1973-04-09

ROUTINE PROCEEDINGS


Hon. Otto E. Lang (Minister oi Justice):: Mr. Speaker, I am pleased to announce to the House that the Canadian Wheat Board has signed contracts covering the sale of some $200 million worth of Canadian grains to the Union of Soviet Socialistic Republics.
The wheat contract covers a total of 1.5 million metric tons, or some 58 million bushels. This will include a variety of grades of spring wheat and durums. The barley sale amounts to 500,000 metric tons, which is approximately 24 million bushels.
The grains will be shipped through east and west coast ports and for the first time, I am pleased to say, through our northern port of Churchill.


Some hon. Members:: Hear, hear!


Mr. Frank Hamilton (Swift Current-Maple Creek):: Mr. Speaker, we are very pleased to hear the announcement by the minister in charge of the Canadian Wheat Board. However, what concerns western farmers is the eventual price they will receive. It is hard to know what the return will be. It is interesting to note that the latest report from Statistics Canada indicates that western farmers intend to plant some four million acres less than recommended by the government. There is great concern in western Canada about all the unknown factors.
I would like to hear the minister clarify as soon as possible some of the guidelines regarding who will be eligible to vote in the forthcoming vote on whether oilseeds should be sold through the Wheat Board, as well as clarify the whole feed grain situation in western Canada. The western feed grain growers are in a quandary. They do not know whether the eastern market will be protected. I hope the minister will clarify some of these matters soon.


Mr. A. P. Gleave (Saskatoon-Biggar):: Mr. Speaker, I was very pleased to hear the minister's announcement. The other day in the committee the Minister of Agriculture said he would like to have the job of looking after the Wheat Board, and I did not know how quickly the two ministers were going to make the switch. Apparently the minister in charge of the Wheat Board is still on the job and has negotiated another sale to the Soviet Union. I only
hope that we can produce enough grain to meet these and other commitments. I also hope that the weather will be favourable and that there will be enough moisture to produce the kind of crops we need on the acreages we have.
I think that transportation again needs maximum attention from the minister to enable us to develop a rail system that will move our grains effectively. I am very pleased that the government is planning to make greater use of the port of Churchill. This will help to make up for some of the traffic taken away when the job of supplying northern stations was moved from Churchill to Montreal.
If the minister has some influence, perhaps he could also restore this traffic and thus improve the over-all situation.
So far as planting is concerned, I think the farmers are reacting to the relatively dry conditions in western Canada. Hopefully, this situation will improve and result in much greater planting. With regard to price, perhaps the minister might develop the habit of telling parliament and the farmers the price at which he is selling our wheat. This might be helpful.


Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, first I must thank the minister for sending us a French copy of the statement which he has just made. As I would rather congratulate than blame, I am pleased to discharge my responsibilities, especially since my point of order was rather strangely reported in newspapers last week. Therefore, I hope that they will report my comments today as being a compliment to a minister of the Crown.
This being so, I would like to make some brief remarks on the minister's statement that a rather considerable quantity of grain will be exported to Russia. This clearly shows that Canada is in a position, when wisely developing its natural wealth, especially its soil, to contribute to feed mankind.
I am very pleased with this sale which will contribute not only to feed part of mankind but also to expand further agriculture in Canada. However, I would like to point out to the government that if we want to keep on exporting so that we may help feed mankind we must not neglect our important and basic industry, namely the agricultural industry.
And, in conclusion, I would also like to point out to the Minister of Agriculture (Mr. Whelan) that Canada could find it beneficial to engage on a larger scale in stock-farming so as to use up our grain and put us in a rather favourable competing position, thus preventing us from having to import more meat when it is possible to increase such production at home.
Anyway, I am most pleased by such a transaction and I am convinced that all Canadians will benefit from it.

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Again I congratulate the minister for his interest in this matter, though I maintain my position and suggest once more that the Canadian Wheat Board be put under the immediate responsibility of the Minister of Agriculture.


EXTERNAL AFFAIRS
Hon. Mitchell Sharp (Secretary ol State for External Affairs):: Mr. Speaker, it is my very sad duty officially to inform the House that Captain Charles Eugene Laviolette of the Canadian Armed Forces, on assignment to the Canadian delegation to the International Commission of Control and Supervision, was killed in the line of duty on Saturday, April 7, when the International Commission helicopter in which he was a passenger crashed near Lao Bao in Viet Nam with the loss of all nine persons on board. I know that all members of the House, and all Canadians, join with the government in extending sincere condolences to the wife and family of Captain Laviolette and share their deep sense of grief at this tragic event which has befallen them.
The sadness and grief caused by this incident do not affect Canadians only. One Indonesian officer and two Hungarian officers were also killed, as were two Americans and one Filippino, crew members on the helicopter, and two Viet Cong or PRG liaison officials accompanying the party. We are relieved, however, that the other two Canadians, Captain R. L. Parsons and Master Corporal J. M. R. Laplante, who were passengers in another helicopter on the same mission which went to the aid of the stricken aircraft, are now safe in good health.
The Canadian government deplores this tragic and unnecessary incident which, according to preliminary investigation and reports, was the result of a hostile act directed, either deliberately or by mistake, against helicopters which were clearly marked with ICCS insignia. One helicopter was struck by a missile fired from the ground, presumably by the party in whose area of occupation the incident occurred, while it was approaching Lao Bao on an ICCS mission. This happened despite the fact that all the safety procedures and precautions designed specifically to prevent such incidents had been carefully followed. The team had secured the Viet Cong's assurances of safe passage, as witnessed by the presence of two of their representatives on the stricken helicopter, and according to our information the helicopters did not stray from the designated flight corridor to which these assurances of safety specifically applied.
I wish to state as clearly and as forcefully as possible, Mr. Speaker, the conviction of the Canadian government that absolutely no circumstances should ever justify the firing upon personnel of the International Control Commission by any of the belligerents. Even if these helicopters had strayed off course, which all the evidence available to us denies, the penalty for losing one's way in the cause of peace should not be death at the hands of one of the signatories to the Paris Peace Agreement.

While we were under no illusions at the start of our participation in the ICCS concerning the dangers that, existed for Canadian personnel in Viet Nam, we have advocated and, we believed, had secured adequate safety and security measures in the field, based largely on trust in the assurances the ICCS is given by the parties involved in each particular case. However, the circumstances of this incident and the events which followed, particularly the hindrances encountered by the commission in its efforts to locate and bring aid to ICCS personnel on the missing aircraft, are such that they jeopardize this trust, even to the point of questioning the ability of the PRG representative in Saigon to speak for all of the military formations occupying the area in question. It cannot but have an effect on the future operations of the ICCS in the deployment of its teams and its investigatory capacities and, as a result, on the attitude of the Canadian government.
The International Commission is still attempting to carry out a detailed investigation of the incident and, until it is completed, not all details will be known. In the meantime, however, I wish to provide the House with the following information, as we have it to date, on events leading up to Saturday's tragedy, what we know of the incident itself, and what has passed since.
May I at this point apologize to the spokesmen for the other parties that I was not able to get this statement into their hands earlier. It was in the course of being revised right up to the last moment on the basis of the latest information.
Under article 4(d) of the protocol on international supervision, attached to the 1973 Paris Agreement, Lao Bao is a specifically designated team site of the ICCS. According to the agreement, the Lao Bao team was to have been in place and operational within at least 30 days after the agreement was signed. However, for a variety of reasons, it was not until March 17 that the first helicopter reconnaissance visit took place to Lao Bao, via Quang Tri and Gio Linh. For this visit the necessary assurances of safety were received from the Vietnamese parties involved and the Viet Cong provided liaison officials to accompany the ICCS team. A second reconnaissance visit was planned for April 5, to see if the Lao Bao facilities were ready for ICCS occupation, but it was abandoned when the Viet Cong liaison personnel were prevented by officials of the Republic of Viet Nam at Quang Tri from boarding the helicopter.
This reconnaissance flight was rescheduled for April 7; on the morning of April 7, at Quang Tri, with clearances and safety guarantees for the flight received from both the South Vietnamese and Viet Cong authorities, the crew of ICCS helicopters Nos. 006 and 115 were carefully briefed by Captain Parent on the exact routing designated by the Viet Cong as being safe for travel to Lao Bao. The two helicopters left Quang Tri at nine o'clock in the morning on April 7 for Gio Linh, where two Viet Cong liaison personnel boarded helicopter 006 and a third boarded helicopter 115. The helicopters departed at 11.15 and proceeded along the route designated by the Viet Cong, from Gio Linh to Dong Ha, and from Dong Ha toward Lao Bao following highway nine at a pre-arranged altitude of 1,000 meters within the agreed corridor two kilometers either
April 9, 1973

side of highway nine. At ten minutes before noon, helicopter 115 reported that it was in its final approach to Lao Bao. Approximately three minutes later the ICCS team in Quang Tri received a transmission from the helicopter to the effect that one was receiving ground fire and that the other helicopter had been hit by a missile and was going down.
Canadian personnel aboard the surviving helicopter confirm that their helicopter was fired upon at this time. They report that it took evasive action and landed in a hamlet on highway nine, from where they walked to the crash site of the other helicopter, about two kilometers away. There is therefore no reason to believe that either helicopter was outside the flight corridor at the time of the incident, and the weather conditions were excellent. The helicopter which landed safely was fired upon with small arms after it was on the ground, where its ICCS markings could not have been mistaken.
The PRG authorities in Quang Tri have issued their own account of what they call "the accident". They claim that the two helicopters were at least 25 kilometers, that is, about 15 miles, away from the approved flight corridor when helicopter No. 006 was shot down. The statement maintains that they had been this far off course for 40 minutes.
Within minutes the commission's regional headquarters at Hue were informed of the radio distress report and were told that there had been subsequent loss of contact. Immediately, Canadian and other ICCS personnel began common efforts in Quang Tri and in Saigon to get information on what had happened, and most important, to launch a search and rescue mission.
All efforts were to no avail. At Quang Tri, about 40 miles away, Colonel McLeod, commander of the Canadian forces in ICCS region one, contacted representatives of the Viet Cong, which claims to be the party in control of the area of the incident, who were across the river from Quang Tri. During the course of the afternoon of April 7, he was three times refused permission to proceed by either land or air to Lao Bao. He was eventually informed early in the evening of April 7 that necessary arrangements for safe passage to Lao Bao could not be made. Later he was told that one helicopter had landed safely, but that the other had, and I quote, "met with an accident". The PRG or Viet Cong representative would give no information on casualties or on the condition of the personnel involved.
In Saigon, while General McAlpine and his three colleagues on the military committee of the ICCS left for Hue to conduct the inquiry personally, similar attempts were being made to secure information from the PRG or Viet Cong delegation to the two-party Joint Military Commission. These efforts, which involved a three-hour meeting between the PRG representatives and the Indonesian chairman acting on behalf of the commission, also faded. The Viet Cong would not permit a proffered American search and rescue operation to proceed from Thailand as the commission had requested, and they refused to provide liaison officers for any search organized by the ICCS, although helicopters were standing by. Nor would
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they give any information on the personnel involved. Almost 24 hours after the incident, the best that could be obtained from the Viet Cong was a letter to the commission confirming that one helicopter had "met with an accident", and that the PRG was organizing its own search and rescue operations.
By this time General McAlpine had proceeded from Hue to Quang Tri with other members of the ICCS military committee where, on the morning of April 8, he met with the same PRG representative who had refused Colonel McLeod permission the day before to go to Lao Bao. The Viet Cong representative reported, at last, that all those aboard one helicopter had been killed in the "accident", but he still either could not or would not say which helicopter was involved. General McAlpine was also told that the Viet Cong were bringing out the dead and survivors to Gio Linh that evening, and that he and his colleagues should proceed there to receive them. Early in the morning of April 9, which was yesterday afternoon by our time, General McAlpine received the Canadian survivors and we are able to positively identify, for the first time, which helicopter had been shot down. As I mentioned above, the survivors were examined medically and found to be in good condition.
We have been informed by the Canadian representative on the military committee of the ICCS, Major General McAlpine, that when the so-called PRG officially handed over the bodies and survivors on the morning of April 9 at Gio Linh, it made an attempt to have the ICCS military committee sign a prepared statement claiming that the helicopters were off course and that the incident was an accident. The ICCS military committee quite rightly refused to meet such an outrageous demand.
From the reports which we have received, however, it is understood that before they were released, the surviving passengers and crew of the helicopter had been required to sign statements prepared by the PRG that they were off course, and that it was implied that if they refused they might not be returned to ICCS authorities. I understand that the survivors did sign the statements; I am sure that hon. members will make no mistake about the value of such statements signed under these circumstances.
In the meantime, the commission is proceeding on an investigation of this tragic incident. The PRG have agreed that the military committee will be escorted to the crash area where they will be permitted to conduct their own on-site inquiry.
Mr. Speaker, that is the extent of the information which is available to us now. I am bound to say that this incident is only the most tragic of a number of cases in which ICCS aircraft, all of which are clearly and prominently marked, have been fired upon. As hon. members will recall, the first such incidents occurred in late February. Since the incident of which I have just given an account, I have received a report that another ICCS helicopter has been fired upon within the past 24 hours. Two Canadians were among its passengers. On April 9, in the southernmost of the ICCS's seven regions, the ICCS helicopter was accompanying a helicopter of the Joint Military Commission near a team-site called Vi Thanh. The JMC helicopter was flying at an altitude of 500 feet, and the ICCS helicopter was following it at an altitude of 3,500 feet. Both

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were fired upon from the ground, and the JMC helicopter is reported to have been hit by a number of rounds. As a result, all ICCS helicopters in the region have been grounded pending consideration of the matter by the ICCS at its headquarters in Saigon.
I wish to assure all Canadians, and especially the families and friends of Canadians serving in Viet Nam, that the government is taking these incidents very seriously indeed. It is doing everything within its power to ensure that they do not recur. We are in touch with our representatives in Saigon to ensure that all possible measures are taken to that end. When we are satisfied that we have obtained all the relevant information, and after consultation with our partners in the ICCS, particularly those whose nationals have lost their lives, we will take appropriate action to hold accountable those responsible.
Such serious incidents will of course have a bearing upon the government's decision concerning Canada's continued participation in the ICCS. Hon. members will recall that in my statement to the House late last month, I said that the general situation in Viet Nam was highly unsatisfactory, and that Canada would terminate its participation at the end of June if the situation did not improve substantially. Since then, the general situation has not improved; in fact, it has deteriorated. If it does not improve very substantially, it will be clear that by continuing to serve in the ICCS we would be staying on to observe, not a peace, not a cease-fire, but a continuing war. We would be doing so, as this recent deplorable incident makes clear, at totally unjustified human risk. This we will not do. This House may be sure, and all Canadians may be sure, that we will not continue to risk Canadian lives in fulfilment of a task which is not worth doing. The parties are responsible for making the task worthwhile, by making it a task in support of peace in Viet Nam. We will expect them to fulfil that responsibility.


Mr. Claude Wagner (Saint-Hyacinthe):: Mr. Speaker, a Quebecer, in the line of his peace keeping duties has just lost his life in Viet Nam. It makes us all feel very sad and on behalf of the Leader of the Opposition (Mr. Stanfield) and of my party, I extend to Madame Laviolette and to her family our deepest sympathy.
In our opinion, this tragedy is not an isolated case which is to be accepted with submissiveness and fatalism. It is a tragedy which must be considered in the overall picture of a mission that is becoming more perilous and desperate each day, because this government to which we gave the benefit of the doubt when it renewed its commitment shows that it is incapable of securing the required guarantees for the safety of our observers.
Not only did we fail to get essential and necessary guarantees, but because of a stupid, incomprehensible and foolish act which we strongly condemn, NLF sharpshooters have killed several observers, including a Canadian, Captain Laviolette from Quebec. How far, Mr. Speaker, do we have to go to establish peace in Viet Nam?
We agree to hope beyond all hope, but we must not confuse daring and recklessness, or highmindedness and naivete. We shall continue to question the government on its ambivalent behaviour in this whole business. We trust

the government will give us answers that are as specific as our questions will be. We will continue to demand that complete light be shed on this subject in committee.
And if, after having performed a superhuman task, Ambassador Gauvin may be justified in having holidays, we wonder why he could not appear before the committee and do so with the same government permission he had to get for his visit to Tokyo, to enlighten the public and the Members of Parliament on the measures taken by the government in Viet Nam.
Mr. Speaker, there are some fundamental questions that must be asked about our operation in Viet Nam. They are questions Canadians have a right to see answered. If, as the minister said in his statement to the House when the government's decision to recommit was made known, our role is more in the area of providing an international presence than supervising the peace, why must our men be continually subjected to increasing danger? More directly, what action are we taking at the ICCS level to ensure that all ICCS personnel are subjected to as limited a degree of danger as possible? If, as Canadians have believed, we are there at the invitation of the combatants, why did we experience, if reports are correct, continued difficulty in gaining access to the crash site in order to make our own inquiry, either independently or as part of a special ICCS investigation?
We must ask whether those we are dealing with representing the combatants really do have control of their forces in the field. If we do obtain guarantees of safe passage from the Viet Cong, for example, can we be satisfied that such guarantees will be respected by Viet Cong regulars in the field? Are Canadian forces in the field, in conjunction with other ICCS members, being afforded basic co-operation-basic at least to the extent of safe passage? Are ICCS craft so viewed by the combatants that the slightest diversion from course causes them to be classified as hostile and open to attack?
Sir, these are questions to which every responsible member of this House and of the government should want answers. There were accidents in Cyprus, there were accidents in the Middle East and in the Congo. Nevertheless, there was a basic assumption of safety under international auspices throughout all those assignments. It is this assumption which Canadians are working under now and which was understood when most agreed that we should accept our responsibilities in Viet Nam. It is surely the basic assumption that we must demand from the combatants if we are to continue to maintain our commitment.
When the party to which I belong accepted the view advanced by the Secretary of State for External Affairs that we should continue our commitment in Viet Nam in the hope that our presence might ease peace into place, we asserted that the minister had the responsibility to continue and re-initiate efforts to gain formed acceptance of the essence of our basic conditions for participation. The tragic death of Captain Laviolette and those of his international colleagues underlines the need for those initiatives. I say to the government that all Canadians are now calling on the government to illustrate clearly and
April 9, 1973

forthrightly that we have done all we can, and are continuing to do all we can, in order that no more Canadians or other ICCS members should have to make this supreme sacrifice.


Mr. David Lewis (York South):: Mr. Speaker, needless to say, every member of my party in the House, like every Canadian throughout the country, is saddened by the tragic death of those aboard the helicopter, saddened not only by the death of Captain Laviolette, although his death is closer to our hearts and to our thoughts, but saddened also by the death of the other people who were on that helicopter, some of them members of the ICCS and even Viet Cong people as well. I join the Secretary of State for External Affairs and the spokesman for the Conservative party in sending Madame Laviolette and her family our very deepest sympathy.
It is possible, of course, in a situation of this kind, to start making political accusations against the administration, either in Ottawa or in Viet Nam, accusing them of having failed to obtain sufficient guarantees or of not doing enough. I submit that this is not the issue. There is no evidence that Mr. Gauvin and his associates in Viet Nam have not worked their hardest to get all the assurances it was possible to obtain, and I am not prepared to try to make political capital out of this situation-


Some hon. Members:: Hear, hear!


David Lewis: -by accusing either the people in Ottawa or the people in Saigon or other parts of the Viet Nam of having failed in their duty.
What has obviously happened-and this is the saddest part of the situation-is that the assurances that had been obtained, particularly from the Viet Cong, particularly from the PRG, are assurances that have not been kept. The PRG would not have placed two liaison officers on the helicopter that was destroyed if arrangements for the flight had not been very carefully and fully made.
I say this to the minister, which seems to me to be important above anything else: the event which occurred on Friday was not an isolated incident. As he makes clear in his own statement, helicopters have been fired upon since February. The ICCS has not been given an opportunity to do its job. It was even refused the right and the opportunity to investigate the crash itself. It seems to me a pattern is developing which shows there are some parties who are not prepared to keep the Paris peace agreement. It may well be that those parties agreed to the presence of the ICCS only for the period when this was necessary in order to get the American troops and the American prisoners of war out of the area, and that now this has been accomplished certain parties in Viet Nam-not limited to the North Vietnamese or the PRG, since it would seem the South Viet Nam government is also playing this kind of game-are no longer concerned about having the ICCS there but are more concerned about having freedom to continue the war, as the minister indicated in his statement, than in taking action which would really stop the war. If this is the case, I suggest to the minister that the date of June 30 is not a sacrosanct date, even though it is the date we suggested, and I repeat the statement I made in Charlottetown during the weekend that we should now
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decide to withdraw before June 30. I do not think it is a sacred date.
It has already been shown that the work of the ICCS is being interfered with, that the lives of members of the ICCS are being endangered. I think the government ought to decide now that, if this danger continues over the next week or two, we will not wait until June 30 but take action to end the ICCS operation just as soon as it becomes evident that there is no reversal of the attitude of certain parties in Viet Nam. I urge the minister that we not wait that long, not only because of the danger to our personnel there but also because we ought not to participate in an operation that is clearly being frustrated by those people who are responsible for keeping the peace.
One other factor that has disappointed my colleagues and myself immensely about the work of the ICCS is that it has not been given any opportunity at all to look into the question of the political prisoners held by the South Vietnamese government. There are thousands of these prisoners. Their numbers have been debated by those who say they know, but there may well be 200,000 of these political prisoners who are being held by the South Vietnamese government. Their release is not only a humanitarian necessity but also a necessity if there is to be peace in Viet Nam, for they are the people who could build the bridges among the various sections of the Vietnamese people.
If the minister has not already done so, I think he ought to take the initiative in making sure that our arm of the ICCS is having intensive discussions with the representatives of the three other governments. I also suggest that we ought to initiate immediately very serious discussions with the joint military commission of the combatant parties to see whether we can find out if they really intend peace or the opposite.
I close by repeating our deep sadness at the death of Captain Laviolette and the others with him in the helicopter. I also reiterate my plea to the government that they not hold the date of June 30 as sacred but that we leave this dangerous area just as soon as the government becomes convinced that there is no chance of reversing the attitude of certain Vietnamese parties.


Mr. Real Caouette (Temiscamingue):: Mr. Speaker, my colleagues and I join all other members in extending to Madame Laviolette and her family our most sincere sympathy on the very sad incident which took place on April 7, in Viet Nam.
I also endorse the views that the hon. member for York South (Mr. Lewis) has just expressed when he said that one should not use such an incident to play politics.
I heard earlier the hon. member for Saint-Hyacinthe (Mr. Wagner) make a lacrymose statement holding, so to speak, the Secretary of State for External Affairs (Mr. Sharp) responsible for what happened in Viet Nam.
Mr. Speaker, I can't help wondering what the Progressive Conservatives would have done in the place of those who now govern us. That, they forget to tell us. However, they are prepared to put the whole blame on this government, when we know very well that our participation in

April 9, 1973
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the International Commission of Control and Supervision leads necessarily to certain consequences. One cannot go there without running any risk, and by the way, the Prime Minister (Mr. Trudeau) and the Secretary of State for External Affairs said it recently.
And so I do not think it is altogether honest to try and make little of the government's action. If one wishes to avoid all risk, there is only one thing to do: stay at home. We undertake to carry out the mission, and then, when we are there, there is an accident and we are all upset. I thought the Leader of the Official Opposition (Mr. Stanfield) was sobbing just now. I thought the member for Saint-Hyacinthe was going to start saying his prayers; he was that serious.
Mr. Speaker, this is no way to treat an accident of this sort. For my part, I thought, and I still think, that we should have stayed at home, because the situation over there was not clear, and it is not any clearer now. The minister has just said that we will not be taking any more risks. It is high time we thought about that. I consider that we must help Viet Nam if Viet Nam wants to help itself. But if it does not, let us not impose ourselves. I am speaking now to all those concerned. To those who say that what is happening there is the Americans' fault, I answer that it is just as much the fault of the communists. If we blame one side, let us also blame the other. Let us tell them that the Vietnamese must be left to settle their own problems without intervention by the USSR, China, the United States or Canada. It is as simple as that. That is our position.
I am totally opposed, Mr. Speaker, to any attempt at making politics of this issue, and I am sorry that such attempts are being made. What is the government going to do? What is the government going to answer? The government might answer: I think Mr. Laviolette was killed. That is quite simple, and everyone knows it. We do not yet know all the causes of this incident. When we do, we will be able to form a clearer, sounder opinion. But meanwhile, let us hope that there will be no more such incidents in Viet Nam and that, as Canadian members of Parliament, we will do all we can to prevent them.
Mr. Speaker, those are all the remarks that I wished to make. In ending, I again present our sincerest condolences to all of Mr. Laviolette's family and I hope that this will not happen again in Viet Nam.


Mr. Albert Bechard (Bonaventure lies de la Madeleine):: Mr. Speaker, as Captain Laviolette comes from my riding where his parents and his wife's parents are still living, I wish to join the Secretary of State for External Affairs and members of all parties in this House in extending to Mrs. Laviolette, her nine-year old daughter and to all her relatives, my deepest and most sincere sympathy.
[Mr. Caouette (T6miscamingue).J


BANK OF CANADA
Mr. Rene Matte (Champlain):: Mr. Speaker, under Standing Order 43, I ask unanimous consent of the House to introduce a motion which is of urgent necessity.
In view of the failure of the Bank of Canada, because of its present structure and rules, to be really devoted to all Canadian citizens and of the inefficiency of the present banking system, I move, seconded by the hon. member for Rimouski (Mr. Allard):
That an order be given by this House to the effect that the Bank of Canada could finance all public projects on government rates, whether those projects are under the responsibility of federal or provincial governments.


Mr. Speaker:: The House has heard the motion. Under Standing Order 43, this motion requires unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: There is no unanimous consent. The motion cannot be put.


POLAR BEAR PROTECTION BILL
Mr. John Reynolds (Burnaby-Richmond-Delta) moved: for leave to introduce Bill C-174, to provide for the prohibition of the killing of polar bears in Canada.


Some hon. Members:: Explain.


John Douglas Reynolds: Mr. Speaker, I think I will have to yell louder because the microphone seems to be out of order. I am very happy to have my five children sitting in the gallery today and I hope they have not caused any problem.
No more gracious or majestic animal so typifies the spirit of the north as the great polar bear. Yet, like so many of our wildlife resources, this animal too faces extinction. In this regard the purpose of this bill is to protect from extinction one of Canada's most beautiful wildlife resources, the polar bear.


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

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
April 9, 1973
Mr. Coates: 1.	What was the total number of employees involved with taxation within the Department of National Revenue for the taxation year 1971?
2.	Of that total number, how many were permanent employees of the Department and how many were casual?
3.	What is the total number of employees involved with taxation within the Department of National Revenue for the taxation year 1972?
4.	What is the estimated additional staff requirement, over and above 1971, for the 1972 taxation year and of that increased number, how many will be permanent employees and how many casual employees?
5.	What will be the cost of the additional staff to the taxpayers of Canada?


Hon. Robert Stanbury (Minister of National Revenue):: In so far as the Department of National Revenue, Taxation, is concerned: 1. The staff on strength as of March 31, 1972 was 13,203.
2.	Permanent, 9,756; Casual, 3,447.
3.	The estimated staff on strength as of March 31, 1973 is 14,029.
4.	The estimated additional staff for the 1972 taxation year as of March 31, 1973, is 826 which consists of 659 permanent and 167 casual staff.
5.	The estimated cost of the additional staff will be; Permanent $4,940,000; Casual, $900,000; Total $5,840,000.


Mr. Wise: Is the government giving any serious consideration toward the simplification of income tax forms?


Robert Douglas George Stanbury: In so far as the Department of National Revenue, Taxation, is concerned: There is a constant and continuing program aimed at simplification of income tax forms and the Minister has invited suggestions in this respect from all Members of Parliament. In addition to providing for the various features of the Income Tax Act, the 1972 Income Tax form is designed to serve the needs of nine provincial Income Tax Acts, Canada Pension Plan, Quebec Pension Plan, Unemployment Insurance Act, Ontario property tax credit, and Manitoba education property tax credit. This relieves the public of having to file a multiplicity of forms each year.


Mr. Nystrom: 1.	What were the amounts of money spent by the Department of Finance on publicity and/or information in each of the fiscal years 1968-69, 1969-70, 1970-71, 1971-72?
2.	What were the names and addresses of firms or individuals who received these contracts, what amounts of money were spent in each case and what was the purpose of each contract?
3.	What contracts for publicity and/or information were awarded in the current fiscal year, what are the names and addresses of contractees, what are the amounts of money involved in each case and what is the purpose of each contract?
Order Paper Questions


Hon. John N. Tumor@Minister of Finance: 1. 1968-69, Nil; 1969-70, Nil; 1970-71, $1,125; 1971-72, $13,725.
2.	A. D. Lumsden, Ottawa, Ont.-$14,850-Preparation of information relating to departmental programs.
3.	Nil.


Mr. Mazankowski: Is Mr. Robert Kaplan acting as a consultant to the Department of Industry, Trade and Commerce and, if so, how much is he receiving in remuneration, on a per diem basis?


Mr. Herb Breau (Parliamentary Secretary to Minister of Industry. Trade and Commerce):: Mr. Robert Kaplan is providing consulting services under a contract with the Minister of Industry, Trade and Commerce which provides for a fee of $200 per diem for each day his services are rendered. The total remuneration payable under the contract may not exceed $4,940.


Mr. Forrestall: 1.	In connection with harbours or terminals necessary for the servicing of Arctic vessels, does the government intend to announce its policy respecting the design and location of such terminals?
2.	Is it the intention of the government to announce its policy with respect to whether such harbours or terminals would be publicly or privately owned and, if so, on what date?
3.	Does the government have any policies with respect to harbours and terminals for the servicing of Arctic vessels at this time and, if so, what are they?


Hon. Jean Marchand (Minister of Transport):: 1. The
present policy will continue in effect.
2.	The present policy will continue in effect.
3.	The Ministry of Transport policy with respect to Arctic harbours and terminals is the same policy applicable to such developments elsewhere in Canada. This policy allows for public and private development or a combination of both with certain constraints for the building and operation of facilities prescribed under the terms of the Canada Shipping Act and the Navigable Waters Protection Act.


Mr. Forrestall: 1.	Has the government ever let a contract of $500,000 for necessary research and development into the design of a polar icebreaker and (a) if so (i) how many other such contracts have been let (ii) to whom were they let (iii) for what amounts (iv) on what dates (v) at what stage or stages would any such studies at this time (b) if not (i) what has been done with the $500,000 indicated as reserved for this purpose in March, 1970 (ii) is it the intention of the government to implement such a study in the immediate future?
2.	Is it the intention of the government to take steps to ensure that all such studies will be done in Canada by Canadian groups and, if so, what steps have been taken in this direction?


Jean Marchand: 1. No; (a)
Not applicable; (b) (i) Further consideration of this matter

April 9, 1973
Order Paper Questions
indicated a requirement for a substantial research and development program which has resulted in $1.5 million being set aside for this purpose; (ii) The study, which will involve several related research and development contracts, has commenced and will continue over the next two years.
2. The government intends to have as much of the studies and design work as possible done in Canada by Canadian firms. All work underway is being done by Canadians and it is felt that there is enough expertise in Canada to permit not only the design but the actual construction as well. Of course in special areas where the expertise is not available in Canada, we may have to go outside the country in order to ensure that Canada gets the best designed ship possible for its money.


Mr. Godin: 1.	How many computers are in operation at the Unemployment Insurance Commission?
2.	Are such computers owned or rented by the government?
3.	If rented, what is the term of the contracts and for each centre (town) (a) how many computers are in operation (b) what is the cost and term of the contract (c) were tenders called (d) how many tenders were received (e) what was the amount of each (f) who were the tenders?


Mr. Mark MacGuigan (Parliamentary Secretary to Minister oi Manpower and Immigration):: 1. The Unemployment Insurance Commission has six computers, plus a minicomputer which serves as the terminal, at St. John's Newfoundland, of a telecommunications link connecting that city to the main computer for the Atlantic Region in Moncton, N.B.
2.	All of the Unemployment Insurance Commission computers are rented.
3.	The contract was entered into in February, 1969 and provided for the period up to August 31, 1972; (a) There is one computer installed at each of the following locations; (i) Moncton; (ii) Montreal; (iii) Ottawa; (iv) Belleville; (v) Winnipeg; (vi) Vancouver; (b) The original contract provided for the period February 1969 to August 31,1972. The monthly rates as of August 31, 1972 were as follows: (i) Moncton, $11,871; (ii) Montreal, $15,091; (iii) Belleville, $15,089; (iv) Winnipeg, $11,999; (v) Vancouver, $11,792; (c) Yes; (d) Seven; (e) Three tenders were eliminated on the grounds that they did not meet the basic requirements of the Invitation to Tender. The amounts of the acceptable tenders were: $43,923, $44,275; $42,165; $47,656; (f) The firms who submitted tenders were: National Cash Register Company of Canada; Univac Canada; Burroughs Business Machines Ltd.; Honeywell Controls Ltd.; International Business Machines Ltd.; RCA Victor Company Ltd.; Canadian General Electric. In addition, a sixth computer was installed in Ottawa in 1971 to provide for the development of programs used by the regional computers, and to carry out certain statistical and analysis functions required by management. Only Burroughs was invited to propose equipment for the Ottawa site.


Mr. Stackhouse: 1.	How much money has been awarded to Metropolitan Toronto for assistance with grade separation projects to be undertaken in (a) 1972 (b) 1973 (c) 1974?
2.	How much has been awarded to the Borough of Scarborough for the same purpose in the same period?
3.	How much was awarded to (a) Metropolitan Toronto (b) Montreal (c) Vancouver for this purpose during the period 1962-1972?


Jean Marchand: 1. Not
Available (See note below).
2.	Not Available (See note below).
3.	(a) Metropolitan Toronto-Contributions totalling $16,168,560.15 were made toward projects approved in Metropolitan Toronto during the 1962-72 period. In addition $2,022,400 has been committed towards projects approved in this period but final payments have not been made to date; (b) City of Montreal-Contributions totalling $650,213.38 were made towards projects approved in the City of Montreal during the 1962-72 period; (c) City of Vancouver-Contributions totalling $701,855.20 were made towards projects approved in the City of Vancouver during the 1962-72 period.
Note: Since the Committee does not stipulate a time limit in its Orders for commencement or completion of grade separation projects it is not possible to provide answers to questions 1 and 2. However, commitments totalling $1,088,100 were approved for projects in Metropolitan Toronto during the year 1972. There were no grade separation projects approved in 1972 in the Borough of Scarborough. The Committee has not approved any grade separation projects in 1973 to date in Metropolitan Toronto.


Mr. Leggatt: 1.	What is the name of the caterer who prepares in-flight meals for Air Canada?
2.	What is the charge to Air Canada for a single economy dinner?
3.	What is the charge to Air Canada for a single first-class dinner?


Jean Marchand: The Management of Air Canada advises as follows: 1. Meals are provided for Air Canada flights by contracted caterers at locations as shown in the following list. Exception is London and Prestwick where meals are provided from Company-operated flight kitchens.
Contracted caterers: Vancouver, Calgary, Edmonton, Saskatoon, Regina, Winnipeg, Toronto, Montreal, Saint John, Moncton, Halifax and Sydney, CARA Operations Ltd.; Los Angleles, Marriott In-Flite Services; Thunder Bay, Airlane Motor Hotel; Timmins, Empire Hotel Co. of Timmins Ltd., North Bay, Arcadian Restaurants Ltd.; Windsor, Mody's Big Boy Ltd.; Cleveland, Sky Chef's Inc.; Chicago, Marriott In-Flite Services; New York, Chef's Orchid Inc.; Ottawa, Golden Totem Restaurant Ltd.; Sept lies, Airline Food Ltd.; Quebec City, Desjardins & Pare
April 9, 1973

Inc.; St. John's, Nfld., E. W. Harvey Ltd.; Boston, Sky Chefs Ltd.; Tampa, West Coast Caterers Inc.; Miami, Jerry's of Miami Inc.; Bermuda, Bermuda Aviation Services Ltd.; Nassau, Nassau Airport Caterers Ltd.; Kingston, Liner Diner Ltd.; Port of Spain, Bel Air International Airport Hotel Ltd.; Montego Bay, E.S. Campbell & Company, Ltd.; Barbados, Barbados Flight Kitchen Ltd.; Antigua, Antigua Catering Services; Bahamas, Grand Bahama Caterers Ltd.; Shannon, Sales & Catering Service; Paris, Compagnie Internationale des Wagon-Lits; Frankfurt, S.A.S. Catering; Brussels, Belgavia S.A.; Zurich, Swissair; Copenhagen, Hammers Restaurant.
2 and 3. Details of the contracts are considered proprietary information.


Mr. Godin: What amount was paid by the government to potato growers for damage to crops in the constituencies of (a) Champlain (b) Port-neuf (c) Montmorency?


Mr. Leopold Corriveau (Parliamentary Secretary to Minister of Agriculture):: (a) Nil; (b) Nil; (c) Nil.


Mr. Howard: What amount of money has the Canadian government received from foreign governments since March 31, 1970, as interest on the debt of $1,166,721,359 as shown in the answer to Question No. 492 of the current Session as given at page 1496 of Hansard?


Hon. John N. Turner (Minister of Finance):: From March 31, 1970 to December 31, 1972 the Canadian Government received $100,029,725 in Canadian dollars and $5,468,000 in U.S. dollars as interest on the debt of $1,661,721,359* indicated in the answer to question no. 492 of the Current Session.
The correct figure is $1,661,721,359 and not $1,166,721,359 as cited in the question.


Mr. Rynard: 1.	For the years 1969, 1970, 1971 and 1972, how many cases of tropical and parasitical diseases were registered in (a) Montreal (b) Toronto (c) Vancouver?
2.	How many physicians in Canada are qualified as specialists in tropical diseases?
3.	How many of the special drugs used in the treatment of tropical diseases are imported into Canada and how many, if any, of these drugs have been held back by the Food and Drug Directorate?
4.	What was the cost of the drugs used in tropical diseases clinics in Canada for each of the years 1969, 1970,1971 and 1972?
5.	How many immigrants from countries where tropical and parasitical diseases exist were admitted to Canada without health checks for each of the years 1969, 1970,1971 and 1972?
Order Paper Questions


Mr. Norman A. Cafik (Parliamentary Secretary to Minister of National Health and Welfare):: Mr. Speaker, the answer to the first part of the question is as follows: Number of notifiable cases of tropical and parasitical diseases as reported by provincial authorities is:
1969	1970	1971	1972(a)	Montreal	1	None	None	None(b)	Toronto	None	46	63	181(c)	Vancouver	2	None	1	None
No cases of the four quarantinable diseases, smallpox, cholera, yellow fever and plague, were reported during this period.
The answer to part two is that there is no Canadian medical speciality in tropical diseases and therefore, of necessity, no physicians in Canada qualified as such. However, there are doctors who direct a significant proportion of their services towards the treatment of these diseases and who have considerable expertise in this area of medicine. Also steps have been taken by health professionals in Canada to establish a tropical medicine and international health organization.
The answer to part 3 is 38 and none.
The answer to part 4 is that the reported cost of drugs used in the four main tropical diseases clinics in 1969 was $2,386, in 1970 $3,767, in 1971 $4,073 and in 1972 $4,529.
The answer to part 5 is none. All immigrants to Canada, referred to the Department of National Health and Welfare by the Department of Manpower and Immigration for medical examination, are examined to ensure that their presence in Canada will not endanger public health.


Mi. Stackhouse: 1.	What is the time schedule for the development of the proposed Toronto Harbour park?
2.	How many acres has the government acquired for this project and (a) from whom were they acquired (b) on what date (c) at what price?
3.	How many acres remain to be purchased?
4.	What buildings, if any, are to be demolished?
5.	When is the proposed park likely to be opened to the public?


Hon. Jean-Eudes Dube (Minister of Public Works):: 1.
Such a schedule has not yet been determined. It will be the subject of tri-level discussions.
2.	To date the government has acquired 14.569 acres by purchasing Terminal Warehouses Limited on January 22,
1973.	The amount paid to date is $12,041,250.00. Pending audit re final determination of book value the maximum which we may have to disburse is $12,475,000.00, which will be reduced by a minimum of $2,000,000 and a maximum of $2,750,000 depending on the adjusted net book value.
3.	Approximately 72 acres remain to be acquired as follows: Expropriation proceedings are currently underway to secure approximately 21 acres in private ownership, and some 46 acres owned by the Toronto Harbour Commission have been secured by written agreement in

April 9, 1973
Order Paper Questions
principle that the lands will be transferred to the Crown in exchange for harbour improvements works to an equal value. Less than five acres remain to be acquired, generally under Provincial or Municipal control. Arrangements to transfer these lands to the scheme will be discussed at forthcoming tri-level meetings.
4.	No decision has yet been made.
5.	Will likely be opened as it is developed, i.e., probably in phases over five year or more period and within overall concept and design which is to be agreed at forthcoming tri-level meetings.
Note: Minister of State for Urban Affairs has overall responsibility for federal position in this project.


Mr. Knight: 1.	How many full-time employees were there as of January 31, 1970 in the Department of National Defence?
2.	How many of those employees were earning more than $15,000 annually, distributed according to $1,000 intervals?
3.	How many full-time employees were there as of January 31, 1973 in the Department of National Defence?
4.	How many of those employees were earning more than $18,000 annually, distributed according to $1,000 intervals?


Hon. James Richardson (Minister of National Defence):: 
Mr. Rose: 1.	By province, in 1969, 1970 and 1971, how many individuals filed Income Tax forms availing themselves of the provisions for part-time farming deductions under the former Act, Section 13 (new Act Section 31)?
[Mr. Dube.J
..2- By province, in 1969, 1970, 1971, how many individuals who filed under the provisions of Section 13(31) have (a) had their income tax statements accepted completely (b) been sent notices of reassessment?


Robert Douglas George Stanbury: In so far as the Department of National Revenue, Taxation, is concerned: Our records are not kept in such a way to make it practical to answer such a question.


Mr. Orlikow: Of Indian students attending high school, how many are in academic, commercial or vocational (two or four year) courses?


Hon. Jean Chretien (Minister of Indian Affairs and Northern Development):: Grade Grade Grade Grade Grade 9	10	11	12	13Academic	
3,426	1,872	1,096	734	32Commercial	
0	84	83	107	0
Vocational-Four Year
Program	 998	749	391	280	0
Vocational-Three \ear
Program	 73	1U	185	12	0
Vocational-Two \ear
Program	 45	23	131	1	0


Mr. Laprise: How many acres were expropriated for the construction of the Sainte Scholastique International Airport and what was the average cost per acre?


Mr. John M. Reid (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, the answer is as follows: The total land expropriated for the Sainte Scholastique International Airport is approximately 88,000 acres. The average cost per acre is $1,400 including land, buildings and all other compensations.


Mr. Orlikow: Of all family units in the years 1967 and 1972, what percentage of the total money income was received by (a) the lowest one fifth (b) the second lowest fifth (c) the third lowest fifth (d) the fourth lowest fifth (e) the highest fifth?


Herb Breau: Statistics Canada reports that: The latest available information on income distributions is for 1971. The percentage shares of total money income received by family units* 1 in different quintiles in 1967 and 1971 were as follows:
Per Cent Share of
Family Units in:	Total	Income in
	1967	1971
(a) Lowest quintile	4.2	3.6Cb) Second quintile	11.4	10.6(c) Third quintile	17.8	17.6
April 9, 1973

Per Cent Share of
Family Units in:	Total	Income in
	1967	1971
(d) Fourth quintile	24.6	24.9(e) Highest quintile	42.0	43.3100.0	100.0
<* Family units include both unattached individuals and families of two or more persons.
Order Paper Questions


Mr. McKenzie: 1.	In the fiscal years 1968-69 to 1971-72, how much money was contracted to each of the five regions of Canada by the Defence Construction (1951) Limited?
2.	What was this in per capita terms for each region?


James Armstrong Richardson: 1 and 2. Details of Defence Construction (1951) Limited expenditures in each of the five regions of Canada is shown in Appendix "A" following.


[Stage Direction]
Fiscal Year	Atlantic	Quebec	Ontario	Prairies	Br. Columbia	1968-1969 Expenditures	
*6,253,000	*1,926,000	*4,971,000	*2,426,000	*1,	699,000Per Capita	
S 3,114	S 324	* 684	* 702	$	8481969-1970 Expenditures	
Per Capita	
*2,288,000	*2,850,000	*3,284,000	*3,472,000	*5,	579,000
* 1,137	* 476	* 440	* 992	$	2,6991970-1971 Expenditures	
*6,014,000	*7,534,000	*7,204,000	*2,821,000	*5,	358,000Per Capita	
* 2,980	* 1,252	* 943	* 800	$	2,5071971-1972 Expenditures	
*10,557,000	*16,037,000	*10,349,000	*7,255,000	*5,	553,000Per Capita	
S 5,129	* 2,660	* 1,343	* 2,048	$	2,541
Mr. Godin: By province, in the years (a) 1970 (b) 1971, how many building inspectors were employed by Central Mortgage and Housing Corporation?


Hon. Ron Basford (Minister of State for Urban Affairs):: The number of inspectors employed by Central Mortgage and Housing Corporation as at December 31, 1970 and 1971, are shown in the following table:
Province	1970	1971N e wf oundl and	7	9Prince Edward Island	1	1Nova Scotia	12	11New Brunswick	6	5Quebec	54	72Ontario	86	93Manitoba	12	13Alberta	28	30Saskatchewan	11	12British Columbia	24 241	29 275


Mr. Haliburton: 1. How many visitors registered at the Kejimkujik National Park during the summers of (a) 1970 (b) 1971 (c) 1972?
2. How many such visitors were from outside the Province of Nova Scotia?


Joseph Jacques Jean Chrétien: 1. The estimated attendance at Kejimkujik National Park during the summers of 1970, 1971 and 1972 is shown below:
1970	1971	1972June	22,345	18,424	16,259July	30,087	42,710	34,221August	43,394	42,296	36,958Total	95,826	103,430	87,4382.	No estimate can be provided of the number of visitors to Kejimkujik National Park who were from outside the Province of Nova Scotia. Such information is collected only as part of special visitor use studies, the first of which will be conducted in Kejimkujik National Park in 1973.


Mr. Macquarrie: 1.	Has the government agreed to provide funds to establish Province House in Charlottetwon as a "living national memorial" and, if so, what is the significance and cost of such a project?
2.	What changes or additions to the present structure or its furnishings are envisaged?

April 9, 1973
Order Paper Questions
3.	Under what department will the renovation be carried out?
4.	What will be the role and/or contribution of the Government of Prince Edward Island in such project?
5.	Is it the intention of the government to assume authority, ownership and control of the aforementioned building?
6.	In what other provinces does the legislature meet in a building designated as a "living national memorial"?
7.	When and by whom was it suggested that the seat of the Prince Edward Island Legislative Assembly become the property or developmental responsibility of the government?
8.	If and when Province House becomes a "living national memorial" which government will be responsible for hiring staff and maintaining security for the building?
Hon. lean Chretien (Minister oi Indian Affairs and
Northern Development): 1. This subject is under discussion between the Provincial and the Federal Government.
2.	Under discussion in connection with part 1.
3.	If an agreement is reached, the Department of Indian Affairs and Northern Development will carry out the renovations.
4.	Under discussion in connection with part 1.
5.	Under discussion in connection with part 1.
6.	No other provincial legislature meets in a building designated as a "living national memorial". Province House in Charlottetwon is unique because of the preconfederation meetings held there.
7.	Premier A. B. Campbell asked whether the government would be interested in taking over the building as a historic monument and assuming the financial responsibility for its maintenance and administration in a letter dated September 21, 1966.
8.	Under discussion in connection with part 1.


Mr. Forrestall: 1.	What were the original acreages of our 29 national parks upon their respective establishments?
2.	What is the present acreage of these parks?
3.	In terms of percentages, how greatly have these parks expanded after their establishment?


Joseph Jacques Jean Chrétien: 1, 2 and 3.
Park
Banff	
Glacier	
Yoho	
Waterton Lakes	
Jasper	
Elk Island	
Mount Revelstoke	
St. Lawrence Islands	
Point Pelee	
Kootenay	
Wood Buffalo	
Prince Albert	
Riding Mountain	
Georgian Bay Islands	
Prince Edward Island	
Cape Breton Highlands....
Fundy	

Area on Establishment (square miles)
30

5,000
95
0.4
587
10,500
1,377
1,148
5.0
459
Present
Area
(square
miles)
2,564
507
4,200
100
0.4
543
17,300
1,496
1,148
5.4
367
Per Cent
Change
25540.
1637.
4970.
275.9
-16.
368.7
5.2
0
-7.5
64.7
8.6
8
-20
Park
Terra Nova. ...
Kejimkujik___
Kouchibouguac Pacific Rim....
Forillon	
La Maurice....
Gros Morne. . ..
Kluane	
Nahanni	
Baffin Island. .. Ship Harbour. . Pukaskwa	
Area on
Establish-	Present	
ment	Area	
(square	(square	Per Centmiles)	miles)	Change
156	153	-i.
140	140	0
85	85	0
54	54	0
92	92	0
176	210	19.
Boundaries are not yet finalized	
8,500	8,500	0
1,840	1,840	0.... 8,290	8,290	0.... Boundaries are not yet finalized	.... 725	725	0


Mr. Stewart (Okanagan-Kootenay): What was the total revenue obtained from customs and tariffs for each of the years 1960-72 inclusive?


Robert Douglas George Stanbury: Fiscal Years	Total Revenue $
1959-60	526,925,805.50
1960-61	500,325,483.22
1961-62	535,794,201.92
1962-63	646,451,699.33
1963-64	583,037,271.32
1964-65	624,261,967.03
1965-66	687,747,576.43
1966-67	779,666,354.33
1967-68	748,452,156.34
1968-69	764,467,291.09
1969-70	823,011,138.34
1970-71	819,216,092.73
1971-72	994,230.283.04
1972-73 (9 months)	846,215,679.25


Mr. Lambert (Bellechasse): 1.	Since its inception, has the Department of Regional Economic Expansion made any grants to one or more local caisses populai-res (credit unions) in Quebec and, if so (a) to which ones (b) for what purpose (c) in what amount (d) in what year?
2.	Were grants made to one or more federations of caisses populaires Desjardins and, if so (a) to which ones (b) for what purpose (c) in what amount (d) in what year?


Mr. Marcel Prud'homme (Parliamentary Secretary to Minister of Regional Economic Expansion):: 1. No. Not
eligible for assistance, (a) N/A; (b)N/A; (c) N/A.
2. No. Not eligible for assistance, (a) N/A; (b) N/A; (c) N/A.
April 9, 1973

[English}



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. Coates: 1.	To date, how many individuals who were defeated candidates in the federal election of October 30,1972, have become employees of either the Prime Minister or Cabinet Ministers or how many have assumed a position with the government that is paid for from the federal Treasury?
2.	In each instance (a) what is the name of the person (b) what is the position (c) what is the annual salary (d) what are the responsibilities and the date on which those responsibilities were assumed?
Return tabled.



DEPARTMENT OF NATIONAL REVENUE-PUBLICITY EXPENDITURES

Mr. Nystrom: 1.	What were the amounts of money spent by the Department of National Revenue on publicity and/or information in each of the fiscal years 1968-69, 1969-70,1970-71, 1971-72?
2.	What were the names and addresses of firms or individuals who received these contracts, what amounts of money were spent in each case and what was the purpose of each contract?
3.	What contracts for publicity and/or information were awarded in the current fiscal year, what are the names and addresses of contractees, what are the amounts of money involved in each and what is the purpose of each contract?
Return tabled.



CANADIAN INTERNATIONAL DEVELOPMENT AGENCY-EXPENDITURES FOR RESEARCH

Mr. Nystrom: 1.	What was the total amount of money spent in each of the fiscal years 1968-69, 1969-70, 1970-71, 1971-72 by the Canadian International Development Agency on contracts to outside persons and organizations for research, development and other consulting services?
2.	What are the names and addresses of these outside persons and organizations and what amounts of money were involved in each contract?
3.	What was the purpose of each contract and title of each report submitted?
4.	What are the names and addresses of outside persons and organizations who were awarded contracts for research, development and other consulting services in the current fiscal year, what are the amounts of money involved in each case and what is the purpose of each contract?
Return tabled.



DEPARTMENT OF COMMUNICATIONS-RESEARCH DEVELOPMENT AND CONSULTING SERVICES

Mr. Nystrom: 1.	What was the total amount of money spent in each of the fiscal years 1968-69, 1969-70, 1970-71, 1971-72 by the Department of Communications on contracts to outside persons and organizations for research, development and other consulting services?
2.	What are the names and addresses of these outside persons and organizations and what amounts of money were involved in each contract?
Order Paper Questions
3.	What was the purpose of each contract and title of each report submitted?
4.	What are the names and addresses of outside persons and organizations who were awarded contracts for research, development and other consulting services in the current fiscal year, what are the amounts of money involved in each case and what is the purpose of each contract?
Return tabled.



DEPARTMENT OF MANPOWER AND IMMIGRATION-RESEARCH, DEVELOPMENT AND CONSULTING SERVICES

Mr. Nystrom: 1.	What was the total amount of money spent in each of the fiscal years 1968-69, 1969-70, 1970-71, 1971-72 by the Department of Manpower and Immigration on contracts to outside persons and organizations for research, development and other consulting services?
2.	What are the names and addresses of these outside persons and organizations and what amounts of money were involved in each contract?
3.	What was the purpose of each contract and title of each report submitted?
4.	What are the names and addresses of outside persons and organizations who were awarded contracts for research, development and other consulting services in the current fiscal year, what are the amounts of money involved in each case and what is the purpose of each contract?
Return tabled.



CANADA COUNCIL GRANTS IN THE AREA OF HUMANITIES AND SOCIAL SERVICES

Mr. Gillies: 1.	For each fiscal year 1970-71 to 1973-74, how many (a) natural-born Canadians (b) landed immigrants whose country originally was the United States (i) received (ii) applied for Canada Council grants in the area of humanities and social sciences?
2.	How many landed immigrants, whose country originally was the United States of America and who received grants in the area of humanities and social sciences, returned to a Canadian academic appointment upon completion of their fellowship for (a) 1970-71 (b) 1971-72 (c) 1972-73 to date?
3.	For each fiscal year 1970-71 to 1973-74, how many landed immigrants, other than those from the United States of America (a) received (b) applied for Canada Council grants in the area of humanities and social sciences?
4.	How many landed immigrants, other than those from the USA and who received grants in the area of humanities and social sciences, returned to a Canadian academic appointment upon completion of their fellowship for (a) 1970-71 (b) 1971-72 (c) 1972-73 to date?
5.	What are the various criteria used for judging the applications for Canada Council grants in the area of humanities and social sciences?
6.	Who is on the decision-making committee for the Canada Council grants in this area?
Return tabled.



ON-THE-JOB TRAINING PROGRAM

Mr. Kempling: Regarding the On-the-job Training Program, for each of the past two financial years, what were (a) the total number of applications received (b) the dates of receipt of each application (c) the amounts, in dollars, involved in each approved application (d) the dates of approval of each application sought by Eaton's, Hud-

April 9, 1973
Order Paper Questions
son's Bay and Simpsons-Sears subsidiaries, brancnes and associated Companies (e) the guidelines used as to the maximum that any one company may receive in one financial year under this Training Program?
Return tabled.



MANPOWER TRAINING ACT AND TECHNICAL-VOCATIONAL ACT-SPECIAL ENGLISH COURSES

Mr. Orlikow: 1.	How many new Canadians in each province took courses in Special English under the provisions of the Manpower Training Act in each month in 1971?
2.	How many new Canadians in each province took courses in Special English under the provisions of the Technical-Vocational Act in each month in the year 1971?
Return tabled.



MANPOWER TRAINING ACT AND TECHNICAL-VOCATIONAL TRAINING ACT

Mr. Orlikow: 1.	How many adults in each province took courses under the provisions of the Manpower Training Act in each month in the year 1971?
2.	How many adults in each province took courses under the provisions of the Technical-Vocational Training Act in each month in the year 1971?
Return tabled.



CANADIAN CHARTERED BANKS

Mr. Matte: 1.	How many chartered banks are there in Canada?
2.	What are their names?
3.	What are the reserves of each bank?
4.	What was the amount of loans granted by each bank in 1972?
Return tabled.


Mr. Blenkarn:: Mr. Speaker, I rise on a question of privilege. Last week or the week before I inquired about my question No. 278 which atjpeared on the order paper on January 12. That question deals with the Opportunities for Youth program. The Minister is requiring that members of the House give him a report on proposed opportunities for youth programs and that it be presented to him for approval today. It would be very much easier for me and other members if this kind of question which I placed on the order paper were answered. I see no reason whatsoever for this question not having been answered. It is a matter of privilege for myself as a member of the House to point out that the government has not got around to answering this question despite the fact I have already raised the matter on the floor of the House.


Mr. Paproski:: Mr. Speaker, I wish to rise on a point of order or a question of privilege in view of the fact I have had about 60 questions on the order paper since February 23 which ask the government what financial contributions have been made for development assistance to various countries of the third world. What is the minister hiding?

Why do this departmental officials not answer my questions?


Mitchell William Sharp: Mr. Speaker, if I may be permitted to answer, the department has been working for some weeks on these questions involving a very long and detailed answer. I am hoping to be able to condense all the answers into one tabulation and I expect it will be ready this week.


Steve Eugene Paproski: I wonder whether the minister would at least give me some little detailed article? The Department of External Affairs seems to keep publishing in the papers the contributions to different countries, but members on this side of the House cannot receive an answer.



ORAL QUESTION PERIOD


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I should like to ask the Secretary of State for External Affairs a question first for clarification. When he says that all helicopters of the International Commission of Control and Supervision in the region have been grounded, would he clarify what he means by "region"? Does this mean within the whole jurisdiction of the ICCS or does it mean the region where the attack took place?


Mitchell William Sharp: Mr. Speaker, I am afraid I cannot answer that question too precisely. It is my understanding it is in the areas where we have not been receiving co-operation with respect to safety of the flights, but I will put this question to Saigon to see whether I can get a more precise answer.


Robert Lorne Stanfield: Mr. Speaker, I should like to ask the minister whether any further precautions are being taken with regard to the safety of our members particularly on the ICCS and whether any consideration is being given to withdrawing them into a position of relative safety in Viet Nam compared with being perhaps in exposed positions of possible danger in the event of an outbreak of hostilities?


Mitchell William Sharp: The answer to that question, generally speaking, is yes.


Robert Lorne Stanfield: Arising out of the minister's response to my first question in which he was not quite positive concerning what "region" meant in relation to the grounding of the helicopters, could the minister tell us approximately how many instances there have been prior to this tragedy in which ICCS helicopters have been fired upon? He mentioned that there had been a whole series of them. Could he give us the approximate number?
April 9, 1973


Mitchell William Sharp: Mr. Speaker, the House will recall that very soon after the ICCS teams were fielded in Viet Nam there were attacks on helicopters. There was a sufficient number of them at that time that all the helicopters were grounded. That was the first series of events. Then we had the event on April 7 when these two helicopters were fired upon and one of them crashed. Since that time we have had another incident. This is one of the reasons, of course, for the first question put by the Leader of the Opposition about the use of helicopters thereafter. I hesitate to be too precise because it may be there is some information I lack from Saigon, but it is my understanding that it has been in the areas where safety could not be assured. Helicopters are presumably operating in other areas where there have been no incidents of any kind.


Robert Lorne Stanfield: Did I understand the Secretary of State for External Affairs correctly that there were no instances of firing upon ICCS helicopters between the grounding following the first series of attacks and the tragedy of recent days?


Mitchell William Sharp: Yes. There may have been a very minor matter where there was perhaps some small arms fire which never reached the helicopter, or something like that. But, as the hon. gentleman knows, we do not want to put these helicopters into the air unless we are pretty well guaranteed that they will not be fired upon. That is why not only our people in Saigon but the whole of the ICCS, including the Indonesians, the Poles and the Hungarians, have been using helicopters very sparingly and only when they felt they would not be fired upon. This latest tragedy is an instance of how impossible it is to protect oneself in advance against what appears to be a deliberate flouting of the agreement reached by the high command of the PRG.


Mr. Andrew Brewin (Greenwood):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. Has the minister communicated directly with the first ministers of the Provisional Revolutionary Government, the government of the Republic of Viet Nam and the government of the Democratic Republic of Viet Nam to impress upon these governments that if the fighting continues and if the lives of ICCS personnel continue to be in danger, Canada will be compelled to withdraw her contribution to the commission with a minimum of notice as obviously there is no peace to supervise?


Mitchell William Sharp: The statements that I have made to ihat effect in this House and publicly have been conveyed to the representatives of the PRG.


CIVILIAN PRISONERS IN SOUTH VIET NAM-REQUEST THAT CANADA PRESS FOR RELEASE
Francis Andrew Brewin: Mr. Speaker, I have a question on a slightly different subject. In view of the widespread concern throughout Canada, of which I am sure the minister is aware, about the plight of civilian prisoners in South Viet Nam, what steps will the minister take to inform the government of the Republic of Viet
Oral Questions
Nam of the Canadian concern and to press for action to relieve the situation?


Mitchell William Sharp: Mr. Speaker, when I was in Saigon I brought this question to the attention of the foreign minister and the prime minister of that country, and the response I got was that they had given a list of the 5,000 civilian prisoners now being held.


VIET NAM-POSSIBLE RECONVENING OF SIGNATORIES TO PARIS AGREEMENT TO REVIEW SITUATION
Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, may I ask the Secretary of State for External Affairs whether or not, in light of the tragedy and the whole situation over there, the government has given any consideration to our taking any initiative whatever1 to have the signatories of the Paris Agreement reconvene in Paris for the purpose of reviewing, first of all, whether or not the safeguards and assurances given under that agreement can in fact be achieved or whether or not, in light of the present situation, there is indeed any point in continuing?


Mitchell William Sharp: I have not as yet given consideration to that particular suggestion. It is one of the means open to us. I doubt very much whether under present circumstances Canada would get much support in reconvening the Paris conference, but it was one of the points I pressed upon the conference that there should be a mechanism for having the conference recalled. Unfortunately, the mechanism that we had suggested was not adopted, but at least on the request of six members the conference may be recalled to hear evidence that the cease-fire is not being observed.


J. Michael Forrestall: Mr. Speaker, I have a further supplementary question.


Mr. Speaker:: Order, please. The Chair will recognize the hon. member for Darmouth-Halifax East. It seems to me, however, that the supplementary questions asked by the hon. member for Greenwood and the hon. member for Dartmouth-Halifax East bifurcated somewhat from the original question. It might be better, after I have recognized the hon. member for Dartmouth-Halifax East, that we complete the first round of questioning and then return to supplementaries which may be either supplementary or an extension of the original question.


J. Michael Forrestall: Mr. Speaker, we are all concerned about the activities in Viet Nam. I am sorry if I am straying away from the original locale. I do not intend to do that but rather to ask whether or not there is a useful vehicle to ensure that the very objections which were raised could be met. I wish to ask the minister one further supplementary question. I understood the minister to say that the parties must agree to the recalling of the Paris conference. May I ask then, by way of a representation, whether or not the government would now take some initiative to see if within the next two or three weeks such an invitation could be jointly issued by the members of the ICCS to the signatories to that agreement?
26087-4!)

April 9, 1973
Oral Questions


Mitchell William Sharp: I thank the hon. gentleman for his suggestion. I cannot give a definite answer now but it is one of the possibilities that remains open and it will be kept under constant review.


FINANCE
David Lewis: Mr. Speaker, I have a question for the Minister of Finance. I assume from the provisions of Section 14 of the Bank of Canada Act that the governor of the Bank of Canada consulted the minister and that he had the minister's agreement for the increase in the interest rate of half of one per cent which the governor of the Bank of Canada announced. Would the minister inform the House whether my assumption is right, that he was consulted, and whether he agreed to this increase in the rate?


John Napier Turner: Yes, Mr. Speaker, I was informed of this by the governor of the Bank of Canada prior to his raising the bank rate. In our meetings the governor has kept me fully informed. As the hon. gentleman knows, the governor has the day to day responsibility over monetary policy. I am satisfied with the action, particularly if the hon. gentleman refers to the statement of the governor when he stressed that monetary policy in Canada will continue to be expansionary and the bank remains firmly committed to maintaining a rate of monetary growth high enough to support a strong expansion of Canadian output and employment. In those terms, I agree with the action taken by the governor.


An hon. Member:: When did it start?


Some hon. Members:: Oh, oh!


David Lewis: Mr. Speaker, I hope the minister does not accept that gobbledygook-


Some hon. Members:: Oh, oh!


Mr. MacDonald (Egmont):: You accept it.


David Lewis: -of the governor of the Bank of Canada saying, on the one hand, that he is going to have an expansionary policy and, on the other hand, doing something that prevents an expansionary policy.


David Samuel Horne MacDonald: When did he phone you?


INCREASE IN BANK OF CANADA INTEREST RATE-EFFECT ON EXPANSIONARY POLICY
David Lewis: I should like to ask the Minister of Finance since he has the authority under Section 14 of the Bank of Canada Act to disagree with the governor and when he does disagree to give him a written directive as to what the policy should be, whether he has in fact approved this increase in the interest rate, and can he briefly indicate to the House how that is consonant with an expansionary policy?
[Mr. Forrestall.l


John Napier Turner: Mr. Speaker, I ought to recite to the hon. gentleman and to the House the rate of expansion with respect to the monetary policy for the first three months of the year. Total loans of the Canadian banking system increased at an annual rate of 26 per cent. Total major assets increased at an annual rate of 19 per cent. Mortgages increased at an annual rate of 34 per cent, and the privately held money supply increased at an annual rate of 17 per cent.


Mr. Speaker:: Order, please. We are obviously involved in debate. The hon. member may ask a supplementary. He will be recognized for that, and then I believe the hon. member for Edmonton West has a supplementary.


INCREASE IN BANK OF CANADA INTEREST RATE-REQUEST THAT MINISTER NOT AGREE TO FURTHER INCREASES
David Lewis: In view of the fact that this kind of action by the monetary authorities in the past has often been a prelude to continuing similar action to increase interest rates which affect mortgages as well as bank loans eventually, and thereby to reduce the monetary supply and so affect the expansion of the economy-I suggest to the minister that this is a fact-can the minister assure the House that he will not agree to any further increases in interest rates that will affect the Canadian economy as disadvantageously as this one will?


John Napier Turner: Mr. Speaker, I do not agree with the full ambit of the preamble to the hon. gentleman's question. I cannot give the House any such assurance. The bank rate was raised in order to ensure that the continuing expansion of the monetary supply would not be continued at a rate that might jeopardize the situation. Bank loans are increasing at a very strong rate. We are also affected by the short-term interest rates abroad, which are a point and a half to two points above Canadian interest rates. They were attracting money from the Canadian market and that was prejudicial to Canadian borrowers. Those were the reasons the bank rate was raised.


INCREASE IN BANK OF CANADA INTEREST RATE- EFFECT ON VALUE OF DOLLAR AND EXPANSIONARY POLICY
Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, would the minister advise the House how he reconciles a deflationary step such as increasing the bank rate, which today is having a consequential increase in the commercial rate or the prime rate charged by the banks, with his claims of an expansionary budget and economy, as well as relating it perhaps to some problems with regard to the international value of the dollar? Is he now expecting a greater inflow of foreign currency so that the Canadian dollar will be affected thereby?


John Napier Turner: Mr. Speaker, I do not want to speculate on the future value of the Canadian dollar, but I want to remind the hon. member
April 9, 1973

that short-term interest rates in Canada are still considerably lower than those in the United States or Europe, so I would not anticipate the result to which he refers.


Mr. Speaker:: Order, please. The Chair will recognize the hon. member for Temiscamingue, and then return to sup-plementaries on the first and second questions.

[Translation!


REGIONAL ECONOMIC EXPANSION
David Réal Caouette: Mr. Speaker, may I ask a question of the hon. Minister of Regional Economic Expansion.
Last Thursday the minister announced in the House the possibility of reopening the CIP plant at Temiscaming and he stated that he would have discussions with Quebec authorities during the week. Before making this statement last Thursday, had the minister been in communication with Quebec to say how much he was concerned about the reopening of the plant?


Hon. Donald C. Jamieson (Minister of Regional Economic Expansion):: Yes, Mr. Speaker. This afternoon just prior to coming into the House I placed a call to the appropriate minister in Quebec. He was not in his office at the time but I am expecting that the call will be returned later this afternoon. If so, I will be prepared to go to Quebec either tomorrow or Wednesday.


David Réal Caouette: Mr. Speaker, may I ask a supplementary question?
I am glad to hear the minister is prepared to go to Quebec to settle the matter, but has he in hand the productivity study the province of Quebec is deemed to have made on the reopening of the CIP plant?


Donald Campbell Jamieson: I do not personally have it in hand, but I know that my officials have been advised of most of the contents, and of course it formed a large part of the basis on which the decision was made that I announced last Thursday.


FINANCE
Robert Lorne Stanfield: Mr. Speaker, I wish to direct a supplementary question to the Minister of Finance. In view of the very short, terse statement given by the governor of the Bank of Canada in making his announcement of the increase in the bank rate, would the minister make a statement on motions within the next day or so setting forth what the monetary
Oral Questions
stance is now, what the purpose of the increase is and what it is all about, or do we have to have a continuation of the mysteriousness that always seems to surround movements made by the Bank of Canada?


John Napier Turner: Mr. Speaker, I will be appearing again before the standing committee of the House on Department of Finance estimates next week and will be glad to go into that in some derail as members put the issue to me. I just want to remind the Leader of the Opposition that the primary day to day responsibility for monitory policy rests with the governor of the Bank of Canada, unless there is a conflict between the thrust of monetary policy and that of fiscal policy or governmental policy. That is not so as long as the monetary policy remains expansionary, which it does.


INCREASE IN BANK OF CANADA INTEREST RATE- EFFECT ON SLOW GROWTH AREAS-DISCUSSION WITH GOVERNOR
Mr. John Lundrigan (Gander-Twillingate):: Mr. Speaker, I wish to direct a supplementary question to the Minister of Finance. In view of the impact of any restrictive monetary policy on slow growth areas, which I think can be amply demonstrated, can the minister advise whether any conversation took place between himself and the governor of the Bank of Canada with regard to some kind of favourable monetary attitude toward slow growth areas, especially relating to capital formation?


John Napier Turner: Mr. Speaker, when the governor of the Bank of Canada advised me of the action he was going to take, I suggested to him that when he was communicating with the presidents of the Canadian chartered banks he should reiterate to them his earlier strictures, namely, that loans ought to be made primarily available to small Canadian borrowers and in those areas of slow growth, and that the spread between the rate paid on deposits and the rate of interest charged on loans should remain the same so as not to increase the profit potential of the banks. When the president of the Canadian Banking Association telephoned me this morning I repeated to him personally those same concerns on the part of the government.


INCREASE IN BANK OF CANADA INTEREST RATE-EFFECT ON NATIONAL HOUSING ACT MORTGAGE INTEREST RATE
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I wish to direct a supplementary question to the Minister of Finance. In view of the fact that all previous increases in the bank rate have led to an increase in the interest rate on NHA mortgages, could the minister inform the House if before approving of the current increase he calculated its effect on the NHA mortgage rate? Specifically, can he assure the House that the NHA rate, which is already at 9} per cent, will not be increased?


John Napier Turner: Mr. Speaker, there is no direct connection between the bank rate and mortgage rates. As a matter of fact, over the past few
26087-49i

April 9, 1973
Oral Questions
months, as the hon. gentleman knows, rates for conventional mortgages have been coming down.


EXTERNAL AFFAIRS
Mr. John A. Fraser (Vancouver South):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. In view of the stated concern of some United States Congressmen that the United States will not issue the necessary regulations controlling sewage from U.S. vessels on the Great Lakes by the required date of April 15, can the minister assure the House that Canadian regulations required by the Great Lakes water quality agreement are ready to be issued by April 15?


Mitchell William Sharp: Mr. Speaker, I would prefer to take that question as notice and give a more complete answer tomorrow. The information I have now would not justify me in giving the kind of answer that I think the hon. member would like.


NATIONAL DEFENCE
Mr. Douglas Stewart (Okanagan-Kootenay):: Mr. Speaker, I wish to direct a question to the Minister of National Defence. Is the minister aware of the tragic incident yesterday which caused the deaths of two Vernon, British Columbia, children, killed when a mortar shell, picked up on a former munitions training range at Camp Vernon, exploded?


James Armstrong Richardson: Yes, Mr. Speaker, I am aware of this tragic accident. It is being investigated. I do not believe it is yet known what the explosive device was that caused the accident, but the RCMP are investigating and we are co-operating fully.


William Douglas Stewart: Will the minister indicate whether or not he is prepared to issue a directive that this second world war training range be combed and recombed in order to prevent similar disasters?


James Armstrong Richardson: Mr. Speaker, this area has been examined by military engineers over the years, dating back as far as 1963. If there is new evidence following the investigation that warrants a further examination, then I would authorize it.


AGRICULTURE
Mr. J. R. Ellis (Hastings):: Mr. Speaker, I wish to direct a question to the Minister of Agriculture. In light of recent reports that the processing of protein may soon become a leading industry in Canada, has the minister considered the production of protein from whey, which is available at the rate of a quarter of a billion pounds annually in my area and could produce approximately 15 million pounds of pure protein annually?


Hon. E. F. Whelan (Minister of Agriculture):: Mr. Speaker, I can tell the hon. member that the research department of the Department of Agriculture has probably one of the most expanded research programs of any group of researchers in the world studying the use of this product so it can be economically used. We are aware of this and are considering how it can be done in economic fashion for the benefit of all producers that have to use this protein.


CONSUMPTION AFFAIRS
Mr. Eudore Allard (Rimouski):: Mr. Speaker, I would like to direct a question to the Minister of Consumer and Corporate Affairs.
Can he tell the House when he will announce measures to protect buyers of hearing aids, old people in particular, who sometimes are shamefully exploited by unscrupulous buyers?


Hon. Herb Gray (Minister of Consumer and Corporate Affairs):: Mr. Speaker, I am taking this question as notice.


FINANCE
Mr. Bill Kempling (Halton-Wentworth):: Mr. Speaker, my question is for the Minister of Finance. Is the minister aware that some Canadian chartered banks are refusing loans under the Small Businesses Loans Act and, if so, what action is open to him under the act?


John Napier Turner: Mr. Speaker, I should like to have specific instances in order to look into the matter.

April 9, 1973


AIR TRANSPORT
Mr. Derek Blackburn (Brant):: Mr. Speaker, I have a question for the Minister of Transport. In view of the fact that neither the Canadian Owners and Pilots' Association nor the Canadian Airline Pilots' Association was consulted with regard to the hazardous aspects of the Canadian National Railways 1,800 foot telecommunications tower in Toronto, will the minister assure the House that an indepth study with respect to flying hazards will be carried out in conjunction with the two organizations mentioned before any further planning is done?


Jean Marchand: Mr. Speaker, we have taken all necessary precautions concerning air safety in the area of Toronto. We are confident that standards have been respected, but in view of the importance of the problem I am prepared to review this question and consult with all interested parties, particularly the pilots' associations.

Oral Questions
disastrous consequences in the slow growth regions of the country?


John Napier Turner: Mr. Speaker, there is no tight money policy and the demand for loans is heavy enough that the banks and the Bank of Canada do not anticipate any lessening of the demand or acquiesence in credit. As for the slow growth areas, I tried to answer the hon. member's colleague in specific terms. If the answer did not satisfy him, I would be glad to take a supplementary at a later date.


TARIFF REDUCTIONS ON AUTOMOBILE TIRES-REQUEST FOR ASSURANCE NO FURTHER REDUCTIONS CONTEMPLATED
Mr. Lloyd R. Crouse (South Shore):: Mr. Speaker, I have a question for the Minister of Finance. In view of the fact that tariff reductions on automobile tires could lead to the phasing out of marginal second line tire production in Canada, thereby causing unemployment in this $365 million industry, are further tariff reductions being considered beyond the 5 per cent proposed recently, especially in view of the increase in countervailing tariffs by the United States on Michelin tires?


FINANCE
Hon. Paul Hellyer (Trinity):: Mr. Speaker, my question is directed to the Minister of Finance. Has the minister contacted the Royal Bank of Canada to object to their latest advertising gimmick whereby a cash bonus of $25 is given to persons who are willing to mortgage their future to some prescribed extent?


John Napier Turner: No, Mr. Speaker, but I will pass on the hon. gentleman's remarks to the Royal Bank.


Paul Theodore Hellyer: While the minister is passing on these remarks and encouraging the bank not to continue with this sort of gimmickry, perhaps he might inquire to what extent loans being pushed in that direction might affect loans available to small business?


ALLEGED INDICATION OF TIGHT MONEY POLICY BY BANK OF CANADA-MEASURES TO OFFSET RESTRICTION OF CREDIT
Mr. James A. McGrath (St. John's East):: Mr. Speaker, my question is for the Minister of Finance. In view of the fact the governor of the Bank of Canada seems to be heading us into a tight money situation which would run contrary to the minister's expansionary policy, I want to ask the minister, apart from his conversation with the governor, what specific action he intends to take at this time when DREE policies are under review to bring in specific measures to offset restriction of credit which would have such


John Napier Turner: Mr. Speaker, if there were any further moves to be made in the tariff field, of course, they would be announced in the House, but I can assure the hon. gentleman that no further action is contemplated at this time.


NATIONAL DEFENCE
Mr. Stan Schumacher (Palliser):: Mr. Speaker, my question is supplementary to the first question to the Minister of National Defence and relates to his announcement that the HMCS Kootenay would be sent to Southeast Asian waters to relieve the Terra Nova. Is any consideration being given to sending a ship similar to the HMCS Preserver or the HMCS Protector in order that there might be some passenger carrying ability connected with those vessels that will be operating in those waters, particularly after the events of Saturday?


James Armstrong Richardson: Mr. Speaker, if I may correct the question in this way, we did not announce that the Kootenay would be going; we asked the Kootenay crew to stand by and be prepared to leave if necessary. The Terra Nova will be there until the end of May. No consideration has been given to other ships because in fact that would not be necessary. The Terra Nova or the Kootenay could carry all of our personnel in Viet Nam.

April 9, 1973
Oral Questions GRAIN


POSSIBLE TRANSFER OF WHEAT BOARD TO DEPARTMENT OF AGRICULTURE
Alfred Pullen Gleave: Mr. Speaker, may I ask the Minister of Agriculture, in view of his answer in committee the other day that he would welcome the transfer of the Canadian Wheat Board from its present position under the Minister of Justice to the Department of Agriculture, whether he can tell the House if he contemplates this transfer taking place in the near future?


Mr. Speaker:: I recognize the hon. member for
Bellechasse.


Joseph Adrien Henri Lambert: Thank you, Mr. Speaker.


Mr. Speaker:: I apologize to the hon. member.

Order, please. The hon. member for Saskatoon-Biggar apparently has a supplementary.


Alfred Pullen Gleave: Mr. Speaker, may I direct a question to the minister in charge of the Wheat Board. Would he tell the House if he is willing to relinquish his duties as minister in charge of the Wheat Board in view of his reported ambition to be leader of the Liberal party?


Mr. Speaker:: Order, please.


AGRICULTURE
Joseph Adrien Henri Lambert: Mr. Speaker, I should like to put a question to the Minister of Agriculture.
As a result of the statement which he made in the House on March 29, announcing a possible increase in the price of manufacturing milk of 60 cents per hundred pounds, will the minister take the necessary steps to obtain the assurance from his Quebec counterpart that the producers will get the full 60 cents or as in the past, will the increase be frittered away without the producers being a position to take full advantage of it?


Eugene Whelan: Mr. Speaker, we are discussing the whole program in detail and if changes have to be made it will be within our realm or within the realm of working very closely with the provincial people that we will make that change, but only with that co-operation.


Joseph Adrien Henri Lambert: Mr. Speaker, I have a supplementary.

Could the hon. minister tell the House whether, before the announcement made on March 29, he had had discussions with his Quebec opposite number, or else with officials of the Quebec Marketing Board?


Eugene Whelan: Yes, Mr. Speaker, the officials were in touch.


AIR TRANSPORT
Donald Alex Blenkarn: Mr. Speaker, I have a question for the Minister of Transport. Is it the policy of the government to gradually phase out precustoms clearance for passengers going to the United States from our airports?


Mr. Speaker:: Order, please. I have the impression that the question has been asked before but if I am wrong the minister could reply. Perhaps he has additional information for the House.


Jean Marchand: I am
afraid, Mr. Speaker, that the answer is the same as last week. This is something we are discussing with the United States, not only preclearance but international routes. We have been in negotiation with the United States for four years, so we hope that we are going to solve all these problems together.


PUBLIC SERVICE
Mr. Paul Dick (Lanark-Renfrew-Carleton):: Mr. Speaker, my question is to the President of the President of the Treasury Board. Considering the present high levels of unemployment, especially amongst those under 24 years of age in this country, and the number of university graduates and other professionally trained persons who are having difficulty finding suitable employment, is it now the policy of the government and the Public Service Commission to go outside Canada for clerical, junior career, and professional people and have they in fact abandoned the policy of hiring Canadians first and, second, landed immigrants?


Hon. C. M. Drury (President of the Treasury Board):: Mr. Speaker, they have not abandoned the policy of hiring Canadians first. I would be surprised if the Public Service Commission were to endeavour to recruit outside of Canada for jobs to be performed in Canada. Understandably, I think, there would be some effort abroad to recruit locally for jobs to be performed locally, abroad, on a continuing basis.
April 9, 1973

Oral Questions DRUGS


Paul Wyatt Dick: Mr. Speaker, I draw to the attention of the minister-


Mr. Speaker:: Order, please. Will the hon. member please resume his seat. Unless the hon. member rises on a point of order or question of privilege, which I hope he will not do, he may only ask a question and not draw to the attention of the minister or the government a situation or alleged facts. The hon. member is recognized for a supplementary.


Paul Wyatt Dick: Is the minister aware that an advertisement was carried in The Economist in England on March 19 asking for junior financial and accounting people, who are to be paid $11,000, to be transferred to Canada to serve across Canada?


Charles Mills (Bud) Drury: No, Mr. Speaker. I would be interested in seeing that.


AGRICULTURE
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, my question is addressed to the Minister of Consumer and Corporate Affairs. In view of reports that American beef cattle now being sold in Canada have been finished with the hormone fattening agent known as diethylstilbestrol, which has been banned in Canada because it is suspected of possibly inducing cancer in humans, can the minister say whether he has contemplated recommending that cattle implanted with this agent be banned for sale in Canada?


Herbert Eser (Herb) Gray: Mr. Speaker, I would be happy to consult on this matter with the Minister of National Health and Welfare and the Minister of Agriculture. I think the Minister of Agriculture may have some further information on this, if he may be permitted to add to my answer.


Lorne Edmund Nystrom: Mr. Speaker, may I direct my question to that minister.


Eugene Whelan: Mr. Speaker, the impression is that cattle in Canada do not contain any DES. This is not true, because if farmers quit using DES when the sale of DES was banned the last use would have been at the end of December and it will not have worn off until the end of April. So, Canadian cattle still contain some DES and American cattle still contain DES. However, only 50 per cent of American cattle are implanted with DES, so that it is very hard to tell. We are running 30 checks a week on testing beef products to find if there is a carry-over of DES, and there is a carry-over of DES in all beef cattle.


ALLEGED CONFLICT BETWEEN DEPARTMENTAL REPORT AND LE DAIN COMMISSION REPORT ON NUMBER OF DRUGS USERS
John Douglas Reynolds: Mr. Speaker, my question is for the Minister of National Health and Welfare. One week ago Friday the minister released his department's report on drugs which showed there were approximately 7,000 people on heroin and approximately 45,000 on cannabis. As the Le Dain commission report shows that there are roughly 900,000 in this country who have used cannabis and that there are approximately 15,000 on heroin, which report are the people of this country to look upon as being credible.


Hon. Marc Lalonde (Minister of National Health and Welfare):: Mr. Speaker, I am sorry, but I missed the last part of the question. Would the hon. member repeat the last part.


John Douglas Reynolds: Which report is the official report, or which report should the people of Canada look upon as being the credible report?


Marc Lalonde: Mr. Speaker, of course the report from my department.


John Douglas Reynolds: Mr. Speaker-


Mr. Speaker:: Order, please. The Chair will recognize the hon. member on a supplementary, but I hope there will not be too many supplementaries so that we can give an opportunity to as many members as possible to participate in the question period.


John Douglas Reynolds: Mr. Speaker, since the report of the minister is more credible, is the minister now saying that all the money spent on the LeDain commission, all those millions and millions of dollars, was a total waste?


Mr. Speaker:: Order, please. That supplementary, of course, is out of order.


POSSIBLE PROVISION OF SECRETARIES FOR MEMBERS IN CONSTITUENCIES
David Réal Caouette: Mr. Speaker, I have a serious and urgent question for the right hon. Prime Minister.
In view of the substantial increase of our work in our respective ridings, is the government giving consideration to following the lead of the province of Quebec in giving all hon. members the facilities of secretarial services in their respective ridings?


Right Hon. P. E. Trudeau (Prime Minister):: That is a matter, Mr. Speaker, which is being actively considered in the Cabinet and if there is anything to announce in that regard, we will make a statement in the House.

April 9, 1973

Oral Questions


ADMINISTRATION OF JUSTICE
Mr. Otto Jelinek (High Park-Humber Valley):: Mr. Speaker, I am sorry for the inconvenience being caused by the microphone system. My question is directed to the Minister of Justice. On March 21, the minister stated that he had received few if any complaints about the way the new Bail Act was working, not even from authorities in Ontario, and therefore would make no substantial changes in the bail law. In light of the fact that the wives of Toronto policemen have collected more than 149,000 names on petitions which urge reforms not only in the Bail Reform Act but call for more control and for capital punishment, is the minister now satisfied that there is an abundance of complaints regarding this matter? Will he, therefore, reconsider his position and tell this House what changes, if any, he is considering making in the Bail Reform Act? If no changes are being considered, why are they not?


Mr. Speaker:: Order, please. A question asked in those terms cannot be in order. The hon. member, to be brief, is inviting the minister to make a general statement which ought to be made on motions. However, the minister might be allowed to reply briefly to the hon. member's question, after which I will recognize the hon. member for Edmonton Centre.


Otto Emil Lang: Mr. Speaker, as I have indicated many times, we are interested in looking at constructive proposals for change, and we certainly do so. I have had an exchange of correspondence with all the Attorneys General and, basically, have found that they too agree that the new law is working much better in protecting the liberties of individual citizens. There is a great deal of misunderstanding about how the new law and the old law differ, and I am afraid that many of the complaints ignore the fact that nothing-


Mr. Speaker:: Order, please.
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COAL-POSSIBLE SHORTAGE IN UNITED STATES AND EMBARGO ON SHIPMENTS TO CANADA-GOVERNMENT ACTION
Steve Eugene Paproski: Mr. Speaker, my question is for the Minister of Energy, Mines and Resources. In view of the claim by United States coal firms that their reserves are depleting at a much more accelerated pace than previously expected and that an embargo on shipment to Canada may be necessary to protect their home consumption, may I ask the minister if he is aware of this? If so, what action does the government plan if the United States should slap an embargo upon shipments of coal to Canada?


Hon. Donald S. Macdonald (Minister of Energy, Mines and Resources):: Mr. Speaker, we have under study mea-

sures which would, we hope, make it possible for western Canadian Rocky Mountain coal to penetrate the central Canadian market. There have already been a number of experimental shipments. We will be carrying on discussions on this matter, particularly with the ministers involved in each of the two provinces affected.
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CANADIAN BROADCASTING CORPORATION
Mr. Elias Nesdoly (Meadow Lake):: Mr. Speaker, I wish to address my question to the minister responsible for the Canadian Broadcasting Corporation. In view of the fact the CBC has indicated that its extended coverage plan, the purpose of which is to bring television service to areas of the north not at present served by television, would be completed by March 26, 1973, and presented to cabinet, may I ask if this plan has been presented to cabinet and, if it has been, what was the cabinet's decision?


Mr. Gilles Marceau (Parliamentary Secretary to Secretary of State):: Mr. Speaker, my hon. friend's question is extremely interesting. I shall waste no time in transmitting it to the Secretary of State who will give it an appropriate answer as soon as possible.
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SUPPLY AND SERVICES
John Howard Lundrigan: Mr. Speaker, my question is for the Minister of Supply and Services. In view of the fact that the income tax changes and basic exemptions are still before the House, can the minister indicate whether he has sent an official memorandum to personnel under his direction advising them officially that the reductions in income tax will take place on their April cheques?


Hon. Jean-Pierre Goyer (Minister of Supply and Services):: That is correct, Mr. Speaker.


John Howard Lundrigan: Mr. Speaker, may I table the letter?


Mr. Speaker:: Order, please. The Chair will recognize the hon. member for Lethbridge, and then we will call orders of the day.
April 9, 1973


NATIONAL PARKS
Mr. Ken Hurlburt (Lethbridge):: Mr. Speaker, my question is for the Minister of Indian Affairs and Northern Development. Two years ago the Supreme Court of Canada ruled that perpetual leases in national parks were valid and could not be altered. Why, then, has the government not instituted proceedings to reinstate those perpetual leases which were terminated?


Mr. Speaker:: Order, please. I doubt if a question asked in those terms is in order. The minister may reply briefly, after which we will call orders of the day.


Joseph Jacques Jean Chrétien: Mr. Speaker, we are now studying this problem. We have already taken certain steps with regard to the new leases which expire and are studied again by the government. The whole question is now under review and I do not know exactly when we will be able to make a decision with regard to the leases which were renegotiated a few years ago.


SUPPLY AND SERVICES
John Howard Lundrigan: Mr. Speaker,
I rise on a point of order. When the answer from the Minister of Supply and Services reached me, it sounded as if the minister said he would take the question as notice. I have been advised by some of my colleagues that the answer was something different. I wonder whether it would be possible for the minister to clarify this very important matter.


Jean-Pierre Goyer: Mr. Speaker, I have in fact signed a letter to that effect which has been sent to all employees of the federal government.


John Howard Lundrigan: That is fine, Mr. Speaker. I understood the minister this time. I now rise on a question of privilege. In view of the fact there was no translation system, I would have thought the minister would have had some respect for my Irish background and answered in English. Be that as it may, I want to bring to the attention of hon. members something which I consider to be of very substantial importance. We have before us a bill which has to do with the basic income tax exemption proposed by the Minister of Finance in February.
I have in my hand a copy of a letter which was sent to the minister's officials. It indicates that the deductions from the April cheques will be along the lines proposed by the Minister of Finance. If this move had been made by a company, corporation or anyone outside of the govern-
Income Tax Act
ment, it would be understood to mean something, namely, anticipating the behaviour of parliament. Out of respect for the Minister of Supply and Services, I will not use the word arrogant, but I certainly consider it to be an affront to parliament when a member of the Privy Council circulates a document through his office indicating that changes will take piece. In doing so, he is anticipating the behaviour of parliament. The minister did not indicate that there might be a change in the basic exemption or that there would possibly be a change. The minister, himself, decided that there will be deductions from the April cheques along the lines proposed by the Minister of Finance.
Despite the fact that we welcome the proposed change, and hopefully it will be in effect before the end of April, I consider the minister's actions to be completely out of order. I think the minister owes this House an apology. It is an affront to parliament. The minister should have a little more respect for this House of Commons.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Orders of the day.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Friday, April 6, consideration in committee of Bill C-170, to amend the statute law relating to income tax-Mr. Turner (Ottawa-Carleton)-Mr. McCleave in the chair.
The Chairman:: Order, please. The House again in committee of the whole on Bill C-170, to amend the statute law relating to income tax. The discussion will commence with clause 1 of Part I.
On Clause 1.


Marcel Joseph Aimé Lambert: Mr. Chairman, 18 months after the beginning of the discussion on Bill C-259, we find ourselves in a very interesting situation. We have a bill before us that is about one seventh as big as the previous one. However, it introduces many amendments. I hope that members on the government side have not accepted these on blind trust because Bill C-259, which was accepted on blind trust, was shown to be terribly deficient. I want to make a couple of observations on clause 1 because of what I said on Thursday last about the complexity of this bill and the difficulty in dealing with it in detail as we should.
I know that hon. members, as well as the media, shun an income tax bill like the plague. They do not want to put their hands near it. In fact, many do not even want to hear of it. They are afraid it is contaminated. I think hon. members will recall the bitter experience when we were dealing with Bill C-259. The difficulty lies in comparing the bill as presented with the ways and means motion. That in itself, is a complicated procedure. We then have to mesh the bill with the Income Tax Act so that it makes
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some sense and can be understood. I am the first to admit that in the time that has elapsed since we have had the bill, it has not been possible to get all the homework done. Therefore, my questions to the minister will be of an exploratory nature. I trust that he is thoroughly versed in the provisions of the act and the amendments. It would have been much more convenient to have had a private briefing session around the committee table. It would have been possible to examine these proposals. I intend tp proceed on this basis and I hope that the minister will have the answers. I would like to see this bill cleaned up as quickly as possible.
I wish to draw to the minister's attention a letter which I received from a young man attending university. He filed his income tax teturn many weeks ago. There is owing to him approximately $240. The last instalment on his university dues is $134 and he only has $6 in the bank. His parents filed their income tax return some weeks after he did. They received the refund to which they are entitled. However, because he availed himself of a provision in the Income Tax Act as outlined in the budget last May and which the government delayed bringing forward until last week, he has not been able to get his money. This student would like to know whether the Minister of Finance is prepared to intercede with the university authorities on his bahalf. He has not been in a position to pay his dues because of the $240 that was extracted from him in excess of what should have been. He does not yet have his refund and he is not in a position to pay. I am sure that this situation is repeated in hundreds and thousands of cases.
I want to re-emphasize the major complaint I have made about the delay in implementing these provisions of the act. All this could have been done last December. There is no excuse. The legislation was ready. The motions had been presented to the House, and Bill C-222 had actually been presented in June of last year. As to the procedure to be followed today, I am not yet sure whether it will be preferable for our discussion to go forward clause by clause or not. I am disposed to think so at the present time, though later, possibly, on re-examination, it might appear there would be a better grouping allowing us to discuss several items en bloc. Here again, there was not much time available in which to determine what the best course would be. All of us, I think, would have appreciated it had there been more time available between the presentation of the bill and its detailed study so that those who are recognized to be tax authorities and commentators could have made their professional and impartial views known in connection with the effect of these provisions. Views of such experts as CCH and DeBoo's would have been an invaluable service to the committee had they been given an opportunity to make their comments.
I recall that in late September and in early October, 1971, when we were discussing the subject matter of the first clause of this bill which involves the determination of what is income, we were considering the definition of a new aspect of income, that is the benefit conferred on taxpayers who have automobiles placed at their disposal. In cases where a company owns vehicles and a car is made available to the president or any of the company's

officers or employees to use for their own purposes, the question arises as to the value of that benefit to the individual taxpayer. This provision is causing concern to a great many people who have hitherto been able to incorporate into what one might call the total package of their jobs, the advantage of the use of such a vehicle. It was a new provision and we have seen that difficulties arise in its implementation. I notice the minister has made the amendment retroactive to January 1, 1972. It is a question of what is a reasonable standby charge on a vehicle, what is the valuation under lease. The effect of the amendment here is to adjust for automobile insurance as against the value of the vehicle on the basis of a lease.
Clause 1 subsection (2) deals with the assessment made on an automobile salesman who is allotted a demonstrator for his own use. It has brought forth a great number of anguished cries, since a fair assessment is very difficult to determine. I notice that the minister has reduced the basis of the charge from one per cent to three-quarters of one per cent or the net average cost of the vehicles which have flowed through the inventory of a distributor. Mind you, Mr. Chairman, I would think that a salesman in a large agency who concentrated on compact models might feel unhappy in finding attributed to him a charge based upon consideration of cars of the Cadillac or Lincoln class. Perhaps experience will show what variation ought to be provided in such cases. In any event, in many automobile agencies the man who sells the Vegas does not sell Cadillacs and he might well have cause for complaint if he drives a Vega all the time and is charged Cadillac rates in whole or in part.
My general remarks have to do with the handling of the bill at the present time. It will be interesting to see how many hon. members take part in this discussion. I see that some members who used to sit on the Finance Committee have now assumed different responsibilities and it occurs to me they are likely to prove discreetly silent. I wonder whether some of those who, in the past, thought the bill was so good are now considering whether they ought to come forward and suggest improvements. Income tax is so horribly complicated that we are bound to make an attempt to put some of these requirements into the best possible layman's language. I shall have further observations to make in the course of our discussion during which I shall point out some of the horrible complexities into which we have gotten ourselves. They almost defy description. I have in mind particularly the effect of the interaction of three or four of the clauses in the bill before us.


John Napier Turner: Mr. Chairman, I should like to reply to one of the questions which was raised by the hon. member for Edmonton West during the debate on second reading. He wanted to see some comparison of the bill with the ways and means motion. I would be glad to follow his wishes, because I believe it would be useful to do so in the context of our discussion of the bill in committee.
The documents which were tabled in the House on March 29, 1973 were notices of the ways and means motion amending the Income Tax Act and the income tax application rules by providing, among other things, certain specific measures. The phrase "among other things"
April 9, 1973

is included to allow, for instance, for the precise problem raised by the hon. member for Edmonton West and, within reasonable limits, I suggest the rules do allow for the inclusion of new items, particularly if they do not involve major matters of policy or increases in the tax burden. I am willing to submit this material either by tabling it or as part of my remarks, or, as the hon. member suggests, by making it an appendix to Hansard, with the consent of the committee.


Some hon. Members:: Agreed.


John Napier Turner: I take it I have consent.
There are, in total, 39 clauses or subclauses in question. Of these, 15 might be considered consequential. Eight of the clauses are corrections to the French version of Bill C-259, the earlier tax reform bill. The remaining 16 clauses are technical changes involving no alteration in policy. Virtually all of them are relieving in their effect. A number of the clauses are intended to clarify the operation of particular sections of the act or of the application of rules. In a few instances it has become apparent that a particular section or subsection is redundant. Therefore, the bill proposes to eliminate it. For example, I refer to clauses 2 and 70(1). In another case, clause 82, there is an extension of the filing date for an election to be treated as a public corporation. In some cases obvious anomalies of a purely technical nature are corrected: for instance, clauses 3, 5 9(1), 21 and 89.
In a sense, most of these 16 clauses or subclauses can be said to be consequential amendments, except that they are not consequential upon the amendments proposed in the ways and means motions of March 29, 1973; rather they are consequential upon the provisions of the Income Tax Act and the income tax application rules themselves. These 39 clauses or subclauses were not mentioned in the ways and means motions because they were of a purely technical dimension and do not involve any important changes in policy nor any significant change from the existing act. I wanted to clarify that for the committee in view of the point raised on second reading by the hon. member for Edmonton West.
As to this particular clause-


Mr. Baldwin:: Mr. Chairman, may I put a question on that to the minister? Could he tell the committee, either now or later, how many of these amendments in the bill constitute an attempt by the government to comply with the statement made by the former minister of finance to the Senate committee? The minister will recall that when Bill C-259 was in its final stages in the other place, in order to accelerate passage of the bill through the other place the then minister of finance appeared before the Senate committee and admitted that Bill C-259 did require a number of very important changes, both remedial and mechanical. Indeed, the minister will know from the experience of the government that there were certain defects in that bill which we drew to the attention of the House, and this was followed by this admission made to the Senate. The minister of finance at that time said that these changes would be made and would be brought forward "next spring", meaning the spring of 1972. There-
Income Tax Act
fore, may I ask him whether Bill C-170 is, to any extent, the implementation by the government of the promises the former minister made in the other place?


John Napier Turner: Mr. Chairman, I would be glad to give the committee a precise list. I am advised that, to the best of our knowledge, we have fulfilled all the commitments made by my predecessor in the other place, but I shall be glad to furnish further details to the committee.


Robert Jardine McCleave: Before discussion continues, may I ask the minister whether the analysis of clauses which was sent to the Chair is the material to be printed as an appendix to today's proceedings?


John Napier Turner: Mr. Chairman, I think that was the general feeling of the committee.


Robert Jardine McCleave: Then that can be done when Mr. Speaker is back in the Chair.


John Napier Turner: Mr. Chairman, as to the specific clause before the committee, this amendment makes a relieving change to the provision of the act that deals with determination of the reasonable stand-by charge for the use of an automobile in cases where an employee is furnished with an automobile for personal use by his employer. Relief goes primarily to salesmen in automobile dealerships and there is also some change to the wording for sake of clarity. The hon. member for Edmonton West had the general sense of it.


Mr. Ritchie:: Mr. Chairman, may I just ask the minister a question. Every car would carry a different charge, depending on its make and value. As most of the automobile dealers have suggested, their accounting departments would have obviously an impossible task in view of the number of different prices. The price would differ monthly or even daily, since a salesman could have a different car every week or month.


John Napier Turner: Mr. Chairman, I believe this does meet the problem that the automobile dealers put to us. The salesman has the option of taking three-quarters of the actual charge or of taking three-quarters of the averaging of all the demonstrators in the dealership. Depending on the accounting facilities of the employer, he can now do it either way.


[Stage Direction]
Clause agreed to.
On clause 2.
Marcel Joseph Aimé Lambert: Mr. Chairman, I have a note on this particular clause. If one traces through the effect of the amendment to see what it means, one is taken to section 12 of the act, first of all. This amendment goes to subparagraph 12(l)(e)(ii) and all that is being dropped is a reference to subsection 20(7). Section 12 deals with amounts to be included in income from business or property. This amendment removes subsection 20(7), which in itself is a listing of reserves to be included in income. We then go to section 20, and the chief heading is "deductions permitted in computing income from business or property".
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Income Tax Act
So, first of all, we have reference to amounts included in income from business or property, and then there is a reference to the deductions permitted in computing income from business or property. What we are chopping off from the first reference is an exception to deductions. We are removing that reference to subsection 20(7), which must mean that this is a tidying up process, as mentioned by the minister, in the list of 39 clauses of Bill C-170 that are not included in the ways and means motion. The reason I have taken so long to draw this to the attention of the committee is that the act is so complicated. I cannot overemphasize the care that one has to exercise in examining all of these particular provisions because they have cross-references. But in short, why the change?


John Napier Turner: Mr. Chairman, as the hon. gentleman realizes, this is a technical amendment. It will delete reference to subsection 20(7) presently in subparagraph 12(l)(e)(ii). The reference to subsection 20(7) is redundant since it is previously mentioned in subparagraph 12(l)(e)(i). It is just a redundancy that we are eliminating without any policy consequences.


[Stage Direction]
Clause agreed to.
On clause 3-Obligation issued at discount.
Marcel Joseph Aimé Lambert: Mr. Chairman, May I ask the minister why the change? Is it merely an error? I recall that Bill C-259 had the date June 17 or June 18, and this was the wrong day. Is that all it is?


John Napier Turner: Yes, Mr. Chairman. This is another technical amendment to ensure that bonds and other obligations issued on June 18, 1971, the date of the former budget, are covered by this subsection. This date was inadvertently missed in the existing provisions.


[Stage Direction]
Clause agreed to.
On clause 4.
Marcel Joseph Aimé Lambert: Mr. Chairman, I think I should make it clear at this point that you had better keep looking down my way when you call clauses since I have many questions to ask. At some point we must have an explanation on the record from the minister of every change that we are making. There need not be a long elaboration, but I think that both the House and the general public are entitled to know why these changes are being made in the act. There is no other way for the public to be acquainted with these problems. Those reasons may be commented on by outsiders at some later date. However, this is the only way we will have an Income Tax Act which makes any sense.


John Napier Turner: I am agreeable to that procedure, Sir, but I would intend to follow it with the understanding of the committee that I give a brief explanation of every clause as we come to it. If members of the committee are not satisfied with the explanation or wish a further explanation I will rise again. I might say that the hon. member for Edmonton West knows that whatever I say is not binding on the court in any event. It will be the wording of the clause which counts. I mean my words will not be binding on the court in respect of a determination

of the meaning of a particular section or subsection. Subsection 18(4) of the present act provides that where a corporation's debt equity ratio exceeds three to one, that is to say where the ratio of debt to equity is larger than three to one in terms of dollar value, the excess debt will be regarded as equity and an appropriate part of the interest will be treated as a non-deductible expense.
This is the thin capitalization rule, and is used to prevent corporations so arranging their financial affairs that they artificially arrange their debt-equity ratio so as to have a good deal of their equity in debt and deduct the interest on it rather than have it as a non-deductible expense. Paragraph 18(4)(a)(ii) requires the equity portion of the formula to be calculated at the beginning of a corporation's taxation year. This creates a hardship for newly incorporated and expanding corporations. The amendment, in effect, permits the taxpayer to determine the equity by reference to the paid-up capital at either the beginning or end of the year. This is primarily a benefit to smaller companies which would not want to duplicate their accounting unnecessarily.


Marcel Joseph Aimé Lambert: Mr. Chairman, I am just wondering whether the insistence by the government on this debt-equity ratio is not going to work a much greater hardship on small businesses and those just starting-out. I am not worried about the bigger established corporations. I am wondering, in this so-called neutrality approach to the act, what the effect will be. I have known many companies in the past which had perhaps $50,000 worth of assets. Two or three individuals would decide to incorporate the business. They would be in partnership and would have anywhere from $25,000 to $50,000. There is no question that this many shares will be issued as their contributions and that they are going to issue the necessary shares to themselves for the carrying on and establishment of a corporate entity because this very definitely, shall we say, affects their future operations with regard to the shares.
In setting up an obligation by the company to the individual shareholders concerning their major contribution, frankly I would suggest to the minister that he is being overly severe on small business. Whether it is at the beginning of the fiscal year or at the end matters little insofar as these businesses are concerned. I think what the minister is forgetting is that interest is being charged to the company expense account. If the business should be a small business, likely it is being taxed at the lower rate. Remember that as soon as it is charged up to the company's account, it is deemed to have been received by the shareholder whose marginal rate quite conceivably may be considerably higher. Therefore, why limit the structure to Canadian business if there is no way that the public is being cheated, since these are private companies. Why make it so difficult?
I am looking also at certain provisions which did exist in the province of Alberta of no-share qualifications for directors. Where there is a very small issue of shares, maybe three or five, for small businesses, why have this insistence on that particular rule? This is where I think the minister is doing a disservice to the smaller and newer businesses.
April 9, 1973


John Napier Turner: I may have misled the hon. member. Primarily, of course, this is to apply to foreign-owned corporations so that they cannot artificially arrange their capital and debt structure to lower income by way of deductible interest against debt and in effect manage to distribute that equity dividend back over the border or back to wherever the parent is. That is the purpose of the thin capitalization rule. It really has application only to foreign-owned corporations.


Marcel Joseph Aimé Lambert: In what way does the minister suggest it has application? Surely, the statement in the act catches all corporations?


John Napier Turner: I am advised not, Mr. Chairman.


Robert Jardine McCleave: Shall clause 4 carry?


[Stage Direction]
Clause agreed to.
On clause 5.
Robert Jardine McCleave: Shall clause 5 carry?


Marcel Joseph Aimé Lambert: Wait a minute, Mr. Chairman. I raised a question as to whether this provision relates to a domestic corporation. Section 18(4) states:
Notwithstanding any other provision of this Act, in computing the income for a taxation year of a corporation resident in Canada from a business or property, no deduction shall be made in respect of that proportion of any amount otherwise deductible in computing its income for the year in respect of interest paid or payable by it on outstanding debts to specified non-residents that
I see that it states "to specified non-residents".


John Napier Turner: Yes.


Marcel Joseph Aimé Lambert: All right. I will take it within limits. But, can the minister say if it was felt there had been an abuse or if an abuse had been suggested? What proportion of companies does he think this affects, and is there any feeling that it materially affects the structure of those companies that he purports to catch with this section?


John Napier Turner: Well, we had some difficulty in this regard, but it was felt at the time of the tax reform that there had been some abuse and the thin capitalization rule was to meet it. We are now rendering the rule not more flexible in substance but only in accounting date.


Robert Jardine McCleave: The hon. member for Yorkton-Melville. This is on clause 5.


Lorne Edmund Nystrom: I would like to ask whether there had been a previous rule here relating to debt equity or whether this is the first one.


John Napier Turner: This rule was enacted by my predecessor and came into effect on January 1, 1972.


Robert Jardine McCleave: Shall clause 5 carry?


John Napier Turner: I am not getting up because I like to do so, Mr. Chairman, but because the committee feels I should give a brief explanation of every clause.
Income Tax Act


Robert Jardine McCleave: Is the minister referring to clause 5 or clause 6?


John Napier Turner: Clause 5, Sir. This is a technical amendment which was necessary in order to ensure that the amount paid with regard to principal payments in any preceding year is taken into account in determining the amount of reduction made in the current year. Paragraph 20(l)(f) of the act provides that when payments in respect of principal made in previous years exceed the amount for which the obligation was issued the excess is deductible.


Robert Jardine McCleave: Shall clause 5 carry?


[Stage Direction]
Clause agreed to.
On clause 6-Farming business.
John Napier Turner: I wonder if I might follow the procedure agreed upon. This is an important relieving provision concerning farm animals. It permits farmers to value their inventory of livestock, other than animals included in the basic herd, at any amount at fair market value even though they are reporting income on a cash basis.
Section 28(1) allows farmers to use the cash basis method under which an amount is included in income only when received and an expense is deducted only when paid. The new paragraph (b) of section 28(1) permits farmers to adjust their income otherwise computed under the cash basis method with the amount of inventory of livestock valued at a flexible amount from nil to the fair market value of livestock. This amendment responds to the fact that in the early years of establishing a herd on a farm expenses often far exceed income, and neither the five-year averaging nor the loss carry-over provision can fully absorb the loss in herd. The use of this flexible inventory system will provide the farmer with another way to average his income.


Alfred Pullen Gleave: Mr. Chairman, I would like some clarification now. As I understand the clause and the minister's remarks, this would mean in effect that a rancher could keep taking cattle into the herd and he would be, in effect, depreciating the total value of the animal as it was put into the herd. He could claim the value of the animal as a total expense. Am I correct?


John Napier Turner: No, Mr. Chairman. This provision does not apply to the basic herd situation at all. It applies to animals other than a basic herd.


Alfred Pullen Gleave: Perhaps I should not have used the term. This means, then, that the farmer may retain animals in the herd and claim them as a total expense as they are retained, that is as a charge against his year's operation. Is that correct?


John Napier Turner: The hon. gentleman should not confuse the animals that are treated separately outside of the herd, with which this clause deals, and the basic herd where other provisions pertain. In referring to

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a herd situation, he is putting himself outside the context of this amendment.


Alfred Pullen Gleave: What does this mean in effect? It says here that farmers may declare that they have kept animals. Let us get back to the start. As I read the clause, the farmer can declare the value of an animal without having sold it. Am I correct, or does this only apply to the selling side and not to the income side?


John Napier Turner: He can value his livestock other than the basic herd as a going inventory.


Alfred Pullen Gleave: Going into the herd? As he takes them in?


John Napier Turner: This is an entirely different situation. This does not apply to animals going into a herd or coming out of a herd. This applies just to livestock, other than animals treated by farmers as part of their basic herds. So, the basic herd provision is not applicable here.


Alfred Pullen Gleave: Mr. Chairman, I still have some questions to put to the minister.


Robert Jardine McCleave: I will recognize the hon. member for Saskatoon-Biggar in a moment, but it seems to me he has asked the same question several times, and perhaps with an opportunity to consult the minister or his officials that difficulty could be resolved. Perhaps we can stand the clause until it is resolved. I do not want to hasten the committee but I think we cannot really have repetition of one question. We should try to avoid it.


William Gordon Ritchie: Mr. Chairman, I would like to ask the minister a question. Can some farmers who have retained the basic herd also use this?


John Napier Turner: Yes, indeed, for animals that are not part of the herd.


William Gordon Ritchie: Say a farmer has 20 head of cattle and increased this number by the addition of five head of cattle which have a certain value. Let us assume they are valued at $300 each. Does he declare an income of $1,500 for these five animals with which he has increased his herd from 20 to 25?


John Napier Turner: If he is increasing the herd from 20 to 25 head of cattle, he comes within the basic herd provisions. If he elects to treat some animals in a different way, as livestock other than the basic herd, then the inventory calculation in this section applies.


William Gordon Ritchie: It was my understanding that this provision would not apply to farmers who establish the basic herd after the provisions of the Income Tax Act came into effect, only those who already held the basic herd previously.


John Napier Turner: That is right.


William Gordon Ritchie: Therefore, we have to assume that on these five animals the farmer would declare an income of $1,500 although he did not have the cash but only animals worth $1,500. He would declare this as income for the year as well as what he sold.


John Napier Turner: Yes, he can value those, according to the meaning of this amendment, anywhere between zero and the fair market value of those five animals.


William Gordon Ritchie: I would like to ask a question. Let us say the market value of the 20 animals is a certain amount one year. The next year the farmer has 25 animals but their market value has gone down although he has far more animals. Is he deemed to have any income that year? He does not assume any income.


John Napier Turner: As I understand it, he can revalue every year.


Marcel Joseph Aimé Lambert: Mr. Chairman-


Alfred Pullen Gleave: I rise on a point of order, Mr. Chairman.


Marcel Joseph Aimé Lambert: I am on the same one. As I take it, the minister's explanation of this matter is that if a farmer had no basic herd or if these animals are supernumerary to the basic herd, they are inventory on which tax will be paid because they are taken into the income in that taxation year, and although they are sold the following year those receipts do not become income in the subsequent year, the same way as accounts receivable of the professional such as the doctor or the lawyer who has billed his patient and takes his account, although not collected, into his income and pays tax on it. Be that as it may, it would make it rather difficult, I think.
I am not too sure that there is an option here. Yes, I see there is an option if the taxpayer so elects. Once having elected, does it mean it is his option or choice depending on valuation, and therefore there is a degree of flexibility? Let us assume that we are in this year when animal prices are very high on the market. At the end of the taxation year prices will be at the same level and therefore this will tend to increase the farmer taxpayer's income. He may find himself in a higher tax bracket. The animals that he has now may be sold only some time next year when the market price may have dropped 25 per cent. Then, he will have paid income tax on what is more than the fair market value on the sale of his animals. Is there provision for readjustment between the actual realization and the valuation that the farmer puts on an animal this year at fair market value, or will the taxpayer be committed?


John Napier Turner: No, Mr. Chairman.


Marcel Joseph Aimé Lambert: Is my simile correct?


John Napier Turner: Yes, the hon. member's simile is correct and valuation can be made year by year. He is not held by his previous valuation. The problem is to allow a flexible inventory valuation so that he, in effect, can allocate losses in a future year against an inventory built up, if he chooses.


Alfred Pullen Gleave: Mr. Chairman, over a period of time the farmer or rancher could continually build up his cattle herd. I am not referring to the basic herd. I am sorry that came into the discussion, because I very well understand that the basic herd provision was eliminated except for
[Mr. Turner (Ottawa-Carleton).l
April 9, 1973

those people who already had such a herd. Now, nobody can start a basic herd. But the farmer or rancher, as I understand it, can still build up and expand his herd. With each animal that he retains he can declare it as an expense and so would be building up his herd. In other words, he would be acquiring animals on which he did not have to pay income tax. Is that right?


John Napier Turner: Yes, that is right.


Alfred Pullen Gleave: What happens X number of years down the road when he decides to liquidate those animals, which he has been able to acquire without paying tax on them? Does he liquidate them all as a bunch, and at that stage pay income tax which may be very high, or is there some way he could spread that payment over a period of time?


John Napier Turner: If in an earlier year the farmer had brought the cattle into income by putting them on his inventory at fair market value he would already, in calculating his income against expenses, have paid taxes on them, and on their eventual disposition he would not be taxed twice. If the hon. gentleman is not satisfied with this explanation we could explain it to him in an accounting way thoroughly.


Alfred Pullen Gleave: Mr. Chairman, this bill is before the committee, and accountants are asking me these questions. I think that question should be answered here and now in this House. If the explanation is given to me afterwards, that will not clarify matters for members of the House. For those people in Canada who deal with farmers' accounts, and who must advise farmers I think the explanation should be given now. But if the minister is unable to answer my question now, I am willing to accept that.


John Napier Turner: Mr. Chairman, I submit to the committee that I have answered it, so that any accountant who is advising a farmer, from my explanation would be able to advise him how to value his inventory of cattle through the business life of a farm. I do not think, from an accounting point of view, I could be any more explicit, than by saying this permits farmers a flexibility in valuing inventory which is not available to any other businessmen. It gives the farmer the flexibility of bringing cattle into income at any stage in the life of a beast. If he brings an animal into income, then tax is paid on it because the inventory is increased by the value of that animal. He would not be taxed twice when he disposes of it. That is the simplest explanation I can give. I submit that it is clear, and that an accountant who is familiar with farm accounts and with inventory in farming would have no difficulty in following that explanation.


Alfred Pullen Gleave: If the farmer disposed of the final herd he would not be taxed on the total received for these animals, on the cash income at that time. Is that right?


John Napier Turner: That is right. If those beasts have been brought into income, and the income calculated in a prior year, he would not be taxed again.


William Gordon Ritchie: I would presume that once a farmer elects this method he will have to make an assessment of what his herd is worth every year, because it is going to vary from year to year?
Income Tax Act


John Napier Turner: That is so, but he can
always return to a valuation at zero if he wants.


William Gordon Ritchie: What is covered by the term "livestock"? Does it include a stable of race horses, pigs, chickens and so on?


John Napier Turner: I will get the definition of that as found in the existing act and will give it to the hon. gentleman in just a moment. Now, I understand there is no definition in the act, and that being so the term can be given its ordinary meaning, to include horses.


William Gordon Ritchie: And poultry and pigs?


John Napier Turner: The hon. gentleman is just as capable of defining livestock as I am, and probably better.


Mr. Hargrave:: Mr. Chairman, my remarks will deal with the basic herd provisions. Even though these provisions go part way, they do not recognize the full intent of the basic herd in the cattle industry in Canada today. The beef cattle industry is the largest agricultural commodity group in Canada today, with sales of $1.2 billion at the farm gate last year. The cattlemen through their organization, the Canadian Cattleman's Association, have made representations to the Minister of Finance, and more recently to the Minister of National Revenue. I believe this took place at a meeting in Kamloops. I would strongly support their representations. A number of abuses in connection with the basic herd provisions could be corrected with the introduction of a proper amendment, but the principle of the basic herd provision, in recognizing the capital value of a breeding herd, is a very sound one, and the cattlemen of Canada would like to see this fully incorporated into the provisions of the Income Tax Act.


Marcel Joseph Aimé Lambert: Mr. Chairman, my colleague from Dauphin asked what animals would be covered, and since there is no definition of livestock in the act itself I would ask the minister to look at section 248(1), the definition clause on farming, which states that farming under the terms of the act includes tillage of the soil, livestock raising and exhibiting, maintaining of horses for racing, raising of poultry, fur farming, dairy farming, fruit growing and the keeping of bees. If you are engaging in the farming business and are talking about livestock, all those things are a form of livestock. They are certainly alive. Someone asked if you are going to count the bees and find out whether they are alive. If you are mink ranching you will find out by poking your fingers into the cages! But is there any definition? I think the hon. member for Dauphin had a perfectly valid question when he asked what you mean by livestock and how far this is going to go.
There might be a distinction. If there is a narrow interpretation given in the new subsection 28(1) to the word "livestock". Livestock appears to be cattle because in the definition clause on farming there is a definition drawn between dairy farming and livestock raising. Let us hope there is not this narrow definition in this interpretation. Fortunately, the Minister of National Revenue is in the

April 9, 1973
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House and I hope his ears are tuned to this discussion and that he will make sure there is not a narrow interpretation of this particular clause but that it will be applicable to dairy farmers, to mink ranchers, to poultry raisers, horse breeders, cattle breeders and beekeepers. Let the minister change the act. He does not understand because the section indicates that the keeping of bees is farming.


John Napier Turner: Mr. Chairman, I do not read the subsection the same way as the hon. member, but I will give an undertaking to committee that if I find on consultation with my colleagues the Minister of National Revenue that there is an undue restriction on this I will bring it back.


William Gordon Ritchie: Mr. Chairman, my information is that most beef farmers are a bit concerned that this provision will not work to their advantage or be as fair to that type of industry. I think this is because it takes a long time to build up a herd-it is generally 10 or 15 years before the farmer makes anything. Will the minister monitor the effect of this clause very carefully to see whether there should not be a change back to some type of basic herd?


John Napier Turner: I certainly will, Mr. Chairman. I am concerned that the Income Tax Act should make some sense down on the farm and on the ranch. The purpose of this amendment is to allow for the early years in establishing a ranch or a farm when the expense usually exceeds the revenue. In those days neither the five-year averaging or loss carried forward is of any use to the farmer or rancher to fully absorb the losses that are incurred by a flexible valuation of inventory; now he only needs to bring his inventory into valuation when it best suits from his own revenue-expense point of view. This amendment is in response to the representations we have received from the dairy and cattle industries, particularly the beef industry, and we will continue to stay in touch.
I want to recall to the committee that when the Prime Minister gave me this particular job I arranged with the former member for Calgary South to set up a three-way committee of finance, national revenue and agriculture, to examine the application on a continuing basis of the Income Tax Act to agriculture. I felt then, and I still do, that a good many of these provisions were made by people who had not too much experience on the farm. We are trying to improve on a continuing basis, so that I can give an undertaking to the hon. members for Dauphin and Edmonton West.


Robert Jardine McCleave: The hon. member for Red Deer.


Marcel Joseph Aimé Lambert: Can we get a firm understanding-


Robert Jardine McCleave: The hon. member for Red Deer has the floor.


Mr. Towers:: Mr. Chairman, I want to ask one question of the minister. In speaking about the basic herd, we are talking about numbers. Is the minister speaking about numbers of cattle or is he talking about dollars?


John Napier Turner: Mr. Chairman, we are not talking about the basic herd at all. This amendment

applies to those animals not in the basic herd. We are talking about numbers of dollars, about bringing individual animals into inventory at the choice and election of the farmer. He could bring them in at zero or the fair market value or anywhere in between as suits him best.


Alfred Pullen Gleave: Mr. Chairman, are we agreed that we shall stand this clause and come back to it later with the changes the minister may find acceptable to correct this situation?


John Napier Turner: Mr. Chairman, I have not yet found any situation to correct. I have been trying to give an explanation. The only problem we had was the definition of livestock. Since there is no definition in the act then according to the ordinary rules of interpretation, the dictionary definition of livestock would apply. I gave an undertaking to the hon. member for Dauphin and the hon. member for Edmonton West that if in the course of these proceedings I find that the administration is more narrow than that I just indicated, I would bring it back to committee and we would cure it.


Alfred Pullen Gleave: Mr. Chairman, the minister says that he does not see anything to correct in the clause. This particular part of this bill is supposed to take the place of the provisions we had in the previous act for a basic herd, according to my understanding. I do not know what other purpose it serves. The last time I heard these changes discussed it was decided that the basic herd provision would be eliminated with. The only reason that I can see for this particular clause is to try to put something into this bill that will permit a farmer to build up a herd. As the hon. member for Dauphin pointed out, that takes about 10 or 15 years. Surely this must be the purpose. Therefore, instead of livestock the reference it should be, to the kind of herd you would build up, which is cattle. Why do we not stand the clause and put in what is necessary so that the ordinary, working farmer will understand it?


John Napier Turner: With respect, Mr. Chairman, I think the ordinary working farmer understands what livestock is; livestock is certainly wider than cattle. I think the wider the definition the better the farmer would like it. It certainly includes cattle.


Herbert Thomas (Bert) Hargrave: Mr. Chairman, I should like to make some comment about the term "farm" and the term now being used by a good many of the more viable farm units all across the country, the "family corporate farm". I want to assure everybody concerned that by this terminology I do not simply mean a sort of branch of the business type corporation in any sense of the word. The corporate family farm is a device that farmers, as their land requirements grow because of the need to spread their unit costs, have had to resort to in order to maintain a little longer the original concept of the family farm. This is no way can be considered as a large business corporation.
My point is that family corporate farms should be treated under the tax laws as individual farmers are treated. Corporate farms are discriminated against, and this dis-
April 9, 1973

crimination works real hardship on the farmer who incorporates. Strong representations have been made on this point. A good example of the situation is the fact that corporate farmers are not permitted to average over five years and are not able to declare their principal residence. These items are most important. I stress their importance and suggest that the family corporate structure should be dealt with in the same way and on the same lines as an individual farmer is dealt with, for taxation purposes.


John Napier Turner: Mr. Chairman, I am advised that for purposes of this clause, the evaluation of inventory applies to any type of farm, whether incorporated or unincorporated.


Alfred Pullen Gleave: Mr. Chairman, I should like to see this clause stood and the word "livestock" changed in the bill. There was a reason for previously establishing the basic herd provision with respect to beef cattle. The reason is that a cow usually has one calf, whereas a sow may have a large litter and the chicken population can be built up just as quickly as the farmer can put eggs through an incubator. The producer does not need a long time to build up his stock of hogs or poultry, but he does need a long time to build up his herd of cattle. I submit that this particular clause should refer specifically to cattle. That is what I am trying to impress upon the minister. Let us stand this clause and change that word. I think the hon. member for Medicine Hat would agree with me, as would all those here who are familiar with farming, and say that that is what we want to do. I am not prepared to see the farmer left in his present position, as some members, when we are considering some other part of the bill, may see fit to introduce changes to this effect. Why not act now?


John Napier Turner: Mr. Chairman, the problem to which the hon. member is addressing himself is unreal. He suggests that this clause should apply to cattle only. Its application is wider than that. The definition of farm business is to be found at the beginning of the amendment and that term is defined widely. The farmer can elect to value animals of other than his basic herd at fair market price, at zero, or anywhere in between. He does not need to do so. Not only will cattle farmers get the benefit of this provision, but farmers engaged in other types of livestock rearing will also benefit. Therefore, I submit it is in the interest of the whole farming community.
The hon. member has suggested that this should be restricted to cattle. I am suggesting that he really wants a wider purview of the amendment which, after all, is a relieving amendment and will encourage the farmer to begin animal production by the flexible evaluation of inventory. He can set income against losses, when loss is incurred. He does not need to take advantage of this provision. It is not introduced only for the benefit of the cattle farmer; it is there for any other type of farmer. If the hon. member wants to restrict it to cattle, then he is running against the interests of what he wants to continue, and I say this with respect.


Lorne Edmund Nystrom: Mr. Chairman, the minister a moment ago said that this provision applies to all farmers. I wonder whether, when drafting this legislation, it was decided to limit this provision to the family farm, or to the incor-
,	Income Tax Act
porated family farm, eliminating, in other words, the nonfamily farm corporation, the huge concern which goes into farming much as it might go into any other business for the purposes of tax reduction. Or, the same might apply to a lawyer or a doctor who might purchase a farm and use it for a tax deduction. I wonder if this matter is being considered.


John Napier Turner: Mr. Chairman, it would be very difficult to do that, as this part applies to the computation of income from a farming business.


Robert Jardine McCleave: Shall clause 6 carry?


Some hon. Members:: Agreed.


[Stage Direction]
Clause agreed to.
On clause 7-Loss from farming where chief source of income not farming.
John Napier Turner: Mr. Chairman, this is a relieving provision which permits the taxpayer whose chief source of income is either from farming or a combination of farming and some other source, in other words a hobby farmer, to deduct from his income all scientific research expenditures without being subject to the loss limits under section 31 subsection 1. Section 31, as it now exists, permits the hobby farmer to deduct from other income a maximum of $5,000 of losses originating from farming business, but these losses can be included as a deduction for scientific research. The maximum of scientific research would be in the amount of $5,000, and that would be the limit. The new amendment will ensure that the deduction of all expenses for scientific research related to the farming business can be deducted. Submissions to this effect have been made. A number of people across this country are saying that it is in the interest of legitimate scientific agricultural research to have that expense deducted.


Marcel Joseph Aimé Lambert: Mr. Chairman, I am gratified to see this amendment, because I suspect there is a big pile of letters in the minister's office on this question. This matter has been drawn to my attention by farmers, that is, by those engaged in farm operations in Alberta. I know that this is of concern to farmers across the country. The people I am concerned about, particularly, are engaged in a large ranching operation. They operate with a particular type of land that has been seeded in a special way. Records have been maintained by computer and special nutrients and food additives have been prepared and fed according to formulas of, shall we say, the more scientific developers of agricultural feeds. They are the corporations which carry on business in these nutrients. They use machinery and other equipment and are engaging in, shall we say, a partnership in this type of operation. They were able to deduct their expenses. There is a particular operation I have in mind. Now, it is paying taxes, I am glad to say, and is no longer a loser. There were some large initial losses under the old ceiling, which was lower, which had a very serious effect. I am glad to see this amendment. The point I want to make clear is-


Robert Jardine McCleave: Order, please. This is a good time to call it five o'clock. After completing our procedures, we shall go on to the consideration of private members' business.

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Income Tax Act
Progress reported.


Mr. Deputy Speaker:: It was agreed earlier that the Minister of Finance (Mr. Turner) would request leave, when the Speaker was back in the chair, for the printing of the analysis of clauses or subclauses appearing in Bill C-170 and not referred to in the ways and means motion. Is it agreed that these be printed under this part of our proceedings?


Some hon. Members:: Agreed.
[Editor's note: For text of analysis referred to see Appendix "A"]



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Wellington-Grey-Dufferin-Waterloo (Mr. Beatty)-Canadian Pacific Railway-site for dumping of garbage from metro Toronto; the hon. member for Saskatoon-Biggar (Mr.	Gleave)-Agriculture-feed
grain-suggested additional compensation to western producers; the hon. member for Ottawa East (Mr. Gauthier)- National Capital-inquiry as to purchase of LaSalle Academy by government.
It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, notices of motions.



PRIVATE MEMBERS' MOTIONS


Mr. Jim Balfour (Regina East) moved:: That, in the opinion of this House the government should consider the advisability of introducing a measure to amend the Income Tax Act to provide that a taxpayer be entitled to deduct in computing his income for a taxation year, interest paid on money borrowed to finance the cost to build or purchase a home to be used by such taxpayer as his principal residence.
He said: Mr. Speaker, housing is a universal need, yet home ownership is too expensive for the majority of Canadians. Canadians want to own their own homes. Surveys conducted by the task force on housing and veri-
[The Chairman.)
fied elsewhere clearly established that 80 per cent of Canadian families want to live in single family dwellings. If 80 per cent of Canadians want such housing, it is our job to see that they get it, if it is within the power of the House to do so. The effect of the policy I propose would be a dramatic reduction by almost $1 billion per year in the cost of housing for Canadian families. Much has been said in this House and in the press about the tendency of the government to profit from inflation. Proposals have been made by our party and adopted by the government which will tend to off-set future inflation to some extent.
The deductibility of mortgage interest would in effect reduce the impact of inflation on land and construction costs and interest rates over the past 10 years which have, partly through errors and omissions of government, been out of proportion to the general increase in the cost of living. I cite as an example the recent report that housing in the Toronto area costs 11 per cent more than it did one year ago. While food costs rise people are still eating, while clothing costs rise people are still clothed. The rise in housing costs, however, has deprived many of the prospect of home ownership and committed them to a life of paying rent.
My motion seeks to eliminate what I feel has been a serious loss to the quality of life of lower and middle income Canadians. Canada's population has increased from 21.4 million people in 1970 to 21.7 million people in 1971, and to just over the 22 million mark today. During this period, net family formation has been estimated at well over 200,000 families. The need to increase the supply of reasonably-priced housing for these and existing families in Canada is obvious.
To this end, a comprehensive plan must be evolved which would effectively reduce the final price of a home by compensating for any disproportionate component in the cost of a house. By reducing the final cost of a home, this plan would have the added appeal of increasing real demand and thereby stimulating the economy. This, then, is the problem with which we must deal.
There are three main components in the cost of a house; the land it is built on, the structure itself and the mortgage loan by which it is financed. All three have contributed to the escalating costs in both the home ownership and rental markets. Unquestionably, the largest single cost contributor, in recent years at least, has been the cost of money as reflected in spiralling interest rates.
The rise in interest rates from about 6 per cent to about 9 per cent has added more to the monthly payment of an average mortgage loan than a $5,000 increase in the price of the building lot would have added without a change in the interest rate. For example, a mortgage with a principle amount of $16,500 repayable over 25 years at 6 per cent would have a total interest cost of $15,200. The same mortgage carrying an interest rate of 9 per cent would have a total interest cost of $24,500, a difference in interest costs of $9,300 on a mortgage loan of $16,500. Furthermore, high interest rates have the effect of substantially raising the level of annual income needed to secure a mortgage compared with previous years.
Similarly, cost pressures are affecting the rental market. A rise of 3 percentage points in interest rates, for example, will add between $15 and $30 or more to the
April 9, 1973

monthly rental for a new apartment, depending on its size. Therefore, not only are more families excluded from the market for the single family dwelling, but it is now much more difficult for them to find relief from the pressures of rising financing costs in the rental market. As a result, families in search of decent housing are being priced out of the market and the long-run health of the housing industry is being threatened. This housing market of relatively short supply and relatively high cost has made the quest for adequate accommodation a major problem for more than the lowest income groups. They have a problem, to be sure, but so do those in the next income brackets, the average wage earners of the $6,000 to $12,000 range who in most cases do not qualify for public housing assistance and should not have to seek such assistance in any case.
With the general level of living costs escalating and with single family dwelling prices what they are, the home-ownership dream of many of these Canadians is just that, a dream. Instead they are left to scramble in the grim reality of the rental market to obtain accommodation, much of it ill-suited for family living and much of it renting at monthly rates well beyond the 27 per cent of income the CMHC handbook deems acceptable for a family budget. It is this group who, in many urban centres, are increasingly earning the designation of the affluent poor.
Existing government housing programs which were designed and intended to aid average and low income groups in Canada to own their own home are not adequate. The estimated average family income of all Canadian families in 1971 was $10,471. However, the average family income of NHA borrowers was $12,005 in 1971, a gap of over $1,500 in money terms and uncounted thousands in human terms. Additional methods and programs must be developed in Canada whereby low and middle income families can reasonably aspire to home ownership. That they do aspire to it, as indeed do most Canadians, was one of the more unanimous conclusions reached by the 1969 federal task force on housing and urban development.
This task force listened to a continuous flow of expert testimony that future housing policies for Canada must be directed to the provision of multiple unit accommodation, largely on a rental basis. They found, however, that as a result of economic pressures, group after group of concerned citizens came forward to voice their deep yearning to own their own home. It became the practice of the task force at its public meetings to seek a show of hands on this question. Invariably the response indicated that at least 80 per cent of those present wanted to own their own home; the same figure, incidentally, which Professor Edward Michaelson of Toronto obtained in a more scientific sampling.
To have a such a high percentage of real and potential homeowners within the Canadian population should come as no surprise. It was the pursuit of independence and the search for new beginnings that brought pioneers to Canada originally as a place where a man and a family could acquire a piece of land. There seems to be little doubt that this same attraction and spirit are still vital forces in this country, even if that piece of land is beeom-
Income Tax Act
ing over more expensive to acquire. We are living in an age of exponential change. Individuals are being buffeted about by forces they do not understand. If we are to avoid alienating Canadians, we must provide a continuum whereby the past can be lined to the present. It is my belief that the best vehicle to stabilize any individual against the vagaries and pressures of a changing society is to place his roots firmly in the soil of home ownership.
In recent years, Canadians have come to accept continuing inflation as a way of economic life and, having done so, they are looking more and more to investment sources which seem to offer protection for their earnings and savings from the ravages of an inflationary rip-off. Today, there are a few better such sources than single family dwellings, prices of which have generally been rising in a supply-short market at rates sufficient to allow for even the worst inflationary loss. Single family dwellings then are increasingly becoming not only a desirable place to live, but a good investment as well.
In short, as a result of factors such as these, there still exists a definite, if frustrated, philosophy of home ownership among the Canadian people. I realize there are not simple solutions to the cost of money problem. The mortgage market cannot be divorced from the over-all Canadian capital market and the general level of interest rates in Canada cannot be divorced from those of the western world in general and, particularly, the United States. Any steps that can be formulated and implemented, however, which would have the effect of reducing the net cost of mortgage money to homeowners would be constructive. The alternative is to continue to deny large numbers of Canadians access to the housing market.
By ensuring an adequate supply of mortgage funds we do not necessarily ensure that such funds will be available at rates of interest which bring housing costs within the range of the average Canadian wage-earner. Indeed, there seems no question that the sharp rise in money cost during the past several years has been the largest single factor in maintaining the gap between average family income and average homeowner income. A straightforward, pragmatic method of dealing with high interest rates would be to simply alter the tax laws so that interest payments could qualify as a legitimate expense against taxable income. This would be consistent with the present treatment of interest rate expenses incurred by investors.
Since the purchase of a home is a most important social and economic investment for most Canadian families, such tax write-offs should be given priority consideration. On equity grounds, similar write-offs might be granted to renters-the portion of the monthly rent which covers the mortgage interest payments of the landlord being the tax deductible expense. These modifications to the tax law would comprise an additional and beneficial component to the present policy. At the same time, exemption from income tax of interest paid on house mortgages would mean a redistribution of government revenue-federal as well as provincial since both levels of government share income taxes-in favour of taxpayers who own a mortgaged house. In this sense, there is no debating the significance of home ownership as a technique by which low

April 9, 1973
Income Tax Act
income households can acquire their one major asset and build a substantial nest egg at the same time.
If mortgage interest payments were made tax deductible a ballpark estimate of the annual cost in terms of foregone revenue would be in the order of $930 million. The alternative proposal to eliminate the 11 per cent sales tax on building materials it is estimated would cost about $365 million per year. However, the mortgage interest cost calculation does not take into account offsetting federal government revenue which would be derived from increased mortgage interest payments resulting from a greater number of homeowner mortgages being taken out. Similarly, the increased sale of building supplies which would result from the stimulation to the housebuilding industry and the resulting increased level of employment among those who would be engaged in this industry would aid this sector of the business community significantly and, therefore, the Canadian people.
By stabilizing the housing industry we would effectively reduce union demands for higher wages geared to offset numerous lay-offs. This, in turn, would help dampen inflationary tendencies in the economy and the increased level of employment in absolute terms would increase government tax revenue while decreasing transfer and welfare payments and, at the same time, reduce our chronic unemployment problem.
The real cost of the mortgage interest program could further be reduced if, to offset excessive benefits accruing to more affluent housing consumers, a limit were placed on the amount of interest payments exempted from taxation. For example, a $2,000 annual limit per family up to a maximum of $30,000 over the life of the mortgage, would cover all or the greater part of mortgage interest payments from most home purchasers. Payments beyond this limit could be taxable either wholly or partially, according to some graduated schedule. With any incentive directed to a specific section of the economy there is a need to assess its efficiency. In my submission those who would benefit the most from this motion are the very people who have the potential purchasing power to give a massive thrust to the development of new housing in all areas of Canada, given this type of assistance.
This proposal then, by reducing the cost of housing to the individual buyer, would enable a more realistic number of Canadians to acquire home ownership and thereby provide for Canadians access to a lifestyle in accord with their aspirations and the promise of this great country.


Some hon. Members:: Hear, hear!


Mr.   Fernand-E. Leblanc@Laurier: Mr. Speaker, the hon. member for Regina East (Mr. Balfour) the mover of this motion, says that the government should permit homeowners from now on to deduct interest charges from their taxable income.
Obviously, this proposal has a great deal of political appeal and were it not for the fact that we are good administrators we certainly would be inclined to adopt this proposal and to put it in effect in order to get votes. However, I do not feel this is part of the Progressive

Conservative program, because, on looking at the program they submitted at the time of the last election campaign, I did not notice that they had put forward a proposed tax reform whereby interests paid on individual properties would be deducted from taxable income.
At the time of the budget debate and in the course of speeches made on other financial measures, I listened to spokesmen for the Progressive Conservative party, and I have to make the same remark. As for the member for Regina East, his proposal reflects his personal views, because, to my knowledge, it does not have the support of his party.
The hon. member particularly explained to us the aspect of housing promotion for low and middle income people. According to me, he did not consult the recent statistics, because since 1968, there have been more houses built in Canada than in the last 20 years. Consequently, the fact that a homeowner could not deduct from his taxable income the interest he was paying on his mortgage, has not proved an obstacle, in my opinion, to the construction of private homes in Canada.
Maybe certain arguments have not been put forward, either the principal of the Income Tax Act according to which there cannot be deducted, as personal or living expenses, genuine personal expenses. This obviously includes interests paid on loans obtained for the purchase of goods and services for personal use, as opposed to those that are used for business purposes.
Already, under the Income Tax Act, the interests paid on money borrowed to earn an income or for reasons of business is deductible, and we have gone one step further in the context of tax reform for we have even suggested that when a company borrows to increase its share capital, the interests should be deductible. We are well aware that as many individual exemptions as possible must be made, but we must nevertheless bear in mind the important principle of taxation which says that expenses may be deductible when they produce income.
If, as the previous speaker suggested, expenses of a personal nature were deductible, obviously very few people would have any taxable income in the long run because it seems to me people would rush to get loans and deduct the interest so as to take advantage of the additional exemptions.
In order to balance a budget, taxes must be collected, and to do so, somebody has to pay taxes.
[DOT] <1720)
Rather than allow such deductions, we have, since 1972, raised the basic exemptions to $1500 for single person and $2850 for a married one. In fact, the February 1973 budget provides for an increase in basic exemptions to $1600 and $3000 respectively. To these exemptions, we have added additional exemptions such as for dependent children. Furthermore, under the provisions of the bill now before us, the taxpayer over age 65 benefits from an extra exemption of $1000. The blind have special exemptions especially when they have to stay in bed or move in a wheelchair.
The basic deductions allowed in this country stand among the most generous in the world. Compared with
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those granted in the United States, we see that in that country the basic exemption is $750 for a single person and $1500 for a married couple. Even if certain countries have already recognized the possibility of deducting, for income tax purposes, the interest levied on a mortgage, their basic exemptions were rather different from ours and I think that it is quite an appreciable benefit for low and average income groups.
According to the motion of the hon. member for Regina East, it must be pointed out that the principal residence is the home where the taxpayer is living and consequently, such a purchase must be considered as a personal expense.
As a rule, the purchase of a house is not different but more important than that of any personal item. However, such a purchase is usually the highest individual expense made by the taxpayer in his lifetime. We are conscious of that problem since we have put forward some incentives and steps to help the small investor build or buy himself a house, if he chooses to, it should be remembered that when the fiscal reform was introduced, we of the Liberal party recognized the desirability of encouraging home ownership. On the other hand, we did not feel that the best solution lay in departing from the basic rule of deductibility of above-mentioned personal expenses.
The Income Tax Act therefore provides two major incitements to home ownership. The first consists in allowing a taxpayer, when he sells his home, a tax-free capital gain. The second provides for continuation of the rule whereby such economic advantages accruing to him because he owns his home are not included in his income. This advantage can be considered as a return on invested capital, i.e. the value of his home. It could also be considered as income not received because he did not invest his money otherwise.
Incidentally, it is useful to note also that in other countries, especially in Great Britain, presumed income was once added to the taxpayer's income.
We should bear in mind whenever we deal with the Income Tax Act, the principle of justice whereby all taxpayers, whoever they may be, get the same treatment, as regards their participation to any government's budget, especially the federal government's.
If two individuals have $20,000 each and one of them decides to invest his $20,000 in bonds or something that would yield an income while the other one decides to use his $20,000 to buy a house, the result would be that the one investing in shares would contribute to the development of Canadian economy and the creation of employment, the one investing his $20,000 in interest bearing bonds would pay tax on the interest he would get, while the person investing in property, would see the mortgage interest he would have to pay, if there were a mortgage, deducted from his taxable income tax and that would be unjust perhaps in the case of the tenant as compared with that of the owner. One could also say this, should one wish to carry the arguement further: if we grant such an exemption to owners, we should also grant one to the tenant who pays rent.
The Progressive Conservatives very often complain, Mr. Speaker, over the complexity of the Income Tax Act; it
Income Tax Act
would be still more complex if we followed such a method.
If the individual investing $20,000 in something other than personal property and the one investing in the property, would sell after 10, 15 or 20 years the assets they have acquired and both make a $10,000 profit, the home owner would have no tax to pay on capital gains since the law provides for a special exemption on the taxpayer's residence, whereas the individual investing in other areas would have to pay capital gains tax.
Then perhaps there would be a different status between tenant and owner and since the Income Tax Act is aimed at equalizing the economic force of Canadians in the field of taxes, this proposal would hardly be acceptable. The implementation of this proposal could be technically detrimental to those investing in areas other than real estate.
Moreover-and this is a rather important point-the adoption of such a proposal would favour high income taxpayers in three different ways. One thing we do not want now is to be partial to the rich at the expense of the not-so-rich.
First, if an individual's earnings do not allow him to save the down payment for a house, obviously he could not take advantage of this provision.
Second, if an individual owns his own home but has a taxable income lower than his mortgage interest, he would not be entitled to the full deduction.
Third, because of the escalation rate of personal income tax, a deduction is more valuable for a taxpayer whose maximum rate is currently about 50 per cent than for another whose maximum rate is 10 or 12 per cent. One could also point out two other aspects of that proposal, hypothetical ones, of course, but having some importance, since the proposal itself is hypothetical in that sense that if it were applied, one could wonder about the results. There might be results which the mover perhaps has not considered.
First, such a system could boost mortgage interest rates because house buyers might be ready to pay higher rates since they could deduct interests from personal income tax. Therefore, a problem could appear.
Second, one can assume that such a system would incite people to mortgage their houses in order to accumulate funds for other personal expenses, since they could not deduct from their income tax the interest paid on the money borrowed to buy personal items. Which means that instead of borrowing, for instance, to purchase a boat or any other object that people now use daily, someone could say: I am going to borrow on my property, serving as a guarantee, since I am entitled to deduct the interest that I shall pay on the mortgage, and that money I will use not for amortization of the price of a property, but for personal purposes, for instance, buying a boat or some other thing of that kind.
And that way I think we would be encouraging people to mortgage their houses to buy all sorts of other items which are not directly related to production and which could not constitute a source of income.

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We could thus end up with a situation where a sense of clear-cut ownership of a house could be an indication of very bad tax planning.
It is difficult to assess the exact cost of such a proposal from a tax point of view and I hesitate to put a figure on it. If we need $18 billion or $20 billion to operate this country, obviously people will have to pay taxes. If on the one hand we grant them a mortgage interest exemption, surely the amount lost which could reach $500 million or more will have to be recovered by considering the abolishment of certain present deductions as a replacement for those I have mentioned. I think that if we look at the issue of income tax, budgets and estimates, that suggestion is not valid.
However, I want to congratulate the hon. member for Regina East for having raised that very interesting problem and I think it is good for the people of Canada to know the arguments voiced by the hon. member concerning housing and also to stress the effects that such a suggestion could have on government revenues.
In fact, there are still two aspects to those questions and I think it is very valid to allow hon. members to express their personal views through motions such as the one before us and to have them debated so people will be able to judge as long we can recover the amounts thus lost by the Treasury.


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I wish to take only a few minutes in this debate. I should like to commend the hon. member for Regina East (Mr. Balfour) on the statement he made in presenting his motion. If that commendation seems to imply that he said something in his speech that is not contained in the motion, that is precisely the implication I intend to convey.
As hon. members will be aware, there are times when this kind of motion is presented that we ask certain questions. Today, however, the hon. member for Regina East anticipated those questions and indicated the terms on which he would like such a policy to be administered. In particular, he made two points on which I commend him. I wish the hon. member for Laurier (Mr. Leblanc) had listened to the speech instead of merely giving us the prepared answer.
On the one hand, the hon. member for Regina East said that something comparable to the measure proposed in his motion should be available for persons who rent their accommodation. His second point was that there should be a limitation on the amount of mortgage interest that could be claimed for income tax purposes. These two problems arise in connection with a policy of allowing mortgage interest as an income tax deductible item, and I welcome the fact that the hon. member for Regina East has made it clear that in working out such a policy he would want these two points to be met. Therefore, the understanding is that this is what we are talking about in these income tax adjustments which will assist people to purchase their own home: we are not talking about borrowing money to buy boats or other things, which the hon. member for Laurier raised as a sort of strawman. I am getting mixed up here when I have boats turning into

strawmen. But what we are talking about is a policy which will encourage home ownership and at the same time provide comparable assistance to those who rent their accommodation. In our view, this is a commendable policy. I would like to see further thought given to it.
I know what happens to resolutions and bills in private members' hour. The only thing I must not do is take part in any talking-out process. May I say again that I think the hon. member for Laurier should have listened to the hon. member for Regina East when he said there should be a limitation placed on the amount of mortgage interest that would be allowed for income tax purposes. That certainly meets the point about an arrangement of this sort being a bonanza for the wealthy rather than one to meet its intended purpose.
As many members of this House will be aware, some of the provinces already have done something in this area. I know this because I am familiar with the situation in two provinces, namely, Manitoba and Ontario. This probably applies to other provinces as well. Rebates on account of property taxes are being allowed. The conditions vary in these two provinces, but not greatly. In both Manitoba and Ontario an arrangement has been made whereby persons who rent their living accommodation receive a tax credit similar to that which is available to home owners. So this is not a crazy idea about which no one could ever do anything: Manitoba and Ontario have done something about it. I think it is time this arrangement was looked into at the federal level with respect to the cost of shelter.
Another argument the hon. member for Laurier used was that if you start talking about expenses for which you allow deductibility for income tax purposes, where do you draw the line? This expense is allowed, somebody wants another, and pretty soon all of one's income is claimed as expenses and there is no taxable income left. May I suggest, again, that that argument is a strawman. May I also suggest that surely living accommodation is a pretty basic fact of life and it is not unreasonable to suggest that income tax exemption arrangements should take care of that fact.
The cost of accommodation is becoming so high that I do not think we can trade on the arguments against this sort of arrangement which for many years the department has ground out for government speakers in private members hour. This has become a serious problem and I think something should be done about it. Let me say quite frankly that there are several ways: there are tax credits, there are special exemption amounts for home ownership or for home rental, such as the blanket exemption which we have for charitable donations, or we could adopt a formula such as the one proposed by the hon. member for Regina East. In any case, I think the House should take seriously the proposition that consideration should be given in our income tax arrangements for the cost of occupancy, whether it be for those who rent a home or for those who endeavour to buy one.


Mr. Jack Cullen (Sarnia-Lambton):: Mr. Speaker, at first blush one reads the hon. member's motion with interest and certainly with approbation. The problem with the
April 9, 1973

motion, in the view of the government, is that the hon. member did not elaborate it enough. Notwithstanding the support which the hon. member for Winnipeg North Centre (Mr. Knowles) sought to give, I think the motion raises many more questions than it answers. The few buttressing answers provided by the hon. member for Winnipeg North Centre just do not fit the bill, so far as I am concerned, although they certainly make the views of the hon. member for Regina East (Mr. Balfour) more palatable.
The feeling regarding motions of this nature which are so often put on the order paper is that they do not look far enough down the road. Hon. members who sponsor such motions are prepared to show all the advantages but they do not spend too much time elaborating the problems that would arise nor the administrative difficulties that would be involved.
The great thing about a motion such as this, however, is that the government, nothwithstanding the fact that a motion or a bill in private member's hour may be talked out, is given an opportunity to pause and ask itself: Is there a way in which this particular administrative difficulty can be overcome? I think some of the views expressed by the hon. member for Regina East endeavour to do just that. I do not think he provided all the answers but 1 think that for once-we do not get too much of this from opposition members-he conceded that there might be some problems and he came up with suggestions to overcome them, namely, a limitation on the amount of mortgage interest that would be exempt and the suggestion dealing with the unfairness that would arise relating to a man who rents as opposed to one who owns a house.
The hon. member for Laurier (Mr. Leblanc) was listening, but did not feel it was necessary to elaborate on the comments made by the hon. member for Regina East. However, he went down another road and dealt, not so much with the man who buys a house but the man who invests his money. There might be further difficulties in that particular area. So the motion does give rise to many questions.
There is a grey area in the hon. member's motion, and with the latitude allowed in private members' hour I would like to explore it for a few minutes. 1 refer to the situation where a home owner has imposed upon him a problem not of his own making, where he is required to put out money and where in all probability he has to borrow that money and pay interest on it. I think there is an area here where the total amount of money borrowed and the interest paid should be allowed either as a writeoff, as a deduction, or as some form of tax concession to the home owner.
I am thinking primarily of the problem faced by home owners as well as those who rent, because this would be equally applicable to both categories, along the shores of the Great Lakes. When I say "along the shores," let me point out that some years ago they lived 100 yards or so from the shore but now find themselves on the shore of Saint Clair Lake or of the various rivers that feed into the Great Lakes basin. This is the situation of people who had built a house, or a substantial building, on the lakefront but suddenly found that erosion had occurred. When they built the house it was far enough from the water's edge
Income Tax Act
that they did not have to worry; now they find the water has come closer to their front door and they are forced to do something to protect their property.


An hon. Member:: What about floating a loan?


Jack Sydney George (Bud) Cullen: An hon. member suggests floating a loan. They are faced with this situation, and they have to build walls or hire trucks to drop loads of gravel and stone along the water's edge. A great deal of money has to be spent simply to protect their property. Perhaps a concession might be made-this is an area which could be considered by the Department of Finance-in the interest of helping these people. It is not a problem they created; it is a problem forced upon them by the vagaries of nature, if you will.
Some people may ask why such action should be taken because an individual is protecting his private property. I suggest he is protecting a piece of property which will be owned by others down through the years, and the land involved will be protected in perpetuity. The home owner is not only protecting his home for his own use and benefit, but for the benefit of those who will buy it from him and will own the property through the years in perpetuity. So, in effect, it is money he or she is spending in the interests of protecting a piece of property that must be protected now if it is to maintain its value. Here is a situation where a tax allowance somewhat along the lines proposed in the hon. member's motion could work to the advantage not only of the home owner but of the person who rents along the shores of the Great Lakes.
Some of the points I had hoped to make were, in effect, made by the hon. member for Laurier. This is where I thought the hon. member for Regina East and the hon. member for Winnipeg North Centre might have helped us a little more by having carried out more research on this motion to discover how much tax revenue would be lost as a result of this proposal. I know the hon. member made a valuable effort to indicate that tax revenue would be lost, and he felt there were some areas where it would be recouped. If there had been a little more research I would be more apt to vote in favour of the motion should it come to a vote today.
I conclude by again pointing out that perhaps a tax allowance or a tax credit could be considered in the case of people who have an adverse situation forced upon them. In this situation, governments are often prepared, after the fact-after a flood, after substantial damage, after a tornado or a hurricane-to pour millions of taxpayers' dollars into repairing the damage. Government at all levels seems somewhat loath to make taxpayers' money available, to make tax concessions to people before a problem arises, in the course of its arising or before it becomes a disaster or a catastrophe.
I was pleased to hear the Minister of the Environment (Mr. Davis) indicate the role the federal government is prepared to play, and I hope some initiative will be shown by the provinces. I understand that the province of Ontario is taking some action so that the taxpayer will be protected in this instance. One of the things that concern people when taxpayer's money is spent on a particular project, or when tax concessions are made, is that they might find themselves with their land in the public

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domain. In some cases, beaches or access to beaches will be thrown open to the general public. This is a question that should have been answered many years ago and I am sorry that it was not. There is an immediate problem here and I believe a tax allowance or concession should be made available to people, along the lines suggested by the hon. member, respecting interest on mortgages when they have to deal with a problem not of their own making.


Joseph Adrien Henri Lambert: Mr. Speaker, I should simply like to make a few comments on the motion now before us concerning home ownership and the deduction from personal income of the interest a person must pay for any building which enriches the whole country.
I think we should make efforts to encourage young people to become owners, because to be an owner is in fact to participate really, to possess really part of the fatherland. In some way, the home is a small fatherland someone owns, someone loves and someone wants to defend with all his strength.
It is fine to make nice patriotic speeches and to show young people that the fatherland is something sacred we must defend with all our strength but if we make it possible for young people to become real owners through legislation, they will have the pride of improving their property from year to year, and of being more concerned about the public administration, not only at the national level but at the provincial, municipal and school levels.
When we succeed in getting young people interested in becoming real homeowners, then we will interest them indirectly in the entire public administration, at any level. When we succeed in creating this concern in young people's mind, we may be sure that when unhappily a dramatic situation happens where our nation's fate is at stake, as I said earlier, then these young people will understand that their real homeland begins at the very level of the property.
When these young people understand that their property is part of the nation, they will be prepared to make sacrifices to safeguard it, at the school, municipal, provincial and national levels. I suggest that then it will really be possible to count on an efficient and interested contribution from every citizen to safeguard all the provileges that the property right involves.
I therefore understand perfectly well what prompted the hon. member to present that motion. He would like the state to facilitate access to home ownership and its permanence. For it is not enough to be able to become the owner of one's home; one must also be able to keep the house and tell the family: This property is truly ours.
I therefore feel that deducting the interest from taxable income of the individual to guarantee that right to ownership is very legitimate. I, who have several children, heard yesterday that two of them negotiated terms last week with a view to buying their own homes. So, from the bottom of my heart as their father, I congratulated them on their efforts to save on their income in order to do something that would make them worthy of being true Canadians and to interest their wives to do more so that
the houses will really be theirs, their own corner of Canada, so to speak.
I think that in their heart, all Canadian fathers and mothers want their children to be able to own a house where they can live 365 days a year. The government should allow them to deduct, for tax purposes, the interest they must pay to become owners which, in short, is part of the national heritage and we then will contribute to create among our youth a real interest that will finally enable them to better understand what is the meaning of father land.
I strongly support this motion so that we should finally give our youth the right to private ownership. We must recognize this not only in principle but in fact and give youth tax benefits so that they should realize their ambitions.


Mr. J.-Roland Comtois (Parliamentary Secretary to Minister of Finance):: Mr. Speaker, I merely wish to add a few words concerning this motion and to remind hon. members that one of the problems to be faced by the government is the matter of establishing its priorities. According to the wording of his own motion, the hon. member for Regina East recognizes that the government's income would decrease by at least $930 million, whereas his colleagues and namely the financial critic of his own party, suggest that the government should increase its disbursements by $2 billion for the current year.
As for the hon. member for Winnipeg North Centre (Mr. Knowles), who supports the motion, he recommended an increase in old age pensions last week and the lowering of the age of eligibility. So-


The Acting Speaker (Mr. Laniel):: Order. I regret to interrupt the hon. parliamentary secretary. The time allotted to private members business has expired. The House will now resume the debate interrupted at five o'clock.

The hour appointed for the consideration of private members' business has now expired. Before the Chair calls it six o'clock, I might suggest that the House go back into committee of the whole on Bill C-170. Is this agreed?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration in committee of Bill C-170, to amend the statute law relating to income tax- Mr. Turner (Ottawa-Carleton)-Mr. Laniel in the chair.
Gérald Laniel: Order. It being six o'clock, I do now leave the chair until eight o'clock.
At six o'clock the committee took recess.

April 9, 1973



COMMONS DEBATES AFTER RECESS

[Stage Direction]
The committee resumed at 8 p.m.
Gérald Laniel: Order. House again in committee of the whole on Bill C-170, to amend the statute law relating to income tax. The committee is on clause 7.
On clause 7 -Loss from farming where chief source of income not farming.


Marcel Joseph Aimé Lambert: Mr. Chairman, I had the floor when the committee recessed at six o'clock. I wonder whether the minister feels it necessary to establish some guidelines here. Section 37 of the act does refer to scientific research. Whether it is sufficient to meet the definition of section 31 and the amendment proposed by the minister, it does use the phraseology "scientific research". And, of course, it makes reference to section 37.1 ask as a final question: Is there a ceiling on the loss?


John Napier Turner: Not on scientific
research, Mr. Chairman.


Marcel Joseph Aimé Lambert: What about guidelines, or does the minister feel they are not needed?


John Napier Turner: I would think the definition found in section 37 would be a good analogous reference. If we find, on application of the measure, that we need guidelines, I suppose we can provide them.


William Gordon Ritchie: I should like to ask the minister what kind of person would qualify as an individual farmer. For instance, would he have to be connected with a university, or would a person growing specialized seeds fall under this definition? Who would make the decision-the Department of National Revenue?


John Napier Turner: First of all, by the amendment anybody would qualify whose chief source of income was neither farming nor a combination of farming and another source of income and who was engaged in scientific research involving expenditures. Section 37 of the act sets out what "scientific research" means. Anybody who meets the definition of these two sections would qualify without limit.


William Gordon Ritchie: Can the minister cite an instance where this has occurred? Perhaps that would clarify the matter.


John Napier Turner: The variety is immense. Take somebody in Calgary who operates a ranch parttime but whose major income comes from oil. He would only be entitled to a $5,000 deduction on the land of his farm, because he is not in the business of farming. On the other hand, if he is interested in animal diseases or some of the toxic aspects which affect cattle and buffalo herds in Wood Buffalo National Park and spends $25,000 a year trying to develop a preventative because he is interested in the breed and in agricultural research, then he would be entitled to a $5,000 loss on farming, but only to that.
We wanted to plug a limitless deduction against other income where a man was not a legitimate farmer but was a hobby farmer. Because of the social and agricultural advantages of engaging in research in the agricultural field, on the representations of a number of members,
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including the hon. member for Edmonton West, we felt it was good policy to encourage agricultural research. If the expenses were legitimate and were incurred for scientific research within the definition of section 37 of the act, then they should qualify. It is almost limitless.


William Gordon Ritchie: Mr. Chairman, I do not believe there has been any change in the deductions of $2,500 and $5,000 for a long time. They are probably too low by present day standards and should have been raised. The structure of farming is changing. Most farmers now have a double income because they farm part-time and have income from another source. I think it is important that agriculture have some more capital-injected income.
At the present time, injected income is largely derived from government loans. It seems to me there is a place for individual entrepreneurs who would invest in bona fide farming. The figures of $2,500 and $5,000 were set some time ago; they could well be doubled and still not be excessive. One of the difficulties, of course, would be to distinguish between bona fide farming and so-called hobby farming. I have heard of cases where a farmer has had to take other work. He has been classified as a hobby farmer. I think such instances are quite genuine.
I think the Department of National Revenue has been hard in the interpretation of this section and perhaps more thought should be given to its administration, because more and more people who are engaged in farming are part-time farmers; either they or their wives are bringing extra money from other sources into the family. I urge the minister to consider raising this deduction for a non-farmer or for the person whose income is not totally derived from farming and to define, in conjunction with the Department of National Revenue, who is entitled to the deduction and who is not.


Lorne Edmund Nystrom: Mr. Chairman, may I ask the minister one or two questions? I think I may have missed some of his previous explanations relating to deductions for scientific research. How much can be deducted for scientific research and who may make such deductions?


John Napier Turner: Anyone who is not in the business of farming, or anyone whose principal source of income is not farming is entitled to deduct the loss from the farm that he runs on the side, whether as an interest, as a hobby or for pleasure because he wants to get out of the asphalt jungle. Because this was in the past used by some urban taxpayers as a way of artificially reducing their income, there was a limit of $5,000 placed on the amount that could be deducted.
All a person need do in order to qualify, is not to be principally in the business of farming. He may deduct $5,000. But if he is engaged in scientific research within the meaning of section 37 of the Income Tax Act, then in addition to the $5,000 he is entitled to all that expense which could be classified as coming under legitimate scientific research. His activity may consist in improving animal stock, conducting research into animal diseases, improving grain strains, and what have you. The purpose of that, in terms of national policy, is to encourage agricultural research. Not only have representations come

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Income Tax Act
to us from people who were legitimately doing this as a hobby in all parts of the country, but a good many agricultural associations thought it was a good idea.
If I may return to the representations of the hon. member for Dauphin, we must reconcile two interests. We must protect the public treasury from people who might tend to abuse the family farm as a way of artificially reducing income and, on the other hand, we must help the legitimate farmer who in order to supplement his income enters another business. I will look at this question again, and will ask the department to do so. But that is the saw-off we must make.


Lorne Edmund Nystrom: Mr. Chairman, will a bona fide, full-time farmer qualify for an exemption for scientific research?


John Napier Turner: He always did, as part of the cost of doing business.


Alfred Pullen Gleave: Mr. Chairman, I do not understand the minister. Supposing a man in Ottawa decides to buy a piece of land; there are marginal farms around here that are not very profitable. Supposing he decides to buy one of those farms, plant a special kind of tree and see if it will grow in a certain way. Or let us suppose he tries to find the best way to grow trees. Would his expenses in that undertaking qualify as expenses for scientific research, even though he is enjoying living in the little log cabin next to the lake?


John Napier Turner: It is a matter of administrative fact. It would have to be legitimate scientific research and that would be a matter of fact that the Department of National Revenue would have to interpret. I refer the hon. member to section 37(1) which spells this out clearly. It reads, speaking of deductions that the taxpayer may consider:
(a) all expenditures of a current nature made in Canada in the year
(i) on scientific research related to the business and directly undertaken by or on behalf of the taxpayer-
In this case it would be the farmer. I continue:
(iii) by payments to an approved university, college, research institute-
The hon. member spoke about marginal farms around Ottawa. I assure him that the farming community of Ottawa and environs would not want to be referred to as operating marginal farms. There are good farms here, including some of the best dairy farms in the country.


Mr. Baker:: Particularly in Grenville-Carleton.


John Napier Turner: There are many good farms in Ottawa-Carleton, and in Grenville-Carleton too. I therefore hope the hon. member from western Canada will reconsider that portion of his remarks.


Alfred Pullen Gleave: Mr. Chairman, the minister may have his fun but I do not want to reconsider my remarks. I am perfectly serious about this. There are marginal farms around Ottawa, just as there are marginal farms around Saskatoon; and there are people who engage in farming because they like to do so. And God bless them; I appreciate their interest. Speaking as a farmer, I have experimented with special crops just to see what would happen.
[Mr. Turner (Ottawa-Carleton)
In such instances I could charge the expense off as an ordinary expense.
In the case I referred to a moment ago, the person planting the trees would be undertaking what might be called scientific research. If that activity is controlled through, say, the University of Ottawa or the Experimental Farm, or if the University of Saskatchewan works closely with the individual concerned, that would be one thing; it would be a controlled experiment. But if an individual simply says that what he is doing constitutes a scientific undertaking, that is something else. That is specifically why I asked the question. I think this committee deserves a specific answer and not the sort of spin-off or joke which we heard about the kind of farms which are to be found around Ottawa.


John Napier Turner: Mr. Chairman, I take a great deal of interest in the sort of farms which are to be found in Ottawa-Carleton and in Grenville-Carleton. Let me return to section 37(3) of the Income Tax Act, which provides:
The minister may obtain the advice of the Department of Industry, Trade and Commerce, the National Research Council of Canada, the Defence Research Board or any other agency or department of the Government of Canada carrying on activities in the field of scientific research as to whether any particular activity constitutes scientific research.
So it is open to the Minister of National Revenue to determine whether any particular activity by any person who is not primarily in the business of farming constitutes scientific research for the purposes of this deduction. Scientific research is further detailed in section 37, subsection 7 of paragraph (b) of the regulations. The definition is precise.


Gerald William Baldwin: Can one go to Information Canada?


Alfred Pullen Gleave: Mr. Chairman, the minister regards the definition as precise. If a person carrying out such an operation claims a deduction in his income tax return, will somebody with knowledge and capability in this field examine his operation, or is it assumed from the return he files that he has complied with the regulations?


John Napier Turner: I am advised that there has not been any problem in the administration of this particular section, and that the definition is considered to be precise enough that its factual application is easy to determine.


William Gordon Ritchie: Mr. Chairman, may I ask a question about restricted farm losses? Previously, farm losses for 1971 and before then were restricted to $2,500 a year. Is the farmer to lose what he accumulated prior to 1971?


John Napier Turner: Mr. Chairman, I am afraid I cannot appreciate the full significance of the question. Perhaps the hon. member could be more precise.


William Gordon Ritchie: As I understand it, a person with a restricted farm loss can carry it forward for only five years. He then loses the benefit of the provision if he does not take advantage of it. The suggestion in the report on tax topics in the budget, as I read it, is that a person who has a restricted farm loss for the year 1971 or previously would
April 9, 1973

not be able to take advantage of it; under this clause it would be wiped out.


Mr. Howard:: Mr. Chairman, I know a little about fishing but not much about farming. I hope the minister will bear with me as I try to put into words what I understand this provision to be. From reading the clause and listening to the minister, I understand that a scientist with the National Research Council, for example, could buy a 50, 150 or 200-acre farm somewhere around Ottawa, farm it marginally-in other words, as a hobby farm-but use his scientific knowledge to engage in some kind of scientific research as contemplated in section 37 of the act and thereby be able to curtail the amount of tax he must pay to the federal government. However, in the case of someone in my constituency trying to develop a farm and working eight hours a day in a mining operation, logging operation or some other industry, he does not get any advantage out of this provision. He spends his spare time trying to clear the land and develop it into a producing farm.
On the surface, it seems that if you have an "in" with the Department of Industry, Trade and Commerce, you are all right. However, a poor guy trying to slug it out by working in industry and trying to build a farm cannot get any help whatever. A person frying to make a go of farming in the north country is subject to attack by the Department of National Revenue. They check his books for the previous five years, say that he is not a bona fide farmer and do not permit him the few deductions available to him, even though he cannot develop the farm by himself and needs money from some other source.


John Napier Turner: Mr. Chairman, here again we are referring to expenses for scientific research. They are actually expended. Their purpose is scientific research. They are defined within the regulations. They do not accrue as an advantage to the person who expends them. Because of the national purpose of including agricultural research, we propose to allow them as an additional deduction.
It is true that somebody with a basic scientific background might be able to qualify more easily, but it is not so limited. If a miner in Terrace or Kitimat wants to buy a farm and operate it in his spare time, he can qualify for the $5,000 deduction as a non-farmer. I refer to regulation 2900 under the heading of "Scientific Research." If a person in Terrace gets material from the University of British Columbia for basic research that he would like to do on mid-northern agricultural farming, he would qualify as easily as somebody who is a member of the National Research Council operating in Grenville-Carleton, if he undertook, with the help of a university or anybody in the area of applied research, the following:
(a)	basic research, namely, work undertaken for the advancement of scientific knowledge without a specific practical application in view,-
(b)	applied research, namely, work undertaken for the advancement of scientific knowledge with a specific practical application in view, and
(c)	development, namely, use of the results of basic or applied research for the purpose of creating new, or improving existing materials, devices, products or processes.
Income Tax Act
That is the purpose of it. Agricultural research could be done in the hon. member's part of the country and could be used intensively. It is that kind of research the Department of Agriculture wants to encourage and has recognized, under the Income Tax Act, as a deductible expense.


Frank Howard: Mr. Chairman, the minister put it clearly and distinctly when he stated that somebody from the National Research Council would probably have a bit of an edge in this matter.


Mr. Danforth:: Mr. Chairman, I wish to direct a question to the minister. Perhaps he dealt with this matter before, but I am not clear on it. It seems it is left to the minister's discretion when a taxpayer's chief source of income is neither farming nor a combination of farming but is from another endeavour. This is a sore point in my area, because many farmers who find it difficult to earn a suitable living from farming try to earn outside income. Many obtain employment in automobile factories. Through some circumstance of crops they find they are not able to declare a full farm loss on their operation. I am wondering how a determination is made in this case.
I wish to refer to two specific examples. First, a person who farms part-time and also works in a factory may lose his entire crop due to floods. His farm operation may have a net loss of $8,000, $10,000 or $12,000. The way the act previously read, he was not able to claim this loss because he was not considered to be a farmer of this type. Second, a farmer may have had a very successful year in farming but did not dispose of his crop before the end of the taxation year. His entire crop may be in storage. Under the terms of the act as it stood previously, he was unable to claim his legitimate farming expenses to the extent they actually accrued. Can the minister give an indication of how it is decided whether a farmer is indeed a bona fide farmer when his income is derived from two sources?


John Napier Turner: Mr. Chairman, this relieving amendment is open to people who are non-farmers but are in the partial business of farming. If a farmer from Kent county or Essex county decides to work in an automobile factory, it is a question of fact whether he shifts his principal source of income to farming or to being a wage earner in an automobile factory. Who determines this? In the first instance, I suppose that he determines this when he files his income tax return. He may be challenged by the officials of the Department of National Revenue. If the taxpayer objects, he can file notice of objection. He may then go to the tax review board, then to the Federal Court or any other part of the appeal system, it becomes a matter of judicial interpretation. It is an appraisal of fact whether his principal business is farming or not.
Second, as to qualifying for this relieving provision, whether the expenditures for which he is claiming an additional deduction beyond the $5,000 deduction already allowed in the act are for the purpose of scientific research, that is a question of fact that would have to be interpreted by a court. It is not left to ministerial discretion.

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Income Tax Act


Harold Warren Danforth: I understand the provision made for scientific research. What I do not understand is the way in which determination is made as to a taxpayer's chief source of income. This could change from one year to another, taking into account the vagaries of farming. What about the example I gave of the taxpayer who stored his crop? His chief source of income in the year in which he disposed of his crop might be his wages as an automobile worker, not his income as a farmer. Certainly, his category cannot change from year to year depending on whether or not he stored his crop.


John Napier Turner: I suggest it could. Here again, it is a question of fact. What is the chief source of income? A taxpayer might have one view of it, the minister might take another. If there is a dispute, the review board or the appeal court can make a decision.


Harold Warren Danforth: But it could not change under the act from year to year?


John Napier Turner: I would think so. The hon. member has put forward a borderline case, but conceivably it could.


Gerald William Baldwin: Suppose he was on a farm, drawing unemployment insurance for ten months?


Alfred Pullen Gleave: I would point out that the trend in agricultural research is away from the type of operation the minister was describing. There was a time when substations devoted to agricultural research were operating in various places-for example, in northern Ontario and in Saskatchewan-under the direction of the principal research stations. Local farms were picked to carry on experiments designed at the central station in Ottawa, Saskatoon or Swift Current. This practice has been discontinued, as far as I know, because it was felt by those responsible for agricultural research that research should be concentrated in the main experimental stations.
I am a little surprised the minister should tell us he has been advised by the Minister of Agriculture and others that we ought to start again along these bush operation lines. The bill reads:
Where a taxpayer's chief source of income ... is neither farming nor a combination of farming and some other source of income-
That is a nice definition. But would the minister tell us what the real source of income of this individual would be?


John Napier Turner: The hon. member may feel that in general terms the main rate of agricultural research is carried on by the provincial experimental farms, and I agree with him. I wonder whether he would want to discourage scientific research in agriculture which could be carried out by individuals across the country because they have an interest in the land. As long as the research is bona fide, and as long as its purpose is the furthering of knowledge pertaining to husbandry and horticulture, the hon. member might think it was an effort we should encourage. Surely, some of the great ideas in agriculture have come from individuals who stood apart
[Mr. Turner (Ottawa-Carleton).l
from the main research centres. This is the social purpose behind the suggested amendment.


Alfred Pullen Gleave: I do not want to discourage that kind of activity. I just do not want to encourage people to do it at the taxpayers' expense, that is all. It is true individuals have made outstanding contributions to research, but most of the work in this field has been associated with our experimental farms. I think our tax money should go to the experimental farms and to the universities; I do not think it should be frittered away into little cul-de-sacs here and there. I object to the minister suggesting that I want to discourage experimental agriculture. I have done it myself on my own farm. But no one gave me a tax concession for doing so. I cannot accept the charge that I want to discourage research in farming.


Mr. McKinley:: If the department is not prepared to allow all the expenses incurred on a farm out of income other than that which may be used for experimental purposes, how can the department justify charging income tax on any profits made from that farm?


John Napier Turner: This is not a deduction allowed in respect of farming in general. A farmer is entitled to deductions with respect to all expenses incurred in running a farm. This provision is for the non-farmer who has a farm on the side known as a hobby farm. At the moment he is allowed a maximum of $5,000 as a deduction. The national policy reflected in the amendment before us is that we ought to allow, beyond that $5,000, any expenses legitimately incurred for purposes of agricultural research.


Robert Elgin McKinley: If the department does not allow all the expenses legitimately incurred in the operation, I cannot see on what grounds it can levy income tax in the event of profits made.


John Napier Turner: A person whose principal business is farming is entitled to every legitimate expense he incurs. But if, as is often the case, he is not working the farm full-time and incurs a loss, the maximum he is allowed is $5,000 a year. Under this amendment there would be a further exemption with respect to legitimate scientific research.


An hon. Member:: It is open-ended.


Marcel Joseph Aimé Lambert: It is not.


John Napier Turner: The hon. member says it is open-ended. The taxpayer has to spend the money and the department has to be satisfied that the expenditure was legitimate. It is up to the committee to decide whether agricultural research is worth enough to the country to allow such expenditure to be covered. I might add that the $5,000 figure was set, taking into account the balance of convenience, as applying to people living in the cities who were running farms as a hobby or for pleasure. It was felt that they should not be allowed to reduce their income unduly by running a farm, so a limit of $5,000 was placed on the deduction. The figure of $5,000 is a figure decided on by parliament in its wisdom at an earlier date. We are proposing to add now, beyond and above that, an allowable deduction in respect of legitimate research.
April 9, 1973


Robert Elgin McKinley: Suppose expenditures of more than $5,000 a year are incurred in making a farm into a profitable unit, and eventually a profit is generated; will the extra expenditure then be allowed?


John Napier Turner: If a farm shows a profit, the person whose principal source of income was not farming would then be allowed every legitimate expenditure because the particular provision would not come into play.


Frank Howard: Mr. Chairman, I wonder if the minister could give me a little additional information. The words to be added, namely, "without reference to this section and before making any deductions in respect of expenditures described in section 37", are, I gather to be substituted for the words that are now in the section, namely, "otherwise determined", presumably to make the section more precise. The words now in the law, "otherwise determined," obviously include so-called scientific research as enumerated in section 37. However, do these words include anything else? I assume that the words "otherwise determined" may embrace other things. If that is so, what are those other things?


John Napier Turner: Section 31 now reads:
Where a taxpayer's chief source of income for a taxation year is neither farming nor a combination of farming and some other source of income-
Under that section he would be entitled to deduct the lesser of the amount by which the aggregate of his losses for the year otherwise determined from all farming businesses carried on by him exceeds the aggregate of his incomes for the year from all farming businesses and the amount derived as a result of the equation contained in subparagraph (b) of the section. So that if the losses attributable to the business of farming exceed $5,000, he is only allowed the amount of those losses after calculating his income from the farm and calculating his losses. If the losses exceed his income by more than $5,000, he is only entitled to the maximum of $5,000 deductible from other income, non-farming income.


Frank Howard: So what happens now if a person opts to take advantage of section 31(1), the provision we are talking about, and that person is engaged in scientific research?


John Napier Turner: That is the point of the amendment, Mr. Chairman. If a person undertakes scientific research now-agricultural research, obviously-then the capital expenditures incurred are part of his total expenditures and his loss deduction is still limited to a total of $5,000. He may have spent $15,000 on legitimate agricultural research and he may have another $15,000 expenses for his farm, a total of $30,000. If his income is $10,000, his loss is $20,000. But he only gets at the moment the maximum of $5,000, despite the fact that his agricultural research cost him $15,000. Under this amendment he gets the entitlement of $5,000 on his losses, plus his $15,000 expended on agricultural research.


Frank Howard: But, Mr. Chairman, it does not relate only to agricultural research; the provision relates to the whole
Income Tax Act
range of scientific research set out in section 37. If we were talking in this amendment of research conducted on a farm for agricultural purposes that would accrue to the advantage of agriculture, then I would buy it. But we are not. What we are talking about is every conceivable crackpot with some bent for scientific research and who has the money to buy a hobby farm and engage in such research. If this is the case, then I would suggest to the minister that he consider holding this clause until we can take a little more time to look at it and see whether we can nail it down in the way I should like to see it nailed down, namely, to agricultural research that accrues to the benefit of agriculture in a general way.


Gérald Laniel: Shall the clause carry?


Alfred Pullen Gleave: No, Mr. Chairman. I think some of the matters that have been raised must be adequately answered. These proposals are not clearly defined. As my hon. friend from Skeena has just said, this provision is an open invitation to any-to use his words-crackpot who wants to spend some money on a hobby. Since the question has not been answered by the minister, I think we should stand this clause.
These changes have wiped out the old-style concept of the hobby farmer who is tied to his farm. This is the chap who ran a farm, the operations of which were not selfsupporting so he also got a job to see him through until he built up his farm. That concept has now disappeared and we are creating a special category which we loosely label "scientific." In our general approach to scientific research in agriculture we have been moving away, as I said a minute ago, from that concept and concentrating on research in universities and research institutions. I would oppose any suggestion that we free taxpayers' money for this sort of thing. I wonder whether the minister would stand the clause so we could look it over, as suggested by the hon. member for Skeena.


John Napier Turner: Mr. Chairman, I have a little more confidence in the individual than the hon. gentleman has. Section 37(1) provides as follows:
There may be deducted in computing the income for a taxation year of a taxpayer who carried on a business in Canada and made expenditures in respect of scientific research in the year the amount by which the aggregate of
(a) all expenditures of a current nature made in Canada in the
year
(i) on scientific research related to the business and directly undertaken by or on behalf of the taxpayer ... exceeds the aggregate of amounts paid to him in the year under an Appropriation Act and on terms and conditions described in paragraph (c).
The taxpayer is entitled to a deduction for scientific research anyway.


Marcel Joseph Aimé Lambert: Related to the business.


John Napier Turner: Related to the business. What we are doing here is allowing the same deduction to be added to the $5,000 deduction that he has if he is not in the business of farming. So there is nothing radically new here. We are just trying to recognize the impetus given by the Income Tax Act now to encourage individuals in this

April 9, 1973
Income Tax Act
country-not only individuals working in institutes and on experimental farms, but ordinary individuals-to try to advance the scheme of knowledge.
This has been part of the Income Tax Act of this country, and before that it has been part of the tax law of Great Britain for 300 to 400 years. This research is for the benefit of the public; scientific research is considered to be for the benefit of the public. If this money is expended by somebody not in the business of farming because he has a legitimate interest in trying to advance the knowledge of agriculture, then I submit to the committee there is an argument to be made for his having this expense as an additional deduction.


Alfred Pullen Gleave: Mr. Chairman, the minister has not told us why agriculture is singled out from other occupations for this purpose. He said there is provision already in the Income Tax Act for people or for corporations or businesses carrying out scientific research. Of course there must be provision so that research can be carried out. But the minister has not said why he or his colleagues found it necessary to give it particular application to farming. This is the question I have raised, because I say it runs counter to what we have been developing in the past few years in our approach to agricultural research. It leaves it open, I believe, to a fair amount of abuse at the expense of the ordinary taxpayer.
Clause 7 agreed to.
On clause 8.


John Napier Turner: Mr. Chairman, I am not attempting to belabour this matter, but perhaps you would allow me to reiterate the procedure we established earlier in the day, namely, that the committee suggested I make a statement on each clause and, if necessary, expand later on that short statement.
Clause 8 is a relieving amendment. The present act requires professionals to pay a tax on money received for services to be rendered at a future date. As other businessmen are permitted a deductible reserve against this type of receipt, so should the professional.


William Gordon Ritchie: Mr. Chairman, I believe this clause has caused considerable comment. It refers to a "reasonable reserve." As I understand it, the reserve cannot be greater than that claimed on receivables to the end of the year 1971, and there will be a new reserve established every year. Have the rules been formalized concerning how the reserve shall be calculated?


John Napier Turner: Basically, the professional has a retainer for work to be rendered in the future. If he has not accomplished the work, then under this amendment he is only bound to take into income that part of the retainer for which he has already rendered service.


William Gordon Ritchie: In making a calculation in professional partnerships, I believe this reserve is considered to be very complicated. Does this clause clarify the matter so far as partnerships are concerned?


John Napier Turner: It does not clarify the essential allocation of income in partnerships, but it applies to partnerships and, of course, to partnership assets.


William Gordon Ritchie: I would ask the minister if his department would look at this question in order to solve some of the problems in respect of allocation of reserves in partnerships. As I understand it, it is so complicated it may well mitigate against the use of partnerships among professionals. I think the practice of forming partnerships has become a natural process in doing business, and unless the rules are clarified I believe there will be considerable hardship and a great deal of uncertainty over many years.


John Napier Turner: I accept the point of the hon. member. We hope to proceed with some clarification which appears to be necessary, and to come up with it fairly soon. But there is nothing in the bill in this regard.


[Stage Direction]
Clause agreed to.
On clause 9 -Deemed disposition of property where taxpayer has ceased to be resident in Canada.
John Napier Turner: Mr. Chairman, let us look, first, at section 48 of the act. This section provides for the deemed acquisition or disposition of property, as the case may be, where a taxpayer becomes, or ceases to be a resident of Canada. The object of this provision is to ensure that a taxpayer is taxed on the gains accrued during the period of his residence in Canada-and neither more nor less. The so-called departure tax does not apply in respect of property that is taxable as Canadian property. There is a right to receive payment described in any of the paragraphs from 212 subsection (l)(h) to paragraph (o) for other property which the taxpayer has elected to treat as taxable Canadian property. The latter exclusion permits a taxpayer to defer his tax on such property until his gains have been realized.
These amendments are in large measure responsive to representations for modifications to alleviate the burdens on employees who are required to move from one country to another in the ordinary course of their career. The principal change is to permit a departing taxpayer to elect to avoid a deemed realization of capital properties, and he agrees to include in his income the actual gain made when the property is sold.


Marcel Joseph Aimé Lambert: Mr. Chairman, I suppose one might say this deals with some of the worms which came out of the can called capital gains. We find that Canadians are moving on a multinational basis, and presumably there will be a lot more moving on that basis. Am I not right that in a ten-year period the residence abroad must not be more than 36 months, and that the provision of capital gains does not apply? Now I see it is in respect of residents coming into Canada; that is the revision. If someone coming into Canada is not going to stay more than 36 months in a ten-year period, he is not caught by the capital gains tax in any way.
What is the situation in respect of a Canadian who goes abroad? We have a number of Canadians in North Africa working in the oil industry. We also have people going off in advance parties all over the world for other valid reasons. I presume if they leave their property in Canada,
April 9, 1973

such as a house which is no longer their principal residence and they rent it, plus a summer cottage, the property would be subject to capital gains. If it is left here, is it the requirement of the minister, under this provision, to hypothecate, to make some charge, or to leave this property in part as security for any capital gains the individual may have?
What about Canadian military personnel who are posted abroad as military attaches or who are seconded to commands? What about personnel in the foreign service, either in trade commissions or in the consular service? How are these people affected? It might be to the advantage of an individual to sell his house if he should be posted abroad for five or six years. He may decide to sell his house.


John Napier Turner: If he elects to defer the tax on the realization until it is sold, then of course I say to the committee he would have to post the necessary security, as the hon. gentleman suggested.


Marcel Joseph Aimé Lambert: Mr. Chairman, since this act has been in force for some 15 months, I am wondering whether the minister has any information from his colleague, the Minister of National Revenue, concerning just how many worms are being found in Canada with regard to this particular part. I refer to Canadians leaving this country and having a deemed realization.


John Napier Turner: I am advised it is a pretty clean can, Mr. Chairman.
Clause 9 agreed to.
On clause 10- Where option expires.


John Napier Turner: Mr. Chairman, the hon. member for Edmonton West has asked me for an explanation. This clause is simply a consequential technical amendment to amend the subsection in line with the amendment of subparagraph 65(15)(v) which is made in subclause 18(5).


Marcel Joseph Aimé Lambert: What is the effect of it? It refers to "an option to acquire shares of the capital stock of a corporation in consideration for the incurring, pursuant to an agreement"-which is described in another subsection-"of any expense described," and so on. I would like to know what the effect of such an option, or the expense, would be.


John Napier Turner: If hon. members turn to clause 18(5) they will see that this, again, is a technical, relieving amendment to the subparagraph to which I have referred, which presently provides that certain exploration and development expenses incurred for shares in Canada, pursuant to an agreement in consideration for shares of a corporation, will constitute Canadian exploration and development expenses.
The changes made to this subparagraph by reason of subsection 18(5) of this bill are the following: The benefit of this subparagraph is widened to encompass all taxpayers instead of only principal business corporations. The amendment makes clear the requirement for shares
Income Tax Act
which are issued as consideration for the incurring of exploration and development expenses are those of the corporation which is a party to the agreement and not those, of some other corporation. The amendment makes clear that the phrase "after 1971" applies to when the expenses were incurred and not to when the agreement under which the expenses were incurred was entered into. The amendment also makes clear that it is expenses incurred pursuant to the agreement for activities or acquisitions specified in the amendment that constitute Canadian exploration and development expenses, and not amounts paid for the shares. Obviously, the option for those shares that are related to exploration and development will fall in the same way as the allocation of the shares themselves.


[Stage Direction]
Clause agreed to.
On clause 11-Convertible properties.
John Napier Turner: Clause 11 is another relieving amendment to section 51 of the Income Tax Act. This amendment removes the restriction that only preferred shares qualify as convertible properties eligible for roll-over treatment, and extends such treatment to common shares as well. As a result, it is now possible to convert one common share to another class of common shares under the protection of roll-over treatment. It has made it easier for companies to take advantage of special rules for distributing pre-1972 surpluses.


[Stage Direction]
Clause agreed to.
On clause 12-Idem.
John Napier Turner: Clause 12(1) relates to the cost of property acquired by a non-resident. The amendment has a new subsection 52(1.1) to give a cost of the specified property of a non-resident which otherwise would have no cost. Without such a cost, the property when disposed of would attract capital gains tax on the full amount of the proceeds of the disposition.
Clause 12(2) relates to the cost of property transferred by trustee under employees' profit-sharing plans. It is an amendment which is consequential to the changed tax treatment of the distribution of property from employees' profit-sharing plans which is proposed in clause 49 of this bill.
Clause 12(3) is, again, a technical amendment. It ensures that the untaxed half of capital gains can be passed on to beneficiaries tax free, from when they are distributed on a current basis.


[Stage Direction]
Clause agreed to.
On clause 13.
John Napier Turner: Clause 13(1) relates to clause 22 of the bill which introduces in section 80.1 of the act special rules in respect of property, or a business taken over by a foreign government in exchange for government bonds or other securities referred to as expropriation assets. The consequential amendments to section 53 which are set out in subclauses (1), (2) and part of subclause (4) of clause 13 provide the necessary changes to the adjusted cost base of expropriation assets for the purposes of the provisions of the act relating to capital gains.

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Income Tax Act
Clause 13(3) is simply a consequential technical amendment to amend section 53(e) in line with the amendment to section 66(15)(b) of 18(5) as (v) in clause 18.


[Stage Direction]
Clause agreed to.
On clause 14-"Principal residence".
John Napier Turner: Clause 14 refers to the definition of "principal residence." This is a relieving amendment whereby the definition of "principal residence" would bring it within the exclusion of capital gains treatment, and is expanded to include the lease on interest in the housing unit. Disposition of these interests will henceforth be exempt from capital gains tax in the same manner as the principal that is owned by taxpayers. This amendment is in response to inquiries from the Ontario Housing Corporation which administers the HOME plan, and will also cover other situations such as government parks where homes must be or are leased.


Herbert Thomas (Bert) Hargrave: Mr. Chairman, I would like to comment on this "principal residence" clause. I commented this afternoon on this matter, but this is the section of the act where I am sure my comments more properly apply. My remarks deal with what I prefer to call the family farm corporation. There are many of these now. This is a development that has been necessary to maintain the family farm.
At present, the principal residence of the family or corporate farm are not exempt. I suggest that the principal residence clause should apply to the family farm corporation set-up. The way this provision is being interpreted, where the family farm corporation cannot apply, simply means that the residents are the only class of citizens in Canada denied the right of the principal residence exemption, if in fact the minister suggests that a corporation does not require a residence. I suggest that a family farm corporation does indeed require a residence.
The key, of course, is to accept the terminology of family farm corporations. This is the traditional family farm, in the way it is used today, and it should be treated for tax purposes as an individual family farm, not as a large, conglomerate business corporation which is the interpretation given to it in the present act.


Marcel Joseph Aimé Lambert: Mr. Chairman, I would like to join with my colleague from Medicine Hat on this matter in that in the consideration of capital gains and principal residence, and the fact that the House some 18 months ago refused to exempt farmlands from capital gains, the residence of the farmer, which is included in the farm, and the value thereof in this particular case, are caught by a capital gains tax. In other words, the farmer who uses his farm home and buildings as his principal residence, under the act is denied the same consideration as any other taxpayer with regard to that person's principal residence. It seems to me that there is a very definite discrimination against the farmer in this regard.
In addition to that, there has been total lack of recognition of what exists in all provinces of Canada to a varying degree-I would suggest to a very surprising degree out in the Prairies and, I am told in parts of Ontario; and cer-

tainly I know it exists in parts of the province of Quebec- where the farm has been incorporated either by the farmer and his son, or by the farmer and his wife. Anyway, they have a family corporation, not in the terms that we know the family corporation but at least they have a private company running the farm. The company is the registered owner and the farmer, his wife, and possibly his children, own the shares. But, lo and behold, under this act, if then they sell their principal residence they are caught by the total provision of capital gains on farmlands.
This is what my hon. friend from Medicine Hat is suggesting, that right here at this point in section 54(g) of the act, in determining the principal residence, if we are prepared to say it means a housing unit, or a share of the capital stock of a co-operative housing corporation owned in the year by the taxpayer, if the housing unit or if the share was acquired for the sole purpose of inhabiting the housing unit, and furthermore provide that it is ordinarily inhabited by the taxpayer the year round, and so on, why would it not be possible-if we now make this amendment-where they are going into a very desirable or innovative type of housing, a leasehold interest of a public nature, also to introduce provision covering the shares in the family corporation owning the farm to include the principal residence in the exemption to capital gains? Certainly a strong case can be made for that.


Donald Alex Blenkarn: Mr. Chairman, the problem in connection with family farms also applies to businesses that are incorporated, where the living accommodation for the private owner is located on the business premises. There seems no reason why the concept of a leasehold interest could not be broadened by changes in this section to allow the leasehold value or the personal residence value not to attract capital gain.
The use of a corporation for estate planning or for moving property from father to son in a corporation is a common method that has been encouraged by ministers of finance and ministers of agriculture in the past. It strikes me it is imperative at this point that the private business with personal residence on it, and that of course would include the family farm-here I would ask the minister to talk on a broader base than just the family farm-should be included by a redrafting of this clause so that the personal residence, or principal residence of a taxpayer, if it is within a privately controlled corporation should still have the advantage of a tax-free capital gain.


John Napier Turner: Mr. Chairman, through you I want to say first of all to the hon. member for Medicine Hat that there is no discrimination here against the farmer. The same problem involves every taxpayer who has a personal corporation in which he has put his principal residence. So the same rules apply to a corporation whether the corporation has as a principal shareholder a farmer and his own residence is within the assets of that corporation, or whether anybody in a city or in business has his residence in a corporation. To begin with, there is no discrimination between the farmer, the small businessman or anybody else.
Therefore, the question is really this: Should treatment of the disposition of a personal residence be extended not only to where the taxpayer personally owns the house or
April 9, 1973

to where the taxpayer leases the house under a situation contemplated by this amendment, but where the taxpayer has put the house into a personal corporation in which there are other assets represented by shares? The difficulty here is how to allocate the transmission of the house against the shares. In administrative terms, it is a potential nightmare. After all, the shares of the corporation represent all the assets of the farm, the land, the principal residence, depreciable property, whether this be the barn or the silo, and the animals. In the case of a small business having a personal corporation, those assets against which the value of shares has been calculated might represent a so-called principal residence, stock in trade, inventory, goodwill and a number of other items.
The act is quite clear at the moment. The personal residence, in order to be given capital gains-free treatment, must be owned by the taxpayer, and the taxpayer is the individual who dies or sells. It becomes a very difficult problem if it is going to be allocated to a corporation, because here again there must have been other tax reasons for having the residence in the corporation property. Surely the answer is to take the principal residence out of the corporation, whether it be a small business or a farm, and allow the residence to be treated as the act expected it to be treated.


Donald Alex Blenkarn: The minister's explanation does not have any realism. After all, through all these matters of taxation we go on the basis of assessment. Usually in a real estate transaction, if there is no appointment between land, buildings and chattels, the minister's officials will always take the assessment, made by provincial or municipal authorities and the like. There is really no problem for the minister to assess the value of a residence included among the buildings of a farm corporation, as opposed to commercial' valuation of stock in trade, chattels and the other things that he mentioned.
The problem is that the act refuses to give small businessmen-this includes the farmer and the guy who happens to live in a house from where he runs his trucking business, his garage or service station-any equality with the person who may be an apartment owner and who works for a wage. The government must come to grips with this problem and treat small business equitably. This is a serious problem. On that basis the clause needs to be redrafted to take into account the problems of small business. There is no problem for the assessors. In the past they have had no problem determining the relationship between chattels and land and buildings nor, indeed, has the minister. It has not presented any problems to his office before, and it should not now.


Herbert Thomas (Bert) Hargrave: Mr. Chairman, I suppose the point of my comment about the family farm corporation is that I look upon this as a different structure entirely from the business corporation that I think most people have in mind. In western Canada, our provincial governments recommend that the family farm be incorporated into this type of set-up in order to carry on a viable farming unit. There is no reason why the family farm corporation concept should be treated, in terms of definition, as an individual
Income Tax Act
family farm for purposes of the residence clause and for the five-year averaging.


Walter David Baker: Looking at this clause, I think there is no doubt that there is no discrimination between businessmen and farmers. However, between businessmen and farmers as a group, in the circumstances of this section, and all other types of owners of residences there is in fact discrimination which I do not believe the minister intended.
Another comment I wish to make on the rural aspect is to point out that if a farmer chooses to incorporate his farm and take advantage of the law for an individual owner of a principal residence, it is necessary in the province of Ontario, and I am sure in other provinces, that he obtain a severance of the house and the acreage from the farm and then transfer the farm to the corporation, thereby holding the piece of land with the house on it.
As a matter of fact, at this time in all provinces which have jurisdiction in these matters as a very real onus is placed on the land owner to justify the severance of the land when he makes application for it-particularly in Ontario. I think the suggestion of my friend from Peel South is worthy of consideration, having regard to the peculiar situation in which farmers find themselves in this age of urbanization as a result of the difficulties of land severance. There is a discrimination in the section which I am sure the minister did not intend. I would support him if he saw fit to take this clause back for consideration in order to find some way out of the dilemma. That would be a service to the people who find themselves caught on the horns of this dilemma.


[Stage Direction]
Clause agreed to.
On clause 15 -Bourses d'etudes de perfectionnement, etc.
John Napier Turner: This is an amendment to the French version, paragraph 56(l)(n). It would make the underlying changes to the text.


[Stage Direction]
Clause agreed to.
On clause 16-Estate tax applicable to certain property.
John Napier Turner: This amendment would correct a technical feature of paragraph 60(m) which now prevents an intended deduction for taxpayers. Paragraph 60(m) is intended to allow a deduction from certain kinds of income, such as a pension, in respect of estate tax and provincial succession duties that have been imposed on the value of the right to this income. The present wording of paragraph 60(m) makes the deduction dependent upon the property having been taxed under the Estate Tax Act. This makes the paragraph inoperative with respect to property passing as a result of death after 1971 when the estate tax ceased to apply.
The amendment would divide the present paragraph 60(m) into two paragraphs. Revised paragraph 60(m) provides a deduction only in respect of estate tax, and hence applies only to property that was part of a pre-1972 estate. It also drops a reference to the income averaging annuity contracts which did not exist prior to 1972. The new paragraph 60(m.l) provides a deduction in respect of provincial succession duties.
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Income Tax Act


[Stage Direction]
Clause agreed to.
On clause 17.
John Napier Turner: This amendment
expands the definition of an income averaging annuity in section 61 to include annuity contracts sold by trust companies. The amendment will allow trust companies to compete for this business.


[Stage Direction]
Clause agreed to.
On clause 18.
Marcel Joseph Aimé Lambert: I suggest to the House that it would have been worth while to have the comments of the oil industry, the tax specialists or the investment people on this particular clause because this is one of the most complicated parts of the act. The cross-references are innumerable, and I make no pretence of understanding them. We are now getting amendments which say, "such part of his income for the taxation year as may reasonably be regarded as attributable to the production of ... gas".
In paragraph 66(l)(b), which is the main portion of this amendment, we are dealing with a principal business corporation, and beyond that we are getting into many cross-references. I would be interested to see at least some indication of where the thrust of the amendment is under clause 18. Are we in any way varying the principal occupation here? I do not think so. The information available to the minister and to us on this side is almost nil, yet we are being asked by the officials of the department, along with the drafters of the legislation, to accept highly complex language that is supposedly meant to do something. I am afraid that neither side of the chamber tonight is in a position to comprehend what is being accomplished by the committee accepting amendments.


John Napier Turner: It might help the committee if I were to read the explanation of clause 18 and the subclauses. Clause 18(1) is a particular amendment to provide for the order of deduction of Canadian and foreign exploration and development-called "E and D"- expenses for principal business corporations. This amendment provides that foreign E and D expenses will be deducted up to the amount provided by subsection 66(4). Then, Canadian E and D expenses will be deducted under paragraph 66, subparagraph (1), subparagraph (b), to the extent of the corporation's income, after the deduction of E and D expenses. This amendment assures the taxpayer of the right to a deduction of foreign exploration expenses up to the amount of foreign resource income. Without the order of deduction provision it was not clear whether the foreign income would be first reduced by Canadian exploration and development costs, which would limit the deduction of foreign exploration expenses to something less than foreign resource income.
If I may turn to subclause (2) of clause 18, this is a relieving amendment which will allow for increased deduction of E and D expenses by individuals and nonprincipal business corporations by the deleting of certain restrictions from the act. Individuals and non-principal business corporations are presently entitled to deduct
[Mr. Turner (Ottawa-Carleton).l
their previous undeducted Canadian E and D expenses to the extent of the greater of 20 per cent of their previously undeducted E and D expenses and the aggregate of their income from oil and gas and mining in Canada, but such income would only qualify if certain restrictions are met. These restrictions are that the taxpayer has to operate and have an interest in the oil or gas well or mine. This amendment will delete these restrictions. May I now refer to subclause (3).


Marcel Joseph Aimé Lambert: Mr. Chairman, may I intervene in order to make clear the particulars of the matter? Has the minister just referred to the elimination of the principal occupation rule with regard to Canadians investing in the exploration and development of petroleum and natural gas?


John Napier Turner: Mr. Chairman, it is not really the elimination of the 20 per cent figure. It has to do with the redefining of income that an individual qualifies for.


Marcel Joseph Aimé Lambert: Mr. Chairman, the subclause talks about "such part of his income ... as may reasonably be regarded," and so on. Is the minister depending on the word "reasonable" and, if so, what guidelines will the minister use in that regard?


John Napier Turner: Mr. Chairman, as I read this clause, the reasonable action will be left, in the first instance, for the minister to work out with the taxpayer; but the final determination, of course, will be for the courts. Ministerial discretion does not interfere with that determination.


Robert Jardine McCleave: Shall clause 18 carry?


Marcel Joseph Aimé Lambert: No, Mr. Chairman. We were discussing subclause (2) of clause 18 and there are five or six pages to go yet. We have not passed clause 18; we have not considered all of it.


Robert Jardine McCleave: Order, please. There are three pages connected with clause 18, and not five or six. Is it agreed that the subclauses on page 16 are carried?


John Napier Turner: As I understand it, we have finished subclauses (1) and (2).


Marcel Joseph Aimé Lambert: That is right.


John Napier Turner: With the consent of the committee, we will now deal with subclause (3). This is a relieving amendment which will allow for possible foreign E and D expenses by deleting certain descriptions from the act. Taxpayers are presently entitled to deduct their previously undeducted E and D expenses to the extent of the greater of 10 per cent of their previously undeducted foreign E and D expenses and of their income from oil, gas and mining outside Canada. But such income will only qualify if some restrictions are met. These restrictions are that the taxpayer has to operate or have an interest in the oil, gas well or mine. The amendment will delete these restrictions.


Robert Jardine McCleave: Shall subclause (3) of clause 18 carry?


Some hon. Members:: 
John Napier Turner: Subclause (4) is a relieving provision which provides that all corporations, and just not principal business corporations, can be shareholders of a joint exploration corporation. A joint exploration corporation can incur Canadian E and D expenses and can renounce such expenditures to its shareholder corporations, which can deduct them to the extent allowable for calculating their taxable income.
Subclause (5) I dealt with when I was referring to the consequential amendment earlier. This, again, is a technical and relieving amendment. I have put the reasons for it on record.
Subclause (6) is a relieving provision to amend the definition of a shareholder corporation of a joint exploration corporation by removing the requirement for the shareholder corporation to be a principal business corporation.


Robert Jardine McCleave: We now come to subclause (7).


John Napier Turner: There should not be any
problem with this subclause.


Robert Jardine McCleave: Shall clause 18 carry?


Some hon. Members:: Agreed.


[Stage Direction]
Clause agreed to.
On clause 19 -Depreciable and other capital property of deceased taxpayer.
John Napier Turner: Mr. Chairman, I listened with great interest to the debate on second reading, and I suggest that most of the debate on this clause will centre on the transfer, by death, of the family farm. My remarks will relate to clause 19(3) and of course will relate to clause 20 of the bill. I should like to make a few comments about the family farm.
The purpose of the amendment that is now brought before the House is to meet the problem of the transmission from one generation to another of a family farm in circumstances that were set out in the tax reform law which came into force in January 1, 1972, under which there was to be a deemed capital gain upon transmission of the farm; but there was no income or liquidity from which to satisfy the payment of the capital gain.
The distinction between the family farm and any other sort of business is that a farm, by its very nature, tends to be highly capitalized in terms of land and equipment. Secondly, there is a predominantly non-liquid situation in that most of the assets of the farm are tied up in land and equipment. Thirdly, the value of the land is highly volatile; it depends on market conditions prevailing at the time in the area and on other market conditions that may be quite irrelevant, apart from the essential worth of the farm as a going concern. Fluctuations in value might be caused by increased land values because of metropolitan expansion and encroachment.
That being so, it became clear to me when I took on this portfolio that something had to be done to ensure that the deemed capitalization would not hinder the transmission of the family farm from one generation to another in cases where the family intended the land to continue in use as a farm. In other words, something had to be done to prevent a forced sale of the farm in order for the family
Income Tax Act
to meet the debt to the Crown against the deemed capitalization. That is why the amendment is now before the committee.
Some points were made during the debate on second reading to the effect that freedom from capital gain should apply not only to the deemed realization on death but also to any transfer within the family during the lifetime of the farmer, so long as the farm continued as a farm. When we first reviewed the situation it was our opinion that the same situation did not apply during lifetime as applied after death. In other words, the capital gain could only be incurred during lifetime by actual payment, because the actual payments by son or daughter to the father or mother would take place and the capital gain would only be incurred as the moneys were received. If payments were made in instalments, the capital gain would only be due in instalments.
Take the situation where a farm was originally worth $100,000 and increased in value to $200,000 at the time of transfer. There is a capital gain of $100,000. The payments are made in instalments over a ten-year period; they are each $10,000. The capital gain would only be 50 per cent of each of those payments, namely, $5,000 out of each $10,000 payment. The capital gain payable on that $5,000 would only be one half that amount, namely, $2,500 at whatever the taxpayer's graduated rate may be. If it is 30 per cent, it would be 30 per cent of $2,500, which equals $750. That does not appear to be the same type of hardship as deemed realized of a total capital gain. I have looked at the situation. We have consulted our own people. If it is the feeling of the committee that the purpose is to maintain the family farm, the government is prepared to look at this matter seriously. I can recall the words of the hon. member for Bruce at the finance committee, who said this ought to be done.
As hon. members know, subclause 19(3) of this bill would implement the ways and means motion to provide a roll-over for farm profit on the death of the taxpayer. As I have said, this change is to avoid the disruptive effect which the imposition of tax on an accrued gain might have at that time, and thus help preserve the continuity of the family farm. We all want to see that. Representations have recently been made. I listened to speeches by members opposite and by members on the government side, both in caucus and in the finance committee when I was discussing my estimates, very carefully. I read them again to make sure I understood what I heard. Representations were made that this roll-over be extended to transfers during the farmer's lifetime. I am prepared to take that point. I am, therefore, prepared to move the necessary amendments to the ways and means motion when the Speaker is in the chair. This can be handled however Your Honour wishes. If the amendments are accepted by the Chair, I can then make the necessary amendments in committee to clauses 19 and 20.
A new clause No. 20.1 would permit a farmer to transfer his farmland and appreciables to his child by sale or gift during his lifetime without imposition of a capital gain at that time. There are two other consequential amendments I would want to put to the committee at this stage. Hopefully, the committee will think about them and assess
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April 9, 1973
Income Tax Act
them. A new clause 20.2 would attribute a subsequent gain or loss on the farm property back to the farmer who transfers to a son or daughter if the child sold the property before he or she reached the age of 18. This is the deemed realization of any transfer by a minor. I do not think that any member of the committee or the House would want to see the sale through a child to a third party. I think that is fair ball.
A further amendment to clause 75 of the bill would preserve the transitional rule where the farm was owned by the taxpayer at the end of 1971. Those are the so-called neutral zone rules. The new clause 20.1 would also permit the farmer to set a price on the sale to his child which would realize some capital gain or capital loss where the fair market value of the property had changed, if he desired to have this effect.
In any event, I think the committee would want to see the ways and means motion. Members will want to look at the effects of the amendments. Perhaps we could stand the necessary clauses so that the committee could look at them. I am willing to accept whatever procedure Your Honour wants to adopt. I am willing to table the notice of ways and means motion which will have to be forwarded to Mr. Speaker. I am willing to table the amendments to the bill, to take effect if the House allows the amendment to the ways and means motion and then goes back into committee on these particular clauses.


Marcel Joseph Aimé Lambert: Mr. Chairman, I rise on a point of order. I think that would be appropriate, because an amendment to the ways and means motion requires 48 hours' notice. As I understand the future business of the House, we will receive this bill again on Thursday. This would allow the appropriate time to elapse before we take the necessary steps. Certainly we will want to study all the implications. As we have not seen this, Mr. Chairman, it is hard to say whether it meets exactly what opposition members want. I look to the 1971 debate on this point. I refer to the deathbed confessions or repentance on the part of the government with regard to this particular point.


John Napier Turner: Just as the amendment would propose switching from death into inter vivos or during the lifetime, I want to assure the hon. member that the government is very much alive. He ought to take the analogy very seriously indeed. I hope the members of the committee, in their capacity as members of the House, will waive the 48-hour rule. In any event, the hon. member informs me that we will not get back to this bill before Thursday. He knows more than some of the rest of us.


Stanley Howard Knowles: Mr. Chairman, even though what is being proposed is obviously welcome, I would not want to suggest that members be asked to waive the 48-hour rule on something we have not seen. I wonder whether this possibility could not be left open. After we have seen the amended resolution in print, we might let it go at 24 hours.


Robert Jardine McCleave: Order. Do other members of the committee wish to speak on the particular point of order?


John Napier Turner: Perhaps I could table these amendments, with consent.


Marcel Joseph Aimé Lambert: Let the committee rise, and we will call it ten o'clock.


Robert Jardine McCleave: Several points are being suggested to the chair at this time. The hon. member for Saskatoon-Biggar wishes to pursue the point of order.


Alfred Pullen Gleave: Mr. Chairman, I want to ask the minister a question. When considering this question, did the minister also consider whether it could apply to the family farm corporation? This may not be possible, but I ask the minister if it was considered, because this point was also raised.


John Napier Turner: Mr. Chairman, I would prefer at this stage to exclude the corporation, whether it applies to the family farm, small businesses or whatever. The exclusions from capital gains treatment of the personal residence applies to the taxpayer. The committee ought to realize that we have a very difficult problem in trying to segregate the assets of a corporation to allocate the transfer either of a principal residence or a farm. This was originally set up to make the farm more liquid, in a transmissible sense, by reducing it to a shareholding. The shares can be transferred much more easily over a period of time. The same lack of liquidity is not apparent in a farm corporation as it is in a family farm. I hope the committee, and eventually the House, will allow this amendment as a recognition of the sociological and agricultural problem of preserving the sanctity and integrity of the family farm.
The corporation question not only involves the family farm, but small businesses, personal residences and corporations. It is a far vaster subject and far more open to problems. I could undertake to look into that question, but I hope the committee will not press the government at this stage because I must say we have not thought all these problems through. They give rise to great difficulty.


Thomas Gordon Towers: I should like to ask the minister a question before we leave this clause. For some time we on this side of the House have been trying to get answers from the Minister of National Revenue with respect to the evaluation of farm properties which is presently taking place. To refresh the memory of the Minister of Finance I should like to read a question asked in this House on April 4 by the hon. member for Pembina, as reported in Hansard at page 2968.
Mr. Speaker, I should like to direct a question to the Minister of National Revenue concerning the land evaluation taking place in Canada for tax purposes. Will he inform the House whether the property owners whose properties have been appraised for tax purposes have been notified and, if so, is there an appeal procedure to handle these evaluations?
To that question the Minister of National Revenue replied:
Mr. Speaker, the valuations which are taking place are for the purpose of future reference. They do not necessarily have any status in law at this point. Valuations from any source can be considered. This information is being gathered to assist parties in the future determination of values.
April 9, 1973

The hon. member for Crowfoot then asked the following question:
Mr. Speaker, I should like to ask the minister a supplementary question. How can one appeal some five, six or ten years from now when that same assessment is put forward by the department?
The minister replied:
That is not the assessment, Mr. Speaker. The assessment would take place at the time of disposition, and any owner is free to make that kind of valuation himself or obtain one.
The next day I put the following question to the Minister of National Revenue:
Would the minister make available to farmers the evaluation assessments made by departmental appraisers or by those working on behalf of the minister?
The minister replied:
I think perhaps what the hon. member is referring to is not what he and others have been calling valuations but rather information being gathered for a realistic data bank which will assist taxpayers and the department in arriving at valuations on disposition of property. The kind of information that is being gathered, for instance, is the address, the legal description, the sale price, terms of sale, the municipal assessment, the dimension of the land and buildings and the income and expenses at the time of sale where relevant. Obviously, this is mostly available to the buyer and most of it actually comes from public records and observation.
I have found, from my experience over the years, that there is information available to the government which is not available to the farmers concerned. If the government wants to do what is right by the farmers across Canada, they will enter into an agreement with them to establish a value on their property which is acceptable not only to the Department of National Revenue but also to the farmers. If it is not acceptable to the farmer, he should have an opportunity to appeal the decision and clarify the situation during his lifetime; the task should not be left to his heirs. This is an important point and it behooves the government to look into it while other amendments to the act are being considered.


Robert Jardine McCleave: Perhaps it would meet the convenience of hon. members if we rose and reported progress. Then we could receive properly in the House the amendments which are being presented by the minister. Is this agreeable?


Some hon. Members:: Agreed.
Progress reported.


Mr. Deputy Speaker:: The Minister of Finance (Mr. Turner), in committee, made reference to an important amendment which was being considered. I think that for the interest of hon. members I should refer to Standing Order 60(1) which reads:
A notice of a ways and means motion may be laid upon the table of the House at any time during a sitting by a minister of the Crown, but such a motion may not be proposed in the same sitting.
Perhaps the chair might suggest that we now receive the changes proposed by the minister and agree to have them printed as part of today's proceedings so that our record would clearly indicate exactly what is being proposed, since I gather that the change proposed is of a fundamental nature.
Adjournment Debate


John Napier Turner: With the consent of the House, I should like to table an amendment to the ways and means resolution relating to the transfer of a family farm, and to advise the House that when the House again goes into committee of the whole this amendment will be put forward, unless the House would be interested to see the amendment earlier so that there would be sufficient advance notice before we resumed in committee.


Some hon. Members:: Agreed.


John Napier Turner: Perhaps it would be for the convenience of the House to see the amendments we propose before we resume later in committee of the whole.


Stanley Howard Knowles: Could they not only be tabled but also printed as an appendix to Hansard or to Votes and Proceedings?


John Napier Turner: I believe the consensus of the House may be that they be printed in Votes and Proceedings.


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: It is suggested I read the following two paragraphs of Standing Order 60:
2.	An order of the day for the consideration of a ways and means motion or motions shall be designated at the request of a minister rising in his place in the House.
3.	When such an order is designated for the purpose of enabling a minister of the Crown to make a budget presentation, a motion "That this House approves in general the budgetary policy of the government" shall be proposed.


John Napier Turner: I will designate
Wednesday.


Marcel Joseph Aimé Lambert: That doesn't apply.


Stanley Howard Knowles: Let's stick with paragraph two.


Mr. Deputy Speaker:: Is the motion presented by the Minister of Finance concurred in?


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: It is agreed.
[Editor's note: For ways and means motions referred to above, see today's Votes and Proceedings.]



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn the House under Standing Order 40 deemed to have been moved.
[Stage Direction]
April 9, 1973
Adjournment Debate

Mr. Perrin Beatty (Wellington-Grey-Dufferin-Waterloo):: Mr. Speaker, on February 2 I asked the following question of the Minister of Transport (Mr. Marchand) as reported at page 907 of Hansard:
Mr. Speaker, my question is for the Minister of Transport. Three weeks ago, in response to a question from the hon. member for Northumberland-Durham, the Minister of Transport undertook the investigate and report back to the House on the location of the site to be used by Canadian Pacific Railway for the dumping of 400,000 tons of metro Toronto garbage annually for the next 15 years. Has the minister investigated this and can he report to the House which site is the prime site under consideration and the locations of the other five or six sites being considered by the railway?
The Minister of the Environment (Mr. Davis) chose to respond to my question with the following answer:
Mr. Speaker, perhaps I might answer that question. I have discussed this matter at length with the minister of the environment for Ontario. It is substantially a matter for the provincial authorities.
Since the time I spoke with the minister in the House about this matter, CP Railway have made the announcement that they have not decided not to go ahead with the Minto township dump site, but that plans to put one into Hope township near Port Hope are under way. This is a matter of great concern to the people of Hope township, just as it was for the people of Minto township. Certainly a great sight of relief was heaved by most of the people in our area when we discovered that this dump site was not going to be forced on us.
Since that time an article has appeared in the Mount Forest Confederate which indicates we may not be completely off the hook yet. In the Thursday, March 1 edition of the Mount Forest Confederate there appear the following three paragraphs:
Barbara Murray, full time worker for Derail Dumps Today, feels that the group may set be in for a fight with CPR over garbage. She formed her opinion after talking to CP officials at a four-day information exhibition in Hope township.
It has been rumoured for several months that CP wanted to establish a land fill site in Minto township. The rail company announced last week that they would be asking the Ministry of the Environment for permission to operate a site in Hope township about 55 miles east of Toronto.
Speaking with John Cox, public relations representative for CP, she learned they may apply for a site in Minto if the proposal in Hope does not go well.
This is a matter which still concerns our area. We believe that it is the right of small municipalities to determine for themselves the kind of developments that take place in their own communities. We believe that a large and powerful corporation like CP Railway does not have the right to ride roughshod over the wishes of local citizens, who should be fully consulted about such matters.
We also believe that CP Railway have been extremely negligent. They have been extremely secretive about their plans, and only told the people of Hope township what they had in mind for them after they had prepared a massive public relations presentation. At no time did they really level with the people of Minto township. People may now wonder whether Minto township is off the hook and whether this debate we are having tonight is still 
relevant. To me.it is very relevant. It raises much broader issues than merely the future of Minto township; it raises questions as to the role of the Department of the Environment in regulating environmental matters in this country.
The minister seemed to feel that this matter was strictly within provincial jurisdiction. I disagree. I believe in the case of Minto township there is a possibility that the fishery may have been polluted-section 33 of the Fisheries Act gives the federal government responsibility for fisheries, pollution-and to the people in Minto township it is an important matter. I also believe that there is a possibility that water systems could be polluted which ultimately flow into international territory, so the federal government should show an interest there too.
Beyond that, it is the federal government, not the municipal or provincial authorities, who is responsible for making sure that good corporate citizenship is shown by the great train companies in this country. This they have not done. The train companies have shown extremely poor faith in dealing with the people in my area. They have closed down train passenger services in my area. They have allowed their rights-of-way to go to weed, to the detriment of farmers' fields, and they have not shown any concern to keep up fences along the rights-of-way. This is symptomatic of the way that CP and CN view the people of this country. The federal government has responsibility for making sure they act as good corporate citizens.
Beyond that, there is the question whether the Department of the Environment is to be construed as anything but a simple piece of window-dressing for the government. We all know it has very little responsibility north of the sixtieth parallel, for example. If you get north of that area the responsibility is that of the Department of Energy, Mines and Resources and the Department of Indian Affairs and Northern Development.
There is also the question of what is being done in southern Canada. It is very little. The federal government has shown little initiative and little imagination in this matter. For example, the province of Ontario is quite willing to go ahead with massive projects in conjunction with the municipalities, the federal government and corporations in order to get to work in recycling the projects which could prove valuable for the whole of this country. The provincial government is willing to free the money for this, but the federal government has proved to be very lax in this regard and has shown very little initiative in providing any leadership.
We are also concerned because in many small municipalities the question of sewage treatment is a matter of life or death. Often the municipalities are not able to grow unless they can put in proper sewage facilities. The municipalities do not have the money to do this. The government of Ontario has come through with money for this, but the federal government has once again shown it has little interest.
I believe this is an area where the federal government could be active. As we enter the next decade we will have to be more and more concerned about making peace with the environment, if we are still concerned about the sort of quality of life our children will inherit. I think there is no other area in this country where the federal govern-
April 9, 1973

ment could pay more important and essential attention than this area. There is no other area in the whole of this country in respect of which the government has been more negligent in taking action.


Mr. William Rompkey (Parliamentary Secretary to Minister of the Environment):: Mr. Speaker, my minister answered the question earlier, and I would like to elaborate on it to some degree now. The acquisition of any property which might be developed as a waste disposal site is solely a matter between the vendor and the purchaser-in this case, private property owners in the Port Hope area and Canadian Pacific Railway. I understand that Canadian Pacific now owns the land in question. Control of the development of the lands for waste disposal purposes can be exercised at the local level by municipal bylaws and in particular zoning bylaws passed under the provisions of the Ontario Municipal Act. Use of land, contrary to the provisions of any bylaw, would be illegal and if the bylaw is to be amended it would require the approval of the Ontario Municipal Board. This will be required in this case.
Approval for the development of lands for waste disposal sites comes under the direct control of the ministry of the environment of the province of Ontario. Before a certificate of approval can be granted for a waste disposal site, a formal application must be received by the ministry and a public hearing before the environmental hearing board must be convened and completed. The environmental hearing board will hear arguments for and against the proposal and report to the executive director, air and land pollution control division, who will then decide whether a certificate should be issued and, if so, under what circumstances and with what conditions.
For a certificate to be issued, the acceptability of the area will have to be proven to the ministry of the environment, which will also specify development and operating procedures. In the event that the executive director refuses to issue the certificate, the applicant can appeal the decision to the pollution control appeal board which will hear evidence supporting the proposal and in support of the refusal. This board can direct that a certificate be issued.
The present status is that the province of Ontario has recently received an application for a certificate, but no date has yet been set for an environmental board hearing. The position of the municipality of metropolitan Toronto is that the Canadian Pacific Railway is the sole agency responsible for acquiring and developing the waste disposal site subject, naturally, to receiving approval of site from the provincial ministry of the environment. The initial commitment between the two parties is for Canadian Pacific Railway to transport and dispose of 400,000 tons of refuse per year, representing approximately 25 per cent of the waste generated in the metro Toronto area, in accordance with provincial regulations and at an agreed unit cost of $6.35 per ton. There are two fundamental points to be recognized. The management of waste comes under the jurisdiction of the province of Ontario, and the proposal by CPR will be subjected to close scrutiny both in the public forum and by professional staff in the provincial government. The socioeconomic and environmental concerns will be fully examined.
Adjournment Debate
The CPR is making an effort to expand the type of service available to potential clients. The concept of rail haul is new to Canadian waste management practices and comes at a time when large urban centres are facing serious problems in providing waste disposal facilities. This problem is probably most acute in the metropolitan Toronto area.


The Acting Speaker (Mr. Laniel):: Order, please. I regret interrupting the hon. member, but according to Standing Order 40 he is limited to three minutes. I see from whatever notes he has that he might go beyond one or two minutes more, and I cannot allow that.


AGRICULTURE-FEED GRAIN-SUGGESTED ADDITIONAL COMPENSATION TO WESTERN PRODUCERS
Alfred Pullen Gleave: Mr. Speaker, I want to speak briefly on the question which I asked the minister in February regarding the method of pricing feed grains domestically in the eastern market and in British Columbia. I was concerned with the eastern market.
This matter arose out of questions which I asked, in the committee on miscellaneous estimates, of Dr. Perreault of the eastern feed board regarding prices at that time. According to the information he gave me, for example, we were selling barley at $1.53 i at eastern ports and at $1.63 at Thunder Bay. When you put it on a tonnage basis, we were selling barley to the Montreal market at $65.54 a ton whereas U.S. corn in Montreal at that time was selling at $68.93 a ton. I am interested in asking the minister what policy is being followed and what policy will be followed in arriving at a price that is fair and equitable.
It is significant that at the same time as I asked these questions in the committee, I was told that previously we had charged the domestic market more than the export market. This information came out also at a seminar of the Canadian Federation of Agriculture held in Ottawa in the winter. It seems to me that if we are going to be fair and practical, we must adopt a method of pricing in the eastern feed market that is more consistent than heretofore. One yardstick that has emerged as being reasonably good is the price of U.S. corn in Montreal. That is the competitive product. The other could be the export market which we could use. But in my view the main thing is to adopt a policy that is known to the western farmer who is the producer, and to the eastern farmer who may choose to buy.
I think we will probably need a good benchmark much more in the future than we have needed in the past. The European market is changing, with Great Britain entering the Common Market. This means a single market for practically the whole of western Europe so far as pricing procedures are concerned. Freight rates may again come under review, but that is another matter. The main thing I am concerned about in raising this question with the minister is the pricing method which it is proposed to follow, while at the same time leaving the Canadian Wheat Board free in exercising its judgment as to the day to day pricing. This factor has to be borne in mind.

April 9, 1973
Adjournment Debate
I note that in his answer to my question the minister said he thought I was in favour of Wheat Board marketing. He is quite right, I am. I believe we need to leave the Wheat Board in a position that it is free to make its day to day decisions, but the producer and the feeder should also know within what frame of reference the general policy is operating.


Otto Emil Lang: Mr. Speaker, I welcome this opportunity to say a few words in answer to the question of the hon. member for Saskatoon-Biggar (Mr. Gleave). For quite some time now the Canadian Wheat Board in effect has been pricing barley into the Canadian domestic market, outside of the designated area, at prices which bear a fair relationship to the competitive potential of American corn. It has done this during a period of time when world grain prices were very low and where, on occasion, in order to continue to move our products into markets and to secure and maintain customers it was willing to offer barley at prices fairly low throughout the world. It at that point offered at prices somewhat higher in eastern Canada and British Columbia, maintaining that competitiveness with American corn which has marked our pricing since about three years ago when the Wheat Board decided to compete and avoid the entering into Canada of the American feed grain product.
It has now been holding those markets in British Columbia and eastern Canada against competitive corn really on the same principle, even though on occasion and for a variety of reasons international prices may have been higher than American corn, as they have in recent days. It is interesting that when domestic prices were higher than international prices, they still were very low prices, generally not covering the cost of production. Now that they are falling behind international prices, they more likely reflect a fair return.
There is another consideration facing us which we will be dealing with in the days ahead, and that is the challenge to maintain a fair relationship between feed grain prices in the designated area and prices outside that area. The government has committed itself to maintaining that relationship by a formula which we hope to announce prior to August 1, the start of the new crop year. That is important in order to maintain a fair balance between competitiveness of the different regions of the country.
In answer to the direct question of the hon. member, I would say that for the last several years it has been the Wheat Board's policy to price Canadian barley in relation to American grain, and that has been shown by a generality of price as much as $5 a ton less than American corn although occasionally creeping up as high as $3.50 a ton below the American corn price.


NATIONAL CAPITAL-INQUIRY AS TO PURCHASE OF LASALLE ACADEMY
Mr. Jean-Hobert Gauthier (Ottawa East):: Mr. Speaker, on March 20 last, I asked the government, and in particular the Minister of State for Urban Affairs (Mr. Basford), whether the historical LaSalle Academy building, which
[Mr. Gleave.l
is located in my constituency, had been purchased by the federal government, and if so, to what end?
We have since been informed that the government has purchased the building in question, and that it will carry out repair work with a view to preserving it, aging the exterior, that is, giving it its former look, and modernizing the interior to house the Department of Urban Affairs. Mr. Speaker, all who live in the national capital welcome the news that the building will be renovated and preserved.
There can be no doubt that this federal government purchase is a wise decision, in contrast, some would say, with the fate of the Rideau street convent. We are all aware of the great changes that are taking place in our city centres; we all agree that the old areas of our cities need redevelopment for the modern world. Unfortunately, our insatiable thirst for modernizing threatens the existence of many older buildings, to make room for bigger, more modern and often more profitable ones. Sometimes these soap box constructions are outstanding only for their ugliness, and they are sometimes sterile from their conception.
In any event, Mr. Speaker, the purchase of the LaSalle Academy by the federal government really fits in well with the program for the renovation of the west part of Lower Town; this program which bears the label "Centre Rideau" is part of Phase II of a complementary project doubtless intended as the counterpart of a similar project now under way in our twin city, Hull.
I rose, Mr. Speaker, not only to recognize the soundness of that purchase but also to point out the importance of the name LaSalle for generations of Canadians, Francophones as well an Anglophones in the Ottawa area, and to suggest to the government that the building should keep its name of LaSalle.
Built in 1852 by the bishop of Ottawa to lodge the Bytown College, later to become the Ottawa University, it became a hotel in 1856 where part of the Queen's 100th Regiment was billeted during the Fenian War; later, it was leased by the Ottawa Separate School Board to be used as a school by Notre Dame Parish, in Ottawa. The Brothers of Christian Schools had been teaching there since 1870. In 1889, they bought the building where they dispensed Christian and French teaching until 1971.
In fact, Mr. Speaker, for over 100 years the Brothers of Christian Schools have been giving quality teaching and pupils have been receiving serious and religious academic teaching. Being my Alma Mater, Mr. Speaker, I must say I deeply regret the disappearance of this institution which has been integrated into the Ontario secondary French public school system.
All the same, we rejoice that the building will remain, and I think, Mr. Speaker, that I express the wish of all the people of Ottawa, of the Academy alumni, of all the French-speaking and English-speaking people of Ottawa and Hull, who know that building under the name of LaSalle. I think I can rightly speak in their name and ask the government seriously to consider keeping the name of LaSalle for that building.
More and more, Mr. Speaker, citizens' groups conscious of the historical value of some old buildings not only fight
April 9, 1973

lor their preservation but are also convinced that they represent an integral part of our cultural heritage and our indentity.


Mr. Ian Watson (Parliamentary Secretary to Minister of State for Urban Affairs):: Mr. Speaker, in co-operation with the Department of State for Urban Affairs, the Department of Public Works has purchased the LaSalle Academy building for the price of $1 million. When the building has been restored to its original 19th century state, it will house the Department of Urban Affairs. This acquisition comes under the government's policy on the restoration of buildings in the lower town and on the redevelopment of residential and commercial areas, which is an improvement on simply demolishing the old buildings.

The choice of the LaSalle Academy complex was a deliberate one. It is a unique urban opportunity for the Minister of State for Urban Affairs (Mr. Basford) to symbolize in the national capital area one of the goals he holds for communities and neighbourhoods throughout Canada. Renovating a viable heritage property in Canada is a case of practising a policy we are preaching. It reflects our concern with the revitalization of older neighbourhoods and with business districts in the downtown cores of Canadian cities. It reflects our concern that the character of older communities be preserved when they are worth preserving, and it reflects our feeling that the recycling of older districts is as important as the creation of new communities and new housing developments.
Adjournment Debate
The proof of our concern lies not only in the choice of our future headquarters, however. It also lies in the Neighbourhood Improvement Program and other measures now under discussion by the House in Bill C-133. By preserving and renovating the LaSalle complex, which includes two other, more modern buildings, the ministry is demonstrating its belief that older buildings and neighbourhoods of historic significance need not be destroyed or preserved merely as museum pieces.
The purchase of the site is consistent, too, with plans for urban renewal in the Byward market-lower town area. Hon. members may recall the plans announced in the fall to sponsor the rehabilitation of a 50-acre area in lower town near the LaSalle site. This will involve the co-operation of all governments involved and participation from businessmen in the national capital area. Plans for renovating the LaSalle academy complex are now being completed by the Ministry of State for Urban Affairs and the Department of Public Works. The restoration of the buildings to a viable economic and social future will in turn stimulate the preservation and rebirth of the surrounding area. In this way, the ministry will have served as a catalyst to make the historic lower town area once again a focal point in Ottawa's business life and in the daily affairs of its residents.

Mr. Speaker, I can assure the hon. member for Ottawa East that his remarks on the naming of the building will be brought to the attention of the minister tomorrow morning.

Motion agreed to and the House adjourned at 10.28 p.m.
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April 9, 1973


APPENDIX
[Stage Direction]
Analysis of Clauses (or Subclauses) Appearing in Bill C-170 and not Referred to in the Ways and Means Motion
A.	Consequential changes-15
10, 12(2), 13, 26(3), 28(4), 28(5), 43, 45, 46, 52, 59, 66, 74(4), 74(5), 88
B.	Clarification of the French Version-8
15, 23(1), 31(1), 35(2), 50(2), 62, 69(1), 74(2)
C.	Clarifying Changes of a Technical Nature-16
2,	3, 5, 19(1), 21, 33(2), 40, 42(2), 49(1), 68(1), 69(3), 70(1), 74(1), 81, 82, 89
[Stage Direction]
Tuesday, April 10, 1973