1972-03-03

ACTION OF PROTECTIVE STAFF RESPECTING DELIVERY OF CERTAIN DOCUMENTS TO PRESS GALLERY BY MR. ROGER JAY

Mr. Speaker:: Hon. members may be aware of the report that appeared in this morning's Globe and Mail-I believe the matter was also referred to during the CBC national newscast this morning-having to do with an incident which apparently occurred yesterday involving Mr. Roger Jay, communications officer for the Union of Ontario Indians, when he was delivering certain documents to the House of Commons. It was suggested in the press report and newscast that the gentleman had been treated unfairly in that certain comments had been made by the chief of the protective staff of the House of Commons. I might say I had a conversation this morning with the Sergeant-at-Arms who is responsible for the administration of the protective service. Later in the day he will give me a complete statement in regard to the matter and I will immediately report to the House.
I might say in a preliminary way that Chief Syms has given the assurance that he did not at any time pass any comment or judgment in relation to the contents of the statement proposed to be delivered. I want to assure hon. members, in any event, that I will certainly, on behalf of the House and on behalf of the staff of the House of Commons, extend apologies to this gentleman if in any way we have been at fault. Whether we are or not, we still express regret if any inconvenience was caused to this distinguished person who was here on official business and had every right to call on the press gallery as he proposed to do.
I think it would be unfair to our staff and to the chief if I said more until a formal report has been received which I will pass on to the House later today.



ROUTINE PROCEEDINGS


[Stage Direction]
Mr. Thomas S. Barnett (Comox-Alberni), for Mr. Howard (Skeena), moved for leave to introduce Bill C-166, respecting Indian lands in the province of British Columbia.
Some hon. Members:: Explain.


Mr. Barnett:: Mr. Speaker, the purpose of this bill is to give parliamentary recognition to the historical fact that the aboriginal and hereditary ownership of the land in what is now British Columbia has not been extinguished. The native Indian people in British Columbia have been concerned about this for many decades and have pressed their case before government without result.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I wish to direct a question to the Minister of Transport. It relates to the proposed James Bay project and the recognition by the minister, as expressed in the House on February 23, that permits are required under the Navigable Waters Protection Act. Has the minister received any request for such permits? I ask this question in view of the fact that on February 23 the minister indicated he was not sure whether a request had been received.


Hon. Donald C. Jamieson (Minister of Transport):: Mr. Speaker, to my personal knowledge we have not received any such request. I will inquire of my officials in the department and advise the House in this regard at the earliest opportunity. I suspect that had any such requests come in, I would have been notified of them.


Robert Lorne Stanfield: Has the minister indicated the position of his department to the province of Quebec, that the department insists upon prior approval of this project with regard to navigable waters? Has the minister conveyed the position of his department with regard to the Navigable Waters Protection Act to the government of the province of Quebec?


Donald Campbell Jamieson: Once again, Mr. Speaker, I am not sure if this has been conveyed in precisely the manner in which the Leader of the Opposition has put it. Essentially, the Navigable Waters Protection Act works on the basis of an application being filed in the first instance and publicized in the newspapers. It is at that point the application comes forward to us and is dealt with. An interdepartmental committee has been studying this matter and I would imagine the province of Quebec has been advised of the
March 3, 1972

Inquiries of the Ministry
requirements of the Navigable Waters Protection Act. Again, rather than attempt to speculate I will, with the hon. member's permission, wait until Monday and get a specific answer for him.


Robert Lorne Stanfield: I have a supplementary question for the Acting Prime Minister. In view of the fact there is a ministerial committee or another committee concerned with this project, can the Acting Prime Minister inform the House whether the position of the government of Canada with regard to a permit has been conveyed to the province of Quebec? I ask this in view of the obvious importance that the government of Quebec attaches to this project and the obvious opportunities there are for misunderstanding. Can the Acting Prime Minister indicate whether the government of Canada has conveyed its position on this matter to the government of the province of Quebec?


Hon. Mitchell Sharp (Acting Prime Minister):: Mr. Speaker, I am sure the government of Quebec knows the law of Canada with respect to projects of this kind and intends to comply with the law. I am sure the hon. gentleman would not suggest otherwise.



PROPOSED JAMES BAY HYDROELECTRIC DEVELOPMENT-GOVERNMENT POSITION ON HUNTING RIGHTS OF INDIANS FOLLOWING TRANSFER OF LANDS

Thomas Speakman Barnett: Mr. Speaker, I should like to ask the Minister of Justice whether his department has been looking into the terms and conditions under which these lands were transferred to the province from territorial status in relation to the rights of the Indian population? If so, can the hon. gentleman report to the House as to the position the government is taking with regard to the proposal to develop these areas which are within the traditional hunting and trapping grounds of the Indian people?


Hon. Otto E. Lang (Minister of Justice):: Mr. Speaker, we have been looking into a number of aspects of the legal issues related to this question. As to the specific one referred to by the hon. member, we have been doing some work in the general area. However, I should like to take notice of the precise terms of the question directed to me and see whether there is anything I can usefully report to the House at this stage.



PROPOSED JAMES BAY HYDROELECTRIC DEVELOPMENT-REQUEST FOR ASSURANCE THAT NAVIGABLE WATERS PROTECTION ACT WILL BE OBSERVED

Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I have a question for the Acting Prime Minister. In view of the fact that some years ago, at the time of the government headed by the predecessor of the present Prime Minister, the province of British Columbia, presumably in full knowledge of the law, went ahead and constructed a dam across the Peace River in breach of the Navigable Waters Protection Act, thereby causing great environmental damage, will the Acting Prime Minister give an undertaking to the House that the law will in fact be observed?


Mitchell William Sharp: Mr. Speaker, I do not think it is necessary to give any such undertaking. This government is committed to the support of the law of Canada and will support it in this instance. Perhaps the hon. gentleman would like to make some accusations that would clarify the matter.


Gerald William Baldwin: What about the Temporary Wheat Reserves Act?



THE CANADIAN ECONOMY


Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I have a question for the Acting Prime Minister. In light of a government report released yesterday which revealed that Canada's foreign exchange reserves reached a record level of $5.67 billion in February, and in view of the fact that Canada has a floating dollar and hence does not need these reserves, does the government intend to use part of these funds in order to regain Canadian control of certain key sectors of the economy which are currently dominated by foreign firms?


Mitchell William Sharp: Mr. Speaker, the hon. gentleman is suggesting we should keep our reserves in other than a liquid form. I would be glad to hear more details of his proposal.


John Edward Broadbent: That is precisely what is being suggested. To be more specific, in view of the report made available from Swiss sources earlier in the week that Canada has the highest percentage of foreign-controlled insurance companies, would the government consider seriously using part of its foreign exchange reserves in order to gain control of these foreign-owned insurance companies in Canada, bearing in mind that these companies are an important source of investment capital which could be used to make more jobs available in this country?


Mitchell William Sharp: What the hon. gentleman is suggesting is that if we needed these reserves to support our currency we would sell these assets. I do not think that is a very good policy.



HOUSING


Mr. Gerard Laprise (Abitibi):: Mr. Speaker, I have a question for the Acting Prime Minister.
I would ask him whether the Canadian government intends to take steps to indemnify house owners of La Ferme le Baron development at Pointe-Gatineau against the many defects and poor quality of the construction.
March 3, 1972


Mr. Speaker:: In my opinion, such a question could readily be placed on the order paper or debated on the adjournment motion. However, if the hon. minister can give the question a brief reply, I shall allow him to do so.
The hon. member might take for granted that due note has been taken of his question.


Gérard Laprise: Ten o'clock, Mr. Speaker.



AIRPORTS


Mr. G. H. Aiken (Parry Sound-Muskoka):: Mr. Speaker, I have a question for the Minister of Transport concerning his announcement yesterday of a new airport in the Toronto region. Is it intended that the new airport will be the major terminal for overseas flights or will Malton continue in this role?


Donald Campbell Jamieson: Mr. Speaker, the new airport which I announced yesterday will be an international airport and will in fact be about comparable in size and operation as the one that is now under construction at Ste. Scholastique. As to whether it will be a totally international airport or one with a mix of services, this can, of course, only be determined with the passage of time. But it will have all the necessary amenities and facilities to be an international airport, and we visualize that that would be its main purpose.


Gordon Harvey Aiken: Does the development of new airports in the Toronto and Montreal regions indicate a new policy concerning air traffic handling and, specifically, the development of a distinction between passengers and air freight?


Donald Campbell Jamieson: No, Mr. Speaker. I do not expect, at least in the state of the art as it is at the moment, that there would be any such clearcut division. Generally speaking, air freight is carried quite frequently on planes that also carry passengers, and this looks as though it will be the largest part of such movements for the immediate future. So there could be no such distinction. Each of the airports at Toronto and Montreal is designed to accommodate the traffic growth that has taken place and will take place in both these regions.



AIR TRANSPORT


Mr. J. P. Nowlan (Annapolis Valley):: Mr. Speaker, I have a supplementary question for the Minister of Transport on the subject of air policy. I should like to refer to another airport in Canada, the one at Vancouver, and the prospects for its future growth. Has any decision yet been
Inquiries of the Ministry
made as to which carrier will attempt to service mainland China?


Mr. Speaker:: Order, please. I suggest that this is hardly supplementary to the question asked about the Toronto airport, but again we can perhaps save time by allowing the question and allowing the minister to reply to it.


Donald Campbell Jamieson: Mr. Speaker, the procedure, as I expect the hon. member knows, is for the two countries to initiate talks with a view to reaching agreement on a bilateral. I can advise the House that we have in fact advised the government of the People's Republic of China that we are prepared to enter into such bilateral negotiations at any time they are prepared to start such negotiations. In so far as the designation of a carrier is concerned, I think it is common practice to refrain from indicating publicly just which carrier it will be until such time as the bilateral has been negotiated.



PENITENTIARIES


Right Hon. J. G. Dielenbaker (Prince Albert):: Mr. Speaker, in the absence of the Solicitor General I ask this question of the Acting Prime Minister. It has to do with the special report No. 1 on the design of federal maximum security institutions, which was tabled yesterday in the House. In the report there are recommendations concerning the prairie provinces and the Drumheller, Saskatchewan and Manitoba penitentiaries. One of the recommendations is that the Saskatchewan penitentiary should be phased out and its use as a correctional institution discontinued.
In view of the serious economic consequences that would follow the carrying out of this report in so far as Saskatchewan is concerned, would the government give the assurance that before the theoretical conclusions in the report are carried into effect opportunities will be made available, for example, through a travelling commission, to hear at first hand the views not only of the people affected in the case of the Saskatchewan penitentiary but also in regard to the other two institutions.


Mitchell William Sharp: Mr. Speaker, the right hon. member for Prince Albert speaks with his customary eloquence, and I am quite sure his views will be conveyed to the Solicitor General who will treat them very seriously indeed.


John George Diefenbaker: I appreciate that very much, Mr. Speaker, but eloquence without action on the part of the government would be ineffectual. I am asking for action.
Inquiries of the Ministry HOUSE OF COMMONS

March 3, 1972



PROTECTIVE STAFF-INCREASE IN HOURS OF WORK PER WEEK-REQUEST FOR INVESTIGATION

Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I had intended to put my question to the President of the Privy Council in his capacity as a member of the Board of Commissioners of Internal Economy, but he seems to have departed since I started rising so perhaps I can put it to the President of the Treasury Board who is also a member of that body.
In view of reports that have reached us to the effect that the members of the protective staff have been advised that their hours of work per week are to be increased without any increase in pay, could this matter be looked into and could arrangements be made for His Honour, the Speaker, to include a comment on it when he reports to the House later this day on another matter affecting the protective staff?


Hon. C. M. Drury (President of the Treasury Board):: Mr. Speaker, I am unaware of the particular circumstances, as I am sure the other commissioners are, but I will be glad to look into this. So far as the second part of the question is concerned, I do not think the hon. member seriously expects the commissioners to examine this question and conclude it by today.



TOURISM


Mr. Mac T. McCutcheon (Lambton-Kent):: Mr. Speaker, may I direct a question to the Minister of Industry, Trade and Commerce. With the renewal of the United States-Canada trade discussions expected soon, can the minister say whether the United States government is still insisting on Canada increasing the duty free allowance on goods that Canadian tourists bring back from the United States?


Hon. Jean-Luc Pepin (Minister of Industry. Trade and Commerce):: Mr. Speaker, the negotiations have not resumed yet so it is too early to know what the position of the United States will be on this particular item at that time. Of course, my hon. friend knows that the Americans had identified as an irritant the fact that our allowances for tourists were lower than theirs in the first place, and had not been restored to the level they were in 1962 when we had to change them because of balance of payments difficulties. This was one of the irritants on which we had sympathy for the U.S. case.


Maclyn (Mac) Thomas McCutcheon: Mr. Speaker, recent figures indicate a many million dollar deficit in tourist account for Canada last year. In light of this, will the government now take measures so that air travel within Canada can become competitive with air travel overseas-in other words, a program to encourage Canadians to see Canada first?


Jean-Luc Pepin: Mr. Speaker, I want to observe first that the balance in tourism between Canada and the United States
is favourable to Canada, so that that is not a good argument to present to the Americans. On the subject of package programs for travelling in Canada as opposed to package programs for travelling abroad, I want to underline the fact that my office of tourism which has now an added domestic orientation has been working diligently in order to bring the first to the level of the second. I will be glad to send a note to the hon. member showing that some progress is being made in that direction. I will give him a copy of it.



CANADA-UNITED STATES NEGOTIATIONS-DATE FOR RESUMPTION

Robert Lorne Stanfield: Mr. Speaker, I wish to direct a question to the Minister of Industry, Trade and Commerce. With regard to the discussions taking place, or about to be resumed soon, between Canada and the United States, can the minister say whether a date has been set for the next meeting or, if a date has not been set, can the minister say whether discussions are actively under way with a view to fixing a date for the next meeting at which these discussions will be continued?


Jean-Luc Pepin: It all depends on how one defines "active". I can just confirm that there is no date fixed for the resumption of negotiations at this moment. As I keep repeating-


Robert Lorne Stanfield: No date has been set for a meeting?


Jean-Luc Pepin: No date has been set for a meeting.


Robert Lorne Stanfield: No discussions?


Jean-Luc Pepin: But contact has been maintained. Our position is along the lines suggested by the hon. member for Peace River who said the other day that we should be tough but soft at the same time. To summarize, we are being reasonable.


Mr. Speaker:: Is the Leader of the Opposition rising on a supplementary question?


Robert Lorne Stanfield: Yes, Mr. Speaker. Perhaps the minister can explain how negotiations are continuing when in fact there are no arrangements for meetings or no preparations for meetings.


Jean-Luc Pepin: There are many ways of keeping contact with people if you have some imagination.


An hon. Member:: Such as mental telepathy.


Mr. Speaker:: Order, please.

March 3, 1972



MANPOWER


Gerald William Baldwin: Mr. Speaker, I will resist the natural inclination to deal with the Minister of Industry, Trade and Commerce and put that off until later. I should like to ask the Acting Prime Minister a question. In light of the fact that last Wednesday, as found on page 425 of Hansard of March 1, the Acting Prime Minister enthusiastically endorsed a grant of $26,000 under the local initiatives program to The Process of the Final Judgment church and cited several endorsements by the Bank of Montreal, the YMCA, the mental retardation centre, and the Premier of Ontario and in view of the fact a newspaper report is circulating in Toronto today that these organizations, or most of them, have denied endorsing or approving this particular local initiatives program, will the Acting Prime Minister be good enough to secure and table the endorsements in question so that we in the House may have a chance to examine them?


Mitchell William Sharp: Mr. Speaker, the Minister of Labour will be very happy to deal with this question when he is here on Monday.


Gerald William Baldwin: As the Acting Prime Minister was very conversant with the subject on Wednesday I should like to ask him this supplementary question. As this program is costing many hundreds of millions of dollars and as the supplementary estimates were rushed through the Miscellaneous Estimates Committee without adequate opportunity being given to study the matter, will the Acting Prime Minister do his very best to see that this particular issue of the local initiatives program is referred to a specific committee for close examination and study on behalf of the taxpayers of Canada?


Mitchell William Sharp: There will be the same opportunity to discuss this program as all other programs of the government, and if the opposition is sufficiently diligent in these committees I am sure they will be able to obtain all the information they want.


John George Diefenbaker: Would the Acting Prime Minister, having regard to the details given in the Toronto Sun, look into these grants that are being made under the LIP program such as the one to the Rochdale free clinic which provides counselling to deserters and draft dodgers and grants to various other organizations connected with Rochdale which has been described as a refuge for draft dodgers, deserters and drug pushers? Will he have this looked into, because other worthy projects are being turned down and it is difficult to understand why such projects as the Rochdale grants should have been permitted?
Inquiries of the Ministry CANADIAN PACIFIC RAILWAY



REMOVAL OF STATION AGENTS, SASKATCHEWAN AND ALBERTA-REVIEW OF TRANSPORT COMMISSION ORDER BY MINISTER OR CABINET

Mr. lohn Burton (Regina East):: Mr. Speaker, I wish to direct a question to the Minister of Transport following questions asked previously in the House concerning the decision of the Canadian Transport Commission to allow the Canadian Pacific Railway to close a large number of station agencies in Saskatchewan and Alberta and to allow the establishment of a customer service centre in Saskatoon. Has the minister considered this matter or has it been considered by the cabinet in terms of the government taking some initiative in reviewing or altering the decision rendered by the Canadian Transport Commission?


Donald Campbell Jamieson: Mr. Speaker, the specific answer to my hon. friend is no, it has not been considered in the manner he outlined. I have explained to the House on previous occasions that there is a provision, first of all, for an appeal against this decision which anyone can take if they so desire and, second, that the CTC has indicated that if in any way the railway company breaches the instructions or regulations that were laid down, a complaint can be filed.


John Stratford Burton: May I ask the minister whether he has received any indication of appeal procedures or any other actions that will be taken as a result of this decision, and will the minister or the federal government be taking any action in conjunction with any such procedures?


Donald Campbell Jamieson: To my knowledge a formal appeal has not been received. There have been communications or objections of an informal nature but nothing that conforms to the National Transportation Act. Since that is the case, or at least to my knowledge that is the case, the second part of the question is hypothetical until an appeal is received.



TAKEOVER OF FEDERAL GRAIN COMPANY ELEVATORS BY POOLS-ACTION RESPECTING BOXCAR ALLOTMENT TO ASSURE SUFFICIENT SPACE IN OTHER ELEVATORS FOR DELIVERY

['They may be refugees from the tax reform bill.']
Mr. Cliff Downey (Battle River):: Mr. Speaker, my question is to the minister in charge of the Wheat Board and arises out of the purchase of Federal Grain by the Prairie wheat pools and the fact that this consolidation gives one company approximately two-thirds of the country elevator system. Can the minister say what steps are being taken to change the 12-month floating average method, or what is referred to as the Bracken formula, for the allotment of boxcars so that other elevator companies will have sufficient space available to ensure that their customers have delivery privileges and that true competition in the grain buying trade will exist and not just seem to exist?

March 3, 1972
Inquiries of the Ministry


Otto Emil Lang: Mr. Speaker, serious consideration is being given to the congestion problems that may arise and at times interfere with the right of the farmer to deliver to the elevator of his choice. There does seem to be general support for the Bracken formula and the 12-month period. However, some other aspects having to do with the congestion problem might well be added to it.


Mr. S. J. Korchinski (Mackenzie):: In light of the fact that there is general support for the Bracken formula in normal circumstances and the fact that these are unusual circumstances and also because of the great concern of many farmers to the point where they are cancelling curling games to attend meetings regarding this matter, may I ask the minister whether he would not at this juncture consider the possibility of allowing the free movement of boxcars which would normally have gone to the Federal Grain elevator system so that the farmers would in fact have the right to choose the elevator to which they wish to deliver?


Otto Emil Lang: As I indicated, I believe there is general support for the Bracken formula, and by that I mean support from all parties concerned. However, there is a view which some hold, as I have just mentioned, of the need for a new method of dealing with the congestion problem. If this can be dealt with it will mean that the farmers themselves will in effect be making the decision on where they deliver their grain and therefore where boxcar allocations go. I hope this can be done at an early date. If the curling games can be taken up again, I would be very glad to attend.



Mr. Lee Grills (Hastings):: Mr. Speaker, my question is for the Secretary of State for External Affairs. It deals with a report I received about a Canadian soldier who is on duty in Belfast, Ireland, and whose mailing address is Camp Gagetown, New Brunswick. Can the minister say whether or not there are Canadian soldiers serving with the British forces in Belfast?


Mitchell William Sharp: It is my understanding that no members of the Canadian Armed Forces are serving with the British forces in Northern Ireland. There may be Canadians who have joined the British armed forces and are now serving in Northern Ireland, but in these circumstances the Canadian government is not involved. The standing instructions are that if any Canadian soldiers are attached to British units they are not to serve in such places. If there has been some transgression of this rule we will look into it, but so far as we know this is not so.


Lee Elgy Grills: I should like to ask the minister whether or not there are any Canadian soldiers serving in any capacity in Belfast, apart from the British military efforts there?


Mitchell William Sharp: So far as I know there are no members of the Canadian Armed Forces who are serving in Northern Ireland.


Gerald William Baldwin: They may be refugees from the tax reform bill.



FISHERIES


Mr. Robert McCleave (Halifax-East Hants):: Mr. Speaker, my question is for the Minister of the Environment but in his absence I shall direct it to the Acting Prime Minister who has a stake in this as Secretary of State for External Affairs. Since the Prime Minister and the Minister of the Environment have just been sent a petition asking the government of Canada to urge the United States government to permit importation of Canadian swordfish, can we be advised of the response to this plea?


Mitchell William Sharp: Mr. Speaker, it has been received and it is under consideration.



TRANSPORT


Mr. A. P. Gleave (Saskatoon-Biggar):: Mr. Speaker, may I direct a question to the Minister of Transport. When may we expect the report on rail safety as a result of the investigation undertaken by the Railway Transport Committee some months ago?


Donald Campbell Jamieson: Mr. Speaker, I am informed by the Canadian Transport Commission, in response to an inquiry I made which was prompted by the hon. member's question, I believe, a few days ago, that the report is in the process of being completed or written and should be available within two or three weeks.


Alfred Pullen Gleave: May I ask the minister whether specific studies or investigations are being undertaken into the most recent causes of derailments in the east and also on many branch lines in western Canada since these affect the safety of the men who operate the trains?


Donald Campbell Jamieson: Mr. Speaker, I cannot say with certainty that investigations into the various accidents to which the hon. member refers have actually started. It is mandatory, however, that an investigation of each rail accident be undertaken as quickly as possible after its occurrence, so undoubtedly all of them will be covered in this way.
March 3, 1972



AGRICULTURE


Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, may I ask the Minister of Agriculture a question?
As the estimates for the next fiscal year indicate a decrease of $21 million as compared with last year, could the minister tell the House whether he has received representations from industrial milk production boards in Quebec or Ontario in this respect?


Hon. H. A. Olson (Minister of Agriculture):: Mr. Speaker, it is not clear from the question whether the hon. member is talking about a projected increase in dairy support. If that is the impression he got, it is erroneous.


Mr. Speaker:: Is the hon. member for Bellechasse rising on a supplementary?


Joseph Adrien Henri Lambert: Yes, Mr. Speaker.
I hope the minister will not take my question as criticism. I simply wish to know whether he has received representations from industrial milk production boards with respect to the reduction that is announced in the estimates.


Horace Andrew (Bud) Olson: Yes, Mr. Speaker, I have received a number of representations dealing not only with the level of subsidy support but also respecting the price levels and, indeed, a new situation that has to be dealt with, when the market price for some dairy products is substantially above the support levels.



AIR TRANSPORT


Mr. Maurice Foster (Algoma):: My question is for the
Minister of Transport, Mr. Speaker. In view of the announced increase in Air Canada service within the province of Ontario and recent press reports that the Ontario government is sponsoring or assisting a new air service, Air Ontario, does the government of Canada plan to meet head on any challenge to its authority to regulate and license air carriers within the province?


Donald Campbell Jamieson: Mr. Speaker, I would not regard this as what the hon. member has described as a challenge to our authority. As things stand at the present time and as I indicated yesterday, Air Canada will be holding discussions with the government of Ontario with a view to providing more in the way of what might be described as regional or hub and spoke services. Given the existing regional air policy, of course the company to which the hon. member refers would not
Inquiries of the Ministry
be entitled to apply for services within Ontario or anywhere else unless that policy were changed.


Mr. Speaker:: The hon. Leader of the Opposition.


Mr. Peters:: A supplementary question.


Mr. Speaker:: The Chair will recognize the hon. member for Timiskaming on a supplementary question. I draw to the attention of hon. members that we will be running short of time within five or six minutes. There may be time for that number of questions if hon. members are quick in asking them and we obtain prompt answers from the ministers. The hon. member for Timiskaming has a supplementary.



ONTARIO-ACQUIRING BY AIR CANADA OF TYPE OF AIRCRAFT REQUIRED TO PROVIDE REGIONAL SERVICES

William Arnold Peters: Mr. Speaker, I should like to ask the Minister of Transport whether he has a report as a result of the investigation he agreed to undertake that Air Canada has available the type of aircraft that could service the area mentioned by the hon. member for Algoma?


Donald Campbell Jamieson: Yes, Mr. Speaker, I think I can say I have a report in terms of further discussions with the chairman of the board of Air Canada. There are two or three types of aircraft, some already in use in Canada and some not, which are being examined. However, a final decision on this matter is not possible until the route structure has been put together.



POST OFFICE


Robert Lorne Stanfield: Mr. Speaker, my question is directed to the President of the Treasury Board and concerns the negotiations with the postal unions. Has Treasury Board replied to the proposals of the unions regarding wages and security of jobs by either accepting them or making counter-proposals?


Charles Mills (Bud) Drury: Mr. Speaker, I am not sure what the situation is this morning but as of yesterday Treasury Board had not replied nor countered in view of the fact that the unions have not presented any proposals.



SUPPLY AND SERVICES


Hon. W. G. Dinsdale (Brandon-Souris):: My question is for the Minister of Supply and Services, Mr. Speaker. Is the hon. gentleman aware of the $70 million contract

March 3, 1972
Inquiries of the Ministry
awarded recently to the International Telephone and Telegraph Corporation lor the purpose of mechanizing the mail-sorting process in the Post Office Department, and can he assure the House that this contract was awarded on the usual tendering basis?


Hon. James Richardson (Minister oi Supply and Services):: Yes, Mr. Speaker, I can assure the House that the contract was on the usual tendering basis.


Walter Gilbert Dinsdale: In view of the fact that there has been a recent exchange of personnel between the Post Office Department and the corporation at a high level, would the minister look into the matter further and report to the House?


CONTRACT AWARDED TO INTERNATIONAL TELEPHONE AND TELEGRAPH TO MECHANIZE MAIL SORTING IN POST OFFICE-POSSIBLE CONFLICT OF INTEREST
John Patrick (Pat) Nowlan: Mr. Speaker, I have a supplementary question for the Acting Prime Minister. In view of the fact the deputy minister of the Post Office Department is a former president of the International Telephone and Telegraph Corporation and that an important employee of the Post Office is now with International Telephone and Telegraph, would the Acting Prime Minister confer with the Postmaster General, who I understand is holding a news conference right at this moment, so that a statement can be made in the House on Monday correcting any erroneous impression that may be left with the public about a possible conflict of interest in the awarding of this contract?


Mitchell William Sharp: Mr. Speaker, I think that what the minister has said, that this contract was awarded on the usual basis of tendering, should be sufficient assurance. Perhaps the hon. member wishes to create an erroneous impression, and of course that is his responsibility.


John Patrick (Pat) Nowlan: Without trying to create any impression but hoping that incorrect impressions can be clarified and knowing full well that some employees have changed positions between International Telephone and Telegraph and the Post Office, will the Acting Prime Minister at least confer with the Postmaster General to ensure that there is no potential conflict of interest in the award of this $70 million contract?


EXTERNAL AFFAIRS
Mr. Ambrose Hubert Peddle (Grand Falls-White Bay-Labrador):: Mr. Speaker, my question is for the Secretary of State for External Affairs. In view of the fact the present lease covering the United States Air Force base at Goose Bay expires in December of this year, can the minister advise whether negotiations for the renewal of

this lease have commenced, and when does he expect to make a statement to the House in this regard?


Mitchell William Sharp: Mr. Speaker, negotiations have begun and when they are completed a statement will be made.


Ambrose Hubert Peddle: I have a supplementary question for the Minister of National Defence. Can the minister tell us briefly whether the establishment of a Canadian Armed Forces base is contemplated in the Goose Bay area?


Hon. E. J. Benson (Minister oi National Deience):: Mr. Speaker, as the Secretary of State for External Affairs said, negotiations are taking place.



SHIPPING


Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, may I direct a question to the Minister of Transport arising out of the unfortunate sinking of the tugboat, Haro Straits, off the coast of British Columbia with the loss of the entire five-man crew. Has the minister ordered an investigation into this accident? If not, will he order such investigation?


Donald Campbell Jamieson: Mr. Speaker, I have already initiated such an investigation, the normal kind of investigation that follows a tragic incident of this sort. In this particular case it has been possible to go a little further with the initial stage of the investigation because the towline is still attached to the vessel and we have engaged the services of a submersible so that an on the bottom or underwater investigation can take place. My information is that weather conditions have hampered the investigation in the last two or three days but that it is going ahead as rapidly as possible.


Thomas Clement (Tommy) Douglas: Since the whole question of the towboat regulations and the effectiveness of their application may be a factor in determining the cause of this unfortunate accident, would the minister undertake to have an independent investigation made by knowledgeable people outside the Department of Transport which administers the towboat regulations.


Donald Campbell Jamieson: Mr. Speaker, I believe the House knows from earlier explanations I have made that the procedure followed in all such cases is for an initial investigation to be conducted and, on the basis of that report, I can then decide whether to continue with a more formal inquiry of the nature the hon. member has outlined. Certainly, if the preliminary or initial report suggests that this would be advisable, I would be sympathetic to the proposal of the hon. member.
March 3, 1972



POLLUTION


Mr. Thomas M. Bell (Saint John-Lancaster):: Mr. Speaker, my question is for the Minister of Transport. Is the minister, along with the Minister of the Environment, giving new consideration to the levies regarding oil pollution in the Maritimes, particularly in view of the approach of the provincial governments and others to this question? If so, when will we be hearing about this new consideration?


Donald Campbell Jamieson: Mr. Speaker, there is certainly no consideration being given to the possibility of abandoning the levies. What I have indicated in conversations with various maritime interests, both governmental and otherwise, is that I am prepared to be somewhat more precise than the act requires in indicating the top level of the fund and, once that level has been achieved, how we would propose to de-escalate the payments. I would hope to have a statement on this to convey to interested parties in a few days. I have also indicated my willingness to meet with them.


Mr. Speaker:: Orders of the day.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Thursday, March 2, consideration of the motion of Mr. Turner (Ottawa-Carleton) that Bill C-8, to authorize the making of certain fiscal payments to provinces, to authorize the entry into tax collection agreements with provinces, and to amend the Established Programs (Interim Arrangements) Act, be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
John Stratford Burton: Mr. Speaker, during my remarks last night I indicated my support, and that of other hon. members of the New Democratic Party, for the principle of equalization. I said that this bill goes a long way towards implementation of the principle of equalization and that we were happy to see the progress, as indicated in this bill, made in effecting an effective equalization plan across Canada. At the same time it must also be said that I am very much alarmed, as are many people, by the prospect of certain proposals which, by one means or another, may undermine the principle of equalization. Any set of proposals which may attempt to declare the principle of equalization as unconstitutional or which may try to destroy the principle will bring about, if accepted, the greatest possible mischief to the well-being of Canada in the long run. Certainly I, for one, want to make sure that all steps are taken to ensure that the principle of equalization is not destroyed or undermined and that this
Federal-Provincial Fiscal Arrangements mischief never comes about. Even though some of the proposals brought forward as alternatives to the present system may be well meaning, I think they are ill-conceived and will not achieve the objectives set for them by their proponents.
Last night in my remarks I also urged the government to take steps to broaden the revenue base in determining equalization payments and to include within the scope of the calculations and the formula used for determining the revenue base the matter of municipal revenues. This is particularly important at this time because shifts in responsibilities with regard to various government functions are taking place as between the provincial and municipal levels of government. A number of developments are taking place in various provinces which contain implications for an adequate equalization plan across Canada.
I am also concerned about the future of our health programs, and especially about federal participation in those programs. It seems to me, on the basis of certain indications which are evident at present, that the federal government is making moves in an effort to opt out of these programs in the long run. The first step in the process, of course, is limiting the federal government's contribution to these programs. As I understand the situation, the federal government has proposed that further increases in federal contributions to health programs, and federal-provincial health programs in particular, involving hospitalization and medical care, should be based upon growth in the gross national product or some other similar indicator.
Actually, health costs at present are growing more quickly than these indicators. Therefore, the government's proposal will leave the provinces holding the bag, so to speak. At the same time I think we should all be concerned about increases in health costs and also remember that we must reorganize some of our health delivery systems in Canada, while making sure at the same time that we do not decrease the quality of health care. Actually, we must take steps to improve the quality of health care across Canada. I suggest that this can only be achieved if the federal government makes it clear that it will go along with the provinces and stand behind the provinces in supporting these programs, both at present and in future.
Today, Mr. Speaker, I want to refer to some further points that are of concern in our consideration of this bill. I wish to make particular reference to some remarks the Minister of Finance (Mr. Turner) made in introducing the bill. At one point in his speech the minister referred to the benefits of stabilization and the changes made in stabilization payments. He said, as recorded at page 435 of Hansard:
Another benefit of stabilization is the help it provides to provinces when they attempt to borrow on international money markets.
The minister's statement, Mr. Speaker, may be perfectly correct. Yet it seems to me that that statement conflicts with the request that the federal government some time ago made of the provinces when it asked them to refrain as much as possible from entering the international money markets in raising money for their financial

March 3, 1972
Federal-Provincial Fiscal Arrangements
requirements. The minister also made the following statement as recorded on the same page of Hansard:
Within this framework of tax harmonization and uniformity, provinces are perfectly free to establish their own rates of taxation. They have been doing so to an increasing extent. This is the real test of fiscal independence and decentralization-the willingness to exercise the responsibility to tax as well as the responsibility to spend.
I must take issue with that statement, Mr. Speaker. Although we may recognize that, technically, within the present restricted framework the statement is accurate, there are also loopholes in it. At present the provinces can be involved in the system of taxation as proposed only if they accept the basic structure proposed by the federal government with respect to tax systems. They can then determine at what percentage level they want to have their taxes. However, they must accept the federal government's basic structure as it has been established. If one province wants to give greater benefits and exemptions to lower income groups, for example, they are not able to do so under the present plan. This is a real deficiency. I recognize that there are complexities in overcoming this problem, but I do not think it is fair to say that provinces are perfectly free to establish their own rates of taxation when they have to conduct themselves within the type of framework that has been imposed by the federal government.
The Minister of Finance (Mr. Turner) made another statement which is recorded on the same page of Hansard. The minister stated:
The present bill would also empower the federal government to collect, on behalf of Manitoba, Saskatchewan, and the four Atlantic provinces the succession duties which they have proposed. I want to emphasize that these provinces have made the decision to rejoin Ontario, Quebec and British Columbia in the succession duty field entirely on their own. We have had no part in their decision and have agreed to assist in collections only in response to their urgent requests to us.
That is a nice way for the minister to wash his hands of the entire area of succession duties, as the provinces are now taking them up. The federal government must take primary responsibility for this development. In fact, it was the federal government that opted out of the estate tax field in the income tax bill which was passed in the last session. The federal government must assume primary responsibility for the many problems that are going to arise with regard to the entire matter of handling estate and succession duties. In many cases, the provinces have no choice but to enter this field for purposes of obtaining revenue and so on. In fact, the federal government has recognized this in the definition of revenue sources, since they have included a reference to succession duties in the formula. The federal government has done a great disservice to Canada by opting out of the field of taxation of estates or any form of imposition of succession duties. One way to keep this country together, about which the government claims it is so concerned, is to ensure that there is one levy across Canada with regard to taxation of estates. That levy can most properly be imposed by the federal government.
Many inequities will very shortly develop. The new situation is such that nine out of 10 provinces will be in the

succession duty field. The province of Alberta thinks it will get away with something by staying out of this field. In the long run, it may find that it will be faced with some serious problems. What is the situation with regard to some cases? In recent months some very well known and distinguished Canadians have passed away, leaving large estates. They happened to live in the provinces of Ontario and Quebec. Under the new plan, those provinces will be the sole beneficiaries of most of the succession duties of the estates of these people. In some cases these individuals gained their wealth and financial resources by carrying on business activity all across Canada, not just in the particular province in which they lived.
If the federal government is really concerned with the principle of equalization as a means of keeping Canada together, it has a duty to take the initiative and once again re-enter the field of taxation of estates by imposing an equitable succession duty, the revenue from which could be distributed among the provinces on an equitable formula. The only type of equitable plan in the long run will result from the federal government accepting its responsibility in this field.
I want to associate myself with the remarks of the hon. member for Waterloo (Mr. Saltsman). He stressed the importance of the equalization of transportation costs in Canada in the future. This is one of the thrusts that should be developed in federal policy in the coming years. Moves toward equalization of transportation costs would do a great deal to keep Canada together. This one step would do more to eliminate regional disparities in Canada than the millions of dollars which the federal government is handing to private industry and private business. Transportation costs is one of the major factors contributing to regional disparity in Canada at the present time.
I suggest this factor is important in relation to some of the comments made recently by the Minister of Industry, Trade and Commerce (Mr. Pepin) when he indicated he and his department are working on an industrial strategy for Canada. If the benefits of this new industrial strategy, whatever it is going to be, are to be equitably distributed across Canada, it will be necessary to ensure there is an equalization of transportation costs. With the technology and economics of the operations of many industries in Canada today, if we allow the present inequitable transportation cost structure to remain, many parts of Canada will be left out in the cold when this new industrial strategy unfolds.
While a good many aspects of the bill before us are concerned with economic measures and financial aspects of the operation of government, there are some features which deserve attention. Under this bill there is another five year extension of the Hospital Insurance Act, the Blind Persons Act, the Disabled Persons Act, the Unemployment Assistance Act and the Canada Assistance Plan. They are simply being extended for another five years. It is not clear whether there will be any changes or improvements in these programs. I certainly feel we should give them some consideration.
Today I would like to mention two particular areas which I feel should be kept in mind. First, I want to make particular reference to the Blind Persons Act. This is a selective program to assist people with a particular prob-
March 3, 1972

lem in life. It is not the type of selective program that tells the people concerned that they will receive more favourable treatment than other groups in society. Under the terms and benefits of this act, blind people today are in a selective unfavourable position. It is a disgrace that we in Canada have been so niggardly in our assistance to the blind people in this country. I hope the federal government will take some initiative to improve the level of assistance provided to this group of people.
I also note that the Canada Assistance Plan is to be extended another five years. There are many worthwhile features in the Canada Assistance Plan in terms of the federal government's contribution to this program. There are deficiencies as well. I wish to make just one comment in this regard. That is to take note of the recent growth of unfavourable comment in Canada about welfare programs in general. There seems to be a mood and feeling developing in Canada that there are many thousands of bums, people who are too lazy to go out and work and so on. They feel they are simply getting along on the Canada Assistance Plan benefits and that the whole program is a shambles. I suggest we all have to recognize that some problems do exist. We all recognize that there are new life styles and new life patterns developing in Canada. These are producing problems which have not been totally taken into account in the programs as they have been developed in this area to date.
But if we concentrate our attention in this area without reference to those who have a justifiable claim to assistance we are doing a disservice to many thousands who are in dire need. A good case could be made out for a better deal for many who are presently existing on welfare benefits under the Canada Assistance Plan and various provincial plans. We need to keep in mind our responsibility as a nation to help those who are not able to help themselves adequately. It may be we are devoting insufficient attention to the requirements of many thousands who are living in unfortunate circumstances and who have a justifiable claim for assistance under these programs.
The government and its officials will feel a justifiable sense of accomplishment with respect to the bill now before us. There are useful items in it. Some progress has been made in implementing the principle of equalization though much work remains to be done. I certainly hope we shall see more progress in the coming months in dealing with some of the shortcomings which have been pointed out in the course of this debate.


Mr. Paul St. Pierre (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, this is not the type of speech I prefer to make in this House or anywhere else for that matter. I intend to deal with some of the less lovely aspects of political life. I am dealing with the subject of irresponsible statements made by some British Columbia politicians who are in a position to know better and who are, to put it plainly, making pronouncements aimed at showing that French-speaking Canadians are being favoured by the present federal government.
Before going further, I should like to say that the remarks I intend to make are not directed against members of the British Columbia Legislative Assembly whose
Federal-Provincial Fiscal Arrangements
ridings are in my federal constituency of Coast-Chilcotin, namely, Alex Fraser of the Social Credit party, the member for Cariboo; the Hon. Isabel Dawson, Minister without Portfolio, the member for Mackenzie; Bill Hartley of the NDP, the member for Yale-Lillooet, or Alan Williamson of the Liberal party, the member for West Vancouver. I am personally acquainted with these four people and I know that the type of campaign of which I am speaking would be beneath their dignity. As for some of the other members of the British Columbia Social Credit party, if the cap fits, let them wear it. But they should not think that because some of their wild statements are not always promptly rebutted here they have gone unnoticed. They are not unnoticed. There are letters. There are meetings arranged but never held. There are public statements. And they are on the record.
In this bill we are dealing with an idea which is fundamental to a federal state. Nothing could be more so. No nation can exist without brotherhood, without sharing and without recognition of the basic principle that the poorer sections of the nation shall be helped by those which are wealthier. There is nothing unfamiliar about that idea, whether we look to Yugoslavia or Switzerland or to a score of other states. And the complaints which arise in connection with redistribution are familiar enough, also.
I had the privilege during the recess of sitting in the famous mother of parliaments in Westminster. On the day I happened to be there, the British minister of trade and commerce was being questioned by the opposition and by members of his own party on his policies. The subject turned to special incentive grants to slow growth areas of Britain, and the familiar complaints were heard. Why is one particular area of Scotland receiving aid while certain areas of Wales or the Midlands are not? The old questions and the old problems. We in this federal parliament are engaged in trying to make some redistribution of the tax dollars of all Canadians in the name of a greater Canada. Skillfully or otherwise, this is what we are attempting to do. I am one who has some doubts about the ways in which federal governments, both this one and its many predecessors, have sought to redistribute the wealth. Also, as a westerner, I have some quarrels with the east. There are many of us at home who have no deep and abiding affection for the Canadian banking system, controlled, as it is, by eastern Canada-surely one of the most conservative and unimaginative banking systems of any vigorous young nation. We do not particularly appreciate the control of many of our companies by boards of directors selected from the east all of whom appear to have snow-white hair and ideas which are very old.
British Columbia is producing some of the wealth which is available for redistribution to the poorer provinces. This is being created back home by people with imagination, drive and energy and we sometimes feel we are doing it in spite of the eastern Canadian majority vote in this federation. But that is not the main burden of my remarks today. The fact remains that some redistribution of wealth is fundamental to the very existence of Canada. Indeed, the principle applies even within provinces. In the Province of British Columbia wealth tends to concentrate in the City of Vancouver. Provincial governments over the

March 3, 1972
Federal-Provincial Fiscal Arrangements decades have ensured that some of this money is spread abroad to less developed areas of the province.
In any case, the Minister of Finance (Mr. Turner) set out very clearly, using figures which I truly hope the newspapers of British Columbia will relay to their readers, the facts about the present redistribution system and its true proportions. Mr. Speaker, I am afraid I must deal openly here with a campaign which is being carried on by some people designed to convince the public that these transfers of money are not really from the richer to the poorer provinces but from the English-speaking provinces to the French-speaking province of Quebec. Nothing could be more divisive or unfair or damaging. Here today I should like to pass on a few balsawood cannonballs to any at home who wish to pursue this little game.
To illustrate my point, I have here some figures concerning the DREE program. They concern the grants made available under this legislation up to November 30, 1971, the latest date for which figures are available. They show that Quebec got by far the largest share of these grants-$86,299,232. Ontario received only $19,147,632, and British Columbia a mere $2,719,263. Now, any who wish to pursue the anti-French campaign in British Columbia are welcome to use those figures. However, those same people should not read any further in the Hansard report of this speech. They should confine themselves to the figures I mentioned a moment ago.
A misleading campaign of this sort is dependent on the suspension of curiosity on the part of the listener. I say this because the figures I quoted compare grants province by province, not person by person. To accept the proposition that Quebec gets the lion's share of these grants, it is essential that the audience never be reminded that Quebec has a larger population than almost all other provinces, not to mention a larger share of unemployment than many.
If we see what these grants amount to on a citizen to citizen rather than province to province basis, an entirely different picture emerges. Let us see what it is. The highest per capita grants go to Nova Scotia at $32.60 per person. The population of the province at the last census was 756,039, and the total grants amounted to $24,547,833. The second largest per capita grants went to New Brunswick, at $29.78 per capita. This is derived from a population figure of 616,788, with total grants of $18,368,467. Third in rank, for some reason, is the comparatively wealthy province of Alberta, one of the have provinces, at $16.40 per capita, grants totalling $23,999,555 and a population of 1,463,203. So far the charge of favouritism to French-speaking Canadians is not holding up very well, is it, Mr. Speaker? However, Quebec, which has a four-to-one ratio of French-speaking citizens, does rank fourth on the list. Industries there have had money made available to them at the rate $14.93 per capita, a little less than half the per capita rate for Nova Scotia. The total grants to Quebec were $86,299,232, with a population of 5,780,845.
I will run through the other provinces very briefly for hon. members. They can do their own arithmetic, but I can assure them that I have checked the figures very carefully. In diminishing order of amount we have New-

foundland with $12.54 per capita, total grants of $6,185,743 and a population of 493,396. Manitoba has $12 per capita, total grants of $11,572,647 with a population of 963,066. Prince Edward Island has $10.25 per capita, total grants of $1,112,727 and a population of 108,535. Saskatchewan has $5.87 per capita, total grants of $5,605,658 and a population of 955,344. Ontario has $2.75 per capita, total grants of $19,147,632 and a population of 6,960,870. Then lastly, British Columbia has $1.45 per capita, total grants of $2,719,263 and a population of 1,873,874.
I suggest there is much scope for debate about the picture that emerges here. One might wonder why Alberta, one of the three have provinces, ranks third while the other two have provinces of Ontario and British Columbia are ninth and tenth on the list. Or why the disparity between two neighbouring and very similar provinces, Saskatchewan and Manitoba? But that is not the purpose of these remarks. The purpose is to match the figures against claims that the federal government favours those Canadians who speak French. Let us keep that insinuation out of this debate and, hopefully, out of other political arenas.
To the extent that I can claim to know something about my home province, I want to tell the House that we British Columbians have our disagreements with the east and I suppose will continue to do so until, as is inevitable, the dumbbell shaped economy develops in Canada, as happened in the United States with the relationship of California and New York. But British Columbians in an overwhelming majority do not want to see federalism damaged by the insinuation that there is favouritism that is based upon whether a Canadian speaks French or English. I thank hon. members for their courteous attention.


Robert Jardine McCleave: Mr. Speaker, my colleagues have dealt ably with many aspects of this important legislation, and I intend to confine myself to one point and one point only. So that the Minister of Finance (Mr. Turner) does not remain in a state of expectancy, it arises from clauses 9 and 10 whereby the federal government, on behalf of certain provincial governments, will collect succession duties under legislation that is still not passed in those provinces.
The federal authority, as 1 shall prove, has already frozen, in effect, the estates in those six Canadian provinces, and the argument I will be making is the very age-old one of taxation without legislation. It is true that ministers of finance are able to announce tax changes at certain times during the year, such as in their budget speeches, and the hours at which those taxes are to take effect are later given legislative authority.
However, once in a while a storm breaks in this institution as a result of different courses being followed. For example, a present judge of the Supreme Court of Canada, who previously was a Minister of Finance, Judge Abbott, provoked such a storm in the late forties by announcing an important tax change through the medium of radio, an announcement that later became known as the "radio budget". There was some considerable discussion in the parliament of that time as to whether this was the proper course to follow.
March 3, 1972

But if it is bad to have that sort of thing happening, it is much worse when we are wielding the headman's axe on behalf of other authorities. The Minister of Finance and the Minister of National Revenue (Mr. Gray), whose department is mixed up in this unholy business, find themselves doing this chore on behalf of the provinces, none of whose legislatures, as far as I am aware, have yet passed the necessary legislation envisaged by this bill.
Clause 9 of the bill provides:
Where a province imposes duties or taxes on any legacy, succession, inheritance or gift, the Minister, with the approval of the Governor in Council, may on behalf of the Government of Canada enter into a tax collection agreement with the government of the province pursuant to which the Government of Canada will collect the provincial duties or taxes on behalf of the province and will make payments to the province in respect of the duties or taxes so collected in accordance with such terms and conditions as the agreement prescribes.
Subclause (2) provides that:
The Minister, with the approval of the Governor in Council, may on behalf of the Government of Canada enter into an agreement amending the terms and conditions of an agreement entered into pursuant to subsection (1).
The third subclause then provides that the federal authorities will not be bound by this type of agreement in the case of any death occurring after the year 1974. Already an apparatus has been set up for the collection of succession duties, or for what I call the freezing of estates. At least that is what I called it in a question that I put to the Minister of National Revenue (Mr. Gray) the other day. A procedure has been devised and is being enforced by the banks, or really in effect being enforced by the local offices of the Department of National Revenue. This has the effect of subjecting the estates of people who have died since January 1 of this year to a new tax that has not yet been sanctioned or passed by any provincial legislature.
Up to the present the federal authority has been the one that has taken any discredit or any blame from people concerned, lawyers acting on behalf of estates, or widows and other beneficiaries of estates who find they are operating in the dark. And darkness is what it is, Mr. Speaker, because none of the legislatures have passed succession duty legislation. There have been press releases issued by the different ministers of finance of the provinces indicating what they will attempt to do in their legislature. But thanks to the public discussion that these releases have caused, for example in my own province of Nova Scotia, there are indications that the original proposals by the provincial ministers will be watered down, and that substantial changes will take place in what they announced just before the end of the past year. As a result, the federal authority comes under fire, and I think just fire, for taking part in such an exercise.
The federal authority opened the way to a lot of goodwill by reason of the very sensible provision it included in the income tax legislation upon which we spent so much time last fall and last December. A lot of good will was created by the removal of the estate tax, because very properly it was recognized that when certain estates were sold a form of capital gains tax would attach anyway. I believe that decision was endorsed by all parties in this
Federal-Provincial Fiscal Arrangements
House, except perhaps the NDP. I want to be fair, and I believe most hon. members thought the removal of the estate tax was a proper thing.
But no sooner had it cleansed its hands in that direction than the government then bloodied them in another direction, I suppose out of good nature because who wants to collect taxes? It has bloodied them by offering to do this job of collecting this tax on behalf of certain of the provinces. I have said that the machinery has been set up, and I will proceed to outline it for the record. The first part of it is a directive, or really a letter from J. C. Ruddy, Director of the Estate and Gift Tax Division of the Department of National Revenue, directed to the Secretary-Treasurer of the Canadian Bankers' Association.
I presume the purpose of sending this letter to Mr. J. F. Riegert was simply that the Canadian Bankers' Association in turn could pass it along as an aide-memoire or direction to banks that have to decide what to do with safety deposit box contents when some of their customers die. I will read pretty fully from Mr. Ruddy's letter in order to give the substantial parts of it. I quote:
This will confirm our recent conversation concerning the proposed succession duty Acts of the provinces of Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Manitoba and Saskatchewan, which the Department of National Revenue- Taxation will be administering on behalf of these provinces. The Acts when enacted will apply in respect of the estate of any person who dies on or after January 1st, 1972.
Mr. Ruddy is not a member of any provincial legislature that I know of, and it is pretty obvious that he is taking that as a direction from whatever agreement has been made between his minister and the federal government on the one hand, and the provincial ministers of finance and their governments on the other hand.
Prior to the coming into force of the proposed succession duty Acts there will, of course, be requests from executors, beneficiaries, or their representatives of the estates of persons who die after 1971 for the transfer or payment over of the property of the deceased including the proceeds of life insurance and also for the release of the contents of safety deposit boxes and property held in custody by banks, trust companies and others.
In order to facilitate matters for estate representatives and beneficiaries in these circumstances, until the respective Acts are passed by the Provincial Legislatures and the official provincial consent forms become available, the Department will release assets on request, by way of a letter under the signature of the Estate Tax Auditor of the District Office which will be processing the provincial succession duty return in respect to the estate of the deceased. The amount and number of assets released for any estate however will be restricted.
I ask that hon. members note this sentence very carefully.
-will be restricted to ensure that sufficient assets remain unreleased in order to protect the revenue.
To protect whose revenue? It is to protect provincial revenues, Mr. Speaker.
A specimen copy of the letter (marked 1) which will be used is enclosed for your information.
I now turn immediately to that form letter. It bears the Coat of Arms of Canada. It is typewritten in English on one side and in French on the other, and the English side reads:
Re: Estate of-

March 3, 1972
Federal-Provincial Fiscal Arrangements
And space is left to fill in the name of the deceased. Then, this appears:
Date of death-
And another space. The text reads:
We acknowledge receipt of your recent communication in which you requested consent to transfer assets of the above noted deceased.
On behalf of the Province of .... in relation to the proposed Succession Duty Act, as announced on December 29, 1971, we agree to the transfer, delivery or payment over of the following property:
Then, room is left to list the property. If the provinces are not ready with their forms and paraphernalia for the collection of these succession duties, it appears that the federal government has been very quick to get into the field with its own forms drawn up for the occasion. I now quote further from the letter:
The same procedure may be continued as under the Estate Tax Act by an individual or corporation, in transferring, delivering or paying over property of the deceased person situated in Canada or where the deceased was domiciled in Canada any superannuation or death benefits and any amount payable under a policy of insurance, without the Minister's consent providing notice is given to the Department of such payment. The Estate Tax form ET75 (Notice of Payment) may continue to be used for this purpose until the official comparative provincial form is available.
So, while Estate Tax Form ET75 is as dead as the dodo so far as estates are concerned from the first of this year, its soul goes marching on in its use for the collection of provincial succession duties. The letter continues:
The Department would like to have particulars of payments, if any, already made to date in respect of persons who died after 1971.
That provokes the thought that some crusty lawyer acting for an estate may very well ask, "On what authority do you base this sort of request?" At least until the provincial act is in the field, I would imagine that the Department of National Revenue would have to tread pretty tenderly because there is no ground at all on which they can make such a request.
The letter continues:
The release of a safety deposit box or other depository will also be dealt with by the issuance of a letter from the district office concerned. A specimen copy of the letter (marked No. 2) which will be used, is attached.
That one again bears the coat of arms of Canada and the reference to the Department of National Revenue. The reference to the name of the estate reads:
On behalf of the province of ..., in relation to the proposed Succession Duty Act as announced on December 29,1971 we agree to the above named Custodian or Lessor permitting the following property to be withdrawn or delivered to the Executor, Administrator, the Legal Representative or his authorized attorney or agent:
Then, there is a blank space which can be filled in with the material to be released.
The letter continues:
The depository, usually of course a bank or a trust company, is asked to continue as now for Estate Tax purposes to send a certified list of the contents of the depository to the relevant district taxation office, that is the office where the return in respect of the estate of the deceased will be filed. Upon receipt of

this list the matter of the release by the issuance of the above mentioned letter will be promptly dealt with by the District Office receiving it.
The Estate Tax procedure in these circumstances of requiring consent (form ET 76) to the preliminary opening of a safety deposit box or other depository to withdraw documents or of consent (form ET 77) to the opening of a safety deposit box or other depository for the listing of contents will be dispensed with until the date when the provincial acts are enacted. There may be withdrawn at any time without consent the following:
1.	Will or other testamentary writing of the deceased.
2.	Birth certificate.
3.	Marriage licence.
4.	Marriage contract.
5.	Title deed, lease, agreement for sale or deed of mortgage or hypothec relating to real property.
6.	Any deed, record or other document required in connection with the burial of the deceased.
Then, on the final page of his letter, Mr. Ruddy continues:
The district taxation offices of the Department where the respective provincial succession duty returns of information will be filed and processed are set out below. Requests for release of assets should, of course, be directed to the District Office where the return will be filed or has been filed.
Where the deceased died domiciled in the province of
Newfoundland, Prince Edward Island or Nova Scotia New Brunswick Manitoba Saskatchewan
District Office where return will be filed
Halifax, N.S.
Saint John, N.B. Winnipeg, Man. Regina, Sask.
The provisions, of course, of the Estate Tax Act do not apply in respect to the estate of any person who dies after 1971 and accordingly the consent requirements of this Act to the transfer of assets do not apply in respect to the assets of any such estate.
The letter is signed J. C. Ruddy, director, Estate and Gift Tax Division.
I put the letter on the record because it may be useful for members of parliament whose constituents are asking about what happens between the first of the year and the time that the six provincial legislatures act, and they may wonder what is involved. I will not claim that it creates all the hardship in the world, because it does provide for the release of assets and in the past there has always been a method of releasing assets so that widows and young people can obtain material from estates. But there might be a hardship should any of the provinces decide to tax estates that are left by one spouse to another. This was the cause of considerable difficulty in the past, but it was removed.
One of the great accomplishments, the only one of which I can think, of the just society was the Estate Tax Act which was passed in 1968. It removed tax from estates passing between husbands and wives. There were many horrendous examples in the past of widows who went practically barefoot because of the enormous amounts of succession duties that had to be paid on their husbands' large estates and the fact that the estates were not in liquid form. That problem was removed by the Estate Tax
March 3, 1972

Act in 1968, but it could return depending on what type of legislation is passed by the provincial legislatures. However, I will not get into that particular issue. It is the responsibility of these legislatures and I am sure they will fight those issues very capably. What I object to, however, is the fact that the federal authority is moving so willingly into the field. It is strange that they are going into a business that is bound to bring ridicule, hatred and contempt on their shoulders. It is strange to see that sort of thing happen, something which did not have to happen.
In my research into why we should be doing for others what, if we did it for ourselves, would get us into hot water-the word "we" refers to government-I went to the days of Charles I whose famous battle with Parliament over his right to taxation occurred in the seventeenth century. In 1628 the Petition of Right was: exhibited to His Majesty by the Lords Spiritual and Temporal, and Commons in this present Parliament assembled, concerning divers rights and liberties of the subjects-
To the King's most excellent Majesty: ... by which the statutes before mentioned, and other the good laws and statutes of this Realm, your subjects have inherited this freedom, that they should not be compelled to contribute to any tax, tallage, aid, or other like charge not set by common consent in Parliament:
Here we have the whole sophisticated apparatus of government moving into the operation of the collection of taxes on behalf of other authorities. We know what happened. Charles I levied a ship tax and eventually, in the argument, the Lords Temporal and Spiritual in the Commons won the battle and Charles I lost his head.
I think there might be a remedy for a situation such as this, namely, to have some provisional type of legislation. This was a point made by Mr. Coldwell, then the member for Rosetown-Biggar in the debate of 1948 on the famous amendment to the Excise Tax Act which caused some stir in that year. What I am trying to say in my participation in the debate is simply that I think it was a wrongful act for a department of government to set itself up to collect taxes for another level of governmental operation without any legislative sanction whatsoever. I do not think there is anything in the law now which would give the Department of National Revenue the right to take the course it has followed. I have made the point as best I can, and I would like to put the minister on notice that when the matter does go to the committee I expect that he, his parliamentary secretary or his senior officials, will have an answer to why this particular course is being followed.
As for the other points of the legislation, I have listened with great interest to the debate here. I would be concerned about the formula, particularly for university educational costs and about whether there is any possibility of getting some adjustment in the Blind Persons Act. I think that is important. They have been sending us petitions for years and it is time we gave these disabled persons a better break. However, Mr. Speaker, that can wait until the bill has received second reading and is studied in committee.


Mr. Guy LeBlanc (Rimouski):: Mr. Speaker, as it is very close to one o'clock, might I, with consent of the House, call it one o'clock?
Federal-Provincial Fiscal Arrangements [English]


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: Is it agreed that we call it one o'clock?


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: It being one o'clock, I do now leave the chair to resume same at two p.m.
At 12.54 the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
TTranslation]
Louis Guy LeBlanc: Mr. Speaker, I wish to thank you for affording me the opportunity of expressing my humble opinion on the bill now before us.
I have noted that the hon. member for Halifax-East Hants (Mr. McCleave) who has preceded me, has referred to "the so-called just society". I think he should not have used these words because, once uttered, they produce an adverse effect on the people in terms of the ideal which we are all pursuing, including the opposition parties. I believe that when the leader of the Liberal party spoke of the just society a few years ago, he was not promising to create a just society there and then.
I think that this slogan, or better still this motto, was proferred to the Canadian people as an aim which we should all strive to attain not only in the Liberal party and in the government, but all Canadians together. This is why I believe that the hon. member who spoke before me should not follow in the footsteps of others, and ridicule this slogan, at a time when we all need optimism, enthusiasm and motivation to direct our actions.
Mr. Speaker, my remarks will be limited to the two parts of the bill that interest me most and that I consider, in view of our needs, to be two most important, if not the most important part, that is Part I on equalization and Part VI on post-secondary education.
We can all discuss this problem and try to simplify it, but I think we all recognize the fact that it is a complex one and even the experts are not always successful in having us understand what actually is the meaning of equalization payments, of the transfers to the provinces in certain tax fields, and of all other aspects of the taxation problem.
Nevertheless, we all know this is a basic principle of Canada's Confederation. It is one of the corner-stores of Canadian unity and prosperity. It is not enough to say that Canada is a confederation of sovereign states. We must do more than that and I think the introduction of this bill we now have before is one step further in that direction.
It is not enough to say that Canada is a mosaic of ethnic groups; we must act accordingly and this is what we are doing.
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There are people, even among foreigners, who will say that Canada is an artificial nation. Legislation such as the one before us help build this nation.
It may be true that Canada is an artificial nation but one must remember that this feature derives from men, that the artificial feature is a superior and transcendent natural feature.
I thinkT equalization is a means of saving our Confederation, of ensuring a decent standard of living for all Canadians and of allowing all of us to live together and avail ourselves of equal opportunities.
The equalization program is being critized by many. People in the Western provinces do criticize it, but I think that in my own province there are people who also object to it, perhaps not with words but with actior
Small groups in my province are trying to prove what little use it is for Quebec to be part of this group of peoples called Canada, and they overlook the equalization system which is designed to assist all the poor provinces which find it hard to keep up with the average level of public services in Canada, including Quebec.
I would like my fellow-citizens to remember the figures that have been quoted occasionally since the beginning of this debate. For instance, when we consider that in 195758 federal equalization payments granted to the provinces reached a total of $136 million and that they are expected to reach $1 billion in 1972-73 and $1.5 billion in 1976-77, we cannot help noticing the increase.
As for equalization payments, taking into consideration the percentages and the overall amounts given to certain provinces-Quebec being one of them-they may appear to be very high. If, however, we consider the per capita amount, we can then evaluate those figures more correctly. If we stop to think that Quebec's gross revenues for the year 1971-72 were roughly $2,764 million, as compared to Ontario's $4,291 million and Newfoundland's $168 million, we then realize that federal equalization payments do make sense.
This is why Quebec received, for the year 1971-72, federal equalization payments totalling $446 million, whereas Newfoundland received $110 million.
If we refer to the percentages of their own revenues, they are 65 per cent in the case of Newfoundland, and 16 per cent in the case of Quebec. Consequently, if a province such as Newfoundland had to levy taxes, for lack of those equalization payments, the income tax burden on the citizens of that province would be far too heavy.
All the same, if one remembers the silent majority in Canada, and particularly in my province, one can assume that our fellow citizens are generally satisfied with those measures and are happy to benefit by them.
We are told that those amounts are paid out of the Consolidated Revenue Fund, which would mean perhaps that this bill is not that much unfair to the three provinces living above the average Canadian standard, since those amounts come from the general revenues and the rates, in so far as income tax and other taxes are concerned, seem to me to be the same throughout Canada.

[DOT]	(1410)
As for postsecondary education, it is of particular interest to us in the province of Quebec, at least for the same reasons as the citizens of the other provinces. Whatever may be said about the achievements in the field of university education, until now we have all benefitted from it; it has most certainly given young people, who would not otherwise have gone beyond high school, the opportunity of getting an education that enabled them to live honourably and to work with the rest of their fellow-citizens towards achieving the Canadian ideal.
With regard to the cost-sharing programs that are criticized from time to time-I mean the Canada Assistance Plan from which my province takes advantage, as do all the others-I feel that the advantage, for the provinces, in allowing the federal government to take care of those measures, lies in striving towards greater unity and more efficiency while reducing the work, the administration it entails. I agree with those who speak of encouraging work, especially when they discuss social measures.
Mr. Speaker, I bring my remarks to a close by saying that I support this bill; it fosters Canadian unity and the well-being of all Canadians. All I ask is that the bill should be studied very seriously and passed as soon as possible for the greater good of all Canadians.
[DOT]	(1420)


Cliff Downey: Mr. Speaker, in rising to speak on Bill C-8, the bill dealing with the equalization payments plan,. I, as a member coming from one of the provinces which is a net contributor to the program, cannot argue against the concept of equalization payments. I think there has to be some redistribution of wealth among the provinces if we are to maintain confederation. But the prime area of concern felt by the provinces which are referred to as "have" provinces is directed to such questions as these: where the money is going, whether or not an end can be seen to these equalization programs and whether the money which is being poured into these regions is being used in the best possible manner-whether it is effectively correcting the problems which must be corrected if ever there is to be an end to them.
Over the years there has been a continuing escalation of these payments. In 1970-71, the amount was four times as great as it was ten years earlier. I saw projections the other day which showed they would likely rise to something like $1.5 billion by 1975, a further sharp increase as compared to present payments. When we are considering a subject like this we really need to consider the whole area of taxation, since all this money comes out of common taxes. I realize that politicians will be tramping all over the country in the next few months in connection with the election-many are preparing for it now-and I suppose there are a great many voters who will vote for the man of their choice largely on the basis of the promises he makes and the extent to which he commits himself to various give-away programs. In my view, both the voters and the politicians have got themselves into trouble because of this.
March 3, 1972

It is not irrelevant to mention in this connection the internal document which was circulated in connection with the affairs of Information Canada. I think it was discussed in the House only yesterday. I read a little footnote in connection with it in the paper the other day; it very well sets out the story of what is happening in the field of government expenditure generally. It refers to the $10.3 million allotted to Information Canada in this year's spending estimates and describes the memorandum as saying that the agency cannot justify its existence on the basis of its record of operations over the past six months. I think it is very good that the department should be looking at its own shortcomings-this is an internal memorandum. The report went on:
The paper, highly critical of the service, was. drawn up by the branch's deputy director and was addressed to the director-general. It urged that the branch find new projects to justify its spending in the public view.
So, having been allocated the sum of $10.3 million in the estimates, the people in the branch are now being urged to justify this expenditure in the eyes of the public. In other words, we can expect the staff of this department to be scurrying around seeking other projects. Whether they will be worth while or not I shall not even try to imagine.


Mr. Gundlock:: Looking for a place to spend it.


Cliff Downey: Yes. The taxpayers of Canada are sick and tired of this. More and more of them are losing their initiative as each year passes. Fewer and fewer people are willing to work and contribute to the economy. Increasing numbers of people accept the philosophy of working for the government, living off the government, or, in some manner, working government to their advantage so that they may have an easier life. This is the direction in which the philosophy of the country is going and the government is certainly doing nothing to change that situation. If I might say so, it is contributing considerably to encouraging this attitude.


Mr. McBride:: Would the hon. member permit a
question?


Cliff Downey: I shall be glad to do so at the end of my remarks.
What happens in countries which tend to drift into socialistic attitudes? We all recall the time a few years ago when certain Scandinavian countries, particularly Sweden, were held up to us as glowing examples of nations which had solved all their problems as far as business and people were concerned. We were told about the wonderful situation they had created for their citizens. In this connection, I was interested to read an item which appeared in the Globe and Mail of March 1 under the heading "Psychiatric report on Sweden's welfare State describes a merciless, unfriendly society." This was a report on mental health and human environment written by Dr. Hans Lohman in Sweden. It describes what happens when people accept the premise that the state will look after people rather than people looking after people. I shall read some excerpts from this report as summarized in the newspaper.
The study points to a vicious circle in which a high rate of economic growth is necessary to pay the cost of looking after
Federal-Provincial Fiscal Arrangements
those who cannot keep up, but as their number steadily increases a higher growth rate is needed, which only results in more people being unable to keep up-and so on.
The conclusion to be drawn from the report is that a country's welfare can no longer be measured simply by its standard of life, and that Swedes are increasingly sacrificing their mental health for improvements in their material environment.
This article then goes on to relate what is happening to countries that have tried to maintain this vast and all-encompassing social security program, and then says this about the rate of admissions for mental disorders in Sweden:
The latest available figures show that the number of inpatients admitted to mental institutions rose from 73,000 in 1969 to 83,000 in 1970-
This is costing the state $20 a day per patient, which means that over $1.5 million is being funnelled into keeping these patients under psychiatric care in mental institutions. The article continues:
A still greater number of out-patients were given light psychiatric care at public hospitals, while the enormous number who took to alcohol or drugs as a way out are not included in these statistics.
I read that only to show what is happening in countries in which the people depend on the state to too great an extent. Certainly, state welfare is not the paradise that some would lead us to believe.
To get back to the objections that I hear voiced by the people in the "have" provinces of Ontario, British Columbia and Alberta where the equalization payments originate, I may say that when industry is phased out the displaced workers have to be looked after. In many instances they do not want to move to a new community but rather wish to continue their lives in the same area. In this regard, I can think of no better example than workers in the Maritimes. I do not think workers made redundant should have to move to one of the "have" provinces. Indeed, I do not think the "have" provinces expect them to and, as a result, do not begrudge any payments they make under the equalization grants. But what does concern the "have" provinces is that with some families welfare is perpetuated from one generation to another. Families, for four or five generations, live off the largesse of government. This is a big problem and I do not have any easy answers to it. However, I do think that if a man remains unemployed during most of his life, some sort of manpower mobility program should be set up to see that the younger members of his family do move, perhaps to the "have" provinces where they will possibly be able to better themselves.
The subject or transportation has also been referred to in this debate. I agree with those who said that much of the money poured into equalization grants could very well be spent on equalizing transportation rates across Canada. Again with particular reference to the Maritimes, if the freight rates in the Maritimes were equalized with rates elsewhere, farmers in particular would have access to feed grains at the same price as those in the central provinces. They would be able to commence livestock feeding ventures or something of that kind which would enable them to help themselves. The same thing is true of industry. A transportation equalization program would
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enable these people to help themselves to a far greater extent than is presently the case. Similarly, it would make industries more competitive and enable many other enterprises to break fresh ground, which at the moment they cannot afford to do.
The hon. member for Coast-Chilcotin (Mr. St. Pierre) who spoke prior to the lunch hour drew our attention to some figures relating to grants under the DREE program. He showed definitively the per capita ratios and pointed out that Alberta was third in the list of recipients of government funds under that program. Although I do not think anyone can argue with the figures that he presented, I do not believe he filled in the whole picture relating to grants. One of the major projects in Alberta that probably accounted for much of Alberta's share was the pulp mill at Grande Prairie. About $6 million was given to the Proctor and Gamble company, and I can only doubt the Wisdom of those who made this grant. We all know that pulp is presently at the stage of over-production in this country. Therefore, I see little point in giving $6 million to Proctor and Gamble and closing down another pulp mill in a different part of Canada. As I say, I question the judgment of those who made this decision.
Another complex in Alberta, which may be in the riding of the Minister of Agriculture (Mr. Olson), made an application to set up a hog factory that would produce over half a million hogs a year in the southern part of the province. I must say I can think of no more unlikely place in which to start a hog factory than southern Alberta. A better place would have been in the feed grain area of the province. One can only assume that there are certain political motives behind setting up a hog factory in that area. I also question whether, in view of over-production of hogs, we should have government competing with farmers.
Looking at Alberta in the total picture, I think if all factors were brought into account one would find that Alberta was in a far poorer position than many other provinces. Here again, I refer to the subject of freight rates. We in Alberta pay the freight on our products sent to Ontario and out to the west coast ports. In addition, we pay the producers in those areas for the freight to send their products back to us. In other words, we pay freight both ways. This was not revealed in the figures presented to the House by the hon. member for Coast-Chilcotin.
I can think of many other similar examples. There was a rapeseed processing plant contemplated not too many miles from where I lived which was regarded as a doubtful economic enterprise simply because of the cost of freight. Seed shipped out to the coast or to Ontario carries a freight subsidy. However, if the rapeseed is processed on the spot in Alberta, a different freight rate applies for the end product. On the other hand, anyone who builds a processing plant in Ontario can have the rapeseed shipped to him at the subsidized freight rate. Such a person is in a much better position and more likely to have a profitable operation. These are the things which work against the provinces that are not in central Canada.
I shall not continue much further, Mr. Speaker, but I wish to stress that there is ample evidence to indicate that

the whole matter of regional incentives needs review. I cannot see that we are getting the desired results in many of the areas that are the prime recipients of these transfers of money. The people in those provinces which contribute to these funds have a right to an accounting from the federal government on how the funds are being spent. It is true that the federal government can generalize when asked how the funds are being spent, but it should indicate more specifically what the success ratio has been. Funds are being pumped into these areas in ever increasing amounts. The federal government will find itself in a position of great difficulty if any attitude of rebellion appears in some of the contributing provinces, from whose coffers money is taken. This may happen if the federal government does not show more responsibility for the performance achieved from the expenditure of this money.


Mr. D. Gordon Blair (Grenville-Carleton):: Mr. Speaker, the debate we have been having indicates that there is substantial unanimity about the importance of this measure. There is support for it from all quarters in the House. We have had a certain amount of sniping at the legislation, and some bootlegging into the debate of other questions which we debate here from time to time.
I was born and brought up in the province of Saskatchewan, and I lived the active years of my youth there during the great depression. Like a lot of other people who were young at that time and going to university, the most important event of the day to me was the great imquest conducted into our national affairs by the Rowell Sirois Commission and the publication of its report on Dominion-Provincial relations in 1940. Certainly, at that time in western Canada it appeared as if the terms of confederation had been switched inside out. We were suffering from a great depression, from drought and other factors which made life in Saskatchewan very difficult and reduced the income of the province to minimal proportions. In Saskatchewan, we were also able to see that the benefits of confederation had not spread themselves equally over the country. Manufacturing was centred in eastern Canada.


Mr. Maclnnis:: Central Canada.


Duncan Gordon Blair: The hon. member for Cape Breton says central Canada. But more than that, the head offices of most of the business and financial institutions were in central Canada. In those days we used to speak a lot about the evils of Bay Street and St. James Street, two well known thoroughfares in the cities of Toronto and Montreal. But all through the discussion there was a realization that it was impossible in a country like ours to equalize every economic opportunity, to equalize access to every source of personal or business income. It was quite apparent then, and I think it is still apparent that different parts of this country at different times will achieve differential benefits from confederation. For example, in those days the province of Alberta was almost as badly off as the province of Saskatchewan. It was most definitely a "have-not" province. It is now, as we have just been told by the hon. member for Battle River (Mr. Downey), a have province. I hope this does not change, but these are casual circumstances which can and do change, as our history shows.
March 3, 1972

What is important is how we respond to the challenge of this basic situation, to the changes that occur, so that at all times in this country there will be some basic equity and equality in the provision of governmental services for our citizens. As hon. members know, from the very beginning of our history there has been continual fighting about the financial terms. The ink was hardly dry on the British North America Act before the cry came up from the distinguished province of Nova Scotia for better terms. In one way or another ever since there has been a claim by one province or another, by one section of Canada or another, for better terms.
As the great report of the Rowell-Sirois Commission pointed out, for many years it was possible for these pressures to be adjusted on a more or less casual political basis. In the early years of this century, the role of government in our affairs was nowhere nearly as great as it is now, and it was possible to make adjustments which were essentially ad hoc, which from time to time quelled the clamour of different parts of Canada. However, this whole operation came apart during the depression. The gimmickry, the jerrybuilt structure of federal-provincial financial relations could not stand the test of the depression which put ever increasing pressures on governments for increased expenditures.
This fact was recognized by the Rowell-Sirois report, and I think it might be appropriate at this time to quote a portion from its main recommendations, Book II, page 269 giving the analysis of this great commission of the essential problem of our confederation. I quote At the heart of the problem lie the needs of Canadian citizens. These needs, whether material or cultural, can be satisfied only if all the provincial governments in Canada are in a position to supply those services which the citizen of today demands of them. The ability of provincial governments to meet the demands of their citizens depends in part on the constitutional powers which they enjoy, in part on their financial capacity to perform their recognized functions. The striking fact in the Commission's study of Canadian conditions is that many provinces, whose financial position is not the result of emergency conditions, are unable to find the money to enable them to meet the needs of their citizens. The basic problem before the Commission lies, therefore, in finding a way in which the financial position of the provinces could be improved and assured, without disastrous financial consequences to the Federal Government on whose efficient functioning all provinces are dependent. National unity and provincial autonomy must not be thought of as competitors for the citizen's allegiance for, in Canada at least, they are but two facets of the same thing- a sane federal system. National unity must be based on provincial autonomy, and provincial autonomy cannot be assured unless a strong feeling of national unity exists throughout Canada.
As hon. members are well aware, arguing from that strong premise the royal commission recommended the elimination of all the ancient deals which had been made between the federal government and the provinces, and between the provinces, to hold the financial structure together. It recommended what we have seen develop since the war, a system of payments from the federal treasury which will ensure to people in all parts of Canada a basic common level of governmental services.
At another stage in this report, in commenting upon this recommendation in more detail the Royal Commission had the following to say at page 274, also in Book II:
... the Dominion was to pay subsidies in 1867 to enable the
Federal-Provincial Fiscal Arrangements
provinces to perform the functions entrusted to them without having to resort to oppressive taxation. Under the Commission's proposals the Dominion would pay National Adjustment Grants for precisely the same purpose. It is true that a different measure of the amount to be paid to each province would be adopted now than that which was then considered appropriate. But this difference is more apparent than real, for it arises from the inequalities of wealth which have developed as between the provinces. Equal per capita subsidies did conform in some rough approximation to the fiscal needs of 1867. They would not do so today. The Commission hopes that the method which it has employed for calculating the appropriate adjustment grants will be able to accomplish what the per capita formula was intended to achieve in 1867, for, though the means have changed, the end remains the same, namely the maintenance of provincial governments which can provide the necessary services for their people.
What I have quoted illustrates the truth that everyone here in this House would recognize, namely that nothing has changed in our confederation since its commencement. There was then a recognized need for the federal government to contribute to the revenue of different provinces so as to enable them to provide services for their people. That need has continued down through all the 100 or more years. It continues today, and it is the responsibility of this parliament to respond to that need and to provide legislation and measures which are appropriate for satisfying them.
The hon. member for Battle River (Mr. Downey) who preceded me made a comment which I think must be noted. He said, in effect, that there are taxpayers in some provinces who are paying the shot for other provinces, that the good citizens of Alberta are picking up the fiscal tab for the people of Nova Scotia. Whatever the situation may be in his mind, it is different in reality; it is different so far as confederation and the life of this nation are concerned. There are taxpayers all over this country paying taxes to the federal government, and perhaps most of them feel they are too high.


Some hon. Members:: Hear, hear!


Duncan Gordon Blair: I knew that I would wake them up.


Thomas Miller Bell: Wake up the minister.


Mr. Turner (Ottawa-Carleton):: Which minister?


Thomas Miller Bell: The Minister of Finance (Mr. Turner).


Duncan Gordon Blair: The talk in this Chamber about the level of taxes is always very interesting, but the real question is how will the taxes be disposed of by the governments which receive them. It is to this question that I will direct my attention. The suggestion is made that somehow or other we who are taxpayers in Ontario, those people who are taxpayers in Alberta and those who are taxpayers in British Columbia, are paying their money directly to other provinces such as Newfoundland, Prince Edward Island, Quebec, or any of the other provinces, and that there is something illegitimate and improper in that. There is the suggestion that because we live in the three provinces I have mentioned we have some kind of super role of surveillance which providence has cast upon us in respect of the expenditures made by other provinces which receive some of these grants.
I think that it is well at this stage to look in totality at what takes place in this country in terms of all the grants

March 3, 1972
Federal-Provincial Fiscal Arrangements and all the payments which are made by the federal government to all the provinces of Canada. I refer to a document which was published by the Treasury Board entitled "How your Tax Dollar is Spent, 1972-73" and more particularly to page 31 where a table is set forth showing the estimated federal payments to provinces and municipalities for the coming fiscal year. The totals disclosed in these tables are themselves impressive. In all, when allowance is made for tax abatements, the total amount of federal funds which is payable to the provinces is $5,205 million, which is approximately one third of the total estimates of the federal government for the coming year which are stated to be $15,700 million.
But let us look at how some of these funds are distributed. For example, the total of all federal payments to the province of Quebec is $1,665 million, the total for Ontario is $1,423 million. The next highest province is British Columbia where the total is $360 million. The next highest province is Alberta where the total is $316.5 million, and so on. It is true that some provinces do not receive equalization payments, but the equalization payments for the current year are estimated to be $944 million out of a total of all federal grants to all provinces for all purposes of $5.2 billion.
So, I suggest that we should look at federal expenditures in their total perspective and realize that the responsibilities which this government and parliament have assumed spread across a broad spectrum of our country. They cover all kinds of services to people in all provinces, and it is quite improper, unjust and unfair for some politicians in some provinces to suggest that they are carrying a load when large amounts of money, for example, are paid to the Atlantic provinces, to some of the western provinces, and to the province of Quebec. It is also unfair for anyone to suggest that there is some kind of impropriety, as Premier Bennett has suggested, in the calculation of these payments, that somehow or other the provinces in eastern Canada do not have to account properly for all their revenues in the determination of revenue potentials when in fact they do.
I have spoken here simply to suggest that there are good reasons for carrying on with this system of tax equalization. It is something which we have had throughout the whole history of our country. It is something which has been applied in an increasingly rational and sensible fashion since the report of the Rowell-Sirois Royal Commission in 1940. If we are going to maintain not only the unity of this country but decent standards of life in all parts of Canada, then it will be necessary for us to overcome the infirmities of economics in different provinces and jurisdictional problems by continuing to pay equalization payments. Therefore, I support the legislation which has been put before us.


Mr. Henry Latulippe (Compton):: Mr. Speaker, I am pleased to have the opportunity to speak to the bill under consideration.
I wish to say what I think about the equalization payments and the situation in which the government finds itself with regard to the provinces in that respect.

Mr. Speaker, the federal budget is close to $16 billion. Transfer payments to provinces, including tax exemptions, will total $5.2 billion during the next fiscal year, that is one third of the budgetary commitments of the central government. However, the funds needed for the administration of the Old Age Security Fund and for advances and loans eventually repayable are not included.
Finally, Mr. Speaker, the budgets of the provinces add up to about the same as that of Ottawa. In general, the provinces therefore get one third of their money from the federal treasury.
Such a policy is inadequate. Is it realistic? It is therefore not surprising, Mr. Speaker, in those circumstances, that the provinces feel that they are not receiving enough from the federal government.
Seven provinces receive tax rebates from the central government. And all of them are not satisfied, and feel that they are not getting enough, and, even Quebec and the three other provinces that receive nothing are not satisfied. They state that the central government is asking too much of them, and that it is not logical to be so highly taxed, because those provinces, that are said to be rich, are those in need of revenue, as they do not have enough. The citizens of the latter provinces, like those of the others, have to pay close to 50 per cent of their income.
According to some economists, we are now paying 50 per cent of our income to provincial, federal and municipal governments and to school boards. Taxpayers say that they are not satisfied and that they are unable to make ends meet. They claim that they will be unable to put up with this very long, that it is impossible that taxes should be further increased when they are already paying 50 per cent of their income in taxes.
In the case of Quebec, equalization payments amount to $446 million, that is 10 per cent of the provincial budget. Conditional payments, hospital insurance, the Canada Assistance Plan, health insurance will bring in a contribution of $440 million, that is 20 per cent of the budget.
Mr. Bourassa's last estimates totalled $4.5 billion. Now, for the coming fiscal year Quebec will receive from the federal government grants of $1.5 billion, that is one third of its budget. If to this are added the tax rebates arbitrarily set by the federal government, the direct or indirect amounts handed to Quebec by Ottawa represent $1.6 billion.
Now, under the circumstances, can the provinces, even in their own fields, talk on an equal footing with Ottawa, when the two levels of government have to share sources of revenue.
Federal-provincial conferences have been held for several years, but they have failed to satisfy the provincial as well as the federal government. Canada has therefore reached a very high degree of federal-provincial tax coordination. We have developped an elaborate and efficient procedure to increase provincial revenues.
For the next financial year, Mr. Speaker, Newfoundland will receive $213 per capita; Prince Edward Island, $214; New Brunswick, $164; Nova Scotia, $135; Saskatchewan, $102; Manitoba, $59 and Quebec, $74.
March 3, 1972

I would not hesitate to say that the present taxation system is vitiated just as the financial system is. It is contrary to the hard economic realities. It is used for centralization in the hands of the financial empire of the state.
Modern taxation is illegal, even though it is effected through a political democracy which, for its participation, gets an insignificant share of its advantages. I think that it is rather the pursuit of an objective which can be nothing but socialism. Economists trained at the London School of Economics claimed that it is possible to reach happiness by condoning the theft of property through taxes.
Present financing and taxation are but means of concentration of financial power. It is obvious that taxation, under its present form, is an inefficient and irritating way of achieving the desired objective. Be that as it may, some form of taxation is inevitable as long as public services and production to meet private needs co-exist.
Public services demand a minimum of goods and labour; the mechanism through which those goods and labour are transferred from the private to the public sector is essentially a form of taxation.
Some claim that through equalization payments, the people can provide both private and public goods. But under the present system, goods are taken away from people who do not have enough, for private production, under the pretext of allowing public production. But in other cases, taxes are in essences legalized robbery. For instance, when taxes take away the purchasing power of the individuals, while production waits for buyers.
The government is levying taxes for functions that should be left to individuals, families and intermediary bodies. The robbery increases as government interference is stepped up. It is true that the government always alleges the financial inability of persons, families and public bodies, when it should apply itself to removing this inability, as a financial system working for the public good would do.
I say that taxes are a nonsense, because the collection is too costly and it is the taxpayer who has to pay for it all without getting anything in return. Under a system consistent with reality we would not have to levy taxes to meet the ever growing financial needs of the social insurance services. As co-heirs and co-proprietors of the capital the citizens should find a unconditional economic security in the guaranteed social income accompanied by an adjustment of the prices, because all physical possibilities would simply become financial possibilities. The public would be able to pay for all the production originating in the private sector of the economy. Thus the public service expenses would not be, as they are today, a burden or a hindrance to the obtainment of goods from the private sector.
On the other hand, a guaranteed income for everyone, at least for the basic necessaries of life, would ensure a fair amount of well-being, according to our productive capacity.
To have a correct perspective of the civilized world, one must be realist. The standard of living would no longer
Federal-Provincial Fiscal Arrangements depend on the financial system, but on actual or potential production. Finance would intervene only to lubricate the machinery of production and to protect the freedom of the consumer.
Government measures should be geared to the financing and development of our physical potential.
Mr. Speaker, if we must always, in order to meet requirements of provinces and claims of the poorer ones, do what we accomplished with Bill C-259, the government will tax citizens to the point of empoverishing them, of wiping them out. Bill C-259 and the capital gains tax will ruin many businessmen and farmers. Many citizens will be reduced to kiss the dust and to be dependent on welfare benefits.
Where are we to find money to increase equalization plans in order to keep the have-not provinces going?
Mr. Speaker, since so many provinces are poor, since they have so many problems, we must improve their system in order to keep them afloat, to enable them to develop their public schools and institutions, in short to enable them to keep pace reasonably with science and progress. And, with science and progress available, why could we not adjust our financial economy to the material and spiritual needs of the population. We could certainly help the provinces, so long as men are willing to work and the plough is tilling the earth.
Mr. Speaker, so long as the earth will be supplying more than the total population requirements, we should feel no insecurity. Yet, all the provinces are now insecure, wondering how to balance their budgets, meet interest payments on our debts to financial institutions.
The government should establish effective regulations at once, since we boast of having reached the pinnacle of development. And we can still go further if we make available to the people all possible financial controls to achieve that growth. But as long as we give only crumbs to the provinces, as long as we tax people to the extreme to prevent them from living decently, we will have difficulties at the provincial level, we will experience the threat of separatism and revolution because of the inefficiency of the government in giving people what they are entitled to. As a matter of fact, it would be possible to finance all institutions, even with a reasonable rate of interest, the only cost being on the administrative side.
We would save millions of dollars and some provinces could have those millions, further our development and provide more services to the Canadian people.
As long as we stay as we are, there will be credit restrictions, dissatisfied provinces, revolutions, because the people are unable to provide for their needs and because the financial economic system does not meet with people's requirements.
We know that all provinces would like to do more for the people and give more to them. Schools are now being built in all provinces with borrowed money at 8 or 9 per cent rates of interest. All those provinces will have to repay those loans in 10 years and the interest will be doubled by that time. We shall have paid for such schools or institutions in 20 years twice their value, in 30 years thrice, and in 40 years four times.

March 3, 1972
Federal-Provincial Fiscal Arrangements
Mr. Speaker, I think I have said enough on this subject, although hon. members in this House might not all agree on that point, I wish they were all at least in agreement to find another solution. If the solutions we are advocating are not appropriate for balancing our economic system, well, let them find out the true solutions.
Our former system led us to our present predicament, that is, complete failure, complete unbalance. The more we apply the suggested solutions, the more our system gets off balance and the more discontentment prevails.
No doubt means do exist to settle such problems. Therefore, if hon. members are not pleased with the solutions suggested, they could at least be consistent enough to propose other solutions, and we shall be among the first to approve them.


Jean-Luc Pepin: Mr. Speaker, would the hon. member permit a question?


Henry P. Latulippe: Certainly.


Jean-Luc Pepin: Mr. Speaker, my question is complicated but I am interested in this subject as a student and analyst of the Social Credit concept.
I am well aware that the hon. member is convinced that Social Credit is able to build paradise earth, a new Eldorado for future generations, but sometimes in his speech he seems to refer to provinces and countries which, in the past, have been fully happy. He seems to refer to governments which, in the past, would have been fully efficient. For my own guidance I would like to know which are those happy provinces and those fully efficient governments of the past?


Henry P. Latulippe: Mr. Speaker, the hon. minister says that I have alluded to past governments whose management was quite satisfactory to the provinces.
It is not new to say that the provinces have never been satisfied and never obtained what they should have and it is also logical to say that the provinces debts have kept on increasing. Currently, both the provinces and the federal government are indebted up to their neck. The provinces are no longer able to pay even the interest on their debts and part of their contributions to the federal government is used to pay the interest on these debts.


Mr. Mark Rose (Fraser Valley West):: Mr. Speaker, I am pleased to see that the Minister of Finance (Mr. Turner) is here. On Wednesday afternoon we were delighted and entertained by his opening solo in his new role as Minister of Finance. As we have come to expect from this minister, his speech was informative and sincere. Above all, it was rational. I know the minister will not mind my joshing him a bit about some of his personal platforming idiosyncrasies.
On Wesnesday afternoon I could not help but notice that the minister shares some traits with present and former leaders of parties. This may be a good omen. Like the right hon. member for Prince Albert (Mr. Diefenbaker) and the leader of the Social Credit party (Mr. Caouette),

the minister has developed a certain pivotal skill which allows him to swing approximately 180 degrees without moving his feet. He can speak directly, almost confidentially, to his own backbenchers. This is of considerable importance because the minister always exudes a glow, and his caloric radiations cannot help but envelop with cozy warmth these otherwise obscure and often forgotten individuals. They often have no one to speak to them at all.
In my introduction I would also like to take note of another interesting but, I think, distracting habit which the minister has acquired. When switching from French to the vulgate, he becomes somewhat migratory. Watching him is sometimes like watching a ping-pong match. The minister may be nimble, but trying to follow a nomadic speaker can become a pain in the neck. I will now get to the point I was trying to make before the asides.
I said the minister's arguments were extremely rational; by this I mean reasonable and logical. Perhaps that is why his case is not as convincing as it should be. It has been my observation that people are infrequently moved primarily by logic.


Mr. Osier:: You would not want a minister of finance to be logical.


Mark Willson Rose: If the hon. member for Winnipeg South Centre (Mr. Osier) would care to seek the floor and make a speech-


An hon. Member:: He never does that.


Mark Willson Rose: For instance, was there any real economic logic behind the desire of the African states to be free of their colonial masters following World War II? Certainly there was no economic benefit accruing to these new states. Similar emotional content is said to motivate people to select certain kind of cars, houses and maybe even wives. It is not just what is rational that always moves people; perhaps more important is the appeal to the non-rational.


Jean-Luc Pepin: We count on you for that.


Mark Willson Rose: The minister, who is celebrated for the saying "it takes two to tango", indulges himself most of the time in the hesitation waltz. If he cares to ask me a question, I will be pleased to answer it when I have concluded my remarks.
What is crucial is not what is necessarily true, but what people think is true. This is precisely where the Liberal government has failed in areas other than central Canada, as the party membership in this House obviously testifies. Perhaps people in Canada's extremities believe the Liberals are primarily interested in central Canada. Who can deny the logic in that? The electoral logic in the Liberal caucus probably goes something like this: if there are 23 seats in all of British Columbia and in each of the two cities of Montreal and Toronto, whose voices are most likely to be heard most consistently?


Jean-Luc Pepin: Manitoba's.


Mark Willson Rose: I know it is becoming tiresome to prattle on about alienation. It is repeated over and over that the poor
March 3, 1972

are alienated. We also hear that the young are alienated and the west is alienated. Mr. Speaker, the west is alienated. I do not think we can deny that certain provincial politicians use western genuine alienation to build an elaborate set of additional fears and suspicion that our taxes, for example, are being siphoned off to parts of Canada favoured by the Liberals. If alienation did not exist there would be no environment for this kind of activity and people would laugh them out of court.
Western Canadians are not tightwads, but they are convinced that the federal government does not really give a damn about their problems. For years westerners have seen themselves "hosed" by freight rates, gouged by tariff-protected central Canadian manufacturers and forced to concentrate instead on capital-intensive rather than labour-intensive resource industries such as mining, agriculture, fishing and forestry which for the most part the west must flog in an open world market. Add all these things together and you have a perfect environment for what I consider to be political irresponsibility.
Contributing to western alienation has been the utter failure of the news media, other than CBC radio, to present the national picture in my province. Take the lower mainland dailies, for instance: very little space is devoted to Ottawa news. What is printed usually gets about the same prominence as the truss ads. It is bad enough in the Vancouver Sun, for Liberals-because the Sun has traditionally smiled on Liberalism-but for NDP members it is a black-out.
Similarly, CBC television programming has gradually been centralized in Toronto and Montreal, so that the west is never adequately presented to the remainder of Canada. The eleven o'clock news which is seen here is even edited, and much less about Ottawa comes through to the west. The newspapers in my province would counter by saying that more space would be devoted to national affairs if more people were interested. I say the people are not interested precisely because they are denied information about the federal program. Not enough attention has been devoted to this matter.
What this vicious circle really adds up to is genuine western sentiment that prompts many, even when talking to their own member, to use such impersonal phrases as "those guys in Ottawa" rather than "our guys in Ottawa".


Jean-Luc Pepin: No; it is "these gentlemen".


Mark Willson Rose: I see this questioning of equalization in some quarters as 'nothing more than an unscrupulous move designed to distract our citizens from real issues and to play upon genuine frustrations and irritations which the federal government could help overcome if it set its mind to it. No one can be against the principle of equal opportunity and security for all Canadians, no matter in which part of Canada the citizen may reside or in which tongue he wishes to express himself. That is the price and responsibility of confederation. I am not against genuine equalization, neither are the people I represent who are not, and never have been, bigots.


Some hon. Members:: Hear, hear!
Federal-Provincial Fiscal Arrangements


Mark Willson Rose: Therefore, I believe that I would serve well neither my constituents nor Canada in general by playing the red-neck, so I do not intend to do it. that does not mean that the formula upon which the equalization is based ought not to be examined for its genuine equity.
It is the contention of at least one writer, Mary Rawson, that per capita income is not the most equitable basis upon which to distribute the payments. Mary Rawson points out in the Vancouver Sun of February 10 that there is at least a partial injustice to a donating province if recipient provinces fail to tax their resource industries at an equal rate. Unfortunately, Rawson chooses to compare British Columbia with Quebec, thus adding linguistic overtones to the argument, and I would just as soon avoid that.
I do not have the figures for the other provinces but I am sure similar figures might well apply to them, both donating and receiving provinces. But Rawson claims that in 1970, with an accessible mineral resources base twice as large as that of British Columbia, the Quebec treasury received only $2 million while the B.C. treasury benefited to the extent of $49 million. It seems an extreme difference. Naturally, if one province or several choose not to tax their extraction industries as heavily as do other provinces, the per capita income upon which equalization grants are based would, accordingly, be lower and have-not provinces might appear for grant purposes to be eligible for fatter equalization payments. Rawson observes that "perhaps per capita income is a poor yardstick for judging the wealth of a region."
I have no idea how accurate or how up to date these figures are, Mr. Speaker, but certainly I believe this line of argument should be examined in much greater detail when the bill reaches committee stage. I believe we should look for a system which will set out revenue sources available to provinces on a truly standardized basis.
What we are dealing with here is, of course, a stand-pat bill. Equalization payments are necessary because we have failed in other areas. I should like to mention some of these areas in the time remaining to me. No matter how fair and equitable a grant formula may be, the government cannot be excused for its failure to establish national policies which would make the imperative of equalization less valid. Equalization payments are necessary because we have failed to do other things. Despite equalization, regional disparity still presents a tremendous problem. The government has allowed manufacturing to be centralized in the golden triangle: this is one reason some provinces have so much and others so little. This government, and no other, has tinkered with area incentive grants until they are now applicable to virtually the whole nation except for Toronto and a strip of British Columbia. This government, and no other, has failed to develop a national transportation system which would give the extremities of^our country a fair shake. This government, and no other, after sucking the provinces into shared cost programs is now preparing to welsh on them as costs rise.
Bearing in mind the astronomical cost projections for health care, where are the initiatives to develop new
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March 3, 1972
Federal-Provincial Fiscal Arrangements approaches to meet the needs of people? Has there been any suggestion that the fee for service method of payment of health service fees should be continued in perpetuity? Where are the initiatives in developing new kinds of postsecondary educational institutions?
We cannot simply continue to pay out to this extent. There are people with new ideas in this area. The government should be considering new methods of training doctors in the way we trained navigators in the Second World War, that is, recruit, clothe, pay and educate bright young men and women so that the contrived doctor shortage could be eliminated and we might cease stealing our doctors from other countries who can ill afford their loss.
It is important we examine many of these areas. Equalization payments are not enough, in themselves, to eliminate inequity and regional disparity. Canada is a rich country, a land with talented people and backed by plentiful resources. There is much to be done, so let us get on with it.


John Patrick (Pat) Nowlan: Mr. Speaker, I should like to add a few remarks to this debate. I promise the House they will be few. I do hot want to let the opportunity go by without expressing a point of view directed particularly to post-secondary education and the way in which the present formula affects, adversely in my view, institutions of higher learning in the Atlantic provinces.
I agree with the opening statement of the Minister of Finance (Mr. Turner) that there is probably no other piece of legislation, no matter how dry it sounds and no matter how dull the debate, which affects the federal state more than the bill dealing with equalization payments to various provinces.
Having been born and raised in one of the so-called have-not provinces, Nova Scotia, and having contributed, I suppose in a small way, to the gross national product in one of the "have" provinces, British Columbia, I feel that though I am by no means an expert, my experience as a professional man in the community as well as my experience as a politician permits me to say that we are all part of the family of Canada. As in any family, there are various contributors to the home. Their age differs, as does their state of health. When a family is seated around a supper table, the mother and the father are normally present. In the case of Canada, I suppose one could say that the mother and the father are the two central provinces of Ontario and Quebec. These are certainlv the two founding provinces.
Then there are the other provinces, some, in the west, expanding because of their basic economic wealth and others, in the east, going through a transitional period, not sharing in the growth rate of other parts of the country. To reduce this question to a common denominator one ought to consider equalization in the light of a family sitting around a table. The provinces of Canada make up, in their various jurisdictions, the family of Canada. The smallest and weakest member of the family has a part to play, just as do the big brothers and the older sisters. So I am in complete agreement with the Minister of Finance when he said that this equalization concept is the cornerstone of the federal system. In fact, I would go further and

say it is the foundation of the federal system-because if there is no equalization within the economy, that is, within the family, what is left?
I should like to compliment the Minister of Finance on his new and challenging post. It so happens, I suppose because of the legislative platter before the House last session, that he had to introduce an equalization bill as his first item of business. There is no item that he could have introduced more important to the federal system in Canada, not just important to us in the east but to the west and the central provinces as well. After all, the whole is only as strong as the parts, and the parts make up the whole.
I come back to my analogy of the family. The squalling, squealing baby in the crib, with which the Prime Minister (Mr. Trudeau) is confronted when he goes home from a busy day in this House, has something to contribute to the household, the same as the older brother or sister and the two parents. We all have our part to play: the equalization concept recognizes this fact.
Since, hopefully, we shall conclude this debate this afternoon, I will make my remarks brief. I should like to philosophize further on the concept of the "have" provinces contributing to the have-not provinces. That in itself is a myth, because for the "have" provinces to develop the wherewithal or money to contribute to the have-not provinces they have to be part of the whole. People in Ontario and Quebec are able to produce certain tax revenues because they have been able to benefit from various policies that helped other regions.
We now have British Columbia, developing and economically booming, able to contribute to other provinces. Many years ago, years which many people want to forget about or have forgotten about, B.C. was given a form of equalization grant when Canadian taxpayers subsidized and in effect helped to build the Canadian Pacific railway to bring together the country from coast to coast. The railway certainly was not built to carry passengers or freight to the sparsely populated and remote parts of the country at that time. Nevertheless, out of a concept that did not start with the present government or the previous one but goes back more than 60 years, British Columbia has grown buoyant and rich. I myself participated in their economy in a small way for seven years. British Columbia is now a "have" province and can help the rest of Canada in the sense of developing its raw materials and other resources in the province.
I should like to comment on one thing that the Minister of Finance said in regard to the three concepts that the Rowell-Sirois commission defined for Canada in his maiden address as Minister of Finance in opening this debate on March 1. This commission, which was fundamental really to the future of Canada, wrote that the federal authorities were to develop a financial role so that there would be national growth and stability; secondly, fair standards in public services and, thirdly, co-ordination in tax policy.
I could have much to say about tne present government, the former minister of finance, the hon. member for Kingston (Mr. Benson), and the tax reform bill. They have
March 3, 1972

fallen flat on their faces in regard to co-ordinating federal tax policy with tax policy at the provincial and municipal levels, so much so that unless measures are taken by this new Minister of Finance we will recreate the tax jungle that we had in Canada prior to the Rowell-Sirois commission. I hope the minister will show some new life, energy and initiative so that we once again do not get into this morass of financial swampland.
Coming particularly to the post-secondary education part of the equalization bill, namely part VI, which in effect extends post-secondary payments for another two years, with a ceiling of up to 15 per cent of the national average, I want to mention several areas of concern. Firstly, of course, in Atlantic Canada there is fundamental concern that the formula for post-secondary education was changed in 1966 in order to get away from a per capita student cost basis to a 50 per cent shared cost basis vis-a-vis operating expenses.
The Secretary of State (Mr. Pelletier), who is responsible for this part of the program, quite correctly says that mushrooming post-secondary education costs have risen more than the educator pot, increasing from $422 million in 1967-68 to $870 million for 1971-72. In Atlantic Canada we have, historically, educated Canadians from many parts of the country. I come basically from what is a poor province. However, in many ways we were better off with a per capita payment for our students, especially students from Ontario, Quebec and other provinces in Canada, than we are under the present program where we receive from the federal treasury 50 per cent of our operating costs.
Very simply and fundamentally, in the province I come from, Nova Scotia-the picture is the same in the other Atlantic provinces-we cannot develop the level of help for post-secondary education that other provinces can. Sharing on a 50-50 basis the operating expenditure, since the 50 per cent from the provincial treasury is a relatively low figure in view of the realities of provincial financing in Nova Scotia and Atlantic Canada in general, obviously the 50 per cent we receive from the federal treasury is also low. Yet we still have a large influx of students from other parts of the country. One of the things we can do in Atlantic Canada is build educational institutions. Historically, we have been the provider of education for many who have gone elsewhere in Canada in fields of business, science, politics and the church.


Thomas Miller Bell: Premier Bennett, for one.


John Patrick (Pat) Nowlan: Yes, Premier Bennett himself, as my hon. friend from Saint John-Lancaster (Mr. Bell) reminds me. He was a product of the equalization system. He was born and grew up in New Brunswick before going to the west. I, too, went west many years later, but I came back while he stayed. I am not going to say who fared better, although he has done very well for himself. Be that as it may, it is interesting to note that the Premier of British Columbia is a living example of the Canadian experiment. Having shared, at the lower level, our education system and inherited that bounty he has now gone to another province and today leads the province.
There are many in eastern Canada who look measily at the massive, amalgamated schools that we have. Some
Federal-Provincial Fiscal Arrangements
sociologists suggest that these will be the pyramids of Atlantic Canada in the not too distant future if we continue to have the outflow of human resources we now have to other parts of Canada. This is a reality of life today. We should try to build into any formula for post-secondary education a per capita allowance for students in Atlantic Canada. Educational institutions in the Maritimes have finally achieved a special place at the post-secondary education level. The present 50-50 cost sharing arrangement which was arrived at in 1966-67 gives cause for concern in view of the outflow of human resources to which I have referred.
One way that the "have" provinces get more fingers into the federal pie is by involving themselves in a cost-sharing program. As I said earlier, 50 per cent of $100 provides a little bit more than 50 per cent of $75.
I have some knowledge of a particular institution in Nova Scotia. I have the honour to be a governor of the board of Acadia University, the university which last year won the national basket-ball championship. I am not sure of its status in that championship this year, but I do know that the playoffs are being held this week. At Acadia University I know that government involvement, provincial and federal, is only 60 per cent per student, whereas in Ontario and the western provinces government involvement is in the order of 85 per cent per student. This is an area in which striking a balance is difficult, because in some cases the "have" provinces have established a higher level of expenditure at the provincial level and thus receive more from the federal treasury.
I hope that in the consultations which the Secretary of State will have with the provincial ministers of education in the next two years, this historic fact of Atlantic Canada will be taken into consideration and that there will be built into the new formula which is to come into effect after 1974 some type of per capita allowance to help redress the imbalance that exists now, whereby several select institutions are educating a great many students from other parts of Canada.
Another problem is how the 15 per cent will be divided. I hope it will be divided equitably. I know, Mr. Speaker, that another hon. member wishes to speak before the debate closes, but I wish to refer to a speech made by the Secretary of State to a Liberal nomination meeting in Laurier about a week ago. In it he said that we have to look at the total package, that if we do not discharge our responsibilities at one level then we will not get the benefits at another level. While that thinking may sound fine in theory and may be great philosophically, I hope that when it comes to the question of post-secondary education transfer payments it will only be the educational needs that will be looked at and assessed in finally drawing up the arrangements.


Mr. Bruce Howard (Parliamentary Secretary to Minister of Industry, Trade and Commerce):: Mr. Speaker, in the few remaining moments of this debate I want to say something on behalf of Canada. I want to speak for a strong, undivided federalism in Canada. We have those in Canada who have sought to divide our nation for their own political purposes. We have seen much of this in the
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Federal-Provincial Fiscal Arrangements province of Quebec where the disease of separatism has been used by some as a vehicle for racism and for personal political gain. I join with all those who oppose these divisive forces.
We have seen the same kind of prejudice in my own province of British Columbia. It has been said in that province that the principle of equalization is wrong and, by illustration, that Quebec gets too much. Mr. Speaker, if there are those who oppose equalization, let them say that. If there are those who oppose the French language in Canada, let them say that. But let them not confuse and divide by mixing the two together.
If politicians in British Columbia oppose equalization grants only, then why do they always use Quebec as an illustration of why they are wrong? After all, Quebec, with grants of $74 per capita, is the second lowest of all the receiving provinces. If there is any conflict or any complaint why not talk about Newfoundland, with $213 per capita, or New Brunswick, the home province of the Premier of British Columbia, with $164 per capita?
I can only assume that what is meant by British Columbia politicians is that it is only wrong to have equalization grants for French-speaking provinces and it is all right to have them for English-speaking provinces. If there is any complaint from British Columbia, surely it should be with regard to Prince Edward Island, which gets two-thirds of its revenues from equalization grants. It is not my purpose to complain about Prince Edward Island.
The reasons for this apparent anomaly are part of our constitutional heritage, as are certain of our French-language rights which also are part of our heritage. My objection is not with Prince Edward Island; it is not with Quebec. It is not with any province. Rather, it is a complaint against those who create such issues for the purpose of building their own power.
There was never a better example of the old adage of divide and rule than the present course of action being followed by a few provincial politicians in British Columbia. There have been suggestions that British Columbia would challenge equalization rights in the courts. Where is that challenge? It has disappeared. It has disappeared in the laughter of constitutional experts in Canada.
There have been other foolish things recently said by some British Columbia politicians. There have been claims that wages are especially low in Quebec and that this is why equalization grants are unfair. Again, why single out Quebec? Wages are low in Quebec, but they are lower in Newfoundland, Prince Edward Island and New Brunswick. I could go on, Mr. Speaker.
The Minister of Finance (Mr. Turner) dealt with a number of these items the other day when he spoke on the same subject and demolished many similar arguments. In the time remaining I wish to make only a few remarks. Canada is a big nation, a family of provinces, a federalism. Any family has to learn to live together. A family with no strains, no tensions, is a family without deep or developing relations. As a British Columbian I support the principle of equalization grants and I assure the House that most British Columbians feel the same way 
and are equally strong in support of any necessary measures for maintaining a strong federalism and a strong ten provinces in Canada.


Mr. Speaker:: Is the House ready for the question?
Hon. ]ohn N. Turner (Minister of Finance): Mr. Speaker, I understand that if I speak now I will close the debate.


Mr. Speaker:: Yes, if the minister speaks now he will close the debate.


John Napier Turner: Mr. Speaker, I want to speak for just one minute. I have followed the debate very attentively. I am gratified to note that there is general agreement in the House about the principles underlying this bill, principles based on equal opportunities for all provinces to provide a minimum national standard of public services to Canadians wherever they live. Members of the House have indicated general support for the principle that it should be possible to provide improved services without the poorer provinces having to raise their rates of taxation to unsupportable levels compared with their more fortunate neighbours. The unity of this country will remain strong through use of the basic arrangements spelled out in this bill.
I had hoped to have time to deal with arguments put forward by various hon. members, particularly those having to do with the tax sharing problems raised by some of the provinces, the misconception that the federal government has really frozen provincial revenues by means of this type of arrangement, the arguments that dealt with the scope of the equalization program and with the formula itself, with the question of whether municipal taxes should be included in the revenue capacity base, whether school taxes should be included, whether a tax base brought in for revenue capacity purposes should be used or not, the effect of certain provinces exploiting a wider tax base than other provinces and what this does to the equalization formula, the failure of some provinces to include some type of taxes in their tax base and how this affects the equalization formula, but I hope to deal with all these questions in committee.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.

Mr. Speaker:: Earlier today I referred to a press report relating to an incident which occurred yesterday when Mr. Roger Jay, secretary of the Union of Ontario Indians, sought to deliver a press release to the House of Commons press gallery. Inquiries into this incident confirm that Mr. Jay presented himself at the main entrance of the centre block of the Parliament buildings for the purpose of delivering a press release. The normal practice would have
March 3, 1972

been for the desk sergeant to communicate with the press gallery to arrange either for the delivery of the papers to the Canadian Press representative in the gallery or for the press officer to have the parcel picked up at the desk. Instead, Mr. Jay was directed to the office of the chief of the protective service where, after conversations, contact was established with Mr. Mollins of the Canadian Press.
The chief of the protective staff of the House of Commons gives the assurance that the action taken was not inspired by the contents of the release but only to ensure that the papers were indeed intended for distribution to the press gallery. At the same time, it would appear that the procedure adopted by the security personnel was irregular and that it did cause Mr. Jay inconvenience and embarrassment.
In the circumstances, I have no hesitation in saying on behalf of all hon. members that the incident is a regrettable one, and express the hope that such incidents can be avoided in the future.


Some hon. Members:: Hear, hear!



BUSINESS OF THE HOUSE

John Napier Turner: Mr. Speaker, in the absence of the government House leader I should like to confirm an understanding reached with the other House leaders that the business for Monday, after the procedural aspects of orders of the day, will be second reading of Bill C-4 respecting financing of the CNR.


Mr. Speaker:: It being four o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, notices of motions, public bills, private bills.


Stanley Howard Knowles: Mr. Speaker, I believe it was agreed among us that the first seven items under private members' notices of motions would stand but that they would retain their position on the order paper.


Mr. Speaker:: Is it agreed?


Some hon. Members:: Agreed.



PRIVATE MEMBERS' MOTIONS


Mr. Roland Godin (Portneuf) moved:: That, in the opinion of this House, the government should consider the advisability of introducing legislative measures so that the income of Canadians will be adjusted to the increasing cost of living by eliminating all taxes for single persons earning less than $3,000 and for married couples earning less than $5,000 with the addition of a further $500 exemption for each dependent child.
Mr. Speaker, the reason I am presenting a motion today is that I am convinced that the adjustments made at the
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time the tax reform bill was passed last fall, or rather at the end of last year, are clearly inadequate.
In spite of all the talk which has been going on these past few years about the establishment of the just society, I fail to see any real justice in a small exemption of $1,500 for single people and $2,850 for married couples. I think it is somewhat ridiculous to levy taxes at this level. If we compare, for instance, these amounts with the governor general's salary of $46,500 a year and take into account the fact that this same person who lives among us enjoys a $72,000 a year expense account for entertainment, gifts, medal awards, and government house administration, that is to pay the salaries of kitchen and household staff and all the retinue around him, this situation cannot be justified.
Canadians are well aware that they are being double-crossed by this government. It is true that this administration has published a white paper on taxation so that Canadians could argue their case, but this procedure is to me only a bluff, since the amendments to Bill C-259 have exclusively favoured large associations and corporations. The voice of small earners has not been heard and when some labour associations or citizens made representations, it was obvious that they were ignored because they could not contribute to the electoral fund of the old parties. I think that this is why no amendment was tabled in favour of the working class.
I must recognize, for example, that following the reaction of those who could contribute to electoral funds, the government has been prepared to introduce some amendments.
Mr. Speaker, if we consider that 70 per cent of the country's revenues are paid up by those earning less than $5,000 a year, then there is cause for concern. What is to me a flagrant injustice is evidenced by the comparison between the taxes levied on workers and those paid by oil companies. When one considers that from 1965 to 1968, oil companies have paid only $45 million in taxes, that is 5.7 per cent on profits amounting to $795 million, then there is other cause for concern.
Mr. Speaker, the motion I am introducing today for tax exemption for all single people earning under $3,000 per annum and married couples earning under $5,000 per annum, is based on the fact that they are always and everywhere considered as taxpayers. At all government levels, they pay the same price as anybody else. Nothing, be it municipal taxes, school taxes or insurance services, can be paid by them at reduced prices. If they are lucky enough to get a $3,000 car, for instance, they have to pay the 12 per cent federal tax and, if in Quebec, the 8 per cent provincial tax, as anybody else. If they wish to get a 40-ounce bottle of whisky, they have to pay the same price as anybody else-$8.75.
In that connection, Mr. Speaker, it is quite enlightening to consider who are the end recipients of the amount of $8.75 paid by the consumer for the 40-ounce bottle of Canadian whisky since we know that the distiller sells it for $1.22 only.
First of all, the federal government takes 44 cents for sales tax, and $2.49 for excise tax. The provincial government's share in Quebec amounts to $3.94. This already

March 3, 1972
Income Tax Exemptions
makes $8.10 per bottle. If one adds the 8 per cent provincial tax, one reaches the figure of $8.75.
It is worth noting that 10 years ago the consumer paid $6.90; since then, the distiller's share has increased by only 22 cents; the balance, that is $1.63, is being divided between the federal government and the provincial government.
Now, why should people be surprised to find out that some of them have one glass too many and develop stomach ulcers. No wonder since they end up drinking a much larger quantity of taxes than of liquids. Sooner or later, they wake up with a hangover and related injuries.
Mr. Speaker, whether the worker is earning $4,000 or $10,000 a year, the price for gas is the same, about 50 cents a gallon. Of this amount, the federal government collects about 4 cents while the province of Quebec, for instance, gets 19 cents.
We know that this also applies to a 30-cent loaf of bread. The western wheat producer, the miller who prepared the flour, the baker, the wholesale dealer, the retailer and all those who worked hard and who have been living on fractions of cents in profit could sell us their bread for 15 cents if it were not for all the taxes they have had to pay at all levels of government.
Studies have proven that there were 100 indirect taxes on bread. It is astonishing to see how little taxpayers realize the total amount of taxes they are paying each year.
For instance, at the retail level, the humiliating feature of the sales tax is obvious. If you add up the aggregate amount of taxes paid by a family over one year you reach an astonishing amount. Moreover, most consumers completely forget that the prices imposed by the manufacturers must necessarily include their own taxes.
With the present system, it is unavoidable and unfortunate that the lower income people have to pay a major portion of the revenue required by the governments for their services and programs.
The corporate tax is another kind of indirect tax imposed without the taxpayer's knowledge. This burden compels corporations to reduce their dividends; in fact their benefits are now so low that the shareholders seem to be under maximum pressure. The only way out for a corporation is to increase its sales price. Mr. Speaker, taxes do amount to a theft when imposed on taxpayers who do not have enough money to get the things they need to live at a time when there is an abundance of goods in Canada.
Taxes also amount to a theft so long as there are unsold products, unemployment and an undeveloped capacity of production because of a lack of purchasing power which in turn stymies the sale of goods.
Taxes amount to a theft at a time like this because they limit the purchasing power, lead to an accumulation of products and deprive the people in the same way as inflation does. In fact, taxes should exist only to absorb the money surplus in circulation at the very time when there is a shortage of products. When there is no money, we do not need taxes but an increased purchasing power.

From the start, we have to recognize that every direct or indirect tax leads to an increase in the prices of goods and services. It is always the consumer who pays the bill. The real taxpayer is always the consumer.
An eminent professor gave a lecture which appeared in Le Devoir on May 31, 1971 and in which he suggested that Ottawa should reduce income tax for individuals and sales tax. He said in part:
The government should reduce the income tax of individuals and the federal sales tax in order to stimulate productivity and slow down salary inflation, said economist Grant L. Reuber, director of the Department of Economics at Western University, in London.
Professor Reuber, a former president of the Canadian Economics Association, submitted to the Senate Committee on Finance some suggestions that are contrary to federal theories on the management of the economy.
In an oral and written submission that he presented in collaboration with economist Ronald G. Bodkin, Mr. Reuber questioned the arguments put forward by Prime Minister Pierre Elliott Trudeau, Finance Minister E. J. Benson and Prices and Incomes Commission Chairman John Young against tax cuts.
According to Mr. Reuber, the Bank of Canada has intensified the economic problems of Canada by going from one extreme to the other and by alternating the limitations on credit and the influx of capital in the banking system.
Mr. Reuber has agreed that the economy is moving ahead after the recession of 1970, but unemployment will not go down much below 5 per cent of the labour force. It now stands at about 6 per cent.
That is why the government should pursue a "moderately expansionary tax policy", promote expenses likely to stimulate the demand for goods and services, in order to multiply employment.
Mr. Speaker, we are witnessing an opposite phenomenon, for never have the burdens of the worker been so heavy. And still more surprising, is that each year, the taxpayers are called to pay increasingly higher taxes under the item of the public debt and incurred interests.
In 1969-70, actual expenditures under the public debt amounted to $1,709,938,172. In 1970-71, those expenditures amounted to $1,862,400,000 and finally for 1971-72, the Minister of Finance (Mr. Benson) then anticipated a public debt expenditure for the tidy sum of $1,988 million.
Mr. Speaker, if we take into account the fact that Canada has some 21 million inhabitants and that the interests to be paid amount to $1,988 million, this represents something like $100 per year for each Canadian citizen.
Now, one should recall that, after the Second World War, the per capita interest on the national debt was $26.42 and that, in 1960, it was $42.17. Twelve years later, that is in 1972, every Canadian will have to pay $100 for this. Such are the fruits of the financial system that current and previous governments have favoured and continue to favour.
Some will no doubt say that that is a good thing and, unfortunately, they are the ones who represent high finance.
If we investigated, we would find that those to whom the interest on the public debt is paid and who will receive the $2 billion or so that Canadians will pay in 1972 are not people who earn only a pittance.
March 3, 1972

On the contrary, they are in the higher tax brackets and a major part of this interest just goes to swell bankers' dividends.
Mr. Speaker, since in view of all kinds of tax increases the national debt is still rising, we arrive at the conclusion that taxes paid by small wage-earners are just money wasted which, ultimately, serves only to swell the wealth of high finance.
The Prime Minister (Mr. Trudeau) has already asked the working population of the country to tighten their belts. The constant increase of the cost of the debt in interest charges makes it clear that this appeal was meant for high finance.
Mr. Speaker, that is why I am now offering this government an opportunity to demonstrate fairness in establishing its budget by curtailing the amounts allocated to the national debt and, as a result, to evolve a tax system to relieve single people earning less than $3,000 a year and married people earning less than $5,000 a year.


Maurice Brydon Foster: Mr. Speaker, in speaking on the motion of the hon. member for Portneuf (Mr. Godin), I would congratulate him for bringing the motion before the House. It is a very important one. When we talk about basic exemptions for income tax, if we look far enough ahead we can see that no matter what is proposed, the chances are that it will come to pass some time in the future. So it is well that we should seriously consider this matter this afternoon.
I am pleased, too, that the hon. member has been able to enlighten us on some of the Social Credit theories and the benefits thereof. I am very sorry that these things have never come to pass in the provinces of Alberta and British Columbia which have had the wisdom to support Social Credit. However, Mr. Speaker, that does not in any way detract from the importance of this motion.
The hon. member for Portneuf has suggested that the amendments passed during the last 12 months did not go far enough in providing basic exemptions. I think this amendment is always true, but it is a case of trying to balance equity against growth in the economy.
It seems to me that in the two or three years when we debated the white paper on tax reform, and especially in 1969, we were enjoying rapid growth. Young people had not entered the work force in such large numbers and unemployment was at a lower level than it has been recently. Of course, as time went on-and this has been most evident in the past 12 months-it seems to me people felt that we should adopt a tax system and introduce budgets that would provide for growth in the economy. Certainly the warnings of the Economic Council of Canada bore out what would happen if that were not done. The council in its projection contended that we needed something like 6 per cent of real growth in the economy for the next four or five years.
I think we have been pretty successful in reaching this growth level. In 1971 real growth in our economy was at the 6 per cent rate. Our rate of growth between 1968 and 1971 averaged pretty nearly that figure. The Economic
Income Tax Exemptions
Council of Canada has told us that 1.4 million new jobs must be created between now and 1975. If this rate of growth is maintained we will be able to absorb into the work force many of the 1.4 additional people who will be entering the work force.
As the debate on tax policy developed, it became clear that people wanted a more equitable tax system and that we should strive to introduce a progressive tax system in which the person earning more pays more. We must also recognize that we want the economy to grow if we are to provide jobs for people entering the work force. If you are not working and are not earning any income, it really does not matter to you how high the basic exemption levels are. However, being against this motion would be like being against motherhood. We all know how difficult it is for a single person to get along on less than $3,000 a year, or for a married couple to get along on less than $5,000, the amounts set out in the notice of motion.
The hon. member also talked about the inequity of the sales tax. During the debate on the tax reform bill last fall the former minister of finance indicated that in the years ahead we would be reviewing taxes and reconsidering the sales tax. I agree with this. The hon. member for Portneuf used the example of sales tax on a bottle of whisky. I did not think that example was appropriate. If he had chosen bread, meat or something like that, his example might have been more appropriate. The sales tax is a flat tax; it taxes the poor and the rich alike at the same rate. The genius and beauty of the income tax is that it taxes progressively: a person who makes more pays more.
The notice of motion before the House reads:
That in the opinion of this House, the government should consider the advisability of introducing legislative measures so that the income of Canadians will be adjusted to the increasing cost of living by eliminating all taxes for single persons earning less than $3,000 and for married couples earning less than $5,000 with the addition of a further $500 exemption for each dependent child.
The notice of motion uses the words, "by eliminating all taxes for single persons earning less than $3,000 and for married couples earning less than $5,000". It also refers to a further $500 exemption for each dependent child. The proposal to eliminate tax for those earning under $3,000 or $5,000 could be accomplished by starting points or exemptions. The starting point device is used by the province of Quebec which provides that an individual does not pay income tax unless his income exceeds $2,000 if single and $4,000 if married. When an individual's income exceeds these amounts, the basic exemptions of $1,500 and $2,850 come into play. Thus, if a single individual has an income of, say, $2,001, he would become taxable on $501, the amount permitted by the federal exemption. However, this is prevented by a notch provision which has been introduced to prevent the tax reducing income below the starting points.
On the other hand, an exemption of a stated amount applies to everyone. For example, an exemption of $3,000 for single persons would eliminate from the tax rolls everyone with income of less than this amount and would also permit all single taxpayers to deduct $3,000 from income in computing taxable income. The advantage of the starting point device is that it is much less costly in terms of revenue. However, it requires a notch provision for income that is just above the starting points. Even

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Income Tax Exemptions
with such a provision the marginal rate on such income is likely to be very high.
No matter whether the hon. member has in mind starting points or exemptions at the $3,000 and $5,000 levels, the government's position might be that this matter was extensively reviewed following the report of the Royal Commission on Taxation, the preparation of the white paper on tax reform and the preparation of the tax reform income tax amendments passed by Parliament in December, 1971. There was considerable debate in the House on this subject when the white paper was discussed and during consideration of Bill C-259 last session. The exemptions recommended by the government and accepted by Parliament in the legislation passed in December, 1971, apply for 1972 and subsequent years and are as follows: for a person of single status, $1,500; for a person of married status, $2,850; for a dependent under 16, $300, and for a dependent over 16, $550-or $50 more than the amount mentioned in the notice of motion.
In addition, every taxpayer may deduct an optional standard deduction of $100 in lieu of claiming deductions for medical expenses or charitable donations. Every taxpayer may also deduct 3 per cent of his income from salary or wages, up to a maximum of $150. Taxpayers over 65 are granted an additional deduction of $650. The result of the combination of these deductions is that an employee with single status who is under 65 will not be subject to income tax until his salary or wage exceeds approximately $1,650. An employee with the full married exemption will not be subject to income tax until his salary or wage exceeds approximately $3,041.
The question is, what would be the effect on revenues if the high exemptions mentioned in the notice of motion were put into effect? Whom would we tax, or where would we obtain the needed taxes to overcome any losses. Of course, the tax reform bill passed last year provided for the imposition of capital gains taxes. These will supply additional revenues and allow tax levels to be reduced for practically all people in the labour force. Everyone pretty well, with the exception of single status taxpayers earning more than $8,500 a year, will benefit. Married couples with dependants will pay reduced taxes. As I say, the reductions will affect almost everyone.
The revenue implications of the hon. member's resolution cannot be easily estimated in detail. However, with starting points of $3,000 and $5,000 it would probably reduce revenues by less than $100 million, although this would depend substantially upon the notch provision used to tax income just in excess of the starting points. The increase in the basic exemption of the order proposed would cause substantial reduction in revenue. The order of magnitude can be guessed by noting that the increase in the basic exemptions from $1,000 to $1,400 and from $3,000 to $2,800, as proposed in the white paper on tax reform, was estimated at $1 billion.
When we look at this matter from the human point of view we cannot help but believe that what the hon. member is proposing will in the long haul be adopted in some form because of the inflation which occurs every year and the fact that people in the lower income brackets

will have less and less resources with which to pay taxes. This is the important point of a graduated scale: it not only helps the progressive tax system and the poorer parts of the country but it helps the poor people.
Last week a group from the national anti-poverty organization met in Ottawa. It presented briefs to all the caucuses of the House. I must say they were a very forwardlooking group. Like practically everyone coming to meet the government, they were looking for funds, but they were doing this in a positive way. They were looking for assistance in order to help themselves. This is an encouraging development.
This group proposed that there be a poor people's development corporation. Their proposal had two objectives: first, to assist income groups in developing self-sustaining organizations and, second, to allow low-income people to participate in some organizations. This corporation would be made up by appointments from the government and appointments from within their organization. The corporation would fund self-help projects.
One of the projects they proposed was co-operative grocery stores in isolated areas. They gave the example of a small community of 200 people in one of the western provinces which does not have any store to serve them. They suggested that this kind of national organization would be able to provide the resources for a self-help project. They also proposed that in urban areas funds be used for housing developments and that 5 per cent of the needed capital would be provided by this corporation: the balance would come from Central Mortgage and Housing Corporation. This group also talked about free stores in Winnipeg, a self-help community organization. This would provide an opportunity to assist each other, as well as those who are transferred, in the provision of supplies.
I believe the motion before us would be of benefit to many Canadians in the lower income brackets. The idea of hearings on the tax reform measures which were before us last fall worked toward more growth in our economy. The budget that was presented last fall also worked in this direction. Personal income tax was lowered by 3 per cent and corporation tax by some 7 per cent in order to provide more funds to get the economy of the country moving faster.
I know there are speakers on both sides of the House who want to speak this afternoon. I think it is interesting that this debate should occur just at the time we are debating the federal tax sharing agreements which this afternoon received second reading, approval in principle. One of the beauties of this country is that we have such co-operation between the federal and provincial governments. We know that when the levels of minimum basic exemptions are raised to the levels suggested by the hon. member for Portneuf, they will apply across the country and the benefits will be nationwide. We do not have the tax jungle in Canada that we had at one time and which exists in many other countries.


Maclyn (Mac) Thomas McCutcheon: Mr. Speaker,
I congratulate the hon. member for Portneuf (Mr. Godin) for bringing forward this intriguing notice of motion. I would like to go on record as being sympathetic to the proposal of the hon. member if it really means relief to
March 3, 1972

Canada's hard-pressed taxpayers. However, as a responsible member of this chamber I must point out that having regard to practical considerations and a shrinking tax base that has not been recognized by the government, this probably would not bring the result that the hon. member envisages. I do not think for one minute there would be enough money left to go around. We are aware that next year income tax exemptions will be increased from $1,000 to $1,500 for single persons and from $2,000 to $2,850 for married couples, plus the $100 mandatory exemption. For married couples over 65 in standard circumstances where the wife is not earning any money, the exemption next year will be $3,600.
The notice of motion before us calls for the elimination of taxes for single people earning up to $3,000. This is an increased exemption of $1,500. In the case of married couples it calls for an increased exemption from $2,950 to $5,000, an increase of $2,050. These figures seem rather large at first glance but I suspect they are probably closer to the actual purchasing power of the dollar than the government is prepared to acknowledge. If one considers that until 1948 the exemption for a single person in this country was $750 and in 1949 it was advanced to $1,000, where it has stayed until today, and having regard to the decrease in purchasing power of the dollar during that time, I suggest that a fair figure might be 3 per cent annually, we know that it has been at least 4 per cent a year since 1966 and, therefore, having regard to the compounding effect of the decrease in the purchasing power of the dollar the suggestion of the hon. member is not so far out of line. Indeed, the Ontario Association of Superannuated Teachers passed a resolution along these lines regarding 1972 income tax exemptions. I have received dozens of letters from this organization and I should like to quote a resolution which was passed by them:
Be it resolved that:
(1)	The income tax exemption be increased for all citizens of Canada or 65 years and over to $3,000 for all single persons and $4,500 for all married couples, and
(2)	That an escalation clause be included in the exemption to establish an escalation geared to the cost of living for retired persons of 65 years and over.
These people are concerned, as well they might be. In light of the situation which exists I must say that while I am sympathetic to their case and to this resolution, in my opinion this approach is only a band-aid treatment for the disease: the cure for the disease is something else. I submit that the sky is the limit as far as exemptions go, but this will not treat the disease of profligate spending by governments in Canada today. This has placed our people in the unenviable position in which they find themselves.
I am not a senior member of the House by any means, but it came as a shock to me to find that in the short period in which I have been in this chamber the national budget has more than doubled. That is in less than a decade. No, Mr. Speaker, the answer is not necessarily to increase exemptions. I submit that the answer lies only in establishing real priorities for expenditures. The cure to this impasse is to spend money only on things which are worth while. We must cut out the frivolities. I ask this question: Has the group referred to as Satan's Choice or
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devil worshippers, or whatever they are called, which applied in Toronto for a LIP grant, actually received $25,000? If the money has been received by them, what is the situation? I make no statement as to whether they should or should not have received the money, but supposing after investigation it is determined that they should not have been given it: what happens? Do Canadian taxpayers have any chance of getting their money back? Has any taxpayer received a refund following the exorbitant waste in the course of refitting the Bonaven-ture"! What about the grant to CHAT, the Community Homophile Association in Toronto which received $14,602 to succour Toronto's homosexuals?


Duncan Gordon Blair: You have strayed a little from the resolution.


Maclyn (Mac) Thomas McCutcheon: In conclusion, may I say that I am sympathetic to the motion but in all honesty it appears to me that a thorough review of the priorities of government would result in a more meaningful and more direct solution of the problem.


Mr. Bill Knight (Assiniboia):: Mr. Speaker, it is indeed a pleasure to address a few remarks to the House on the motion moved by the hon. member for Portneuf (Mr. Godin). I suggest there is a great deal of merit in the hon. member's proposal by way of tax reform. It would result in purchasing power being placed in the hands of those who need it most.
I was interested in the comments of the hon. member for Algoma (Mr. Foster) who told us, with great piety, that he is sympathetic to the motion. Nevertheless, I note that the government which he supports, last fall when it had the opportunity to introduce meaningful measures of tax reform evaded its responsibility and put forward legislation designed merely to continue the special privileges of corporate interests. The government should take the opportunity afforded by this motion to alleviate the tax burden upon those whose incomes are low. The hon. member for Algoma told us that the government would lose revenue of $100 million. I believe this $100 million could be made up from sources of revenue other than taxing people of severely limited means.
The tax legislation introduced last fall left wide disparities in terms of what income is taxed and what is not. An individual who earns $10,000 a year as a farmer, a working man or a professional, will pay tax amounting to about $2,285. A person who derives an income of $10,000 from capital gains will pay in the neighbourhood of $788, and a person deriving a similar income from dividends will pay only in the neighbourhood of $173. Disparities of this kind are completely out of line with any concept of a just society.
It would be well for the government to allow this motion to go to a vote, assist in its passage and give a break to people in the low income brackets in terms of the tax they must pay.


Mr. Lloyd Francis (Parliamentary Secretary to Minister of Veterans Affairs):: Mr. Speaker, I have listened to this debate with considerable interest, particularly to the remarks of the hon. member for Assiniboia (Mr. Knight) who has just spoken.

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I note that all members who have spoken have pronounced themselves in favour of increased tax exemptions, which is the basic principle embraced by this motion. They have also said that tax reform such as that already undertaken has not gone as far as it should have gone. I should like to raise one basic question for the consideration of the hon. member for Assiniboia. I believe in tax reform, in giving tax reductions to those in the lower income brackets; but when the hon. member increases the basic exemption by, say, even $1,000, then the man in the 80 per cent marginal tax brackets gets tax relief amounting to $800 whereas the man in the 20 per cent tax bracket gets tax relief amounting to $200. Therefore, I would ask him this question: Is this always the fairest and most equitable means of achieving the social purposes that I know he has in mind?
When one increases basic tax exemptions across the board there is no question in my mind that the greatest benefit from such an increase is derived by the man in the higher tax brackets.


William George Knight: A point of order, Mr. Speaker.


Mr. Deputy Speaker:: Order, please. The hon. member for Assiniboia is rising on a point of order.


William George Knight: May I suggest that the hon. member reread the resolution, which speaks in terms of people in the lower income brackets, not as he suggests.


Cyril Lloyd Francis: Mr. Speaker, I have read the resolution very carefully and for the sake of the hon. member I will read it again into Hansard. The motion reads:
That, in the opinion of this House, the government should consider the advisability of introducing legislative measures so that the income of Canadians will be adjusted to the increasing cost of living-
How that is done, I do not know.
-by eliminating all taxes for single persons earning less than $3,000 and for married couples earning less than $5,000 with the addition of a further $500 exemption for each dependent child.
I agree there is some ambiguity of meaning, but there is reference to a further $500 exemption. Presumably an exemption is an exemption. Presumably this resolution is couched in terms of exemptions. Indeed, I find it difficult to read it in any other way. Is the resolution intended to give us an elaborate system of tax reduction that does not change the tax brackets of anyone except by a notch provision with certain starting points, such as was introduced by the province of Quebec in its administration of tax law?
I understand that in the province of Quebec the basic exemption for a single person is $2,000. The basic exemption under the new law would be something like $1,500 or $1,400, plus the $100 charitable deduction with the tax rate cutting in above that. Then there is a notch provision so that anyone paying taxes on, say, $501 would pay no more as a result of cutting in above the basic exemption.
It is not clear at all whether the Quebec system is intended here, or some blanket exemption. I personally read the resolution to mean there should be an exemption of $3,000 and one of $5,000.1 was not aware that the mover

of the motion made this point at all clear. I think my reading of it is consistent with the hon. member's remarks, but there will be other opportunities, I am sure, for members on all sides of the House to set the record clear.


William George Knight: We will.


Cyril Lloyd Francis: I am delighted to hear that. One thing that is clear is that we have already gone through a measure of tax reform. We have increased basic exemptions. At the present time the law provides an exemption, for those claiming single status, of $1,500; and for those claiming married status, of $2,850. For each dependent child under the age of 18 eligible for an allowance there is a deduction of $300. For the dependent age 16 and over the allowance is $550. In addition, every taxpayer may deduct an optional standard deduction of $100 in lieu of claiming medical expenses and charitable donations.
Every taxpayer may also deduct 3 per cent of his income from salaries or wages up to a maximum of $150. Taxpayers over the age of 65 are granted an additional deduction of $650. The result of the combination of these deductions is that an employee with single status under age 65 will not be subject to income tax until his salary or wages exceed approximately $1,650. An employee with the full married exemption will not be subject to income tax until his salary or wages exceed approximately $3,041.
I want to make it abundantly clear that in the course of the inflation which unfortunately is part of our times, the case for a review of basic exemptions under our tax laws is so strong that it is unanswerable. The mover of the motion has given us no formula to relate this to the cost of living, despite the pious phrasing of his motion. It will be necessary to review the law from time to time and to raise exemptions in such manner as may be provided. But none of us is so naive as to think that this can be done without regard to the effect of increasing exemptions on tax yields.
I note, for example, that something like $1 billion was the estimated cost to the treasury of increasing exemptions from $1,000 to $1,400. Increasing them to $3,000 would result in a very substantial tax loss to the treasury. The cost of the $500 exemption for dependent children- and the word "exemption" is clearly used-would cost in the order of $500 million considered separately in its own right.
I am sure nothing will give hon. members on all sides of the House greater satisfaction than to be able to give tax reductions to large numbers of voters. I am sure that in this, an election year, the thought would be particularly appealing. But we have to be something more than just cynical in promising great things and large hand-outs; we have to ask ourselves the basic question: Is this the best way to administer expenditure for public purposes?
I start with the question I asked the hon. member for Assiniboia: Does he intend to give a man in the 80 pef cent tax bracket the greatest amount of tax relief? I am sure he does not. The effect of increasing exemptions in a blanket way would do just that.


Thomas Clement (Tommy) Douglas: A system of tax credits would not.
March 3, 1972


Cyril Lloyd Francis: The hon. member for Nanaimo-Cowichan-The Island (Mr. Douglas) interjects, perfectly logically, that tax credits would not, but the motion before the House does not talk about tax credits. The motion before the House, as I understand it, is put in more simplistic terms and would have the effect, I submit, of giving large
Income Tax Exemptions
reductions in areas that I am sure members on both sides of the House would be the last to stand and defend.


Mr. Deputy Speaker:: Order. The hour appointed for the consideration of private members' business has now expired. It being five o'clock p.m. this House stands adjourned until Monday next, pursuant to Standing Order 2(1).
At 5 p.m. the House adjourned, without question put, pursuant to Standing Order.

Monday. March 6, 1972