedness of governments. We speak of federal government debts, but we could speak as well of the debts of the provinces, municipalities and school boards. The taxpayers must, through their taxes, pay the interest and the principal on those debts, on all debts, municipal, school, provincial and federal so that finally they get discouraged because there is no end to it.
Yet, financing the development of our country would be simple if we turned to the financial institutions we have, such as the Bank of Canada; the Canadian taxpayers would save that much.
It will be said that it is the miracle solution, the stupid solution of the Creditistes. However, nothing proves that the present system is not absurd. Indeed, it is inflationary, while the one we advocate is not. When it is suggested that Social Credit will create inflation by using Canadian financial institutions, it is not true, because inflation exists at the present time. Social Credit is the solution which does not lead to inflation.
What difference is there between $7 coming from the United States and Europe or $7 from the Bank of Canada, if both amounts are based on Canadian development? The big difference just the same is that the $7 from the Bank of Canada will be reimbursed only once, since the amount is lent to the Canadian people while the $7 from the United States or elsewhere must be repaid with interests. As a result, the taxpayers through their taxes will have to pay three bridges to big business and one to themselves, three trans-Quebec highways to big business and one to themselves, three Trans-Canada highways to big business and one to themselves, three James Bay projects to big business and one to themselves, four Quebec Hydro, at the very least, given the interests and the indebtedness that this corporation has contracted with the Americans, and one Quebec Hydro to themselves, all this according to the wishes of politicians of the old school, so as to become masters in our own house.
Mr. Chairman, are we masters in our own house, when we are kneeling in front of big business to ask them for permission to breathe in our own country?
Mr. Chairman, this means that as we are discussing Bill C-259-more than 710 pages on how to tax our fellow citizens-we ought to question the financing system of this government so that the latter will add a third source of financing. If the only sources of financing for this government are loans and taxes, it should add a third one, the Bank of Canada, in order to finance the public sector of Canada.
October 19, 1971

The Economic Council of Canada, in its eighth annual review published in September 1971 under the title: "Design for Decision-Making", states that the public sector in Canada is expanding more and more and is becoming more and more costly. I invite my colleagues to read this report which was not published by the Creditistes but by the government. It says that more and more the public sector of the Canadian economy is gaining in importance over the private sector.
That, Mr. Chairman, means-if one is able to understand the situation-that the proposed tax reform will not solve the problem but that, on the contrary, another measure will be needed in a couple of years, perhaps twice as thick as this one, to solve another problem, because expenses will continue to rise in the public sector because of its increasing importance.
Mr. Chairman, they devise all kinds of ways to tax our fellow citizens with bills that even officials do not understand. They propose a superficial tax reform which not only fails to solve the problem, but affects a new class of unprotected people, namely the average wage-earner with an income between $7,500 and $12,000. They will have to pay the grants awarded to large companies as well as the tax exemptions allowed to 750,000 other Canadians.
Mr. Chairman, we should be ashamed to say that 750,000 Canadians will be tax exempt, which means that
750.000	other Canadians do not have enough income to pay taxes and have to live on welfare. This means that
750.000	other Canadians are outside the economic system of production and are thus deprived of consumer goods.
Mr. Chairman, it is more and more imperative that the government stop joking about this question, come back to earth and look seriously into the Social Credit proposals. What has it to lose? In any case, it is now in a vicious circle.
But, Mr. Chairman, I doubt that the government will look into the Social Credit doctrine.
I think the only way the administration can solve the problem is by calling a general election. The best example of this is found in the publication of the Treasury Board entitled "How your tax dollar is spent". Here what it says on page 23, and I quote:
This interest payment is-
It is mentioned here that 14 cents of every tax dollar pay for interest on our debt. In fact, to make Canadians swallow the interest payment on our debt to foreigners, the government says, as one can read on page 23, and I quote:
This interest payment is almost wholly-
Mr. Chairman, it is dishonest, it is insidious, I continue to quote:
This interest payment is almost wholly a return on investments in Canada by Canadians.
Let one Canadian stand up, whether he is a farmer, a labourer or anything else, and show me the dividend cheque he has received from the federal government for investments in his country: No Canadian can do it. The only investments that bear interest are the Canada savings bonds, and they do not even finance 30 per cent of the Canadian government administration. The balance is
Income Tax Act
loans, Mr. Chairman, for which Canadians receive no interest.
However, in this brochure designed to sell taxes to Canadians, the government tells them: Continue, it is a good thing to borrow abroad, a good thing for you to pay taxes of over 14 cents per dollar to the federal government as interest on our debt, because actually that is just reimbursement for what you have invested.
That is all pure ballyhoo, pure demagogy, blatant lies, Mr. Chairman. There is not a word of truth in what is written there and I shall go even further, saying that the Minister of Finance and the President of the Treasury Board, the authors of that text, should be sued by Canadians because that is not truth, it is shear phantasy, it shows how dishonest some people can sometimes be, in the belief that power belongs to them.
Mr. Chairman, the autority to administer may belong to the government, but the authority to finance that government belongs to the Canadian people and they require the government to make use of its financial institutions in order to help it ensure the sound and normal development of the country by taking part in and by getting its financial institutions, like the Bank of Canada, involved in the financing of the public sector. As I said, and as pointed out by the Economic Council of Canada, it is increasingly costly.
Mr. Chairman, as a member of this House, I am really sorry to see how keen they are to tax our Canadian people and to see how little the members on the other side are interested in seeking solutions in order to alleviate the tax burden of our fellow-citizens.
I urge the hon. member to read the booklet entitled "How your tax dollar is spent" and, if they have the courage, to go and read it in their riding. Then we shall perhaps be able to discuss matters on an equal footing. But if some people want to go on playing games and concealing the truth from the Canadian people, if this country keeps getting bogged down and if its financial situation continues to deteriorate, the day will come when only a tiny minority will be paying income tax, while most of the other citizens will be on welfare. Believe it or not, there remains one fact which nobody can laugh off: how is it that a country as rich as Canada has so many poor?


Mr. Mazankowski:: Mr. Chairman, when we look at the massive bill before us-in fact, as the whole matter of tax reform, the white paper and Bill C-259-and what all this legislation has cost the Canadian taxpayer, we must ask whether the exercise has really been worth while. I believe the changes proposed in this bill could have been incorporated during the course of a normal budget.
I was a member of the Standing Committee on Finance, Trade and Economic Affairs which travelled through the western provinces receiving briefs and hearing the reactions of the public to the white paper proposals. We were constantly reminded of the repercussions which those proposals were having on trade expansion and on construction, resulting in a reluctance to embark upon new ventures, all of which had a cooling effect on the whole economy.

October 19, 1971
Income Tax Act
There is no need to say that today we have an economy which is dreadfully sick, with high unemployment, inflation and one of the highest rates of bankruptcy we have experienced. To realize this one has only to be reminded of the postponement of the plans of Syncrude, in northern Alberta-a $300 million venture which was postponed deliberately as a result of the tax proposals enunciated in the white paper.
I do not believe we will ever know, in terms of dollars and cents, exactly what the whole exercise has cost the Canadian taxpayer. But suffice it to say that it has been plenty. We will never be able to assess, in terms of dollars and cents, the misery and hardship created as the result of lay-offs, lack of confidence in the economy and lack of suitable employment. We have suffered from lack of an expanding labour market which has been brought about in large measure by the effects of the white paper that was published in 1969.
We might ask ourselves why this uncertainty has existed. I believe the answer could be summarized by referring to page 5 of the white paper in which it was said that the government's proposals were the result of careful study of tax principles, practices and impact, and that the government believed they were the best practical proposals "to attain our objectives in present circumstances." Mr. Chairman, I submit that that was a pretty firm declaration. It was a firm commitment that the white paper proposals, so far as the government was concerned, were an almost perfect approach to change not only the tax structure but also the social and philosophical attitudes of Canadians.
Businesses large and small, and corporations foreign and domestic became very apprehensive about the future. To date many patchwork measures have been undertaken in an attempt to stimulate the economy. Recently we have experienced a situation arising from actions taken by the United States. It is obvious to me that much of the uncertainty and stagnation of our economy was caused by the white paper proposals put forth in November, 1969.1 have already said that probably we will never know the exact amount of the losses incurred as a result of this exercise, but we do know that the economy has suffered considerably. It has suffered as a result of the ostensible determination to inject equity into the tax system.
We know that the direct cost of the exercise was something in the order of $10 million. This was outlined in an article in the Ottawa Journal on July 10. We know that the exercise, right here in the House of Commons, was very costly-something in the order of $1 million. The cost of the hearings conducted by the Standing Committee on Finance, Trade and Economic Affairs was $601,321. The amount it spent for research staff and studies was $200,818, and the cost of calling witnesses was $8,766. The Senate committee had similar costs. The business community also had high expenses in hiring professional help in order to present its case adequately before the committee.
Not only do we have an expensive tax structure but we have a complicated tax structure; a myriad of changes which can serve only to confuse the average taxpayer. This may force the average taxpayer to engage the services of accountants and other professional people, which
(Mr. Mazankowski.]
in normal circumstances might not be necessary. I believe this has been adequately enunciated by those who attended the convention of the Canadian Bar Association. It was readily supported by professional accountants and others. We have a situation in respect of the new measures incorporated in Bill C-259 which will make Canada a nation of bookkeepers.
I should like to deal briefly with the effect of this legislation on small business and the impact it will have on the agricultural community, including co-operatives. In respect of co-operatives it will have a very devastating effect on those organizations which provide services to the agricultural community. I think of the small, seed cleaning plants, for example, which provide a service to farmers at cost and which will find themselves in a very difficult situation in attempting to carry on under the new proposals. Members of the Vermilion Seed Cleaning Association met with me and pointed out that under their present policy they are not making money but are merely providing a service to the farm community. They were unable to accumulate any money under the old system and stated that under the new system they will have to increase the tariff to farmers in order to remain solvent. I believe the same thing applies to other small co-operative organizations such as the livestock co-operative and many other small groups which provide services not provided by private enterprise.
One does not have to be much of a tax expert-I certainly am not-to realize that this bill will have a serious effect on agriculture and small business. While the capital gains tax implications are obvious, little has been said about the much greater tax disadvantage the farming community will suffer because of the new measures. This leads one to realize that even the Minister of Finance and the tax experts who work in conjunction with the authors of the task force report on agriculture want to do away with two-thirds of the farmers of our country.


Patrick Morgan Mahoney: You must do better than that if you want to continue for another four minutes.


Donald Frank Mazankowski: I will be here as long as you will. The situation, simply, is that the type of legislation brought forth by this government has been deliberately aimed at destroying the family farm and the welfare and occupation of farmers.


Patrick Morgan Mahoney: You don't believe that.


Donald Frank Mazankowski: There is no doubt about it. The notorious Bill C-176, Operation Lift which more properly should be named operation "Flop," the stabilization bill and then what has commonly been referred to as the adjustment program which has been brought forth in the form of a so-called white paper are aimed at speeding up the rationalization process in the farming community. From reading the statistics provided by DBS we know the effects of the cost-price squeeze and the strangulation which has taken place since this government assumed office. We know the government is well on its way to succeeding in what I refer to as a measure of occupational genocide.
We know that in 1966 the total net realized farm income in the three western provinces was in the order of $1 billion. This decreased in 1970 to a net realized income of roughly $500 million, a reduction of 50 per cent. Yet we
October 19, 1971

have a government which intends to bring in tax measures which would further aggravate the situation.
The point I am making is that we are creating a situation in which the removal of two-thirds of the farmers from the land will in fact will become a reality. We know many farmers have found themselves in the position of being in a cost-price squeeze. The cost of their input has increased since 1967 by roughly 8 per cent, while in the same period the price of the goods they sell has decreased by roughly 11 per cent. This type of situation cannot continue. It must be recognized that agriculture is indeed a risky business. The Minister of Finance and the parliamentary secretary-I do not believe he has a great deal of sympathy for the agricultural community-have not seen fit to incorporate any measures which would take cognizance of this fact.
May I call it ten o'clock, Mr. Chairman?
Progress reported.


Joseph Adrien Henri Lambert: Mr. Speaker, on a question of privilege.
I would not want to be nasty to anybody, but I have not heard, because the sound system was not working, the progress report to the Chair, following the meeting of the committee of the whole.
Would it be possible for you to repeat the report which has just been brought forward?


Gérald Laniel: To answer the hon. member, the report handed to me read as follows:
Mr. Chairman, the committee of the whole has considered a certain bill and has invited me to report progress and request leave to resume consideration at the next sitting of the House.
Such is the report handed to me.


Mr. Gilles Marceau (Lapointe):: That was read in French by the Assistant Deputy Chairman of the committee of the whole.
(10:00 p.m.)



PROCEEDINGS ON ADJOURNMENT MOTION

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

Robert Jardine McCleave: Mr. Speaker, it is a great pleasure to be able to put our good friend the hon. member for New Westminister, now Parliamentary Secretary to the Solicitor General, (Mr. Hogarth), through his baptismal fire.
In a speech to the Canadian Association of Chiefs of Police on September 2, his boss the Solicitor General (Mr. Goyer) said that the work of the police calls for "a much
Proceedings on Adjournment Motion
greater degree of open public discussion about police policy". As we know, the matter that brings us here tonight is the affairs of father Eadie and son Eadie-that is, the young fellow who was informer, and his father. I had asked a question about the activities of the younger Eadie and the statement to the House of the Solicitor General keeps us here tonight.
As former U.S. attorney general Ramsay Clark said-
No area of police activity calls for greater skill or discipline than drug control. Of all consensual crimes, the victim here is least reliable and least likely to co-operate. His dependence on his supplier is great. Most traffickers are users themselves and therefore doubly dangerous-dangerous as persons dealing in serious crime and dangerous as unstable individuals. Evidence is difficult to obtain in drug cases. Historically narcotics agents have worked under cover and through informers.
Mr. Clark, I imagine, is regarded by most of us, or at least those who have some knowledge of the law, as one of the great lawyers of our times. He went on to say:
Informers, rarely wholly reliable, are even more rarely so in narcotics cases.
Now we come to the case of the Eadies, and especially Eadie junior who appears to have earned his living from giving information to the police about drug users. His father has spoken on this matter. Whether the RCMP used intimidation to recruit his son, as he claims they did, by threatening to have him "busted" on planted evidence and sent back to the reformatory is one of the serious questions that has come out of this whole melancholy case.
Robert Wayne Eadie, on the CBC program of September 9, said his son had been paid $305 by the RCMP over 2 1 years dating back to when he was a youth of 18 for supplying information that had led to three arrests, that his son had been forced to supply information to the RCMP after they had been contacted by the Cornwall police who were holding him on a charge of drunkenness, and that his parents were never notified that he was being paid as an informer. He said that the RCMP coerced his son into providing information by threatening to plant drugs on him and prosecute him, and that his career as an informant ended after he was severely beaten by six guys and left for dead. He said his son lost his teeth because of this action.
The Solicitor General told us in the House that the practice of paying juveniles for information given by them to the police is repugnant. That this practice did not add appreciably to the efficiency of police operations I think almost anybody here could believe.
Before that, on August 15, the Solicitor General had told the Canadian public that the RCMP would not have a young person on the payroll as an informer. That leaves us in the position where we are very much in doubt about police operations. Perhaps we are left in doubt as to whether anybody should now be in jail because of information given to any court by a young person under oath. We are also left in some doubt as to the rapport between the Solicitor General and the Royal Canadian Mounted Police.
This is a subject totally repugnant to me, Mr. Speaker. As a matter of fact, if I did not have the particular responsibility I would not be raising it this evening. I suppose, like most citizens, I would like to believe that

October 19, 1971
Proceedings on Adjournment Motion
everything was working for the best of all possible worlds. However, because of the rather substantial differences between people in different positions I feel it my duty and obligation to raise the matter tonight. I hope my hon. friend, who has had a great career in the courts-much more than I have had-in dealing with this type of matter and dealing with crime, will be able to support some of the points I have raised.


Douglas Aird Hogarth: Mr. Speaker, in dealing with this question which has been raised by the hon. member, and which is indeed a very serious subject, the Solicitor General (Mr. Goyer) has very little to add to what was said in his statement on motions on September 17 last as reported in Hansard at page 7937. This dealt both with the policy of the Royal Canadian Mounted Police with respect to the employment of informers of a young age and with the Eadie case.
Specifically, five allegations were made by young Eadie. First, that he was forced to supply the RCMP with information relating to drug offences under threat of returning to prison. This was refuted, as reported in Hansard at page 7938. Second, Mr. Eadie alleged that his parents were not aware of his activities. This was refuted at the same page. Third was the allegation that there was a threat to plant drugs upon him if he did not provide the police with information. This was refuted. Fourth, he alleged that he gave information which resulted in three arrests. This was not necessarily refuted; the RCMP reported that he gave information on 21 occasions which resulted in successful police action in respect of 14. Fifth, he alleged that he was threatened with physical harm because he was a police informer, or at least that it was found out, and that the police refused him protection. This was categorically denied.
In respect of the statement on motions made by the Solicitor General, I think it is to be noted that the hon. member for Skeena (Mr. Howard) made specific mention of the fact that it is sometimes inadvisable to rely on statements made by paid informers. Indeed, as my hon. friend knows, the rules of evidence are such that this type of evidence must be corroborated in any court of law.
In any event, on September 30, the young man went on television again. It was this second appearance that gave rise to these proceedings tonight. At that time it did not appear to the Solicitor General that he said much that he had not alleged before, and there was very little that could be added. In that broadcast it was alleged that the Solicitor General was wrong with respect to the fact that Eadie's parents were informed. The Solicitor General has reviewed the file and contacted the Royal Canadian Mounted Police again on this point. It is suggested that there is a difference in fact here, and the Solicitor General relies on the previous statement that he made.
The second allegation made in the new broadcast, that he was forced to inform about drugs under threat by the RCMP, is also denied, as it was before. The third allegation is that he was beaten up because he was a drug informant and that he asked for protection. Similarly, there is nothing to add to what was said before. The fourth allegation was, and this was somewhat new in that broadcast-
(10:10 p.m.)


The Acting Speaker (Mr. Boulanger):: Order, please. I regret to interrupt the hon. member, but his time has expired.


Douglas Aird Hogarth: Mr. Speaker, might I have half a minute to finish?


Some hon. Members:: Agreed.


Douglas Aird Hogarth: The fourth allegation is that he was contacted by the RCMP in November, 1968, that he provided information one week later and that he received payment for this information during Christmas of 1968. This is denied by the RCMP. The records indicate that the first payment to him was made on April 30, 1969. I regret that is all the information we have to provide. There has been a thorough looking into of the case on behalf of the RCMP.



TAXATION-SUCCESSION DUTIES AND GIFT TAXES- PROPOSED FEDERAL ABANDONMENT-REPLY TO PROVINCIAL REQUESTS FOR DELAY

Douglas Charles Rowland: Mr. Speaker, on October 8, as reported at page 8554 of Hansard, I directed the following question to the Prime Minister (Mr. Trudeau):
I understand the Prime Minister has now sent a reply to the previous letter of August 6 requesting a one-year delay in the implementation of the proposals regarding changes in succession duties and gift taxes. I wonder whether the Prime Minister is now in a position to inform the House of the nature of his reply?
The Prime Minister said in reply:
-I indicated that my reply was to the effect that we were not going to delay the implementation of the government's decision, subject to our getting the legislation through the House, of course. I added that federal officials and ministers would be prepared to discuss with provinces that desire to have discussion ways in which we might assist them in preparing to raise their own taxes if they wanted to step in where the federal government had stepped out. As the House knows, the announcement was to the effect that we would not continue collecting these taxes but that if the provinces wanted to start collecting them we would try to assist them to do so.
In a word, Mr. Speaker, that reply is completely unreasonable. If the provinces are to collect estate and gift taxes, they must first pass legislation. They do not know at this moment when the tax bill before this House will pass, so they cannot very well begin the procedures necessary for the passage of the legislation. There is no time available to them to consult with other provinces in an attempt to establish the sort of uniformity necessary in estate and gift tax legislation, if they are to be administered by the provinces. There is no time available for them, after the bill before this House passes, for the framing of their own legislation. There is no time available for them to call special sessions of their own legislatures in order that their legislation may come into effect on January 1,1972.
Their request was entirely reasonable and I fail to understand why the government has not acceded to it. In view of the problems the provinces would face in attempting to get all these tasks completed by January 1, 1971, the Prime Minister's offer of assistance is nothing more than hot air.

October 19, 1971


Stanley Howard Knowles: That should be "1972."


Douglas Charles Rowland: Yes, 1972. If a vast jungle is not to be created in the field of succession duties and gift taxes, then the federal government must agree to this eminently reasonable request on the part of the provincial governments for a one-year suspension in the proclamation of that portion of Bill C-259 which provides for the complete withdrawal of the federal government from the imposition of estate and gift taxes.
The provinces need time to consult, if there is to be any uniformity in their approach to the problem. Surely even a complete cretin can see the need for a large measure of uniformity in the area of taxation. If the rich provinces, for example, were to decide that they do not need that revenue and therefore they will not impose any gift taxes, what would happen to the poor provinces? In Manitoba, the revenue gained from gift and estate taxes is equal to a 1 per cent surcharge in income tax. Where are you to find that kind of revenue?
If the richer provinces decide not to impose estate taxes because there is not enough time to get the legislation through, the poor provinces must follow suit and further narrow an already too narrow tax base. This is a completely backward step that the federal government has taken. It should never have abandoned the field of estate and gift taxes. Indeed, it should never have contemplated that step. One of the major purposes of a proper system of taxation is to equitably redistribute the wealth of society. Estate taxes and gift taxes are one of the best means of so doing.
Why should a person receive an immense boost over his neighbours simply because, for example, he was fortunate enough to be born into a family having a rich uncle? If a man has worked hard and used his ingenuity and initiative to accumulate wealth beyond that possessed by his neighbours, I can understand the desire on the part of society to let him keep it. However, if he has done absolutely nothing to warrant more wealth than his neighbours, other than being born into a family with wealth to pass on, I fail to see why society should not get a cut, given the fact that no man, no matter how hard working or how ingenious, succeeds without relying in some degre? upon the services provided by society.
Abandoning estate and gift taxes is, as I have said on a number of occasions, a retrograde step. Not allowing provinces time to avoid the potential confusion resulting from an attempt to impose estate and gift taxes on their own, without consultation with one another, is absolutely criminal. I ask the members of this House to remember that eight out of ten premiers requested the one year's delay. These premiers represent every major political philosophy in this country.
I am astounded by the degree of arrogance-I realize that "arrogance" is an overworked word in this House but it is the only way to describe this cavlier rejection of a request by eight out of ten premiers-and stupidity required to deny that request. It will not make one iota of difference to the government's budget if it delays the imposition of that portion of the bill for one year, because it represents an abandonment of revenue and not a source
Proceedings on Adjournment Motion
of revenue. It creates no problem whatsoever with the budget. If the government cannot see logic, why not be gracious and accede to the provincial governments' request which is absolutely reasonable and necessary?


Patrick Morgan Mahoney: Mr. Speaker, on September 22, 1971, the Prime Minister (Mr. Trudeau) wrote the chairman of the premiers' conference reaffirming the federal government's decision to repeal federal estate and gift taxes effective January 1, 1972. The federal government has no intention of continuing this form of taxation when capital gains are included in the tax base as provided in the June 18 budget.
The federal government is, nevertheless, prepared to afford technical and administrative assistance to provinces wishing to enter these fields. This offer of assistance was communicated to provincial finance ministers by the Minister of Finance (Mr. Benson) on October 14 and expresses our willingness to administer a succession duty imposed by any province that is not presently levying succession duties, that is, provinces that do not themselves have the staff and facilities to administer such a duty.
The offer is contingent upon the following conditions being met: One, at least four provinces must enter into the agreements; two, each participating province would enact a model act providing that the base of the succession duty would be the same; three, some degree of uniformity of rates would be provided under the model acts having regard to the rates now in effect in those provinces imposing their own succession duties; four, that administrative procedures be reasonable in terms of the rights of taxpayers; five, it would be clear that the federal government's role is purely administrative and the presentation to the public would make clear that it is a provincial, not a federal tax. There are a number of other conditions, including provision for a reasonable administration fee and a three-year term of agreement.
A similar offer has been made in connection with the gift tax, with the proviso that the minimum of four provinces participating be provinces that have entered into the collection agreements for succession duties. Officials of the federal and provincial finance departments concerned will be meeting very soon to discuss the offer. With regard to the matter of time, the government does not anticipate that the House will take an undue time to pass Bill C-259 in view of the numerous benefits to Canadian taxpayers and the economy which are embodied in it.
Most provinces are expected to adapt their own income tax systems to the federal system. We hope the House and the other place will soon pass Bill C-259 into law so that the provincial legislatures can meet and at least receive budget speeches from their governments before the end of the year.


Douglas Charles Rowland: We can't do that.


Stanley Howard Knowles: How can a
grown man be so childish?

October 19, 1971



REGIONAL ECONOMIC EXPANSION-INQUIRY AS TO SIGNING OF AGREEMENTS WITH NOVA SCOTIA

J. Michael Forrestall: Mr. Speaker, the burden of my message tonight arises out of a question I asked in this House several times of the Minister of Regional Economic Expansion having to do with what I consider to be a breakdown in communication between the provincial authority in Nova Scotia and the federal authority in Ottawa. In this context, it has to do with agreements.
On October 7 I asked the Minister of Regional Economic Expansion (Mr. Marchand), as reported at page 8516 of Hansard, whether the minister could indicate the present status of a subagreement under the basic agreement between the federal authority and the province of Nova Scotia, which is an agreement entitled "Nova Scotia federal-provincial agreement on special areas and highways," dated at a point in the administration in Nova Scotia of Hon. George Isaac Smith who was then Premier of Nova Scotia. I asked the question particularly in light of a headline which had appeared in the Halifax Chronicle-Herald of September 14, 1971, which read "$40 million more from DREE: Highway work to take half". The article
The Nova Scotia government is expected to sign a formal agreement with Ottawa next week whereby the province will receive an additional $40 million in grants and loans under the regional economic expansion (DREE) program.
Half of the money will be committed to highway work, with the bulk of the balance going to projects in the Halifax-Dartmouth metropolitan area.
Premier Gerald Regan told a news conference at Province House yesterday that the funds are an extension of the province's existing DREE agreement plus another $20 million for highway work.
He and finance minister Peter Nicholson gave newsmen only sketchy information about details of the new programs, saying that more information could be revealed upon official signing of the agreement with Ottawa.
The new money constitutes a one-year extension of Nova Scotia's existing $34 million DREE package, from June 30,1972, to June 30,1973.
Mr. Regan said his government opted for a short-term agreement so that more detailed planning could be conducted on a proposed three-year package covering the period April 1, 1972, to June 30, 1975. It was better for a new government deciding its options and long-term programs to secure a short-term agreement so that greater attention could be given to the future, he said.
Some surprise was registered in Nova Scotia at an announcement being made at that point by the Premier, but he explained he was making it then because he was off to Malaysia to attend a conference.
When I raised the question in the House of Commons the minister indicated that he had no awareness of what I was talking about. On the basis of the article I have read, I cannot question the veracity of the minister, because he said he knew nothing about it, but I do without hesitation question the veracity of the Premier of Nova Scotia. This is the second time I have raised the question, only to learn there is still no awareness on the part of the Minister of Regional Economic Expansion as to what in hell this is all about, and I am a little fed up with lying and evasion of
public trust. God damn it, what is going on? The minister is too lazy to be here tonight. I ask the parliamentary secretary to tell us whether he knows anything about this or not.
I have come from a testimonial dinner tonight in honour of a man who represents the epitomy of integrity in this country, a former hon. member from British Columbia, Mr. Howard Green, a man who embodies what is important to this institution and has done so over the years. The people of Nova Scotia do not need any misleading information to be given to them. Either the people of Nova Scotia have government by headline or they have government on the basis of consultation with the senior government. It is that question and that question alone that brings me here this evening.
I should like to know whether or not there is about to be signed, or has been signed within the last week or ten days, an extension of or amendment to the original DREE agreement between the federal authority and the province of Nova Scotia to grant the province of Nova Scotia some $40 million in funds. If that is not the case, then I wish the parliamentary secretary to the minister would get to his feet and tell the people of Nova Scotia that Mr. Regan does not know what he is talking about.


Mr. lohn Roberts (Parliamentary Secretary to Minister of Regional Economic Expansion):: Mr. Speaker, I am very pleased that the hon. member for Dartmouth-Halifax East (Mr. Forrestall) raised this matter on the "late show." As part of my new duties I have been reading back through the minutes of proceedings of the Standing Committee on Regional Development and I can testify to the hon. member's continuing interest in this subject. Obviously, as he indicated tonight, this is a subject on which he feels very strongly, and rightly so.
He did say that the minister said in the House that he did not know anything about this matter. If the hon. member would look back to Hansard he would see that what the minister actually said was whether it would be possible to know to which agreement the hon. member was referring, because there were several agreements to which he might have been referring. So it was not a declaration of ignorance; he was asking the hon. member for information.
The hon. member also said that there has been a breakdown in communications. This is not so. In fact, to the contrary. We have recently completed negotiations in regard to two agreements with the government of Nova Scotia, one dealing with highway projects and the other,- I am sure the hon. member is happy to know-dealing with the development of the special areas of Halifax-Dartmouth and the Strait of Canso. The latter represents an extension of the term of an earlier agreement that was signed last year. These two agreements have now received the approval of the Governor in Council and within the next day or two a letter will be sent to Premier Regan to make arrangements for the signing of the agreements. In accordance with normal practice, details will be announced jointly by the two governments as soon as possible after the agreements have been signed.
I am sure the hon. member will be pleased at these developments and I thank him for his continuing interest in the affairs of the department.
Motion agreed to and the House adjourned at 10.30 p.m.



END OF VOLUME VIII