1972-05-11

PRESENCE IN SPEAKER'S GALLERY OF DELEGATION FROM YUGOSLAVIA

Mr. Speaker:: Order, please. Before we begin today's proceedings I should like to draw the attention of hon. members to the presence in the Speaker's gallery of a very distinguished delegation from Yugoslavia, led by His Excellency Mr. Mika Spiljak, President of the Chamber of Nationalities of the Yugoslav Federal Assembly.


Some hon. Members:: Hear, hear!


Mr. Speaker:: This Yugoslav parliamentary delegation is visiting Canada at this time as guests of the House of Commons. I know all members would want me to extend to them on behalf of the House a most cordial welcome to the parliament of Canada. It is our hope and trust that they will find their visit in our country enjoyable, rewarding and fruitful. We welcome them to our country.


Some hon. Members:: Hear, hear!



PRESENCE IN GALLERY OF TEAMS PARTICIPATING IN MEMORIAL CUP HOCKEY FINALS

Mr. Steven E. Paproski (Edmonton Centre):: Mr. Speaker, I should like to direct the attention of the House to the presence in the gallery of three great hockey teams participating in the Memorial Cup 1972 playoffs in Ottawa, the Cornwall Royals, the Peterborough Petes and the western Canada ambassadors, the Edmonton Oil Kings.


Some hon. Members:: Hear, hear!


Mr. Speaker:: The hon. member has a very valid question of privilege, particularly in so far as the Cornwall Royals are concerned.


Some hon. Members:: Hear, hear!



ROUTINE PROCEEDINGS


[Stage Direction]
Third report of Standing Committee on Justice and Legal Affairs-Mr. Gervais.
[Editor's Note: For text of above reports, see today's Votes and Proceedings.]


Mr. Roch La Salle (loliette):: Mr. Speaker, pursuant to Standing Order 43 I ask the unanimous consent of the House to propose the following motion: In view of the slowness of negotiations between the Quebec and Ottawa governments concerning social policies, and in view of the fact that an agreement between the two governments is urgently necessary in the present situation in Quebec, I move, seconded by the hon. member for Charlevoix (Mr. Asselin):
That this House forthright refer the whole matter to the Committee on Health, Welfare and Social Affairs and that special meetings be held in order to reach a solution agreeable to both governments.


Mr. Speaker:: The House has heard the motion moved by the hon. member for Joliette. This motion, moved under the provisions of Standing Order 43, requires unanimous consent of the House.
Is there unanimous consent?


Some hon. Members:: No.


Some hon. Members:: Yes.


Mr. Speaker:: The hon. member will have noted that there is no unanimity. Therefore the motion cannot be put.



PENSION ACT. WAR VETERANS ALLOWANCE ACT AND OTHER ACTS AMENDMENT TO PROVIDE FOR ANNUAL ADJUSTMENT OF PENSIONS AND ALLOWANCES

Hon. Arthur Laing (Minister of Veterans Affairs) moved: for leave to introduce Bill C-208, to amend the Pension Act, the War Veterans Allowance Act, the Civilian War Pensions and Allowances Act, the Children of War Dead (Education Assistance) Act and the Department of Veterans Affairs Act, to provide for the annual adjustment of pensions and allowances payable thereunder.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.
Inquiries of the Ministry PUBLIC ACCOUNTS
[Stage Direction]
May 11, 1972

[Stage Direction]
On the order: Government Notices of Motions.
May 9, 1972-The President of the Privy Council:
That the Public Accounts for the year ended March 31, 1969 and the year ended March 31, 1970, and the reports of the Auditor General thereon, together with the evidence adduced by the committee during the second and third Sessions of the 28th Parliament, be referred to the Standing Committee on Public Accounts.
Mr. Speaker:: Pursuant to section 2 of Standing Order 21 this government notice of motion stands transferred to and ordered for consideration under government orders at the next sitting of the House.


Mr. MacEachen:: Mr. Speaker, perhaps I might rise on a point of order to suggest that as a result of discussions it might be possible to move that this reference to the Standing Committee on Public Accounts be accepted at this time, if this could be done with consent.


Mr. Baldwin:: We are quite agreeable. We think that the sooner we get these looked into the sooner we can look at the next ones which will be interesting.


Mr. Knowles (Winnipeg North Centre):: The minister's point of order is the one on which I was rising, Mr. Speaker. Yes, we agree.


Allan Joseph MacEachen: That the public accounts for the year ended March 31, 1969 and the year ended March 31, 1970, and the reports of the Auditor General thereon, together with the evidence adduced by the committee during the second and third Sessions of the 28th Parliament, be referred to the Standing Committee on Public Accounts.


Mr. Speaker:: Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, in the absence of the Prime Minister-I do not know whether he is visiting Rideau Hall or where he is-I should like to direct a question to the Minister of Finance.


An hon. Member:: You are nervous.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: I should like to ask the Minister of Finance upon what projections of consumer demand levels he based his decision to allow an increase of 3 per cent in personal income taxes to come into effect on January 1 next?


Hon. John N. Turner (Minister of Finance):: Mr. Speaker, I do not agree with the hon. gentleman's premise. There was nothing in the budget affecting personal income tax. This parliament three or four weeks ago extended for the year 1972 the temporary 3 per cent reduction on personal income tax and the 7 per cent reduction on corporation tax which were introduced in October last by my predecessor. In the terms of that law, a law of this parliament, both the 3 per cent temporary reduction in personal tax and the 7 per cent reduction in corporate tax will expire at the end of 1972 except, of course, for manufacturers and processors with which the budget dealt. I would say to my hon. friend that in terms of personal tax I discussed this matter thoroughly when various options were put to me by the press as to what alternatives were available to me, and I explained to them what I intended to do on the basis of the resources available to me. Personal taxes will continue to decrease under the tax reform legislation of my predecessor under the four-year schedule which he set out, and of course the exemptions will be higher.


Robert Lorne Stanfield: I thought we were getting into a debate for a minute, Mr. Speaker. I should like to ask a supplementary question of the Minister of Finance. Granted that those of us who are members of this chamber and are very knowledgeable about taxation matters realize that the rate of taxation on personal income will increase again the first of January, I wonder why, in view of the very fulsome way, to use the minister's own words, in which he approached the general outline of the government's position, he did not feel it necessary to mention during the course of his budget speech that personal income taxes would go up again on the first of January next?


Mr. Speaker:: Order, please. The Chair will allow the minister to reply, but I take the liberty to remind hon. members, before we spend too much of the question period on the budget, that we do have a budget debate later today. This having been said, the question has been asked and the Minister of Finance should be allowed to reply.


John Napier Turner: The answer to that quite clearly is that the budget did not touch on the personal income tax. I went on the assumption that parliament was aware of the present provisions of the law.


Gerald William Baldwin: How about the people?


Robert Lorne Stanfield: confidence is based that, despite the increase in the personal income tax which will take place on January 1 next, the level of consumer demand will be sufficient to support an expansion of the economy and therefore fight unemployment in the manner to which the minister has dedicated himself.


John Napier Turner: It was my judgment that consumer demand as represented by the expansion of the economy would be sufficient and that the temporary reduction authorized by parliament should be allowed to expire. That was fully disclosed to the press at a national press conference when they put those options to me.



REGIONAL ECONOMIC EXPANSION


Mr. John Burton (Regina East):: Mr. Speaker, I wish to direct a question to the Minister of Regional Economic Expansion, and I have given him notice of my intention to ask him a question on this matter. In view of the revelations in the Standing Committee on Regional Development concerning some millions of dollars in offers of grants by his department that had not been reported to parliament as required by law, would the minister undertake to submit an interim report to parliament at the beginning of next week providing the information that is available now? I ask this question because the deputy minister indicated that it would take several weeks to provide a complete report.


Hon. Jean Marchand (Minister of Regional Economic Expansion):: Mr. Speaker, I think the hon. member knows that, as reported yesterday to the Standing Committee on Regional Development, I have instructed my department to produce a supplementary report on cases involving revised incentive offers as soon as possible. Assurances to this effect were given to the standing committee yesterday both by myself and my deputy minister. Those assurances will be kept.


John Stratford Burton: In view of the admission that about 90 grants to corporations were revised after the original offer, could the minister inform the House why it should take several weeks to provide a report to parliament on this matter?


Mr. Speaker:: I doubt that the supplementary question is in order.


John Stratford Burton: May I ask the minister whether he could not undertake to speed up the completion of this report and to provide an interim report, as I asked in my original question, which would provide information that is available now and allow time for checking out all the departmental records? Furthermore, could the minister also assure the House that this information will be made public before the next federal election?


Jean Marchand: I do not know when the next election will be held, Mr. Speaker.
25316-14J
Inquiries of the Ministry


Mr. Edward Broadbent (Oshawa-Whitby):: The minister said, perhaps properly, that it would take considerable time to go through the 1,400 cases which have already been given grants, but could he not early next week at least present us with a list of the 90 corporations, which, as he has already said in the committee, have had their grants revised?


Jean Marchand: Mr. Speaker, I do not want to draft an interim report as I would like to make sure that the figures quoted are correct. Otherwise, the committee members would be justified in charging us with giving false information. All records will have to be checked and a report could be brought in within reasonable time, I think.



UNEMPLOYMENT INSURANCE


Mr. Real Caouette (Temiscamingue):: Mr. Speaker, I wish to direct a question to the Minister of Manpower and Immigration.
In view of the fact that following the closing of Que-mont and Noranda mines and of the CIP mill in the town of Temiscaming, these companies have to give severance pay to laid off employees, and in view of the fact that the Unemployment Insurance Commission refuses to pay benefits to these newly unemployed people on the ground that they would have to exhaust this money before benefits can be paid to them, is the minister in a position to indicate whether his department is reviewing this situation which I think is utterly illogical so that these unpaid unemployed people can get fair treatment?


Hon. Bryce Mackasey (Minister of Manpower and Immigration):: Mr. Speaker, the whole area of what constitutes income is being reviewed at the present moment in light of the regulations, and that includes severance pay and vacation pay. As a general rule severance pay is spread over a period of not more than 33 weeks to make certain that people with labour attachment of 52 weeks still qualify for major benefits.


David Réal Caouette: I would like to ask a supplementary question, Mr. Speaker.
I could see the smile on the face of the Minister of Regional Economic Expansion when I spoke of the unpaid unemployed.
However, I would ask the minister to tell us if the local unions have made representations or filed briefs with the department so that these people will be treated fairly. Because, even though they are receiving severance pay they are still unemployed.

May 11, 1972
Inquiries of the Ministry


Bryce Stuart Mackasey: Yes, Mr. Speaker, I have asked for representations from the representatives of the workers and also, of course, from the employers. The basic concept behind unemployment insurance is interruption of earnings rather than unemployment, but there have been representations from the representatives of the workers concerning the definition of earnings.



SOCIAL SECURITY


Hon. Martial Asselin (Charlevoix):: Mr. Speaker, I would have liked to ask my question of the right hon. Prime Minister but, as he is absent, I shall ask it of the Minister of National Health and Welfare.
Since Mr. Castonguay suggested that the lack of comprehension and consultation between the federal government and Quebec is the reason for his threat of resignation, in view also of the present volcanic climate in the province of Quebec, we must endeavour to improve the situation and to prevent the loss of one of the outstanding Quebec ministers.
Would the minister say to this House whether he intends to meet his Quebec colleague as soon as possible to discuss with him the question of a social security system which would be more acceptable to the Quebec government?


Hon. John C. Munro (Minister of National Health and Welfare):: Mr. Speaker, I would advise the hon. member that in terms of the family allowances we have been meeting constantly with Quebec, and I think to the beneficial end of both levels of government.


Robert Lorne Stanfield: Which is the beneficial end of this government?


John Carr Munro: I would expect that we would come to an agreeable accommodation within a matter of days, so the negotiations along that line have been proceeding very well.
With reference to the government's intention to increase old age pensions, this, of course, was announced in the budget speech. For reasons that are obvious when that procedure is adopted, there could not be the consultation that otherwise might have taken place. As is obvious from recent speeches by members of all the opposition parties in the House, we were faced with what they agree is a fact, that a significant number of those 1,800,000 Canadians desperately need assistance, and that is what the Minister of Finance has done.


Mr. Speaker:: Order, please.



FAMILY ALLOWANCES-EXERCISE OF LEGISLATIVE POWER BY QUEBEC

Martial Asselin: Mr. Speaker, I have a supplementary question.
In view of the answer which was recently given to me in the House by the hon. minister, specifically that there was no question of the federal government granting Quebec legislative primacy in the area of family allowances, does the minister intend to change his mind, following the events taking place in that province, and assure Social Affairs Minister Castonguay that the federal government will indeed grant Quebec legislative primacy in this area?


John Carr Munro: Mr. Speaker, the discussions with Quebec as well as with the other provinces were set out in a letter from the Prime Minister to the premiers. He indicated the guidelines within which we felt it would be reasonable to expect the provinces to have an option to design family allowances within federal minimum standards. As far as I am aware the negotiations with Quebec have been proceeding very well and there has been no dissatisfaction expressed by that province with respect to the suggested accommodation in this particular regard.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. I hope we will find a way to shorten both the questions and answers because we are running short of time.

Some hon. members have supplementary questions, including the hon. member for Temiscamingue (Mr. Caouette).



PENSIONS


David Réal Caouette: Mr. Speaker, I wish to ask a supplementary question.
If we grant a senior citizen, whose spouse has not yet reached the age of 65, the security income supplement, do we in such a case file an application with the social welfare office of Quebec or with other provinces? Would the minister tell us whether he found out from provincial authorities if the increase granted people aged 65 will decrease the welfare allowance his spouse is receiving at the present time?


John Carr Munro: Mr. Speaker, the fact that the-


Mr. Speaker:: Order, please. I will allow the minister to reply but it seems to me that to some extent we are getting involved in discussing the details of a bill which is already before a committee.



I don't want to suggest that the minister should not answer the question put by the hon. member for Temis-camingue, but we should try to go on to something else and perhaps come back to it later on.

The Minister of National Health and Welfare has the floor for the moment.


John Carr Munro: Mr. Speaker, the fact is that the increase in pensions will benefit the elder spouse in the example the hon. member quoted; the spouse under 65 will not benefit from the increase, of course. It may be that the province will use this increase to deduct what they would otherwise pay the spouse under 65, but I hope that will not be the case.



FINANCE


Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, I have a question for the Minister of Finance. In view of the fact the Canadian dollar reached a value on the spot market yesterday of $1.0103, would the minister advise the House whether he shares the optimism of his predecessor that the Canadian dollar, following the negotiations of last fall, would move downwards to become equivalent to the United States dollar? Would he also advise the House whether it is the intention of the government to have the Bank of Canada maintain a clean float with regard to the relative values of the Canadian and U.S. dollars, notwithstanding the fact that his figures disclose that there was an intervention of about $500 million in the foreign exchange market in order to participate in a so-called clean float?


John Napier Turner: Mr. Speaker, to deal with the $500 million first, that money was purchased from the exchange fund during the latter half of 1971 previous to the Smithsonian agreement of December 15 last year when the world money market was in a state of disorder and we felt we had to protect the dollar at that time. Since then, the dollar has been allowed to float cleanly.


Marcel Joseph Aimé Lambert: In view of the difficulties that are imposed upon Canadian exporters by the ever-increasing value of the Canadian dollar, will the minister advise whether he shares the confidence of his predecessor that the policy of the Canadian government would not affect Canadian exports adversely?


John Napier Turner: Mr. Speaker, the budget measures, particularly the corporate tax reductions for manufacturers and processors, had as one of their purposes to protect them against any movement in the Canadian dollar.
Inquiries of the Ministry



LEVEL OF CANADIAN DOLLAR-NATURE OF FLOAT

Robert Lorne Stanfield: Mr. Speaker, I should like to put a question to the Minister of Finance or the Acting Prime Minister. It arises from the admission just made by the Minister of Finance that the float was not clean prior to the Smithsonian agreement. To what extent can we rely upon the assurance given by the government, which has insisted consistently that the float was a clean float all along, when we now learn that it was only clean since a certain date?


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. We are obviously getting involved in the debate which I gather we are to have later this afternoon, but the minister might reply briefly and then we will try to get on to another subject.


John Napier Turner: Mr. Speaker, nothing that the hon. gentleman has suggested in his statement deprives me of the validity of an answer that during the relative chaos of the international monetary market between August 15 and December 15, every country in the world took steps to protect its currency. That was the only time we had to intervene in any appreciable way to protect the dollar-


Mr. Speaker:: Order, please. I will recognize the hon. member for Nanaimo-Cowichan-The Islands shortly, but we have had so many supplementaries from the beginning of the question period that we are not moving along very quickly. For the moment, the Chair will recognize the right hon. member for Prince Albert.



RED ENSIGN-REASON FOR DELAY IN ANSWERING QUESTION

Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, since March 28 I have been waiting for an answer to starred question No. 446 concerning the red ensign.


Some hon. Members:: Oh, oh!


John George Diefenbaker: I see the Parliamentary Secretary to the Prime Minister ridicules the red ensign by his interruption. I ask why there has been such difficulty getting an answer to that question?


Hon. lean-Eudes Dube (Minister of Public Works):: Mr. Speaker, the right hon. gentleman wanted to know how many flags were left in the country under the control of my department at a certain time. I presume that my officials are busy counting flags and I expect we will have an answer by next week. We want the reply to the question to be correct and exact.


John George Diefenbaker: Mr. Speaker, is the reason for the delay the fact that many red ensigns were put to the torch, or burned at the stake?


Some hon. Members:: Oh, oh!

May 11, 1972
Inquiries of the Ministry


Mr. Speaker:: Order, please. The hon. member for Nanaimo-Cowichan-The Islands.


Jean-Eudes Dubé: Mr. Speaker, perhaps I can reply briefly that next week the right hon. member will find out-


Mr. Speaker:: Order! May we have order? The Chair has recognized the hon. member for Nanaimo-Cowichan-The Islands.



FINANCE


Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, may I direct a question to the Minister of Finance. In view of the fact that the value of the Canadian dollar in relation to the American dollar is at the highest figure since the Canadian dollar was unpegged, and in view of the fact that analysis shows that this is largely due to the fact that interest rates in Canada are higher than in the United States, is the minister, with the governor of the Bank of Canada, taking any steps to reduce interest rates in Canada to bring them in line with those in the United States so that we will not have this disequilibrium which is having such a harmful effect on manufacturing, particularly on lumbering in British Columbia?


John Napier Turner: Mr. Speaker, there are a number of other factors operating on the value of the Canadian dollar as well. If any steps are to be taken they will be announced here in due course.


Thomas Clement (Tommy) Douglas: In view of the fact that analysis shows that Canadians, particularly the provinces, are borrowing in the United States because of lower interest rates there and short-term capital is coming into Canada because of high interest rates here, and while the process of watching interest rates, as the minister said a few days ago he was doing, may be interesting, may I ask him when he proposes to act on interest rates?


Mr. Speaker:: The hon. member for Red Deer.


EXTERNAL AFFAIRS
Mr. R. N. Thompson (Red Deer):: Mr. Speaker, in view of the fact that neither the Prime Minister nor the Minister of Energy, Mines and Resources is here, may I direct my question to the Acting Prime Minister. As the United States Secretary of the Interior, Rogers Morton, has today issued a permit authorizing construction of the trans-Alaska pipeline, would the Acting Prime Minister please inform the House what response the government of Canada has made to this tragic decision which threatens the entire environment of the Pacific west coast?


Arthur Laing: Mr. Speaker, the granting of the permit by Mr. Morton was not unanticipated here nor in the United States as the matter has been before him for some time. In the meantime we have had discussions through the Minister of Energy, Mines and Resources-


Robert Lorne Stanfield: That great diplomat.


Arthur Laing: -with Mr. Morton and with the government of the United States and they have been very satisfactory.


An hon. Member:: A clean float.


Arthur Laing: The minister put before Mr. Morton the possibility of reconsideration of a pipeline through the Mackenzie Valley. He indicated to him that in a very few months we would be in a position to delineate clearly the requirements for ecology. That has been taken into account by the government of the United States. It may be some time yet before construction can commence on the pipeline and it is our thought that there will be further discussions with the United States government.


Robert Norman Thompson: A supplementary question, Mr. Speaker. The minister has said that the Minister of Energy, Mines and Resources placed the proposition before the Secretary of the Interior of the United States. However, we do not know what the policy of the government is or what is to happen. I have tried to learn from answers to questions whether anything is being done to speed up the pipeline feasibility, in view of what the Prime Minister said in Edmonton about the Mackenzie highway being paid for with the rent from such right of way.


Mr. Speaker:: Order, please.



INDUSTRY


Mr. Lloyd R. Crouse (South Shore):: Mr. Speaker, I wish to direct my question to the Minister of Industry, Trade and Commerce. It is my understanding that the American government is considering imposing extra custom duties against Michelin X radial steel belted tires being manufactured in Nova Scotia. Has the minister any knowledge of this action and what difference will this make, in Canada's view, in the Domestic International Sales Corporation program? In other words, what action does the government contemplate taking?


Hon. Jean-Luc Pepin (Minister ol Industry. Trade and Commerce):: Mr. Speaker, I understand that a notice of countervailing duty is expected to be issued by the United States government. Thirty days would be given under this notice for parties to make representations. The United States government has already received our views on the Michelin case, and I am quite sure that these views will be repeated during that period of time.
May 11, 1972



MICHELIN TIRE COMPANY-POSSIBLE EXEMPTION FROM CUSTOMS DUTIES ON CERTAIN IMPORTS

John Edward Broadbent: Mr. Speaker, may I direct a supplementary question to the Minister of Finance on the Michelin question. For about a week I have tried to learn from the minister when the commitment made by the government to the Michelin Tire Company to give them tariff-free access to the Canadian market would come into effect. He has not answered the question clearly and he said he would look into it. Can he now inform the House when duty-free entry to the Canadian market will be granted to the Michelin company?


John Napier Turner: Mr. Speaker, if the hon. member is talking about remission, I told him that no remission or relief has actually been granted to the Michelin company, nor, to the best of my knowledge, has any decision been taken as to when or in what form such supplementary relief would be given.


John Edward Broadbent: A further supplementary question, Mr. Speaker. Since I have a letter from the former Minister of Finance dated last June which states categorically that such concession was being granted to Michelin for such entry into the Canadian market, can the minister inform the House now as to what happened to that decision? Was it revoked? Was I misinformed at the time? What has taken place?


John Napier Turner: Mr. Speaker, I will check the correspondence against my answer, and if the hon. member deserves further clarification I will give it to him.



MICHELIN TIRE COMPANY-DEPENDENCE OF EXPANSION ON REMISSION OF CUSTOMS DUTIES ON CERTAIN IMPORTS

Robert Lorne Stanfield: Mr. Speaker, may I direct a supplementary question to the Minister of Regional Economic Expansion. Is the decision of the Michelin company to proceed with expansion dependent upon such a remission being actually granted?


Jean Marchand: No, Mr. Speaker.


Mr. Speaker:: The Chair will recognize the hon. member for Oshawa-Whitby for one last supplementary on this subject. I think all hon. members will want to consider the fact that we are fast reaching the end of the question period and we have not made much progress because of the length of questions, the length of answers and the number of supplementaries.



MICHELIN TIRE COMPANY-CONSULTATION WITH OTHER FIRMS IN INDUSTRY BEFORE MAKING GRANT

John Edward Broadbent: Mr. Speaker, may I direct a supplementary question to the Minister of Regional Economic Expansion. Since millions of dollars of the taxpayers' money have been allocated to the Miche-
Inquiries of the Ministry
lin company in order to begin expanding the car tire market in Canada, and since the factories of existing firms in this country are already operating below capacity, did the minister's department consult with the other firms in that industry and did they agree to the notion that another firm should be tax supported and brought into the economy to produce tires?


Jean Marchand: Mr. Speaker, the entire matter was discussed yesterday in committee with the deputy minister and the official responsible for the grants.



REGIONAL ECONOMIC EXPANSION


Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, I should like to put a question to the Minister of Regional Economic Expansion.
Considering that last week an important sawmill was completely destroyed by a fire which caused damages of more than $2 million and since 250 workers thus lost their jobs, could the minister tell the House whether discussions have been or are being held with the heads of this company with a view to rebuilding the mill?


Jean Marchand: I could not say, Mr. Speaker. If company officials want assistance, they know they must contact the department. If this took place in the Quebec City area, we have offices there. I am not personally aware of this situation, but I will endeavour to find out whether there have been any meetings.


Joseph Adrien Henri Lambert: I should like to put a supplementary, Mr. Speaker.
In order to hasten things, let me say that this sawmill is in St. Just de Bretenieres, in the riding of Bellechasse-


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



INDUSTRY


Mr. Don Mazankowski (Vegreville):: Mr. Speaker, may I direct a question to the Minister of Industry, Trade and Commerce arising out of the questions I asked him last week respecting Versatile Manufacturing. Since the president of Versatile has revealed that officials of the Department of Industry, Trade and Commerce have not consulted and held discussions with officials of Versatile regarding the company's expansion in the United States, would the minister now take steps to initiate discussions

Inquiries of the Ministry
with top level officials of the Versatile company with a view to having this expansion take place in Canada rather than in the United States?


Jean-Luc Pepin: Mr. Speaker, I think I gave the hon. member all the information I had at the time, but I will check. I hope that Versatile will also review its position bearing in mind the advantages that were contained in the budget of last Monday.


Gerald William Baldwin: The minister has got to be kidding.


Donald Frank Mazankowski: In view of the minister's answer and since the president of the company has indicated that the DISC program was not the major, determining factor in this decision being taken, would the minister personally intervene and take an active interest in setting up meetings at once with the president and vice-president of Versatile with a view to having this plant expand in Canada rather than in the United States?


Mr. Speaker:: Order, please. That of course, is a representation to the minister.



POST OFFICE


Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I have a question for the Postmaster General. Can the minister tell the House whether he intends to reintroduce six-day letter carrier delivery in the urban areas of Canada? I ask this question in view of the minister's remarks in Vancouver.


Hon. Jean-Pierre Cote (Postmaster General):: Mr. Speaker, I answered that question in the House a couple of weeks ago.


Wallace Bickford (Wally) Nesbitt: Mr. Speaker, the minister indicates that he has already given a reply in the House some two weeks ago. I am aware of that. I was wondering whether the minister could perhaps give some further clarification at this time in view of his comments two weeks ago.


Joseph Julien Jean-Pierre Côté: No, Mr. Speaker.



PROTEST AGAINST CANADIAN FILM, &quot;WOW&quot;, AND SHOWING IN VIENTIANE, LAOS

Mr. Robert Muir (Cape Breton-The Sydneys):: Mr. Speaker, my question is for the Secretary of State and has to do with the recent film festival in Laos and the showing in April in Vientiane of a 90-minute Canadian government film, entitled "Wow", in which a number of actors illustrate the dreams they experienced while under the influence of marijuana. As many members of the diplomatic corps as well as others could not take 90 minutes of this drivel and walked out during the showing, may I ask the minister if he was aware of the showing, is this the gov-

ernment's way of portraying the good life in Canada, and is taxpayers' money to be spent in this manner?


Gerald William Baldwin: Was the Minister of Finance in the film? [Translation]


Hon. Gerard Pelletier (Secretary of State):: Mr. Speaker, I could not endorse the esthetic judgments of the hon. member, whether accurate or not, I could not say, for I have not seen the film. However, the hon. member must know that all the films of the National Film Board are stocked with the various embassies throughout the world and that a committee of the NFB authorizes the participation of its own films in festivals throughout the world where they win many trophies.
I did not know the film "Wow" had been sent to Vientiane; I have just learned it. Should the hon. member ask me to have an inquiry made into the consequences of the viewing of that film at the festival, I should be happy to oblige.


Some hon. Members:: Wow!



HOUSING


Mr. Andrew Brewin (Greenwood):: Mr. Speaker, my question is addressed to the Minister of State for Urban Affairs in charge of housing. Some two weeks ago I asked whether he would table in the House the final report on low-income housing of the Dennis committee. At that time he said he had not received it. I am sure he must have received it by now; I understand it was sent to his office some time ago. Has he received it, and will he table that report in the House?


Hon. Ron Basford (Minister of State for Urban Affairs):: Professor Dennis is still editing the report, as I made clear in the committee on the estimates the other day.



AGRICULTURE


Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, I had a question for the Minister of Agriculture who was supposed to have been here today. I have given notice to the department, and in the minister's absence perhaps the parliamentary secretary might provide an answer. Can any information be given to farmers concerning the grassland incentive program? Have there been any changes introduced as a result of last year's operations? There is some confusion. Some farmers are not certain whether they should apply or whether it is still possible for them to get grants this year.


Mr. Marcel Lessard (Parliamentary Secretary to Minister of Agriculture):: I have been informed by the department that the hon. member can be assured that the grassland incentive program will definitely continue. To date, although the response has been excellent, there is still provision in the program for another two million acres of grassland. A number of improvements have been made in the program and a copy of a press release detailing these improvements will be in the hands of hon. members this afternoon.



REQUEST FOR STATEMENT ON GOVERNMENT POSITION RESPECTING MARIJUANA

Mr. P. B. Rynard (Simcoe North):: Mr. Speaker, my question is directed to the Minister of National Health and Welfare. In view of the great and anxious interest in the Le Dain Commission report on marijuana, which the minister says is just about ready for release, may I ask the minister to tell the House whether the government intends to make its position clear at this time?


John Carr Munro: If the hon. member is asking me whether the government will make its position clear concerning a report it has not yet received, I do not think that makes too much sense. If he is asking whether we shall analyse the report once we see it, the answer is yes.


Philip Bernard Rynard: It is important to realize that it is not knowing where the government stands on anything which is disturbing people.


Mr. Speaker:: Order, please.



REGIONAL ECONOMIC EXPANSION

[Stage Direction]
POSSIBLE WEAKENING OF OPERATION OF ACT BECAUSE OF ACCELERATION OF DEPRECIATION ON MACHINERY AND	EQUIPMENT-PRIOR	CONSULTATION WITH

Mr. James A. McGrath (St. John's East):: Mr. Speaker, I should like to ask the Minister of Regional Economic Expansion whether there was consultation with the Minister of Finance regarding the introduction of the new accelerated depreciation rate on equipment and machinery, which might have the effect of seriously weakening the position of the Regional Development Incentives Act, especially in areas such as the Atlantic provinces.


Jean Marchand: Would the hon. member be good enough to repeat the first part of the question?


James Aloysius McGrath: Yes. I wanted to ask the minister whether he had consulted with the Minister of Finance with regard to the provision in the budget with respect to the accelerated write-off of equipment and machinery costs, a
Inquiries of the Ministry
provision which could weaken the effect of the grants made under the act?


Jean Marchand: I was at the cabinet meeting when this matter was discussed.


James Aloysius McGrath: What steps is the minister prepared to take to make sure that this does not happen?


Jean Marchand: I think the premise is wrong, Mr. Speaker.


Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, I have a supplementary question for the Minister of Finance related to the question asked by my hon. friend from St. John's East. Will the minister give consideration to the position in which manufacturing and other companies find themselves? Having received grants they are now required to write off that portion of the grant applicable to production machinery before they can establish their cost allowances. Would the minister give consideration to this point? In terms of the budget brought down the other night there would appear to be some lessening of the power of DREE to attract industry to designated areas.


John Napier Turner: I do not
accept the premise, but I will certainly consider the point the hon. member has brought up. In general terms, I would hope that this change announced in the budget would make the Atlantic provinces more competitive, not only within this country but throughout the world.



PUBLIC WORKS


Mr. Robert Simpson (Churchill):: Mr. Speaker, I have a question for the Minister of Public Works. It relates to the redevelopment program being carried out jointly at Churchill, Manitoba, by the province and the federal government. Can the minister say whether any final decision has been reached concerning the inclusion in the program of an incinerator so that the influx of polar bears might be controlled or discouraged?


Mr. Speaker:: I am not sure that this question ought to be answered at this time, rather than placed on the order paper. I have the impression it is the kind of question which might well be considered at the time of adjournment.


Robert Simpson: On a point of order, Mr. Speaker, I thought the minister was preparing to rise. I was merely asking whether a final decision had been taken.


Jean-Eudes Dubé: No,
Mr. Speaker, I was not preparing to rise. I shall have to look into this matter and give the information to the hon. member later.

May 11, 1972
2170________________________________
Inquiries of the Ministry



LABOUR CONDITIONS


Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Minister of Labour. In view of the fact that it now has the authority to do so by order in council, is the government giving consideration to raising the level of the minimum wage for those who come under federal jurisdiction?


Hon. Martin P. O'Connell (Minister of Labour):: Consideration is being given to the minimum wage. Such consideration has been going on for some time now. While I am on my feet, may I-


Stanley Howard Knowles: May we expect an announcement soon?


Mr. O'Connell:: If an announcement is to be made it will be made in due course. While I am on my feet-


Mr. Speaker:: Order, please. We have just about reached the end of the question period. Perhaps the Chair might recognize the hon. member for Edmonton Centre and possibly return to the minister in a short while.



CANADIAN CULTURE


Steve Eugene Paproski: Mr. Speaker, I should like to direct my question to the Secretary of State. Would the Secretary of State advise the House what his department plans to do about the evident discrimination shown in making grants under the multicultural program, considering that not one of the numerous applications by Canadian-German organizations in Alberta has been approved?


Gérard Pelletier: Mr. Speaker, I do not accept the charge of discrimination in the member's question. I only wish to point out to him that he is very quickly drawing inferences. The process of grants to organizations under the multicultural policy has not been completely developed up to now, but surely there has been no discrimination against a group, especially that referred to by the member for Edmonton Centre.


Steve Eugene Paproski: The minister said "multicultural". I received a telegram today stating that all the German organizations in Alberta have been discriminated against. They have not received one grant.


Mr. Speaker:: Order, please. I apologize to the hon. members who have not had an opportunity to ask questions, but before moving to the budget debate and allowing the hon. member for Edmonton West to make his contribu-

tion, I will recognize the Leader of the Opposition who appears anxious to ask a supplementary.


EXTERNAL AFFAIRS
Robert Lorne Stanfield: My
question is to the Acting Prime Minister or to anyone who is authorized to speak for the Department of External Affairs. What is the position of the government with respect to the initiative taken by the government of the United Kingdom in attempting to persuade the government of the U.S.S.R. to join with the United Kingdom in sponsoring a conference on Viet Nam similar to the conference which those two governments jointly sponsored in 1954? Has the government of Canada taken any steps to support the United Kingdom initiative?


Arthur Laing: Questions have been directed to the Prime Minister and to the Secretary of State for External Affairs on the Viet Nam situation and the suggestion has been made that a statement should be made in the House either by the Prime Minister or by the Secretary of State for External Affairs. I think this is still under advisement. If a statement should be made, I have every confidence that the matter now brought forward by the Leader of the Opposition will be dealt with in the statement.
 * *



BUSINESS OF THE HOUSE


Gerald William Baldwin: Mr. Speaker, I should like to seek information from the government House leader-I see him behind the curtain-I know he has been cogitating upon my question. I should like to ask the House leader what the business will be for the rest of this week and all of next week.


Allan Joseph MacEachen: Mr. Speaker, as for the rest of this week, today, as my hon. friend knows, we are beginning the budget debate. Tomorrow we will continue our discussion of the Old Age Security Act amendments. If that bill receives second reading, we will commence second reading of the veterans bill. On Monday we will continue the budget debate, and on Tuesday we shall resume, if uncompleted, the pension bills, old age security and veterans.


Gerald William Baldwin: Mr. Speaker, might I ask a supplementary? Can the hon. gentleman advise the House whether he has had certain discussions with his colleague, the Prime Minister, and can he reassure his anxious colleagues on the other side of the House that the House will in fact be sitting until the end of June? Can he also assure the opposition that we will in fact have an opportunity to
May 11, 1972

The Budget-Hon. M. Lambert



GOVERNMENT ORDERS

[Stage Direction]
debate supply for the requisite number of opposition days; and in view of the limited number of days left for government debate, will the minister take an opportunity next week to indicate precisely what priority he will give to the legislative items on the order paper still to be considered?
Allan Joseph MacEachen: Mr. Speaker, I want to give my hon. friend the assurance that, in the normal course, the House will be sitting until the end of June.


Mr. Speaker:: Order, please. I understand the hon. member is rising on a supplementary. The question period expired some minutes ago, so perhaps the hon. member has a point of order.


James Aloysius McGrath: Mr. Speaker, I wanted to ask the government House leader when we can expect him to call government order No. 25, the amendments to the British North America Act granting educational rights to certain religious groups in Newfoundland.


Allan Joseph MacEachen: Mr. Speaker, that item is on the order paper, and I hope that I will have some discussion with my colleagues to determine at what stage we would bring on the motion, especially in light of what might be the present wishes of the government of Newfoundland.


Stanley Howard Knowles: Mr. Speaker, may I direct a supplementary question on the House business to the government House leader. What about Bill C-201, the foreign takeover review bill? Is it high on the list or down at the bottom?


Allan Joseph MacEachen: Mr. Speaker, it is high on the list.


Mr. Speaker:: Is the hon. member for Spadina rising on a point of order?


Mr. Ryan:: Mr. Speaker, I have been trying hard to be recognized. I have a very urgent question and will not be here tomorrow.


Mr. Speaker:: Order, please. I suggest to the hon. member that a question cannot be brought up by way of a point of order. The question period ended at 2.58 p.m., some seven minutes ago. There were a number of members waiting for an opportunity to ask questions which I am sure were urgent. It is not up to the Chair to determine which question is the more urgent. If the hon. member has the unanimous consent of the House, of course-


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: There is not unanimous consent to return to the question period. Orders of the day.



THE BUDGET


[Stage Direction]
The House resumed, from Monday, May 8, consideration of the motion of Hon. John N. Turner (Minister of Finance) that this House approves in general the budgetary policy of the government.
Marcel Joseph Aimé Lambert: Mr. Speaker-


Mr. Speaker:: Order. May we have order, please. It is difficult for the hon. member to commence his remarks unless the conferences now taking place are pursued behind the curtains. The hon. member for Edmonton West.


Marcel Joseph Aimé Lambert: Mr. Speaker, I thank you for your courtesy.
Hon. members will remember that before the debate adjourned on Monday night, we dealt with some of the highlights of the budget speech of the Minister of Finance (Mr. Turner). I criticized quite bitterly some of the comments of the minister about the amendment to the Old Age Security Act. We saw the government's strategem and of course we will hear tomorrow a more precise account of the proposals of the Minister of Finance on the Veterans' pension increase, on the cost of living, etc. With all that show off, the minister was purring like an old cat.
If I could get the attention of the minister, Mr. Speaker, I could tell him my mind. He was already gloating over the regard he hoped to win from everywhere on account of the proposed increases for old people, veterans and other citizens.
Although the minister announced a basic tax exemption increase for persons of 65 or over, he failed to point out- intentionally or not-that at the end of the fiscal year the 3 per cent deduction on the tax payable for 1972 would be lost. As early as January 1, 1973, some taxpayers will benefit from deductions but what is given them with one hand is taken back with the other.
We had already witnessed the sleight-of-hand of his predecessor, but the present Minister of National Defence (Mr. Benson) took pleasure not in granting a tax deduction but in levying a surtax. And I do not have to go into details about his statement. Yet, we know very well that in the 1970 budget speech we were told that the surtax would automatically come to nothing at the end of December of the same year. But, and this was extraordinary, we had a budget, and a mini-budget in December 1970, to re-instate the 3 per cent surtax. But, stranger still-because of the fiscal needs of the government which, at the same time, wanted to slow down inflationary forces-the government found it advisable to re-instate that surtax. That was the first face-about.
Mr. Speaker, what is strange is that in June, the then Minister of Finance stated in the House that the government had an entirely new policy, an expansion policy, a policy of kindness towards the Canadian people, and the

May 11, 1972
The Budget-Hon. M. Lambert
government strained its shoulder trying to pat itself on the back in a self congratulatory gesture by saying that it had reduced taxes, because it had cancelled the surtax.
Why did the Minister of Finance not speak as well about the 3 per cent deduction which is to end in December and which will apply to all Canadian people as regards personal income tax-a new 3 per cent tax increase. After all, over these past 18 months the public has got used to this 3 per cent reduction. Of course there are reductions for old age people, but nothing at all for the public in general. And now, one can see the reason for this hike in taxes. Actually, in the budget statement the minister referred to a table showing government revenue and expenditure. And what else can be seen in there? In personal income tax, Canadians will pay about $1,100 million to the government. Is that a reduction in taxes? Mr. Speaker, claiming that there is a tax reduction for the general public is a terrible thing.
This is impossible, for there is a $1,100 million difference which will result from the elimination of the 3 per cent reduction. The minister is peculiarly silent on this matter.
When you re-examine his speech and his statements made outside the House, you realize that when he found himself cornered by newspapermen who do not consider themselves naive enough to accept everything the Minister of Finance says, he had to admit that we would have a tax increase.
Mr. Speaker, this is an amount of $1,100 million in the personal income tax field. It is true that taxpayers aged 65 or more will benefit, retroactive to January 1, 1972, from an extra exemption of $350. We also know that guaranteed income is going to be increased by $15 and $30, effective January 1, 1972. But I want to point out to the Minister of Finance and others concerned that not one of the ministers who are in the House this afternoon were here last night when the hon. member for Winnipeg North Centre (Mr. Knowles) analyzed the Machiavellian policy of the government.

This is Machiavellian and will have to be examined in greater detail during our study of the bill in respect of the increase in old age pensions. There is reference to the increase in the GIS and the cost of living escalator, but I want to ask the Minister of Finance (Mr. Turner) what he is doing with regard to the $15 and $30 increase in the GIS in relation to war veterans allowances. We have not seen the bill yet amending the War Veterans Allowance Act.


Mr. Mahoney:: It was tabled today.


Marcel Joseph Aimé Lambert: We get a pontifical statement from the hon. member for Calgary South (Mr. Mahoney) that the bill was tabled today, but it has not come down here yet. Can the minister tell the House whether the treatment of this particular increase will deviate from the treatment of past increases in the GIS and not count as revenue under the War Veterans Allowance Act? In the previous case, what was given with the right hand was taken away with the left hand and recipients of war veterans allowances were left at the same level.


Some hon. Members:: Shame, shame.


Mr. Francis:: It was corrected on April 1.


Marcel Joseph Aimé Lambert: Not with regard to the guaranteed income supplement.


Cyril Lloyd Francis: Yes, it was corrected on April 1 in the regulations.


Marcel Joseph Aimé Lambert: As a matter of fact, the War Veterans Allowance Board insisted that veterans go through the GIS plan rather than make their election under the War Veterans Allowance Act as to what would be their income, if they had any option in determining whether they would take the GIS. The ruling is, notwithstanding what the hon. member for Ottawa West (Mr. Francis) says, that veterans shall be deemed to go through the GIS whether or not they make an election, and that is the rule that applies today. Is this going to be continued in respect of this increase?


Cyril Lloyd Francis: May I ask the hon. member a question?


Marcel Joseph Aimé Lambert: You can make your speech in due course.


Cyril Lloyd Francis: I just wanted to ask you a question.


Marcel Joseph Aimé Lambert: I am asking the Minister of Finance whether it is proposed that the increase in the GIS will be exempt from the computation of revenues under the War Veterans Allowance Act?


Stanley Howard Knowles: The whole $15.


Marcel Joseph Aimé Lambert: On the last occasion, there was an increase in the permitted ceilings under the War Veterans Allowance Act, only to the level of the increase in the statutory payments, not one penny more or less.


Cyril Lloyd Francis: It was corrected on April 1.


Stanley Howard Knowles: Only for the $2.70.


Cyril Lloyd Francis: That is what he is talking about.


Stanley Howard Knowles: No, he is talking about the $15.


Marcel Joseph Aimé Lambert: If the hon. member for Ottawa West had listened, he would know I am not talking about the cost of living escalator. I am talking about the $15 and the $30 which are the statutory payments under the GIS. I am not talking in any way about the cost of living escalator, because the cost of living escalator is not subject to the income ceiling. I am referring to the limited increase amounting to $2.88 per month.


An hon. Member:: Big deal.


Marcel Joseph Aimé Lambert: There is not going to be any equivalent, but you tell that to the thousands of war veterans who are, after all, entitled to something from this country. I want to state what the facts are, Mr. Speaker. The increase of $15 under the War Veterans Allowance

May 11, 1972

Act, and the increase of $30 under the guaranteed income supplement will be treated as income, so the net result for the veteran will be one big fat zero. This is generosity across the board!
Now, I ask the Minister of Finance if he intends to bring in an amendment to correct this injustice because it is pure, unadulterated injustice and discrimination against the category of veterans entitled to this type of coverage. It may be that this was an unfortunate lapse in thinking, but I ask this administration, which is not distinguished by the number of veterans in it, to look at this particular problem. This concerns the debt of one generation to another. The taxpaying Canadians in general owe a debt to our senior citizens of age 65-and this is being recognized more and more-I suggest to everyone who was not a veteran either by reason of age or choice that there is a debt owing to the veterans of this country and this administration will stand condemned if it does not make the necessary changes in that regard.


Patrick Morgan Mahoney: What increases did the Tories give the veterans?


Marcel Joseph Aimé Lambert: I will speak directly to the hon. member from Calgary South. I ask that hon. member-and I had the honour to serve in the regiment of his city- to look at the record of those administrations with regard to veterans.


Patrick Morgan Mahoney: You did not raise the pensions once.


Marcel Joseph Aimé Lambert: Mr. Speaker, to have a minister of the Crown sit in his seat and make remarks which show precisely how wide the gap is between his ears is a disgrace to the administration. I will be charitable and say he is merely mistaken through ignorance. He could not possibly mislead the House.
Now, having said that I want to move to another item in the budget speech of the minister. He referred to percentages and worried about the escalation in the cost of living. Percentages were used. In all the press releases which have been issued by government departments and by his predecessor Minister of Finance, the performance of the economy has been given in percentage figures.
The government says that the cost of living has increased about 3.6 per cent in the last year. That is fraudulent misrepresentation all the way. If hon. gentlemen will only take a look at the tables of the consumer price index they will see that a five point increase, which is bad, becomes a smaller percentage figure because the base is increasing. Let us take a look. We have releases indicating that the consumer index is up 4) per cent since April, 1971 and is up 0.6 per cent compared with March 1972. But, the real increase is six points in the consumer price index. I say to the Minister of Regional Economic Expansion (Mr. Marchand) and the Minister of Justice (Mr. Lang) and any minister that when there is an increase of six points in the cost of living index, whether you start from base 100 or from base 133, it is still an increase in prices of six points and not a diminution of percentages. This is the point. I am not a mathematical numbskull.
The Budget-Hon. M. Lambert


Cyril Lloyd Francis: That is clear.


Marcel Joseph Aimé Lambert: All right. Government Representatives always speak of percentages.


Cyril Lloyd Francis: It is 3.6 per cent.


Marcel Joseph Aimé Lambert: The base is 100. Let us not have the hon. member for Ottawa West (Mr. Francis) cavil about this. He showed his ignorance on the last item and I will take him through this one, too. If it is six points on 100, let us wait five years at the present rate and we will be up to 175. What does six points mean with a figure of 175? It means a much lower percentage and the government will preen its feathers. The government will be happy. But I tell the hon. member for Okanagan-Boundary, the Parliamentary Secretary to the Minister of Industry, Trade and Commerce (Mr. Howard), that he will know about this because his pocket and his wife's housekeeping budget will suffer the same sort of debilitation. It will mean that his wife will be able to buy less and that the hon. member will be able to buy less than when the figure was 100.
It is the points which count, not the percentage. The hon. member has made a fatuous assertion and has taken an indefensible position because food prices have gone up
9.2	points since April, 1971. If hon. members do not believe this, let them read the statistics in the Bank of Canada Review for the month of April. They will see that in the general index for the end of April last year, food stood at 132.2 and at the end of April this year it stood at 138.2. When we mention food, I have to make this particular point. What are the senior citizens primarily concerned about? Of course, it is food, clothing and shelter. I would invite the Minister of Finance and any other of his disbelieving colleagues, to show me where the concentration in the consumer price index increase is, if it is not in food, clothing and shelter. It is 9.2 points in respect of food. It is
7.3	points in respect of shelter and 8 points in respect of other services these people get. We have heard this administration saying that in 1971 there was no more than a 3.6 per cent increase in the cost of living. That is a deliberate deception of the public; it is using another version of the figures because percentages are always calculated on an ever increasing base. The results are usually bound to come out as a lesser figure. I just want to put on record that no one should be fooled by this alleged percentage increase in the cost of living index.
Now, I will talk about another point that I made and that my colleagues will make shortly, particularly the Leader of the Opposition (Mr. Stanfield) when he speaks about personal tax cuts and the matter of unemployment. Others will speak about certain changes in the Income Tax Act, and the list of omissions is long. I will go through some of the undertakings made by the previous minister of finance which have gone unanswered in this budget. I have spoken about inflation. The Leader of the Opposition and others will speak about unemployment. If I were to list all the omissions in the budget I would be here until eight o'clock tonight, and the Minister of Finance (Mr. Turner) could not stand me for that long.

May 11, 1972
The Budget-Hon. M. Lambert


John Napier Turner: I will miss my supper to listen to you.


Mr. Dinsdale:: This is great stuff.


Marcel Joseph Aimé Lambert: As I indicated the other night, over the months and the years we have spoken a great deal about the government's policy with regard to foreign investment. Then, the great day dawned. It was a grey dawn, covered with cloud. No sun shone on the Canadian scene as a result of that report. We got a picayune, repressive measure establishing a screening agency whose jurisdictional status is very much in doubt within the purely provincial realm. Frankly I expected the minister to do something about this matter because I think the Canadian public, particularly businessmen and the general investors, right down to the smallest buyer of mutual funds, expected the minister to drop the other shoe, the other half in what seemed to be a logical pattern in dealing with foreign ownership.
I can understand the setting up of a screening agency, but I do not agree with what is enunciated in that bill. On the other hand, I would have thought that the Minister of Finance would have brought in a fresh outlook, judging by his background and his statements regarding how he approaches his job and taking into account the complete bankruptcy of the previous policies of the government to which the minister makes more than incidental reference in his budget speech when he refers to the crippling effects of inflation. Who allowed inflation to go unchecked? The minister speaks about worrisome unemployment. Is the former minister of labour responsible for that? I do not think so. It is the general administration that is responsible. After all, the minister's predecessor took great credit when there was a momentary dip in the unemployment picture.
The Prime Minister (Mr. Trudeau) said that the problem of inflation was licked. I expected a fresh look at things, and I hope the Minister of Finance will take a fresh look in the immediate future. Perhaps he can agree to amend the bill and bring in another recommendation. What about bringing in some incentives to Canadians investing in Canadian enterprises? This does not mean the list which the minister trotted out the other afternoon in reply to a question of mine regarding interest being allowed on purchases by Canadian enterprises of other Canadian enterprises. This is one foot on the road to Damascus.


Stanley Howard Knowles: They are all on
that road.


Marcel Joseph Aimé Lambert: Then, there is the principal occupation rule.


Stanley Howard Knowles: It is crowded.


Marcel Joseph Aimé Lambert: The hon. member was not a member of the Finance Committee. Those propositions were fostered three years ago in the Finance Committee.


Stanley Howard Knowles: Will the hon. member permit an interjection? When I interjected I was referring to the road to Damascus being crowded.


Marcel Joseph Aimé Lambert: I was speaking about the principal occupation rule, which has been one of the real nemeses to Canadian participation. I was involved in the development of the oil business back in the early 1950's, and if there was one thing that really killed Canadians as independents participating in the development of oil leases and in obtaining oil leases, as well as holding profitable control of the industry, it was that silly bureaucratic rule made I do not know where, perhaps in central Canada, the rule about the principal occupation. The minister tells me that the government has made a gigantic step in regard to it.
Under Bill C-259 Canadian citizens are still 80 per cent behind Americans on searching, exploring and developing within Canada. An American citizen has an 80 per cent advantage over a Canadian in the research and development of resources in Canada. You ask what has hobbled Canadians. Why did we have this stupid rule regarding interest not being deductible when you are competing with Americans who have an advantage? The Prime Minister has said that living next to the Americans can be compared to a mouse sleeping next to an elephant. A grunt from the elephant is an earthquake to the mouse. With regard to so much development on an industrial basis, whether or not we recognize it, there is a geographic continental approach. The minister knows very well what obstacle there is to the flow of capital across the boundaries. It is nil. There is, in fact, a continental financial policy which has been in existence a long time. Our friends to the south had every advantage when they came into Canada, but under our tax laws Canadians are not even allowed to compete on even terms.
I am disappointed in the minister. I would have thought that he would have striven to give us at least competitive equality. I would go much further in this field, Mr. Speaker. I personally, and I believe with the support of Canadians, would be prepared to discriminate by incentives in favour of Canadians and Canadian companies, without any fear of retaliation or what-have-you from anybody else. You know, Mr. Speaker, when Canadians try to invest in other countries, and some do, again notwithstanding a few of the proposals in Bill C-259, they run into rules and regulations that are enforced on behalf of the nationals of the countries into which they are going, and nobody objects to that. Why will the minister not do something with regard to Canadian investors? Why will he not give them an opportunity? I do not mean that this necessarily should be an opportunity to buy back Canadian industry. I don't know that you can buy it back. That is a pipe dream in somebody's mind. Not all the people in the New Democratic Party believe in it. Members of the Waffle wing are living in a fool's world. They think they can buy it back.


Bryce Stuart Mackasey: They are listening behind the curtains.


Marcel Joseph Aimé Lambert: Mr. Speaker, hon. gentlemen opposite can see what is going on behind me, and members behind and to the left of me will have opportunities to make their own speeches. There is no question of buying back; but is there no way of encouraging Canadians to get out of American equities, to encourage Canadi-

an mutual funds to get out of American equities and invest in Canada?
I can suggest a way of doing this. We have imposed a new tax on equities-capital gains. Why not, within our resources, give Canadians a break on capital gains and long-term investment in equities in the resource field? I suggest that the minister try this for size among the mining people, the oil people and the forestry people, and see what their reaction would be. I have here a report of the last meeting of the Council of Forest Industries of British Columbia. I quote from it in all seriousness, particularly for the benefit of members who do not come from British Columbia, and 1 include Albertans among those. The Minister of State from Calgary South (Mr. Mahoney) has heard this previously when he was a member of the Standing Committee on Finance.
B.C. forest industry is the highest taxed in the western world.


Mr. Howard (Okanagan Boundary):: What about provincial tax?


Marcel Joseph Aimé Lambert: Federal taxes plus provincial taxes.


Bruce Andrew Thomas Howard: What are the provincial taxes?


Marcel Joseph Aimé Lambert: This is the kind of excuse we get from people like the Parliamentary Secretary to the Minister of Industry, Trade and Commerce. It is always somebody else's fault. Looking at it from the Canadian point of view, what is the competitive position of that industry?


Patrick Morgan Mahoney: Let's have the rate of federal tax.


Marcel Joseph Aimé Lambert: It is shameful for the federal government to participate with the provincial government in this, and I am not going to excuse the provincial administration one iota, no more than I will excuse any provincial administration that has escalated its estate tax, another subject with which I will deal later. The report of the meeting stated that in British Columbia:
-the industry's tax burden is the highest in the western world, and has reached the point where various levels of government are now taking nearly 80 per cent of pre-tax earnings.


Bruce Andrew Thomas Howard: How much is federal tax?


Marcel Joseph Aimé Lambert: I don't care how much the federal tax is. The provincial tax and the municipal tax take about 30 per cent or perhaps 32 per cent. The federal share is 47 per cent or 48 per cent.


Robert Lorne Stanfield: There is a bit of silence over there now.


Marcel Joseph Aimé Lambert: It strikes me as a very lame excuse for government members to say they recognize while they may have a sliver in their eyes, then the others have a tence post in their eyes. They are both blind. Whether the tax on Canadian industry is federal, provincial or municipal, that tax will be reflected in the sale price of the goods produced. And if there is a continuous loading on of tax, as some administrations are so blind as
The Budget-Hon. M. Lambert
to do, including the federal government, all it means is that Canadian industry becomes less and less competitive.
With respect to the mining industry, I would like to ask whether the minister has read the recent speeches by the President of the Mining Association of Canada? Has he read the annual report by the President of Noranda? I hope he takes it to heart. I wish I could file the speech of the President of Noranda as an appendix to my own as I will not have time to read it in now, but I commend it to all hon. members.
The lack of initiative really lies at the federal level. In trading, we live in a very competitive world. Canada will live or die depending on the success of its international trade. A complete change is taking place in the Common Market. Next year the Minister of Finance and the Minister of Industry, Trade and Commerce-whoever they may be-I am not going to say they will be the same two men who occupy those portfolios now-


Mr. Bechard:: They will be.


Marcel Joseph Aimé Lambert: -will wake up and have to admit, as the present Minister of Industry, Trade and Commerce has already done, that on commodity account our surplus is going down. Next year, with the coming into force of the expanded Common Market, we will face some very difficult short-term problems. I am not going to affix any blame to any particular individual for that. This is something that is beyond Canada's control.


Jean-Luc Pepin: That is why we have the budget we have.


Marcel Joseph Aimé Lambert: This is peanuts. And you are not even getting into the growing of peanuts.


Jean-Luc Pepin: $500 million worth of peanuts?


Marcel Joseph Aimé Lambert: Remember the example of the British government in the groundnuts scheme in Tanganyika. Don't get into peanut growing!
Mr. Speaker, what is lacking, and some provincial premiers have adverted to it, is a policy of industrial strategy for Canada. Perhaps we have seen a glimmer of this in some of the speeches made by the Minister of Industry, Trade and Commerce (Mr. Pepin) but within the taxation policy there is no reflection of it. There is an ad hoc bow to manufacturing and processing-but somewhere else. I am talking of manufacturing and processing as of now and next year. Most of the benefits of this administrative step will not occur until 1974 and 1975. The proof of the pudding in regard to any tax reduction measure is in the reaction of the people tasting it.


Patrick Morgan Mahoney: Oh, oh!


Marcel Joseph Aimé Lambert: Frankly, Mr. Speaker, I have seen this minister display tax ignorance and financial ignorance when he was handling Bill C-259, and more lately as well. If an industry says that a benefit or concession will mean very little, I am prepared to take their word ahead of those people who operate in an ivory tower. God knows, Bill C-259 was conceived in the tallest

May 11, 1972
The Budget-Hon. M. Lambert of ivory towers and was defended to the death by people who were shown to be absolutely and blatantly wrong.
This is within the context of what I have said about the needs of an industrial strategy for Canada. I commend to the Minister of Finance (Mr. Turner) that, if they have not already done so, he and his officials should start to work on a policy of industrial strategy for Canada. The manufacturing and processing benefits are going to be felt in Ontario and Quebec-the minister shakes his head.


John Napier Turner: Alberta is going to be booming as a result of it.


Marcel Joseph Aimé Lambert: The government of the province of Alberta does not think so. The minister should read the remarks of the provincial treasurer and provincial premier in regard to this, because they do not see it at the present time.


John Napier Turner: It is giving the premier just what he needs.


Marcel Joseph Aimé Lambert: I am talking about a change in manufacturing and processing. At the present time, the benefits will be too concentrated. What incentive has the minister given to Canadians to invest in new business in Alberta in competition with foreign interests which already exist there in large numbers, and which are not controlled by a foreign review board or a takeover board? This is what I am talking about, an industrial strategy. For instance, where have the benefits of DREE gone in the various provinces? They have gone to the constituency of the Minister of Agriculture (Mr. Olson).


John Napier Turner: Oh, oh!


Marcel Joseph Aimé Lambert: All right, all one has to do is talk to the Minister of Agriculture and tell him that they have gone to his constituency, and the one next door. They have gone to other provinces too, but will there be any real benefit?


Jean Marchand: And the Conservative ridings in the Maritimes.


Marcel Joseph Aimé Lambert: Where have they gone in the province of Ontario and the province of Quebec? In many instances, they are working contrary to the provincial departments of industry and trade. Let the Minister of Regional Economic Expansion (Mr. Marchand) ask the provincial ministers this question. I have heard his name included in a list, and it was not in a litany of saints, in relation to the operation of DREE.


Bryce Stuart Mackasey: And the Okanagan Valley.


Marcel Joseph Aimé Lambert: We can pick various areas, but it has been a hit and miss operation. The Department of Regional Economic Expansion is operating on its own hook, and not within a policy of industrial strategy established after discussions between the Minister of Finance and the provinces.
There are occasions when, for the benefit of Canada as a whole, the government of Canada should consult with the provincial governments so that we do not get the

situation that we have now where there is confrontation between governments nor between the Minister of Finance when he was making sharp cracks at a provincial premier the other night. I will invite the Minister of Manpower and Immigration (Mr. Mackasey) to read the newspaper reports on the remarks of the Minister of Finance concerning Premier Bourassa.
Mr. Speaker, I do not want to take up all the time of the House this afternoon. Someone else is going to talk about the details of the tariff changes. My colleagues and I welcome the creation of the new category of general preferential tariff to assist developing countries, and I commend the minister for it as will every thinking Canadian. It is much more constructive than just handing out grants and subventions. It will have to be worked out, and there will have to be some adjustments, but it is a step in the right direction.
One thing worries me about this whole change in the customs tariff, however, and that is it may be a reversal of free trading, particularly with regard to textiles. It will be much easier to impose duties and conditions unilaterally without negotiating quotas. There is a benefit in negotiating quotas in that there is usually a trade-off. During the election period of 1968, the then minister of industry, trade and commerce imposed a surcharge on certain textiles and this caused dislocations here in Canada as well as the countries it affected. As a result business relationships were soured. Surely, that is the wrong way to proceed, hiding behind the facade of bureaucracy. Members will not be able to get at those changes in a meaningful way until debate is over and the law in force. This is a point. Oh, it looks good. I know the Minister of State (Mr. Mahoney) loves efficiency and being able to put a big, heavy hand down on something, and hiding it. That is his way of behaving. But that, Mr. Speaker, is not how this House likes things to be done. It wants them out in the open.


The Acting Speaker (Mr. Laniel):: Order. The Postmaster General on a point of order.


Joseph Julien Jean-Pierre Côté: Mr. Speaker, I was trying to listen to the simultaneous interpretation and I did not understand exactly what was said concerning the term "facade". As a matter of fact, I did not understand the exact translation of this word.


Marcel Joseph Aimé Lambert: Yes, Mr. Speaker, it is "un mur sans ouverture", "it is a fagade without opening". It is an English expression, but the minister knows English as well as I know French. Therefore if the expression is not easily translated, it is comprehensible.

This trend worries me, Mr. Speaker. Some of my colleagues will develop this point.


Joseph Julien Jean-Pierre Côté: Did you lose your place?
May 11, 1972


Marcel Joseph Aimé Lambert: For the moment I have mislaid some material that I want to put on record. This is a case, you know, of saving the face of the hon. member for Calgary South (Mr. Mahoney).


An hon. Member:: Have you found the material?


Marcel Joseph Aimé Lambert: Yes, I have found it. I am about to refer to the Bank of Montreal survey on investment policy and capital spending in 1972. Some weeks ago, the capital investment intentions for 1972 of Canadian companies in the Canadian economy were released and, quite frankly, notwithstanding what the minister said, they were very disappointing. There is to be an increase of only 4.9 per cent over 1971 preliminary spending figures. If a price factor in the neighbourhood of 4 per cent is assumed, then total gain or growth for 1972 will be exceedingly slim. This is rather strange, Mr. Speaker, because the minister insists that there is a growing buoyancy in business activity. Remembering that during the second year of what we were told was economic expansion capital spending traditionally should have gathered strength, it would appear that this survey I hold in my hand should have shown more pronounced gains. The minister may have his explanation for what has happened. Yet, why was there this stagnation, shall we say, in the forecasts regarding capital spending in 1972 in the private sector?
First, let me say the low rate of growth indicates the rather large additions to plant capacity which were made in the previous two or three years. During 1969 and 1970, when inflationary psychology was particularly prevalent in the economy, producers in the manufacturing industries increased their investment outlays by an average of 19.4 per cent, at a time when one might have expected investment to drop under the pressure of the tight monetary policy prevailing at that time. May I interpose some other thoughts at this time. Since this 19.4 per cent evidently represents an overcapacity, the minister's incentives for the manufacturing and processing industries in the form of tax benefits and accelerated depreciation will not be as effective as he might think. It will be seen that during 1971 the mining industry also greatly expanded its investment outlays, thus increasing its capacity during a period when world demand was sluggish. Look at International Nickel and at many other companies with unused capacity. Does anyone think they will spend more money in 1972 and 1973 for machinery and expanded production facilities? I do not think so. Overall, these relatively large increases in productive facilities added inordinate weight to the high levels of excess capacity evident last year.
Second, possibly an even more important factor influencing capital spending intentions was the businessman's interpretation of future trends in the economy at the time the survey was taken. It was to be expected that some downward bias would exist, since businessmen were then still influenced by the poor performance of the Canadian economy in the previous year. In addition, the rather gloomy mood of the business community was further intensified last year by extraordinary events both in the domestic and international environment. There was the very unsettled international financial situation. Of
The Budget-Hon. M. Lambert
course, in Canada we saw the establishment of the surcharge and trade protection measures taken by the United States.
Last, but by no means least-and I want the Minister of Finance to pay particular attention-there was the avalanche of proposed Canadian legislation affecting business. I refer to matters like Bill C-256, Bill C-263 and a litany of other, infamous acts. While over-all investment outlays by business on plant and machinery are scheduled to increase by 3.7 per cent, individual industries face vastly differing circumstances which are reflected in a fairly wide inter-industry disparity in capital spending intentions for this year.
I spoke earlier about the pulp and paper industry and the forest industry. Let us see where the pulp and paper industry stands at the present. This industry, the pulp and paper industry, constitutes one of the weakest investment sectors within the business community, whereas in the sister industry, the forest industry, investment outlays are expected to increase at the rapid rate of 12.4 per cent. This wide discrepancy is not surprising, since the forest industry in 1971 enjoyed a buoyant demand for lumber in the midst of a North American housing boom while pulp and paper, beset by sluggish demands, intense competition in its traditional markets and a further squeeze on profits as a result of the appreciation of the Canadian dollar, has seen its profit margins dwindle by two thirds. Today, if I may interpose, the minister did not have much to say about the future of the Canadian dollar. If the present trend continues, the pulp and paper industry, the Canadian heavy chemicals industry and many of our export industries will be even more hard hit. The tax reduction in 1973 will not be of assistance to them, because it becomes effective only in 1974 so far as cash flow is concerned.
The mining industry, with the exception of iron ore and petroleum, has also experienced a softening in market demand as a result of the slowdown in manufacturing activity in Europe and Japan. After the heavy investment program in 1971, producers in that industry have indicated a considerable cutback, by at least 17.5 per cent, in capital spending as well. Because of the heavy capital intensity of these resource based industries and the large weight of their investment expenditures within the business sector of the economy, their scheduled reduction of capital spending will act as a significant drag on the over-all expansion of spending on business plant and equipment.
That is the sector that the minister wishes to encourage. What will produce immediate results, Mr. Speaker. Will it be tax reductions in 1973 and 1974?


John Napier Turner: It will help corporate planning. We have given corporations the right to immediate depreciation.


Marcel Joseph Aimé Lambert: The minister talks about corporate planning and thinks that this will help. Why did the minister not do something about Canada's multinational corporations and the matter of international income? He has only postponed the evil day when the axe shall fall. Instead of being in 1973, it is to be in 1975. And is there any area in which long range thinking and long range commitment is of greater importance than in the

May 11, 1972
The Budget-Hon. M. Lambert
international field? What company from western Canada, for example, would enter into a joint arrangement with Japanese industrialists in the absence of some greater certainty as to its future position? Oil and drilling operations are now limited in Canada. Take the position of a Canadian company which is operating in the North Sea, or elsewhere, through a subsidiary, or in partnership with foreign companies. Is such a company likely to go forward with its plans without knowing what the future is likely to be? Remember, all that these companies have been exposed to so far is the philosophy of Bill C-259 and, what is worse, of the white paper before it. The minister has said: I intend to put off the evil day until 1975. If I were a Canadian businessman considering the possibility of expanding overseas, Mr. Speaker, I would stay home. The minister must come to an early decision. There is no room for a postponement until 1975 at this point. It is totally wrong. How many companies have already transferred their headquarters?


John Napier Turner: Name them.


Marcel Joseph Aimé Lambert: There are some. It is wrong to say "Name them", because by then the decision to move will have been taken, and there is no way in which the minister or anyone else can go cap in hand to a board of directors and say, "Please come back." This is an area in which we are bound to be competitive, an area in which it is necessary to compete with others on equal or on better terms. Just because someone says there has to be a certain amount of so-called equity in taxation, and someone in government says "A buck is a buck" a decision is made to tax business companies, even though the money has not yet been received by them, even though under the laws of the country in which the investment has taken place, in which the operation has taken place, it may not be remitted, even though the Canadian concern might own only a minority interest and cannot get the money home, the Canadian company is to be obliged to count this money as income and be taxed on it. What sort of hamstringing philosophy is that?
I am disappointed in this budget. I expected a great deal from the minister, having heard certain statements from him in the past expressing what I had hoped would be his philosophy, a philosophy which recognized that the Canadian economy works on the basis of incentives; that it should be encouraged; that it should feel the government is behind it, not on its back. But the government is exacting from the economy ever more hundreds of millions of dollars each year. One has only to look at the tables of government revenue and expenditure to realize how true this is. All this money comes from only one place. Every blessed last dollar comes out of the pockets of Canadians, people living and working in Canada. The government, of course, takes credit for redistributing it. It distributes largesse. All it is doing is taking money out of one pocket, putting it into another, and saying "What good boys we are; we are giving it back to you this way". As I say, I am terribly disappointed, and therefore, seconded by my hon. friend from Saint John-Lancaster (Mr. Bell), I move:
That while acknowledging certain beneficial provisions-


Stanley Howard Knowles: Isn't there something missing? Shouldn't you move to delete all the words after "That"?


Marcel Joseph Aimé Lambert: I am sorry, Mr. Speaker. There has been a certain hiatus. The motion should read:
That all the words after "that" be deleted and the following be substituted therefor:
While acknowledging certain beneficial provisions in the budget proposals, this House regrets the failure of the government to bring forth effective measures to relieve unemployment, to provide incentive for Canadian investment in Canadian development or to propose personal tax relief for stimulation of the economy.


Stanley Howard Knowles: Don't you have any drafters on that side?


The Acting Speaker (Mr. Laniel):: The Chair was about to raise this technicality, the relationship of the amendment to the motion before us. We shall make the necessary arrangements so that the motion provides for the removal of all the words after "that".


Mr. Max Saltsman (Waterloo):: Mr. Speaker, on March 3 the hon. member for Winnipeg North (Mr. Orlikow) placed a question on the order paper. It read as follows:
In the years 1957 and 1967, what percentage of the total money income was received by the (a) lowest one-fifth (b) second lowest fifth (c) third lowest fifth (d) fourth lowest fifth and (e) highest fifth of all family units?
A reply was tabled a few weeks ago and, to the amazement of everyone who examined it, it clearly showed that in the ten years between 1957 and 1967 there has been no appreciable change in the way in which income is distributed in Canada. And this despite all the vaunted programs brought in by the Liberal party and by the Conservatives before them aimed, it was said, at the redistribution of income. The distribution of income in this country remains essentially the same. The columnist, Douglas Fisher, simply took this information and printed it in the paper for which he writes, offering only a very limited amount of comment, something which, for Mr. Fisher, is unusual. This is a case, though, where the facts speak for themselves and additional comment is scarcely needed.
The other day, in the Committee on Finance, Trade and Economic Affairs, the Chairman, the hon. member for Don Valley (Mr. Kaplan) was obviously in a state of agitation. He asked the officials from Statistics Canada, who were appearing before the committee, to come prepared to state whether these figures were correct or not. I should like to quote from the minutes of that Committee for May 4, at page 11. The hon. member for Don Valley addressing the representatives of Statistics Canada had this to say:
I am not satisfied with the information that you have. I appreciate that you are giving us all there is, certainly I am prepared to accept that, but 1 am not satisfied that enough priority has been given by Statistics Canada to this area. I would just like to tell you that, to me, this is one of the most serious allegations I have ever seen made against the government that in the last X years, whatever it is there has been no significant or any redistribution of income. I think it is very important for the credibility of Parliament, if you like, that there has been movement. If it does not show in the dollars, but there are redistribution programs and
May 11, 1972

government services that are not reflected in these figures, then Statistics Canada, I would submit, has a responsibility to try to produce the information so Canadians can actually see we are going to try to remedy this kind of disparity.
That is a most pathetic statement made by a young man in search of justification for his policies. Here was a conscientious Liberal, a man who really believed that Liberal policies would cure the ills of our society, dashed by statistics. The facts simply do not bear out that there has been any appreciable improvement in the distribution of incomes in this country.
Like so many of his colleagues, when the statistics did not bearout the point he was trying to make he accused those who were gathering the statistics. Or, as the Minister of Finance so often does, if he does not like the statistics on unemployment he quotes statistics he does like. He says: "Let's not talk about levels of unemployment, let's talk about how many people are working. Perhaps unemployment will then go away. I am not in the forecasting business; don't ask me what the levels of unemployment are going to be". He does not like the figures on unemployment because they are shocking, a disgrace to the country, so he finds himself some new statistics or challenges those that exist.
As a matter of fact, a little further on in the same committee proceedings the hon. member for York East (Mr. Otto) showed his unhappiness with the statistics on unemployment and started a round of questioning to see whether or not he could get Statistics Canada to indicate that there was something wrong with the way unemployment statistics are reported. Statistics Canada had to reassure him that the figures were indeed as they were, and that all the talk about participation rates and levels of unemployment and the number of young people in the labour force, new entrants in the labour force, and so on, do not alter the essential failure of the government to correct some of the glaring problems that are facing our society.
To some extent, the rising gross national product and the rising increase in production, that has taken place all over the world have obscured the redistribution of income and the fact that the benefits that are supposed to accrue from a Liberal society simply have not materialized. We live in a rich country and to some extent have been living off our capital assets. We have been polluting and taking short cuts, living off our resources, our power supplies, our iron ore, selling them off as a cheap way of maintaining much of the status quo. But we have not been running the country-certainly, the government has not-in an intelligent way.
I use these remarks as a preamble to what I am going to say about the budget, simply to indicate what has been going on and to show that the budget before the House is a continuation, a very bad continuation, perhaps even worse than before, of policies designed to perpetuate inequality between the people of the country and maintain the essential unfairness that exists. To paraphrase Walter Bagot's comment on the House of Lords, the cure for this budget is to have a close look at it; and when you take a close look at it, you see it for the bad budget that it is.
The government had at its disposal rapidly increasing revenues that could have been used to lower taxes for the
The Budget-Mr. Saltsman
ordinary people of Canada. Instead of that, the government gave the bulk of its growing tax revenues to the corporate sector. Of the $850 million that the government distributed, $350 million went-we think-for some worthwhile purposes, such as assisting pensioners and those who are going to school. But a much larger amount, $500 million, went to reduce corporate taxes. The government is going to collect 49.9 per cent of its revenue from income tax and 12.2 per cent from the corporate sector, which indicates a growing disparity between the two revenue fields. This situation is particularly objectionable when we consider that only a little while ago there was a temporary tax reduction of 3 per cent given in the personal income tax field but 7 per cent in the corporate field. Going back to 1962, at that time the government collected 31 per cent of its revenue from the personal sector and 21 per cent from the corporate sector. Today, the percentage is 44 per cent and 15 per cent. That is an administrative budgetary figure; the other figures were taken from national accounts.
In this budget the government is proposing to increase personal tax by $1.12 billion. Over the amount collected last year, this represents an increase of roughly 15 per cent. The government is proposing to increase direct sales taxes, which in the main come directly from the people, by almost 10 per cent. While the government is doing this, it is reducing corporate tax revenue by something like $60 million. When you look at what the government is doing it seems hardly credible.
The government apologists may say-I am sure the minister will say this-that it is impossible to make this kind of distinction between personal income and corporate income. After all, what are the corporations? They consist of shareholders and eventually this money goes to the shareholders. This may be the case in some kind of closed society where the shareholders of an industry are nationals of one country. But this is not true in a country like ours where the bulk of the taxes collected from corporations are collected from the companies rather than the shareholders. More than half of the taxes collected in Canada from corporations are collected from foreign owner corporations. So to the extent that a tax advantage is given the corporate sector, we are conferring a benefit on a foreign treasury or on foreign investors, not on Canadians. The government is asking the taxpayers of Canada, the wage and salary earners, to pay a fantastic subsidy to foreign owned corporations.
The hon. member for Edmonton West (Mr. Lambert) asked why did not the government simply give these advantages to the Canadian owned corporations. This would have nullified what the government is trying to do, namely to bribe United States corporations in Canada not to return to the United States or to transfer production because of DISC. The hon. member for Edmonton West also said that the government did not have an industrial strategy. They certainly do have an industrial strategy, one that is becoming very obvious now. Their industrial strategy is simply to offer bigger bribes than anybody else. Their policy is: "Don't try to manage the economy, don't try to regulate industry, don't try to incorporate safeguards; just bribe. Whatever bribe is offered elsewhere, offer the same bribe".

May 11, 1972
The Budget-Mr. Saltsman
Before the Minister of Industry, Trade and Commerce (Mr. Pepin) leaves the House-I know he is not doing so intentionally-I should like to make a comment that I want him to hear. I read one of his speeches the other day in which he said very much the same thing. Perhaps he did not mean to say it, but what he said was that the only way we can keep foreign-owned corporations in Canada is to give them higher profits. I think he said this in reference to the fact that automobile prices are higher here than in the United States. He says we have to give them more profits. In other words, we have to continue to bribe them. The minister may now leave if he wishes.
I suppose this is an industrial strategy of sorts, but is it really the kind of industrial strategy any self-respecting nation can live with, and is it the kind of industrial strategy Canadian wage and salary earners want? Are they going to be willing to pay more and more taxes in order to bribe corporations into staying in Canada? Are we Canadians so impotent we cannot develop our own country? Do we not have the technique, the ability, intelligence or whatever it takes to do this ourself? The sole industrial policy of the Liberal party is to bribe the hell out of corporations.
If DISC offers certain advantages let us figure out what this will mean to foreign-owned corporations. The Liberal government will not try to legislate in respect of them, put safeguards in our measures and will not tell these corporations that while operating in Canada they must act as good citizens. This government just bribes them, ups the ante and gives more than any other country would give them. I do not think we can give them much more as we sire collecting very little in corporation taxes now. The amount is down to about $2.3 billion. If you take into account the fact that almost a billion dollars goes out in respect of DREE and another half billion in other government handout programs, we are not even collecting $1 billion from the corporate sector. As Carter asked, if you do not get anything from the corporations why do you need them? Surely, we are entitled to expect, not that corporations will carry the entire load of requirements in our society, but that they will carry part of the load instead of shifting it entirely to the shoulders of the wage and salary earners in this country.
One must ask who his friends are, because that's what politics is all about. It is obvious who are the friends of the Liberal party, and it is not the wage and salary earners of Canada. That party gives little consideration or thought to them. Perhaps now that an election is imminent, it will be very difficult for the Minister of Finance (Mr. Turner) to resist the pressures being brought to bear by the bagmen. I am sure they will not have any more trouble with him. This budget is a bagman's delight. The bagmen could not ask for anything better from the Minister of Finance. He has given them a marvelous gift on the eve of the election. The government does not even have to be very generous to the corporations of Canada. There are a few that are important, but that number becomes even less as far as the Liberals are concerned. They sometimes think about the Tories, but that is corrected very quickly when a budget such as this is presented.

This is not a very generous government. If you take back one per cent of the beautiful handouts, the Liberal party will only have $5 million to go into this election. There is another incidental benefit. If the Prime Minister (Mr. Trudeau) wants to hold a banquet in Toronto, he can up the price because they can certainly afford to pay it. He does not have to improve the quality of the food and there is no reason to expect that the speeches will be any better. At least he can ask for more money because he has been generous, and I would think this generosity will be reciprocated in some way. Business may be grateful for these handouts but most Canadians will not be. I do not want to minimize some of the features of this budget which provide some benefit, but for the majority of Canadians there is very little in the budget which will be of assistance.	.
The Minister of Finance is playing a curious kind of game. He is playing a sort of Robin Hood role in reverse, robbing from the poor in order to help the rich. Perhaps we should call him "Hood Robin" when he plays the game that way. He is putting his hand in the pockets of the poor to help the rich. One is not supposed to rob from anyone in a civilized country, but he has decided to put his hand in the pockets of the wage and salary earners in order to help those people who do not require this kind of assistance. If we felt this was the only way to stimulate the economy of Canada, no matter what inequalities might result, perhaps we might have to put aside this question of equity. However, there is no evidence that equity has to be sacrificed, particularly at a time when profits are rising substantially in Canada. Profits bottomed out long ago and are now beginning to level off. There is no evidence which would indicate that the profit picture has to be improved in a general way in order to provide full employment, unless of course you take the view that the government is impotent, helpless and has no way of dealing with things like DISC or threats against the Canada-U.S. auto agreement.
Let us consider this charming and gallant "Hood Robin", our Minister of Finance. He does what you expect of a charming and gallant man. As he leaves the bank he has just robbed, or leaves the poor from whom he has just taken, he sees a lady selling apples on the corner and is seized with a moment of sentimentality. He reaches into his pocket and gives her a big tip. He hopes this act of kindness will obscure what he has just done. He hopes it will obscure the offence of acting against the poor of Canada in favour of the corporations. I do not think even his smile is enough to cover up what is happening.
In my view, and I believe in the view of all my colleagues, this is a fraudulent budget. The old age pensioners are supposed to be grateful for the $2.88 increase they will receive. Those receiving the income supplement will get some assistance and we are happy for that. There was no increase in basic old age pensions, and this is long overdue. These pensioners are supposed to be very thankful, but from every indication I have seen they are not. These people are not stupid. They know that the cheques are supposed to reach them just before the election and that they are expected to respond with gratitude. Perhaps the pensioners would be grateful if they were to receive the kind of largesse the corporations are getting from this government. Perhaps they should give back 1 per cent,

which would give the government 2.8 cents. Perhaps the government should print a special bill of that denomination and send that along with the first cheque to the old age pensioners in order that they might show their gratitude to this government by mailing back that special bill. This could be done as a token of the gratitude they have for this government.
The other day I obtained a copy of the Evening Report and a copy of the Kitchener-Waterloo Record. The Record contained an article headed "3.6 per cent pension increase for vets 'great insult,' says legion head". Pensioners in this country may need every cent they can get, but they have some pride. It is an insult for the government to give them this kind of meagre handout in anticipation of an election, expecting them to be grateful rather than suspicious of the government's motive. The government would be better off to leave this matter alone until after the election. Once we had a "three buck election" in this country.


Stanley Howard Knowles: It was six bucks.


Max Saltsman: That's even better. We might look at the student assistance which on the surface would appear to be very good. I can tell you, Mr. Speaker, it will be very good for somebody like myself with my income. It will be very good for members of parliament because we are receiving reasonably substantial incomes. We are not being badly treated. But it will not be good for an ordinary workingman because it is only possible to take advantage of the student assistance, the $50 a month for a student attending school, if you have taxable income. It will be a very substantial benefit for me since I have a son attending university. What sort of benefit will it be for the steel worker who is earning $5,000, $6,000 or $7,000 a year? What sort of benefit will it be to him?
Is this fair, particularly when we realize that the provincial governments have increased the fees at universities. They are cutting back in many ways and making access to university more difficult. I do not want the Minister of Finance to tell me it is a provincial problem and not a federal problem. The provinces started cutting back when the federal government placed ceilings on the aid it was prepared to give the provinces. The federal government told the provinces that every time their expenditures exceeded a certain amount there would be no sharing of the amount above that figure. The federal government said, in effect, that the provinces had so many years to start raising the money because they would no longer get it from the federal government. Then, the government has the gall to preen itself for what it is doing for the students. It destroys the financing of universities on the one hand, and then says that students will be better off because some advantages and compensation will be offered.
There are many things wrong with the financing of universities. I do not agree with everything that is done there. However, this method creates more difficulty and is insulting to the students of this country who do not make a great deal of money. It is a great benefit to a student who does make a lot of money, but how many students are there in Canada who can attend school and earn large enough sums of money to have a taxable income against
The Budget-Mr. Saltsman
which they might obtain a benefit? There are not very many so far as I am aware.
The assistance to the crippled and those who are disabled falls into the same category. Whoever drafted this legislation must have thought that only rich people have mothers who are incapacitated, that the poor do not have mothers or relatives who have to be wheeled around, because the benefit again applies to taxable income. This is similar to child care provision in the tax legislation which gives far more benefit to those with high incomes than to those with low incomes.
Also, it would seem that there are no farmers in Canada. I do not think a word appears in the statement about farmers. If the minister did not intend to do anything for the farmers or the fishermen, he might have had the good grace to apologize and say that he will do something for them later. It is as though they did not exist. When the Minister of Finance is asked why there has been this gross oversight, he says a lot is being done for them in other legislation. He will have many hard-nosed farmers to convince about that. The farmers have only themselves to blame, because they do not pay the $50 to attend the banquets at Toronto. The farmers have placed themselves in a terrible position by not attending the banquets and thereby qualifying to receive this treatment in the budget. I hope they have learned something from this budget about attending banquets. I do not know how much money is required to fly from Moose Jaw to Toronto to attend these banquets. The only reason they do not attend is that their wives prepare much better food; they cannot tolerate either the food or the speeches.
Let us take a look at machinery purchases. The government's argument is that the provision of benefits for machinery purchased will create jobs. I do not think the government will find many economists on its side. There is no evidence to support the idea that stimulation in respect of capital equipment will provide more jobs. It may improve profits and productivity. We will not quarrel about that. But it will not provide more jobs, particularly when we realize that more than half the machinery purchased for use in Canada does not come from Canadian sources but rather from sources outside Canada. Of course, the government is talking about correcting that situation.
There is no evidence that there is unused plant capacity. The factories in Canada are not so burdened with work that their machinery is overworked and is getting so hot that it is necessary to retool. Quite the contrary. There is a hardly a member of this House who cannot give an example of a plant closing down. In my riding, which is a highly industrialized riding, there is all kinds of plant capacity. The true effect of these plant purchases will be to increase corporate profits. The assumption the government is making is that if it gives its friends these goodies, they will be very responsible. The Minister of Finance loves the word "responsible" just as previous ministers have loved the word "confidence". There are things called corporations, markets and financial institutions, but there are no people. The government worries about the market because it says that is where confidence is needed. It says that you must stimulate corporations because that is what must be done. The people do not count. The minister has

May 11, 1972
The Budget-Mr. Saltsman
not heard about creating demand. What we are saying is that equity, productivity and improving the gross national product are not contradictory but go hand in hand. If you give the ordinary person a tax reduction you give him confidence that his government is not robbing him in favour of somebody else, and you will do more to improve the economy than by improving the profits of a handful of corporations.
If we look at the machinery bit, we find it is not 50 per cent depreciation that some corporations will be able to take. It will be 50 per cent this year. Next year it will be 100 per cent, because next year they can take the 50 per cent depreciation to which they were entitled on the machinery purchased this year, plus the 50 per cent on the machinery purchased the next year. That is a pretty nice bonus. It is not as though this approach has not been attempted before. It is not as though there has not been this rapid write-off and accelerated depreciation before and with a similar lack of effect, except on profits. It is a remarkable philosophy which says the only way one can run the economy is to increase profits, because otherwise the whole economy would run down.
At the end of this year, the 3 per cent relief that was given on the personal income tax is to be removed. There is no evidence to suggest the government has any intention of continuing this relief in respect of personal taxes. On the other hand, the 7 per cent benefit that was given to corporations is being formally included by reducing the corporate rate to 40 per cent. It is even better than the 7 per cent, and we have a long-term commitment from the Minister of Finance that corporations will be receiving this for a very extended period. This, in fact, is the beginning of a totally new policy. One has to wonder whether this Minister of Finance is more concerned about looking after the people of Canada or more concerned about building up the power brokers at the next Liberal leadership convention through the direction of his budget. He will not go down the slippery slide of the former minister of finance, because the former minister of finance, despite some of my objections to his policies, occasionally broke through with something for the people. Occasionally, he made a speech in which he said he had something for the people. But the present minister will not permit himself to fall into that kind of trap. They say that the Ministry of Finance spells the end of all leadership hopes. The minister has managed to surmount all kinds of obstacles and he may go down in history as the first minister of finance who managed to hold that office and, at the same time, to please the right people.
In my riding, the textile industry is important, and it is hard pressed. According to the local paper, the first reaction of the people in the textile industry to the budget was favourable. They really think that the Minister of Finance is doing something good for them. I hope they are right but I do not think so because there is a "Catch 22" in that budget when it comes to textiles. The tariff for textile goods coming from Great Britain is being raised. The preferential treatment that we have given on textiles is being extended, and therefore it looks as though this measure will be of some assistance to manufacturers in Canada.
The minister has brought in another good measure. He is removing all the tariffs for the underdeveloped or developing countries. He will let manufactured goods from developing countries come into Canada. But he has included some protection. He allows the manufactured goods to come in so long as they do not disrupt the Canadian market, or words to that effect. What will happen? First of all, those people who are being excluded by the tariff will move to the developing countries where they will be welcomed. Meanwhile, the Canadian industry will be encouraged to expand and to say that happy days are here now, the Liberals are finally doing something for them. But then, they will find themselves right back in the same box in which they have been until now. There will be the same pressures from manufacturers to exclude the goods, and we will have gained nothing. It is a juggling, a fooling of everyone; it is not a policy, and it will turn out to be a cruel joke that the Minister of Finance has played on everyone.
We are also going to pay in another way because the cost of all public financing in Canada will rise sky high. As Corporation profits increase because of these tax measures, the price of equities will rise. It will be more profitable for people to hold equities rather than bonds. This will mean that bonds will have to compete at a different level. Higher interest rates will have to be given for fixed securities, for bonds and mortgages. There will be an increase in the cost of government financing of all kinds, municipal, provincial, federal and housing because the minister has increased the profitability of corporations. All of us will pay for it because all of us use these services to some extent.
One of the greatest problems facing every Canadian is the growing amount of municipal tax that has to be paid. As a result of this bonanza that the minister is handing out, this gift to the corporations which sounds so great now, the minister will make the job of financing everything outside the corporations in Canada virtually impossible, and the chief beneficiaries will be the American subsidiaries in Canada. The minister has consolidated the position of the American subsidiaries in this country. The foreign ownership policy has strengthened foreign-owned corporations, and they are the ones that will get the main benefit from the tax relief being offered and from the concessions that the government is giving.
I wish I had more time because there are so many things to criticize in this budget. I have only started to mention all the bad things that can be said about what the Minister of Finance has done. As the days go by, the bad things will become more and more obvious, as I think they are becoming more obvious.
Before my time runs out, I should like to move the following subamendment:
That the amendment be amended by changing the period at the end thereof to a comma, and by adding immediately thereafter the following words: "it being the view of this House that a substantial reduction in personal income tax on low and middle incomes should replace the tax cuts and other handouts to corporations."


Mr. Deputy Speaker:: Hon. members have heard the amendment which is now before the House.

May 11, 1972


David Réal Caouette: Mr. Speaker, an amendment and a subamendment to the budget brought down Monday night by the Minister of Finance (Mr. Turner) are now before the House.
The amendment simply states, and I quote:
While acknowledging certain beneficial provisions in the budget proposals,-
-no doubt a reference to the increased old age pensions-
-this House regrets the failure of the government to bring forth effective measures to relieve unemployment, to provide incentive for Canadian investment in Canadian development or to propose personal tax relief for stimulation of the economy.
And the subamendment states that this House believes that a substantial reduction in personal income tax on low and middle incomes should replace the tax cuts and other handouts to corporations.
I think three main points stand out in the budget: First, old age pensions are increased from $135 to $150 a month for single people and to $285 a month for married couples. Secondly, help is given to students, who are granted monthly deductions of $50 to further their studies. Thirdly, corporations are helped by getting tax cuts, tax concessions or incentives in the amount of $500 million, in order to stimulate the Canadian economy.
First of all, Mr. Speaker, I shall deal with the matter of senior citizens. In 1970, more precisely on May 4, the following motion was introduced in the House by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House calls upon the government to give consideration to an immediate and substantial increase in the basic amount of the old age security pension and in veterans' pensions and allowances, and this House also urges that still further steps be taken to improve the quality of life of all our older and retired people.
That motion was introduced on May 4 and, on the occasion of the debate on the proposal, I said, as recorded at page 6536 of Hansard, and I quote:
Why not pay $150 pensions to old people? I remember that in 1962, when the old age security pension was $65 a month and that my colleagues and I called for it to be raised to $100, we were literally told that we were crazy, that we were asking for the moon.
Now, in 1970, the same pension has reached $111.41 a month. This means that the government is crazier then we were then by $11.41 a month.
The question remains the same: Where will the money come from? When it was decided to increase the pension of hon. members, did anyone ask where would the money come from? Nobody did. The raise was approved. It was like an electronic system-so smoothly it went through.
And on page 6538 of Hansard, one can read the following:
Mr. Speaker, all this to say that the motion as drafted is very much acceptable. We support its intent because all the people and groups mentioned in the motion interest us to the utmost.
For many years now, we have been asking for $150 per month for old age pensions.
Now, on the same day, that motion was put to a vote and it is surprising to see to what extent an opinion can evolve over a period of two years. At that time, nine of my colleagues and I voted for increasing the old age security
The Budget-Mr. Caouette
pension. We supported the motion of the hon. member for Winnipeg North Centre. Among those who voted against it, I see the names of the Minister of Regional Economic Expansion (Mr. Marchand), of the Prime Minister (Mr. Trudeau) and of the Minister of Finance (Mr. Turner). All three voted against the motion because it was allegedly impossible to raise the pensions. Why has it now become possible, with a larger number of unemployed and an economy more unstable than ever?


Jean Marchand: That is not true.


David Réal Caouette: How is it that we were ridiculed in 1970, whereas, today, the government is introducing this very legislation?


Jean Marchand: He will say anything.


David Réal Caouette: Mr. Speaker, we intend to support this measure. I already said so yesterday in no uncertain terms. This is why I remarked on the night of the budget speech that I had never seen a government prove us so right, we Creditistes who for 30 years have been asking for a better deal for senior citizens as well as for all classes of society.
Mr. Speaker, in his budget speech, the minister forgot to speak of the increase in the national debt. He did not say that it amounted to $16,943 million as at March 31, 1970, to $17,360 million by March 31, 1971 and to $17,922 million by March 31, 1972.
Nor did he say that the interest on our debt in 1970-71 was $1,880,000,000; in 1971-72, $2,030,000,000 and it will be $2,260,000,000 in 1972-73.
I hope that members of the press gallery will mention this: $2,260,000,000 which represent $6,191,100 per day in interest alone on the national debt.
The hon. Minister of Regional Economic Expansion nods to me that we must pay it. We have to.
When his illustrious colleague, the hon. Secretary of State (Mr. Pelletier) is asked whether he can spare a few dollars for the Opportunities for Youth program, he replies to our young people: "It is too bad, we have already received 19,000 projects". He sends that same letter all the time. I quote:
I regret to advise you that your project cannot be subsidized this year. The 1972 Opportunities for Youth program created a tremendous interest and more than 19,000 projects were submitted to us. Budget limitations-
For the interest on the national debt, there is no budgetary limit. We must pay. I keep on quoting:
Budget limitations unfortunately compelled us to make a choice out of the thousands of applications that met with the program's general eligibility criteria.
We cannot even find out what those general criteria are. We ask the minister what they are and he answers: I don't know, my departmental officers know it. But he is the one who signs the letter, not some civil servant.
I quote once more:
Therefore after carefully studying all applications, we had to turn down projects of undoubtable value and interest.
I wish to thank you and your friends-

May 11, 1972
The Budget-Mr. Caouette
How nice! Just in case the election should suddenly be called. Back to the quotation:
-for your efforts in drawing up your project and for your interest in the program.
Yours sincerely,
Gerard Pelletier


John Napier Turner: Lovely.


Jean Marchand: What a lovely letter; not a single mistake.


David Réal Caouette: Mr. Speaker, it is an excellent piece of rhetoric. Very nice, and in good French. But when you ask young people to present projects, why not tell them: Now listen; we cannot accept your project because we think there is discrimination with regard to the ridings. When the ridings are Liberal, we are a bit more generous. But they are not all Liberal.
Mr. Speaker, a project was submitted by a group of young people from Guerin, in my constituency. I am going to read a letter dated May 7 which they addressed to Opportunities for Youth:
To whom it may concern:
We have been advised that projects 281-5746 and 281-4937 have been refused.
As we live in a marginal parish, we prepared two projects related to tourism, while emphasizing the development aspect and the participation of everybody.
Since we feel we gave adequate answers to the questions asked, we cannot understand why the said projects have been refused.
We wish to know what the criteria for assessment are.
Those young people are not stupid! They know what they want, and their projects were serious and worthwhile. These projects were not those of social agitators, of communists or socialists. The letter went on:
We wish to know what the criteria for assessment are, and we request that these two projects be reassessed.
We would like to point out that the projects involve seven postsecondary students.
Hoping to receive a favourable reply, we thank you in anticipation,
Yours sincerely,
Opportunities for Youth,
Bernard Bois,
Guerin, Temiscamingue County
I have before me another one originating from Saint-Lambert Desmeloizes, in the Abitibi riding, and another from Malartic in the Villeneuve riding. Three people have signed the letter from the Abitibi riding, which indicates that young people are fairly concerned about this matter. At least they got an acknowledgement of receipt following the submission of their project; but the letter is more interesting than that and I quote:
This is a little story about two student groups of our parish and their experience with the Opportunities for Youth program.
We were informed, at the end of February, that graduating secondary students would be allowed to submit projects within the 
Opportunities for Youth program and that someone would call at the school to explain to them how to get organized-
This is about a government official who was to detail and specify the criteria. I proceed with my quotation:
Their project should reach Ottawa at the beginning of March. We had, therefore, some ten days ahead of us to think, organize and find a project which would meet the "general criteria", (very, very general ones).
The official in question who was supposed to give the necessary information was not immediately available-Time went by. One meeting after another was held, in the evening, in the parish church to set up a project as best as we could: There were no means of obtaining precise information and we were left to our hopes!
We received an "acknowledgement of receipt". That was something, at least!
A couple of months later, we received a nice letter informing us that the project meets the criteria-But that there were too many projects.
That was exactly the same letter I read earlier concerning another project.
No money-
And I proceed with my quotation: that the project meets the criteria-But that there were too many projects. Ours were both rejected.
Two projects in one parish and none is accepted. I proceed:
Why? Was the choice made at random. Was there any reluctance to invest in our region? We should have been forwarned-
Were the projects not of the kind to be subsidized this year? Who could advise us? A matter of luck? We do not believe that anymore!
Should have we been told some secrets? We are far from Ottawa. We do not know any of your officials-
There would be many other questions which we would like to ask you, Sir.
It should be noted that the letter was sent to the Secretary of State. I continue to quote:
The same applies to LIP. We are promised the moon and stars and then nothing happens. Then some people will say that the young people have no interest whatsoever . .. that they want everything ready-made . .. that they do not know how to commit themselves,... that they are pessimistic, passive, etc.
After so many deceptions, it is evident that they become passive.
The letter is signed by Louise Fluet, Johanne St-Georges and Mario Laroche: one is animator in the parish and the others are responsible for the program.
Mr. Speaker, I shall not read the other letter coming from Malartic. It says the same thing-a well presented project, which represents an expenditure of about $12,700 and could provide jobs for 17 people. Messrs. Gaetan Boulanger and Bernard Dube, from Malartic, were responsible for it. The project number was 282-1970.
Mr. Speaker, I reviewed this project this morning, and I realized that it was very well thought-out. It is a good and necessary thing for the city of Malartic. Now, the minister continues to give the same answer: "I regret to inform you that your project will not be subsidized this year." No doubt that it could not be subsidized last year, since it had not been introduced.
May 11, 1972

Therefore, I must say that as a result of a lack of funds, thousands of projects are refused, and I say to the Minister of Finance that if a world war were to break out tomorrow morning, all young people would be enlisted in the armed forces. Then the necessary funds would be available to pay them, to clothe them, to feed them and provide them with suitable accommodation. I consider the government as being responsible for the disillusionment of the youth, which is completely disgusted by the public administration.
So, I am plainly telling this government that what the old parties have been able to achieve in wartime, the Creditistes undertake to do it in peacetime, that is to enable people to live decently in law and order.
Let no one tell me that there are not enough funds to assist our young people in creating or building something, when in wartime we find all that is required, nothing is lacking.
Mr. Speaker, we complain that youth is rebelling. We do not even allow them to participate in society and then we are surprised to find out that young people take up the cudgel against anything and want to destroy our Canadian society.
Instead of blaming the young who have their backs to the wall, let us condemn the financial system administered by the Minister of Finance. This is where the trouble lies.
To help the young, impossible! To pay $6,191,000 a day in interest only on the national debt, forget about it. The minister did not criticize that in his speech. He simply said: We shall help the aged. We agree. We have been in this House for ten years. Personally, I have been a member for ten years. I have constantly asked for better pensions for the aged. They are given $150, we ask for $200, but we shall nevertheless vote in favour of the government proposal.
We would have liked to see pensions granted from age 60, instead of 65; when the minister reaches 60, he will find that he can no longer find any work. He will no longer be in Parliament then and he will not be able to find a job. So, he would be happy to have the old age security pension. He should have thought about this when he prepared his budget. He should have announced pensions for people of 60 or over as well as for their spouses.
This afternoon I directed a question to the minister about pensions, because, last night, I was stunned to see on television the Quebec Social Affairs Minister about to faint because the federal government was granting increases in pensions. That would disrupt his comprehensive system, which he never produces. He blames Ottawa for giving something to Quebec's senior citizens. I fail to understand the stance of Quebec's Minister of Social Affairs. I have been told that by this time he may have turned in his resignation because Ottawa is considerably damaging the Quebec plan. I don't see what damage can be done if Quebec is not contributing a penny to this increase.
However, these increases still create problems on the provincial level. This morning I received a letter from a mother who is on welfare and supporting, alone, ten children, ranging from 20 to 2 years of age. She receives
The Budget-Mr. Caouette
welfare benefits of $232 and she is wondering how they can pay $285 to a senior citizen and his wife. And justifiably so! She has no objection to old people receiving $285-not at all-but she is asking me to find out from the government how it could support 10 children and their mother on $232 a month. These are welfare benefits to which the federal government contributes 50 per cent and which are administered by Quebec-according to Quebec criteria.
Rene Levesque could not improve on the minister.
Mr. Speaker, that mother is right. What reply did she get when she applied for an increase in her welfare payments? The public servant employed by Quebec told her: "Madam, the criteria prevent us from increasing your benefits. Go out and work to increase your income". If she did go to work, she would lose her whole allowance, or part of it.
However, there is another solution. They told her: If you cannot make both ends meet, if you cannot maintain your children, hand them over to us and we shall look after them. In such a case, the government would be willing to pay $800 a month or $80 per month per child placed in a foster home. They would break up the family by taking the mother out of her house and by taking her children away from her. The department is willing to pay. If the minister does not believe me, I could bring him to the welfare office in Hull tomorrow morning; I could have him see for himself whether this is true or not. They grant $80 per month for each child placed in a foster home by welfare offices. The Minister of Regional Economic Expansion knows that this is true.
So, why should we put up with such a situation? Why, Mr. Speaker, must we inflict such troubles to mothers, as I pointed out earlier today? If a man receives a pension of $150 and his wife is under 65, she is not entitled to a pension. If both are 65, they will receive $285. If the mother' is 58, 59 or 60, she will probably apply to the welfare office to get $30 or $40 a month-


An hon. Member:: 


David Réal Caouette: -$25 or $30. Let us say $40 and be generous with the government. Forty dollars plus $135 make $175. If the wife is 65, then she will be granted $285 instead of $175, that is, $110 more, as if a person who is 65 ate more than she did at 58, 59 or 60.
That is not all. As the Minister of National Health and Welfare (Mr. Munro) told me at noon today, as soon as the pension increase is passed by this House, the Quebec Social Affairs Department will reduce the pension paid to the mother who is not yet 65. She receives $40-


Mr. Ouellet:: He never said that.


David Réal Caouette: He added: "I hope not". But we know that this has always happened in Quebec. If the hon. member for Papineau (Mr. Ouellet) says the opposite in Quebec, he will lie to the people. I know how things go because I am aware of it. The hon. member for Papineau takes pleasure
2186

May 11, 1972
The Budget-Mr. Caouette
in disparaging the Social Credit in Quebec. Let him meet me on the hustings and I will fix him in public.


André Ouellet: Any time.


An hon. Member:: He is going to bust his balloon.


David Réal Caouette: Mr. Speaker, I have burst a lot of balloons in my days.
People are being told shameful lies and the Creditistes are accused of talking nonsense and of proposing senseless programs. The hon. member for Papineau thought it was funny when we asked for $150 a month. Who would have voted against that? Now, he is saying: the Liberals gave you $150. But it took the Creditistes to kick the government in the right place.
Mr. Speaker, we are asking for the adjustment of the financial system in Canada. That is where the trouble is. I know that the government members are human. Both the government and the hon. member for Papineau know that the financial system is the sore spot. That is why there is no reference to it in the budget, that is, it is being changed for the benefit of big business which is getting more incentives and tax concessions under the pretext that more jobs will be created.
Here is a good one. We will see how good the minister is. Let us look at the blatant inconsistencies among the government people. The Liberals agree with one another. Here is what the Minister of Finance said in his budget speech on May 8, and I quote:
Mr. Speaker, my first words to this House as Minister of Finance last February were that my most urgent priority was jobs. This remains my first priority. The main thrust of this budget is to deal with this problem; to buttress the Canadian economy-to provide incentives for Canadian industry to grow and compete and provide jobs.
This is what the minister said. The objective is to create jobs. All the new industries are happy. Everything is clear: they will make more profits without increasing their sales, because the consumers don't have the money to buy the finished products.
Mr. Speaker, on March 10, 1972, the Finance Minister's chief, the Prime Minister, stated in Victoriaville, and I quote:
"Man's most sacred task is to develop his talents, and that objective is not necessarily fulfilled through work, because we are moving more and more toward a society of leisure," stated the Prime Minister of Canada before some 500 people in Victoriaville on Friday, March 10.
One says: My main objective is to create jobs. The Prime Minister says: one must not believe that, it is self fulfillment that matters.
It seems we should organize leisure instead of creating jobs. If he thinks of creating jobs through further subsidies to large companies, the minister will not reach his objective. At the present time, those corporations are faced with overproduction in all Canadian economic fields.


The Acting Speaker (Mr. Boulanger):: Order. It is my duty to tell the hon. member that the time allotted to him has expired.

To proceed, the hon. member must obtain the unanimous consent of the House. Is that consent given?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Boulanger):: The hon. member for Temiscamingue.


Albert Béchard: Provided it is new.


David Réal Caouette: Mr. Speaker, I hear the hon. member for Bonaventure-lles de la Madeleine say: "Provided it is new." I feel that what I have just said is rather new. Anyhow, I thank my colleagues for their kindness and I will do my best not to abuse their generosity.
To get back to the conflicting statements made by the Prime Minister and the Minister of Finance in the space of two months. The former said: We must organize leisure, and the latter: We must create jobs. So, the Canadian taxpayers are wondering who is right and who lied.
Who is on the right track? I agree 100 per cent with what the Prime Minister said in Victoriaville because that is what we have been saying for the past 30 years. More and more, through the use of new techniques, workers are going to be replaced by machines. Then, we will have to organize activities and provide the people with a higher purchasing power so that they can buy the products of machinery.
Mr. Speaker-and again I say what I have been saying for a long time-the problem in Canada is not one of production. Even if car dealers were paid grants-I sell Chrysler products myself-they could not possibly sell every last unit. The same applies in all sectors: clothes, food, grain. During a recent visit out west I noticed four-year old crops in warehouses but no buyers. The Minister of Trade and Commerce (Mr. Pepin) is well aware of it.
In eastern Canada there are too many apples, too much milk, too much wood, too much of all kinds of things. In the Maritimes there is too much fish.
In British Columbia there is too much fish as well as too much wood and fruit.
In Alberta there is too much oil.
Recently that province's premier came to Ottawa in the hope of finding new customers.
Mr. Speaker, even if industries are subsidized, how will that increase the purchasing power of the Canadian taxpayers? It won't. That is why we claim there is obviously not much difference between what the government now proposes, for instance, for big business, and what the Creditistes have been suggesting for a long time. The big companies will make additional profits, but the little people, the average citizen, the ratepayer will still pay for the minister's budget. The minister did not say, in his budget speech, that the government expects to collect an additional $1,125 million more in income tax from the private citizens than in 1971-72.
The so-called gift of $500 million the government will give industry and that of $425 million to the veterans together amount to $925 million. This means that the

government will distribute $925 million more but that it will take $1,125 million more from the taxpayers. Older people are going to get something!
Last year, 1,300,000 Canadians were looking for summer jobs. This year, it has just been announced that 1,400,000 young people will look for summer employment. It is assumed that 400,000 of them will find something, but this means that 1 million will not find employment. What are we going to do? What benefit will these unemployed young people get from this budget? They will be able to deduct $50 per month from their income, but they won't earn a cent. The minister should start by paying them these $50 so that they can pay them back later.


Albert Béchard: You should read the budget statement in full.


David Réal Caouette: The hon. member for Bonaventure-Iles de la Madeleine (Mr. Bechard) suggests that I read the budget statement. But with $50 a month deductible, or $600 a year, if the young person earns nothing, how is he going to pay?


Albert Béchard: Read a little further!


David Réal Caouette: There is nothing in the budget which says that the governemnt is going to assist students, absolutely nothing.
I have duly established my allegations. I have just read three letters from the Secretary of State. We have no money! Out of the 19,000 projects, only 700 or 800 will be accepted. There you have it.


Albert Béchard: There were none before.
^ Mr. Caouette: Let the hon. member for Bonaventure-Iles de la Madeleine go and explain that to his constituents to find out whether they will believe him.


Albert Béchard: I already did.


David Réal Caouette: The party in power grants us a basic annual exemption of $1,500-approximately $30 a week. For a married couple, $2,850 a year represent $55 a week. The old age security pension, together with the guaranteed income supplement, come to a total of $150 per month.
What the hon. members of the Social Credit party suggest-something which should have been granted a long time ago-are basic income tax exemptions of $2,500 for single people and $5,000 for married couples.
What we also suggest in order to boost the purchasing power of the public so that the industries and the large corporations may sell their products is to grant a discount on the retail price, a discount compensated by the federal government to the industry.
If on a purchase of $1,000 the government were to allow a 20 per cent discount, the cost would be $800 instead of $1,000 and the consumer's purchasing power would be increased with no effect on the cost price of goods. This would bring retail prices down and the government would compensate retailers for the discount granted to the consumer. Because of this greater purchasing power, obviously industry would sell its products.
25316-15',
The Budget-Mr. Caouette
Increased buying power would obviously foster sale of products. With industry selling its products, obviously there would be new jobs created, new machines, new techniques used, etc. That is sheer common sense! It would be logical to finance production through consumption. But instead of that, we keep on supporting production and ignoring consumers. They are not organized to benefit by an increase in their buying power.
Failing distribution of dividends, prices should be brought down, with the government giving a discount to retailers.
Furthermore, we want to change the present welfare system throughout Canada. I discussed this in the West and in the East, saying the same everywhere. Welfare, as now operated, is an encouragement to sloth and fraud. Some people receive welfare benefits and do not deserve them while others, badly needing them, get none. Laziness and fraud are being encouraged. People are being told: Stay home, don't move. Should you work at all, you will lose your benefits. That is how fraud is being encouraged.
Recently, a Montreal mother was arrested for having received during the previous year over $12,000 in welfare benefits. She had registered her family at all welfare offices in Montreal and was drawing a cheque from each of those offices. At the end of the year, I believe the amount was $12,678.


Albert Béchard: There is no spiritual director for the city of Montreal.


David Réal Caouette: I will send the hon. member for Bonaven-ture-Iles de la Madelaine as a spiritual director to the city of Montreal, because one is badly needed there.
Mr. Speaker, we believe the whole welfare system should be replaced by a social security program including basic exemptions as far as personal income tax is concerned as well as economic security benefits to everybody. As for young people of 18 or over, including the students who are sending projects to the government, instead of having them cut branches along highways or maintaining them I don't know how, they should be guaranteed a yearly income to enable them at least to go back to school when courses will resume in September or October.
We call for a $1,200 grant per year for any citizen of 18 or more and $250 per year for those under 18. In the case of children, an amount of $250 per year represents a little more than $20 per month. Married people should also get a guaranteed yearly income of $2,500, not an income granted only if they do not work, but an additional income to the one they can earn.
People with a $3,000 or $5,000 income will receive in addition $2,000, $3,000 or $3,500. Apart from encouraging people to work, this will promote honesty, because people will know that they do not have to hide in a bedroom or elsewhere to work, so as not to be caught and lose their welfare benefits. Therefore, this would encourage people to be honest and to work. Nobody will ever refuse to earn something if they are encouraged to do so.
Mr. Speaker, instead of 600,000 unemployed people in Canada, we probably would have only 100,000 of them, or less than 50,000. These people would be working and

The Budget-Mr. Caouette
producing something. They would contribute to the upswing of the economy.
On reaching the age of 60, not 65, there ought to be payments of $200 monthly to pensioners and to their spouses as well, even if the latter are only 60. Instead of receiving $285 an old couple should be getting $350, that is $65 more than is paid at present by the government. This should be paid as soon as age 60 is reached.
Everybody knows, including hon. members and the ministers-especially the Minister of Finance-that people aged 60 as well as mothers of 57 or 58 should not be allowed to work. Not being as old as their husbands who are 65, these women are not eligible for anything. In the Parliament Buildings there are working women aged 55 or 57. In order to make a living, they have to wash windows and scrub floors at night in a country as rich as Canada. This is unacceptable and the Creditistes certainly do not approve of this way of serving Canadians.
Mr. Speaker, those were the remarks I wanted to make on the budget which was presented on Monday by the hon. Minister of Finance. What is the purpose of the amendments and sub-amendments? To ask for jobs. I say that, in Canada, the problem does not consist only in the creation of jobs, but in the establishment of security, independently from employment.
When I hear labour leaders speak of job security, I submit that Canadians are not concerned about job security, but about pay security. The solution lies in having the purchasing power to buy the available goods and services. Whether we recognize it or not is immaterial. There is something I mentioned at the beginning of my speech, namely that $150 was unacceptable two years ago. Today, not only does the government accept it, but it introduces legislation to this effect. And all parties have unanimously recognized its necessity.
When we were asking for higher pensions at the time the Progressive Conservatives were in power, we had the same reaction-it was impossible. Today, we have seen them vote, to a man, in favour of the pension. As for NDP members, they have long been insisting on increased pensions. Almost every day, I hear the hon. member for Winnipeg North Centre speak of veterans, of retired CN and CP employees and of all other pensioners whose benefits should be increased. He is right. Since the cost of living is going up, we should agree to increase these people's income. But do not always grab from those who own something to give those who have nothing because the end result will be that nobody will be poor, but nobody will be rich either. That is exactly what would happen.
As has been the case in various countries I have visited, people have said: Let us eliminate the big ones. Today, people in Quebec say: Let us go for large industries, let us smother them into oblivion. Once they have disappeared, we will be better off. But go out and see what happened in the countries where this has been done. Large industry has disappeared followed by the smaller. And the small one who did not have any large industry is controlled by a government which says: Power to the people.
Power to the people? You can forget about that! Power is in the hands of a few kooks who forcibly lead the

people. This is exactly what is advocated at the present time, if we are to believe some Quebec labour leaders.
Mr. Speaker-


An hon. Member:: Sometimes he shows some common sense.


David Réal Caouette: The Liberal members know that I always have common sense-


An hon. Member:: It is true!


An hon. Member:: Oh no, not always!


David Réal Caouette: We all deplore what is happening in Quebec, but we must not forget that exactly the same things occurred 55 years ago in Russia. Unrest in Russia began with strikes, with labour leaders challenging the law, the rules, the authorities and saying to the union members: "Pay no heed!" Then the bloodshed began. This is exactly what happened in Sept-Iles last night. It was such a beautiful thing to behold: Canadians who are tearing at one another, saying: "Power to the people!"
And when these leaders take over-because it is never the people who assume power-the first thing they do is to control the courts. Castro, in Cuba, first took control of the courts, and 2,000 or 3,000 people were shot. That is their first reaction.
This is why I say that if people like Chartrand, Pepin, Laberge and Charbonneau tried in Russia, Czechoslovakia or Cuba what they have done here, within 24 hours they would be facing the firing squad!
That is the kind of system that they would give to our workers, farmers, people of Quebec and other Canadians! As for myself, I say to Canadians: Citizens of the silent majority, be a little more conscious!
We must open our eyes before it is too late. We must start by making people respect the order of justice, not that of injustice. Straight jackets in a system like ours are precisely what causes people to rebel. Let us improve the system rather than destroy it. It has been destroyed in other countries without result. On the contrary, things there are worse than they were.
If we compare farming in the USSR or in Czechoslovakia with farming based on personal initiative, we see a whole world of difference. Are we going to allow ourselves to be destroyed from within our country, as has happened in Cuba? When I hear Chartrand say: The only thing Cuba lacks is American toilet paper-I maintain it lacks something else. According to him, justice, judges, members of parliament, governments, nothing or nobody is any good any longer. Those people defy the law. Let them go and try to defy the law in the USSR or Czechoslovakia and see what happens. They would like to get hold of power for themselves, not for the working class.
Let us compare Canada with the USSR: here, the working week is 37, 38, 40, or in some cases, 42 hours. In the USSR, it has been 46 hours for the past 55 years. In Czechoslovakia, it has been 46 hours as well for the past 30 years.
In Czechoslovakia, three years ago students attempted to recover their freedom. Their rising was crushed with

Soviet tanks. They are no longer allowed to recover their freedom.
Mr. Speaker, I warn not only parliament but the Canadian people against this. If some day we lose our freedom, we will never be able to recover it. We will be treated in exactly the same manner as the individual is treated in communist or socialist countries.
In my opinion, it is to the interest of the Canadian legislator to take a stand and to act with the aim of serving the best interests of the human being. We must move ahead, pass laws, introduce budgets, not only budgets which are generous when wars, killings and revolutions are involved, but generous budgets conceived in time of peace to preserve justice, law and order.
In this manner, we could achieve economic stability and personal freedom.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Speaker:: Before I call on the minister, it is my duty to bring to the attention of the House that the following matters will be considered at the time of adjournment tonight: the hon. member for Dartmouth-Halifax East (Mr. Forrestall)-National Defence; the hon. member for Fraser Valley West (Mr. Rose)-Housing; the hon. member for Athabasca (Mr. Yewchuk)-Grain.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Hon. John N. Turner (Minister of Finance) that this House approves in general the budgetary policy of the government, the amendment thereto of Mr. Lambert (Edmonton West) and the amendment to the amendment of Mr. Saltsman.
Jean-Luc Pepin: Mr. Speaker, I did listen with great interest to the speeches that were made this afternoon, but before going any further, I want to say how much the remarks of the hon. member for Waterloo (Mr. Saltsman) astonished me.
Let me tell you, because I don't want him to be judged solely on some comments he made this afternoon, that, in private, he is usually quite humble and even very kind. And this is contrary to the impression he sometimes gives to the House, where he assumes the role of a Moses, entrusted with the safekeeping of the Tables of the Law.
The Budget-Mr. Pepin
As far as I am concerned, I don't mind being told that I am not very clever, but to be told that I am in the pay of business, any business, that, Mr. Speaker, does not go down very well. In my opinion, the remarks made this afternoon by the hon. member were rather uncalled for. I wanted to say it before carrying on with my comments.
Mr. Speaker, if I had not committed myself to report to the House on the price of cars and on the DISC program, I would have had the time to describe how important the manufacturing sector is to our economy, to our rate of employment and mainly to the increase of our exports. Perhaps the House is aware that 75 per cent of Canadian exports originate in the sector which the Minister of Finance (Mr. Turner) saw fit in his wisdom-and I quite agree with him-to grant special consideration in his financial statement.
I could also have explained further why the Minister of Finance has decided to help this particular sector, the reasons being, among others, tied in with international trade. Most if not all of our important international competitors, all the major industrialized countries, have recently taken some measures to favour their manufacturing sector.
Mr. Speaker, some balance had to be re-established and the budget has done that, I think, in a way that was needed. Some people have not yet understood this. It seems to me that it is simple enough to understand, when we consider the changes that have taken place in the world of international trade, when we consider, for example, the support, that the European Community, Japan and very recently the United States-especially through the DISC program-and the governments of the industrialized countries give to their manufacturing sector. I for one feel that it would not have been rational not to do as much in Canada. We would have put ourselves in a position which would have brought great harm to us in the future.
All the people who say that nothing in this budget aims at increasing employment should be aware of the fact that the measures introduced by the Minister of Finance have consolidated and secured many positions presently existing in the sector of manufacturing. As far as I am concerned, I think that these measures will also have the effect of creating a good number of other jobs in the near future.
Mr. Speaker, if I had enough time-and I don't-I would have emphasized the contribution of this budget to the development of an industrial strategy which better meets the needs of the 70's. This budget brings a solution to a certain amount of problems which have been put forward very often by some industrial sectors whose leaders explained to us the very particular difficulties they had to cope with.
I believe as well that the budget will pave the way for a number of projects which had been shelved, delayed or considered as unfeasible at this time, very often as a result of the level of taxation which prevails in Canada.
A number of people suggested, this afternoon in particular, that tax reductions should have favoured personal rather than corporate income tax. Mr. Speaker, I ask them to think it over, for the consumer demand is already

May 11, 1972
The Budget-Mr. Pepin
strong in Canada; on the other hand, imports are also increasing at a very rapid pace in this country; by the way, during the first quarter of 1972, there was a 22 per cent increase.
A tremendous reduction in personal income tax would have above all contributed to boost imports. It was really necessary to put the producers themselves in a competitive position enabling them to compete with these imports. Of course, we have a right to do it. Second, it was imperative that they be able to compete on international markets, in the area of manufactured goods.
Mr. Speaker, 1 will now speak about the two reports, as promised. They are difficult reports. Therefore, I will refer quite often to the notes before me, which I do not usually do, and I ask you to excuse me beforehand. I regret having to do so. I would rather talk as easily as the hon. member for Temiscamingue and leader of the Rallie-ment creditiste (Mr. Caouette), who does not have to refer to very precise notes.
Mr. Speaker, I undertook last week to make a statement on DISC in the course of this debate. As the House knows, the government has been concerned that the introduction by the United States of the Domestic International Sales Corporation scheme might adversely affect the level of production, employment and investment in Canada, especially if a large proportion of U.S. companies with manufacturing facilities in Canada, exporting to this country or competing with Canadian goods in foreign markets were to take full advantage of this legislation.
DISC'S effects are not, as everybody knows, confined to Canada. Canada is, however, highly dependent on exports, especially to the United States, and on imports from that country as well. We are also important users of U.S. investment. Canada is, therefore, uniquely vulnerable to any United States measures which might affect our trade or investment patterns. This is a fact.
The government has, therefore, been consulting since the DISC legislation was passed with Canadian companies likely to be affected and has, of course, been following developments very closely in Washington. We have given a great deal of consideration to the kind of policies which might become necessary if the DISC scheme became a serious threat to Canadian production and investment. Some people will ask why it takes us so much time to assess the situation. I think the reasons are pretty good. First, United States companies have been relatively slow in registering their intent to set up DISCs. Fewer than 1,500 firms are reported to have elected DISC status, out of some 25,000 U.S. companies now engaged in exporting and 500,000 with some export potential. Registration by March 31 did, however, qualify a corporation for tax deferral privileges retroactive to the beginning of this year and a company can still register a DISC at any time and qualify from the date of registration. What I am saying is that companies can come later and request DISC status, but the number that have already done so is limited in relation to the number of U.S. companies involved in exports.

Secondly, Canadian firms consulted do not yet know precisely how the DISC scheme may affect them. This is partly because the U.S. treasury department has not yet defined the full dimensions of this scheme, and also because many U.S. corporations have not apparently decided how and for what exports, if any, they will use their DISCs. So it is difficult for the government to be informed ahead of events. It is difficult to know what are the intentions of the companies before they have made decisions themselves as to their intentions.


Robert Lorne Stanfield: I did not know the Liberal government was so modest.


Jean-Luc Pepin: Mr. Speaker, I am not establishing a contrast this afternoon between the hon. gentleman and myself- we are both humble and, as was said about Attlee, for such good reasons. I am establishing a contrast between myself and the hon. member for Waterloo (Mr. Saltsman). I for one am quite willing to accept the idea today, yesterday and for the future that I do not have a monopoly on truth.


Some hon. Members:: Hear, hear!


Jean-Luc Pepin: I undertook to report particularly on my consultations with the major motor vehicle manufacturers regarding the use of DISC. My report is that of the four producers that were consulted, Ford of Canada confirmed that a division of the U.S. parent has been registered as a DISC and is including shipments to Canada under the provision of the DISC program to enable the parent corporation to take advantage of the income tax deferral provisions. This will enable Ford, U.S.A., to reduce its tax obligations to the United States government. The company says that it does not anticipate that the use of the DISC by this parent corporation will have any short-term effect.


An hon. Member:: Short-term, yes.


Jean-Luc Pepin: I said "short-term effect", and this is underlined in red in my text. It is not anticipated that DISC will have any short-term effect on their operations in Canada and, therefore, no immediate shift to U.S. sources, with a consequent lower utilization of company facilities in Canada, is expected. DISC would affect the company's longer term investment plans in Canada. I put it the way it is.


Mr. Speaker:: Order, please. I wonder whether this might be a good time to interrupt the minister, if there is ever a good time. I must bring to the attention of hon. members that it is six o'clock.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
Jean-Luc Pepin: Your Honour, when I was so sweetly interrupted by Mr. Speaker at six o'clock-as he said, if ever I can be interrupted-I was explaining the reason why the

information on the effect of the DISC program has been so slow in coming and remains inadequate. I was also reporting on the state of affairs in respect of the four major automobile companies in relation to DISC. I covered Ford and I now move to General Motors and Chrysler. These two companies in the United States have registered under DISC with the United States federal department, but so far have taken no decision to include shipments to Canada under the program.
Again, neither of these two companies expects that DISC will have any short-term effect on the level of production in Canada, although each was less certain that the benefits under DISC would not have a bearing on longterm investment plans for the industry in North America. American Motors have not registered under the DISC program nor, they say, have they any present plans to do so.
As hon. members are aware, the demand for motor vehicles this year is expected to be well ahead of last year. It is expected to be a record year. The Canadian companies report that sales in Canada are exceeding those of last year. As the market demand in the United States is also very strong, the level of our automotive trade, in both exports and imports, is expected to exceed that achieved last year. The growth in both markets is not expected to significantly alter the trade pattern that is being achieved this year between the two countries. So despite the differences we have had with the United States over the future shape of the automotive agreement, this arrangement continues to bring substantial benefits to both countries.
It is obvious that the budget which the government brought down on Monday has placed the automotive as well as other manufacturing and processing industries in a position to compete more effectively with producers abroad, including those countries which have adopted various tax measures directly to further their own exports without affecting their domestic position with respect to pricing or sales. We regard many of these measures, which are direct export subsidies, as being contrary to the principles and obligations of GATT and we have protested against them to the countries concerned. As my hon. friends know, a direct export subsidy is considered to be an unfair advantage.
The new budget provisions for fast depreciation on equipment, machinery and anti-pollution devices, as well as the lower corporate tax on manufacturing and processing, are not retaliation against the value-added tax systems, income tax holidays, tax deferrals on exports and other specific measures which have unfortunately proliferated in recent years. As the Minister of Finance (Mr. Turner) said on Monday, our new measures are designed to provide greater incentives for new investment in Canada and to strengthen the general ability of Canadian industry to compete with foreign manufacturers both here and abroad.
My hon. friends know that there is a difference between a direct subsidy and a general economic measure. Among their beneficial effects, these measures will put Canadian manufacturers and processors in general on an equal footing with producers in other countries. These measures
The Budget-Mr. Pepin
will strengthen the ability of manufacturers in Canada to adjust to the challenges of enlarged European markets and other international developments and opportunities.
Despite the improved situation of Canadian business brought about by the revision of the corporate tax system, it may be that in special circumstances a Canadian producer may still feel at some disadvantage compared with his foreign counterpart, either in his competitive position or in his investment prospects. If this should come about, the government will consider any further steps which may be warranted.
The government is also looking at ways to obtain better identification of imports to Canada at prices which reflect export subsidies. Our objective in this regard will be to assess more accurately the impact on Canadian producers which subsidies may have, so that appropriate steps may be taken. The government is confident that the improved corporate tax system which the Minister of Finance placed before the House will enable Canadian manufacturers to hold their own in the increasingly competitive international market and play their part in the development of Canada.
My second short report is on the automotive price differential. I have consulted the same major Canadian automotive producers on this particular matter. The main purpose of the 1965 automotive products agreement was to expand production and employment and improve efficiency in the Canadian automotive industry. The government had the further intent, and the confidence, that the differential between car prices in Canada and those in the United States would be progressively reduced.
Production and employment in Canada have expanded dramatically since the agreement was signed in 1965. Efficiency has risen steadily and large investments have taken place in this country. Figures showing this great progress are public, and consequently I do not propose to repeat them tonight. They are available. The cost savings made possible by this rationalization were translated into a continuous decrease in the price differential until May, 1970, which is the date of the floating of the Canadian dollar.
May I briefly trace the progress which was made toward reducing the price gap under this agreement. In doing so-and this is a very complex exercise; I am not hiding the fact-I will use weighted average prices at the manufacturer's level, that is, f.o.b. factory excluding sales taxes. I am sure that at least one hon. member understands the meaning of these words, because we have gone over these things a number of times. So I repeat, they are weighted average prices at the manufacturer's level. "Weighted" means that in establishing figures we took into account the number of automobiles sold in each model of car.


Robert Lorne Stanfield: It does not mean it is weighted to suit yourself?


Jean-Luc Pepin: I did not understand the remark: I would like to hear it later. It is at the manufacturer's level that the automotive pact influences the costs of production and resultant prices. Because of sales tax differences at the dealer level, manufacturer's prices must be used if a meaningful comparison is to be made between Canadian

May 11, 1972
The Budget-Mr. Pepin
and U.S. car prices. In other words, I exclude taxes because obviously they are different here from what they are in the United States. A comparison which would not take into account this fact would not be useful.
I shall also be using Canadian dollars in comparing Canadian and United States prices, converting the latter into Canadian dollar terms to permit a direct comparison. As the exchange rate of our dollar averaged 921 per cent of the U.S. dollar during most of the period since 1965, I shall first compare prices using this rate both at the beginning and the end of the period. I shall then make a second comparison using the present rate of exchange, which for practical purposes I have taken at par. The use of these uniform exchange rates avoids the distortions which would result from converting each year's prices at varying rates of exchange.
The following is the first comparison: In 1965, when the agreement was signed, the average weighted price differential between Canadian and U.S. cars was over 8 per cent at, I repeat, the 92.5 per cent rate. As the benefits of the agreement gradually bore fruit, the average price gap grew narrower until by 1970 the differential was down to
3.5	per cent. By 1971 it would have been 3 per cent, and for the current model year about 2 per cent, had the value of the Canadian dollar remained unchanged.
In May, 1970, the Canadian dollar was allowed to float, and since then has risen to the present near-parity. If I adopt the present rate of exchange in calculating the price differential since the signing of the automotive agreement, in 1965 the average Canadian car would have cost nearly 16 per cent more than its United States counterpart. By 1970 this gap would have been about 11 per cent, and for the current model year the differential is just over 8 per cent at, I repeat, the manufacturer's level.
This price gap naturally varies from company to company and from model to model. Some cars are priced lower in Canada than in the United States. Most are more expensive, by various amounts. In general, the smaller, more popular cars are sold at a lower price differential than the larger, more luxurious models. One of the new sub-compacts, in the version which is the largest seller, is on average $61 less expensive in Canada, at the dealer level, tax free, than it is south of the border on the same basis.
The exchange rate which I have used to trace these prices does not have a direct bearing on the Canadian dollar price actually paid by the Canadian consumer for his car. Canadian car prices, in Canadian dollars, have risen over the period of the agreement only half as fast as those in the United States in U.S. dollars. But the Canadian citizen, Mr. Speaker, still buys cars at a higher price than the U.S. citizen. How come? The question, then-and it has been repeatedly posed in this House-is whether a differential of this size, or indeed of any size, is warranted under a continuation of virtually tariff-free trade in vehicles and parts with the United States. This is the question with which my department has been constantly engaged, and one which both I and my predecessor, the now President of the Treasury Board (Mr. Drury), have discussed with the vehicle producers on many occasions.

Then, Mr. Speaker, what is the explanation? The producers have identified a number of elements where costs in Canada are higher than in the United States. These factors include cost of transportation of the cars to the dealers, sales taxes on materials, for example, construction materials, and other supplies, higher average costs of capital when they are borrowing on the Canadian market, greater administrative and overhead expenses related to Canada's separate and smaller economy, and the added burden of our colder winters. The companies are not able to identify, and neither are we, in cost accounting terms- I mean in any precise numerical terms-what these costs would amount to in terms that would be acceptable to economists, both ours and probably theirs.
While economists and accountants can, and do, recognize these and other cost factors in their studies of Canadian automotive production, it has never been possible to determine accurately just what these amount to in any particular Canadian operation and, even less, in the production of any given Canadian car. One can conclude, however, that there are in fact some continuing higher cost factors in this country which bear on the production of cars and their delivery to the dealers. It may be suggested that we buy a roomful of computers, hire a thousand economists and a few thousand accountants in order to get to the bottom of this problem, but some people say that even they could not decipher the complexity of the situation.
At the same time, Mr. Speaker, our studies of this industry indicate that there are certain elements which offset some of the higher costs which the producers have identified. It is mentioned sometimes, for example, that the cost of steel is lower in Canada than in the United States. It is also mentioned that labour stability is an advantage in determining the costs of production in Canada. But these lower cost elements seem to be just as difficult to measure precisely for particular factories or vehicle models as are the higher cost factors. I hope that I am at least giving an indication of the tremendous complexity of establishing proportions and comparisons in this particular industry.


John Edward Broadbent: You left out profit margins.


Jean-Luc Pepin: Mr. Speaker, the knowledge we have is that profits in Canada, generally speaking, are lower than they are in the United States for companies in this particular sector of the economy. But, again, this is terribly difficult to establish; often you have global or international figures for the operations of these companies and from these you have to try to extricate the Canadian aspect. Again, the exercise is a most difficult one.
Whatever the past situation may have been, the budget provisions which the government introduced on Monday have already substantially altered the cost and profit equation which has been such an important element in our review of this matter. The availability of the new provisions for accelerated depreciation of machinery and equipment used in manufacturing, and the lower corporate tax rates which will bear on this industry, have removed any doubt about the ability of the industry to continue to reduce the price differential. The 1973 models, when they come out in the fall, may well cost as much as current models because they will have to incorporate in
May 11, 1972

both Canada and the United States stricter safety and pollution control devices. However, I expect the car manufacturers to narrow substantially the gap between Canadian and U.S. prices for the coming model year.
Why, you may ask, is the automotive industry singled out in this way? Why should it be expected to continue to move its prices closer to the U.S. level? First, this industry has been given privileges by the automotive agreement which are unique in Canada. The corporations can rationalize their production for the total North American market, with all the economies of efficiency and scale which that involves. Moreover, they continue to be protected in this country from overseas competition by what is now a 15 per cent tariff on most vehicles imported from third countries. The comparable tariff in the United States is only 3 per cent.
It would be intolerable if an industry which has been given the opportunity to arrange its production and distribution on a continental basis were to try to shelter behind this tariff. The government is, consequently, determined that this shall not happen and expects that the progress in reducing price differentials must resume and continue and that the advantages brought to the industry by the new budget measures and by the automotive agreement shall thus be shared equitably with the Canadian consumer.


John Edward Broadbent: Mr. Speaker, I rise on a point of order. I tried to get the minister's eye before he sat down. Would he answer a question on one matter, for clarification, before he finishes his speech?


The Acting Speaker (Mr. Laniel):: Order, please. I point out to the hon. member that this is not a point of order. I must also point out to him that the time allotted to the minister has expired, and the hon. member's question could be put only by unanimous consent.


John Edward Broadbent: Agreed.


The Acting Speaker (Mr. Laniel):: Is there unanimous consent to allow the hon. member for Oshawa-Whitby (Mr. Broadbent) to ask a question of the minister, provided the minister is ready to accept it?


Some hon. Members:: Agreed.


John Edward Broadbent: A central part of the minister's reasoning as to why prices have not narrowed as substantially as they might have was the changing value of the Canadian dollar, which he said had a significant impact. If I followed the minister correctly, he seemed to suggest that, without explaining why, it should affect the price of cars. I wonder if he would take a minute to explain why this should be so.


Jean-Luc Pepin: Mr. Speaker, there are many reasons for this. One is, obviously, that the companies have to meet competition in the United States at whatever price prevails there. The other is that some of them would tend to export more than they import, and consequently the disadvantages of revaluation would be greater. The case I was trying to make was that the price to the Canadian pur-
The Budget-Mr. C. H. Thomas
chaser of an automobile, in Canadian dollars, at the manufacturer's level, has been substantially reduced since 1965 in comparison to what has happened in the U.S. I was trying to make the case, also, that the budget presented by the Minister of Finance brings in an important new element and we are expecting, indeed we are insisting, that this new element should be visible in the reduction of prices in the future.


Some hon. Members:: Hear, hear!


Max Saltsman: Mr. Speaker, I wonder whether, with the approval of the House and the minister's willingness, I might ask-


The Acting Speaker (Mr. Laniel):: Order, please. Is the hon. member for Waterloo (Mr. Saltsman) rising on a point of order, or for the purpose of asking a question? The previous hon. member was permitted a question by unanimous consent. I think the Chair should again ask if there is unanimous consent, otherwise the question cannot be asked. Does the House agree to allow the hon. member for Waterloo to ask a question of the minister?


Some hon. Members:: Agreed.


Max Saltsman: Thank you, Mr. Speaker. This is a direct question.


Cyril Lloyd Francis: One speech is enough.


Max Saltsman: The report in the Globe and Mail of Tuesday of this week quotes the minister as saying:
One of the reasons for the difference in price was the need for car firms to make a higher profit in Canada or there would be nothing to induce them to move out of the United States.
Is the minister still of the opinion that this is a valid position, and how can he reconcile that-


Jean-Luc Pepin: Mr. Speaker, I very sincerely do not recall having said that. If it can be proved that I said it, I will try to explain what I meant.


Mr. Charles H. Thomas (Moncton):: At first glance, Mr. Speaker, the Minister of Finance (Mr. Turner) appears to be embarking on a new economic course, a course in line with his public statement that jobs are his first priority. He would appear to have succumbed to the pleas of the opposition over the last four years that unemployment is the number one problem in this country and that significant corrective action must be taken at once.
The adjustment of the old age pension and the guaranteed income supplement, the application of the escalation of veterans pensions and the increase in the basic exemption for people over 65 will put an extra $350 million-this is the minister's estimate-into the hands of some two million people, to spend as they please. While this is inadequate, as my colleague the hon. member for Edmonton West (Mr. Lambert) has pointed out, it will provide some immediate stimulus to the economy.
The proposals to cut corporate income tax, while a step in the right direction, will bring no immediate stimulus to the economy. After all, they do not become effective until January 1, 1973. Even if they were to take effect immediately, I question whether the $500 million involved could
2194

May 11, 1972
The Budget-Mr. C. H. Thomas
not have been directed to better advantage in the creation of jobs. Let me refer briefly to my remarks in the previous budget debate. On January 19, 1971, as reported at page 2566 of Hansard I said:
We need substantial cuts in both corporate and personal income tax, to place more money in the hands of consumers and to reverse the pessimistic attitudes held by businessmen about the immediate future of the economy. Above all, the government must admit that it has been wrong in its political philosophy that everything must be brought under government control. We need an admission that it has been wrong in its theory which suggests that economic expansion can only be achieved where, when and how the minister and his bureaucrats decide ... we want from the government recognition that private enterprise and not the government is the only lasting source of economic growth and jobs.
The key phrase there, Mr. Speaker, is "both corporate and personal tax cuts" for I question the effectiveness of one without the other. Corporate tax cuts in themselves, despite all the good intentions of those who receive them, do not necessarily imply that manufacturers will increase their production. I recall that the Carter commission said as follows in this connection:
Changes in corporate income taxes are likely to have a delayed impact on the investment spending of corporations.
It has been estimated that the average length of this lag is 15, or at least 12 months. This measure will not significantly affect investment decisions until well into 1973. It is difficult to be more precise about the length of this lag since it depends upon corporate expectations of future demand for their products. The Carter commission put it this way, and this is what has applied in our country in the last two or three years:
When corporations have excess capacity, it will be difficult to induce them to make additions to capacity by reducing the rate of corporate income tax, especially in the short run. The only sure way of inducing them to expand capacity is by increasing the demand for their output.
The only measure in this budget, Mr. Speaker, that will help to increase consumer demand immediately is the $350 million going to the pensioners. Realizing this, it is obvious that the minister has not really changed direction; his is still the same old preoccupation with inflation as the villain of the economy. Despite his recognition that jobs are the first priority, there is little or nothing in his budget to create jobs now, when they are needed. Injecting $350 million into the economy under a tax system that is geared through progressive rates to bring most of it back is hardly inflationary. But I will come back to this point later.
Let me turn briefly to those sections of the economy which this budget completely overlooks. There is nothing in these budget measures that will provide any direct assistance or incentive to many of the most labour-intensive and important sectors of the economy. For instance, there is nothing that will provide any relief to the service industries, the construction industry, to farming, fishing or logging. When I recite these various industries, the obvious fact strikes me that these are the types of industry which form the backbone of the disadvantaged areas of this country both east and west. These industries are the mainstay of our Atlantic economy. In the Atlantic area we depend largely on farming, fishing and lumbering for employment.

One of the disturbing features of this budget is the fact that it completely overlooks these important industries. How important it is to stimulate employment in this area can be illustrated by referring to the March figures for unemployment in Canada.
The unadjusted figure for the Atlantic area was 12.1 per cent. For New Brunswick, 12.6 per cent of the work force was unemployed, representing 27,000 people; for Nova Scotia the figure was 9 per cent, or 23,000 people; for Newfoundland, 15.4 per cent, or 24,000 people; for P.E.I.,
16.2	per cent, or 6,000 people. According to Statistics Canada, about 80,000 people in the area are unemployed.
Although the figures are serious, what is most significant about them is that they are becoming static. If one looks at the figures for the last 12 months, one will find there has been little variation in the level of unemployment. This indicates that unemployment in the area is chronic. I do not mean to condemn outright the policies of DREE, but although DREE has pumped a great deal of money into the area unemployment levels remain chronically high.
It seems to me that the relief offered in the budget to the corporate sector will have the greatest effect in those areas which least need it and, conversely, the least effect in those areas which need it most. Most of the large manufacturing and processing industries of this country are located in Ontario and Quebec. Once again, there is to be no help at all for primary industries, in other areas involving the farmer, the fisherman and the lumberman. Surely these areas of our economy have the right to expect some assistance.
We need more direct employment and investment stimulus in our economy. Corporate tax relief measures are a step in the right direction. These should be coupled with selective personal income tax cuts. We must create the demand which will encourage production. I was interested to read a survey undertaken by a Toronto Star writer on April 1. He was examing the question of unemployment and asked all manner of people in this country what steps they thought we should take to cure unemployment. According to the survey, labour in British Columbia said that there should be lower taxes for the poor. On the Prairies, labour said there should be higher corporate taxes. In Ontario, labour suggested that taxes should be reduced; in Quebec, that there must be a fairer tax structure; and in the Maritimes, that taxes should be reduced.
When the same question was put to management, it is interesting to note that the replies from all areas were unanimous: the proper course was to cut taxes. When the economists were asked-and economists agree on hardly anything-their answers, again, were unanimous. In every area of the five surveyed, the unanimous reply was, "Cut taxes." It seems to me there is a message here for the government.
Every time members on this side of the House suggest cuts in personal income tax they are labelled irresponsible. Government supporters invariably ask, "Where will the money come form?" One is always tempted to reply that if this government would trim some of the fat, waste and extravagance which is the hallmark of its administra-

tion, it would not need to soak the taxpayer at every turn. That suggestion might be termed irresponsible by my friends across the way, therefore let me briefly outline how I think taxes would be cut in a way that would still provide enough revenue for normal government spending, although possibly not as much as this government would like.
In 1971 the economy was operating at a level approximately $3 billion below potential, according to Economic Council estimates. Given the high labour force growth and growth in productivity, it is certain that the loss of output in each of 1972 and 1973 will be at least $2 billion. A substantial stimulus to output is, therefore, required if this potential production is not to be lost.
It has been estimated that the increase in Gross National Product from every $1 cut in personal income tax will be $1.60. On the basis of that estimate, which is taken from the Carter commission, we would require a $1,250 million cut in personal income taxes because according to Carter a cut of $1 in personal taxes would increase the deficit by only 60 cents, due to the offsetting of a 40-cent increase in federal revenues which would accrue as a result of the increase in the Gross National Product. It should be noted that these figures of the Carter commission were estimated for the tax system in effect before the recent tax amendments were introduced.
It is also interesting to note that despite the many assurances we were given last year these tax amendments have resulted in federal revenues rising more quickly than the Gross National Product. If we use the Carter figure for the moment, however, a $1.25 billion personal tax cut would result in a net federal revenue loss of $750 million. According to one economist, a revenue cut of $500 million would be needed solely to eliminate fiscal drag in the coming year. "Fiscal drag" is the term for the additional revenues generated by the tax system with the growth of Gross National Product in money terms and without any change in tax rates.
This drag comes about because, according to my understanding of the system-no doubt other hon. members understand this-the tax system is geared to a progressive income basis. As the name suggests, this revenue leakage from the private sector is a drag on economic growth unless taxes are reduced or government expenditures increased. So the $500 million in drag that we shall see in the coming year will be generated primarily by an automatic increase in the level of personal income tax revenues. In other words, the tax bite automatically goes up as personal incomes increase.
It can therefore readily be seen that the $500 million in revenue forgone through the various adjustments will not be expansionary; that is to say, the $500 million that the minister estimates will be lost to the government through these tax cuts will not have an expansionary effect. This reduction in revenues will simply place us in the position we formerly occupied; it is needed to offset fiscal drag. Therefore this measure, in effect, is simply a transfer from individual taxpayers to corporations.
Let us consider the effects this budget will have on increasing the prospects of greater consumer demand in the near future. The only measure of significance in this regard is the $250 million in increased pension payments.
25316-16;
The Budget-Mr. C. H. Thomas
Using the same multiplier as before, this would result in a GNP increase of approximately $600 million. A rough estimate of the likely effect of this increase would be to reduce unemployment to approximately 5.5 per cent by next May.
There is a continuing argument about what is a desirable rate of unemployment, and no one has really put forward a satisfactory answer. However, a figure of 4 per cent has been suggested many times as one for which we should strive. But to reduce the unemployment rate to close to 4 per cent within a year would require a budget deficit in the order of $940 million, slightly more than twice as large as that of the budget brought down earlier this week. This would be achieved by means of a personal tax cut of about 8 per cent. This figure is only an approximation, however, because of the difficulties in accurate revenue forecasting. The minister, with the resources of the finance department at his disposal, was forced to admit the following:
It would be totally unrealistic to expect a revenue forecaster to forecast within 2 per cent. But 2 per cent of total revenue is some $320 million. This year we shall have particular difficulty in revenue forecasting owing to the fact that we have no experience of tax collections under the reformed tax system.
Assuming accuracy in the forecast, the 8 per cent cut in needed personal tax collections is based on uniform, across the board reductions. The size of the needed revenue cut would be reduced if the personal tax reductions were tailored to favour lower and middle-income groups. If the cuts given to these groups were increased, the over-all cut in total personal revenue collections could perhaps be reduced to 5 or 6 per cent. This is because cuts favouring lower and middle-income groups have a greater impact on stimulating consumer demand. These income groups spend higher proportions of income increases than do higher income groups; thus, the multiplier effect of tax cuts favouring them is higher.
It should be repeated that the $500 million adjustment in corporate taxes can be seen in large part as a non-expansionary redistribution of income from individual taxpayers to the corporate sector. It is difficult to argue, however, that the manufacturing sector did not merit some substantial tax relief since, as many hon. members have pointed out, the existing taxation system discriminates against this sector. The discrimination, however, has not been in favour of individual taxpayers who have in fact been bearing an increasing share of the tax burden. The lessening of the tax burden of manufacturing industries should not, therefore, have been at the expense of the individual taxpayer. What I am arguing is that despite all the assertions on the government side, when tax cuts are mentioned, that the economy cannot afford them, this is just not the case.


Mr. Bigg:: Stop wasting money.


Charles Humbert Thomas: One of my hon. friends says, "Stop wasting money." That is one way to begin. Cut out some of the fat and waste, as I said earlier. But even without this, our tax system is so geared that increased tax cuts affecting personal income do not mean corresponding decreases in revenue for the government,

The Budget-Mr. Gillespie
because as percentage figures go up the government takes a larger proportion of our income. In fact, it can be argued that aside from the stimulatory justification for personal tax cuts developed earlier, personal tax cuts are needed on grounds of fairness.
It was mentioned earlier that the fiscal drag results primarily from increased personal income tax revenue collections. Since tax rates are expressed in terms of money income and not real income, personal tax payments increase automatically due to inflation as taxpayers are pushed into higher income tax brackets even though their real income may not have increased. To prevent the government from profiting by inflation, therefore, and to avoid reducing the taxpayer's real income through increased taxation, personal tax rates should, it may be argued, be reduced in some relation to the cost of living index. The amount of this reduction should be sufficient to offset the personal income tax contribution to fiscal drag. I would commend these proposals to the Minister of Finance and to his officials.


Some hon. Members:: Hear, hear!


Hon. Alastair Gillespie (Minister of State for Science and Technology):: Mr. Speaker, may I say how pleased I am to speak in support of the measures introduced by my colleague, the Minister of Finance (Mr. Turner), in the budget presented to the House last Monday evening. That budget had two main thrusts: it was designed to build on our economic strength, while at the same time helping those who are least able to help themselves. These are complementary objectives and fundamental principles of this government and, indeed, of all Liberals.


John Napier Turner: Hear, hear!


Alastair William Gillespie: My colleague, the Minister of National Health and Welfare (Mr. Munro), has already spoken to his bill introduced in the House yesterday. Bill C-207 is designed to maintain the purchasing power of those receiving old age security pensions and to supplement the pensions of those most in need. I hope-and I speak for all those on this side of the House-that this bill, together with the bill providing for changes in veterans pensions, will receive speedy passage. Because those two pieces of legislation will be the subject of a separate debate I do not propose to deal with that thrust of the budget this evening. Rather, I want to concentrate on the thrust which is aimed at building on our economic strengths.
In my speech this evening I want first to comment on the basic thrust itself. Second, I want to emphasize the importance of technology as part of this thrust. Third, I hope to show the close interrelationship between the budget and the policies pursued by various departments of government, including those of my colleague, the Minister of Industry, Trade and Commerce (Mr. Pepin), the takeover policy of the Minister of National Revenue (Mr. Gray), and the policies and interests of my own ministry.


Frederick Johnstone (Jack) Bigg: Spoken from the heart.


Alastair William Gillespie: Finally, I have some comments to make on the position of the opposition parties. I regret that the

Leader of the Opposition (Mr. Stanfield) has left the Chamber and will not benefit from them.


An hon. Member:: He is looking for the cabinet.


Alastair William Gillespie: It should by now be very clear that this government attaches the highest priority to the on-going development of competitive and efficient industry in this country, with emphasis on those types of activities which will create opportunities for the meaningful employment of well trained, highly skilled Canadians.


Mr. Horner:: Would the minister permit a question?


The Acting Speaker (Mr. Laniel):: Order. The hon. member for Crowfoot (Mr. Horner) knows he can only ask a question if the hon. member who has the floor accepts the question, and there does not seem to be such acknowledgement by the minister.


Alastair William Gillespie: I will be pleased to entertain a question from the hon. member at the end of my remarks. He may be driven to ask a question or two when I deal with the position taken by opposition parties.


John (Jack) Henry Horner: I am sorry, Mr. Speaker; I did not mean to make the minister lose his place in the notes of his speech. Somebody must have written the speech very well.


Alastair William Gillespie: Now that we have heard the intervention by the hon. member, I will proceed. Our future standard of living and the future quality of life of all Canadians will depend on our ability as a nation to develop a competitive manufacturing industry-firms and industries which are competitive with the best in the world.
My colleague, the Minister of Finance, has reminded the House that we are a trading nation and depend far more on exports than many, if not most, other industrialized countries, and considerably more proportionately than the United States. The Minister of Industry, Trade and Commerce also emphasized in his speech today the measures that his department has taken to provide access to world markets, and he has commented on the particular aspects of the budget in regard to the effect of DISC and on the automotive industry of Canada.
The proposed reduction in corporate income tax applicable to manufacturing and processing profits, the proposal to extend the present depletion write-off privileges applicable to equipment used in mineral ore extraction to equipment used in processing these ores, and the proposed two-year write-off provisions with regard to machinery and equipment used in manufacturing or processing are all designed to improve the over-all competitive position of Canada's processing industry and-


John (Jack) Henry Horner: When will they take effect?


Alastair William Gillespie: -to meet the special and peculiar challenges proposed by DISC.


John (Jack) Henry Horner: He does not know; it is not in the script.


Alastair William Gillespie: As I have already indicated to the hon. member opposite, if he will wait till the conclusion of my

remarks I shall be pleased to answer any question he has to put. It will be evident that these measures are not short-term handouts; rather, they represent important components of a broader, longer run strategy designed to foster development of Canadian manufacturing industry.
One of the important elements in any industrial development program is, of course, the creation of a climate appropriate to innovation and technological advance. During the last few months several reports, such as the report of the Science Council on "Innovation in a Cold Climate: The Dilemma of Canadian Manufacturing Industry", the study sponsored by the Science Council dealing with multinational corporations and direct investment, and volume 2 of the special Senate committee report on science, have all focused on the innovative process in Canadian industry.
Many of the concerns expressed in those reports can perhaps be best summarized in the following way: "To lose the power to innovate in a changing environment is to yield control of the future to those who retain that power."
As Minister of State for Science and Technology, I have been particularly concerned with the whole question of industrial research and development, but particularly with the development end of the spectrum, the innovative process itself. Innovation is that research and development activity that is oriented toward the market need. It is the essential activity underlying all the successful new products, processes, systems and services. It is concerned with what will fill a need, what will sell. It is concerned with the ultimate test, the test of the market place itself.
Industrial R and D in Canada is not as great nor as well supported or productive as I should like it to be. Expenditures by Canadian industry on its own account, for instance, are low alongside those of other nations. One has only to take a brief look at some of the leading industrialized nations, such as the United States, the United Kingdom, Germany, France and Japan, to see that Canadian industry's expenditures on its own account rate lowest when related to a percentage of the gross national product. For example, United States industry spends 1.15 per cent of the GNP on its own account, the United Kingdom 0.96 per cent, France 0.65 per cent, Germany 1.1 per cent, and Canada 0.41 per cent. I am quoting the 1969 figures which are the most recently available.
Another way of looking at this is to say that last year Canadian industry invested-I think that is the proper word-on its own account something over $300 million in research and development. Japanese industry during the same period increased its expenditures on industrial research and development by $600 million. In other words, the increase in industriaal R and D expenditures in Japan was nearly twice the Canadian R and D expenditures financed by Canadian industry. As far as the Japanese experience is concerned, just as important as size of expenditure is how it is spent. For the most part they emphasize the innovative end of the research and development elements. Why do they do so, Mr. Speaker? They do so because it is profitable for them to do so, because it is in their interest to do so, and because in their judgment their future growth depended upon it.
The Budget-Mr. Gillespie
New technology or improvement in existing technology, as the background papers tabled by my colleague the Minister of National Revenue indicate, is the largest single factor in economic growth. What do I mean by new technology or improvement in existing technology? Simply this: new products to fill an existing or new market need, or a process which will improve the quality of existing products, or a new invention or better way of producing a product at lower cost.
Total expenditures on R and D by themselves do not tell the story. As I have already indicated, the kind of R and D is important. The pay-off comes with R and D which is directed at the marketplace and with R and D which is directed by the entrepreneur, for innovation is more than just imaginative engineering and market research. The distinguishing characteristics of an entrepreneur are that he anticipates, he looks for the opportunity and then goes on to make it a reality. He does not wait for someone to present him with the opportunity. He is an activist. He is, above all, future-oriented; and he is an optimist-much the same qualities as I am sure you will recognize, Mr. Speaker, in the members of this side of the House.
The entrepreneur is an innovator with a sense of proprietary interest. This sense of proprietary interest is to be found in some, but not all, Canadian subsidiaries of foreign corporations. It flourishes in those which have specialized and have developed a distinctive competence around a particular product, process or system. It is the same sense of proprietary interest that is likely to be eliminated by foreign takeovers, and once lost is likely to be gone forever. I think it is worth mentioning at this point that entrepreneurship and proprietary interest, if they mean anything, mean the ability to take decisions about your own future, your own growth, your own style, your own directions, to plan your own development and your own specialization-in a word, to build your own distinctive competence.
I am emphasizing the entrepreneurship function and innovation because I think they are central to the development of competitive Canadian industries. The entrepreneur finds his excitement in the future. He is not backward-looking or inward-looking; he is outward-looking and future-oriented. And this is an outward-looking, future-oriented, forward-looking budget. That is why I think this budget is the right budget at this time. That is why I think the thrusts of the budget reinforce the initiatives of the government in trade policy, incentives and takeover policy.
Let us look at some of these measures for a moment. Industrial research and innovation are already encouraged under a series of plans provided by the Department of Industry, Trade and Commerce-I refer to the Industrial Research and Development Incentives Act, IRDIA; to the Program for Advanced Industrial Technology, PAIT; to IRAP, the Industrial Research Assistance Program, sponsored by the National Research Council-to establish a research capability in industry. I could refer to many other programs sponsored by the Department of Industry, Trade and Commerce, introduced, extended and approved by my colleague the Minister of Industry, Trade and Commerce, including DIRP, the

The Budget-Mr. Gillespie
Defence Industry Research Program; DIP, the Defence Industrial Program, industrial design assistance programs and programs to enhance productivity. They are considerable in number.
I should also like to remind the House of the provisions of the existing Income Tax Act, section 37(l)(b), which allow the manufacturer to write off his capital equipment purchased for research purposes in one year. There are other measures I could mention, but I shall mention only two. The first is incentive grants under DREE, which are aimed at assisting industry to establish itself in areas of slow growth. The second measure, which is very successful and popular, is the in-plant training program sponsored by the Minister of Manpower and Immigration (Mr. Mackasey). This program has allowed many Canadians to learn skills within a plant to the full advantage of the plant or the firm, and the employee.
There were three particular measures mentioned by the Minister of Finance in his budget which will provide additional stimulus to new technology and innovation. I refer to the proposed two-year write-off provision with regard to machinery and equipment used in manufacturing and processing, and to the reduction in the corporate tax rate which will enable otherwise marginal projects to get off the ground and to offer a possible profitable return where none existed before.
I refer, thirdly, to the decision of the Minister of Finance to remove the 12 per cent federal sales tax on purchases of scientific research and development equipment used in the testing and development of new products and processes. Based on current expenditures by Canadian industry on research and development equipment, this is equivalent to a saving of approximately $4 million annually. I am confident that this saving will represent an increased expenditure in research and development activities by all firms, to the long-run benefit to all Canadians.
It has been claimed by some opposition spokesmen that these measures will result in higher profits for the few, at the expense of the many. I think it is worth noting that there is no better guarantee of increasing jobs than a profitable, growing business. Businessmen commit their capital funds, whether they be for new machinery, new plant or research and development, when there is a chance to make a profit. That is precisely why the Japanese have spent so heavily on research, development and innovation. Obviously, the critic of the NDP, the hon. member for Waterloo (Mr. Saltsman), understands the meaning of the profit and loss system. I believe he is an entrepreneur. His leader gives no indication that he understands how the system works.
I should like to comment on one or two aspects of the government's policy on foreign ownership and, more particularly, the implications surrounding the acquisition of control of Canadian business enterprises. The takeover review policy is aimed at prohibiting the takeover of control of a Canadian enterprise when there is no significant benefit to Canada. In my view, these measures go hand-inglove with the general thrust of the budget provisions aimed at strengthening and developing our secondary manufacturing and processings industries and, in particular, strengthening their innovative capacity. The takeover

control measures are an essential element in the development of distinctive competence by Canadians in new technology and high technology industries.
A particularly important part of the Minister of Finance's budget was his decision to reduce the corporate tax rate on the manufacturing and processing profits of small firms from 25 per cent to 20 per cent. It is among the smaller firms that entrepreneurial activities are often most pronounced, and there is very good reason for this. The larger the corporation, the more difficult it is to innovate. The larger the firm, the more bureaucratic it becomes and the more it struggles with the problem of how to organize for innovation. That is why small, high-technology Canadian firms are a prime takeover target for foreign corporations. It is not the only reason, but it is often the principal one.
There are a number of other reasons why a foreign corporation may wish to acquire a Canadian corporation. It may be to eliminate a competitor, or perhaps to obtain a marketing arm for a product which a foreign corporation wishes to introduce into the Canadian market. It may be to obtain a source of supply which it does not now have. It may be to broaden the product line by acquiring new technological expertise, or it may be to update its own technology with the latest innovation. If it is the latter reason, that is, to broaden product lines through new technology or update its own innovation, and if the result is at the expense of future Canadian growth, that seems to me a reason for real concern, a concern held by all members on this side of the House. That, in my view, is one of the key features of the new bill on takeovers which reinforces the budget support for competitive, growing industries.
I should like now to spell out some of the specific ways that the budget proposals and the takeover policy interact and reinforce one another. The low rate of tax, which was 25 per cent and is reduced in this budget to 20 per cent on the first $50,000 of taxable income which can be accum-mulated up to $400,000, is a two-edge sword. I am not sure that opposition members appreciate the two edges. First, it encourages young and growing, innovative companies. I think probably they have not seen that. I am not sure they have seen the second, because it applies only to Canadian-controlled companies.
The benefit is not available to foreign-controlled companies. Secondly, if the foreign-controlled corporation were to purchase a small Canadian firm, not only would it lose the low rate of tax but it would have to pay a penalty equivalent to the amount of the benefit the small firm had earned during the period of the tax incentive. That in itself is a significant encouragement to the Canadian-controlled corporation.
The Minister of Finance in his speech on budget night also referred to the tax deductibility of the interest on funds used to purchase another corporation. This interest deductibility applies now to Canadian corporations which would be interested in making a purchase of another Canadian corporation. It places them now on all fours with United States corporations.
May 11, 1972

Mr. Speaker, I should like to direct your attention to the provision introduced in the House on May 2 by the Minister of National Revenue to require that all prospective acquisitions of Canadian firms with assets of more than $250,000, or annual sales of more than $3 million by nonresident interests, be examined by a takeover review agency. I would stress the importance of these threshold figures in relation to the activities of relatively small firms with development potential based upon technological capability. Some opposition critics have claimed that the $250,000 figure is too high. They may be unfamiliar with balance sheets and have confused gross assets, that is to say, the total of the figures on the left-hand side of the balance sheet with net assets; in other words, the total assets of the corporation less the outstanding obligations of the firm to its creditors. A second look might convince them that the screening process will pick up the innovative firms, particularly in high-technology and new technology industries, and give an edge to a Canadian buyer of a Canadian enterprise which wishes to sell control.
Mr. Speaker, there is another step which this government has taken to stimulate R and D activity and innovation in the private sector. It was the decision that I announced in the House during the Throne Speech debate to contract out research and development to the private sector wherever possible; in other words, instead of building up in-house capability in government laboratories, to place contracts outside as much as possible where the spin-off benefits can be realized, where the information can be used in an innovative way.
As I have already indicated in my remarks this evening, it is my view that innovation is a product of entrepreneurial activity, that entrepreneurial activity and a sense of proprietary interest go hand in hand and that a good deal of important technological innovation will be spawned in the smaller companies. This does not mean that our policies are designed only for small firms. Let us not forget, however, that big companies were once small. Our policies are aimed at stimulating entrepreneurial innovations and attitudes in the larger firms whether they be foreign-controlled or Canadian-controlled. Both can develop a sense of proprietary interest around distinctive products or processes unique to the Canadian firm.
In conclusion, I should like to discuss one or two of the criticisms of the opposition parties. The first, incredible as it may seem, is that the Conservatives have not yet grasped the basic issues in the foreign direct investment question. They have chosen to ignore the concept of significant Canadian benefit, I suspect because they have no convictions. They have chosen to confuse the issue of investment. They have not distinguished between portfolio investment and direct investment, and there is a difference as great as night and day. One might look at the difference in terms of the players and the spectators at a hockey game. Direct investment involves the management, the players. It involves a significant say in the management and policies of the firm, often involving control. This is the essential characteristic of multinational corporations.
Portfolio investment is passive. You choose your team and bet on it: that is about it. Nor have the Conservatives distinguished between the question of control and owner-
The Budget-Mr. Gillespie
ship. The Leader of the Opposition, for instance, was quoted as saying that there were not positive measures for Canadians to invest and thereby reduce the proportion of foreign ownership. His chief financial critic made a very similar statement which would seem to indicate that the party has decided to fudge the issue rather than confront it. They are wrong on both counts. The Minister of Finance has already detailed a number of measures, including a 33 per cent dividend tax credit, and referred to the provisions governing pension funds. That looks after the portfolio investment side, if one is interested in making a distinction and knowing the difference.


The Acting Speaker (Mr. Boulanger):: Order. I regret that the time of the minister has expired. Is there agreement that the minister continue?


Some hon. Members:: Agreed.


An hon. Member:: Read on.


Alastair William Gillespie: Mr. Speaker, I thank hon. members. I shall not take advantage of their good will by speaking very much longer. However, I want to make this point about the difference between portfolio and direct investment, a distinction the opposition parties, particularly the Conservatives, have not made. They have not recognized that there are different incentives for the two different types. They have not recognized that on the direct investment side there are particular advantages for Canadians. The Minister of Finance mentioned them. He referred to the 33 per cent dividend tax credit, which is not extended to foreign corporations but to Canadian corporations.
Similarly, there is the low rate of tax, which I have already mentioned, on the small Canadian firms. This is not available to foreign corporations purchasing Canadian corporations in the direct investment way. Nor have the Conservatives recognized the interest deductibility which now applies to Canadian firms that want to make a direct investment in a Canadian firm. They have not recognized the difference, yet they piously go on saying there is no incentive for Canadians to invest. Let them, when they are speaking of investment, specify portfolio and then let them say where the incentives do not exist. I challenge them to do that.
Mr. Speaker, at no time has the Leader of the Opposition or his chief financial critic been prepared to distinguish between ownership and control. I would draw their attention to the title of Bill C-201, "An act to provide for the review and assessment of acquisitions of control of Canadian business enterprises by certain persons". The question of direct controlling investment is quite separate from providing incentives to portfolio investors to invest in Canadian securities. It is about time the Conservative party realized this. The Montreal Gazette, not always a critic of the Leader of the Opposition, in a recent editorial highlighted this obfuscation, this evasiveness, this confusion, this lack of commitment in an editorial entitled-


An hon. Member:: Did you write the article?


The Acting Speaker (Mr. Boulanger):: Order, please. The Chair asks hon. members to recognize that the minister

May 11, 1972
The Budget-Mr. Gillespie
has the floor. It is difficult for the Chair to hear what the minister is saying.


Alastair William Gillespie: Mr. Speaker, I am about to give hon. members some of the facts, but they may not like them. The editorial is entitled "Non-answers aren't enough".


John (Jack) Henry Horner: Mr. Speaker, will the minister accept a question now?


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


Alastair William Gillespie: It is difficult to make oneself heard over the noise. I wish to quote from the article. If the opposition will listen, they might learn what some of their onetime admirers are now saying about them. The article reads in part:
Politicians who avoid definite statements are nothing new, but Robert Stanfield would not even commit himself to the view that this is the month of May. The Conservative leader's non-answers to questions on the latest episode of the CBC television program Encounter must have set some kind of record for evasiveness.
To an observer of the scene this will come as no surprise.


Steve Eugene Paproski: Who wrote that?


Alastair William Gillespie: It is he, not Mr. Watkins, the other leader of the NDP, who should be described as the chief Waffler in the country. There were other perceptive comments in the editorial that I would like to share with you, Mr. Speaker, and other members of the House, but I will quote only once more as follows:
Even Mr. Stanfield's attacks on unemployment are beginning to sound a little too much like opportunism. He certainly ought not to give the government any respite on that subject, but the country is entitled to something more from a candidate for the prime ministry than a condemnation of unemployment.
He would aim at bringing the seasonally adjusted unemployment rate down to 4 per cent. How?


Steve Eugene Paproski: When we take over after the next election.


Alastair William Gillespie: We on this side of the House know why he gives non-answers. He gives non-answers because he has a non-policy. He has offered only evasiveness, benign generalities and indignant blustering. These are no substitute for policy.


John (Jack) Henry Horner: How many civil servants has the Leader of the Opposition (Mr. Stanfield) writing his speeches for him?


The Acting Speaker (Mr. Boulanger):: Order, please. The hon. member should co-operate with the Chair.


John (Jack) Henry Horner: You did well with the material somebody gave you.


The Acting Speaker (Mr. Boulanger):: Order. The hon. member should co-operate with the Chair and allow the Chair at least to follow the speech of the hon. member who has the floor.


Marcel Joseph Aimé Lambert: Mr. Speaker, I rise on a point of order. At the request of the Chair the House gave
[The Acting Speaker (Mr. Boulanger).]
the minister extra time. I would point out to the Chair a flagrant breach of the practice of the House. The hon. member is a minister who has been here four years. There is nothing to indicate what the sheafs of paper that he has before him and from which he is quoting left, right and centre represent. They are not in any way his own contribution.


An hon. Member:: Shame.


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


Marcel Joseph Aimé Lambert: I rose on a point of order, Mr. Speaker.


The Acting Speaker (Mr. Boulanger):: So far, I did not hear a point of order; unless the hon. member has something to add to make this a point of order.


John Edward Broadbent: Mr. Speaker, I wish to rise on a point of order.


Marcel Joseph Aimé Lambert: I will continue my point of order and point out very definitely that what the minister is doing is contrary to the practice of this House. He should not read his speech.


Some hon. Members:: Oh, oh!


Marcel Joseph Aimé Lambert: There are cases where ministers are allowed to do so for statistical reasons or on matters of policy. But you, Mr. Speaker, have been here also for many years and I do not think I have to point out the practices of this House. The House has been indulgent in granting the minister time to finish his speech, but in no way will we give him permission to read page after page. Members should prepare their speeches to conform to their time, or they should know better.


Some hon. Members:: Hear, hear!


John Edward Broadbent: I rise on a point of order, Mr. Speaker. I think it is entirely inappropriate for the Conservative financial critic to suggest that the content of the minister's speech is not really his own. If one listened with care to the fatuous banalities, one could draw no other conclusion than that they are his own.


Alastair William Gillespie: I had not realized that I was getting to hon. members quite as strongly as their reaction shows. If they are concerned with the printed word, I might tell them that I did not read it all. The quotation was from the Montreal Gazette editorial of May 10, and they can read it themselves.


Marcel Joseph Aimé Lambert: Make your own speech.


Alastair William Gillespie: With the co-operation of the House, I should like to finish my speech.


John (Jack) Henry Horner: You've had co-operation.


Alastair William Gillespie: In my remarks this evening I have tried, over one or two interruptions, to deal with the question of innovation, of technology, of entrepreneurship, of the sense of proprietary interest and of the interaction of various government policies. I have spoken about the
May 11, 1972

policies of the Minister of Industry, Trade and Commerce and about the takeover policies announced by this government. I have referred to policies of the Minister of Manpower and Immigration, and to DREE. I am also trying to point out those which have my particular interest, which have to do with high technology. All of them reinforce the posture and proposals of the Minister of Finance. In my view, his proposals will meet the basic need of this country to establish at this time an industrial base that will ensure the future employment of the most rapidly growing labour force in the western world.


Some hon. Members:: Hear, hear!


John (Jack) Henry Horner: May I ask the minister a question?


John Napier Turner: He is over his time.


The Acting Speaker (Mr. Boulanger):: The hon. member for Oshawa-Whitby (Mr. Broadbent).


John Edward Broadbent: Thank you, Mr. Speaker. It is certainly a tough act to follow. I will try to deviate from my script a little more than did the minister. On a more serious note, I should like to take up my time this evening in replying to the comments made earlier by the Minister of Industry, Trade and Commerce (Mr. Pepin). All members of the House know that we have been waiting with bated breath for almost two weeks now to get answers from the Minister of Industry, Trade and Commerce regarding what this government intends to do about DISC and about the differentials that still remain in the price of automobiles in this country as compared with their price in the United States.
I would appreciate the minister paying more attention to the points which I will make, because I wish to deal with his arguments. In the past, the record has been good for both members and ministers listening to each other's points. I would like his attention, if he would be considerate enough at this time to give it to me because, as I have said, I will be dealing with important matters. I must say that despite my personal respect for the minister, the speech that he gave today was one of the most disappointing experiences I have had.
The DISC legislation passed by the United States is potentially the most serious protectionist legislation passed by any industrial power since the 1920s, but the way the minister and the government have responded to it, Mr. Speaker, would lead you to believe that we had until the end of the century to make up our minds about what we are going to do in this country which, I remind you, is the United State's most important trading partner, just as the United States is our most important trading partner. It is a profoundly important issue. What did the minister say to justify the slowness in our response? He said that according to our knowledge of the United States companies, they were rather slow to act on this legislation. Somewhat fewer than 1,500 companies in the United States have set up DISCs. Further, he said the Canadian firms consulted on this matter did not know to this point how U.S. firms were going to respond. He went on to say that at least three major corporations in this country,
The Budget-Mr. Broadbent
Ford, General Motors and Chrysler, have already established DISCs. Well then, what is to follow from this?


Jean-Luc Pepin: I said more than that.


John Edward Broadbent: I will come to the minister's other comments a little later. My point is that notwithstanding the fact that fewer than 1,500 corporations have set up DISCs, this could be of profound importance to the Canadian economy if a significant percentage of those have subsidiaries in Canada on the one hand, or are simply among those corporations that do a major percentage of their trade with Canada. It is that information which the minister should have presented to the House so that we could determine the situation which now exists.
It seems to me that the only companies he has mentioned by name are those that were already brought to his attention publicly and that were known by people both in this chamber and outside it. I am sure he has a list, or I would hope he has a list of the other firms involved. It is the minister's responsibility to inform the Canadian people of how many of these 1,500 companies are significant traders with Canada. We cannot wait any longer to see just what is going to happen. From the minister's own words we know that the Ford Motor Company, which employs thousands of Canadians, has been exporting cars and trucks from the United States into Canada. This will have an important impact on our automotive industry. How many other companies are doing this, Mr. Speaker? The minister has not told us. I submit that he has an obligation to find out and tell us.
The minister is simply relying on the reduction in corporation tax to deal with the DISC legislation. I suggest that this will not be enough. He knows very well that GATT is meeting later this month in Europe. It seems to me that the minimal action he can take is to go before GATT, having first informed this House that he will do so, and say to the other members of GATT, particularly to West Germany and Great Britain which have a high percentage of U.S. investment in them, "We in Canada are feeling the impact first. We are the major trading partner of the United States. You can imagine what will happen to your countries if the Americans are permitted to act on DISC for an indefinite period of time."
The argument that DISC is a clear and flagrant violation of GATT should be made at the GATT meeting. The minister should be attempting to mobilize support. I have mentioned West Germany and Great Britain. I could also include Japan. Surely these countries have an interest in stopping the Americans from getting away with DISC in the same way as they got away with the U.S. surcharge last August 15. Are we just to sit back and let American economic protectionist measures do severe harm to our economy as a whole? I suggest that we should not. I also suggest that the minister has failed in his responsibilities to the House by saying we really do not know what will happen yet. When we find out, Mr. Speaker, it may be too late. As the minister well knows, trade patterns and orders are set in motion many months in advance and in some cases years in advance. We may not know the full effects of DISC until 12 months, 18 months or 24 months from now. Therefore, the minister should act and not wait for what could be an economic disaster to confront us.

May 11, 1972
The Budget-Mr. Broadbent
I wish now to deal specifically with the minister's comments on the automotive industry. They were indeed very revealing. He said he spoke to the heads of corporations. What did he learn, Mr. Speaker? He learned that the Ford Motor Company is exporting cars and trucks from the United States into Canada under DISC. But, Mr. Speaker, that is nothing new; we knew it before. The minister says he learned that General Motors and Chrysler Corporation have set up DISCs but they have not yet made clear what they intend to do with them. Again, this is not new information. We knew that. However, his conclusion from this-and I noted that he took great care with his words- was that in the short run the companies assured him that the effects on the Canadian automotive industry, as a result of the three firms that have set up DISCs, are not likely to be significant. With respect, Mr. Speaker, as one says around here, I suggest that the minister's comment itself is not very significant.
The minister knows very well that the model plans and production orders for next year's models are already locked in. The DISC legislation has had almost no time to have had an effect on the immediate or short-run plans of the automotive industry. Therefore, I assume he reaches the same conclusion I do, that the statement he made about the short-run effects of DISC on the automotive industry being insignificant is in itself rather insignificant. What we have to be concerned about with DISC in the automotive industry is not what is going to happen next year, but what will happen the year after and the year after that.
Mr. Speaker, I do not have any magical cure but it seems to me there is something we can do other than sit back and wait for events to happen. First, we must make it abundantly clear that the DISC legislation is a 100 per cent violation of the auto pact. There can be no question about that, and the minister knows it.


Jean-Luc Pepin: I said so ten times.


John Edward Broadbent: I recognize that the minister has made that point a number of times, but I also recognize that neither he nor his government has done anything about it. Recognition of the fact, and changing the fact, are two different matters. What has to be done is that the government must not only maintain the production safeguards in the Canada-U.S. automotive agreement, but also insist that the current levels of guarantees be strictly enforced. This would mean that the companies within the present framework of the pact could only act under DISC provisions within very severe limits because of the provisions in the pact going back to 1964 levels of production. Above and beyond that we should have the safeguard requirements in the pact improved so that Canadians will be entitled to produce North American automotive products equal to the dollar value of the total North American market that they consume. That seems to me to be the guts of the issue.
As the minister knows, at the present time in Canada we are consuming about 8 per cent of the total North American output of automotive products but we are producing only about 6.5 per cent. If we made an issue of this, and

that means that the minister made an issue of it instead of sitting back and waiting to see what the Americans are doing, if he would make a few speeches in Canada and if he would go to Washington and say that we Canadians have a right, not to produce more than we can consume in this industry but we have a right at least to produce what we can consume in dollar value-if that were written into the pact and adhered to, it would provide an effective protection against DISC in the automotive industry.
Related to that, of course, is the point that the American government should have exempted the auto industry from the DISC legislation in the first place if it was going to be at all consistent with international law. Again, the minister has said that he pointed this out to the appropriate American officials. But has he made a political issue of it, Mr. Speaker? Surely that is what counts in this country or in any democratic society. To go and speak quietly to some political opponent, whether in your own country or another, has no significant impact. I submit that if the man you are speaking to feels strongly about what he is doing, and if you do not make it a public issue and attempt to mobilize public support on your side, then he can smile and tell you to go to hell, if you will excuse the phrase, Mr. Speaker.
I suggest that is exactly what Mr. Connally and the American government in its trade relationships, with the United States automotive industry and DISC in general, is saying to our country. They are saying, "We will be quite content if the Canadians come to Washington and practice quiet diplomacy"-but unless the Canadian government tells the Canadian people very vigorously what the American government is doing to this industry, then of course the Americans will not change. To get a change the government, in this case the responsible minister, must try to mobilize Canadian public opinion on its side. If the minister did that, we might make a breakthrough in Washington; but as long as he sits back and hopes that the Americans will not be tough on us we will continue to get the short end of the stick. I submit the Canadian people deserve better than that.


Mr. Blair:: Tell us what the UAW is doing.


John Edward Broadbent: The hon. fathead wants to know what the UAW is doing. In the United States it is the only major union that has opposed protectionist legislation coming out of the United States. It is the only major union that has supported the auto pact and has supported the Canadian union workers. If the hon. member has a second question, I will be glad to deal with it later.
I should like now to come to the question of auto prices. I must say I was dismayed, and I noticed the minister looked at little dismayed when he was speaking about this issue. I am sure he realized that the case he was presenting was not the most persuasive. It included items that he has brought forward during the question period in the last two months. Nothing new was provided in his speech. Perhaps he is in a difficult position. I think he has to admit that the auto companies in Canada are making monopolistic profits out of all proportion to what they are entitled to in terms of market price. He quoted the prices from 1965 to 1970 and pointed out that up to 1970 they had continued to go down. There is still a big gap and for some

reason, the logic of which escapes me, he says the change in value of the Canadian dollar must have had some bearing in leading to the current result which is a 10 per cent difference in price. We had gone down to about 3J per cent difference in 1970 and now at the factory list price we have about a 10 per cent difference!
The minister says that this must be due primarily to the change in the level of the Canadian dollar. I do not see that. If anything, it seems to me-I stand to be corrected- that the changing position of our dollar should have helped us because we buy more parts in the United States. Our auto assembly plants buy more parts in the United States than they buy here. That means, if our dollar has gone up in value, that the purchase of parts is relatively cheaper when buying from the United States. That should mean that the production costs of automobiles in Canada should have gone down, since the value of our dollar has gone up. Therefore, the improved position of the Canadian dollar should have meant a further and more significant drop in the price of automobiles.
I should like to put on the record some figures from a carefully documented article which appeared in the Globe and Mail on Wednesday, April 26, in regard to four medium-sized North American automobiles. For a Chevelle we paid $275 more in Canada for the same car that was produced in Canada and sent to the United States; for a Ford Torino we paid $300 more.


Jean-Luc Pepin: How much of that is sales tax?


John Edward Broadbent: That is after all those differences are allowed, sales tax and other like things. We paid $325 more for the Satellite, and for the Matador we paid $325 more. The point is that in 1965 there was an economic reason for us to pay more for cars. We had inefficient assembly plants and we were producing perhaps 14 models in one plant instead on one or two. Now the Canadian assembly plants are the most efficient in North America, and therefore Canadians should be paying less for their automobile, at factory list prices, than the United States. This minister, as the man responsible for the auto pact, has a basic obligation to the consumer in Canada to do something about that.
I suggest that he should go to the corporations before the fall of next year and tell them to get their prices in line. He could make it very clear that he would take some kind of retaliatory action. For example, he might offer to reduce the federal sales tax by 6 per cent if the companies would pass that on to the consumer, plus reducing their price by a further 6 per cent. That would mean a total of 12 per cent. He might tell them that if they do not do this by fall, the government will take all the tariffs off imported automobiles.
The point is, Mr. Speaker, that there is no economic justification for the difference in prices now. The minister has done nothing to clarify this issue tonight. The disparity remains. I submit that if we had equality in price, the consumer in Canada would get justice, and Canadian workers would get justice, because Canadians would buy more Canadian-produced automobiles and fewer foreign ones. That would mean more jobs for Canadians. The minister has failed completely in this area.
Proceedings on Adjournment Motion


Duncan Gordon Blair: Mr. Speaker, on a point of order. We have listened to the diatribe by the hon. member for Oshawa-Whitby (Mr. Broadbent)-


J. Michael Forrestall: Sit down.


Duncan Gordon Blair: I would like to ask him to show us where and when the head office of the United Auto Workers of America have said things in favour of the Canadian interest in the auto pact?


The Acting Speaker (Mr. Boulanger):: Order, please. This is a question, not a point of order.



PROCEEDINGS ON ADJOURNMENT MOTION

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

J. Michael Forrestall: Mr. Speaker, the question I refer to this evening arises out of one put to the Minister of National Defence (Mr. Benson). I asked specifically whether, in light of the alarming 22 per cent drop in Canada's armed forces reserves, the minister had taken steps to identify the cause of this decrease as well as steps to reverse the trend. We may learn if he has been able to identify the reason.
After Mr. Speaker intervened, the minister said that he had answered the question when he appeared before the Standing Committee on External Affairs and National Defence. He was referring to the committee meeting of Thursday, April 27. I asked the question because of the minister's response to a question asked by a colleague to my left, the hon. member for Selkirk (Mr. Rowland).
In view of the concern expressed by at least one member of the House with respect to the downgrading of the reserves in the Canadian armed forces, the minister's response before the committee was, to say the least, unintelligent. Not having fully grasped the meaning of the briefings which I am sure were given to him and which I am absolutely sure were accurate, the minister, obviously aware of his own intellectual capacity for understanding said as reported at page 12 of issue No. 11 of Minutes of Proceedings and Evidence of the Standing Committee on External Affairs and National Defence:
Actually if one takes the authorized ceilings as determined by my predecessor, Mr. Cadieux-
Actually, Mr. Cadieux is the predecessor once removed of the present minister. He is a most intelligent gentleman and if he were still minister of national defence he would show care and concern with respect to members of the Canadian armed forces. In any event, the reference by the minister before the committee was based upon estimates presented by Mr. Cadieux when he was minister of national defence. That hon. gentleman now is ambassador

May 11, 1972
Proceedings on Adjournment Motion
to France, I believe. To continue, Mr. Speaker, the minister reported as follows:
-the total was 23,200 and the actual number on strength at August 1971 was 20,950 which is 2,250 under the authorized strength.
It was the last figure, Mr. Speaker, based on an estimate given in 1969, that gave rise to my question. There are a number of questions that I should like to have answered. First, has the minister been fully advised by his professional staff why the reserve forces of the Canadian armed forces are alarmingly below a strength that is even minimally acceptable? Despite what the minister may have said, statistics show that to date there has been an alarming 22 per cent drop in the strength of the reserve forces. The reason for this drop concerns me, as does our action to stop it. For instance, why is there this alarming dropout from our armed forces? Why are so many dropping out after the initial "year of indoctrination? After serving their first year, many recruits do not even bother to resign; they simply do not come back for training. Why do they stay home?
I suggest that there are many reasons, one being the inadequacy of support from the regular forces brought about by a desire on the part of forces personnel, understandably, in view of the lack of money and lack of manpower, not to detail officers and senior NCOs to reserve units for training purposes. Another reason involves lack of funds. Also, because of our inability to transfer officers and NCOs to reserve units it is difficult to give those units the level of training that is absolutely necessary if we are to give the permanent personnel of the Canadian armed forces the sort of backing that is necessary. The raison d'etre, if you will, for our reserve forces is that they are able to provide backing for our regular Canadian armed forces.
These are the questions we want answered. Has the minister identified the problems? What does he intend to do about them? Is there an adequate advertising program? Is there an adequate integrated training program carried out with the assistance of members of the regular forces? Do the reservists have access to a level of training which is normally available at officer and NCO level in the regular forces? All these questions must be answered if we are to identify the reasons for the alarming decline to which I have called attention. I hope the distinguished parliamentary secretary will give me some answers this evening.
Mr. ].-R. Comtois (Parliamentary Secretary to Minister of National Defence): May I say, in reply to the hon. member for Dartmouth-Halifax East (Mr. Forrestall), that there is little I can add to what the minister told the Standing Committee on External Affairs and National Defence on April 27, two weeks ago, when responding to a question based on a newspaper article concerning the reserve forces.


J. Michael Forrestall: He was responding to Doug Rowland's question.


Mr. Comtois:: To say the least, the article was rather misleading in its use of statistics and in the conclusions which were reached. It is alleged that the reserve force dropped by some 22 per cent in two years. In December,

1969, the then minister of national defence announced a change in the authorized ceiling for the reserves to 23,200, this figure to include the militia, naval and air reserves. As of August, 1971, total reserve force strength was 20,950.
Two weeks ago the Minister of National Defence (Mr. Benson) advised the committee that the department was examining the question of the reserve forces and was developing plans concerning such matters as equipment, uniforms, training and pay.


J. Michael Forrestall: Pay is important.


Joseph-Roland Comtois: As the hon. member knows, elements of the militia were training a few weeks ago with the Canadian airborne regiment in Jamaica.


J. Michael Forrestall: Sixty out of 22,000.


Joseph-Roland Comtois: He will be interested to learn, also, that some 500 militiamen from across Canada will be training in Europe with the 4th Canadian mechanized battle group this summer. The first elements of this group will be departing for Europe in a week's time. Finally, it is planned that the deputy chief of operations and reserves will be appearing before the committee on May 30 to assist members in dealing with the subject of the reserve forces. Any questions of detail will be answered at that time.



HOUSING-SUGGESTED INCREASE IN FUNDS FOR HOUSING FOR INDIANS

Mr. Mark Rose (Fraser Valley West):: Mr. Speaker, some two weeks ago I directed the following question to the Minister of Indian Affairs and Northern Development (Mr. Chretien):
Bearing in mind the interest taken in low-income groups as far as housing is concerned-
I believe there had been a good deal of propaganda in connection with the government's interest in low-income housing development.
-I should like to ask the member of the government who is replying for the Minister of Indian Affairs and Northern Development whether it is intended to increase government assistance toward the funding of housing for Indians. I ask this question in the light of the article by Mr. Stan Bailey in the Globe and Mail last Saturday calling attention to the frustratingly limited resources available for Indian housing at the moment.
The Prime Minister (Mr. Trudeau), who responded on behalf of the Minister of Indian Affairs and Northern Development who was absent at that time, said he would ask the minister to look into it. I have been waiting almost a month and have not had a response from the Minister of Indian Affairs and Northern Development. Since there has been no reply from the minister, whom I feel should be titled perhaps minister of Indian development and northern affairs, I raise the question again tonight.
I believe that of all the low-income groups in Canada, the Indians and Metis are among the lowest. However, I was appalled by the story that appeared in the Globe and Mail for April 24 last under the byline of Canadian Press. It was headlined, "Indians told to look elsewhere for
May 11, 1972

funds", and datelined Sudbury, Ontario. I quote briefly from the article:
A spokesman from the federal department of Indian affairs told delegates to an Indian conference here they should look elsewhere for housing funds and not rely solely on the department.
Stan Bailey, housing finance and winter works programs liaison officer for the department, told representatives from 24 reserves the department has "frustratingly limited" resources.
Mr. Bailey was addressing 40 representatives of reserves in the Robinson-Huron treaty area who met here during the weekend.
He said the department has just over $3 million to spend this year on new Indian housing projects throughout the province. He was responding to Indian chiefs who complained of inadequate housing, a lack of public financing for housing and a large backlog of housing construction requests.
The article goes on, but I do not have the time to quote from it at length, in addition to which quoting from newspaper articles is a dull business anyway. I am interested in what might be done about this question. If Indian affairs does not have the necessary funding, why is it necessary to depend entirely on Indian affairs for this amount of housing assistance for our native people? It seems to me that the very fact we have an Indian affairs department at all tends to set the native people apart. They are people and they are Canadians, and I do not see any real reason for not financing their housing needs through CMHC, as well perhaps as other needs such as health care.
Section 15 has been used extensively throughout Canada. It provides loans up to 95 per cent for housing for other Canadians. These loans are provided to non-profit societies, old age pensioner groups, service club sponsored groups and Legion sponsored groups. Certainly our Indian and Metis groups and associations qualify as nonprofit societies. I suggest to the minister that he urge the government, in caucus if necessary, to let our native peoples participate in CMHC loans and amend section 15 so that loans up to 100 per cent of project cost could be made to them, making the federal contribution in cash up to 10 per cent of project cost, thus matching the provinces.
From time to time I attend the opening of large, senior citizen high-rise developments to which there is usually a triple contribution, even a quadruple contribution-the municipality, perhaps a service club, the federal government and the provincial government. Invariably I am embarrassed by the total grant provided by the provincial government and the loan, with up to 35 years to pay, provided by the federal government. The date of the loan is of significance. If you happen to have a loan dated four days before a neighbouring municipality's loan, the interest rate for which is half a per cent higher, this means an additional $10 a month rental of the suites. Therefore, I suggest it would be really worth while if 100 per cent loans could be provided, with 10 per cent in cash matching the provincial contribution, and that the loans be not only for senior citizen housing but housing that is desperately needed by native people.
Another suggestion I would make is that whether it be a grant or whether it be a loan, it is the people's money. Even if the loan is financed over 35 years, it will be Canadians who will repay the loan. Another suggestion of merit is to make subsidized interest rates available to substandard housing on reserves.


An hon. Member:: And to replace the government.
Proceedings on Adjournment Motion


Mark Willson Rose: We will have to wait a couple of weeks for that. We should make subsidized interest rates on substandard housing available on Indian reserves. Most provinces are willing to make direct grants to support this kind of project. Why not extend it to Indian reserves and co-operatives throughout the country?


The Acting Speaker (Mr. Boulanger):: Order, please. I recognize the Parliamentary Secretary to the Minister of Finance (Mr. Buchanan).


Mark Willson Rose: I have not finished, Mr. Speaker.


Stanley Howard Knowles: Oh, yes, you have.


Mr. ludd Buchanan (Parliamentary Secretary to Minister of Finance):: Mr. Speaker, the government has for some time now been taking various steps to increase government assistance toward the funding of housing for Indians. During the fiscal year 1972-73, over $23 million will be spent on Indian housing, improvements and services. Over 12,000 houses have been built since 1965-66 when the Indian housing program was begun, and over
2,000	houses are expected to be built in 1972-73. During the past year a number of Indian band councils approached the department regarding guarantees by the minister in respect of loans for housing projects. When such proposals are viable, the minister's guarantee is given.
In 1971, for example, one Indian band obtained a loan of $194,000 from CMHC, repayment of which was guaranteed by the minister. Rents will be charged by the housing committee on a graduated rent to income scale. The units will be fully equipped and services will be provided. As the annual operating, maintenance and amortization costs will substantially exceed the amount the housing committee expects to recover from rental charges, the minister has agreed to pay the annual shortfall.
Officers of the Department of Indian Affairs and Northern Development are currently negotiating with officers of CMHC in an effort to work out ways and means whereby borrowing arrangements for construction of houses on Indian reserves may be of greater assistance to Indian people. One of the objectives of these negotiations is an arrangement whereby Indian borrowers in the low income brackets would be entitled to lower interest rates.
The department also administers an off-reserve housing program whereby Indian people can obtain from the department second mortgage loans, based on the amounts of their income, and first mortgage loans from CMHC or approved lenders. If the first mortgage instalments are paid regularly, second mortgage payments are forgiven at the rate of 10 per cent per year over a 10-year period. It is my understanding that in a number of provinces reservations are using the $8,000 per unit allocation they receive as the down payment and getting the balance from the CMHC, and thus are able to build substantially more homes than they would with the basic $8,000 per year grant they are getting.

Proceedings on Adjournment Motion



GRAIN-WHEAT, OATS AND BARLEY-ACTION TO INCREASE PRICES TO FARMERS

Mr. Paul Yewchuk (Athabasca):: Mr. Speaker, my comments are related to a question I asked of the minister responsible for the Wheat Board (Mr. Lang) a few days ago and the fact that the final realized price to the Canadian farmer for wheat, oats and barley has been the lowest in the past ten years. I have before me the annual report of the Canadian Wheat Board for 1970-71. On page 18 appears a schedule of Canadian Wheat Board payments for No. 1 Northern wheat. It shows that in 1970-71 the price was $1.67 per bushel, the lowest in the past 12 years. The next lowest was in 1955-56. At that time the price was $1.58 a bushel.
With the government which came into power at that time, the price slowly climbed to a maximum of $1.97 at the time the government was turned out. Since then there has been a little fluctuation at about that level, and then a general decline to the present level. For oats, the final realized price per bushel was 60 cents. That is definitely the lowest price since the 1959-60 crop year and probably the lowest for the previous ten-year period although I do not have the figures to justify such a statement. For barley in the crop year 1970-71, the final realized price was $1.01 per bushel. The only time it was lower in the past ten years was in the crop year 1969-70.
I wish to bring these figures to the attention of the House and the minister because the minister has been running around the country spraining his wrist through patting himself on the back for doing such a tremendous job for the western farmers in selling wheat.


Jean-Luc Pepin: And the farmers have been patting him on the back.


Paul Yewchuk: They have not, because they have been starving.


Jean-Luc Pepin: They recognize value.


Paul Yewchuk: I recognize value when I see it, and I have not seen value in the grain market in the past couple of years. Another matter I want to mention is the volume sold in the past ten years. The Minister of Industry, Trade and Commerce (Mr. Pepin) seems to imply that the volume of sales has been tremendous. I want to point out that the highest volume of wheat exported from Canada was in 1963 at the termination of the Conservative rule. At that time it was 594.5 million bushels. The highest it has been since that time was in 1966. It has been fluctuating, with a steady decline until the 1970-71 crop year when the volume was 435 million bushels, which is still nowhere near the maximum figure established in 1963 after the efforts of the government of the party to which I belong.
I wish to bring these points to the attention of the House because the farmer in the west, as well as in the east and in the central part of the country, is faced with ever increasing costs of production and an ever decreasing gross return as well as net return on his production.
This annual report also shows that the farmer has tried to compensate by increasing the number of acres on the

farm and also by increasing very significantly the productivity of those acres. In other words, the farmer has made his operation more efficient. However, the net result is still an ever declining net income when his costs are paid at the end of the year. The only significant response from the government to this problem has been to encourage the removal of the farmer from the farm. What better way is there to try to do something about the continual problem than to destroy the farm completely and remove the man from the land so that you do not have to worry about his problems? This is what has been happening.
I could cite an area in my constituency covering a radius of 100 or 150 miles in which only six years ago there were 800 farms, while there are now only 400 farms in the area. What is happening? It is impossible to continue farming under the policies of this government. The farmers are being forced to leave the land and go to other places in order to try to find jobs, new housing and in some cases to re-educate themselves. This creates a host of new problems for a family, problems which sometimes are difficult to overcome.
I think we can be quite critical of this government, with some justification, because they have failed in two spheres. They have failed to do anything about the cost of production; in other words, they have failed to do anything to bring down the cost of machinery and the cost of its operation. Even though the Barber commission made some fairly good recommendations, none of them were implemented and the cost of the overhead to the farmer continues to climb.
The other aspect that was not considered was an increase in the price a farmer receives for his products. If we look at the cost per bushel which farmers receive in the United States, France, the European Common Market and other countries, we see that it hovers pretty close to $3 a bushel. I know that the parliamentary secretary will say that the two-price system is in effect. That is fine, but it applies only to about one-quarter of the production of Canadian wheat and it does not have the effect, in the long-term, for which we are looking.
I hope the parliamentary secretary does not dwell too long on the two-price system, and I hope to hear him say what will be done to increase the net income to the farmer.


Albert Béchard: Mr. Speaker, in the addenda to the annual report of the Canadian Wheat Board for the 1970-71 crop year there are a number of statistical tables, three of which set out the payments to producers for wheat, oats and barley, showing such payments in the case of wheat for the past 22 crop years. The average final payment for wheat in the 1970-71 crop year is by no means the lowest final payment in the last ten to 20 years.
The 1970-71 oats pool account has not yet been closed, so that it is not possible to make a comparison in this case. While the 1970-71 barley pool account had a deficit, it should be noted that there was an adjustment payment of 10 cents per bushel made by the federal government additional to the initial payment announced by the government for that crop year. The government has announced
May 11, 1972

an increase in the level of initial payments on barley for the 1971-72 crop year.
It should also be noted that the government has introduced a two-price wheat program payment under which payments amounting to approximately $57 million have already gone out to grain producers in western Canada and the balance of which will be distributed to other wheat producers in the near future. The government is most concerned with shielding producers from the fluctuations which occur from time to time in the marketplace. It has already expressed its intent to develop the grain receipts stabilization plan which would take account of the downward swing in prices which occur in periods of world oversupply. Such a scheme offers the best protection to producers against depressed prices.
Proceedings on Adjournment Motion
Additionally, the government is keen to achieve co-operation in international grain marketing in order to effect a level of prices which reflects a fair return to producers. Again, the government has established a market development fund of up to $10 million, the major portion of which will be directed toward the expansion of markets for Canadian grain. Finally-and I do not want to enter into an argument with my hon. friend-grain exports were at a record level for the 1970-71 crop year and there is every indication that this level will be exceeded for the current crop year.


The Acting Speaker (Mr. Boulanger):: Order, please. The motion before the House is now deemed to have been adopted. Accordingly, the House stands adjourned until tomorrow at 11 a.m.
Motion agreed to and the House adjourned at 10.30 p.m.

Friday. May 12. 1972