1973-04-06

CONGRATULATIONS TO PRIME MINISTER ON FIFTH ANNIVERSARY AS LEADER OF LIBERAL PARTY

Mr. J. E. Walker (York Centre):: Mr. Speaker, there are some occasions of special significance and importance which are allowed to be noted in the House from time to time. Just a few days ago we all joined in sincere tribute to the right hon. member for Prince Albert (Mr. Diefen-baker) on the 33rd anniversary of his election to parliament. Indeed, Mr. Speaker, we have acclaimed Your Honour and others at relevant times.
Today is one of those relevant occasions for some of us in this chamber because it was exactly five years ago that the Liberal party selected for itself a new leader supremely fitted for the task of leading his political party-


Some hon. Members:: Hear, hear!


James Edgar Walker: -and the country through the difficult and challenging days that lay ahead. Building on the solid base of an awakening Canadianism that had been generated by his immediate prime ministerial predecessors, Pierre Elliott Trudeau has worked every waking hour to forge a conscious Canadian identity and unity.


Some hon. Members:: Hear, hear!


James Edgar Walker: Mr. Speaker, some question his methods but none can challenge his motives or dedication to this task to which every political leader is committed.
In a spirit of political generosity I believe all hon. members would wish to join with us on this side of the House in wishing the Prime Minister good health, good spirits and good will in the task that every Prime Minister faces, the furthering of national unity in a Canada where every Canadian will be at home.


Some hon. Members:: Hear, hear!


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I would certainly like to associate myself with the good wishes to the Prime Minister regarding his health.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: I called across to him earlier, before I realized there was going to be speech-making in connection with this anniversary, that sometimes it is said about other institutions that the first five years are the hardest, and that may well be his wish.
Ordinarily one does not make very much of a third, fourth or fifth anniversary, but I can well understand the
desire of my hon. friends opposite-of course I am not referring to the Prime (Minister-to note this anniversary at this time because it may be their last opportunity.


Some hon. Members:: Hear, hear!


Mr. David Lewis (York South):: Mr. Speaker, of course I join others in wishing the Prime Minister well and in congratulating him on five years of hard work. When I listened to the hon. member for York Centre (Mr. Walker) telling us that the Prime Minister worked every hour of the day for the last five years, it occurred to me that perhaps that was the reason for some of the things that have happened. Perhaps the Prime Minister ought to work less from now on. Mr. Speaker, we wish him well in his personal future.


Mr. Real Caouette (Temiscamingue):: Once again, Mr. Speaker, I thank my colleagues for the warm welcome they extended to me this morning upon my return to the House. It is not my fifth anniversary but I join all my colleagues in wishing the right hon. Prime Minister good health, specially from the political point of view. I hope he will call an election on the double that we may try to act quickly and efficiently as legislators. I join the Leader of the Official Opposition (Mr. Stanfield), the government members, the NDP members and my own colleagues in wishing the right hon. Prime Minister well, that he may continue to do his utmost for the well-being of the people, regardless of their political affiliations, and to act as a true Prime Minister of Canada.


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, in acknowledging the compliments I have received this morning, I should like to say to you that I appreciate the thought that anniversaries can really come up quite often in the House.
I wish to apologize to my colleagues for not having the ease of the right hon. member for Prince Albert (Mr. Diefenbaker) when it comes to expressing thanks on the occasion of anniversaries. With the years, however, I trust I shall improve, and I thank my colleagues from all parties for their great kindness and confidence.
Mr. Speaker, I am not one, as you know, who is very enthusiastic about recalling or celebrating various anniversaries. I know that you have some question in your mind about how much time we should spend doing this. I have, as you know, in the past done my best to suppress some of my own anniversaries, and I hope you will not find me too guilty. Let me just say thank you very much to all hon. members.


Some hon. Members:: Hear, hear!

April 6, 1973
The Prime Minister


Mr. Speaker:: Is the hon. member for Ottawa West rising on a question of privilege?


Mr. Reilly:: No, Mr. Speaker.


Mr. Speaker:: I think the Chair owes an explanation to the House. The hon. member for Ottawa West and the Chair had a discussion about a possible question of privilege. That is why I took the liberty to ask the hon. member whether or not he wished to proceed.



ROUTINE PROCEEDINGS


[Stage Direction]
Second report of Standing Committee on Labour, Manpower and Immigration-Mr. Portelance.
[Editor's Note: For text of above report, see today's Votes and Proceedings.]

Hon. Gerard Pelletier (Minister of Communications):: Mr. Speaker, in allowing a debate this Monday on the March 30 decision of the Canadian Transport Commission you recognized the urgency and the importance of the question and you also recognized the essential role that the telephone plays in the day-to-day lives of all Canadians. This decision affects hundreds of thousands of citizens.
From its very inception in April 1969, my department recognized the social impact of telecommunications and undertook a series of studies under the heading of the Telecommission. The first report-Instant World-followed by the recently tabled green paper asked the question: "How can Canadians be assured of a reasonable variety of choice in the communications services available to them, and what must be done to ensure that at least basic communications services are available to all Canadians, wherever they may live at just and reasonable rates?"
The green paper proposed answers to these and other problems. And in recognition of the impact of telecommunications on the social, cultural and economic life of the country it made concrete suggestions for a new regulatory framework. I hope that these government proposals will, in the very near future, bring about a public discussion leading to a reform of the present regulatory structures so that these social and cultural considerations may be taken into account in future rate cases.

In the meantime, as I told the House last Monday, my department and the government are studying the decision of the Canadian Transport Commission on Bell Canada's application to increase its rates. At the time, I told the House that I would undertake to keep hon. members informed of the results as soon as possible. Even though the study is not complete, it has become apparent that there are some vital points surrounding the decision that need explanation and that the commission should be asked for clarification to that effect. The government has decided to suspend the decision pending clarification from the commission and completion of the review.


Some hon. Members:: Hear, hear!


Mr. Don Mazankowski (Vegreville):: Mr. Speaker, on behalf of my party I welcome the minister's statement. However, I feel that the explanation for this decision is highly irrelevant. Both in the House and in the transport committee we have expressed our concern about the effect of the decisions of the Canadian Transport Commission granting Bell Canada and CN-CP Telecommunications rate increases. This is precisely why our members on the Standing Committee on Transport and Communications moved for the tabling of all documents, reports, studies and papers relating to the Canadian Transport Commission decision, notwithstanding the reluctance of the president of the commission. This also is precisely why we moved for a 90-day postponement of the implementation of these increased rates in the transport committee yesterday.
We have been particularly concerned about the way in which the commission reached its decision under the guidance of Edgar Benson, whose financial competence is well known to the House.


An hon. Member:: Incompetence.


Donald Frank Mazankowski: Yes, incompetence. The CTC has been given the authority to decide on matters affecting all Canadians' personal lives. The government has frequently chosen to ignore the fact that it does have power to intervene under the provisions of the National Transportation Act. We suggest that if the government does not choose to take the responsibility as representatives of the Canadian people in these matters, then the Canadian people themselves should be allowed to participate in the decision-making of the Canadian Transport Commission.
At present the procedure is heavily weighted in favour of the applicants. I believe that ways and means must be found to redress this balance.


Some hon. Members:: Hear, hear!


Donald Frank Mazankowski: I believe that the government should seriously consider allowing greater public participation at CTC hearings, especially when they are particularly relevant to the Canadian consumer. The evidence from recent CTC decisions concerning Bell Canada, CN-CP Telecommunications, and freight rate increases shows that the consumer is bearing a heavy load of inflation. This latest decision has created a question mark in the minds of many Canadians as to the credibility of the CTC in

April 6, 1973

upholding the public interest under the National Transportation Act.
The government's reason, stated by the minister, for delaying implementation of the increases, is the need for integration into a telecommunications policy. This is beside the point. What is at stake and at issue is the government's failure to curb inflation and the commission's failure to act in a way which satisfies the public and ensures that the public interest is being upheld. Surely at this point the time has come when the government, as an absolute minimum, must outline price guidelines, at least for those sectors directly controlled by the federal government.


Some hon. Members:: Hear, hear!


David Lewis: Mr. Speaker, I join with my colleagues in welcoming the minister's statement, and I do so with pleasure. The decision taken by the government precisely coincides with the suggestion I made in my motion of last Monday, and I congratulate the government wholeheartedly on the decision which the minister has just announced.

Mr. Speaker, I hope that this is merely the first step toward the eventual rescinding of the unjustified and unconscionable acceptance by the Canadian Transport Commission of the application of Bell Canada. There have been many instances in the last while indicating that the way in which the commission functions, the way in which it has organized itself, makes it, judging from the results, impossible for that commission really to represent the interest of the Canadian people. In every case they are bamboozled by the kind of bookkeeping that the large corporations do into accepting the arguments that the corporations present to them.
It is my conviction, Mr. Speaker, that Bell Canada is fudging its real profits. Like other such large conglomerates, it simply is not telling the Canadian Transport Commission, the people of Canada and the government the truth about its profits. It is time the people of Canada, the CTC and the government made that giant corporation tell the truth about its profits and stop gouging the people of Canada.


Some hon. Members:: Hear, hear!


David Lewis: The fact is, Mr. Speaker, that Bell Canada will not tell the commission what retained earnings there are in its many affiliates. I understand from my colleagues who are members of the standing committee that Mr. Benson, the chairman of the commission, said yesterday afternoon or evening that the commission is not permitted or does not think it has the right to look into the earnings of the affiliates of Bell Canada. I say to you, Mr. Speaker, that is a silly situation which is against the interests of the people of Canada. Bell Canada has a fully owned subsidiary like Northern Electric and we ought to know what the relationships are between Bell and Northern, what they cook up between them at the expense of
The Prime Minister
the people of Canada. For the CTC to say it does not have the authority to look into that is to me an abrogation of its elementary duties.
Furthermore, I indicated in a letter I wrote to the minister yesterday that if you take the retained earnings of Northern Electric into the profits of Bell, as one should, then you have $8 million last year and probably $10 million this year, and if you were to make Bell add to its profits what it should add, namely, the $60 billion or $70 billion in deferred taxes which it may never pay, the actual rate of return would be 1 or 2 per cent more than it was.
I congratulate the minister and the government for having taken this step. I appeal to the government to follow it up by rescinding the decision of the CTC, all the time remembering that there is another application before the commission demanding even larger increases than the ones which the commission has so far studied. As far as my colleagues and I are concerned, we will simply not tolerate any further enlargement of the powers and wealth of Bell Canada.


David Réal Caouette: Mr. Speaker, the Bell Canada application for an increase in rates seems to be into a purely political issue.
I have just heard the leader of the New Democratic Party (Mr. Lewis) state that Bell Canada refuses to reveal its profits, to indicate how much money is coming in, how much is going out, that the company is deceiving the people etc.
Bell Canada is a big corporation, everyone knows that. We have in Canada what we call antitrust legislation. Those acts apply to Bell Canada as well as any other big corporation.
Bell Canada filed its application with the Canadian Transport Commission to satisfy its shareholders who, as far as they are concerned, want a return on their investment because if their investments in Bell Canada are not profitable, these shareholders will sell them, and invest their money elsewhere.
That is not the only point, Mr. Speaker. They are calling for increases of 5 to 7 per cent. Well, that is shocking, according to those who want to play politics with private corporations throughout Canada. No consideration is given to the quality of services supplied by Bell Canada or other private corporations.
I have made close comparisons with what I have seen throughout the world. 'When I was in Moscow, and I mention this for the information of the hon. member for York-South (Mr. Lewis), it took me 29 hours to put a call through from Moscow to Ottawa.
You had to go through not private companies, but officials who are like the hon. member for York South.
I am not going to be hypocritical; I am not going to mince my words to tell the hon. member what I think. Just wait and see.
Mr. Speaker, I am just back from Jamaica; I stayed at Ochos Rios just 75 miles from Montego Bay where the telephone service is provided by a subsidiary of Bell Canada. I called Ottawa and it took me exactly three

April 6, 1973
The Prime Minister
minutes to get my party. Now, this is a private enterprise, and the hon. member cannot appreciate the services supplied by private enterprise. He is always ready to knock it in an effort to turn the people against it but when the time comes to pay for the services, he is reluctant to do so.
Mr. Speaker, what is worse still, is the fact that Quebec Hydro has just increased its electrical rates. And that company is indeed a government agency. Have members of the New Democratic Party been heard protesting against tariff increases by Hydro-Quebec, the Ontario Hydro or the Manitoba Hydro? No. That is right, that is logical and understandable. If private enterprise says: We are prepared to improve our service, there are protests. And yet the hon. member for York South will agree that Bell Canada provides the best telephone service not just in this country but in the whole world.
Mr. Speaker, did the hon. member for York South protest when the salaries of members of parliament were raised from $18,000 to $26,000? No.


David Lewis: Yes.


David Réal Caouette: Never! He voted for it, just like the others.
From what they say, Mr. Speaker, the New Democrats would have us crush, mutilate and stamp out private enterprise. That is just what would be needed for socialism to develop and make an impact.


David Lewis: That is your opinion, but I-


David Réal Caouette: Yes and it is exactly in line with what the hon. member for York South was saying just now.
But I said at the start that there are laws against monopolies and trusts. If Bell Canada, or any other company, is shamelessly exploiting the population, or trying to, there are laws to prevent it.
The Minister of Communications (Mr. Pelletier), for example, states, and I quote:
The government has decided to suspend the decision pending clarification from the commission and completion of the review.
Now, the Canadian Transport Commission has heard Bell Canada's request, and has studied it. And so I find it hard to understand the government now "playing at politics", falling into the socialist trap to obstruct initiative and prevent private property developing in Canada, while promising the people better service.


Mr. Howard:: Mr. Speaker, I rise on a question of privilege. It relates to the announcement of the suspension by the cabinet of the Bell Canada rate increases. My question of privilege is that this is a discriminatory act on the part of the government, because that self-same government permitted Northland Shipping (1962) Company Limited, which is in a monopoly position, to impose a 7 per cent freight rate increase for its services on the north coast of British Columbia. It approved that, and I simply ask it to be fair. How about suspending the Northland Shipping freight rate increase as well?


Mr. Speaker:: Of course, that is not a question of privilege. I hope the hon. member would not expect the Chair to make a ruling in any event.


THE CANADIAN ECONOMY
Mr. James A. McGrath (St. John's East):: Mr. Speaker, I rise pursuant to Standing Order 43 on a matter of the utmost urgency concerning the continual staggering increases in the cost of living. Food and shelter costs have risen .4 per cent in the past month and 11.3 per cent and 6.8 per cent respectively in the past year. The impact of the sharp rise in food costs affects all Canadians, but in particular those living on low and fixed incomes who are finding it increasingly impossible to afford a nutritionally adequate diet. In light of the seriousness of this matter, Mr. Speaker, I would move, seconded by the hon. member for Northumberland-Durham (Mr. Lawrence):
That, given the continual rise in the cost of living and the consensus now existing in the country, the government immediately implement a freeze on wages and prices and act during this time to formulate long-term policies to halt or alleviate these disastrous increases in the cost of living.
I might say, Mr. Speaker, that I hope the Prime Minister (Mr. Trudeau) and his colleagues-


Mr. Speaker:: Order, please.


James Aloysius McGrath: -will agree to this.


Mr. Speaker:: Order, please. Hon. members have heard the motion proposed by the hon. member under the terms of Standing Order 43. This motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


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


FOOD PRICE INCREASES-REQUEST FOR UNANIMOUS CONSENT TO MOVE MOTION
Mr. Terry Grier (Toronto-Lakeshore):: Mr. Speaker, I rise to ask leave of the House for unanimous consent to introduce a motion under the provisions of Standing Order 43. In view of the fact figures released today show that the food price index rose 11 per cent in the past 12 months, and in view of the fact that consumer groups, including Women Against Soaring Prices, have repeatedly called for a price review board, I move, seconded by the hon. member for Sault Ste. Marie (Mr. Symes):
That this House instructs the government to introduce immediate legislation to implement the recommendation of the committee on food prices to establish a prices review board with all the powers necessary to deal with food costs, including the power, where necessary, to order a rollback in prices.
April 6, 1973


Some hon. Members:: Hear, hear!


Mr. Speaker:: Hon. members have heard the proposed motion which requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


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


CRIMINAL CODE
Mr. Henry Latulippe (Compton):: Mr. Speaker, pursuant to Standing Order 43, I rise to move a motion dealing with a matter of prime concern and national emergency.
In view of the growing opposition from the Canadian people to the liberalization of abortion and the lack of precision of the act, I move, seconded by the hon. member for Champlain (Mr. Matte):
That the Standing Committee of Justice and Legal Affairs be instructed by this House to consider the whole question of abortion and report to parliament before the end of this session.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: There is none, and therefore, the motion cannot be put.


Mr. Lundrigan:: Mr. Speaker, I rise on a point of order. There has been a lot of controversy over the past couple of months regarding the use of Standing Order 43. Motions have been moved under this standing order today and in the past six or eight weeks that were designed to have the House express itself as the parliament of Canada on very legitimate issues. Many of these motions have been moved with no partisan intention.


Some hon. Members:: Oh, oh!


John Howard Lundrigan: There has not been unanimous consent because of opposition from five or ten members. We have a situation where the Parliamentary Secretary to the President of the Privy Council (Mr. Reid) has been designated to oppose such motions that are brought before the House. I have kept a record of what has gone on in the past couple of months. As a result of the action of one government member there is no opportunity for members of this House to utilize Standing Order 43, effectively.


Some hon. Members:: Hear, hear!
Increase in Shelter Costs


John Howard Lundrigan: I respectfully request, Mr. Speaker, that the matter of the use of Standing Order 43 be referred to the Standing Committee on Privileges and Elections and that some direction be given to the chairman of that committee to deal with this matter. Instead of having the matter drawn out for six or eight weeks or several months, as has happened with the subject of the question period which I understand has not yet come before the committee, direction should be given to that committee to report on the subject within a matter of weeks.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Was that a motion under Standing Order 43?


John Howard Lundrigan: I would like to move that as a motion but it would take a moment for me to draft it.


HOUSING
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker,
I rise to move a motion under Standing Order 43. This motion arises from the fact that shelter costs, as announced today, are up 6.8 per cent over a year ago and the related fact that only 20 per cent of the government's proposed spending on housing for 1973 is devoted to low income categories, with only $2 million allocated for co-ops in spite of the fact that the Co-op Housing Foundation of Canada has estimated the need for co-op spending this year to be $30 million. Given the obvious need for a much greater allocation of funds to low income housing and specifically to meet the anticipated demand of the co-ops-


Mr. Speaker:: Order, please. I suggest to all hon. members that there are sufficient difficulties relating to the application of Standing Order 43, some of them being those referred to by the hon. member for Gander-Twillin-gate, that we might at least try to follow the practice established in recent years that hon. members limit themselves to indicating what the motion would be without arguing in support of it. I invite the hon. member to indicate what the motion would be on which he would like to seek the unanimous consent of the House.


John Edward Broadbent: I will do so, Mr. Speaker. However, I would like to add that I have taken no more time than others who have moved motions under this Standing Order today. I will come directly to this important motion. I move, seconded by the hon. member for Broadview (Mr. Gilbert):
That this House instructs the three ministers responsible for the Central Mortgage and Housing Corporation capital budget, the Minister of Finance, the Minister of State for Urban Affairs and the President of the Treasury Board, to appear next week before the Standing Committee on Health, Welfare and Social Affairs to explain why more money is not being allocated to this important area of social need.


Some hon. Members:: Hear, hear!

April 6, 1973
Oral Questions


Mr. Speaker:: Hon. members have heard the proposed motion. This motion also requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


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


SOCIAL SECURITY
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I rise under the provisions of Standing Order 43 with a motion which I dare to hope the House will accept. Now that Royal Assent has been given to Bill C-147, the new $100 basic rate of the old age security pension is in effect. However, in view of rising prices there is urgent and pressing necessity that something further be done during this session to improve the position of our senior citizens. I therefore move, seconded by the hon. member for Nanaimo-Cowichan-The Islands (Mr. Douglas):
That this House indicates to the government that it would welcome, during this session, a further bill to amend the Old Age Security Act, the purpose of which would be to provide an additional increase in the basic amount of the pension paid thereunder and to lower the eligible age.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Hon. members have heard the proposed motion. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


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



ORAL QUESTION PERIOD


Robert Lorne Stanfield: Mr. Speaker, I wish to direct a question to the Minister of Finance. It arises out of the figures released today showing a continuing increase in the consumer price index. Is the government now prepared to adopt a comprehensive approach and attack on inflation in Canada, such as our recommendation of a price freeze, in view of the continued increase and the evident failure of the budgetary measures to halt this increase and in view of the growing

expectation of a continuing high rate of inflation this year?


Hon. John N. Turner (Minister of Finance):: Mr. Speaker, it may be that the hon. gentleman is adding to that expectation. However, I say to him that the basis of the rise again this month is primarily food. It is true that the rise in food prices is disturbing to the House and to every Canadian. As I said earlier, it is primarily a supply problem. It is primarily a reflection of world commodity prices in grains, meat, sugar, coffee and so on. The hon. gentleman referred to the budgetary measures. Looking over the index I note that, except for food, the rise was less than the average in recent years, largely attributable to the removal of the sales tax on children's clothing and children's footwear.


Robert Lorne Stanfield: Mr. Speaker, I want to make it clear that I do not intend to refrain from making suggestions or discussing public problems because of threats from the Minister of Finance or anyone else.


Some hon. Members:: Hear, hear!


CONSUMER PRICE INDEX INCREASE-MONITORING DEVICES TO ASSURE TARIFF CUTS AND SALES TAX REDUCTIONS PASSED ON IN LOWER PRICES
Robert Lorne Stanfield: should like to ask the Minister of Finance or the Minister of Consumer and Corporate Affairs what monitoring devices of a concrete nature have been established to assure that the tariff cuts and sales tax reductions that were made have in fact been translated into lower prices?


Hon. Herb Gray (Minister of Consumer and Corporate Affairs):: As I said in the House earlier, we are working on methods for doing this and will be reporting to the House shortly about these methods.


Robert Lorne Stanfield: I should like to ask the Minister of Finance whether one of the measures he is taking to ensure that such tariff cuts, etc., will be translated into lower prices was the increase in corporation taxes which he put into effect on January 1 for all corporations, all lines of business, in this country except manufacturing and processing?


John Napier Turner: The government is, through the Department of Consumer and Corporate Affairs, the Department of Industry, Trade and Commerce and the Department of National Revenue, in the process of monitoring the effects of the sales tax removal and other commodity tax cuts contained in the budget.


An hon. Member:: Another study?


John Napier Turner: No, it is in operation.


FOOD PRICE INCREASES-POSSIBLE ESTABLISHMENT OF PRICES REVIEW BOARD
David Lewis: Mr. Speaker, I have a question for the Prime Minister. In view of the fact that a
April 6, 1973

temporary freeze lasting 60 or 90 days, as suggested by some members of the House, could not possibly do any good for the consumer since it would store up a likely larger increase in the cost of living at the end of that period, I ask the Prime Minister whether the government is giving favourable consideration to implementing the recommendation of the report of the Special Committee on Trends in Food Prices that an effective prices review board be established?


Pierre Elliott Trudeau: Mr. Speaker, we did discuss this matter, and we are very impressed by the serious nature of the work done by the committee. I hope we shall be in a position to make an announcement on our attitude toward its report in the not too distant future.


FOOD PRICE INCREASES-SUGGESTED QUARTERLY ADJUSTMENT OF PENSIONS AND SUPPLEMENTARY PAYMENTS TO WELFARE RECIPIENTS
David Lewis: Mr. Speaker, I should like to address a supplementary to the Minister of Finance in the hope that he will consider very carefully a suggestion which has probably been made to him by many others. In view of the fact that an increase in the cost of food in particular continues to take place regularly every month and is likely to continue for some time, will the minister give serious consideration to adjusting the old age pension and similar payments quarterly in accordance with the rise in the cost of living, rather than annually, and also give serious consideration to providing funds for supplementing the incomes of welfare and similar recipients in order that they and their families may be able to enjoy a better diet?


John Napier Turner: Mr. Speaker, the hon. gentleman knows that part of the philosophy of the May and February budgets was to protect Canadians on fixed incomes, particularly those whose earning days are over, from rising prices. It is my view that we certainly would not fight inflation on the backs of the senior citizens of this country. I will take the hon. member's suggestion into consideration.


INCREASED FOOD AND SHELTER COSTS-REQUEST THAT PRIME MINISTER MAKE STATEMENT CALLING FOR HOLDING THE LINE
James Aloysius McGrath: Mr. Speaker, my question is for the Prime Minister. In the light of the staggering increases in the cost of food and shelter, and in the absence of positive government action, may I ask the Prime Minister whether he, as the leader of this country, in the interests of the poor and those living on fixed incomes, is prepared to make a statement calling upon the food industry and all other segments of the economy to hold the line, or the government will be forced to take action?


Pierre Elliott Trudeau: I thank the hon. gentleman for suggesting a policy to the government.
Oral Questions


James Aloysius McGrath: In view of the fact that a special committee of the House was set up to look into this problem, and in view of the failure of the country to respond to the request of the Minister of Finance in his budget statement of February 19, may I ask the Prime Minister, because the question is urgent, whether he will issue a call to the country to hold the line against these staggering increases in the cost of shelter and food which are having such a disastrous effect on the poor and those living on fixed incomes?


Pierre Elliott Trudeau: The hon. member credits any Prime Minister with a great deal of strength if he thinks that by making such a call he will obtain automatically the result he suggests. The House will recall that four years ago we did hold a series of conferences with industry, the provincial governments and business in which we indicated the importance of fighting inflation. I do not believe we received much support from the hon. member and his colleagues at that time.


FINANCE
David Réal Caouette: Mr. Speaker, I would like to ask a question of the Minister of Finance regarding the $125 million loan just taken out by the government of Quebec on the U.S. money markets.
Does the minister know if the province of Quebec has asked the Bank of Canada for this $125 million loan?


John Napier Turner: I doubt that very much, Mr. Speaker.


INQUIRY RESPECTING STATEMENT BY BANK OF NOVA SCOTIA VICE-PRESIDENT
David Réal Caouette: Mr. Speaker, I would like to ask a supplementary.
The vice-president of the Bank of Nova Scotia just stated that if banks were authorized to include treasury bonds and short term provincial bonds in their statutory reserves, this would lower interest rates. I would like to ask the minister if he intends to take into serious consideration the suggestion made by the vice-president of the Bank of Nova Scotia who is asking, on behalf of the chartered banks, the right to include provincial government bonds in their statutory reserves.


John Napier Turner: As the vicepresident is backed up by the leader of the Social Credit Party of Canada, I shall take this matter into very serious consideration, Mr. Speaker.


David Réal Caouette: Mr. Speaker, I should like to put a supplementary question.
If the vice-president supports me, does the Minister of Finance expect that the president of the bank will support him in that same field?

April 6, 1973

Oral Questions THE CANADIAN ECONOMY


PRICE INCREASES-GOVERNMENT CONTINGENCY PLAN-LEVEL OF RISE NECESSARY TO JUSTIFY IMPLEMENTATION
John Howard Lundrigan: My question is for the Prime Minister. Some time ago the Prime Minister indicated the government would be willing to put into operation its contingency plan, which he told us has been in existence for some time, when the cost of living had reached a stage at which it seriously affected our export position and the unprotected sector of the Canadian earning community. Can he tell the House whether the cost of living has now increased to the extent that this plan will be used? If not, to what extent must the cost of living rise before the government makes such a move?


John Howard Lundrigan: Mr. Speaker, perhaps I might repeat my question as the Prime Minister obviously did not hear it, and I am sure he would certainly want to answer it.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. I think the hon. member asked his question clearly. Obviously there was quiet in the House and I am sure all hon. members heard the question. The hon. member will appreciate, I am sure, that while he has the right to ask a question he cannot insist on an answer. That is why the Chair recognized the hon. member for Oshawa-Whitby.


John Howard Lundrigan: On a point of order, Mr. Speaker, it is fine for the Prime Minister to sit and sulk, but there are 22 million Canadians across this country who want to know the answers to some of these questions.


Pierre Elliott Trudeau: The hon. member is asking for a statement of our policy on this matter. Such a statement has repeatedly been made by the Minister of Finance and by myself. When we have further announcements to make, we shall let the House know before anyone else.


Mr. Speaker:: Order, please. I realize that a number of members are seeking the floor to pose supplementary questions on this important matter, but perhaps we might try to have two, three or four questions on other subjects following the supplementary question of the hon. member for Gander-Twillingate.
I might also say that I am not sure we completed the first round of questioning. I was not able to determine whether the hon. member for York South was asking supplementaries. He called his first question a supplementary but it was perhaps more a related question than a supplementary. In fairness I think I should recognize the hon. member for Gander-Twillingate on a supplementary question at this time.


John Howard Lundrigan: Mr. Speaker, I ask the Prime Minister a very straightforward question. In view of the fact he has rejected the suggestions by our party, by the hon. member for St. John's East and the hon. member for York South, can he tell the House whether the government is willing to take any action at all toward controlling or influencing the direction of the cost of living, and will he announce to the House right now whether the government has any such plans or whether it is prepared to announce such plans, or does it intend to do nothing about this problem?


Mr. Speaker:: The hon. member for Oshawa-Whitby.


John Edward Broadbent: Mr. Speaker, my question is on housing and I direct it to the Minister of State for-


John Howard Lundrigan: On a point of order-


Mr. Speaker:: Order, please. I apologize to the hon. member for Oshawa-Whitby, but the hon. member for Gander-Twillingate rises on a point of order.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. The hon. member should resume his seat. He has raised a point of order that is not a point of order. He suggests that the right hon. Prime Minister should reply to his question, but he knows very well that he cannot insist on that.


John Howard Lundrigan: Mr. Speaker, I want to know from the Prime Minister if he refuses to answer questions by hon. members in this House-


Some hon. Members:: Order!


Some hon. Members:: Sit down!


John Howard Lundrigan: If the Prime Minister is refusing to answer questions of members of this House, it would at least be an answer if he would get up in the House and say so. But I respectfully submit that for the leader of this country to sit and sulk-


Some hon. Members:: Oh, oh!


John Howard Lundrigan: -and refuse to get up and answer a question-


Some hon. Members:: Order!


John Howard Lundrigan: -which was not in any way a partisan question-


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. The Chair has recognized the hon. member for Oshawa-Whitby. I have made my ruling on the point raised by the hon. member. He is unhappy or concerned about the fact that he did not get a reply to his question. That is his right. But again the rules are clear that an hon. member cannot insist on a reply to a question. I suggest to hon. members that we could spend the whole of the question period arguing whether or not the question should be replied to, but that would not be very helpful. I doubt whether the hon. member would achieve very much except to register his protest, which he has already done.


John Howard Lundrigan: Mr. Speaker, I rise on a question of privilege. Many members on this side of the House have
April 6, 1973

been chastised legitimately, I respectfully say, for a lack of discipline or because of the inability of members like myself to verbalize their questions. But I respectfully suggest to Your Honour that if members of the cabinet sitting across the way are not prepared to co-operate with members of the House by answering questions and giving evidence that it is the responsibility of members on this side to seek in trying to hold the government accountable, then we have lost the last bit of control we have. The only control the Canadian people have left is that exercised by the opposition during the question period. We have lost control in committees and we have lost control in respect of supply.


Some hon. Members:: Order!


John Howard Lundrigan: The only control we have in respect of holding the government accountable is the question period.


Some hon. Members:: Order!


John Howard Lundrigan: Members of the government are not being responsible when they sit sulking and refuse to answer questions by hon. members on this side.


Mr. Speaker:: Order, please.


Some hon. Members:: Order!


Mr. Speaker:: Order, please. For the third time I call the hon. member to order. I recognize the hon. member for Oshawa-Whitby.


HOUSING
John Edward Broadbent: Mr. Speaker, before I ask my serious question, may I suggest-


Some hon. Members:: Order!


An hon. Member:: Ask the question.


Mr. Speaker:: Order, please. I appreciate the hon. member's willingness to assist the Chair by making suggestions, but perhaps he could assist the Chair even more effectively by asking his question at this time.


John Edward Broadbent: Mr. Speaker, I was going to propose a 90-day freeze on questions of privilege but I will not do so.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Mr. Speaker, my question is directed to the Minister of State for Urban Affairs and relates to the increase of 6.8 per cent announced today in the cost of shelter in Canada. In view of this fact and the related fact that only 20 per cent of CMHC's capital budget is intended for low-income housing, will the minister consult in the next few days with the other two ministers responsible for
Oral Questions
that budget to see if there can be a significant increase in the allocation of money for low-income housing?


Hon. Ron Basford (Minister of State for Urban Affairs):: Mr. Speaker, I appreciate the hon. member's support for low-income housing, but there must be some error in his figures. The capital commitment budget for 1973 for CMHC is 20 per cent over what it was last year, and over 80 per cent of the units we are building or financing this year will be in the category of low-income housing, in view of the hon. members' earlier intervention, and I know he is concerned about the level of expenditure in respect of co-operative and other forms of low-income housing, I will certainly give him an undertaking to meet the requests of the co-operative movement in respect of lending under the CMHC program.


John Edward Broadbent: Mr. Speaker, in view of the fact that the $2 million the minister has allocated for co-op housing which, on his own admission last night, would account for the construction of only about 100 units or one co-operative building, and in view of the fact the co-op societies in Canada have estimated their needs for this year to be $30 million in anticipated demand, will he assure the House now that he will reallocate sums to meet that anticipated demand of some $30 million?


Stanley Ronald Basford: I have grave doubts, Mr. Speaker, that the co-operative movement will be able to make loan applications to the extent of $30 million for the year 1973. Should they do so within the provisions of the act, I am quite sure I can reallocate money from somewhere to meet that request for $30 million.


John Edward Broadbent: A supplementary question-


Mr. Speaker:: Order, please. The hon. member may ask a last supplementary question, after which I will recognize the hon. member for Northumberland-Durham and then the hon. member for Calgary North.


REQUEST THAT BANK ACT BE AMENDED TO COMPEL
John Edward Broadbent: Mr. Speaker, my supplementary question is directed to the Minister of Finance. In view of the fact the income of the average borrower under the National Housing Act is well above the average family income in Canada, will the minister take action by changing the Bank Act to make it mandatory that the banks of Canada set aside on an annual basis a certain percentage of their total investment for housing at an interest rate not exceeding 6 per cent?


John Napier Turner: Mr. Speaker, I think the legislation introduced by my colleague, the Minister of State for Urban Affairs, will go a long way toward meeting that particular problem.

April 6, 1973
Oral Questions THE CANADIAN ECONOMY


PRICE INCREASES-REQUEST THAT FREEZE BE IMPOSED
Mr. Allan Lawrence (Northumberland-Durham):: Mr. Speaker, I should like to get back to consumer price increases. My question is directed to the right hon. Prime Minister. In view of his comment a few moments ago that he and the government are considering the establishment of a food prices review board, in view of the fact that the staggering consumer price index increase revealed today covers all items and not just food, and bearing in mind the possibly unfortunate results of his remarks today, will he indicate to the House now, following the precedent of the freeze just put on Bell Canada rates, that the government will impose today a freeze on all incomes, costs and prices?


Pierre Elliott Trudeau: Mr. Speaker, I want to thank this hon. member too for the policy suggestions he is drawing to the attention of the government.


HOUSING
Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, in light of the answer the Prime Minister has just given I should like to zero in on one subject that is very important and in respect of which I think there is a national crisis. Will lje now accept that there is a national shelter crisis in Canada in light of the fact that last year the increase was a big 5.9 per cent and there was a further increase last month, and is he prepared to use the crisis theory under our constitution and bring in at least a temporary freeze on shelter costs, namely, the cost of construction and the cost of land, to help particularly those people on low and fixed incomes at this time? I suggest there is a crisis and that the people are looking for some action.


Pierre Elliott Trudeau: Mr. Speaker, you will realize that these are very far-reaching suggestions that I am receiving from various hon. members opposite. I can do no more at this time than thank them very deeply for their assistance in studying this very serious problem. I hope they will not expect me to answer to shooting from the hip such worth-while and far-reaching suggestions. We will consider them.


SUGGESTED REMOVAL OF SALES TAX ON BUILDING MATERIALS TO LOWER COST OF SHELTER
Eldon Mattison Woolliams: Mr. Speaker, this question is addressed to the Minister of Finance. This is the thousandth time it has been asked and it is still important. Would he now consider the repeal of the 11 per cent sales tax on building materials because the price of some building materials has risen by as much as 100 per cent, which means that the tax today, if it is related to [Mr. Turner (Ottawa-Carleton).l
when it was implemented, is really 22 per cent and not 11 per cent?


Mr. Speaker:: Order, please. The hon. member has asked the question. Perhaps the latter part was an argument in support of his question.


John Napier Turner: Mr. Speaker, the answer is still no, and I find my view supported by the newly elected president of the Lumber Association of Ontario who does not feel that the removal of the sales tax will have the effect the hon. member seeks.


Mr. Speaker:: Order, please. This is debate between the hon. member and the minister. The hon. member for Champlain.


CRIMINAL CODE
Mr. Rene Matte (Champlain):: Mr. Speaker, I should like to put a question to the Minister of Justice.
Could he tell us whether he intends during this session of parliament to alter the Criminal Code provisions on abortion?


Hon. Otto E. Lang (Minister of Justice):: No, Mr. Speaker.


INCOME TAX
Mr. Maurice Dupras (Labelle):: Mr. Speaker, my question is directed to the Minister of National Revenue. It is pursuant to a statement made by the hon. member for Edmonton West yesterday in his speech, as recorded at page 3005 of Hansard, in which he stated that taxpayers entitled to reimbursements will have to wait until June or July in order to obtain their refunds. Will the minister tell us when these reimbursements will be made?


Hon. Robert Stanbury (Minister of National Revenue):: Mr. Speaker, the hon. member for Edmonton West is quite incorrect. We are processing these returns as they come in and refunds, dependent on the current budget bills, will go out within two weeks after these very welcome measures of Liberal tax relief become law.


THE CANADIAN ECONOMY
Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I have a question supplementary to one asked before. I would like to direct it to the President of the Privy Council. In light
April 6, 1973

of the fact, indicated by the Prime Minister's answers, that the government has abdicated its responsibility either through fear or ineptitude, will the government House leader be prepared to consult with the other House leaders in order to permit the motion standing in the name of the hon. member for Vancouver-Kingsway, plus such amendments as may be moved to it, to be brought forward soon and brought to a vote so that the House may have an opportunity to fill the vacuum left by the government's inaction?


Mr. Speaker:: Order, please. The minister may reply to the question, but the hon. member for Peace River, I am sure, will be the first to recognize that the question is not asked in procedurally correct terms.


FOOD PRICE INCREASES-SUGGESTED SUBSIDIES TO FARMERS AND ON IMPORTS TO CONTROL COST
Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I have a question for the Minister of Finance. In view of the fact that the recent cost of living increase announced today is to such a large extent caused by the increase in the cost of food, will the minister and the government give consideration to the advisability of government subsidies on food prices both for the farmer producing food in Canada and on the large amounts of food imported into Canada on which no controls could have any effect?


John Napier Turner: Mr. Speaker, the procedure that the government has adopted, of course, is to meet the problem the hon. member brings up by increasing the disposable income of Canadians by tax reductions and by eliminating one of the cost factors of food by taking off the sales tax on every item of food and drink except alcohol.


David Orlikow: Mr. Speaker, in view of the fact that the organization of the food industry is such that distributors, wholesalers and retailers work on percentage mark-ups when the cost of the product at the farm level goes up the percentage goes up, would the government give serious consideration to a system of food subsidies which would eliminate increases of this kind?


Mr. Speaker:: That also is a representation.


STATISTICS CANADA
Mr. Bill Kempling (Halton-Wentworth):: Mr. Speaker, I have a question which is further to a question I asked the Minister of Industry, Trade and Commerce. I notice he is not in the House. Perhaps his parliamentary secretary could answer for him. I have given written notice of the question. Recently I asked the minister a question regarding possible changes in the basis and procedures for calculating the consumer price index, the industrial selling price index and the general wholesale price index. I ask
Oral Questions
the minister now whether he will assure the House that no changes whatsoever will be permitted in the bases of these indices without publicly specifying the nature and details of the changes involved and simultaneously publishing the previously used bases and figures for a period of one year?


Hon. Robert K. Andras (Acting Minister of Industry. Trade and Commerce):: Mr. Speaker, as acting minister I will be glad to take notice of the question and have my colleague answer it on his return to the House.


INCOME TAX
Mr. Gordon Towers (Red Deer):: Mr. Speaker, my question is for 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?


Robert Douglas George Stanbury: Mr. Speaker, 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 real estate 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. So, obviously this is mostly available to the buyer and most of it actually comes from public records and observation.


APPRAISALS FOR CAPITAL GAINS TAX-POSSIBILITY OF VERIFICATION BY DISTRICT TAXATION OFFICES
Mr. Bill Jarvis (Perth-Wilmot):: Mr. Speaker, I have a supplementary I should like to direct to the Minister of National Revenue. In light of the fact many Canadians have already paid for appraisals to help them determine valuation-day values of their assets, particularly real estate, and many other Canadians are wondering whether or not to do so because of the capital gains tax provisions, will the minister undertake to provide some forum, possibly through the district taxation offices, so that these Canadians can have their appraisals officially verified or otherwise?


Robert Douglas George Stanbury: Mr. Speaker, that is not possible within the resources available to the department. I think the hon. member would not want such a proliferation of bureaucracy that would permit it. It is not possible to do that for farms any more than for any other assets that might be subject to capital gains tax. The valuation has to be made at the time of disposition, and we will help all we can through the real estate data bank to make sure that information will be available so that fair valuations can be made at that time.
Oral Questions NATIONAL SECURITY

April 6, 1973


POLICE AND SECURITY PLANNING AND ANALYSIS
Mr. Robert C. Coates (Cumberland-Colchester North):: Mr. Speaker, I have a question for the Prime Minister. Are the role and scope of responsibility of the Police and Security Planning and Analysis Group the same today as they were when established by the government as the security planning and research group and, if not, on what date and under what authority was the decision taken to enlarge the role and scope of operations of this group?


Mr. Speaker:: Order, please. I have the impression this is a question that might well be placed on the order paper. Indeed, there are questions closely resembling that asked by the hon. member already on the order paper. Unless there is some urgency or some other aspect to the question-perhaps the hon. member would rephrase the question.


Robert Carman Coates: Mr. Speaker, I think I am asking a very serious question which has tremendous import to this nation and I should like to point out why.
On September 21, 1971, this House was made aware of the scope and responsibility of an organization known as the security and research planning group. On April 4, 1973, another Solicitor General, in answer to a starred question, made certain information available to the hon. member for Leeds indicating the scope and responsibility of a new organization known as the Police and Security Planning and Analysis Group.
My question is put in all seriousness to the Prime Minister, and it is a very important question which I think has a great deal of urgency. I want to know-and I believe parliament should have the right to know-when the scope and responsibility of this organization changed, if they have changed, on what basis the changes were made, and what reasons led the government to enlarge the scope as outlined in the answer to the question of the hon. member for Leeds on April 4, 1973.


Mr. Speaker:: The hon. member may be right but if, every time the Chair makes a ruling that a question might be put on the order paper, there is a question of privilege or a point of order or an argument raised whether or not the Chair is wrong in its judgment, hon. members can see where that would lead. I am sure I must be wrong very often, so there would be a debate in many instances. The Standing Order does provide a remedy for hon. members in that the matter can always be brought forward at the time of adjournment. At the same time, we have some minutes left before the end of the question period and if one of the ministers would like to reply quickly to the hon. member's question I have no objection.


Pierre Elliott Trudeau: Mr. Speaker,
I certainly agree with you that your ruling had nothing to do with the importance of the question asked. I realize its importance. It is probably also urgent in the eyes of the hon. member. But I think that the suggestion Your Honour made of putting the question on the order paper

is the best way of getting the answer from me. I would have to ascertain from the Solicitor General if there have been any changes, in depth or otherwise, in the set-up. To my knowledge, none have been made aside from a slight readjustment in name. The Solicitor General has invited hon. members to visit the premises and to meet the group. We are as open as possible on this. But the suggestion of putting the question on the order paper is the best way for me to give a thorough answer to the hon. member.


INQUIRY AS TO REASON FOR REMOVING RESPONSIBILITY FOR SECURITY MATTERS FROM ROYAL CANADIAN MOUNTED POLICE
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, I say with great deference that the suggestion that questions be put on the order paper indicates that Your Honour has not carefully examined the degree to which this government covers up information by not giving answers to questions on the order paper.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


John George Diefenbaker: I want to direct a question to the Prime Minister, whose responsibility as Prime Minister is paramount on the matter of the security of our country from within and without. I want to ask him this question. In relation to the security of classified information, which normally would be under the control of the Royal Canadian Mounted Police, has anything taken place in recent weeks or months that indicates that the RCMP cannot look after security of that kind and security in general?


Pierre Elliott Trudeau: Well, Mr. Speaker, here again I would give the same answer but I would also like to make a suggestion. If the system of putting questions on the order paper is not satisfactory- the House will realize that in the case of questions such as this one it is impossible for me and probably for most ministers to come up with an answer when the question is posed without notice-perhaps we could adopt the British system and change the question period into one where notice would be given to the ministers in advance. Then, they would answer from time to time in the House to this type of question. I would be very happy to do that, Mr. Speaker.


Some hon. Members:: Hear, hear!


John George Diefenbaker: Even on this very happy occasion of the right hon. gentleman's fifth anniversary as Prime Minister, I find it necessary to ascertain from him why there has been a change and why such security has been removed from the RCMP by means of the establishment of this organization, the Police and Security Planning and Analysis Group. Why, I ask him, is the security of classified information taken over now by a group responsible only to the Solicitor General? Does he not realize that this kind of thing would permit concealment, would permit the government to pretend that certain documents were_


Mr. Speaker:: Order, please. The right hon. gentleman has asked the question.
April 6, 1973


Pierre Elliott Trudeau: Mr. Speaker, you will recall that when the report of the Royal Commission on Security was brought down before the House a couple of years ago, one of the recommendations was to take security and intelligence away from the RCMP and to make it a purely civilian function. At that time we did not do this; we left it under the authority of the commissioner of the RCMP but under the directorship of a gentleman reporting to the commissioner and to the minister, a gentleman who was from the civil side of our society. I remember at the time there was criticism of this decision from hon. gentlemen opposite because we had not followed the recommendation and had not taken security and intelligence entirely away from the RCMP. I find it strange now that they are criticizing the general compromise position we took of leaving security and intelligence under the RCMP. I think they will have to make up their minds.


Mr. Speaker:: Order, please.


John George Diefenbaker: This is a question of privilege.


Mr. Speaker:: Order, please.


John George Diefenbaker: Mr. Speaker, I wish to rise-


Mr. Speaker:: The right hon. gentleman should resume his seat, and then I will recognize him. He says he has a question of privilege and I will recognize him for that purpose.


John George Diefenbaker: The right hon. gentleman cannot get away with such a subterfuge. That is too patently transparent even for him who, two years ago-


Some hon. Members:: Question!


John George Diefenbaker: -in December, said that inflation had been beaten and the government had done it. I have before me the recommendations referred to by the former Solicitor General at page 8026 of Hansard for September 21, 1971 when there was set up a security planning and research group. That research group dealt with insurrection potentialities in Canada but not with other matters that come within the jurisdiction of the RCMP.


Some hon. Members:: Hear, hear!


Mr. Speaker:: I am not sure whether the right hon. gentleman is on a question of privilege or whether he intends to ask a question. It seems to me that we are obviously having a debate at present. The right hon. gentleman should ask the question.


John George Diefenbaker: May I say with great deference, Sir, that a debate consists of a difference of opinions. This is a fact that I am placing before the House, not the imaginary conjuring up of something to explain by the Prime Minister. I ask him this, and it is a simple question. He is in charge of security. Why has it become necessary to remove from the RCMP the protection of the security of classified information? Why has that been done?


Mr. Speaker:: Order, please. The question has been asked. The right hon. Prime Minister might be allowed to reply. We have gone beyond the question period, but I will
Oral Questions
recognize the hon. member for Scarborough West and the hon. member for Fraser Valley West. We will have one question at a time. First, the right hon. Prime Minister might be allowed to reply to the question asked.


John George Diefenbaker: Mr. Speaker, I am always very deferential, but there is a matter at stake here that is dangerous to our country. I want to know why there has been a change. Is the government trying to cover up? Has it some confidential, secret documents that it does not want the RCMP to have?


Mr. Speaker:: Order, please. For the last five minutes I have been trying to give the right hon. Prime Minister an opportunity to reply. Unless there are many other points of order and questions of privilege, I will then try to recognize, as I said, the hon. member for Scarborough West who has been attempting to get the floor for the past 25 minutes on another question.


Mr. Cossitt:: Mr. Speaker, on a question of privilege-


Mr. Speaker:: Order, please. I apologize to the right hon. Prime Minister. He will have to wait to reply to the right hon. member for Prince Albert.


Thomas Charles Cossitt: Mr. Speaker, in deference to the office of the Prime Minister I will hold my question of privilege until he replies.


Mr. Speaker:: We must have some order. The hon. member should state his question of privilege now. After that I will allow the Prime Minister to reply and the hon. member for Scarborough West to ask his question, and perhaps by that time we will be able to call it one o'clock.


Thomas Charles Cossitt: Mr. Speaker, I rise on a question of privilege. On Wednesday last the Solicitor General gave his answer to starred question No. 1,779 which I had placed on the order paper, on the subject of the Police and Security Planning and Analysis Group. The right hon. member for Prince Albert has just now drawn the attention of the House to information previously given on this same subject in the days of the predecessor of the minister, and I find that there is a very material difference. Indeed, I would say the discrepancies are startling, and this leads me to question most seriously whether the rights and the privileges of the members of this House have been interfered with in some way.
What exactly has happened here? One of the ministers involved, either the present minister of his predecessor, was not correct in the information he gave to this House, or else the functions of the Police and Security Planning and Analysis Group have been fantastically expanded. I respectfully submit that either of these two possibilities raises a very distinct matter of privilege.
An examination of the answer given by the minister on Wednesday last to starred question No. 1,779 clearly shows that the minister states that the Police and Security Planning and Analysis Group has assumed functions that were, in effect, categorically denied in the previous information given to the House. To illustrate this I refer to the answer given to part 1 of my question on last Wednesday,

April 6, 1973
Oral Questions
where all sorts of things were included, as the right hon. member for Prince Albert has pointed out, that were not included before.
If the statements of the minister on Wednesday last are correct then I submit that in these statements there is a case of privilege involved by virtue of the fact that there is only one possible conclusion to be drawn, namely, that the government has been hiding legitimate information from the members of this House as to the true nature of this police group and that the government, without the knowledge and without the consent of the people of Canada through their elected representatives in this House, has subverted the RCMP, which has been the incorruptible symbol of Canada throughout the world, and has placed certain functions which everybody believed were functions of the RCMP, without the knowledge of the members of this House, in the hands of a group totally unauthorized by this House to perform such functions.
I submit, as one final submission to the House, that what is certainly an affront to and a breach of the privileges of this House is that there is the possibility that the government has been creating, unannounced and behind the scenes, some monstrous form of political police snoo-pery that is a threat to the democratic principles of this country.


Some hon. Members:: Oh, oh!


Thomas Charles Cossitt: What is the Police and Security Planning and Analysis Group? What kind of a dictatorial horror has been manufactured by the government-


Some hon. Members:: Oh, oh!


Mr. Bell:: It is another Watergate scandal.


Mr. Speaker:: Order, please. I believe the right hon. Prime Minister was seeking the floor a moment ago to reply to the right hon. member for Prince Albert. Although the time allotted for the question period has expired, I think that after that I should still recognize the hon. member for Scarborough West.


Pierre Elliott Trudeau: Mr. Speaker, I realize that the question is an important one, and it is because of that I suggested that, if hon. members had given notice of the question, as we give them notice, Sir, of statements we are going to make on motions, I perhaps would have been able to answer it.


John George Diefenbaker: Doesn't the Prime Minister know what is going on in security?


Pierre Elliott Trudeau: Mr. Speaker, I do know one thing that is going on. It is that the Conservative party is deliberately trying to prevent the House from working.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. The hon. member for Scarborough West.


Thomas Miller Bell: Bring on the taxation bills.


Thomas Charles Cossitt: Mr. Speaker, on a question of privilege-
[Mr. Cossitt.J


Mr. Speaker:: Order, please. The hon. member should resume his seat. It is elementary, when the Chair has the floor, that hon. members should resume their seats. The hon. member for Leeds indicates that he wants to rise on a question of privilege.


Thomas Charles Cossitt: Mr. Speaker, I consider it is a legitimate question of privilege when a member of this party raises a matter of concern to all Canadians, a matter of a very serious nature, and the Prime Minister makes some remark about the Conservative party as a way of passing it off. I think it is a matter of privilege when questions are asked in this House by a member and the Prime Minister passes them off by arrogance or by red herrings.


Mr. Speaker:: Order, please. I will not say what is going through my mind at the present time regarding this alleged question period. I recognize the hon. member for Cape Breton-East Richmond on a point of order.


Mr. Maclnnis (Cape Breton-East Richmond):: Mr. Speaker, I rise on a point of order.


Some hon. Members:: Oh, oh!


Mr. Speaker:: I am listening to the hon. member. Perhaps he might proceed.


Donald MacInnis: The point of order arises from the last answer given by the Prime Minister. As you know, Mr. Speaker, questions are often ruled out of order, but the answer by the Prime Minister on this occasion imputes motives to the members of the Conservative party simply because they asked under what authority certain matters had been done and certain information sought. He thereby violated a rule of the House and he should be called to order for an improper answer.


Mr. Speaker:: The hon. member for Scarborough West.


Allan Frederick Lawrence: I rise on a point of order.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order. The hon. member rises on a point of order.


Allan Frederick Lawrence: Mr. Speaker, my point of privilege is this:
I am a member, and proud of it, of the Conservative party in this House. There has been a claim in the House, by the leader of the government in the House, that those of us who belong to the Conservative party unduly delay the work of the House.


Some hon. Members:: Hear, hear!


Allan Frederick Lawrence: I personally, Sir, bitterly resent that.


Some hon. Members:: Oh, oh!


Allan Frederick Lawrence: I think that is a reflection on the way in which I carry out my responsibilities.


Some hon. Members:: Hear, hear!


Allan Frederick Lawrence: I think there has been a great deal of delay in the House in respect of the business of the people
April 6, 1973

of this country. I firmly believe, Sir, that it is the responsibility of the House leader and of the government of the country to get on with that business. But above all, Sir, I think there has been a reflection on my responsibilities and on the way I carry them out here, and I ask the Prime Minister now to retract unreservedly and apologize to the members of the Conservative party.


Mr. Speaker:: I suggest to hon. members that this is not the first time that one party has accused another party of delaying the work of the House. This kind of accusation is made all the time.


Allan Frederick Lawrence: Then it shouldn't be.


Mr. Speaker:: Order, please. The hon. member has stated his case. I cannot agree with his suggestion that it is a question of privilege. The hon. member may feel hurt or may feel that the statement or suggestion made is unfair or incorrect, but that does not necessarily make it a question of privilege.
While hon. members may be asked from time to time to withdraw a statement that is unparliamentary, I suggest to hon. members that in the cut and thrust of debate in the House many statements are made in relation to the other parties, and even during the current session I have heard serious statements made in relation to other parties, by members of one political group in relation to other political groups, but the suggestion has not been made, at least that I have noticed, that those statements are unparliamentary. They are part of debate. I am not sure whether they should be but they are. It is a practice that I am sure hon. members will recognize has existed for a long time. I doubt that the matter can be considered as a question of privilege.


Gerald William Baldwin: Mr. Speaker, may I agree v/ith you and say that we should get on with the business of the House.


Some hon. Members:: Hear, hear!


Gerald William Baldwin: That, Mr. Speaker, is the discussion of a tax bill which it has taken the Minister of Finance 11 months to get to the House.


Some hon. Members:: Hear, hear!


Thomas Miller Bell: He is afraid to bring on the corporate tax bill.


Mr. Speaker:: Order, please.


Frank Howard: Mr. Speaker, I rise with respect to the question that was put forward today dealing with the business of the House. I should like to submit on a point of order that when a government seeks to set up a secret police force, in my opinion that is a good reason to delay the business of the House and find out-


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. I think I gave an undertaking a long time ago to the hon. member for Scarborough West that he would be given the right to ask his question, after which I will call orders of the day-with the assistance of hon. members.
Income Tax Act INDUSTRY


CLOSING OF RADIO PRODUCTION AT DON MILLS PLANT OF PHILCO-FORD-GOVERNMENT ACTION
Mr. John Harney (Scarborough West):: Mr. Speaker, my question to myself is-how do I follow an act like that? I must say that after hearing this 20 minute debate on the rights and interests of members of this House, it is with a certain trepidation that I rise to ask a question on the rights and interests of the ordinary working people in my riding. My question would be directed to the Minister of Industry, Trade and Commerce if he were here but I will direct it to the acting minister, the Minister of Manpower and Immigration. My question concerns the announcement by Philco-Ford of Canada, as it were, that they are going to close down the rado operation of their Don Mills plant, thus throwing 100 or more production workers out of work. In view of the fact that the total production of this unit will be moved to Brazil for re-entry into Canada, would the minister advise the House whether there is anything he can do or that can be done under the provisions of the auto pact to have the company reconsider this decision made with ruthless and impersonal disregard of Canadian interests and the rights of Canadian workers?


Mr. Speaker:: The minister will be recognized for the purpose of a reply to the question, and then I shall call orders of the day.


Robert Knight Andras: Mr. Speaker, as acting minister I shall bring the question to the attention of the Minister of Industry, Trade and Commerce and I am sure he will reply on his return.


John Paul Harney: A supplementary, Mr. Speaker-


Mr. Speaker:: Orders of the day.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Thursday, April 5, consideration of the motion of Mr. Turner (Ottawa-Carleton) that Bill C-170, to amend the statute law relating to income tax, be read the second time and referred to the committee of the whole.
Mr. Roland Godin (Portneuf):: Mr. Speaker, before the adjournment debate last night, I had expressed my wish to make a few remarks about the bill now before us, Bill C-170, which some of us consider as a reform of the tax reform. We all recall that the previous reform-


Mr. Speaker:: Order please. I regret to interrupt the hon. member, but I would invite hon. members to be more courteous toward those who want to listen to the statement of the hon. member for Portneuf.


Roland Godin: I thank you, Mr. Speaker.

April 6, 1973
Income Tax Act
We all remember that the reform inspired by Bill C-259, passed on December 17, 1971, neglected some categories. In the bill before us, we find about the same faults. If the slogan of a just society has lost its value, it is simply because the Canadian government neglected to recognize some responsibilities, and I think that those who pay taxes should have the same privileges in return.
In 1971, I pointed out the advantages enjoyed by some professionals, namely lawyers, notaries, doctors and the members of any other profession who have a right to claim expenses incurred in the practice of their profession. Mr. Speaker, I not only agree but once again I congratulate all these people who succeeded in having laws passed which favour them.
But I think it is my duty to claim the same rights and the same privileges for other Canadian workers. Among these are construction workers, auto mechanics and forest workers. If often occurs that construction workers need tools worth $1,000 and they must continuously replace these tools they cannot do without. The same thing applies to auto mechanics, except for the fact that the value of a tool chest can reach $2,000. For them also there are new tools to get because of the changes in car models and because of wear and tear.
It is the same thing for wood cutters and forest workers who must part from their families for long weeks and who must support rather considerable travelling expenses in addition to their tool expenses. I believe it would also be in order that those workmen be allowed to deduct all such expenses from their taxable income, within certain limits, however, that is within a reasonable daily or weekly commuting distance.
Moreover, thousands of employees of the private or public transportation systems: railwaymen, bus drivers, truck drivers, have to take most of their meals outside their homes. It is only normal that a man should eat three times a day. So the government should allow, when determining the taxable income, such extra expenses to be taken into account in respect to various jobs.
Some tax rules recognize some expenses, but the implementation of those rules make me wonder. I hope I am mistaken, but I fear that the implementation of the Income Tax Act can vary between the year before a general election and the year after.
Let me quote before the House two documents concerning the meal expenses that truck drivers are trying to have allowed as deductions in the legislation. With leave of the House, I shall read a letter that was addressed to me by the Minister of Consumer and Corporate Affairs (Mr. Gray), then Minister of National Revenue, on March 19, 1971.1 quote:
Further to the questions you asked in the House on February 17 and March 4, 1971, I have to inform you that the department has not established new rules prohibiting deduction of the cost of one meal per day by the taxpayers.
In fact, following several complaints, similar to those expressed by your constituents, in the year 1969, the department has conducted a study on the matter of expenses incurred away from home which transportation and railway company employees throughout the country wish to claim as a deduction. This study showed that many of these claims were not supported by vouchers and that the department's policy was not consistent.
[Mr. Godin.l
It was found that those taxpayers find it hard to keep records and obtain vouchers to account for their meal expenses. Consequently, a policy was adopted under which workers in transportation and railway companies, when they could not produce vouchers, received an allowance based on the length of their stay away from their usual residence and on a reasonable amount for the cost of each meal. Moreover, the study we conducted as well as the discussions we had with officials of various trade unions have shown that an amount of $1.75 for each meal was reasonable.
As a rule, when a taxpayer has to be away from his normal place of residence for a period of at least 10 hours, he is allowed to claim three meals at $1.75 each, or a total of $5.25.
I must point out that when a taxpayer produces the TL22 form, which is in fact a claim for expenses incurred away from home, as well as the vouchers for his meals on the road, he may be granted more than $1.75, this amount having been set to check the claims from taxpayers without vouchers.
If you feel that some of your electors were not compensated according to the policy outlined above, please send me their names and addresses.
The letter ends with these words:
Sincerely yours.
And it is signed by the minister.
Last January I received another document from the Minister of National Revenue (Mr. Stanbury) concerning the various claims of truck drivers. It contains the example of a taxpayer whose claim for 1970-71 was reduced from three to two meals a day. In the absence of a detailed report and of a statement of night trip expenses, this would seem to be fair.
In connection with another case, we can refer to information circular 71-30 which reads as follows:
-When a truck driver has the right to deduct meals, he must provide vouchers for claims over $2.50. All meals claimed by this taxpayer were approved, but since he did not supply vouchers, his 1970 claims were reduced to $2.50. His 1971 claim was reduced to two meals a day at $2.50 a meal, in the absence of a detailed report and statement of night trips. This would seem fair.
Mr. Speaker, some senior civil servants informed me that the letter from the Minister of National Revenue dated 19 March 1971 contained a mistake.
The mistake was allowing $5.25 a day for meals for a 200 pound truck driver who works 65 hours a week.
Apparently, the truth was to be found in the second document: two meals a day at $1.25 each.
Mr. Speaker, truck drivers are not asking for their meals to be reimbursed. All they are asking is that their meal expenses be acknowledged and be made tax deductible. There is quite a difference. I am sorry to have to point this out, because I think that there are two sorts of ministers in the present government: there are the good guys, and the others. Personally, I like to think the hon. Minister of National Revenue belongs in the first group.
In view of the Department of National Revenue's large number of employees, the minister obviously cannot control all those public servants. There may be among them people who like to make trouble, over-eager people ready to defy regulations.
So, Mr. Speaker, public accounts have already revealed that the Canadian government was paying for $65-a-day hotel rooms and $12 meals for some CBC employees.
April 6, 1973

Mr. Speaker, I feel there is too great a difference. In fact a $12 meal for an employee who is wondering what he was hired to do and a $2.50 meal for another whose 65-hour week is not long enough for him to do his work, is somewhat revolting.
Now, Mr. Speaker, I wonder what to believe. Because of contradictory documents, I am under the impression that the more you ask the greater the chances of getting it. And in certain cases regulations seem to be truly ignored. Allowing $5.25 to a truck driver who works about 250 days a year means that he can claim about $1,300 a year. In the riding of Portneuf one man put in a claim for $1,675. For 1971 he gets back from the Department of National Revenue the following correction: Travel expenses claimed: $1,675, revised travel expenses: $1,115, which is not too bad for this man.
There is another one who asked for $1,500 for 1970. The department answered:	revised travelling expenses-
$1,000. Another one, Mr. Speaker, had claimed $1,300 for travelling expenses in 1971. He received the following adjustment: revised travelling expenses-$910. A third applied for past travelling expenses of $1,312 for 1971. He was abiding by the rules, according to the letter from the former Minister of National Revenue. Nevertheless, the department sent him a new bill which read: revised travelling expenses-$875.
A fourth claimed $1,275. He received the following note: revised travelling expenses-$875. A fifth claimed $1,280 which was reduced to $868. One who had applied for $1,026 for 1970 was allowed a deduction of $708.75. Another who had claimed $1,061 for 1971 was allowed $647.
Mr. Speaker, another claim of $941 for past travelling expenses in 1971 was changed to read: revised travelling expenses-$437.50.
Some were totally disallowed. Others filed a regular claim and were disallowed 50 per cent of it.
Mr. Speaker, how are regulations applied? I am still wondering since I am under the impression that the higher the claim, the likelier a truck driver is to see his expenses allowed.
On March 4, 1971, the Parliamentary Secretary to the Minister of Finance (Mr. Mahoney) gave me the following answer which I am reading as it appears in Hansard for March 4, 1971, page 3981:
Meanwhile, the hon. member may be assured that the 9,000 audits referred to in the question he asked originally-and presumably the instance that he cited this evening was an example of one of those-are simply desk audits in the ordinary course of the department's 1970-71 reassessment program pertaining to the returns of taxpayers who have claimed deductions from taxable income of personal living expenses while away from their ordinary place of residence. This is part of the regular departmental procedure to assure that our self-assessing tax system works properly.
Mr. Speaker, accounts are sent to know if the system works. I think that we can work with such methods only in the name of the law. We want to know if it works, so we send accounts. Let us imagine the small retailer who would send fictitious accounts to residences in his neighbourhood to know how it works! Imagine a taxi company that would start collecting money for fictitious trips to know how it works. I think it would not be long before
Income Tax Act
people would call it highway robbery or a scandal. I think they would be right. This is called tampering.
Mr. Speaker, the many officials working for the department should concentrate on something else. In the name of the law, foolish things, can be done, but I ask the Minister of National Revenue to suggest to his officials to proceed with understanding, honesty and, above all, common sense.
Also, Mr. Speaker, I wish the minister would make us aware of his intentions. I wish he would make a statement to the House in order to assure the nation's truck drivers that they are entitled to three meals a day.
I would also like to suggest that the act provides for a penalty equal to 50 per cent of the present tax which some citizens would try to evade. I do not see anything in this bill aimed at changing this provision of the act.
In fact, right now, anyone having violated the Income Tax Act has to pay a fine equal to 50 per cent of the unpaid tax. Which means that if a person owes $5,000 in income tax, he will have to pay $7,500.
In some cases, I find this legislation quite ridiculous, because we often realize that those who worked harder are those who are the most hurt by its enforcement.
Tax officials go everywhere, make investigations, harassing small businesses, mostly, private enterprise, corner stores, those who work 365 days a year, who never go to Florida and who support only one woman, their wife.
Then, they show up at a business that does not operate like a company. This businessman has been living so sparingly that he has managed to save $150,000 over 20 years. Now the investigators prosecute him. He is charged with having concealed some income, and he is billed. In addition to his income tax, he must pay a fine. As he is kind-hearted-whether he is a dealer or a businessman- who earns his living and has customers, too often he pays without uttering a word, because he is unfortunately afraid of being pointed at. I think he could avail himself of the act and demand that his case be heard before a court. But to save his reputation and his business he cannot afford to make his problem known publicly.
Unfortunately it is too often that industrialists and businessmen are faced with that problem. I would like to get the minister's views on that practice.
We know that there are families which manage with $6,000 a year and that for others $12,000 is not enough. I think that surveys made by the Department of National Revenue should take those facts into consideration.
When an industrialist or a businessman has set $10,000 aside, it might well be that he hid nothing but it can very well be that he administered his business as a true businessman.
Another thing I would like to point out with regard to Bill C-170 is that the bill contains certain provisions dealing with the transfer of family farms. On the face of it the provisions seem interesting. However, looked at in the general picture this measure is far from being adequate

April 6, 1973
Income Tax Act
as it deals only with the transfer of farm property at the death of the father or the mother.
In brief, under the present government one must die to expect benefits. That provision of the act really lacks rationale and I think it should be amended so as to make it more reasonable.
At the moment, farmers as all other citizens of Canada must wait until they are 65 to qualify for an old age pension. One must remember that farmers as other citizens work hard. Some are exhausted, others are stricken by illness, the case might very well happen where for such reasons a farmer is forced to sell his farm to his son at the age of 55 or 60. And because social welfare allowances in Quebec are very low the farmer selling his farm should normally expect to benefit from his property and live a few years of peaceful life.
That is why I hope the minister will come up as soon as possible with changes which I consider indispensable for that class of society.
We all know how difficult it is to live on a farm and those who succeeded in that profession had to work very hard. They turned to their wives and to all the other members of the family for help. For this reason, it is the Canadian government's duty not only to bring in measures to incite young farmers to take over but also to spare the latter the pain of seeing unduly heavy or harsh taxes levied against parents who wish to retire at a reasonable age or who are compelled to stop working. [English]


Allan Frederick Lawrence: Mr. Speaker, I wish to speak very briefly on this matter and one other matter that was raised a little earlier about the passage of legislation through this House. It should be on the record that those of us in this party certainly intended to see passage of second reading of this bill last night. We were fully in agreement with the Minister of Finance (Mr. Turner) on this matter, as I am sure he will acknowledge. It was not our group that held up the passage of this legislation last night.
With all due respect, if the Prime Minister (Mr. Trudeau) were in his place in this House a little more often to see what is going on here, he would not be so wild in his accusations about holding up legislation. We were quite willing to pass second reading of this legislation last night. It was another group in this House which indicated it had a long list of speakers, and that is what is holding up this bill.
There is only one other matter I wish to mention. My intention is to urge the minister and the government to reconsider this bill and redraft it slightly to make it more realistic to the needs of the farming community. There is no denying that this is sensible and necessary legislation. I know that we in the Conservative party were complimented frequently during the election for proposing in our platform that capital gains taxes should be waived on the transfers of working family farms from one member of the family to another. I might compliment the government for its wisdom in lifting this plank from our platform. However, I would like to stress, Mr. Speaker, that they have not taken the whole plank. In fact, they have forgotten or ignored a very important part of it.
[Mr. Godin.l
Politics aside, Mr. Speaker, the trouble with this bill as it stands is that it does not go far enough. I think all members of this House who represent farming areas will agree with me on this point. The legislation, to fully accomplish its intent, should waive the capital gains tax where a farmer who is retiring, passes on his farm to his son, daughter or spouse who is to continue to work the farm. The child or spouse should not have to wait until the father dies to become owner, or else pay capital gains tax.
As one agricultural spokesman in my riding noted when referring to this measure, many farmers are notoriously long-lived. Therefore, as this bill now stands, we could have a retired farmer dying at age 90 and passing on his farm tax-free to his son who is 70 and also retired, and whose own sons, or perhaps even grandsons, are the ones actually working the farm. It is unrealistic. It creates as legal fiction. Surely, it is only sensible and realistic to allow the ownership to pass, unhindered by this tax, to the member of the family who is actually working the farm.
I recognize that at this stage such an amendment by us would be out of order, but I hope that all members of all parties will agree to a Conservative amendment which will be moved in committee along these lines.


Mr. Speaker:: It being one o'clock, I do now leave the chair. The House will resume at 2 p.m.
At one o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
Mr. Doug Neil (Moose Jaw):: Mr. Speaker, I should like to confine my remarks this afternoon to the proposed amendments to the Income Tax Act as they relate to the farming community.
I listened with a great deal of interest to the budget speech delivered by the Minister of Finance (Mr. Turner), on Monday, February 19, in the course of which he said:
I should like, now, to draw your attention, Mr. Speaker, to another matter which is of great importance, namely the preservation of the family farm.
I expected the minister would then go on to announce tax changes which would in fact help to preserve the family farm. I thought that at long last the government really intended to recognize the pressing problems in agriculture. The thought occurred to me that the election slogan "the Land is Strong" was not just a gimmick but something in which members on the other side really believed. I guess I was wrong. It was a gimmick, and the land is strong only when the farmer dies.
What we need is legislation which will exempt the family farm from capital gains tax when it is transferred during the lifetime of the farmer. The Minister of Agriculture (Mr. Whelan) has gone around the country attempting to give the impression that the present legislation is great legislation, and that it has solved the problems of the farmer who wishes to pass his farm on to his son. I suggest the minister does not understand the legislation. At least, he did not understand it eight days after the
April 6, 1973

budget. He did not understand that it referred to the transfer of land on death only.


Mr. Whelan:: I did so.


Douglas Charles Neil: Let me quote from notes of an address the Minister of Agriculture made to the annual meeting of the Canadian Horticultural Council at the Chateau Laurier on February 27.


Eugene Whelan: Someone has already done that.


Douglas Charles Neil: He said:
Farmers specifically got an exemption from the capital gains tax for family farms passed from parents to children. I welcome this change for two reasons. First of all, it recognizes the importance of the family farm as our basic unit in agriculture. This tax concession does not apply to corporate giants, but to the family farm. Second, the change encourages farmers' children to stay in this business of agriculture. We need good, young farmers in Canada today. A high percentage of our farmers are at, or near, retirement age, and we need the help the budget gives to transfer farms to the next generation.
It is obvious that the Minister of Agriculture was not consulted by the Minister of Finance when his budget was prepared. It is obvious that what the Minister of Finance did was attempt to adopt one of this party's proposals during the election campaign, a proposal he thought was popular with the farmers in the west and one which would make him popular. He did not do his homework as well as he did when he adopted some of our other proposals, such as reducing personal income tax. He only adopted part of this proposal.
I suggest that neither the Minister of Agriculture nor the Minister of Finance understands the problems involved in passing on a family farm from generation to generation. I have practised law in an agricultural area for over 20 years, and I can assure both hon. ministers that even without the capital gains tax, without estate taxes or succession duties, there are numerous problems. It is very rarely that a farmer wishes to retain his farmlands until he dies and then pass them on to his son. He wants, in a majority of cases, to retire at 60 or 65 years of age and at that time turn his farm over to his son. Sons will just not wait and do not want to wait until their fathers die before establishing themselves in farming. If there is more than one child in a family a son does not want to run the risk of waiting until his father dies because, in many cases, the son is middle-aged before his father passes on.
During the lifetime of his father he could make a reasonable business deal with him for the purchase of the farm on agreed terms, whereas in many cases on the death of the farmer the son is faced with the fact that there are other members of the family who have a share in the estate, or is suddenly faced with the need to raise a substantial amount of cash in order to pay off the other beneficiaries. In numerous cases, and I have seen this happen often, a son has not been able to raise sufficient money to buy out his brothers, sisters and other members of the family and the family farm has had to be sold. The son then finds that he has spent most of his life working on the farm for nothing.
Income Tax Act
Quite often as well a situation arises in which a son has worked all his life on the family farm, only to find that in the final one or two years of the father's life they become involved in an argument, the father changes his will and the farm goes to someone else so the son is left with nothing. The most common arrangement over the past number of years between fathers and sons has been for the son to work for the father, building up some capital of his own, possibly acquiring some land of his own, and then, when the father is ready to retire, the son purchases the farm.
Farm prices in Saskatchewan, as hon. members are probably aware, are subject to wide fluctuation. Valuation day, December 31, 1971, was a time when farm prices were low, possibly 50 per cent lower than they were two years previous. Since December 31, 1971, farmland has started to increase in value and, if we continue to have good markets and good prices for grain, the price of land will continue to rise. I suggest that soon there will not be a farm in the province of Saskatchewan which will not be subject to capital gains tax when sold. I suggest also there will be a continuing and increased reluctance on the part of farmers to sell or transfer their land to their sons because this will attract a substantial amount of tax, and the result will be that instead of preserving the family farm there will be a destruction of the family farm.
I would urge the minister to give immediate and serious consideration to the elimination of capital gains tax on the disposal of farms during the lifetime of the farmer, not only when he transfers or sells the farm to his son or a member of his family, but also when a farmer disposes of his land to anyone during his lifetime. The Minister of Finance and the Minister of Agriculture might say that to eliminate the capital gains tax on any sale by a farmer would be giving the farmer an unfair advantage in relation to other citizens of Canada. I submit, Mr. Speaker, that this is not so, and I would point out that in a majority of cases the only source of funds many farmers have for retirement use is the proceeds from the sale of their farmland.
In rebuttal the minister might suggest that a farmer on retirement can draw the benefits provided under the provisions of the Canada Pension Plan. On March 19 I spoke in this House on a motion I submitted on January 12, suggesting that the government should give consideration to the advisability of allowing farmers to make contributions to the Canada Pension Plan, regardless of their net income. In that speech I pointed out that the income of a farmer is subject to great fluctuation and, generally speaking, in a five year period a farmer would have one or two years of substantial income and two or three years with little or no income or, in many cases, a substantial loss. The result is that the farmer probably makes Canada Pension Plan contributions two years out of five on the average and, therefore, when he begins to draw his pension on retirement it will only be nominal.
Many family farms today are small units and, generally speaking, after the debts most farmers have are paid following disposal of the farm, the net return from the sale is no more than sufficient to enable the farmer to retire comfortably. If we charge a capital gains tax on the sale of such a farm we will further reduce the amount the

April 6, 1973
Income Tax Act
farmer has available for retirement. The minister has not seen fit to say whether the elimination of the capital gains tax on the passing of a farm at death refers to the shares held by a farmer in a family farm that has been incorporated. It may be that he has been reluctant to exempt the disposition of shares in a family corporation because this might upset hon. members to my left. To them the word "corporation", whether it be large or small, is a dirty word, and I appreciate that the minister might be reluctant to upset those hon. members and do harm to their cosy relationship.
I point out to this House that in the past eight or 10 years it has been fairly common, in Saskatchewan at least, for a farmer and his son or sons to incorporate. I will not go into the reasons for incorporation as I am certain the hon. minister, being a lawyer, will understand. Basically, however, incorporation has been carried out by farmers as a means of estate planning. If a farmer is not allowed to dispose of his shares on death without attracting a capital gains tax, I suggest that this particular segment of our farm population will have been discriminated against. The preservation of the family farm is of vital concern to all Canadians. We must do our utmost to ensure its continued existence. I am sure it was an oversight on the part of the Minister of Finance when he failed to adopt our policy in total. It could not have been intentional. Our party will give the minister its wholehearted support if he will now undertake to adopt the balance of our party's policy.


David Réal Caouette: Mr. Speaker, Bill C-170 on personal income tax will not bring much of a tax relief to the working people.
Increasing the basic exemption by $150 or $200 a year is no big deal. For years we have been requesting that all incomes under $5,000 for married people be income tax free and that a personal exemption be granted amounting to $500 per child. With a family of six children, the exemption would be $3,000.
We also ask that all incomes under $2,500 earned by single people be tax free and this would improve the plight of those who have no way of "playing" with the tax department. In fact, in their case, their taxes are deducted from their salaries whereas for the well-to-do people there are always expenses for administration, recreation, maintenance and communication which can be claimed as exemptions.
Such is not the case for a worker. The men working for Noranda, in my constituency, and those working for Canadair Limited or Canadian Vickers Limited, in Montreal, have their salaries reduced even before getting their cheques. The situation has become unbearable. I remember myself saying about 20 years ago: if we continue in this direction, within a few years the cheque vouchers will be twice as long as the cheque itself. Have we not reached that point now? In effect, the cheque vouchers are at least 18 or 24 inches long and the cheque itself about 6 inches If we keep on like that for 10 years more the worker will not get any cheque. He will simply receive the voucher which will explain to him how his money has been spent.

There will no longer be any salary but only a breakdown of expenses imposed by bureaucrats, technocrats and all the government employees.
There is another thing that we requested, and that we are still requesting: How is it that a worker, whether he is employed by Canadian National, Canadian Pacific, Air Canada, Coca-Cola Ltd. in Montreal or Seven-up in Levis, or by the little spruce beer plant in Chicoutimi, may not deduct from his taxes his own tools that he uses in his work?
All classes of society have the right to deduct tools and even clothing, within limits.
For example, a doctor can deduct from his income tax any new scalpels that he buys. His new office is tax deductible; if he uses his car to go and see patients, he deducts that from his income tax.
And yet the worker in Montreal, Rouyn, Quebec City or Trois-Rivieres does not have the right to deduct his car expenses for going to work; he does not even have the right to deduct expenses if he uses public transport.
To work in a mine, for example, you need a whole set of equipment: a special helmet, a gas mask, rubber clothing. The worker cannot make deductions. He has to buy boots, a safety helmet, a lamp; yet he may not deduct from his taxes these expenses that are directly incurred in carrying out his duties.
Mr. Speaker, what is the reason for this discrimination against Canadian workers? It is in effect everywhere.
If I have a business, and I change my furniture, I deduct the cost on my income tax return. If I use my car I deduct travel expenses from my income because I use my car for going to work, for travelling all around my constituency. But a factory worker does not have the right to do this. Why not?
The same thing used to happen when Their Royal Highnesses the Progressive Conservatives were in power, with the largest majority that the government has ever had in the House. The workers were treated in just the same way. Today, we hear them weeping on the workers' shoulders. Now they say the workers are being mistreated! Yet when the Progressive Conservative party was in office, they treated workers exactly in the same way. They are what I call'"hypocrits in furs". There is no other way of designating them. They are guys who are ready to do anything when they are in the opposition, but once in office they prove to be inefficient, helpless, numbers, they are of no use.
Mr. Speaker, the Income Tax Act should apply in the same way to the whole society, and basic exemptions should be improved so that ordinary workers, low wage earners, white collars, in short everybody would benefit from them. We must not always relieve the rich and ask the poor to pay more.
Mr. Speaker, this year, for instance, Statistics Canada forecasts that our national product thanks to the work of all workers, farmers, etc., will reach $102 billion. However, the national annual income of the Canadian people-including Members of Parliament-amounts to $70 billion.
April 6, 1973

Mr. Speaker, how can we possibly buy $102 billion worth of products with an income of $70 billion? As I have said quite often, instead of fiddling about under the income tax legislation with some $70 billion which are not enough to enable our production to reach consumers, why does the government not go and get new credits at the Bank of Canada in order to relieve taxpayers from taxes they are now paying?
Could the worker who pays $500 or $600 a year in taxes not use these $500 or $600? Let us ask them. They could certainly spend them. If they were able to do so, they would spur production and create jobs. We would fight against unemployment and inflation at the same time; this would not increase prices, since it is included in those $70 billion.
Mr. Speaker, the government is not thinking about that because economists fail to draw that consideration to its attention, and as it relies on economists, on shady tax speculators as I call them, on people who base the economy on taxation, on lunatics, on guys lost in the fog, the government is idle.
They are waiting for the economists. It is quite strange to hear them! A liberal economist will say to the Liberals; "This is how taxes should be levied." The Progressive Conservative economist who has attended the same university says: "That economist is wrong. As a Progressive Conservative, I have a better solution; instead of taxing A let us tax B". The Neo-Democrat intervenes: "Let us tax both. We will dispossess them as much as possible and give that money to the government". He is wiser than the economists or the political parties. He knows how to bring everybody to their senses. Down with free enterprise and long live state socialism!
Mr. Speaker, there is a limit to such deception. This is still being done today. Indeed, as long as Canada has existed, they have been meddling in the same mess and the same system to try to distribute scarcity when there is an abundance of products everywhere. But why do we not adjust our financial system to Canada's production, to the result of society's work? Production is the result of the work of labour, farmers, white collars, lawyers, professionals, in short, of all the people. But no! They try to equate all people with the total annual income, which economists do not want to disturb, because they would have to proceed with a monetary reform.
Mr. Speaker, they don't laugh at Social Credit as much as they used to but still, in certain circles, through ignorance, ill will, bad faith or simply because they do not think of it, some people still find that funny. They figure that the system is perfectly logical until these people feel somewhat cornered. When they do, they change their minds and say that something ought to be changed. In order to do so, they say: Let us take $10 from Peter's pocket and put it in Paul's, less the cost of bureaucracy. Then, they distribute less than what they have collected. After that, they wonder why there is a lack of purchasing power among the people.
They are all shouting: Spend more, spend more. Go and tell the fellow who has $50 to spend $150. Can he? Spend more, they say, but with no more than you have. That is
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impossible. And that is what economists are suggesting here in Canada. They say: Spend more. Where is the money to come from? I don't know, they say, but spend more just the same. That is clever.
Mr. Speaker, we propose a solution. As for income tax, we don't say "Abolish it immediately but: Begin at the beginning. All incomes under $5,000 for married persons should be free from tax and there should be an exemption of $500 per child, and of $2,500 for single persons. Now, the bill before us provides for a basic exemption of $2,850 for married persons and $1,500 for single persons. Just imagine! A single person will be saving about 12 or 13 cents a year. Big deal! A married, childless person will save what? Twenty-five cents. Then, the government will say: See how generous we have been to the Canadian workers!
I see the Minister of Finance (Mr. Turner) is smiling, but he knows full well I am right. He introduces his Bill C-170 of which I heard someone say: The transfer, at death, of farm lands to a child requires capital gains declaration. That means that if a farmer owns a beautiful farm, he may not bequeath it to his child before his death without paying a tax. Upon his death, he may bequeath it to his son without having to pay taxes. One hon. member said this morning, I do not remember which one: Take a farmer of 92 years of age. He dies. His son of 74 inherits the farm. The grandson of 50 or 52 farms the land because his father of 74 is no longer able to do so. Still, the latter inherited the farm without having to pay tax while his son has to do so. Then the government figures it has helped out agriculture.
Mr. Speaker, what a shame to laugh at people like that!
But why, when everybody in Canada is claiming that agriculture is going bankrupt, why is nothing done to make it possible for a father to hand his land over to his son when the latter is 20, 22, 25 years old? Why do people now leave the family farm in order to go and live in the city? It is because the land is no longer providing farmers with a livelihood. People are compelled to go to work in the city to keep their farms going. Despite that, the government keeps on levying taxes as soon as the father hands over his farm to his son. Now we are told that after the father's death, the property can be transfered without any taxes having to be paid.
Mr. Speaker, this is not a solution. A few days ago I heard some Acadians from New Brunswick say that it will be fashionable within a few years to go back to the farm. In fact, it is now realized that life on the farm is much more natural than life in the chicken coops of Montreal, Hull, Ottawa or Quebec City. It is quite natural: That is not the point provided they have the right to live. There is no return to farming as at the time of the Vautrin program in 1935. Settlers were "carried up" to Abitibi in "ox carts". Mr. Speaker, this is not a return to farming. It is a return to the ox. This is not where they should go but back to farming.
To meet this objective, we should have a global policy which would enable farmers to live on the land. Would not a farmer's son live more happily there than in the Noran-da mine, 8,000 or 10,000 feet under ground, where he will surely lose his health within 15 or 20 years whereas by farming and raising some livestock and by gardening he

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could live and raise a family. You cannot do that in the Montreal streets where the air is polluted by carbon monoxide from cars.
I submit that our provincial governments, with the assistance of the federal government, of the municipalities and of public bodies, should establish a program to spend money as it is done in the big cities to facilitate their return to the land for those interested in doing so. I am confident that these chicken coops will be emptied, that we will resettle the land particularly in Quebec which I am most concerned about.
We shall have helped humanity in connection with social, economic and political problems in so far as people will think of Social Credit.


Mr. Isabelle:: You are doing a commercial!


David Réal Caouette: I am doing a commercial to keep the hon. member for "dull" and not for Hull interested; the "H" should be removed.
Here is the proof, Mr. Speaker; The Minister of Finance was applauding me. I was right to mention the hon. member for "dull".
Joking aside, the Minister of Finance should think seriously of amending this provision of the bill, so that the farmer can transfer his property when he is alive. It is not after death that one must have the opportunity to live, but when one is alive. We should allow the farmer to transfer his property to his son, if he is interested in farming. In this case, let the 25 or 30-year old son become the owner of his father's property without being forced to pay taxes.
The minister realizes this very well. About 90 per cent of our farmers are on provincial or federal farm loan plans. If this has mortgaged their estate, why should we tell them: If you transfer your mortgage to your son it will be considered as income and you will have to pay taxes even on the transfer of your farm.
Mr. Speaker, it is not logical, It is not a way to help farmers or to encourage the young man to carry on his father's agricultural work. No, it is not. We discourage young people when we say: go away, go to town, go to Sarnia, Sudbury, Montreal, or Toronto, leave the land!
After that, what do we see? Smart Americans come to Canada and buy farms by tens, hundreds and thousands; they try to get hold of lands bordering lakes or near urban centers. They will then be divided up and sold back to our fellow citizens at very high prices, while action should be taken immediately, not to send the Americans back home like the Iroquois and the Hurons in 1604, but to help our citizens to own something.
I believe the minister should consider amending that clause to allow present landowners to transfer their property to their children without having to pay any income tax. The various working classes of society should be granted exemptions of up to $5,000 for married couples and of up to $2,500 for single persons; $500 could be granted for each child. The Minister of Finance could then stand proudly and say: At last, I have applied part of the Creditistes' wonderful program!


Frank Howard: Mr. Speaker, it is always a delight to answer the hon. member for Temiscamingue (Mr. Caouette), and particularly today to follow him because our views, only on this matter, coincide. I have a concern about the manner in which personal income taxes have their impact upon people living in urban areas vis-a-vis those living in rural or northern areas. This concern is a bit larger than the concern I have over the impact of these taxes upon the family farm and the transmission of the farm through the generations. None the less, it is still a concern over the impact of tax law as it applies to individuals living in those two types of settings, urban and rural. It has long been recognized in Canada that, because of the fact the population is concentrated within a few miles northward from the U.S.-Canada border, we have always had higher costs the farther north you go from that border and the farther you go from the urbanized centres.
There was reference earlier today about the effect of a 7 per cent freight rate increase to a shipping company, Northland Shipping, in my own province, the result of which is to place the cost of food, for instance in the Queen Charlotte Islands, somewhere in the neighbourhood of 20 per cent higher than it is in the lower mainland area of the province. There is the situation in the midnorth area of the province, all through the area of Prince George and Vanderhoof, where food and living costs run anywhere up to 15 per cent higher than they are 500 miles to the south.
We also have the fact that all across Canada the facilities and services available to society are fewer in the rural and lesser populated areas than they are in the urban centres. Invariably, or almost universally across the land, if you have an extreme or rare ailment, or even moderately rare ailment, you do not get the medical attention that is necessary in your home town if it is a smaller sized community. You have to travel to the larger centre to get that. In Manitoba, the movement of people has to be towards Winnipeg, Brandon and Portage-that part of the province-in order to get the special medical attention that may be necessary. In British Columbia, it is to Vancouver or to Victoria on Vancouver Island. I do not know Ontario that well, but I am quite sure that people in Northern Ontario do not have medical facilities available to them to the extent that they are available to people in the Toronto-Hamilton area.
Recognition was given to this problem in the budget speech which the Minister of Finance (Mr. Turner) made on May 8 last. In order to put it on the record, just in case by some extreme circumstance someone may read what I am saying at some later date, I will read what the minister had to say on May 8 last year in respect to that particular matter of medical expenses.


John Napier Turner: It is already on the record.


Frank Howard: I am sure it is on the record, but it is not on the record in the way I want to put it. It is not in the context of an analysis; it is only in the context of a
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presentation, a presentation that has a failure in it that I want to draw to the minister's attention. The minister said, as recorded at page 2005 of Hansard for May 8, 1972: -I propose to include as a deductible medical expense amounts paid to commercial transport services for transportation of a taxpayer or his spouse, or dependant, and an attendant if necessary, to and from a hospital, clinic or doctor's office to which the individual has travelled a distance in excess of 25 miles to obtain medical services not otherwise available nearer home.
I am not sure whether "in excess of 25 miles" is the round trip, or the one-way distance about which the minister is talking. In other words, if a person is living 13 miles away from where he has to get medical attention, would his going and coming constitute 25 miles or not? The minister shakes his head, so I think it is 25 miles one way.
The minister also talked about paying amounts to "commercial transport services." I think that is a bit too narrow. Let me give a case in point from my own knowledge of the area. In central British Columbia, along the coastal area, there are three communities of relatively equal size, Prince Rupert, Terrace and Kitimat. An attempt is being made to place specialized medical services of a particular nature in all of those communities, with each type different from the other one, so that there will be access to a variety of medical services in the area. Kitimat and Terrace are 38 miles from one another. If a person in the community of Terrace has to travel 38 miles to the hospital at Kitimat, one way, to get specialized medical attention, he would be unable to take advantage of this provision mentioned by the minister because there is no commercial transport available between those two communities. He would have to take a car. If the bill reflects that narrow a concept of commercial transport this is something that I would like the committee to look at, and I will probably expand on it at that stage. I am sure this situation is duplicated in many parts of Canada.
If the principle is recognized that people in smaller communities have to travel some distance in order to get medical attention not available to them in the smaller communities, then this provision should be available to all without confinement, whether or not there is commercial transport available to them. I understand it is government policy, or a least government thinking, to curtail urban growth and concentration of population, facilities and services in metropolitan or urban areas, in order to decentralize these facilities.
I submit that what our tax law is doing as long as it is maintained on the basis that a person is liable to the same percentage of taxation, depending on what income class he falls into, is making him liable to pay the same amount of tax regardless of where he lives or works in this country. In effect, this policy subsidizes urban living and the facilities that exist there at the expense of the facilities that might be available in rural areas. The tax each individual pays, is, in effect, assisting to attract people to the urban areas where the educational facilities are more specialized and varied, the medical services are more specialized, arts, drama and the theatre may be more specialized and more available than in the smaller areas. If you want to hear a good jazz band in Saskatchewan,
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you cannot hear it in La Loche or Buffalo Narrows; you to go to Saskatoon and even there you have to go to the university. In British Columbia, the only place you can go to the opera is in Vancouver. I cannot, at times, understand why people would want to go to Vancouver but they do. Nevertheless, this tends to attract people to the urban areas, especially for such purposes as medical attention or the larger number of facilities and services that are available there.
I think we have to recognize that it costs more to live in northern areas than in the urban areas. We have to recognize the fact and reflect it in a discriminatory way in our tax structure, that there are more facilities and services available in urban areas than in northern or rural areas. We also have to compensate for that by providing the person who lives in the northern or rural area with a special tax consideration. In other words, he should pay less income tax than his counterpart in the city.
I think this was recognized in the speech that the minister made on May 8-and he nods his head. He recognized that problem in so far as travelling for medical purposes is concerned. He should also recognize it in terms of the cost of living in northern areas. The government recognizes it in some mid-northern communities in British Columbia by providing a special living allowance to its own employees. The people who do not have the advantage of working for the federal government are left on their own in those areas.
I am not asking the government to say that every employer in every area where the government, by its own edict, has recognized that people have higher and special costs should give a bonus to compensate for that. I do not think that would be possible and it would not take into account collective bargaining and that sort of thing, but surely the government could recognize the advisability of a lower tax rate in those areas. There could be a higher exemption or something of that nature which would say to the employee who lives in a rural or northern area that he does not have to pay as much income tax as his brother in the urban setting because he does not have the same facilities and his costs are higher. This would be a way of recognizing his difficulties. It would be a bonus for living in that part of the country where facilities are not available.
A couple of years ago the Minister of Indian Affairs and Northern Development (Mr. Chretien) went to New Zealand and Australia to look at the treatment of native people by those governments. He discovered that the Australian government had recognized the thing I am talking about by providing a lower tax rate for people who live in the Northern Territory. Australia is a fine counterpart for Canada. The cost of living is higher in the Northern Territory of Australia and the facilities are fewer. The government recognized this many years ago and said that those people who live and work in the Northern Territory would pay less tax than was demanded of people living in Canberra or other urban areas in the country. That is what I suggest we should do here.
This problem was brought to the attention of the minister while he was in Australia and he sat in on a meeting when the Northern Territory Legislative Council discussed the question of the special tax rate with federal

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government officials from Canberra. I do not know what his impression was, but he gave me to understand that he agreed it was a good idea. It is in my view, in any event. I think such a concession would have to be tied to the length of stay in the area. I do not think a person who lives in Vancouver and takes a job in the Yukon Territory or at Farrell Creek, say, for one week, then comes back to Vancouver should be eligible for the special tax rate. It could be tied to residence of half a year or some period that would make that person a bona fide resident of that area for the taxation year.
The minister is proposing that the tax rate for corporations in the manufacturing and processing industries be reduced to 40 per cent-at least that is what he was proposing last May; I do not know whether he is still proposing it.


John Napier Turner: I am counting on your support on that.


Frank Howard: I did not hear what the minister said.


An hon. Member:: He is counting on your support.


Mr. Douglas:: He is leaning on a broken reed.


Frank Howard: I will tell the minister what I will do, Mr. Speaker, and I have learned how to say this from listening to cabinet ministers. Normally, I would not put it this way. If the minister will commit himself now to come into this House within the next couple of weeks-after Easter, even-with a bill which will recognize the need to have a lower tax rate for people living in northern areas, then I will commit myself to him that I will look at his proposal as to the 40 per cent.


John Napier Turner: What a deal!


Frank Howard: I will consider it.


John Napier Turner: You will have to do better than that.


Frank Howard: The minister laughs; he knows exactly what I mean because he uses that approach himself so often.
I do not want to be diverted too much from my original theme about the burden placed upon people in northern and rural areas through taxation. I want to relate that to the proposal for reducing corporation taxes to 40 per cent in the manufacturing and processing industries only. If the minister contends that the proposed reduction to 40 per cent for manufacturing industries is valid, and I do not think it is, then he is saying that he wants to give a special advantage to the urban areas again because that is where the predominant manufacturing and processing industries are. He shakes his head, but that is where they are.


John Napier Turner: Look at the processing. I want to process these primary resources up in the north.


Frank Howard: We know all about that. I will take the minister's word that he wants to do this in the northern areas. But if the principle is valid for corporations, and I do not think it is, then surely he would agree that it is

valid to apply the same principle to human beings. Surely, he would apply it to people and agree to reduce their tax rate in those northern areas as well rather than just the tax rate of the so-called processing industry. We are not just talking about so-called manufacturing industries.


John Napier Turner: The provision of jobs is what this is all about.


Frank Howard: The minister talks about jobs. That is what he said on May 8 last year. His first words on that occasion were that the provision of jobs was his first priority. But he has yet to show me how fast write-offs for machinery can provide jobs. The more machines you employ, the fewer people you employ.


John Napier Turner: In these days we are not
introducing the cotton-gin.


Frank Howard: The minister suggests that is not so. Obviously, he has information about the activities of the federal government. Computers were installed. They were to replace people. But now the government is employing more people than ever and is using the computers as well. This is the result of incompetence on the part of ministers; it is not the fault of the system itself.
What I am trying to get across, through you, Mr. Speaker, to the minister is that the tax rate applicable to the person who works at Keno Hill in the Yukon, or in the Queen Charlotte Islands in my riding, is exactly the same as that of the person who works in Ottawa, Montreal or Toronto. I say that such a tax system is inequitable because under it the advantage always goes to the person who lives in the larger centres close to existing facilities. It discriminates against the person who has children of university age and who may, therefore, have to move his family from The Pas, Flin Flon or the northern reaches of this nation to Vancouver, Toronto, Winnipeg or somewhere else where there are universities.
The system is discriminatory because from an aesthetic point of view the person concerned may prefer to live in the north where he has a good job with prospects of security and advancement. I know of such cases. A person may have to leave the community where these benefits are available to him, and live in a chicken coop in the city-the hon. member for Temiscamingue (Mr. Caouette) spoke about this-merely because the facilities are to be found in the city. We have argued the other way and said that facilities should be available in the northern areas. But they are not there now.
The only way to compensate for this situation is to introduce an equitable tax structure which recognizes that living costs for persons in rural areas or in the northern reaches of this land are higher than those of persons living in urban centres. This business of those who live in the north-although I do not live in the north, I do live in the mid-north of British Columbia-having to subsidize Canadians who live in other areas should cease and desist. The minister may not have a chance to bring in another budget, so he had better do this right now before he leaves his portfolio. Let him do it quickly. Why wait for spring, John; do it now!
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Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, I feel it would be wise if parliament were to consider what Benson and Turner budgets have actually done for Canada in past years. It is important for us to realize that on a national accounts basis, every deficit or surplus that has been predicted to date by Mr. Benson or by the Minister of Finance (Mr. Turner) has been overstated.
In the 1968-69 budget it was predicted that, on a national accounts basis, there would be a deficit, but that deficit was overstated by $400 million. In 1969-70 it was predicted that there would be a surplus, but we found that the surplus was understated, depending on the type of accounting you use, by between $5 million and $80 million. In 1970-71 a surplus was predicted, but we found that it was overstated to the extent of $490 million. Subsequently, in a second budget, the government predicted a deficit. As it turned out, this deficit was overstated to the extent of $220 million. In the 1971-72 budgetary provisions another deficit was predicted. We subsequently found that the amount was overstated by $250 million.
I am giving this background because I believe if one looks at the budgetary history of the present and the previous minister of finance you will see the sad spectacle of total ineptitude in their attempt to plan for Canada's economic needs. It should be borne in mind that not only has their budgetary planning been inept but it has resulted in an extremely heavy tax load for Canadians. I mean, of course, that if we look at the rise in personal income tax since 1963 and compare this with the projection for 1973, we will find that personal income tax has jumped from $1,700 million to a predicted $6,850 million this year. This compares with corporate income tax which has risen from the 1963 level of $1,182 million to the current level of $2,320 million.
Hon. members to my left often cite these figures as an indication that corporate income tax is not high enough, that there are undue write-offs or that somehow there have been concessions to corporations and these should be remedied. I suggest that undoubtedly in certain respects every tax system contains inequities which should be corrected. I believe the significant fact colleagues to my left are overlooking, and which the Minister of Finance has chosen to ignore, is that Canadian business profitability has gone down extremely sharply under the Trudeau government. That is why businesses are not paying the amount of corporate tax that one normally would expect them to be paying.
There is no mystery about this, I suggest. The Science Council of Canada, in an informative booklet entitled "Innovation in a Cold Climate" has effectively pointed out the complete lack of foresight shown by the Trudeau government. The government, in coming before this House and indicating that it should receive great credit for a suggested reduction from 49 per cent to 40 per cent in corporate tax with respect to manufacturing and processing industries, without making it clear to the House that it created the climate in which these industries have found it increasingly hard to make a profit, is presenting its case in a misleading way.
As was said by the speaker before me, there should be more reference to the fact that the present Minister of Finance, and his predecessor, in every budget speech paid
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great lip service to curing the problem of unemployment. The fact is that the area in which unemployment has risen at a faster rate and, conversely, in which employment has not kept up with predictions, is the manufacturing industry. As the Science Council said:
Until recently, employment in manufacturing industry rose proportionately with the labour force. For most of the sixties, a constant 21 per cent of our labour force was employed in this sector. Most of our models for employment are based on the premise that this trend will continue, and that 20 per cent of the labour force will be employed in manufacturing in 1982.
By mid-1971, however, manufacturing accounted for only 19 per cent of the labour force. This departure from projections began in 1967-
That was the year before the Trudeau government took office. The situation is illustrated graphically in this booklet. The Science Council also pointed out:
By 1971, employment in manufacturing had fallen short of expectations by 120,000 jobs.
Those 120,000 jobs represented two-thirds of the total shortfall in employment projections which had been made. The Science Council also stated:
These profits are stated in current dollars, the value of which decreases about 6 per cent each year. In terms of buying power, manufacturing has had progressively less to reinvest over the last six years, and now has fewer disposable funds than at any time since 1958.
We have witnessed a government which through lack of proper industrial strategy has allowed our manufacturing industry to get into a position where it cannot expand in accordance with expectations because it does not have the wherewithal, the profitability, to do so. The report concludes:
The Science Council views with alarm the current deterioration of technology-based manufacturing industries in Canada. While we have avoided a recession in our over-all economy, something very much like a recession is now occurring in manufacturing. How temporary an effect this is we do not know; what is certain is that the condition will not improve automatically.
Hon. members will recall that in March, 1972, parliament passed a bill providing a 7 per cent reduction in corporate income tax to apply to the last half of 1971 and all of 1972. The bill giving effect to that proposal had first been announced the previous October. The 7 per cent reduction in tax applied to all corporations. For the year 1972 it meant that the general corporation tax would be at the rate of 46.5 per cent. That measure was passed, as I have stated, on March 22 and received royal assent a week later.
Forty days later, on May 8, the Minister of Finance presented his maiden budget to this House. That budget proposed a special reduced tax rate to apply to manufacturing and processing profits effective January 1, 1973. However-and I want to be sure that everyone in Canada understands this-the Minister of Finance neglected to mention in that budget speech that the general corporate tax rate was going to increase in 1973 over what it had been in 1972. I remind hon. members that in the same speech he also forgot to mention that personal income tax would increase on January 1, 1973.
In his May, 1972, budget the Minister of Finance put all the emphasis on the proposed special tax reduction for

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the manufacturing and processing sectors. He did not point out that the implementation of this special reduction would still see the general corporate tax rate on all profits not directly associated with manufacturing and processing increased to the old level of 49 per cent from 46.5 per cent. I think this is unforgiveable misleading of parliament. There is no reason why a minister of finance who expects the confidence of this House, the public and, most important, the business community has to be so devious in his approach.
Now, almost a year later, the Minister of Finance is still up in the air with regard to his proposal for special tax rates on the profits of manufacturing and processing industries. There is still nothing being done about the general corporate tax rate in this country. Businesses other than those in the manufacturing and processing fields will be required to pay almost 6 per cent more this year than it paid last year. The tax rate on Canadian-owned private companies earning less than $50,000 will be increased by 7 per cent in 1973 compared with 1972. The minister's proposed special rate will bring this tax down in relation to manufacturing and processing profits, if he ever gets around to implementing that provision; but for all other business profits the rate of taxation will have increased from 1972 to 1973.1 should add that in February of this year the Minister of Finance did correct the personal income tax situation by reinstating the lower rate effective January 1, 1973. He proposed a cut in relation to the 1972 personal tax rates, and if he ever gets up to date with his budget bills parliament will be asked to confirm them.
The February 19 budget speech made no mention of doing away with the general corporate tax rate increase to which I have referred. One can only presume that the government fully intends this increase to apply throughout 1973, and perhaps indefinitely. After reviewing the history of previous forecasts in Benson and Turner budgets one begins to wonder about this type of devious presentation of what they are in fact doing for business. How can we expect industry and business in this country to have the confidence they should have to ensure they will indeed produce the employment we will need in future years?
Not only with regard to the handling of tax measures should the government be criticized. As a Canadian, I have been deeply concerned about the great increase in business failure in the past few years. The most recent Dun and Bradstreet report shows that 2,848 Canadian businesses went bankrupt last year. That figure is the highest in recent history. It is unequalled since the depression of 1932, when there were 2,938 failures. The difference is only 3 per cent.
This intolerable situation was treated as a priority during the recent election campaign, during the course of which my leader and myself campaigned on the basis that there should be great assistance to smaller businesses in this country. The situation had become so desperate that action in two areas was forecast in the Speech from the Throne. The two items singled out-the only two items- were as follows: first, there was to be aid to small businesses through new initiatives to strengthen management

and consulting services; and, second, the provision of improved access to financing facilities by way of improvements to the machinery of the Industrial Development Bank.
Despite the continuing gap between government policy and productivity, I was greatly encouraged by that statement in the Speech from the Throne, believing that this promise of reform would at long last materialize in the budget. My faith was reaffirmed by the opening remarks in the budget speech of the Minister of Finance on February 19, as follows:
This budget is aimed at the faster growth of our economy and the strengthening of its basic structure.
When the budget presentation ended without evidence of any satisfactory attempt to fulfil its promises, any faith I had in the government's credibility collapsed. The chicken had laid an egg-and it was not a golden egg. The net result of a myriad carefully worded Liberal promises, then, is clause 60 of Bill C-170. This clause would implement paragraph 55 of the income tax resolution, which reads as follows:
That for the year 1972 and subsequent taxation years, the tax in respect of ineligible investments under part V of the said act shall be repealed.
This tidbit of proposed legislation might be equated with the tip of the proverbial iceberg. Speaking on behalf of all Canadians who were led to expect comprehensive legislation designed to guide us back to a firm economic footing, I can only say it is unfortunate that the greater part of this anticipated legislation remains submerged. In short, the Minister of Finance has put small business back to square one. The legislation before us seeks the repeal of a negative measure, and introduces no positive ones, in what is apparently yet another ad hoc approach of the kind so often adopted by the Trudeau government in the last five years.
The Minister of Finance is quite correct when he names unemployment and inflation as Canada's two main problems, but I suggest he is totally incapable of coming up with a solution to either problem.


Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, I intend to deal with several subjects this afternoon. However, before I do I should like to comment on the contribution of the hon. member for Skeena (Mr. Howard) with regard to the special difficulties of those who live in the north. His remarks were well made. I am sure the government is aware of the need for special consideration for those who face the exceptionally high cost of living in the northern regions. We have recognized that this special situation exists by providing increased expense allowances for members of parliament who represent northern constituencies. We realize it is far more costly to travel to these locations, and travel within northern regions is also costly. Then, again, the cost of food is sharply increased by the necessity of bringing in by air so many supplies. This is on top of the present price levels with which all Canadians are becoming familiar.
The Minister of Finance (Mr. Turner) had a wonderful opportunity in the budget to deal with the economic difficulties of Canada. He might have done something, for example, to reduce the cost of housing, which is vexing so
April 6, 1973

many Canadians. But he completely failed to do so. Consider the effect of the sales tax on building materials which go into a home. This is an expense which in practice is financed over a long period of time, and over the years it amounts to a great deal of money. The added cost is, in my view, a continuing inflationary factor. The government should have removed this tax, obtaining revenue from some other source if that was their preoccupation. The minister should have faced this issue squarely.
Again, the government should have addressed itself to solving some of the difficulties which beset agriculture. These can be measure by the average income of our farmers, which last year was in the neighbourhood of $5,200. The average salary of civil servants was around $8,100. Of course, we must bear in mind there are many people earning below the average income. Another measure of the difficulty facing agriculture is the fact that farmers have been leaving the land continuously for 25 years; since the last war, in fact. In the last five years we have been losing seven farmers every hour, day in and day out. This is the problem which results when farmers are disrupted and move from their surroundings. This situation adds fuel to the fire of inflation and the cost of housing in urban centres.
[DOT] <1530)
When considering these difficulties caused by disruption, one might expect the government to move in an effort to resolve the problem, perhaps by creating incentives to keep as many people as possible working the land. One must realize that every additional tax imposes an extra burden. When it comes to the question of capital gains tax, surely there should be an exception in respect of farms passed on from one generation to another. Surely we do not resolve these problems by imposing additional taxes.
We in the opposition have argued very strenuously against the imposition of additional taxes, particularly the imposition of capital gains tax. This government has ignored our arguments. However, since the last election it has realized it should do something about taxation. Rather than doing something constructive, the government has done a lot of window-dressing. It has given the public the impression that capital gains tax is being removed in respect of farms passing from father to son. Let me quote as follows from the highlights of the budget of Monday, February 19, 1973:
Family farms permitted to pass from generation to generation free of capital gains tax.
Can one blame the average farmer for believing that this is true, that there is no capital gains tax on a farm passed on from one generation to another? Let us look at the actual situation, which has been adequately stated in the House. One of the best speeches in this regard was made yesterday by the hon. member for Perth-Wilmot (Mr. Jarvis). He covered the subject thoroughly.
In view of the various interpretations of this legislation by accountants and lawyers within the department, we can well understand that there are complications in addition to those we all know. I suggest that a farmer will never see his land passed on to his son or daughter, as the case may be, because he must die before he can do so
Income Tax Act
without the imposition of taxation. What I am concerned about is the statement contained in the budget to the effect that the deferral will apply only if the land is being used for farming by the taxpayer or his children at the time of the taxpayer's death and if the land is left to a child who is residing in Canada. The point is that the land must be used by the taxpayer or his children at that particular time.
If you read page 6 of the notices of ways and means motions you will find this wording:
That where land in Canada owned by a taxpayer who died after 1971 was used in the business of farming by him, his spouse or any of his children immediately before the taxpayer's death, and upon his death is transferred or distributed to his child who was a resident of Canada immediately before the taxpayer's death, the taxpayer shall be deemed to have disposed of the land for proceeds of disposition equal to the adjusted cost base of the land immediately before his death and the child shall be deemed to have acquired the land for the same amount.
This implies there is no capital gains tax, but the fact is that many children are too old to farm and rent out the land. On many occasions farmers will rent the land as a means of supplementing a pension or other income; someone else may be doing the actual farming. That type of transfer will not be regarded as eligible for tax exemption. I do not believe the minister really wanted to deal with this matter fairly and squarely, but wanted to leave the impression that the problem was solved. At the same time, he wanted to make sure that almost everyone did not qualify for the exemption.
There are many instances where a farmer is living and would like to transfer the land to his son for the purpose of farming but the son is not able, for a number of reasons, to comply with the father's wish. The son may have children who do not wish to farm. He may be one of a number of sons, some of whom passed away before the father. This leaves the family in an awkward position. Also, the farmer's son may be too young to go into the business of farming, so the capital gains tax will be applicable. This is disadvantageous to the family farm operation.
We have heard a great deal in the last few days about the increasing cost of food. We must realize that every time taxes are imposed upon primary producers, the cost is passed on to the consumer. I remember buying a tractor 25 years ago for $2,500 and a combine for about the same price. Today, this equipment costs in the neighbourhood of $15,000. This all adds to the cost to the consumer. There is only one way the farmer can recover the increased cost of machinery, and that is by charging the consumer a higher price for his product.
We have heard about incentives. This is an area in which I disagree with the hon. member for Skeena. Surely we should be considering the opportunity for the government to do something for our farmers. Steps should be taken to reduce their over-all costs and thereby reduce the cost of food to the consumer.
I want to speak about one other aspect, that is, the method of valuation. I have directed several questions in this regard to the Minister of National Revenue (Mr. Stan-bury). Similar questions were asked today. It has been suggested that valuation today would not be applicable at a future time. The minister said that you do not have to pay tax on the basis of valuation today. I suggest that as a
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April 6, 1973
Income Tax Act
result of evaluation of a farm property today, the tax will be fixed for the future, with no appeal. The result will be that ten years from now, after the death of the farmer the inheriting son will not be in a position to argue successfully with the department. It is difficult at best to argue with the department. How can someone argue ten years from now?
When the department sets up its documentation, it will sit in judgment; it will be prosecutor and judge at the same time. That is not fair. I do not think it is proper for the minister to suggest that his staff is not large enough. He suggested this would be too complicated a matter to handle. He wrote me a letter a few days ago saying he could not do what had been requested because it would perhaps mean entering businesses, and so on. This should not be a one-sided affair; it should not be stacked against the taxpayer. Surely, with all its resources, the department should not bank itself up on all sides and then try to prove we are wrong. They will not allow us to see the documents, yet they will be using the information they are preparing today. I think this is wrong. I do not think the department should follow through with the stupid capital gains tax. I do not think this country is rich enough to support it. It may be all right in respect of speculation. But this is not speculation; it is an opportunity to make a living. I think all anyone expects is such an opportunity without being saddled with this tax.
There should be a reappraisal of the tax itself. I think it should be removed. But if this Liberal government insists on retaining it, it should at least provide an opportunity for the individual to defend himself. There should be provision for a turnover from father to son while the father is still living. My grandfather died two years ago, and my father 25 years ago. There is no incentive for anyone to stay on the land. One would have to be stupid to think he would eventually become the owner. I know of many cases where the son has died before the father. As I have already pointed out, the whole tax situation will not provide an incentive for anyone to stay on the land: it only complicates the matter.
There are several other areas I would like to discuss but I shall mention only one other. That is the whole question of valuations. There should be a valuation on quotas as of V-day, as it is commonly known. That valuation should be in the same form as it was in 1971. If someone applied for a permit, and had no cost other than perhaps postage stamps or phone calls, and so on, it is not fair in respect of valuation day to expect another form to be required for purposes of the quota when it comes to dairy cattle, beef cattle, and so on. Sooner or later the government will have to change this situation. Why not do it now? Why saddle a few people with this burden when next year or several years later the government will have to come to its senses. These are some of the areas of grave concern which stand out very plainly.


Mr. Cyril Symes (Sault Ste. Marie):: Mr. Speaker, I welcome the opportunity to say a few words on Bill C-170 to amend the Income Tax Act. I should like to make a few comments to the bill and on the government's taxation policy in general.
[Mr. Korchinski.l
Bill C-170 contains 140 pages of material on tax amendments. Many of them are very complicated. Some of the highlights are that it will increase the tax exemption of people 65 years of age and over from $650 to $1,000; there will be a $50 deduction per month for students in full-time attendance at secondary educational institutions; there will be some medical expenses deducted for full-time nurse or attendant care for the taxpayer, the spouse or dependant in the home. There are some changes in respect of retirement savings plan. There is also a provision in respect of the transfer of a farm to the children of a farmer on his death: this will be free of capital gains tax. There are measures in respect of small businesses, to encourage them. Such encouragement is needed in this country. There is the repeal of the ineligible investment test.
These are some examples of what is contained in the bill. In most cases these are good measures. However, I think we must examine the whole issue of taxation in this country. When we do that we must look at the relationship between corporate and individual taxes. When we look at the first seven years of budgets of the Trudeau government, we find that since 1968 individual taxes in this country have gone up by $1.5 billion whereas corporation taxes have gone down by $500 million.
It is very interesting to compare the percentage of government revenue in 1951 with the percentage of government revenue today in respect of what comes from corporations and what comes from individuals. In 1951, 29 per cent of government revenue came from corporations, and 27 per cent came from individuals. So one can see there was a fairly close relationship; each group was bearing its burden rather equally. However, in 1973, especially if the corporate tax cuts go through, only 12 per cent of government revenue will come from corporations whereas 50 per cent will come from the individuals.
When we look at the loopholes in our present system, we realize that in 1969, the last year for which we have figures available, 46 per cent of the corporations in Canada paid no federal income tax. If we made revisions and plugged some of the loopholes in respect of giveaways to corporations, we would have somewhere around $2 billion more in government revenue, which would mean we could begin to give a break to the taxpayer so that he would have more money to buy more goods and help increase the job situation in this country.
The individual pays more tax. I should like to give an example. It is true that personal income today is 26 per cent more than it was in 1969, but it is important to remember that taxes have increased by 42 per cent in the same period. An average family of four in 1969 had $9,700 after taxes and inflation are taken into account. Today, the same sized family has $10,400, or an increase of only $700. That certainly is not as impressive as the 26 per cent would indicate. Who are the victims of Canada's tax policy? When we look at the whole issue, we see that the Carter commission in 1968 undertook a thorough investigation of Canada's tax system and declared that there were many glaring inequities. The commission recommended that the whole tax system be based on the principle that a buck is a buck no matter how it is earned, whether through wages, interest, income, and so on, and
April 6, 1973

we should therefore base the tax system on that principle. If you have deductions because of expense accounts, and so on, they should be calculated as income.
There are still many disparities and inequities in our tax system. For example, we know that salesmen are given a tax allowance for using their cars for business purposes. I know of supervisors at the steel plant in my riding who have to use their own cars; they travel up to 10 miles a day throughout the environs of the steel plant in order to carry out their work, but they are not given tax deductions for their use of the car, as salesmen are. There are many inequities along these lines. What happened to the recommendation of the Carter commission that the whole system be overhauled? We all know that, unfortunately, the former minister of finance, Mr. Benson, caved in to pressure, mainly from large business groups, and his so-called white paper was not carried out.
Today personal exemptions have been raised from $1,000 which was based on the 1949 cost of living. Now the taxpayer gets a $1,500 exemption for an individual, and the basic $2,000 for a married person is raised to $2,850. But here again we see an inequity. If we kept up with the cost of living, the basic exemption for an individual should not be $1,500 but $1,640; likewise, the exemption for a married couple should now be $3,280 and not $2,850. I hope the minister will look at this problem and agree that the cost of living should be included in the calculation.
Another example is a family with two children and an income of $5,000. They pay tax of $73. Under the reform, that is a saving of $137. But take the same family with two children and an income of $50,000 a year. Their taxes are $20,675, or a saving of $347. In other words, the richer you are, the more you are saving under the current tax system.
People in my riding have written to me about discrepancies. One man asked: "If people whose wives work can deduct for child care, why should he not be able to deduct for his wife taking care of his children?" That is an interesting question to which perhaps the minister could address himself at some time. There is another point. When the baby bonus, or family allowance is cut off, should an individual not be able to deduct a higher amount than the basic $300 per child? Could that not be compensated in the deduction after the allowance is cut off?
There are other examples. The hon. member for Skeena (Mr. Howard) spoke about the cost of living in northern communities. I come from northern Ontario where the cost of living is very high. Could consideration not be given to a cost of living deduction in income tax to reduce the burden of people living in the north? When we look at our whole tax system we find there are many inequities.
The Economic Council of Canada has concluded that the general burden of taxation falls unfairly on low income people despite the so-called tax reform that we have heard about. The low income people have to pay, apart from the federal tax, of course, provincial sales tax which hits everybody equally no matter what their income. And, of course, there are provincial property
Income Tax Act
taxes as well. The middle-class people who do not receive some of the allowances and benefits of the low income people also have to bear the burden of the tax system in this country. What we would like is a really progressive tax structure where those who are wealthy or very wealthy and are making more money should pay more tax.
There are many loopholes in this system. For example, in 1969, the last year for which I have had a survey carried out, we find that of the people earning $600,000 a year there was one person who did not pay any income tax at all because of deductions; and of the people earning $25,000 to $50,000 a year, 98 were able to escape federal income tax.
What I am asking for is not just one, two or three special corrections. I want a complete re-examination of our tax system to give more help to the lower income people and to establish a really progressive structure so that the middle-class is not bearing the whole burden, and under which the wealthy would pay their rightful share.


The Acting Speaker (Mr. Boulanger):: Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to, bill read the second time and the House went into committee thereon, Mr. Boulanger in the chair.
The Assistant Deputy Chairman:: Order. House in committee of the whole on Bill C-170, to amend the statute law relating to income tax.


Mr. Lambert (Edmonton West):: Four o'clock, Mr. Chairman.


Gérald Laniel: It being four o'clock, it is my duty to rise, report progress and request leave of the House to sit again at the next sitting of the House.
Progress reported.


Gerald William Baldwin: Mr. Speaker, in the minute that is remaining could I ask the Minister of Finance if, in the event that the time on Monday is not pre-empted by any other motion, we will be proceeding with this bill in committee of the whole?


John Napier Turner: That is my understanding, Mr. Speaker.


The Acting Speaker (Mr. Boulanger):: It being four o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, notices of motions, public bills and private bills.
26087-48J

April 6, 1973
Public Accounts Committee


PRIVATE MEMBERS' PUBLIC BILLS
Mr. A. D. Hales (Wellington) moved: that Bill C-19, to amend the Financial Administration Act (Public Accounts), be read the second time and referred to the Standing Committee on Public Accounts.
He said: Mr. Speaker, before proceeding with my bill I would like to say a few words in connection with the value of the private members' hour which we have two or three times a week. It is a time allotted by parliament for a very useful purpose. I am sorry to say that it is not always well attended by hon. members. However, it does afford members an excellent opportunity to put forward ideas and suggestions. I well remember as a backbencher how it provided a great opportunity to get the feel of the House. Many important measures have been passed by the House during private members' hour. For instance, the name Trans-Canada Air Lines was changed to Air Canada as the result of a private member's bill.
I remember speaking during private members' hour several years ago when bilingual cheques were introduced as the result of a private member's motion. I also had the privilege of putting forward a private member's resolution which brought about the parliamentary internship program which is now in its third year and has proven very satisfactory around Parliament Hill.
This bill on which I am about to speak deals with the public accounts committee. It is proposed as a reform measure to regularize the constitution and proceedings of that most important of committees, the public accounts committee. When speaking to this bill I would like to emphasize two very important principles. First, the executive should have no income which is not granted to it or otherwise sanctioned by parliament. Second, the executive should have no expenditures except those approved by parliament, in wages approved by parliament. The observation of these principles would be impossible were it not for the existence of a variety of rules, customs, devices and institutions. One of these institutions is the Standing Committee on Public Accounts, which is parliament's own auditing committee, responsible for scrutinizing the use or misuse of public funds.
Today, as the size and complexity of the federal government increase, the task of this committee grows more crucial if the principles of responsible government are to be safeguarded. By a year from now, March 31, 1974, the federal government, with more than 284,000 employees, will pay out roughly $10 billion for goods and services, and $6.5 billion in grants and contributions, along with supplementary estimates that are likely to come forward. This will mean a total expenditure of approximately $20 billion. It is the role of parliament, and of the public accounts committee in particular, to ensure that these
[The Acting Speaker (Mr. Boulanger).]
sums of money authorized by parliament annually are being utilized in the ways parliament intended.
Let us look at some of the weaknesses in the parliamentary control of public funds. In Canada, the different stages in the administrative process of public expenditures are laid down in the Financial Administration Act. Among other things, the act ensures the public accounts and the report of the Auditor General are laid before parliament each year. This is all set out by statute. What parliament does with the public accounts and the Auditor General's report is not laid down by any statute and depends entirely on custom and the business priorities ol the government. This has resulted in a weakening of parliament's control over public funds and in the increasing and unchallenged power of the executive. Furthermore, it has seriously reduced the effectiveness and efficiency of the public accounts committee.
The Canadian system of control of public expenditures, like any chain of command, is no stronger than its weakest link. The purpose of this bill is to strengthen the weakest link, namely, parliament's scrutiny of public funds. The House of Commons, through this committee, should be able to scrutinize thoroughly and without impediment the accounts of Canada and the annual report of the Auditor General, and present to the House for debate reports which empower the executive to take action, thereby completing the cycle of parliamentary control.
What are some of the weaknesses in the House rules? Under the Standing Orders, the Standing Committee on Public Accounts must be struck within a given time at the commencement of the first session of each parliament. Unlike the other committees of the House which must have the estimates referred to them, the public accounts committee may never be called or given an order of reference by the government should it not be in the interest of the government to do so. The executive does not have to organize the committee and does not have to refer anything to it.
May I give just a few examples of the delays that have occurred in the work of the public accounts committee. As you know, Mr. Speaker, it is up to the government House leader to call the organization meetings of all committees of the House, including the public accounts committee. In the twenty-sixth parliament, the opening was May 16, 1963, and the organization meeting of the public accounts committee was not held until October 16. In other words, six months elapsed before the committee was even organized. From the opening of the twenty-seventh parliament on January 18, 1966, to the organization meeting on March 1, 1966, two months elapsed. That was not so bad. From the opening of the twenty-eighth parliament on May 8, 1967, to the organization meeting on May 5, 1968, 12 months elapsed. Imagine, Mr. Speaker, a whole year went by before the public accounts committee was called for an organization meeting! From the opening of the twenty-ninth parliament, the present parliament, on January 4 of this year, to the organization meeting on March 14, two and a half months elapsed.
What about the reference of work to the public accounts committee? From the opening of the twenty-sixth parliament on May 16, 1963, to the first reference in May, 1964, a
April 6, 1973

year elapsed. From the opening of the second session of the twenty-seventh parliament on May 8, to the first reference to the committee, several months elapsed. The present parliament opened on January 4 and there has been no reference of any work to the public accounts committee since then. Three months have elapsed. Yet that committee is behind in its work; it has not yet finished the 1971 report of the Auditor General. The Auditor General's report for 1968 was tabled on March 16, 1969, and was referred to the committee on April 16, 1969. Only one month elapsed. Only the first volume of the 1969 report was referred to the committee. Apparently, from the records that I have been able to locate, the second volume was never referred to the committee.
The Auditor General's 1970 report was tabled on June 4, 1971, and was referred to the committee on September 22 of the same year. So there is still delay between the time the Auditor General tables his report and when it is referred to the committee. I will refer to these delays later in my speech. This practice has weakened parliament's responsibility as the guardian of the public purse and, furthermore, the responsibility of the public accounts committee to examine critically public expenditures.
Under the present rules, committee reports may be presented to the House by committee chairmen. They may be concurred in and debated. It is very seldom done, but they could be. It has been the experience of the public accounts committee that its reports have been tabled with little or no debate. This may be the result of the committee's limited power to secure orders of reference and government recognition.
The committee has no power to enforce the implementation of its own recommendations; it is entirely dependent upon the will of the executive. In Britain, the treasury has the responsibility of reporting to the public accounts committee the status of outstanding recommendations and their effective implementation. The Treasury Board of Canada does not have this responsibility unless directed by the cabinet. There are some other limitations. Attendance and participation at committee meetings pose problems for members with many parliamentary commitments and, in turn, the detailed attention they can give to the committee's inquiries. There is a growing need for research assistance and professional services to facilitate the committee in its work.
What are the solutions? There are two or three possible ways of dealing with the problems. First, amend the statute, the Financial Administration Act; second, amend the Standing Orders of the House of Commons; third, deal with the problems by a separate bill or an act. I have chosen to introduce a bill, but it is immaterial to me how the change is brought about, Mr. Speaker.
I know that the Australian government has had a committee of public accounts act since 1913 and it has worked very well. I have had the opportunity of visiting the standing committee on public accounts in Australia and talking with the chairman and secretary. I also have had the privilege of sitting in at a meeting of the United Kingdom public accounts committee. Both these committees work and are organized under a statute. Unlike Australia, the
Public Accounts Committee
public accounts committee in Britain receives its authority from a specific British House of Commons standing order No. 86. In both Australia and Great Britain the public accounts committee has specific terms of reference. The Canadian committee, on the other hand, observes the general terms contained in the Standing Orders along with other standing committees of the House. They are just general terms.
What are my recommendations, Mr. Speaker? The purpose of Bill C-19 is to ensure that the responsibilities traditionally handed down to the public accounts committee are safeguarded by statute. Presently they are not. They should be. Therefore, it is recommended that the bill include the following four main points: first, the public accounts committee personnel shall automatically be chosen and organized during the first 15 working days of each session of parliament. The Standing Orders of the House set out that the members must be chosen at the commencement of each session, but there is nothing to say that an organization meeting must be held. As I have proven by dates, we have had lapses of up to a year between the day the members were chosen and the organization meeting was held.
Second, the chairman of that committee, unlike the chairman of other parliamentary committees, shall not be a member of the party forming the government, but shall be a member of the official opposition. This is the system we have at the present time but there is nothing in the statute to say it should be that way. In the Australian and British systems it is laid down by statute. Third, the public accounts of income and expenditure, and the Auditor General's report shall automatically be referred to the public accounts committee as soon as they are tabled in the House, and not be delayed from such reference and study at the whim of the government of the day. I am looking at this in a non-partisan way. I am looking at it as a long-term statute for this parliament of Canada, no matter what party is in power. I feel that these principles should all be laid down by statute and there should not be as much power given to the executive as there is at the present time.
Fourth, all recommendations made by the public accounts committee to parliament shall be reported on annually, or sooner, by the responsible minister upon action taken by him or the Treasury Board. This would make it compulsory that the recommendations made by the committee should be handled and reported within a year. I do not care which method is used, Mr. Speaker, whether it is the Financial Administration Act, Standing Orders of the House of Commons or a separate bill. One thing I do know, however, is that if the public accounts committee is to perform the function it was meant to perform, it should be independent of the executive and set up by statute as it is in Australia and the United Kingdom.
I hope my bill is not talked out, but if there is a feeling that there should be more discussion on it, I will agree to whatever the House decides. I should like to have it referred to the finance committee or the Standing Committee on Procedure and Organization, however, so that they could decide which form the statute should take.
It is very important, as I see it, that in the years that lie ahead we should follow the proven and tested system

April 6, 1973
Public Accounts Committee
which other countries have used. We are operating under a sort of hearsay operation, a sort of tradition. There is nothing laid down by statute, and I sincerely feel there should be. It was with that line of thought that I introduced Bill C-19.


Maurice Dupras: Mr. Speaker, I am happy to make my modest contribution to the study of Bill-19 to amend the Financial Administration Act (Public Accounts) introduced by my excellent friend the hon. member for Wellington (Mr. Hales). The hon. member guided my first steps in the House and in the Public Accounts Committee after my first election in 1970. We became friends through this association and I have had the privilege of visiting Guelph the splendid city of his birth. I hold the hon. member in high esteem. I should like to tell him that I sympathise with his complaints and his desire to find some way to accelerate the proceedings of the committee, to alter or reform it and make it more efficient in order to be able to study various public account items and the report of the Auditor General with greater care and attention than at present. In my opinion, that bill is precisely meant to make the committee more efficient. Several reasons have been put forward by my colleague, the sponsor of the bill, to explain why the proceedings of the committee are not carried out as quickly as expected.
He broached a few points, and if I am allowed to do so, I would like to state a few reasons why the proceedings of that committee have often been delayed. While I do not have his experience as a member of that committee, I wish just the same to give some information. I wish to point out in the first place the delayed tabling of the Auditor General's report whose consideration is the main item in the order of reference from the House. And that report-as stipulated in the statutes- must be tabled fifteen days after parliament reconvenes or the beginning of a session. And three months and a half will soon have elapsed since Parliament reconvened and as we know, that report has not been tabled yet. And this is the sixth year, if I remember correctly, that we are unable to get that report.
The Auditor General has been saying every year since I became a member of that committee that for all kinds of reasons, it was hard for him to hire staff, that the government, the President of the Treasury Board (Mr. Drury) and many other things were to blame, but never his incompetence or his inability to get the necessary staff, since it is up to him to recruit the staff he needs to discharge his duties.
While discussing the matter with some of his colleagues who have left and others who are still serving under him, several gave a few reasons to explain the delay in tabling the report or the difficulties experienced by the Auditor General in getting and keeping a staff.
Of course, in a service like his, as in any other organization, there is a certain percentage of the staff that cannot practically be retained, while in a private enterprise of a similar nature, if after five years business is successful and one has been able to keep 50 per cent of his staff, it means that he is a good boss and that the staff is well

paid. On the other hand, in the public service, I am told that the staff stability rate is much higer than in the Auditor General's office. There are surely reasons for this. As a matter of fact, we examined the different reasons that were given by various people in connection with this position and it was said that the employees did not enjoy the same job security as those in the public service because they were operating within a very restricted perimeter. The staff numbers perhaps 200 at best. The public service has thousands of civil servants on its payroll and so offers much more opportunities to those with ambition.
Recruiting opportunities have never been rejected. Each year all the budgets introduced were examined and never submitted to amendments or restrictions. If the Auditor General was requesting additional credits to hire personnel he was never refused and was thus able to ensure the renewal and training of his personnel and his department was as efficient as the House and the government were entitled to expect it to be and because this department should operate as well as all the other federal bodies.
In my opinion this explains why committee business has often been delayed. This most serious reason explains why the report is tabled late each year.
I have a few other reservations about the bill, Mr. Speaker, and I should like to deal with them. I should like, first, to mention that this statutory authority perhaps may be desirable but I am surprised at the choice my colleague made, namely, the Financial Administration Act. His proposal is most surprising, since the Auditor General is a servant of parliament and should not be appointed under legislation generally administered by the Minister of Finance and the Treasury Board. I also looked into the Australian arrangement and have found that the public accounts committee in Australia is a joint committee; it is composed of members of the Senate and members of the House of Commons. On the other hand, our public accounts committee is composed solely of members of the House of Commons.
The bill also provides for the chairman to be a member of the opposition. This practice has been followed in our committee but it is not a matter of statute; it is a matter of convention. It has always been so. It is our tradition that the chairman of the public accounts committee shall be a member of the official opposition party. I agree with this convention. It is a good one and we have the good fortune of having an excellent chairman, as I said at the beginning of my remarks.
I have other concerns respecting the proposed bill and I should like to deal with them. One of my concerns relates to the powers conferred on this committee and the provisions set out in proposed sections 55G to 55S. I believe it might be extremely prejudicial to the ordinarily understood constitutional position of ministers with respect to parliament to insert in this statute authority which might be interpreted as requiring a minister to appear and produce documents. I should like, as well, to draw attention to the effect of conferring the powers in question on a committee of the House, since the result may be that we
April 6, 1973

should confer on such a committee greater power than that possessed by parliament itself. Indeed, if any thought is given to proceeding with this legislation, I would suggest that it be referred formally to the Department of Justice so that they may have a look at the implications and various aspects of the bill.
After providing for the establishment of the committee, there are in the bill just two sections dealing with the duties of the committee and its modus operandi through subcommittees. Following that, the greater part of the proposed legislation deals with procedures for taking evidence, offences and penalties. The provisions for offences and penalties are not consistent with section 92, the section of the Financial Administration Act which deals with offences and penalties.
I should now like to deal with section 55E(l)(c), which speaks of the form of "the public accounts or in the method of keeping them". This is Australian wording and, within the context of the Financial Administration Act, creates a failure to differentiate between the accounts of Canada and the public accounts. In section 55E(2), where the words "shall report annually or sooner if he desires" appear, since the word "annually" covers a period of time rather than a fixed point in time, the word "sooner" would need to be replaced by a word or expression such as "more frequently". This particular subsection does not appear in the Australian legislation, I might add. Further, in section 55E(2) the words "Minister responsible for that department" would need to be replaced by the words "appropriate minister", the approved terminology of the Financial Administration Act.
I should also like to refer to section 55Q, which is intended as an authority for expenditures. Except for the last six words, the section is taken from the Australian act and would not appear to be an appropriate matter for a private member's bill under Canadian parliamentary practice. I suppose this is realized, Mr. Speaker. Of course, there may be many more reasons why we should improve the operation of this committee. Perhaps we should find a way of changing the whole parliamentary system; but that is another problem.


Mr. Barry Mather (Surrey-White Rock):: Mr. Speaker, I rise to give brief support to Bill C-19, introduced by the hon. member for Wellington (Mr. Hales). I will give brief support because, like the sponsor of the bill, I am anxious for these proposals to come at least before the committee so that, hopefully, they can be put into effect.
I will be very brief in my remarks, Mr. Speaker. In a very few words, this bill can be described as one which seeks to add independence and power to the work of the Standing Committee on Public Accounts. That means adding power for the good work of that committee, on behalf of parliament and the public, in which it is engaged whenever it has the opportunity to block the loopholes through which many millions of dollars have escaped in unproductive expenditures-in other words, waste.
The hon. member who introduced this bill knows very well whereof he speaks. As has been indicated, he has been and, hopefully, will continue to be chairman of the
Public Accounts Committee
Standing Committee on Public Accounts. He is an excellent chairman in every respect. I think he adds to his excellency in that capacity by the bill he has introduced.


Some hon. Members:: Hear, hear!


Barry Mather: As the hon. member for Wellington suggested, the Standing Committee on Public Accounts is one of the most important committees of parliament. It deals with the public's money and tries to make the best use of the money provided by the public through taxes. I think the hon. member for Wellington and others will agree that, at best, we are being guided through the labrynth of ever expanding governmental responsibilities and expenditures by the Auditor General, on one hand, and the chairman of our committee on the other.
While engaged in very important work, the committee can hardly do justice to the very important financial matters that come before it. What we are doing in that committee as it is presently constituted, and with the limited powers it has, is touching the peak of the iceberg of public expenditures. It is a multibillion dollar iceberg. We are doing our best, with the aid of the Auditor General and his officials, to probe the tip of that iceberg.
I believe the committee would benefit by the proposals put forward by the hon. member. The committee is in a very strategic position. It could do more, with a little more independence, to effect great savings and make better use of the public's money. I support in particular the proposal in this bill which calls upon Treasury Board to require a report, at its disposition, of the anti-waste recommendations of the Standing Committee on Public Accounts within a reasonable time. At present, after many hearings and doing as well as we can, we make recommendations some of which go unanswered or are hardly acknowledged and certainly are not put into effect for years. This is a waste of public money. If Treasury Board were required to prepare a report, at its disposition, on what action the different departments have taken on the recommendations of the public accounts committee, this would be an excellent step forward.
There are one or two other points which would be of benefit to the committee and parliament if they were adopted or considered in line with this bill. The public accounts committee should have a permanent secretary to improve the continuity of its work. The committee is faced with many detailed and complex financial matters. It should have the benefit of at least two qualified research people to help in its deliberations. I agree with the hon. member who introduced this bill that it would be most beneficial to have the government, through Treasury Board, acknowledge the recommendations of the committee and their disposition.
I do not want to take much more time. I would like to see this bill sent to the appropriate committee for consideration and action. To strengthen the public accounts committee and help it to do better work is not sufficient. I believe that at least every ten years there should be an in-depth and in-breadth investigation of the structure of the Canadian government and its responsibilities and ever growing expenditures. I believe the last such investigation was carried out ten years ago. In view of the great expansion of government expenditures within the last ten years,

April 6, 1973
Public Accounts Committee
the time is ripe for an in-depth and in-breadth examination of the whole structure of the functions of the government and the spending of public money.
This would do more to probe the tip of the iceberg, which is important enough and which is really the function as the committee is presently constituted, which the public accounts committee carries out. We need something more basic. We need to examine the continuing waste of public money as well as the consequences of it. I take rny seat in the hope that the bill will proceed to a committee for action.

Mr. ].-Roland Comtois (Parliamentary Secretary to Minister of Finance): Mr. SpeaKer, I should like to say a few words on Bill C-19, entitled an Act to amend the Financial Administration Act and deal more particularly with the Public Accounts Committee its constitution and the procedure it should follow.
I believe that all the speakers have recognized the importance of that committee, whose duties are to supervise and scrutinize government expenses, besides analysing as minutely as possible the Auditor General's report.
The hon. member for Wellington (Mr. Hales) recommends the adoption of this bill after consideration in the House. At the same time he points out how weak parliamentary control over government expenses is. I must say that even if that control can appear weak from, many standpoints, it is nevertheless essential to the operation of any democracy. My colleague the hon. member for Labelle (Mr. Dupras) has dealt at some length with the matter of the Auditor General's annual report, which is almost always tabled late, and this under all sorts of pretences. Now, I would hope that with a new Auditor General, new rules and a new legislation on the operation of the public accounts committee, we might in the near future get those reports on time, so that we may analyze and study them and make the necessary recommendations each year.
The hon. member for Surrey-White Rock (Mr. Mather) has suggested that the Treasury Board report on the results obtained following the changes introduced as a consequence of the inquiries conducted by the Auditor General in the discharge of his duties. I believe that this is a very good idea which the house should perhaps consider. As to his suggestion that we secure the services of a permanent staff, especially those of a secretary and qualified research personnel, I believe that it is a wise one which could contribute to immensely improve the work of the committee.
It might also be good for members of the committee themselves to be as permanent, if possible, at least for the scan of a parliament.
The mover of Bill C-19 wants to strengthen the power of the committee to scrutinize government expenditures and in fact it all boils down to strengthening the power of Parliament to scrutinize government expenditures. The purpose of the bill is good: the hon. member pointed out several weaknesses in the operation of that committee. For example, he talked about the delays in establishing the committee and he went back to the 25th Parliament but I think that if he had gone further back he would have

found the same delays that we have today and which can be due to a host of circumstances beyond the control of either the government or parliament.
Evidently, we are having difficulties due sometimes to a host of circumstances in all committees and I wonder if it is need for special legislation or if by simply reviewing the procedure we could not reach the same result.
Mention has been made of committee chairmen who by tradition in Canada are members of the opposition. It is obvious that it is not in the books but I think that precedents and traditions in our parliamentary system will always be respected. I think that budget estimates and public accounts should be referred as sson as possible to the committee for examination as well as the report of the Auditor General which, hopefully, in the future will be submitted within a prescribed time limit.
There is often concern about the fact that the recom-mandations of the Committee on Public Accounts are not taken into consideration by the government and that there are delays perhaps more or less warranted before immediate action is taken. I think that there is good understanding within the committee. I have had the pleasure to sit on it on several occasions; I think in spite of everything that can be said that it is one of the committees with the best records and who is doing an excellent job, although there are obviously some difficulties. In spite of that, I think all the committee members would agree that the chairman, whom I have known since I have been a Member of Parliament, is doing an excellent job and deserves the congratulations of all his colleagues. As was pointed out earlier, the hon. member for Wellington will remain chairman of the committee on public accounts for as long as he is a Member of Parliament and of the opposition.
I should like to end my remarks by saying that it is obvious that the more independent a committee, the more independent his members and the better the work done, bearing in mind the political context in which we live. In this committee especially, most of the time there is an absence of partisanship that makes me hope that in spite of all the difficulties and disadvantages that is has to face, the committee on public accounts will continue to do the work expected of it to the satisfaction, I would think, of the large majority of members.


Mr. John M. Reid (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, like other hon. members, I should like to congratulate the hon. member for; Wellington (Mr. Hales) for bringing this measure before us. The functioning of the standing committees of the House of Commons has been engaging our attention for some time. Indeed, it would seem that the whole committee system is under attack at the present time, since it is trying to operate under circumstances which were not envisaged. Consequently, we are discovering that there are imperfections in our rules giving rise to difficulties which will probably have to be fought out on the floor of this chamber.
The problem is self-evident and it is one which will not be easily resolved. It is one which I hope will be discussed
April 6, 1973

in detail in the Standing Committee on Procedure and Organization. At the present time, this committee is engaged in studying the estimates of the House of Commons but, hopefully, when these have been dealt with it will turn to the larger question of the rules governing these committees and the way in which they relate to the House of Commons.
I wish to say a few words on the proposition the hon. member for Wellington has advanced. It has to do not only with the public accounts committee; it seems to involve the relationship of the Auditor General with the House of Commons and parliament in general as well as the question of the appointment of a new Auditor General. Hon. members will no doubt recall that a number of proposals have been put forward as part of a possible new legislative enactment to govern the activities of the Auditor General. A recommendation was put forward some time ago by the public accounts committee itself. It was not acceptable to the House of Commons and so far we have not been able to resolve this dilemma. It would seem to me, however, that the new Auditor General might make recommendations acceptable both to the public accounts committee and to the House of Commons. For this reason I believe the period following the appointment of the new Auditor General would be a much more suitable time at which to legislate the responsibilities in question.
The Financial Administration Act is not a particularly suitable vehicle for this purpose since it deals with the financial responsibilities of Crown corporations and other federal agencies. If we were to insert artificially a description of the role and functions of the public accounts committee, I believe we would be stretching the scope of the act somewhat too far. Indeed, we would be guilty of a crime with which the government was accused last session, that of trying to insert too many pieces of legislation under the title of one bill. I have in mind omnibus bills which the government introduced in past sessions. Hopefully, this practice will not be continued.
I want to draw the attention of hon. members to the delicacy with which we must approach this question. Although the successor to the former Auditor General has been named, he will not assume his duties until some time in July. In the meantime his position is being filled by the Assistant Auditor General. Consequently, it seems to me that until the new Auditor General has had an opportunity to look into his new responsibilities and to read the past minutes of the public accounts committee when the Auditor General's Act was discussed, and indeed to read this debate, it would be somewhat presumptuous of us to give second reading to this proposal and send it to a committee for discussion before the new Auditor General had taken up his position. It seems to me that the least we can do in these circumstances in which we are in transit from one Auditor General to another is to display the courtesy of waiting for him to take control of that position and to make recommendations to the public accounts committee.
I feel it would be far better for the Auditor General to make recommendations to the public accounts committee and for the committee, as a result of studies it has engaged in over the past several years, to make recommendations to this House. I recognize, as I am sure other
Public Accounts Committee
hon. members do, that this transfer is an onerous one. I think in all justice, also, that hon. members will recognize that the position of Auditor General is a matter of some contention between various parties in the House of Commons.
It may well be that even an act of parliament on the Auditor General written in God's own hand would not be acceptable to hon. members of the House. It does seem to me that until we have reached a reasonable agreement in the House of Commons as to the development of the Auditor General's position under an Auditor General's act, we would be presumptuous in moving forward with this proposal. What I am suggesting is that we should not move forward on a piecemeal basis, but instead should march forward with a co-ordinated and logical approach to the whole problem.
The dilemma hon. members have in coping with the estimates of the government is illustrated most profusely in the way in which committee activities have taken place this year. Hon. members know that the entire estimates of the government are referred to standing committees and that these standing committees have until the end of May to complete their detailed study of the estimates. The Standing Committee on Public Accounts finds itself in a different role. It is designed to receive and report upon the findings of the Auditor General. The role of this standing committee could be competitive but it is designed to be co-ordinative and co-operative.
Our dilemma, as a result of the committee system at the present time, is that Members of Parliament find it takes a great deal of time to carry out the work which has to be done in criticizing the spending of the government in a detailed and precise way. It strikes me that this is not the fault of the structure of the committee system as it now stands but is a problem of the individual member of parliament. We often hear in the House of Commons that there is no time for the House to properly and seriously examine governmental spending. In point of fact, there is ample time under our present system, having regard to the supply motion, allocated days and the time allotted for specific examination under other motions.
Your Honour will note that this is not the approach hon. Members of Parliament take. Very seldom do they come forward with detailed plans to eliminate government spending. Instead, the general tenor of the debates since the last election has been for the government to extend its spending in a whole series of trends; in respect of increased pensions to senior citizens and veterans, increased welfare payments, increased subsidies to farmers and corporations, and increased payments for education. The House of Commons is never free of requests for increased governmental expenditures. However, the real skinflint of the parliamentary system is not the opposition, not the members of the government backbenchers and not the members of the small parties; the actual skinflint is the Minister of Finance and the cabinet, not individual members seeking to have the government increase spending programs.
Your Honour has properly drawn to the attention of the House of Commons the fact that in the third report of the Standing Committee on Indian Affairs and Northern Development it is suggested the government make grants

April 6, 1973
Public Accounts Committee
to the Native Council of Canada, I believe it is to provide proper research facilities to examine aboriginal claims. I am sure that members of the House of Commons will agree that this is a laudable aim. However, there is a procedural point in respect of whether a committee of the House can recommend to the House of Commons an expenditure of money without royal recommendation or the recommendation of a minister. This is a very serious procedural point and I give notice that when such motions are brought forward, some hon. members on this side will argue it.
The point 1 am trying to make is that not only do members make such recommendations in the normal course of their duties; they seek out opportunities which,
in my opinion, are clearly not allowed by the rules, and continually importune the House of Commons to authorize further expenditures. Each member comes to the House of Commons with ideas that are perfectly sensible, reasonable and logical. Very few members come here to suggest that we must cut back expenditures in respect of specific items or departments. The problem, therefore, has become one of tradition in the House of Commons. The idea of cutting expenditures has evaporated and now we are continually seeking increased expenditures.


Mr. Speaker:: Order, please. The hour allotted for private members' business has now expired.
At 5 p.m. the House adjourned, without question put, pursuant to Standing Order.


Monday, April 9, 1973