1974-11-27

PRIVILEGE


Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, I rise on a question of privilege that concerns not only the privileges of all members of this House but the basic and fundamental privilege of the House to grant or to refuse supply. Obviously, if that right is taken away, this House does not exist. It is not so obvious that this House does not exist, except in shadow form, when the right to grant or to refuse supply is emasculated through abuse of the rules of the House and the contempt of ministers of the Crown for the law of parliament.
On Friday last, the President of the Treasury Board (Mr. Chretien) tabled Supplementary Estimates (B). These supplementary estimates petitioned this House to provide the government with the sum of $1.75 billion to cover 49 items of expenditure. The Standing Committee on Miscellaneous Estimates is charged by this House with the duty of considering these estimates and reporting them back to the House either granted in full, reduced, or refused.
The steering committee of the miscellaneous estimates committee met on Monday evening, set priorities within a very short time-frame and said they would like to hear ministers with respect to certain estimates. We asked to hear the Minister of Energy, Mines and Resources (Mr. Macdonald), the Minister of Agriculture (Mr. Whelan), the Minister of Transport (Mr. Marchand), the Solicitor General (Mr. Allmand), the Minister of State for Urban Affairs (Mr. Danson), the Minister of Finance (Mr. Turner), the Minister of Industry, Trade and Commerce (Mr. Gillespie), the Minister of National Health and Welfare (Mr. Lalonde), and from certain other departments.
The fact is that so far, no meetings have been arranged. In spite of the fact that $1.75 billion is being asked for- which is more than the total budget of most provinces in this country-we are asked to consider 49 items in, now, only ten meetings at most. I raise this matter because I believe it is unfortunate that this procedure is being followed. For example, instead of referring the estimates only to the miscellaneous estimates committee, they should have been referred to the other relevant committees. I suggest that there must be a better way of treating this kind of expenditure.
In the result, the President of the Treasury Board abused the spirit of one of the basic rules of this House by tabling these supplementary estimates within a timeframe which effectively frustrated the order to this House
to consider-I emphasize the word "consider"-this request for $1.75 billion of public moneys. Several ministers of the Crown have further frustrated that order by refusing to fit themselves within the time-frame that was suggested by the steering committee on miscellaneous estimates. As members of the committee, we are required, by the action of the President of the Treasury Board, to do the impossible.
Therefore, if it is acceptable to Your Honour, I move, seconded by the hon. member for Huron-Middlesex (Mr. McKinley):
That the subject matter of this question of privilege be referred to the Standing Committee on Procedure and Organization.


Mr. James A. McGrath (St. John's East):: Mr. Speaker, I should like to speak very briefly on this question of privilege. I submit to Your Honour that since the present rules of the House under which we are operating were accepted, government spending has more than doubled. I submit it is an abuse of Standing Order 58(15), under which the House deals with supplementary estimates, for the government to rely more and more on the Standing Order to get its supply through this House. In my humble submission, the Standing Order was never intended to be used to the extent it has been used by this government. I humbly submit it was never intended that the miscellaneous estimates committee should be charged with the responsibility of considering, within the very narrow timeframe prescribed by the Standing Order, estimates to the extent of $1.75 billion.
I submit to Your Honour that this is clearly an abuse of the rules of the House. I hope Your Honour will treat the motion of the hon. member for York-Simcoe (Mr. Stevens) with consideration and will have this matter referred to the standing committee, where it can properly be considered.


Hon. Mitchell Sharp (President of Privy Council):: Mr. Speaker, you will have to rule whether this is a question of privilege. I rise only to say that I believe the rules of the House demand a very fundamental revision and I would be quite happy to see this, among other questions, discussed in the committee.


Mr. Speaker:: Order, please. If there are no further contributions to the question of privilege, I might indicate that the hon. member was good enough to give the Chair notice of his intention to raise this question of privilege. It seems to me that the argument the hon. member has presented in support of his prima facie question of privilege, supported by the hon. member for St. John's East (Mr. McGrath), raises what is in fact a very important subject and, therefore, a very important grievance in respect of the manner in which this substantial sum of money for proposed government expenditure will be examined by this House.

November 27, 1974
Railways Freight Rates
There can be no doubt that if there is any rule which is fundamental to the operation of a parliamentary system of government, it is the rule which pertains to the examination of, voting on and approval of government expenditures. Perhaps hon. members will have notices that it is inherent in what has been said in support of the grievance-I use the word "grievance" as opposed to "question of privilege" advisedly-that what has been done is, in fact, in conformity with the Standing Orders of the House. On the other hand, in conforming with the Standing Orders of the House the procedure has worked a hardship or difficulty on members in their necessity to fulfil their proper duties by examining these estimates very carefully.
Therefore, I have to find that because the Standing Orders of the House have been obeyed, there is not a prima facie question of privilege. However, whenever the Standing Orders work a hardship on members who want to do their duty diligently, it is very comforting to have the assurance of the President of the Privy Council (Mr. Sharp) that in the examination of the procedures of the House this very important grievance ought to be, and will be, taken into account.



ROUTINE PROCEEDINGS


[Stage Direction]
First report of Standing Committee on Privileges and Elections-Mr. Blaker.
[Editor's Note: For text of the above Report see today's Votes and Proceedings.]

Mitchell William Sharp: Mr. Speaker, I should like to table copies of the green paper entitled "Members of Parliament and Conflict of Interest". This was tabled in the last parliament, but I understand it must be tabled again in order that I may refer it, as I intend to do shortly, to the Standing Committee on Justice and Legal Affairs for examination and report.


TRANSPORT
Mr. Les Benjamin (Regina-Lake Centre):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of rather urgent and pressing necessity, namely the question of the expiration of the freeze on railway freight rates to take effect at the end of this year. Because of the 
refusal of, the railways to respond to the request of the Minister of Transport (Mr. Marchand) for full disclosure of their costs to justify their present freight rates and their proposed 25 per cent increase effective January 1, and since the minister has threatened since July, 1973, to bring in legislation to force such disclosure, claims he has legislation ready and has asked for the co-operation of the House for speedy passage of such legislation, I would move, seconded by the hon. member for Yorkton-Melville (Mr. Nystrom):
That this House requests the minister to immediately present his legislation for first reading, and further that this House agrees to co-operate to effect speedy passage of such legislation.


Mr. Speaker:: Before putting the question I should tell the hon. member and the House that I have some grave reservations about the validity of the motion in that it seeks to anticipate an order of the day and, in addition, in the latter part it anticipates speedy passage by the House which is a term I submit which, even if the motion were adopted by this House, would be impossible to define with any degree of accuracy. However, the motion as put forward refers to a matter of some pressing necessity and urgency; therefore, I shall resolve the doubt in favour of the hon. member. Does the House give unanimous consent that the motion to be proposed under the provisions of Standing Order 43 be debated at this time?


Some hon. Members:: Agreed.


Some hon. Members:: No.


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


Leslie Gordon Benjamin: Mr. Speaker, on a point of order, I would point out that yesterday the Minister of Transport requested the co-operation of the House to the speedy passage of legislation and it was government members who said no to the motion.


ALLEGED INCREASE IN STAFF AND POWERS OF PRIME MINISTER'S OFFICE-REQUEST FOR UNANIMOUS CONSENT TO MOVE MOTION
Mr. Tom Cossitt (Leeds):: Mr. Speaker, I rise to move a motion under the provisions of Standing Order 43 on a matter of particularly urgent and pressing necessity because of press reports today that the Prime Minister's office will exercise an even larger role in controlling the government of this country with presumably a further decrease of the power of Parliament. I would move, seconded by the hon. member for Marquette (Mr. Stewart):
That it is the opinion of the House that further expansion of the power of the Prime Minister's office is not in keeping with the democratic process or the rights of Parliament and that the House requests the Prime Minister to make a statement on the changes that have been made, or that are contemplated, in the staff and duties of his office and in particular an explanation of the duties, salaries and job designations of Michael Kirby, former principal assistant to Premier Gerald Regan,
November 27, 1974

Michel Rochon on loan from the Treasury Board, Jim MacDonald former Liberal candidate in Grenville-Carleton and Joel Bell, a one thousand dollar a week consultant.


Mr. Speaker:: Order, please. I have tried to take the occasion previously to indicate to hon. members that motions proposed pursuant to Standing Order 43 must relate to not only an important subject matter but must have some factor or ingredient within them that distinguishes them from ordinary important business and puts them in the category of urgent and pressing necessity. I can only say with the greatest respect to the hon. member that I fail to see that ingredient contained in the subject matter of this motion.


MESSAGE FROM THE SENATE
Mr. Speaker:: I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed Bill S-16, to revise references to the Court of Queen's Bench of the Province of Quebec to which the concurrence of this House is desired.


ELECTORAL BOUNDARIES READJUSTMENT ACT
Mr. Antonio Yanakis (Berthier) moved: for leave to introduce Bill C-365, respecting the Electoral Boundaries Readjustment Act.


An hon. Member:: Explain.


Antonio Yanakis: Mr. Speaker, since the new electoral redistribution on the provincial level last year, the territory of the riding of Berthier that I represent is completely included in the provincial ridings of Berthier and Mas-kinonge. That is why I should consider it fairer for all my electors if the federal riding were henceforth to be known under the new name of Berthier-Maskinonge.


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

Mr.   J.-J. Blais@Nipissing: for leave to introduce Bill C-366, to amend the Electoral Boundaries Readjustment Act.


An hon. Member:: Explain.


Mr. Blais:: Mr. Speaker, the purpose of this bill is to amend the Electoral Boundaries Readjustment Act to take into account the greater necessity for the rural and northern areas of this country to receive representation within these honoured halls.
Order Paper Questions


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

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Jack Cullen (Parliamentary Secretary to Minister of Finance):: Mr. Speaker, the following questions will be answered today: Nos. 172, 235, 250, 358, 454, 504, 656 and 861.
If questions Nos. 63, 292 and 562 could be made orders for returns, these returns would be tabled immediately.
Mr. Speaker, would you be so kind as to call starred question No. 516?
I ask, Mr. Speaker, that the remaining questions be allowed to stand.


Mr. Orlikow: 1.	How many persons were serving penitentiary sentences in each penitentiary in Canada during 1973?
2.	Of those persons serving penitentiary sentences, how many were (a) Indians within the meaning of the Indian Act (b) of Indian ancestry in each penitentiary during the year 1973?


Hon. Warren Allmand (Solicitor General):: 1 and 2.
Institution	Number Incarcerated	* Number of Declared IndiansNewfoundland	12 .	1(Her Majesty's Prison) Carleton Community Correctional Centre	53	Springhill	511	30Don dies ter	028	29Dorchester Annex	SO	3Parrtown Community Correctional Ce ntre	39	Dungarvon	15	-St. Hubert Centre	148	-M on tee St.-Franco is	308	2Quebec Medical	130	-Laval	132	1Federal Training	494	-Leclerc	017	5Archambault	451	ISte. Anne des Plaines	182	1Quebec Reception	103	-('ovvansville	559	3Montgomery	88	2Ontario Medical	173	5Ontario Reception	138	2Mill haven	517	19Millhaven Annex	50	3
November 27, 1974
Order Paper Questions
		*Number of
	Xu in her	Declared
Institution	Incarcerated	IndiansPrison For Women	205	19(.'oilins Bay	741	34Collins Bay Annex	04	2Landry Crossing	141	0Beaver Creek	103	2Joyeeville	070	20Joyceville Annex	83	2Wark worth	495	10()sbornc	73	78toney Mountain	052	193Stoney Mountain Annex	97	34Saskatchewan	081	144Saskatchewan Annex	08	13Oskana	11	lDrumheller	490	57Scarboro	70	1Grierson	179	16Bowden	10	2West Georgia	44	1Burrard	83	2British Columbia	529	00William Head	224	12Pandora	34	-Matsqui	498	43Western Medical	151	14Mountain	292	14Agassiz	145	15Ferndale	47	-Total	12,386	848


Mr. Herbert: 1.	Does the government consider it essential or preferable that counselling service for homophiles be provided by lesbians and homosexuals and would the same line of reasoning be applicable to (a) alcoholics (b) drug addicts (c) prostitutes?
2.	Did the government have prior knowledge of the competence of the individuals that were awarded an Opportunities for Youth grant to set up a summertime counselling service for homophiles?


Mitchell William Sharp: I am informed by the Departments of National Health and Welfare and Manpower and Immigration as follows: 1. No.
2.	Yes.


Mr. Herbert: In areas where there is no delivery of mail, particularly in rural areas, and where, as a result, it is necessary to pick up mail at a local post office, will the Post Office Department consider discontinuing the charge for a regular size mail box to be more than offset by the savings to the department in reduced counter and delivery personnel?


Mr. Raynald Guay (Parliamentary Secretary to Postmaster General):: The Canada Post Office is currently reviewing its lock box policy. All relevant factors concerning lock box service are being examined. It is important to note, however, that current Post Office policy provides for general delivery service at no charge for persons living in areas where there is no delivery of mail.
The Information available is extracted from the inmate admission forms filled at the institutional level and represents those inmates who, upon admission, have declared themselves to he of Indian oiigin.


Mr. Reynolds: Does the government subsidize ferries to the tune of tens of millions of dollars on the east coast and, if so, can the government advise for what reason it is refusing to subsidize ferries on the west coast?


Hon. Jean Marchand (Minister of Transport):: In so far
as the Ministry of Transport is concerned: The government of Canada, under the Terms of Union of Canada-Newfoundland, and the Terms of Confederation of Canada and Prince Edward Island maintains and pays for ferry services connecting these two island provinces to the mainland. The ferry services are interprovincial by nature. In general, it is not the policy to subsidize intraprovincial ferry services of a "road link" nature. For this reason, no direct subsidization of such services has been entered into on the west coast. A number of agreements have been negotiated during the past few years transferring from the federal government to provincial governments' responsibility for the operation of ferry services coming under the definition of "road link". The Canadian Transport Commission advises me as follows: The following subsidies were paid to water transport during the fiscal year 1973-74:
1.	East Coast: To coastal freight services, $3,043,220.89; to ferry services, $3,739,881.06; 2. West Coast: To coastal freight services, $923,000.00.
(Mr. Allmand.]


Mr. Forrestall: 1.	With respect to the news conference on transportation policy given by the Minister of Transport, June 19, 1974, on what date will the "new legislation to restructure ports and harbours in Canada based on the principle of giving greater local autonomy to port authorities and allowing greater local public participation in port-related decisions" be introduced?
2.	Will the government invite submissions from representatives of the shipping industry, various Port Commissions and other public and individual bodies prior to or in the course of any Parliamentary debate on this matter?
3.	From what bodies has this been solicited since or before the June 19 news conference and on what dates specifically?
4.	Does the government accept the principle that full and widespread public debate should precede legislative changes involving "greater public participation in port-related decisions"?


Jean Marchand: 1. No
date has been set for the introduction of new legislation on ports, but I expect that it will be in this Session.
2.	The National Ports Council has been the focal point for submissions and discussion concerning ports reorganization for more than two years. These submissions have been the subject of study by the Special Committee on Ports and Harbours since last spring. This committee has reported, and its proposals are being considered. The consultation process will continue: the proposals will be discussed fully with the National Ports Council before any ports legislation is introduced.
November 27, 1974

3.	Submissions have been solicited from the National Ports Council, since this body is composed of representative interests, including Harbour Commissions, the Local Port Authorities, National Harbours Board representatives, and officials of provincial governments, as well as officials of certain federal departments. The submissions were received, for the most part, prior to June 1974.
4.	The development of a new administrative structure for ports is a complex task. The National Ports Council has the expertise necessary to examine the upcoming proposals, and because of its composition, it is considered to be representative of public and port user interests. It will be the focus for discussion of this issue prior to introduction of legislation. My reference to "greater participation in port-related decisions" refers to a principal characteristic of the new ports structure which we are trying to develop. That is, there would be a greater degree of local autonomy for the ports in future.


Mr. Howie: What plans, if any, exist for the establishment of railway passenger service to the capital of the Province of New Brunswick?


Jean Marchand: There are no federal plans to establish a railway passenger service to the capital of New Brunswick at this time.


Mr. Forrestall: On what date will the Minister or Department of Transport make an announcement as to a final decision on the expanded container facilities required for the Port of Dartmouth-Halifax?


Mr. Cliff Mclsaac (Parliamentary Secretary to Minister of Transport):: Mr. Speaker, no recommendation for expanded container facilities at the port of Halifax has been made to the Minister of Transport by the National Harbours Board. Such a recommendation would be only in response to the demonstrated demand for such facilities, the timing of which has not yet been clearly identified according to forecast traffic projections; and to the financial viability of the project related to revenue from such anticipated cargo.


Mr. Grafftey: 1.	What transport contracts have been awarded by the Department of the Solicitor General to Lapointe Transport Ltd., 105 Industriel Blvd., Longueuil, Quebec, since January 1, 1972?
2.	What was the amount of the contract in each case?
3.	Were public tenders called in each case and, if not, for what reason?


William Warren Allmand: Ministry Secretariat, Canadian Penitentiary Service, National Parole Board and Service: 1. Nil.
2. Not applicable.
Order Paper Questions
3.	Not applicable.
Royal Canadian Mounted Police: 1. Nine contracts for the movement of household effects.
2.	$639.64; $1,996.71; $255.85; $894.24; $440.32; $541.18; $1,349.30; $399.21; $261.20; Total, $6,777.65.
3.	No. The contracts were awarded under the equalization system, whereby all approved moving companies are given an equal dollar share of the business available.


Mr. Herbert: 1.	With reference to the answer to Question No. 314, will the specific suggestions made in the study report be communicated to interested parties and particularly to the nurses?
2.	Will the 14th floor at Ste. Anne de Bellevue Hospital now be opened and filled with those veterans who have been awaiting admittance?
3.	Is the hospital operating at patient capacity and, if not, for what reason?
4.	Up to what year is it calculated that this hospital could remain filled to capacity by veterans whose hospital care is the responsibility of the Department of Veterans Affairs?


Hon. Daniel J. MacDonald (Minister of Veterans Affairs):: 1. Yes.
2.	Not at this time.
3.	Yes.
4.	Probably 1985.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. Cossitt: With reference to the answer to Question No. 48 of the Second Session of the 29th Parliament that the government is paying $5,500 annual rent for a post office in Lyndhurst, Ontario (a) what is the name and address of the person or persons to whom this rent is paid (b) at what intervals and by what method is payment made (c) if payment is made by cheque, what are all the names and other information endorsed on each cheque that has been cashed since May 1, 1973 (d) what is the exact name, address and capacity of each bank whose stamp or designation appears on each cheque cashed since May 1, 1973?
Return tabled.



PAY DIFFERENTIALS FOR VARIOUS REGIONS

Mr. Coates: 1.	How many regions exist under the regional pay set-up and, in those regions, how many zones presently exist?
2.	What is the pay differential for employees of similar classification in the zones established in each region of a Man 9, GL and T Group?
3.	What is the pay differential for a Man 9, GL and T Group between the various regions of the nation using the highest rate available to a person in that classification in the preferred zone of each region?
4.	What was the pay differential for the same classification in 1970-71?
1710

November 27, 1974
Privilege-Mr. Stevens
Return tabled.



EXPENDITURES FOR PUBLICITY IN DEPARTMENT OF CONSUMER AND CORPORATE AFFAIRS

Mr. Sym.es: 1.	What were the amounts of money spent by the Department of Consumer and Corporate Affairs on publicity and/or information in each of the fiscal years 1972-73 and 1973-74?
2.	What were the names and addresses of firms and individuals who received these contracts, what amounts of money were spent in each case and what was the purpose of each contract?
3.	In the case of expenditures for publicity and/or information made within the Department by its publicity or information division, what was the amount in each case and the purpose of the expenditure?
Return tabled.


Mr. Robert C. Coates (Cumberland-Colchester North):: Mr. Speaker, I rise on a question of privilege. It relates to the fact that answers to questions standing in my name Nos. 45, 46, 47, 48, 49 and 51, all placed on the order paper on September 30, the first day on which questions appeared on the order paper in this new parliament, have in effect been provided to the press by someone in the government, and almost the complete text of the answers. This information first appeared in the Globe and Mail this week. My objection is not to the fact that this information is now available for public consumption and consideration, but to the fact that if members of parliament still do not have a right to receive the information that is given to the press, then there is something wrong with the whole system under which we are operating.


Some hon. Members:: Hear, hear!


Robert Carman Coates: On a number of occasions this parliament has indicated its support for bilingualism in this nation. Surely, the people of this country have a right to know, through Hansard, what the cost and what the success of the program that the government has proposed is in actual fact. That is what I sought to secure, so that members of parliament would be in a position of being better able to examine the program and determine its strengths and weaknesses. It is rather difficult if the government refuses to give me information that somehow it is able to give to the press. I believe it is a serious matter and one to which you, sir, should give serious consideration to see that we, as individual members of this House, are protected.


Mr. Speaker:: The hon. member for York-Simcoe (Mr. Stevens) on a question of privilege.


Sinclair McKnight Stevens: A point of order, Mr. Speaker. I have placed starred question 788 on the order paper and it continues to be unanswered. The question deals with conflict of interest guidelines for cabinet ministers. In view of the government House Leader's statement on Friday last outside the House that there are such guidelines and that they are, to use his words, "probably the most advanced in the world", I would call on the government to produce the presumably secret guidelines without delay. Surely the government does not want to pretend that the July 18 or
[Mr. Coates.)
December 18 guidelines referred to by the Prime Minister on those dates are the most advanced in the world.


Mr. Speaker:: The right hon. Prime Minister.


Mr. Trudeau:: Mr. Speaker, I may be able to throw a little light on this. I would indicate that the guidelines are those very guidelines I made public in the House when I made a statement a year ago. I can understand that hon. members do not agree with them. That is why we have referred the whole matter to members so that they may express themselves on it. But the guidelines are known; they were made public.


William Warren Allmand: Mr. Speaker, I have a point of order. Yesterday on a point of order the hon. member for Hastings (Mr. Ellis) rose and disputed a statement I made that the RCMP would only investigate members of the House of Commons if they were suspected of criminal or subversive activities. He said that he had been investigated by the RCMP and had not committed any criminal offence. I have checked into this and I find that in November, 1973 the RCMP did conduct an investigation with respect to the hon. member for Hastings because it was alleged that he had in his possession a classified document belonging to the Unemployment Insurance Commission. This could have constituted an offence under the Official Secrets Act. The RCMP did investigate but found that there was no offence and dropped the case.


Mr. Nowlan:: Are those plumbers or snoopers?


Mr. Speaker:: Order, please. The hon. member for Cumberland-Colchester North (Mr. Coates) asked the Chair to take into account a question of privilege but did not follow it with a motion requiring action by the Chair. Nevertheless, the point is not lost.



MOTIONS FOR PAPERS

Jack Sydney George (Bud) Cullen: Mr. Speaker, it seems we may have been scooped by the Globe and Mail which only has to print in one official language.


Some hon. Members:: Oh, oh!


Jack Sydney George (Bud) Cullen: Mr. Speaker, notice of motion for the production of papers No. 12 is acceptable to the government.


Mr. Speaker:: Order, please. Is it the pleasure of the House that motion No. 12 be adopted?


Some hon. Members:: Agreed.


Jack Sydney George (Bud) Cullen: Mr. Speaker, I ask that the other notices of motion be allowed to stand.


Mr. Speaker:: Is this agreed?


Some hon. Members:: Agreed.
November 27, 1974



COPIES OF SUBSIDIARY AGREEMENTS BETWEEN FEDERAL GOVERNMENT AND NEWFOUNDLAND-GENERAL DEVELOPMENT AGREEMENT

[Stage Direction]
Motion No. 12-Mr. Marshall:
That an humble Address be presented to His Excellency praying that he will cause to be laid before this House copies of subsidiary agreements under the General Development Agreement between the government and the Government of Newfoundland.
Motion Agreed to.


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I have a question for the Minister of Finance. I assume that in preparing his budget for presentation to the House the minister had access to the report of the National Energy Board which stressed the importance of the petroleum industry receiving proper economic incentives in order to ensure self-sufficiency in the future. Whether or not the minister had access to it, however, was his budget based upon agreement with the position taken by the National Energy Board that the petroleum industry must have proper economic incentives to ensure self-sufficiency or is it the minister's view that some governmental instrument like Petro-Can can do the job?


Hon. John N. Turner (Minister of Finance):: Mr. Speaker, in my address to the House in the budget speech I made reference to the threat of declining petroleum reserves and it was for that reason I restored the immediate write-off at 100 per cent for exploration of petroleum and gas and, indeed, mineral resources.


An hon. Member:: Eight cents a barrel!


John Napier Turner: I reduced the federal tax from the equivalent of 30 per cent to 25 per cent by increasing the provincial abatement from 20 per cent to 25 per cent and in these measures drew back from the May 6 position as it affected the petroleum industry by about 25 per cent, restored to that industry an additional $100 million this year, $170 million for 1975 and on an accelerating increasing basis over the subsequent years.


Robert Lorne Stanfield: A supplementary question, Mr. Speaker. I take it from the minister's response that it is his view that the budget provisions will assure adequate rates of exploration and development within the present economic climate faced by the petroleum industry and that the minister does not intend to introduce any additional measures of encouragement as a result of the report of the National Energy Board?


John Napier Turner: Mr. Speaker, if the provinces of Alberta and Saskatchewan make some moves
Oral Questions
then the health of the petroleum industry in terms of international competitiveness would be, I think, restored. Whether in other terms over the period of the next few years we have to look at the question of price, cost and other factors, of course, is something we will be dealing with as the situation develops.


Mr. Speaker:: A final supplementary, the hon. Leader of the Opposition.


Robert Lorne Stanfield: Mr. Speaker, if the minister is serious about accepting the proposition that the industry has to be encouraged, in view of the interpretation of the investor as reflected in the market since the minister presented his budget and the decision of the industry to cut back on the amount allocated for investment in the industry, is it the minister's position that the industry simply needs a little more explanation and that he, in fact, knows much more about their business than they do?


John Napier Turner: Mr. Speaker, I think it is generally accepted by officials in Ottawa and Edmonton and by the industry that a fair rate of return at the wellhead or production profits should give the industry 30 or 35 per cent to ensure the objectives the hon. gentleman mentioned. By increasing the abatement and restoring the exploration incentive, in effect the industry's share has gone from 24 per cent to 29 Vi per cent. As for the market reaction, in so far as it affected oil and gas, there was some reaction and probably the market was discounting rumours about the National Energy Board report. During the week following the budget the Toronto stock exchange dropped about 2.5 per cent against New York's 5lA per cent.


MINISTER'S KNOWLEDGE OF REPORT OF ECONOMIC COUNCIL OF CANADA WHEN PREPARING BUDGETARY PROPOSALS FOR OIL INDUSTRY
Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, I hope I can get a straight answer from the Minister of Finance rather than a shilly-shally answer. I should like to ask the minister if he had in his possession and did he study the report of the Economic Council of Canada. Did he know its intention prior to the presentation and preparation of his November budget, particularly in reference to petroleum and natural gas and the question of security of supply. I would refer the minister to page 61 and page 141 of the report.


John Napier Turner: Mr. Speaker, I received a copy of the report at the same time as every other hon. member.


Eldon Mattison Woolliams: Well now, that is a shilly-shally answer. I wonder if the minister would tell us whether he had the report and if he studied it. If he did not have it and did not study it, did he know the intention of the report, particularly the recommendations as to security of supply and price setting?


John Napier Turner: Mr. Speaker, the first time I saw the summaries of the report issued by the Economic Council of Canada was yesterday. I had no advance warning of the content of the report whatseover.
28543 - 4014

November 27, 1974
Oral Questions
The Economic Council of Canada is charged with an over-view for the medium and long term of the economy of Canada. I received the report as did every other member of this House.


Eldon Mattison Woolliams: Mr. Speaker, I am sorry to have to press this but I think the minister should come clean with us. This report has been out since July at least, so it has been lying on somebody's desk. Surely, he knew the intention, particularly of those important recommendations. Where was the report? Did the minister know its intention? If he did not follow it, whose recommendations did he follow in preparing the budget in question?


John Napier Turner: Mr. Speaker, I consulted widely, even including some of the hon. member's friends.


STATEMENT BY MINISTER OF JUSTICE ON FEDERAL TAXATION OF PROVINCIAL CROWN COMPANIES DEVELOPING RESOURCES-CONSULTATION WITH PROVINCES
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I have a question for the Prime Minister. Last night in the House the Minister of Justice indicated that he strongly favoured federal taxation of Crown corporations if they are used by provinces to develop their resources. Was the Minister of Justice speaking simply as an individual at that time or was he stating government policy?


Pierre Elliott Trudeau: Mr. Speaker, the hon. member is not stating what the minister said. I read his speech just a few minutes ago. He did not say he strongly favoured that. I don't know why the leader of the New Democratic Party places those words in the minister's mouth. He said it was possible.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Mr. Speaker, it is a pleasure to learn that the Prime Minister is paying attention to debates in the House. It is very reassuring. Whether the minister strongly favoured it or not is a matter of judgment. If you read his text and argument, I think my interpretation is an understatement. The Prime Minister still has not answered my question. Is this government policy or is it not?


Pierre Elliott Trudeau: Mr. Speaker, the Minister of Justice said it was possible to do that. That is all he stated and I support him in that.


John Edward Broadbent: If the government embarks on such a policy, will the Prime Minister inform the House whether one result would be extending the idea to taxing provincial departmental activities in the resource sector if they took over certain developments independent of using a Crown corporation. Is the federal government considering that as well?


Pierre Elliott Trudeau: Mr. Speaker, I am sure you realize the question is hypothetical.


John Edward Broadbent: Mr. Speaker, I have one final
supplementary.


Some hon. Members:: Oh, oh!


John Edward Broadbent: It is obvious that not only the Prime Minister is a sensitive individual. A lot of his backbenchers are the same.


Some hon. Members:: Oh, oh!


John Edward Broadbent: If I could just have a little quiet over there. If it is the intention of the federal government to move in this direction, will the Prime Minister assure the House that when the government finally acts, it will do so after consulting the 10 provinces and not simply impose such a policy on them unilaterally?


Pierre Elliott Trudeau: Mr. Speaker, if the provinces consult us before nationalizing industries, we will return the same courtesy to them.


Some hon. Members:: Hear, hear!


HOUSING
Mr. Leonel Beaudoin (Richmond):: Mr. Speaker, I would like to direct a question to the Minister of State for Urban Affairs.
I believe all hon. members recognize the efforts the Minister of State for Urban Affairs is making now to give a new impetus to the building industry. Here is my question: In order that those efforts be valid and efficient, could the minister advise the House whether he, his department or the government intend to take the necessary steps to require the Central Mortgage and Housing Corporation to set down their interest rates at 93/i per cent for 1975?

Hon. Barney Danson (Minister of State for Urban
Affairs): Mr. Speaker, I am interested in the suggestion of the hon. member and I appreciate his kind words. I wish I could reciprocate in such a manner to make him as happy as he has made me.


An hon. Member:: Go over and kiss him, Barney.


Some hon. Members:: Hear, hear!


Mr. Danson:: All I can say is I will continue my efforts along with CMHC to make sure we deliver good housing for Canadians at the lowest cost and at interest rates they can afford to pay.


Léonel Beaudoin: A supplementary, Mr. Speaker. Could the minister advise the House whether negotiations have been initiated with loan companies and the Central Mortgage and Housing Corporation to provide for the amounts
November 27, 1974

of money-at reasonable rates-necessary to build houses in 1975?


Barnett Jerome Danson: Yes, Mr. Speaker. I have asked not only the leaders and representatives of the building industry but also the lending institutions to meet with me in Ottawa in the next several days so we can discuss these matters in relation to housing.


NEIGHBOURHOOD IMPROVEMENT AND RESIDENTIAL
Mr. Jack Marshall (Humber-St. George's-St. Barbe):: Mr. Speaker, my question is for the Minister of State for Urban Affairs. In view of the fact the Economic Council of Canada is urging the government to increase funding for the rehabilitation of housing for low income earners, has the minister met with the provinces to designate areas where the Neighbourhood Improvement Program will apply and also with regard to the Residential Rehabilitation Assistance Program? Is the minister intending to increase the funding under this program which at present is very low, as it would do much to satisfy the needs of low income people trying to bring their homes up to standard?


Barnett Jerome Danson: Mr. Speaker, I was interested in the remarks of the Economic Council of Canada in relation to substandard housing. There is more in this country than we should be tolerating. I am pleased to say that all provinces have now signed Neighbourhood Improvement Program agreements. Already grants of $41 million have been committed and $23 million in loans. I believe there are some 65 areas designated under RRAP. This is now expanding. It has been a long process getting these agreements in place and meeting with the various provinces and municipalities. The program is well underway. I am sure there will be adequate funding. I am pleased to say I will be meeting with officials of municipalities in Nova Scotia on Monday on this very subject, and I hope to repeat that across the country.


POSSIBLE EXTENSION OF REHABILITATION PROGRAMS TO RURAL AND NATIVE HOUSING
Jack Marshall: Along with the Residential Rehabilitation Assistance Program and taking into account rural and native housing where Canadians in rural areas can qualify for rehabilitation grants apart from the Neighbourhood Improvement Program, will the minister indicate if there is any exten-tion or promotion of effort in this direction by the provinces and what action is being taken in this regard?


Barnett Jerome Danson: Mr. Speaker, I cannot do everything at once. I find I cannot do one thing as well as I would like. This is an extremely high priority. The Economic Council of Canada has highlighted this. The program is very generous. I look at it as one way to make a rather vigorous attack in the coming year and I look forward to having the funds to do that.
Oral Questions


DATE OF INTRODUCTION OF LEGISLATION CONCERNING FIVE HUNDRED DOLLAR GRANT
Mr. Lincoln M. Alexander (Hamilton West):: Mr. Speaker, I have a supplementary question for the Minister of State for Urban Affairs. In view of the fact that the minister is so concerned about grants, and knowing that the government has been less than honest with the Canadian people in terms of the $500 grant which now calls for legislation, can the minister advise how close that legislation is in terms of preparation for implementation by way of introduction to the House.


Barnett Jerome Danson: Yes, Mr. Speaker. Frankly, I was hoping to have it before the House in about a week's time. There have been some delays, but it will be within two week's time unless something unusual happens.


CONFLICT OF INTEREST
John Patrick (Pat) Nowlan: Mr. Speaker, my question is for the government House leader. In view of the fact the minister seemed to shadow box with the Leader of the Opposition yesterday with regard to reference of the general question of conflict of interest to a committee, has the minister had a chance to discuss with his colleagues, the Minister of Communications and the Secretary of State, a more particular reference involving the Minister of Regional Economic Expansion and a possible conflict of interest there so this matter can be clarified?


Mitchell William Sharp: Mr. Speaker, as members of the House will see, I have given notice to the table of a reference of the question of conflict of interest in which members will be invited to first look at the green paper that I tabled today and make recommendations on it so that we have a foundation. Once they have completed that, they can deal with the subject matter of ministers and conflict of interest, and public servants and conflict of interest. This question can be discussed in committee providing, of course, the committee wants to deal with members of parliament as a whole before dealing with special members of parliament who are cabinet ministers.


EMPLOYMENT OF MR. JOEL BELL AS CONSULTANT IN PRIME MINISTER'S OFFICE-POSSIBLE CONFLICT WITH OTHER EMPLOYERS' INTERESTS
James Aloysius McGrath: Would the Prime Minister tell the House whether or not Mr. Joel Bell who, according to the press, has been hired by the Prime Minister's office as a $1,000 a week consultant, has in fact other employers or other clients and whether or not Mr. Bell will be incorporated into the Prime Minister's office as a public servant in view of a possible conflict of interest?

November 27, 1974
Oral Questions


Pierre Elliott Trudeau: As to the first part of the question, I do know that Mr. Bell is working in the Prime Minister's office. I do not know under what terms or under what arrangements. I will inquire. I will inquire, also, whether he has any other occupations. From then on, we shall see whether the second question is a hypothetical one-whether it has any foundation.


ALLEGED REORGANIZATION OF PRIME MINISTER'S OFFICE-POSSIBLE INCREASE IN STAFF OR CHANGE IN ROLE OF OFFICE
James Aloysius McGrath: Would the Prime Minister tell the House whether the current reorganization of his office will result in an increase in the staff and whether or not his office will now assume a new policy role outside that which is traditional under our parliamentary system, that of the Privy Council or the cabinet?


Pierre Elliott Trudeau: As to the second part of the question, the answer is no. As to the first part of the question, I can tell the hon. member that there is no reorganization currently going on. As to the numbers of staff involved, the hon. member will get that information from the estimates.


POSSIBLE ESTABLISHMENT OF ENRICHED URANIUM PLANT IN JAMES BAY AREA-CONSULTATION WITH QUEBEC ON EXPORT OF PRODUCT
Miss Flora MacDonald (Kingston and the Islands):: Mr. Speaker, my question is to the Prime Minister. In view of the fact that uranium may be exported only if a permit is issued by the Atomic Energy Control Board, and bearing in mind the right hon. gentleman's remarks on the subject while he was in Paris, is the Prime Minister aware of any discussions which will be taking place next week in Paris between the premier of Quebec and the premier of France with regard to the establishment of an enriched uranium plant in the James Bay area? Can he tell us whether there have been any preliminary discussions between the federal government or any of its agencies and the Province of Quebec with respect to the export of the product of such a plant?


Pierre Elliott Trudeau: I do not know with whom the premier will be speaking but I am fairly certain he will be dealing with the subject of the hon. member's question. I believe I made the posture of the Canadian government quite clear when I was speaking to the French authorities, not only with regard to export but with regard to other aspects which concern us. At that time we set up a task force on energy whose purpose was to continue informing the French about the federal posi-

tion. I believe they held a meeting some days ago to inform the French of our position.
As far as discussions with Quebec are concerned, I cannot speak for other levels of the cabinet or of the civil service, but I personally spoke to the premier of Quebec and reminded him of our position on these matters.


EXPORT OF FISSIONABLE MATERIAL-REQUEST FOR POLICY STATEMENT ON SAFEGUARDS
Mr. Stuart Leggatt (New Westminster):: My question, too, is directed to the Prime Minister. Would the Prime Minister tell us when the House will be advised concerning the nuclear safeguard policy which apparently has been considered by the cabinet. It would seem we are now holding up 12 uranium contracts pending a report by the cabinet to this House. Can the right hon. gentleman tell us when we can expect to find out whether Canada is to continue to sell Candu reactors abroad and continue to export uranium or not? There are a great many people in this country who would like to know.


Pierre Elliott Trudeau: It is true that following the nuclear explosion in India the government decided to increase the safeguards which are related to the export of fissionable material. It is my impression that this decision was made known in a public statement. I will check where and when it was made. But whether it was made public or not, it is the policy of the federal government to increase the stringency of the safeguards and the matter is again before cabinet at the present time. If no statement has been made I shall ensure that a statement is made in due course so that the country and the world may know what our policies are in this regard.


CONFLICT OF INTEREST
Sinclair McKnight Stevens: Mr. Speaker, my question is for the Prime Minister. It arises out of his comment concerning my point of order with regard to starred question 788. As that question dealt with conflict of interest and was really a summation of the high points of Prime Minister Pearson's guidelines for his cabinet given on November 30, 1964, could the Prime Minister tell us, now that he says that his guidelines are confined simply to the statement of July 18 and September 18, whether we are correct in assuming that those guidelines, which are much narrower than Prime Minister Pearson's, are now the guidelines in effect?


Pierre Elliott Trudeau: I would have to refer to the text of my statement in the House, but my recollection is that rather than departing from Mr. Pearson's guidelines I based my statement on those guidelines-that, indeed, I gave more precision and more depth to the guidelines he had established; I believe the latter were more general in some instances, while applying to particular cases in others. The difference is, of course, that ministers are now under a specific obligation to declare
November 27, 1974

their holdings. This is certainly something which was not required under previous governments.


Some hon. Members:: A supplementary question!


Mr. Speaker:: Order. Earlier today the President of Privy Council tabled a green paper pertaining to conflict of interest with the intention, at least as disclosed in his remarks, that the matter should be referred to a standing committee. Such an order has not, of course, yet been made by the House, and in these circumstances it would be improper to discourage any questions relating to these guidelines. However, if an order of reference is to be made to the standing committee, once the matter is before a standing committee it ought not to be the subject of questions here.


DATE OF REFERENCE OF SUBJECT MATTER TO COMMITTEE
Robert Lorne Stanfield: supplementary question on that very point. Can the President of Privy Council now give us a date on which this reference will be moved? Can he tell us, for example, whether the reference will be moved on Monday next? Or is he still sticking to the position he put forward yesterday that the reference might be moved some time hence, perhaps some months hence, after the House had dealt with other matters which the President of Privy Council considers to be of even greater urgency?


Mitchell William Sharp: Mr. Speaker, I do not think it is the President of Privy Council who would consider these other matters to be of greater importance. I think it would be the people of eastern Canada where he happens to live. I believe it is important that there should not be a lapsing of the authority we presently have for the payment of a subsidy affecting eastern Canada to ensure that the price of oil is maintained at a stable level throughout the country.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: As Leader of the Opposition, and on behalf of my hon. friends in the House, I again tender to the President of Privy Council one of the allotted days assigned to us. If the hon. gentleman could begin, I invite him to screw his courage up to the sticking point and put this reference before the House.


Mitchell William Sharp: Mr. Speaker, I assure the Leader of the Opposition that I accept his offer. My concern is that the time allotted to the Conservative Party might have been used for other purposes and that we would have to devote other time to discussion of the question of conflict of interest. However, if the hon. gentleman is ready, now, to give up another day-one has already been moved ahead- I would be happy to accept it.


Mr. Baldwin:: No days have been given up!


SUGGESTED BROADENING OF DECLARATION OF INTEREST
Sinclair McKnight Stevens: In the interim, would the Prime Minister tell us whether consideration
Oral Questions
has been given to making the declaration more meaningful? For example, rather than providing that a frozen trust should simply be disclosed, at least show who the trustee is, and in the case, for example, of a 30 per cent interest in a private company, require the minister to show who owns the other 70 per cent, and what interests that private corporation, in turn, controls.


Pierre Elliott Trudeau: I think these are suggestions which are worthwhile. They are precisely the type of matters which should be discussed in the committee. The opposition seems to forget the point that, in addressing myself to this matter in my statement to the opposition of a year ago, I said all ministers were members of one or the other Houses. We will, of course, as a matter of fact be bound by whatever guidelines the House wants to impose on its members or on their spouses. What the cabinet has done has been to adopt guidelines which we think go considerably further than those that hon. members will want to adopt for themselves.


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: Well, Mr. Speaker, we shall see. But when I was speaking about the guidelines relating to ministers I made the statement that this subject would be brought back after we saw the guidelines relating to members, and it might be that we would have to modify them to bring them more into conformity with what members decide to adopt for themselves.


EXTERNAL AFFAIRS
Mr.  R. Gordon L. Fairweather@Fundy-Royal: Mr. Speaker, I have a question for the Secretary of State for External Affairs. Will the secretary of state advise the ambassador of Ethopia that Canadians are appalled by the summary executions which have taken place in that country, including the execution of the international president of the YMCA, and will the minister tell the House what efforts he is making personally to prevent the execution of the former emperor, which should be stopped if for no other humanitarian reason than that he is a very old and courageous man?


Some hon. Members:: Hear, hear!


Hon. Allan J. MacEachen (Secretary of State for External Affairs):: Mr. Speaker, I was shocked, as I am sure hon. members were, by developments in Ethiopia, particularly the further projected executions that are being contemplated. I have instructed the officers of the department, in my name and in the name of the Canadian government, to send a message to the powers that be in Ethiopia asking them to exercise restraint and to hold off any further executions.

November 27, 1974
Oral Questions


RELIGIOUS PERSECUTION IN CHAD-REQUEST THAT REPORT OF CIDA BE REFERRED TO STANDING COMMITTEE
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, my question is also addressed to the Secretary of State for External Affairs. In view of reports reaching Canada that there is a wave of religious persecution in Chad which may affect the future of our aid projects in that country, notably our food aid distribution program in the Sahel, would the minister agree to have the report of CIDA referred to the Standing Committee on External Affairs and National Defence so that these and related matters might be examined to the full?


Allan Joseph MacEachen: Mr. Speaker, I thank the hon. member for his suggestion and I will certainly give it consideration at an early date.


TRANSPORT
Leslie Gordon Benjamin: Mr. Speaker, I should like to raise another freeze with the Minister of Transport. Is it the intention of the government to allow the freeze on railway branch line abandonment to expire at the end of December, or is it the intention to extend the freeze? If not, have any criteria been arrived at as to which, if any, branch lines are to be abandoned?


Jean Marchand: Mr. Speaker, as far as branch lines are concerned, I hope the decision will be made this week.


Leslie Gordon Benjamin: A supplementary question, Mr. Speaker. Is it the minister's intention to live up to the commitment made by the Minister of Justice that no branch line will be abandoned without the prior concurrence of the province concerned? In addition, has he or his department arrived at any agreement with the provinces on the formula for compensation to municipalities, departments of highways, farmers and so on, for the extra costs involved for them?


Jean Marchand: Mr. Speaker, I am sure the hon. member would prefer to have an answer from the Minister of Justice himself.


Leslie Gordon Benjamin: As my final supplementary question, Mr. Speaker, I ask the minister again whether he will agree to maintain the freeze both on freight rates and on branch line abandonment until such time as the costing information has been provided by the railways regarding freight rates, and until such time as the provinces concerned have reached agreement with the government on the abandonment of any branch lines?


Jean Marchand: Mr. Speaker, as far as the second part of the question is concerned, I still believe that the Minister of Justice should answer that. As far as the first part of the question is concerned, I do not think we should change the decision. I think there is a lot of
(Mr. MacEachen.]
misinterpretation concerning the lifting of the freeze. The west was complaining, and justly most of the time, of the inequities, anomalies, long haul and short haul rates and so on, but these anomalies were not related to the freeze at all. Therefore, I think it would be misleading the public to say that in maintaining the freeze we would correct such situations; these are going to be corrected in co-operation with the ministers of transport in the west.


HOUSING
Mr. Eudore Allard (Rimouski):: Mr. Speaker, I should like to put a question to the Minister of Finance.
Since repairs to a house are sometimes more or at least no less costly than the construction of a new one, has the minister thought of granting the $500 rebate to owners of that category?


John Napier Turner: I shall be able to deal with the matter when the House studies the bill, Mr. Speaker.


SUGAR-POSSIBLE CHANGE IN TRADING PATTERNS TO REDUCE PRICE
Mr. R. E. McKinley (Huron-Middlesex):: Mr. Speaker, my question is for the Minister of Industry, Trade and Commerce. In view of the fact that the agriculture secretary of the United States has recommended that the U S. resume grading with Cuba to reduce the soaring price of sugar, does the minister foresee any changes in trading patterns in sugar for this country which would be helpful in bringing down the price of sugar to our consumers?


Hon. Alastair Gillespie (Minister of Industry, Trade and Commerce):: Mr. Speaker, Canada's trading patterns with Cuba in particular have already changed very dramatically. I think last year something like 47,000 tons were imported by Canadian companies from Cuba. This year I think the estimate is very close to 97,000 tons.


AGRICULTURE
Robert Elgin McKinley: Mr. Speaker, since that is quite a small percentage may I address a supplementary question to the Minister of Agriculture, who told me in reply to a question some time ago that he would interest his cabinet colleagues in the question of re-establishing the sugar beet industry in southwestern Ontario, so that if the price of sugar remained at the present level, at least some of these funds could be left in
November 27, 1974

this country to help the economy in his and in my particular district. Could we have a report on the minister's progress in this regard?


Hon. E. F. Whelan (Minister of Agriculture):: Mr. Speaker, we still have ongoing meetings, and as I have said a paper is being prepared for my colleagues in government.


EGGS-DISAGREEMENT AMONG PROVINCES ON RECOMMENDATIONS ON MARKETING-POSSIBILITY OF FURTHER MEETING OF PROVINCIAL MINISTERS
Mr. Don Mazankowski (Vegreville):: Mr. Speaker, my question is also directed to the Minister of Agriculture. It arises out of the meeting of provincial ministers of agriculture on November 25 in connection with the Canadian Egg Marketing Agency and the recommendations that have been presented. It is to be noted that the recommendations that were adopted were passed on division. Could the Minister of Agriculture advise the House which provinces agreed and which provinces did not agree to the recommendations that have been submitted?


Eugene Whelan: It was a
voice vote and was not recorded, Mr. Speaker.


Donald Frank Mazankowski: A supplementary question, Mr. Speaker. Inasmuch as the success of CEMA is dependent upon the total co-operation and support of all the provinces, and in view of the fact that the chairman of CEMA has some very grave reservations about the recommendations that have been put forth, would the Minister of Agriculture now see fit to summon the ministers of agriculture together again for another meeting in order that some better understanding and consensus might be arrived at?


Eugene Whelan: Mr. Speaker, the opinion of the provincial ministers at the meeting was that they would wait until the parliamentary committee submitted its report. If the committee should happen to recommend any great changes and it was necessary to change legislation, then before the changes were put through the parliament of Canada we would summon the ministers.


IMMIGRATION
Mr. Claude Wagner (Saint-Hyacinthe):: Mr. Speaker, I have a question for the Minister of Manpower and Immigration.
Could he tell the House what were his findings and what conclusions he reached as a result of the conversation he had on the 21st with Father Dejean, responsible for the Christian Community of Haitians and, in particular, could he tell us whether he is prepared to give specific instructions to the special attorney representing his department before the appeal board when these deportation orders are being considered, in order that the Public
Oral Questions
Prosecutor leave the whole decision to the appeal board and refrain from any representation?


Hon. Robert K. Andras (Minister of Manpower and Immigration):: Mr. Speaker, the law requires that this judgment be made by the immigration appeal board. As I have stated on many occasions, the immigration appeal board has the authority to exercise its jurisdiction beyond the decision about the legality or otherwise of any deportation order for any person to which one would be applied, in terms of humanitarian and compassionate grounds or on the occasion of unusual hardship. The board has exercised that kind of jurisdiction and made that kind of decision in the past and it will continue to do so in these particular cases. Our departmental representation before the board is on the basis of upholding the legality of the deportation order, or speaking in the odd case of absolutely frivolous claims to justification for a compassionate or humanitarian decision within the Board's jurisdiction. However, it is the jurisdiction of the board that must be exercised and there is no discriminatory power lodged in me or any member of the government and that is the condition that will prevail.


Claude Wagner: Mr. Speaker, I note that the minister has failed to answer the first part of my supplementary. He may like to do it when answering the supplementary question which I am about to ask.
Following the evidence submitted by Father Dejean, is the minister now satisfied? As shown by two examples during recent weeks, it is extremely dangerous for those deported Haitians to return to their country and on the other hand, even if the deportation order were not enforceable or enforced, it follows that hundreds of Haitians are compelled to live clandestinely with all the human, economic and social effects to which it gives rise.


Robert Knight Andras: Mr. Speaker, I had a discussion with Father Dejean last Thursday for two or three hours. I found it informative and interesting, and I indeed expressed to him, as I have expressed in this House, a very deep concern for every individual involved in this situation, as would be the case with anybody who has faced a similar situation, whether they came from Haiti or otherwise. Frankly, Father Dejean did not present to me proof in the sense that the hon. member is implying, or as the words the hon. member used would suggest. I listened to his presentation and would still come to the conclusion that there has to be an individual decision made in each of these cases. That power is vested in the board. We are condident that the board will exercise its jurisdiction and will be able to make a decision as between which case is meritorious on the ground of possible reprisal in the country from whence they came and which are cases of economic migration, which is very distinctly possible in the case of Haitians and others. So, frankly there has not been a change in our position on this matter.
Oral Questions


ENVIRONMENTAL AFFAIRS
[Stage Direction]
November 27, 1974

Mr. John Reynolds (Burnaby-Richmond-Delta):: Mr. Speaker, I have a question for the Minister of the Environment regarding statements made in the budget that there is a shortage and a high cost in respect of fertilizer in Canada. Can the minister advise this House whether she has any plans to bring in legislation to allow the federal government to subsidize sewage treatment plants across Canada in order that Canada can produce fertilizer through these tertiary treatment plants and thus make sure we have a high supply of fertilizer at low cost?


Hon. Jeanne Sauve (Minister of the Environment):: Mr. Speaker, there is already a federal government program of which the municipalities can take advantage for the treatment of sewage waters. Any province can take advantage of it.


John Douglas Reynolds: As the minister must know, Mr. Speaker, this legislation does not require the municipality to have tertiary treatment plants, but only supplies money for treatment plants. Will the minister bring in legislation requiring tertiary treatment plants so that we will have fertilizer from the sewage plants and then Canada will have lots of fertilizer at low cost?


Jeanne Sauvé: Mr. Speaker, the question is a little bit involved and several departments might be required to look at this.


HOUSING
Mr. John Rodriguez (Nickel Belt):: Mr. Speaker, in view of the statement by the Economic Council of Canada in its 11th annual report to the effect that low income families face a very serious housing crisis in this country, and in view of the fact that the predecessor of the minister responsible for housing when introducing the major housing bill at the last session of parliament indicated that co-op housing offered the best opportunity of alleviating the housing problem for low income families, would the minister explain to the House why this discrimination exists against purchasers of co-op housing in respect of the $500 first purchase grant?


Barnett Jerome Danson: Mr. Speaker, there is certainly not a discrimination against co-op housing. As a matter of fact, I give it very high priority, but I do not consider it the one answer to the housing problem, but one in which I am particularly interested. I think the hon. member should bear in mind that there is 100 per cent financing plus a 10 per cent grant. This is to help people make a downpayment. We are not only helping the people make a downpayment, but giving them 10 per cent on top of that to buy the land. If there is not enough money in the new legislation as a
[Mr. Andras.)
result of the 10 per cent for land in high cost areas, we are going to make that even easier for them.


NATIONAL DEFENCE
Mr. Allan B. McKinnon (Victoria):: Mr. Speaker, I have given notice of my question to the Minister of National Defence. As part of the minister's reduction of the armed forces is he planning to close out the defence research establishment facilities with the loss of jobs for 39 scientists and 80 other staff?


Hon. James Richardson (Minister of National Defence):: No, Mr. Speaker, there are no current plans to reduce the level of activity at the defence research establishment at Esquimalt.


IMMIGRATION
Mr. Steven E. Paproski (Edmonton Centre):: Mr. Speaker, my question is for the Minister of Manpower and Immigration and relates to the Kaminski family which has applied for political asylum in Canada. Has the minister examined this particular case and has he made a decision on the merits?


Robert Knight Andras: Mr. Speaker, the Kaminski family has now applied to remain in Canada as refugees, and this will be given full and serious consideration. I am not in a position yet to indicate to the House a decision because all the information has not yet been made available to me.


FINANCE
Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, my question is for the Minister of Finance. In view of the extremely serious world situation arising out of the enormous monetary balance held by the OPEC countries, can the minister tell the House what success the committee, of which he is the chairman, of the International Monetary Fund has had in getting these countries to lend their money to the International Monetary Fund or any other world bank?


John Napier Turner: Mr. Speaker, some progress is being made on a number of fronts and I will be in Washington on Friday talking to the managing director of the International Monetary Fund and the Secretary of the Treasury of the United States.
November 27, 1974


REGIONAL ECONOMIC EXPANSION
Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, without having had a supplementary question I should like to pursue a point I was making with the Minister of Regional Economic Expansion when orders of the day were called yesterday. He indicated that a search is still underway for a chief executive officer for this very important Crown agency, the Metropolitan Area Growth Investments, under his jurisdiction in Nova Scotia. Because of the great delays that have plagued this project over two years, can the minister now say with some precision whether a target date has been set when this agency will in fact be operating, and whether under the circumstances its terms of reference and objects are still the same as they were when enabling legislation was passed in 1972? May I say very briefly that I do not believe the minister is the one responsible. I lay the blame at the door of the Premier of Nova Scotia.


Hon. Donald C. Jamieson (Minister of Regional Economic Expansion):: Mr. Speaker, I will not comment on the last part of the question other than to say we are at the moment in complete accord as to how we are going to proceed. The objectives remain the same, and what we have now agreed upon is a technique for searching. Earlier this was done through one of the professional placement agencies and did not prove to be a very successful way of going about it. I was serious when I mentioned to the hon. member yesterday what we are doing. A number of nominations are coming in from a variety of sources, and we are looking these over in the hope of finding somebody who will be mutually agreeable and who will also at the same time be competent in terms of these objectives to which the hon. member refers.


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


METROPOLITAN AREA GROWTH INVESTMENTS, NOVA SCOTIA-USE OF FUNDS IN ACCOUNT
Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, I apologize for taking the time of the House but since the minister is in an expansive mood with regard to MAGI I wonder whether he will indicate to the people of Nova Scotia and to the Canadian taxpayers to what use the money is to be put that was placed in that account over the years by the federal authority?


Donald Campbell Jamieson: Mr. Speaker, I can only assume, without asking a specific question on this matter, that it is in the Consolidated Revenue Fund, but I shall be glad to make an inquiry and find out.


Mr. Speaker:: The hon. member for Medicine Hat.
Business of the House


Mr. Hargrave:: Mr. Speaker, my question was for the President of the Treasury Board but I see he has left the House.


Mr. Speaker:: Orders of the day.


BUSINESS OF THE HOUSE
Gerald William Baldwin: I rise on a point of order, Mr. Speaker. As today will see the conclusion of the budget debate, unfortunately leaving the budget in the same position after the debate as when it started, I should like to ask the government House leader, following our question and answer of last Thursday, what business the government will be proceeding with tomorrow, the next day and the beginning of next week.


Mitchell William Sharp: Mr. Speaker, following the conclusion of the budget debate we will call legislation in the following order: Bill C-14, the Federal Business Development Bank bill; Bill C-15, the Indian Oil and gas bill; Bill C-18, the fire losses replacement account bill; Bill S-13, the Alberta-British Columbia boundary bill; and Bill C-25, the environmental contaminants bill.
As soon as the consequent bills are ready, we shall seek concurrence in the notices of Ways and Means with regard to the Customs Tariff and to the Excise Tax Act and I would, therefore, in accordance with Standing Order 60, ask the designation of Orders of the Day to facilitate this.
On Monday, December 2, we shall call bill C-36, the representation bill.
We shall commence consideration of the two budget bills just mentioned on Wednesday, December 4.
Tuesday, December 3 and Tuesday, December 10 shall be allotted days pursuant to Standing Order 58. As I mentioned earlier, the opposition House leaders had informed me some time ago of their willingness to transfer one allotted day from the present supply period to the next one and I suggest that we now make it an order that there be four allotted days pursuant to Standing Order 58 in the supply period ending December 10, 1974 and that there be eight such days in the supply period ending March 26, 1975.


Mr. Speaker:: Is the House agreed and is it so ordered?


Gerald William Baldwin: In respect of that last particular proposal of the government House leader, I wonder whether we might have further discussion out of which may emerge a committee reference which hon. members of the House seem to keenly desire, namely the question of the debate on the conflict of interest rules. Then, perhaps the government House leader, other House leaders and myself might work out a suitable date to take into account the question of opposition days at the same time.


Mitchell William Sharp: Mr. Speaker, I am quite willing to hold that part of my recommendation. Therefore, it is only the designation of the Orders of the Day to deal with the Ways and Means motions that I suggest at this time.

November 27, 1974
The Budget-Mrs. Appolloni


Mr. Knowles (Winnipeg North Centre):: Mr. Speaker, since the President of the Privy Council has been giving a forecast of House business which runs into two or three weeks, I wonder whether he could indicate to the House when the bill will be presented which has been referred to several times by the Minister of Transport, and which should be dealt with quickly, concerning a requirement that the railways disclose their freight cost structures?
I wonder also if he could tell us when the Minister of Veterans Affairs will be presenting the bill to implement the unanimous recommendation of the Standing Committee on Veterans Affairs having to do with Hong Kong veterans?


Mitchell William Sharp: Mr. Speaker, I thank the House leader of the New Democratic Party for his representation and I will try to obtain answers for him as quickly as possible.


Leslie Gordon Benjamin: Mr. Speaker, if I may have your indulgence before you call Orders of the Day, when I asked the Minister of Transport if he could advise whether the government would live up to the commitment of the Minister of Justice that no railway branch lines would be abandoned without the concurrence of the province concerned, the Minister of Transport said that he thought the Minister of Justice should answer that question. I wonder whether you would allow the Minister of Justice to answer it?


Mr. Speaker:: Order, please. In accordance with the request of the President of the Privy Council I so designate the day named by him for consideration of the Ways and Means motion.


Stanley Howard Knowles: Mr. Speaker, I trust I shall be forgiven for raising a brief point of order. I do so on the basis of certain discussions which have taken place. There having been two recorded votes with regard to the budget I think Your Honour will find there is general agreement that the debate itself can end on a voice vote and therefore that we could use the extra 15 minutes to get in one more speech.
I therefore suggest, if it is the will of the House, that the debate end today not at 5.45 as provided by paragraph (8) of Standing Order 60 but at six o'clock.


Mr. Speaker:: If it is so agreed, and members are so disposed, it should be so ordered at this time so that there can be no doubt about it. Is it so ordered?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Tuesday, November 26, consideration of the motion of Mr. Turner (Ottawa-Carleton) 
that this House approves in general the budgetary policy of the government.
Mrs. Ursula Appolloni (York South):: Mr. Speaker, with your indulgence I should like to correct an error in my speech of last night as reported in Hansard. It occurred just before the adjournment debate was called. With your indulgence, sir, I will repeat the sentence as it should read. In speaking about the proceedings at the United Nations, I said: "Canada, too, wants peace and strives daily for justice for all. I hope and pray that both can be achieved, and hope that this government of which I am a loyal supporter will continue its efforts and in no way deviate from its path of traditional friendship toward Israel."
Mr. Speaker, at one time in my career I was a member of the air force. There I received training second to none, combined with a sense of duty and discipline which stood me in good stead throughout the following period of my life. May I now take this opportunity to express my deepest admiration for the work done by our armed forces, not only in defending Canada's sovereignty but, more especially, in the peacekeeping activities abroad where they become, for those of us at home, veritable ambassadors of goodwill and political stability. But apart from the other, more widely known roles of our national defence forces, I feel it is incumbent on us all to remind ourselves that the armed forces also provide perhaps the best training school we have in this country. Is it generally known, for instance, that many of our commercial pilots, doctors, engineers, nurses and even tradesmen such as butchers, clerks, cooks, and a long list of others, received their training in the armed forces? And what of our children? I know of few better ways of instilling in them a love of country, dedication to duty, purpose in life and broadening of interests than in the cadet movement.
Mr. Speaker, when I filed my nomination papers during the recent election campaign I gave as my profession that of housewife. I was recently asked what particular qualifications were needed for that profession, and I replied, "A lot of good common sense and patience". The budgets I prepared as a housewife can hardly be compared with those presented here, but there is at least one common denominator: we both had to list our priorities. In this respect, I hope that the Minister of National Health and Welfare (Mr. Lalonde), when setting his priorities, will give a high rating to medical research. Long before coming to this country I had read with great admiration of the work of two Canadian researchers. Diabetics throughout the world now owe their very lives to the studies and efforts of Dr. Banting and Dr. Best. Remarkable progress has been made in medicine and I hope that Canada will continue to promote studies to cure or, better still, to prevent the diseases which still plague mankind.
We have often been reminded that Canada is not one of the big powers. If power is measured by physical might and the quantity of Bellicose weapons we possess, then I hope we will never become one of the big powers. I believe, though, that we should broaden our understanding of this word. I believe that power can mean influence for the common good. I believe that by scrupulously following our moral obligations we are fast becoming not a
November 27, 1974

big power but a great one. We live in an affluent society, yet there are several countries in this world which hunger not for power but for their daily bread. While most of our children eat their fill and pursue their dreams, theirs are condemned to malnutrition and early death from famine.
As a Canadian, I was proud when at the recent food conference in Rome our country took the lead. Instead of uttering pious platitudes we put forward constructive action. Nor will we now be complacent about this action. Our Minister of Finance (Mr. Turner) urges us to put aside narrow self-interest and respond generously to the needs of weaker nations. I hope we will all rise to the challenge. If future generations are ever to accuse this parliament of fairness and humanity, I hope they will find ample evidence on which to convict us. The Minister of Finance will probably be criticized by some for not giving enough. Oliver Twist asked for more because he was in genuine need, and therefore no one can honestly blame him. But in our society there are others who ask for more and still more, and here we must be careful to distinguish between need and greed.
I have the greatest admiration for the frankness of the Minister of Finance. Like all of us, he has his ideals, but above all he is a realist. Of course, he would like to offer more, but I firmly believe that the time has come when we must put an end to the fiction that bigger and better programs are paid for by somebody else. There are those who demand, and once they receive they demand more. For those we could, perhaps, carry a statutory warning on every program which would read, "This package is hazardous to your economic health". The Canadian public is wary, and justly so, of those who would offer more goodies than the Sugarplum Fairy herself but at the same time carefully hide the price-tag; because Canadians know that whatever kind of tax system we have, in the final analysis all taxes are paid by the individual taxpayer in one way or another.
Like the Minister of Finance I, too, am confident that by working together at home and abroad we can overcome our difficulties. I feel that this can best be achieved, not by confrontation but by much more dialogue and more education. There have been heavy increases in the price of food and other basic commodities, and the consumer, with a certain sense of hopelessness and frustration, has often hit out at the apparent cause without pausing to wonder whether the attack was justified and, more important, whether the object of the helpless anger was indeed really the guilty party. No one will deny the producer a just and equitable reward. The operations of the Food Prices Review Board have gone a long way toward informing the consumer of the difficulties and uncertainties faced by the producer. But the consumer needs to know very much more than this. We must know how many middlemen there are between the farm gate and the consumer's table. Are they all necessary? Whom are we paying for what? How much do we pay for their services? Do their services always work in the interests of the consumer?
My personal experience in this area leads me to believe that there may well be erroneous assumption when it comes to consumer reaction and buyer attraction. Not too long ago I heard an advertising executive express the opinion that the average housewife would not buy a cer-
The Budget-Mr. Forrestall
tain brand of cereal unless it were packaged in a colourful box. Mr. Speaker, I can assure you that so long as the cereal is nutritious and reasonably priced, the average housewife will look for her colour at the breakfast table in the natural hues of fruit juice, eggs, and so on, rather than in the more costly production of a multicoloured rooster.
I have already mentioned the advertising media with particular reference to the consumer. I would like to add that in few walks of life can we find the wealth of imagination, creative genius and even power that we find in the advertising media. Because of their power, especially as regards our children and the less sophisticated members of our society, I believe they have a very real responsibility toward our society and the consumer in general. To be more simplistic, I believe that when they teach us to buy they should also tell us why, and their reasons must be as responsible and as honest as their efforts to sell. To take one example, I believe it is morally wrong and highly irresponsible for anyone to try to persuade a young, naive consumer that his or her love-life will dramatically improve if he or she will only use a particular brand of toothpaste or a yucky shampoo. Most of us are well aware that if one does not already have a satisfactory love-life, no toothpaste or shampoo in the world will provide one with it. I would hope, in the interests of future family life in Canada, that our young people would choose their partners on more fundamental and honest criteria than that.
What of the radio announcement which warned us to have our television sets checked now, even though there is nothing wrong with them, instead of next year when prices go up? If we are now asked to have regular checkups even for our appliances, then all we will end up with will probably be less spending money for other, more necessary items and we may even run the risk of owning a neurotic television set! I believe that this kind of thinking will in turn only lead to inflationary psychosis.
Inflation is a problem which cannot be faced by government alone: it is a battle in which we must all do our share. I believe that the Minister of Finance has made an excellent evaluation in setting his priorities and I feel that we should now do likewise.


Some hon. Members:: Hear, hear!


J. Michael Forrestall: Mr. Speaker, one should commend hon. members who rise in the House for the first time to address their colleagues and the Canadian people and demonstrate great concern for people in their speeches, as evidenced by the distinguished and honourable new member for York South (Mrs. Appol-loni). I am not an economist and I know very little about budgets, but I wish some members on the other side would, in terms of priority, let us get on with the bill for which we are all waiting. I wanted, in the limited time available to me this afternoon, to attempt in a historical sense to talk about national defence. I welcome the comments of the hon. member for York South (Mrs. Appol-loni) in this regard. Also, Mr. Speaker, I want to do something I have never done in this House, and that is to read a speech. I can read faster than I can talk, and I am less likely to be led astray.
t

November 27, 1974
The Budget-Mr. Forrestall
There are a number of factors emerging in the current debate with respect to defence spending that I believe require the closest scrutiny of Canadians. For some years now I have had the curious feeling that a direction for the Canadian Forces has been set, procedures laid down and ends to be attained, that has not had cabinet approval nor an adequate input from Canadians generally, let alone the House of Commons. From a standing volunteer force of some 125,000 about ten years ago, we have-with no reduction of agreed defence roles-seen the forces run down to the present level of less than 80,000.
After the Second World War the forces were initially established at approximately 50,000 men and women. For a country which at that time ranked as the fourth power in the world, one which was firmly committed to support of the United Nations and one that heavily depended on foreign trade, this level of military strength was low; indeed, it was considerably short of what our senior military people at the time deemed responsible or prudent. Nevertheless, 1947 saw total forces strength drop to approximately 35,000 at a time when the then secretary of state for external affairs saw fit to be highly critical of the United Nations Security Council, claiming it had become "frozen in futility". The then secretary of state also stated as a guiding principle that there was "need to accept responsibilities in the same way in peace as in war". In the same year, Prime Minister Mackenzie King was widely acclaimed for initiative in establishing the charter for the North Atlantic Treaty.
The point is, Mr. Speaker, that from such actions and pronouncements of those most responsible for our external affairs, the people of Canada were led to believe we were prepared to back up words with action. The harsh reality of the outbreak of the Korean war on June 25, 1950, soon proved this assumption to be false. With the call for help to Korea on June 27, 1950, we were, fortunately, able to immediately dispatch from our small standing force a three-destroyer unit. However, with respect to the primary requirement for ground forces we were out in left field. We underwent the time-consuming and agonizing process of recruiting some 10,000 personnel and forming the 25th Infantry Brigade. This was a task that took much longer than our allies in that theatre would have wished, and a lot longer than was necessary or would have been taken if defence planning realistically had been tailored to external policy and the reality of the world around us.
The 25th Infantry Brigade was not in a position directly to contribute until February 19, 1951-this in spite of the fact that we were able to attract a large number of World War II veterans who were still competent in their military skills. As well, we still had an arsenal of conventional weapons and supporting equipment which was suited to the type of action involved; a situation which, of course, meant that rearming time was relatively short. Nevertheless, it took an embarrassing amount of time to respond to the call.
This leads me to my first general observation. With a force of 50,000 in 1950 we were not able to respond adequately to a plea for help, even with the relatively unsophisticated weapons and delivery systems of those days. How can we expect to respond today, in a timely fashion

that might involve us in hostility or combat with a higher level of sophistication, with the weapons and armed delivery systems which we have? Since 1950 Canada has been assuming responsibility for an increasing number of sophisticated defence tasks. This means that an increasing percentage of our military personnel can be expected to be trained for support rather than for front-line roles. It follows that availability of front-line trained personnel out of the purported 80,000 men and women is unlikely to be much better now than was the case in 1950.
Another area of concern relates to equipment. In all too many cases we are still using fighting equipment that was available in World War II and the Korean war days. Why have we not replaced this equipment? Certainly, Mr. Speaker, we have had plenty of assurances during the past several years that our forces equipment would be modernized. However, these patronizing assurances always seem to have the same result; a further rundown in personnel, no new equipment, and more assurances that with further reorganization and cutbacks all traditional, plus new commitments will be met because money saved through resultant efficiency will be available to buy new equipment.
We know what happened. The traditional opposition approach, when there is reason to suspect serious mishandling of defence matters, is to resort to what might be called the numbers game; that is, attempting to judge the relative merits and costs in terms of dollars and personnel with respect to re-equipment and modernization. This has proved to be a useful technique but, strangely enough, I have been rather more inclined in recent months to question seriously the intentions of the Prime Minister (Mr. Trudeau) in this respect. I am pleased to see him in the chamber. I question his intentions for the armed forces today and in the future. I think it is in this direction that Canadians will find some, if not all, of the answers.
Liberal prime ministers during this century, with perhaps one qualified exception, have displayed consistent lack of appreciation of the relationship of national sovereignty and defence responsibility. Prior to World War I, Laurier consistently sought national autonomy while avoiding defence commitments outside Canada's borders. Borden, on the other hand, took an opposite approach while being equally concerned with autonomy. Borden freely accepted defence commitments and consequently was able, primarily because of the magnificent performance in battle of our soldiers, to demand-not beg-a strong, independent voice in international affairs.
Later, in the mid-1930s, under somewhat similar circumstances, Mackenzie King significantly added to the Liberal tradition of an inward-looking if not irresponsible attitude toward defence. With war clouds ominously gathering over Europe, he made it perfectly clear that he did not want Canada to have any related defence commitments. He was agreeable to having armament industrial business for Canada so long as there was no associated Canadian government responsibility for administering contracts. In 1936, when his defence minister proved so unwise as to support a military recommendation for a $200 million, five-year program, Mr. King expressed his displeasure so vehemently that the defence minister dropped his request.
November 27, 1974

By this time an aroused public, obviously made of more responsible stuff than the Liberal government of the day, forced an about-face attitude toward participation. The country was, as might have been expected, militarily unprepared. But, thanks to the extra time provided by the somewhat "on again, off again" philosophy early in World War I, our national embarrassment with respect to preparedness was reduced to some extent. Canada was again portrayed as a clearly autonomous and responsible entity in the eyes of the world.
In 1950, albeit forced by an alerted opposition and an aroused public over readiness to meet the Korean difficulty, the then prime minister, Right Hon. Louis St. Laurent, took action that appeared to break tradition with Liberal attitudes toward defence. Instead of the standard pattern of isolationist, inward-looking policies of the past, defence forces were built up toward a more responsible status. Defence watchers were encouraged to proclaim that Canada at last appreciated that defence was integral to political and economic factors in the world at large. Not everyone was convinced, and the contrary viewpoint was perhaps best expressed by Mr. Frank Underhill in 1953 when he wrote:
. . . the most modest quota of armed forces to Korea and western Europe shows only a reluctant, half-isolationist acceptance of new, unpleasant international duties-maybe we should not flatter ourselves that the 1950s are so far in advance of the 1920s.
Mr. Speaker, if there is any validity whatever with respect to Mr. Underhill's criticism of Canada's defence posture in the 1950s, I suggest it must represent an undeniable truth in relation to the 1970s. This leads me back to my concern about the Prime Minister's attitude toward defence. Not only does he demonstrate the traditional Liberal-prime minister lack of appreciation of the relationship of international and defence responsibilities, but it seems he is prepared deliberately to deceive the Canadian public as to what our defence capability really is. It is one thing to quite openly adopt an isolationist stance and face the public's conclusion; it is quite another matter to pretend to have an order of defence capability that in reality does not exist.
From the outset the Prime Minister has demonstrated to Canadians his desire to retreat from world involvement. Suggestions of isolationism have surrounded many of his moves since 1967. With respect to the forces, he has questioned their necessity. He has confronted our neighbours to the south on numerous occasions. He masterminded the unilateral withdrawal of half of our forces from NATO at a delicate point in MBFR talks and would have brought them all home except for pressures both from within NATO and from Canadians here at home. Conceding only the importance of international trade, every other posture has been toward neutrality, away from the traditions and patterns of our external alliances and toward external postures which reflect only our own self-interests. They have been away from the recognition that we are deeply involved in a world that does not as yet know peace nor is able to discern it for the immediate years ahead.
We have been cautioned by our senior military field commanders that the forces can no longer meet the roles and tasks as presently laid down for them with fewer men
The Budget-Mr. Forrestall
than they now have. Indeed, it is interesting to note we have now eroded about 40 per cent of our first priority, that of the defence of Canada, so that we might support our fourth priority, that of maintenance and supervision in the Middle East. Indeed, most of them will privately admit that they are hard pressed to even meet these roles with their present strength levels. I must say, Mr. Speaker, that in this regard it is reassuring to have our senior men speaking out.
I have always believed that it was not alone the responsibility of cabinet to maintain civil control over the military but, rather, the responsibility of an informed electorate as well. We will only be fully informed when our senior professional military leaders are able to speak out. I think it is healthy to have an informed electorate, and if this is the only way then let us have more of it from time to time. I trust the high degree of professionalism and belief in our country that is deposited in our general ranking officers. The present minister does not strike many Canadians as being one who is prepared to fight the battles of his professional force within cabinet or with the Prime Minister. He is a good man but he is not known for his strength in cabinet. Therefore, what else can one conclude but that it is the PMO calling the shots?
We do not have enough funds adequately to meet our first priority, let alone the other three. We have not renewed our equipment. We have not renewed our armaments nor their delivery long-range systems. We have shelved long-range maritime patrol replacement. We have seen plans to replace our track-tank. We have not gone into the many areas where equipment renewals are not only necessary but important if we are to maintain the confidence of our allies both within the United Nations and here on the North American continent.
I cannot help feeling that the present position of the Canadian armed forces is as a direct result of application of the personal philosophy of the Prime Minister. If he has sought out the best senior professional military advice and the highest level of external affairs advice available, and on the basis of that advice has concluded that Canada does not require a national armed force, let us have some national dialogue and debate. He may be right, but I say he is not-and he will not be right if he has taken this position in isolation. He is not acting responsibly on behalf of Canada by putting our forces in a position where they are no longer an adequate military force but a paramilitary force with the role of protecting the north or the mid-Canada line. I say the Prime Minister is wrong. The position he has adopted is a disservice to Canada and our allies to the south. It is an enormous disservice to our trading partners around the world.
I suggest he has let down the United Nations with regard to Canada's traditional undertaking to support those actions which require the presence of a neutral military force. I reiterate that Canadians will not find the answer to concerns about Canada's defence forces in numbers, but in the deliberate denial by the Prime Minister's office alone, bypassing the Minister of National Defence (Mr. Richardson) and not providing the funds required and asked for by the senior professional military force in order to maintain an adequate force capable of meeting the priorities which this government has given to it. The

November 27, 1974
The Budget-Mr. Trudeau
least possible position acceptable to the forces and Canadians in general is for the Prime Minister to indicate the posture he would like to see them adopt with regard to our four priorities and to our role in the world today. That is the least the Prime Minister owes to the Canadian armed forces.


Mr. Deputy Speaker:: Order, please. The Chair would like some direction from the House with regard to the order adopted on November 21 setting a limit of 20 minutes on speeches of hon. members. I know that under Standing Order 60 there is no time limit. I wish to be sure of this order now, rather than have someone interrupt the Prime Minister (Mr. Trudeau) after 20 minutes. I would like to be sure that he has unlimited time according to Standing Order 60(9). Is this agreed?


Gerald William Baldwin: Mr. Speaker, we completely agree that despite the terms of the order the Prime Minister should have more than 20 minutes. That is proper, not only because he is Prime Minister but because he will need additional time to deal with these issues.


Stanley Howard Knowles: I trust the Prime Minister is not worried lest I disagree. The fact is that we agree but, as one of my colleagues says, we hope the Prime Minister will have something to say. We hope he will not follow the rule religiously and speak for unlimited time. We hope he can present his case within an hour.


Pierre Elliott Trudeau: Mr. Speaker, I want to thank the House leader of the Conservative Party for agreeing that I not be limited by the 20-minute rule. I shall take some time to deal with the subject which the hon. member for Annapolis Valley (Mr. Nowlan) yesterday asked the then Acting Prime Minister (Mr. Sharp) to make sure I would deal with. That will take up a substantial part of my speech. To the House leader of the New Democratic Party I would say that I want to deal with the questions asked of the Minister of Finance (Mr. Turner) by him, questions relating to petroleum in general. This will take some time. The only thing I can tell the House leader of the New Democratic Party is that I shall not imitate the sixteenth century divine who exhausted time and encroached upon eternity. [Translation]
This year, Mr. Speaker, for the first time in the Canadian history, we have witnessed in an unprecedented way the formidable power of Parliament, with its right to question the budgetary policy of the government. Its refusal of our budget, six months ago, had consequences which caused us to realize more fully the implications of parliamentary democracy.
While I still hold that the recent general election which resulted was both inopportune and useless, except from a constitutional point of view, I remain convinced that the concretizing of the official terms and conditions of our constitution in the supremacy of Parliament and the dependency of the government on the support of the people, has been beneficial not only to Canada, but also to each and every one of us.
[Mr. Forrestall.J
Modesty forbids me to elaborate unduly on the collective decision of the electorate, while my inborn kindness prevents me from emphasizing what the Canadian people thought of the arguments on which hon. members of the opposition based their rejection of our budget.
I need only say, Mr. Speaker, that the Liberal party is now on this side of the House, to your right, that it is presenting a new budget, that it has a few more members and that its members are a little more confident about the results of the vote to be held later.
Thus, Mr. Speaker, many things have changed since May. Only one has remained and will remain the same: the resolve of the government to listen attentively to the concerns and problems of the people who elected it to serve them, and to bring effective solutions to all those difficulties.
There is no doubt that the steady increase in the cost of living constitutes the main concern of most Canadians. We are well aware of that concern that prevails throughout the country. That feeling sometimes turns into powerless rage in the face of economic forces that spread such painful uncertainty among so many Canadian families. We have seen illustrations of that indignation with the recent livestock slaughters and the waste of millions of eggs-scandalous things to happen in a starving world. We still see that feeling in the quiet but deep concern of those workers and their families who could be overcome in their fight to maintain their economic position within the community.
We also find that concern among elder people abashed by the decrease in their purchasing power and who still feel its cruel effects.
Young couples who are disappointed at seeing fade away in an uncertain future their hope of owning their own house one day are also deeply concerned. And the concerned faces of small entrepreneurs and businessmen tired of explaining to their customers that they are not responsible for inflation, but rather its victims, tell us a lot about their state of mind.
We know that many parents are concerned not only about being able to provide decent food, clothing and shelter for their children but also about the economic stability of the world in which they will have to live their adult lives.
Threatened by inflationary forces he does not fully understand, but convinced that no government, no group of influence is entirely responsible for the problem nor able to solve it alone, the average Canadian seems to have adopted an ambivalent attitude.
On the one hand, he is increasingly inclined to look first and above all after his personal interest and those of his family. On the other hand, he is more aware than ever of the interdependence of individuals and nations, more prepared to co-operate and participate in a joint action against that common enemy that is economic instability.
People want a government that is alert and sensitive to their needs, a government that shows compassion for the vulnerable and the weak, a government that can come up with solutions to its most pressing problems.
November 27, 1974

Mr. Speaker, even though the economic uncertainty is extremely serious, the Canadians seem to be deeply aware of the strength and good fortune of Canada: they are confident that by working together at home and in cooperation with other nations, they will finally succeed in solving the world problem with which they are now grappling.
On this side of the House, I admit it willingly, we are disappointed to see how weak an influence governments can exert on the problem that exists on a world-wide scale. But that feeling of frustration has reinforced, and not weakened, the will of this government to act vigorously everytime it can hope, ever so slightly to succeed, even partially, in the common fight against the plague of inflation.

Despite our frustration, Mr. Speaker, this government has been, and will continue to be, a government committed to strong and effective action to protect the individual in his personal fight against inflation and to protect the country by maintaining a high level of economic activity.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: While we have refused to put on the economic strait-jacket which the Conservative Party tried unsuccessfully to sell to the Canadian people, we are continuing to wage war against inflation on several fronts. The budget we are debating is proof of our resolve. Because shortages often drive up prices, create hardship and slow down economic activity, we are giving high priority to measures designed to stimulate the production of a greater supply of the things we need, especially food, energy and housing. Through the two-price wheat system and the federal-provincial energy agreement we are protecting Canadian consumers against the worst effects of high world prices for two vital commodities while at the same time guaranteeing a fair return to Canadian producers.
It was with reference to the oil pricing agreement of March 27 that the Leader of the Opposition (Mr. Stanfield), in his speech a week ago, most clearly revealed the policy vacuum within his own party. To set the stage, let us go back in time to the spring of this year, to the discussions which resulted in the agreement to set $6.50 as the fair domestic price for a barrel of oil. Consider the political problem which confronted the Leader of the Opposition at that time. He could not at one and the same time support the Conservative premier of Alberta who would have liked a higher price, and the Conservative premier of Ontario who would have liked a lower price. Still less could he support the federal compromise of $6.50 because, in the rather antiquated political philosophy of the Conservative Party, that would be the most serious crime imaginable-admitting that a Liberal government of Canada had accomplished something worth while for the people of Canada. What could he do? He had to say something lest the Conservative Party should appear to be an irrelevant observer in a matter of critical importance to the country.
The Budget-Mr. Trudeau
The Leader of the Opposition found his answer in a kind of rhetorical camouflage which allowed him to endorse all the motherhood principles involved, which allowed him to avoid either agreeing or disagreeing with any of the parties to the discussion and allowed him, most importantly, to avoid taking any position whatsoever on the most crucial question at issue, that is, whether $6.50 was a fair price. Yes, he was in favour of a fair return to the producer, and he was even in favour of a fair return to the consumer. Yes, he was in favour of a domestic price lower than the world price. But what about the guts of the issue: was he in favour of $6.50 as a fair price, a reasonable compromise between the competing interests of producer and consumer? His answer was a revealing silence, a pervasive silence which continues to this very moment.
There was a time, Mr. Speaker, when political games of that nature-creating the appearance of a policy to mask the fact that a party does not want to take a stand-and that kind of tactic could have fooled a large part of the electorate. The difficulty for the Conservatives is that the Canadian electorate has become too well informed, too sophisticated to be fooled by the old tried and true Tory strategy. I would have thought they had learned that lesson in July, but they have not.
The proof can be found in the address delivered in this chamber last Wednesday by the Leader of the Opposition. In only one part of his speech could I find any reasonable attack. He pointed out, rightly, that some months ago I had cited the Carter commission as supporting the government's view on disallowing provincial royalties as an expense for federal tax purposes. I have learned that I was misinformed at the time and I agree with the hon. gentleman opposite that the record should be corrected. I know that the Leader of the Opposition, in similar circumstances, would be equally willing to admit a mistake, just as I know he would be as surprised as I was to hear a human error described as a dishonest act. In his speech he also used words like "bad faith" and "treachery"-headline grabbers which deflected attention from the fact that he took no position whatsoever on the issue he was purporting to discuss.
The issue, Mr. Speaker, is the entitlement of the federal government, the producing provinces and the producing companies to fair shares of resource production profits, shares consistent with the rights, needs and responsibilities of each. The question before us is whether the provision in the budget which disallows provincial royalties as deductible expenses in the computation of federal corporate income tax is a reasonable and necessary step toward re-establishment of an equitable pattern of revenue sharing. We believe it is. Some provincial spokesmen believe it is not. Premier Blakeney even stated to the Canadian Press a couple of days ago: "Since resources are constitutionally a provincial area, they are owned by the provinces. As a matter of principle the provinces should get everything over and above a fair return to the corporations". That is what Premier Blakeney believes.
What does the Leader of the Opposition believe? We do not know. We cannot know. Only he knows, and he's not telling. Through the strategem of harsh accusations he has avoided giving any answer to the critical questions at

November 27, 1974
The Budget-Mr. Trudeau
stake. Does he believe the share of resource revenue claimed by the federal government is excessive? He offers silence. What level of sharing does he consider to be fair and reasonable? More silence. Does he support ths provincial argument that the federal government should share with the companies whatever is left over after the producing provinces take as much as they want, no matter how much they want? Deafening silence, Mr. Speaker. He has refused to come down on the side of either the federal or provincial governments in this revenue sharing debate. He has refused to offer any alternative position.
He opted for the appearance of strong disagreement with the federal position, without indicating any actual substantial disagreement. He opted for the appearance of agreement with the provincial government of Alberta, without giving any hint of any actual substantial agreement. In the finest Tory tradition, he skirted the real issues by choosing bombast over substance, rhetoric over commitment. Such a performance does not deserve to be commended, even by the political pragmatists within his own party. He deserves to be exposed, and that is what I propose to do.
The foundation of the attack launched by the Leader of the Opposition was the statement that the resource producing provinces would never have agreed to the March oil pricing agreement if they had known that we would disallow provincial royalties as deductible expenses. He therefore implied that resource industry revenue sharing was an essential ingredient of the March agreement. He further implied that the federal government had made a secret pre-agreement decision to disallow royalties, and that alleged decision vitiated any claim we might make to have been bargaining in good faith with the provinces during our discussions early this year.
Let me deal first with the implication that the provincial governments had no indication, no warning prior to the March conference that the federal government would take strong action to protect its interests in the event that the provinces altered their royalty structures in such a way as to freeze us out of the field of resource taxation or, alternatively, reduce our access. Let me deal at the same time with the allegation that the federal government somehow violated the March agreement by subsequently modifying the level of federal taxation of the resource industries. I would emphasize, first of all, Mr. Speaker, that matters relating to federal ahd provincial levels of taxation formed no part of the March agreement. It was an agreement on price, not an agreement on the sharing of production profits.
Let me remind the House, for the record, of the earlier approach that we adopted at the end of January of this year at an open conference televised for everyone to see, an approach which precisely was one of trying to get an agreement on the sharing of production profits. We had proposed a sharing. We had proposed shares which no doubt were debatable but which were not debated. It was the approach of sharing which was rejected, and this is why in March, when we had only a few days left to make sure that some order was brought into the petroleum industry, we had to act. That is why we did not use this sharing of profits approach; we looked for an agreement on price and on a few other things which I reported to the

House and which I will be talking about. Once again we must keep in context the January approach, which was one of sharing. We did not want the industries to be driven out of business. We did not want the provinces to have too little. We did not want to take too much. We wanted to discuss fair shares, but there was no discussion.
So we come to the March agreement. It is true that prior to the agreement, some time early in March, Premiers Lougheed and Blakeney both gave me an indication of their intentions, the former proposing to move to a royalty rate of about 65 per cent on oil prices above the old price levels then prevailing and the latter proposing to take close to 100 per cent. Premier Lougheed, for instance, told me privately on March 4 of his intentions to move to 65 per cent and I expressed my concern over this. I indicated to him by phone on March 8 that this would be going too far, from our point of view, eating into what we considered a reasonable federal level of corporation tax receipts.
So levels of taxation and royalties were, indeed, discussed with Premiers Blakeney and Lougheed a number of times during the period leading up to March 27, but no agreement was reached. I emphasized that the new and much increased royalty schedules contemplated by the two provinces were a serious concern to the federal government. I indicated that we had to reserve the right to take whatever tax action we felt appropriate and necessary to protect the federal revenue position. To underline still further the fact that the provinces were advised of our concern in relation to royalty levels, and were advised of our determination to protect the federal interest, I would refer to correspondence, copies of which I placed on the table on Monday, between myself and the premiers of Alberta and Saskatchewan on this matter.
Particularly relevant are substantially similar letters I sent to each of the premiers on March 12 of this year, 15 days before the oil price agreement was achieved, not an agreement on taxes. In my letter to Premier Lougheed I said in part:
Finally, with respect to oil policy as such, I should like to comment upon the potential impact of provincial royalty policy upon the corporation income tax. The taxation of corporate income has long been regarded as one of the most important tools of federal fiscal and economic development policy. Further, I think that the needs of the federal government to be able to share, to a reasonably appropriate degree, in the various streams of income across the country are selfevident. Historically, it has not been difficult to reconcile the interests of federal and provincial governments in this regard, but the taxation of the added income arising from higher oil prices is presenting us with a new set of problems.
I continue to quote from the letter, Mr. Speaker;
As I indicated to you, we feel we must preserve the effectiveness of the federal taxing power to raise needed federal revenues.
As I indicated, this was the phone call I made to Premier Lougheed. I continued:
We understand that the provinces appreciate this fully, but believe that any federal action should be confined to the corporation tax field. Under the existing tax structure, a very high level of provincial royalties obviously erodes the corporate tax base and narrows substantially the scope for whatever incentives the federal government feels necessary to maintain exploration.
I would repeat those words, "a very high level of provincial royalties". I continue to quote from the letter, Mr. November 27, 1974

Speaker, and would ask hon. members opposite to remember these words before making accusations of bad faith:
In underlining these facts, I do not want in any way to question your right to levy royalties, or to comment upon your royalty policy. However, I must make clear that any action that you may decide to take in respect of royalties would have to be without prejudice to our freedom of action as regards federal taxation.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: Mr. Lougheed has suggested that this warning, clear as I thought it was, was not a sufficient indication to him that the federal government would go as far as to consider changes in the long-standing treatment of provincial royalties. I accept his statement without question and regret that any misunderstanding could have occurred. Yet I still think the warning was about as clear as we could make it.


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: I will read it again, because I think there is a bit of misunderstanding.


John Edward Broadbent: I have read it. I have a copy here.


Pierre Elliott Trudeau: I will read it again as you do not seem to have understood it. I stated:
... I must make clear that any action that you may decide to take . ..
That was to Premier Lougheed, and I was writing the same thing to Premier Blakeney.


John Napier Turner: The same letter.


Pierre Elliott Trudeau: It was the same letter, in which I stated:
... I must make clear that any action you may decide to take in respect of royalties would have to be without prejudice to our freedom of action as regards federal taxation.
I still think that warning was about as clear as we could make it, in view of the fact that the federal government at that point had made no decision as to the specific nature of any action we would take. We were reserving our right to act, in principle. We had not yet determined what instrument we would use, but there was no doubt in my mind, as I made clear to the premiers, that the federal government would have to act to protect its tax base. What was unresolved at the time was the question of which particular instrument we might use to achieve our goal. That decision was made after the meeting of first ministers, in the weeks immediately preceding the budget of May 6. The Minister of Finance in his budget speech explained why we adopted this particular instrument. It might be worth while to repeat the arguments very briefly.
Why did we choose this technique of total disallowance of royalties instead of some other device? It was for very good reasons. After a full examination of all the alternatives open to us, we found that total disallowance was the only instrument capable of re-establishing a fair share for the federal government of resource production profits. There was no other way. In fact, if we had maintained the deductibility of royalties but eliminated every other federal incentive to the resource industries, we would still have fallen far short of an equitable federal share. If we had eliminated the depletion allowances, the 100 per cent
The Budget-Mr. Trudeau
write-off for exploration costs, the 30 per cent write-off for developing costs, and the new abatements-if we had done all those things we would still not have come close to re-establishing a balance because of the magnitude of the return from the provinces under the royalty structure.
I invite hon. members to read that letter in full. The letter I quoted from, I repeat, was sent 15 days before the March agreement. I would then invite hon. members to compare it with the statement made in this House last Wednesday by the Leader of the Opposition when he said: The Minister of Finance must have known, the Prime Minister must have known, that the provinces concerned would never have entered into that agreement on March 27 if they had entertained the slightest suspicion about what the Minister of Finance intended to do on May 6, and what he repeated again on Monday night.
Then followed these memorable words:
That is what I mean by treachery, sir. Those Pearl Harbour boys are at it again.


Some hon. Members:: Shame.


Pierre Elliott Trudeau: If there was any treachery, it was not on our part; it was on the part of whichever friend of the opposition leader misinformed him to such an extent that he was persuaded to climb out on the limb which has now been cut off.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: There has also been the suggestion that once we made the decision announced on May 6 we should have assumed that the March 27 agreement was void and should have recalled the first ministers. That presupposes, of course, that the agreement covered the question of taxes and royalties, which, as I have noted already, was simply not the case. Does the hon. gentleman opposite really believe, for example, that we would have agreed to the 100 per cent royalty rate adopted by Saskatchewan, leaving no federal share through corporate taxes of the excess revenues involved in moving the price from about $4 to about $6.50? Does he agree with the views expressed by Premier Blakeney in an interview published in the press yesterday where he is quoted as having said that as a matter of principle the provinces should get everything, over and above a fair return for the corporations? I reject that principle, implying as it does that the people of Canada as a whole have no right to any share of the higher revenue resulting from the increased market value of natural resources.
I challenge the Leader of the Opposition to say whether he accepts the principle enunciated by the Premier of Saskatchewan. I am particularly interested to know what the members of the New Democratic Party in this House think of that new doctrine. What do they think of the new doctrine? What does Premier Schreyer think of it? Please let me know. Of course the question of royalties was vital to provincial interests, as were many other factors which had to be considered by all governments before agreement was reached on the $6.50 price, a compromise on all sides made in the knowledge that the price would be reviewed again before too long and hopefully a new bargain struck-one in which the export tax, for example, will

November 27, 1974
The Budget-Mr. Trudeau
almost certainly be a smaller factor than has been the case under the current agreement.
On that latter point, Mr. Speaker, I repudiate the suggestion that the Minister of Finance misled the public by not including the yield from the export tax in his calculation of the current federal share of resource production profits. The export tax is a unique, short-term and disappearing phenomenon. It is a device designed to make possible the federal-provincial agreement that there should be a single domestic price for oil lower than the world price. Benefits derived from the export tax do not remain with the federal government; they are transferred to the provinces east of the Ottawa Valley line so that consumers and industry there may pay roughly the same price as those west of the line.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: So the export tax does not belong in any discussion of the long-term sharing of production profits. Indeed, those who include it are themselves distorting the real picture.
I would like, now, to take a few moments to deal with a question of special importance to the province of Saskatchewan. Premier Blakeney has reacted unfavourably to the budget proposals on equalization. I should like to discuss this question in particular, because Premier Blakeney has been quoted in the press as saying that the proposed equalization arrangements appear to be a clear, direct and specific violation of both the spirit and letter of the March agreement of first ministers. He is also reported to have said, "Saskatchewan would get $40 million less this year than if the oil pricing agreement had continued to be honoured by Ottawa".
In my view, Mr. Speaker, the budget proposals on equalization are clearly in accord with the spirit of the arrangements which were accepted in a general way at the March meeting. Moreover, there is no doubt in my mind that Premier Blakeney is mistaken in implying that the oil pricing agreement would fully protect Saskatchewan from any reduction of equalization in respect of oil. I would like to recall for hon. members the nature of the understanding which was reached by first ministers last March. On March 28 I reported to Parliament on the effect of the new provincial oil revenues on federal equalization payments to the provinces as follows:
The House may wish to note that Saskatchewan intends to place most of its added oil revenues in a capital fund for energy development. Alberta proposes to handle a high proportion of its added revenues in the same manner. While the revenues taken into their capital funds would not be subject to equalization the federal government will, of course, pay equalization respecting any oil revenues that go into general funds. We calculate our added equalization payments will likely be something over $100 million.
This is very vital to the agreement that was reached between the first ministers, because on the one hand those provinces which are consumers of oil and not producers were saying that Alberta and Saskatchewan are getting rich, and asked whether this means that the equalizations payments would correspond to that added wealth, as in other instances added wealth has meant increased equalization payments. Of course, the producing provinces did not have the same point of view. Nor did we. We did not want the totality of the added revenues to go into equali-

zation, because the way we calculated it, we would have ended up in a short time even having to pay equalization to Ontario. This would have made a mockery of the whole system of helping the poor provinces. So we reached this compromise of a fund. Everything put into the fund would not be subject to equalization, and everything that went into general revenue would be subject to equalization. This is the principle. Now, let us see how it applies if we follow the letter of the March agreement and the letter of the budget or the spirit of either. Let us see how it applies, because this statement makes clear our understanding, and I repeat here that our additional revenue would be treated in two ways for purposes of equalization.
The understanding did not go so far as to specify the specific proportion of additional oil revenues that would be placed in general and capital funds by each of the producing provinces. However, it did indicate that this proportion would be high in the case of both Alberta and Saskatchewan. In making calculations of equalization for 1974-75, since last March-the federal government has made the following assumptions; First, that Saskatchewan would place all of its additional revenues from oil into capital funds. I think this would satisfy the interruption of a moment ago by the NDP. Second, that Alberta would place 65 per cent of its additional revenues from oil royalties into capital funds, but none of its additional revenues from other kinds of levies on oil. Third, that none of the other producing provinces would place any of their additional revenues into capital funds, referring of course to revenues from oil. Over-all, we expected that this would have the effect of excluding from equalization approximately two-thirds of the additional revenues from oil.
The Minister of Finance has already referred to the difficulties which would be encountered if the equalization calculations were to be dependent on provincial decisions from time to time respecting sequestering of oil revenues in capital funds. Therefore, an alternative method of implementing the intent of the March understanding has been developed and will be discussed with provincial finance ministers next week when the federal Minister of Finance meets with the provincial ministers of finance. He will put the alternatives before them. However, it might be interesting for the House to know the results and to know of the two systems.


Gerald William Baldwin: They had better take along a Bible: they will want a Bible at that meeting in order to have someone sworn.


Pierre Elliott Trudeau: I think the hon. member opposite has really elevated his mind. I remember a few years ago when his authority was the Canada Year Book. Now it is the Bible.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: Do you remember that time, Mr. Speaker, when you were a backbencher and the hon. member, in the debate on the rules, quoted the Canada Year Book as his authority? But now the Bible may give him something to think about.
November 27, 1974


Gerald William Baldwin: You don't understand either of them. You had better read one of them.


Pierre Elliott Trudeau: I hear the Minister of State for Urban Affairs (Mr. Danson) saying that the hon. member should try the Koran.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: The new equalization proposal should produce approximately the same result as the March understanding since it also involves the inclusion of one-third of the additional revenues from oil. Estimates have been made of the amount of equalization that would be paid under the new proposal for 1974-75-the ones in the budget of the Minister of Finance-and the results have been compared with the latest official calculation of equalization for that year, 1974-75; a calculation made in September on the basis of the March understanding. The results are virtually identical both in total and in distribution.
In fact-I will wait until the leader of the NDP pays attention, because I am sure he would want to know that this is the crux of the argument he has been throwing at me and the Premier of Saskatchewan-the province of Saskatchewan would be slightly better off under the new proposal than it would be on the basis of the March understanding.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: Surely these facts cannot be taken by Premier Blakeney as evidence of a breach of the spirit of the March 27 understanding. Federal ministers and officials have all along been concerned about providing Saskatchewan with protection against a catastrophic fall in its equalization entitlement, even though the province is enjoying an increase in oil revenues which this year is likely to exceed $200 million. In short, we have sought ways to protect Saskatchewan from the full effects of the equalization formula which, roughly speaking, provides that as a province gets richer it receives less help.
We never contemplated, however, that the province would experience no loss in its equalization entitlement, no matter how rich it became from new oil revenues. Indeed, to protect the province absolutely from any decline in equalization payments would have made a mockery of the equalization system. Finally, I should note that the benefits to Saskatchewan from the budget proposal concerning equalization will apply for three fiscal years, whereas the March understanding would apply for only 15 months.
I hope that these facts will help clear the air of the accusations we have been hearing inside and outside the House, as well as in the media, for the past few days, that in some way we broke an agreement because we acted in a certain way. The agreeing parties knew of it in advance; they were warned of the principles of our action, particularly as the so-called breach relates to matters which were not part of that agreement. I hope that will clear the air a little bit and at least deter the Leader of the Opposition from using such words as "treachery" and "bad faith."
I agree that in this debate there is some difficulty in understanding the compromise between the federal and
The Budget-Mr. Trudeau
provincial governments, not only the federal government and the provinces of Alberta and Saskatchewan. Hon. members are wise enough to realize that there were other provinces at that meeting and they wanted a lower price and an equalization formula that would be of more benefit to them than the one that was reached. So there was an honest disagreement. A compromise was reached and an agreement made. I think that should be the basis of any discussion. I repeat that if there are any policies that the Tory Party or, for that matter, the NDP want to put forward to show how a better agreement can be reached- because they and we will have to reach a decision in this parliament for the period following July 1-it would be interesting for them to begin now to lay down the groundwork for their principles on the basis of which they will give advice to the government, rather than waiting until a year later and talking of a breach of agreement.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: I think that our policies, their policies and the views of the Canadian people would be more enlightened if we sketched briefly the history of the taxation of the resource industries in Canada and explained why we had to act as we did. For many years, and especially during the 2*/2 decades following the Second World War, the tax policies of the federal government were designed to foster and encourage the discovery and development of Canada's minerals, oil and gas. The federal government granted preferential tax treatment to these industries. The three most important of these incentives were automatic depletion, rapid write-off of exploration and development expenses, and the three-year tax holiday for new mines.
So generous were these incentives-I think some people even used the word "rip-off", but they are on the other side of the argument and say that we do not do enough to encourage the development of the mines-that in the petroleum industry only a handful of producers had paid any tax by the end of 1972 and the total amount of tax paid to the federal government over the entire period was less then $400 million. During this same period, provinces levied royalties on oil and gas production and collected about $4 billion in the form of royalties and other charges. This figure does not include provincial corporation tax revenues of about $100 million. Over this same period, federal taxes collected from the mining industry were also very low. Federal taxes amounted to considerably less than 15 per cent of book profits before tax, while federal taxes on all other non-resource industries averaged more than 30 per cent, compared to 15 per cent in the mining industry.
In sum, over the long period of development from 1945 to 1972, provinces received almost ten times as much revenue from the petroleum industry, and about 1 Vi times as much revenue from the mining industry, as did the federal government. At the same time, the federal government sought further to encourage resource development in the west by establishing the Borden line, guaranteeing an assured market for western production and at a price higher than world prices so that consumers in Canada were paying higher prices to help develop the petroleum industry of Alberta and Saskatchewan.


Some hon. Members:: Hear, hear!

November 27, 1974
The Budget-Mr. Trudeau


Pierre Elliott Trudeau: In this debate on throttling the petroleum industry, which we hear mainly from the Alberta members, let them remember these figures. Who has been taking the lion's share for the past 25 years, and who has been giving incentives by taking a very modest share, ten times less? The federal government has been developing these industries and giving incentives. The provinces were getting a pretty good revenue. Now, when prices have gone up, I think we should stay in the same position. Yet they say that any increase in our taxes is a sign that we want to drive the petroleum industry out of business. This is not the context in which the petroleum industry was developed, because the industry responded extremely well to the income tax incentives granted over this period. Canadian productive capacity was greatly expanded, so that by the middle of the 1960s it was becoming clear that a lesser degree of federal tax incentives was required to maintain a healthy and growing resource industry.
It is important to recall that in designing the tax regime enacted in 1971 the government acted against the background of the long-standing provincial tax and royalty structure which was in effect at that time. The level of royalties in the petroleum industry was about one-sixth of the wellhead price. The rate of provincial mining taxes at that time did not exceed 15 per cent in any province. One of the objectives of the 1971 regime for taxation of the resource industries was that all Canadians should willingly bear the cost of the tax incentives and should not expect to lay claim to substantial revenues through the tax system in years of relatively low prices. In return, all Canadians could expect to benefit from a reasonable share of the profits of these industries in years of higher prices. At the same time, the people in the producing provinces would receive a reasonable share of the value of output each and every year. As I will show in a moment, were it not for the provisions of this budget the intent that all Canadians benefit during years of higher prices would have been frustrated.
During the period between the beginning of tax reform on January 1, 1972, and the end of the first quarter of 1974 the situation was as follows. The price of Canadian oil and gas was rising slowly. The federal government's share of oil and gas production profits was running at about 5 per cent to 5V4 per cent. The provincial share, including royalties and provincial corporation taxes, averaged about 22 per cent.


John Edward Broadbent: Because you were not taxing.


Some hon. Members:: Oh, oh!


John Napier Turner: You can't have it both ways. Make up your mind.


Pierre Elliott Trudeau: So we are taxing now. Are you going to support us? Are you going to support our budget? We are taxing now.


John Edward Broadbent: Continue.


Some hon. Members:: Hear, hear!
[Mr. Trudeau.)


Pierre Elliott Trudeau: We helped develop the petroleum industry in Saskatchewan, Mr. Speaker. The people of Canada helped through these tax incentives. Now that prices are higher, we think in all fairness the people of Canada should get back a little bit of what they paid.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: In April, 1974, the price of Canadian oil rose to $6.50 per barrel at the wellhead. Had the provinces left their royalty structure as it was in January, 1974, their revenues in 1974 would have been about 31 per cent of production profits. By virtue of the price increase, federal revenues would have risen to about 13 per cent. This increase in the federal share from 6 per cent to 13 per cent was in keeping with the expectation that all Canadians would begin to share in the profits resulting from the higher prices. I remind the House that this was the sharing of petroleum revenues that would have existed for the last three-quarters of 1974 under the tax and royalty structures in place last January. But during 1974 the provinces began to levy new and heavier royalties and other charges. Alberta introduced an incremental royalty which averaged 65 per cent of the increased price of oil.


Some hon. Members:: Shame.


Pierre Elliott Trudeau: Saskatchewan introduced a royalty equivalent to 100 per cent of the increased price.


Some hon. Members:: Shame.


Pierre Elliott Trudeau: British Columbia introduced new and heavy royalties on oil and announced that the British Columbia Petroleum Corporation would appropriate most of any increase in the price of gas. All of these additional levies on income of petroleum producers were in the form of charges of a kind that under the then existing federal tax regime would have the effect of reducing federal income tax revenues. As a direct consequence of these actions the federal share of production revenues would have fallen from 13 per cent to 6 per cent in the last nine months of 1974. In the same period, provincial revenues would have risen from 31 per cent to 42 per cent of production income. A very low level of federal tax would have persisted in the years ahead. For the balance of the decade, and notwithstanding any further increases in the prices of oil and gas, the federal share would not have increased significantly from this 6 per cent level; yet the provincial share would have continued to increase from 31 per cent to 42 per cent. This would have meant that the residents of the resource-rich provinces would have enjoyed very significant benefits, while Canadians in other parts of the country would have enjoyed very little benefit.
This low percentage was not the reasonable share that Canadians as a whole had a right to expect in this period of higher prices. What choice did we have, as a federal government with responsibility to the whole nation, to remedy the situation? We examined many possibilities, but it became abundantly clear that as long as any royalty or royalty-like charges and claims were allowed to reduce or eliminate the federal tax base there was no way to protect federal revenues.
November 27, 1974

Mr. Speaker, I have tried to outline the simple facts which led us to the budget measures relating to the taxation of the resources industries. I have tried to explain why we had to act when we did and as we did. I recognize that our proposed solution has not met with the approval of the producing provinces, and I deeply regret this. We have made it plain that we are not in any way challenging the provincial right of ownership or jurisdiction over natural resources. The issue is simply one of the right of the federal government to tax.
I would emphasize that in the legal sense, in the constitutional context, the budget does not in any way limit the freedom of the provinces to impose any royalty they wish. There has been some talk of our rolling back these royalties or preventing the provinces from taxing. Nothing the Minister of Finance has done in his budget is preventing the provinces from taxing. It does not reverse, roll back or repudiate these royalties. The disallowance provision does not take one dollar out of any provincial treasury. On the contrary, as federal corporate income tax revenues increase so will the provinces' share of that revenue increase. In the economic sense, of course, the budget does exert a very real impact on the resource producing companies, and that is the problem. Not on the provinces, Mr. Speaker-on the companies. If the total tax and royalty demands upon the companies threaten their health and viability, somebody has to give ground. We have given ground; we have reduced our claim by 25 per cent in this budget as compared with the May budget.
Both the federal and the provincial governments have a vital interest in maintaining and encouraging resource exploration, development and production. It is up to both levels of government to co-operate in making that possible. The federal government cannot be expected to bear the full burden of incentives to the industry. The budget does not force the provincial governments to do anything at all, in a legal sense. In an economic sense it invites them to co-operate with us in ensuring a healthy and vigorous industry.
Mr. Speaker, I was very pleased to see that the Liberal leader in Alberta, Mr. Nick Taylor, courageously stood up and spoke in favour of this budget.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: I realize that it takes a courageous man to do that, and Liberals are courageous people when it comes to the good of the country. The Liberal leader realizes that his province will derive enormous wealth from this new development in the petroleum industry, and he believes that the people of Canada should share in some of that wealth because they shared in the crises and burdens which made possible the development of that industry. That is Liberal policy.
Let me make clear that in these comments I have been dealing with the long-term taxing system of the federal government and its access to a reasonable and continuing share of the profits of the resource industries. I have been speaking of the tax regimes which the federal government and the producing provinces apply to the resource industries within the price structure at which these resources
The Budget-Mr. Trudeau
are sold in Canada, or at which they move to the frontier for sale beyond our borders. I have not dealt thus far with the separate question of the export tax which is at the moment applied to Canadian oil as it moves into foreign markets.


An hon. Member:: You bet.


Pierre Elliott Trudeau: I can return to explanations which have been given many times, but I do not think I have to take up too much time of the House to repeat that that is not money which the federal government keeps for its own purposes; it is money which serves to ensure that all the people of Canada will be paying more or less the same price for petroleum products.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: There is no question in my mind that the people of Canada owe a debt of gratitude to the people of Alberta and Saskatchewan for willingly entering into an agreement under which they would receive less for their resources over 15 months than the enormously increased price that suddenly prevailed in the world.


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: I see that the Alberta members who are guffawing do not appreciate that gratitude. Perhaps they do not take my word for it. However, I am sure there are members in their own party who are very happy that the province of Newfoundland, for example, does not have to pay $10.50 a barrel for its oil.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: When I hear members opposite, some provincial politicians from those provinces and in some instances the premiers, argue that the proceeds of the export tax represent simply a gift from their provinces to Canadians generally, I think they carry the argument too far. Surely the country as a whole, which shared with the producing provinces the burden of encouraging the resource industries to develop, as I have said, in the form of very generous tax incentives and in the form of a guaranteed market west of the Borden line, should also have a fair share of the revenue resulting from higher prices, not as a gift but as a right.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: No doubt we will soon be working with all the provinces, with Alberta's and Saskatchewan's interest particularly in mind, toward a new price level for some succeeding period. This is as it should be. At the same time, we have moved in the budget to ensure, over the longer term and across the wide spectrum of resources, that the federal government on behalf of all Canadians can have assured access to a reasonable proportion of the profits generated by the resource industries of this country.
We do not seek a confrontation. We believe our objectives to be fair and reasonable. We are cognizant of the report of the National Energy Board and have reduced our tax imposition in recognition of future development needs. We have taken the steps that we felt were necessary to

November 27, 1974
The Budget-Mr. Trudeau
achieve our objective, consistent with maintaining a healthy industry. We have gone a good distance toward meeting the views of producing provinces while protecting the interests of all Canadians. We have listened to the concerns expressed by the producing provinces and the companies, and we have responded. The budget reduces our claimed share by 25 per cent. With a reasonable approach by everyone, we will have the climate so necessary in Canada to the development of the new energy resources we need.
I have been on my feet an hour and five minutes, Mr. Speaker.


Elmer MacIntosh MacKay: It seems longer.


Some hon. Members:: More.


Pierre Elliott Trudeau: I remember the enjoinder of the hon. member for Annapolis Valley (Mr. Nowlan) yesterday, that I make sure I do not sit down a second time in this session without having dealt with inflation. Therefore, I ask the indulgence of this House to give me another five to seven minutes to talk about the problem of inflation which I dealt with earlier in my speech. I was talking then about the human impact of inflation and about the government's general response. I would like to draw attention to some specific responses and the way in which all Canadians can, together, attack the problem. One of the specific responses was, of course, our petroleum policy which kept prices considerably below world prices and, by the device of the export tax, permitted Canada to escape the kind of disruptions which hit so many other industrialized countries.


John Edward Broadbent: Where did you get that policy?


An hon. Member:: From the Liberal caucus.


Pierre Elliott Trudeau: The leader of the New Democratic Party wants to know where we got the policy. The hon. member is right: we got it from the Liberal caucus. I am sure the New Democratic Party is frustrated in its attempts which began last May to make the Canadian people believe that they had thought up this policy; but never mind, they do not have to remain frustrated. A new agreement will have to be reached by July 1. Let them set out now what their policy is for that period.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: All I can say is I would be very grateful if they did. If they can set out that policy, as I am sure they will-their leader is shaking his head-and they can get Premier Blakeney, Premier Schreyer and Premier Barrett to agree to that policy, it will make it much easier for me.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: If, by some miracle, the Tories can also set out their policy in due course and can get premiers Moores, Hatfield, Davis and Lougheed to agree, we will have a very nice federal-provincial meeting some time in May. We may even have it in front of television, and I will then say that the policy was developed for the people of Canada by the leader of the New Democratic Party and by the leader of the Conservative Party-if there is still a
(Mr. Trudeau.]
leader at that time. I will, as usual, be very humble in telling the Canadian people that.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: As to specific responses, the most obvious of the social inequities caused by inflation is that it aims its harshest blow at the most vulnerable, pensioners and low-income families; the very people who are least able to fight back by increasing their income. That is why this government has redistributed massive amounts of the national income, asking those who have more to share with those who need more. We have raised the family allowances, which in the next fiscal year will involve a payment to Canadian families of some $2 billion of our national income. Increases in the old age pension and the guaranteed income supplement mean that we will allocate some $3.9 billion of our national wealth toward the income needs of the elderly. We have made sure that these social benefits will continue to rise automatically with increases in the cost of living. Through the Canada Assistance Plan we will provide, next year, some $700 million to low-income families and individuals.
To help all Canadians cope with inflation we are reducing what the government would otherwise take of the national income. The tax cuts proposed in the budget will have the effect of giving the government some $2.2 billion less during the next fiscal year than it would have received if the tax structure had remained unchanged. This will leave more purchasing power in the hands of Canadians, helping every taxpayer to cope with the cost of living and helping the economy to resist stagnation.
The government has sought to moderate the rate of price increases by reducing or removing tariffs on some commodities, removing or reducing the federal sales tax on others, and by subsidizing the cost of still others. As Canadians, we on this side of the House are proud of the strength of our economy relative to that of other nations. As Liberals, we are grateful that we have been able to play a part in maintaining and reinforcing that strength.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: Many Canadians have contributed to the impressive performance of the national economy. I would like to draw particular attention to the singularly effective contribution of my colleague, the Minister of Finance.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: His ability and good judgment have won for him the respect and confidence of the people of Canada, as well as the high regard of the representatives of other countries who have chosen him as the chairman of one of the most critically important committees of the International Monetary Fund.
Despite the evidence of Canada's strong performance in relation to other countries, we in the government are the first to admit that the pervasive disease of inflation continues to pose a very serious threat to the economic health of Canada and the world. It continues to breed a sense of fear and futility, especially among those who neither
November 27, 1974

understand its causes nor believe there is anything they can do about the problem. It is important, therefore, that the people of Canada understand the nature and causes of inflation and come to the potent realization that if all of us make a commitment to co-operation we can pack a mighty clout. If Canadians, as individual citizens and consumers, as producers and businessmen, as trade unionists and professionals, as farmers and members of governments, really decided to work together in the one direction of the common good, instead of in the many competing directions of self-interest, we would find we have the strength to deliver a much more powerful blow against inflation.
It is understandable why each group in the price chain feels it must protect itself against rising prices, that it must get a better return for its resources, investment, labour or risk. Yet it has become increasingly clear to everyone that the vicious circle we have created is self-defeating; that even the strong are suffering; that the plight of the weak and unorganized is getting worse; that there must be a better way. There is a better way, if we have the courage and the common sense to pursue it. In normal, non-inflationary times we all accepted the vigorous jockeying for position among the various economic groups in our society. Buyer and seller, producer and consumer, business and labour pitted their strengths against each other in the marketplace and thereby established the share each received of our total national income.
The traditional sharing may or may not have been fair, but at least we had a stable economic framework within which we could apply selective judgments designed to achieve greater economic and social justice. With normal increases in productivity, the size of the pie got bigger. While each group maintained its traditional share, each became better off because an expanding pie gave bigger pieces.
In inflationary times, the relative size of the shares gets thrown out of whack. For example, Canada could not insulate itself completely against the rapidly rising price of oil around the world. It was inevitable that foreign and domestic oil producers would increase to some degree their share of the national income pie. However, if every other group insists on maintaining or increasing its traditional share, inflation is the unavoidable result. That is to say, if the shares add up to more than 100 per cent, if the total claim on income is greater than the sum of the real value of what we produce, then the effort to increase shares when we are at high levels of economic activity and employment causes the dollar value of national income to be raised artificially. That is inflation. Everybody's dollar is worth less.
In normal times, if one economic group increases its share of the pie another group gets a smaller share. If labour gains, business pays through lower profits. If pensioners gain, those who are currently working pay through taxes. What causes instability is the fact that no group, even though it recognizes the inevitability or desirability of a larger share going to someone else, is willing to accept a smaller share for itself. When we, as a country, give a larger share to the oil producing countries because we cannot avoid it, or to our own farmers because justice demands it, then there are only two possible consequences-either other groups in Canada accept a propor-
The Budget-Mr. Trudeau
tionately smaller increase in their incomes and we have a non-inflationary redistribution, or those other groups insist on maintaining their traditional shares and we have to increase the money supply, resulting in inflation. Which do we want? If we want stability, then we must pay for it: all of us must pay for it, excepting only those groups to whom we give a bigger share either voluntarily or involuntarily.
If we want stability, then it makes no sense to say, "Yes, I agree that farmers, fishermen, pensioners or our native population, deserve a bigger share; but don't try to take it from me." Where are these bigger shares to come from, if everyone refuses to budge? I am not asking business, the workingman, the investor or the other levels of government to bear an unfair share of the burden of income redistribution. No one expects any one group to do all the suffering for the rest of us. We can succeed only if all the power groups in our national community, and all the strong countries in the community of nations, are willing to scale down their demands so that those in need may survive and economic stability be restored.
How do we start on the road toward stability, on the road toward some kind of agreement among the strong power groups in Canada, an agreement about how the pie should be divided equitably? We start by talking to each other, by seeking together a greater understanding of the problem which afflicts us all-inflation and the fears and problems it creates. If business and labour, government and the press, the farmer and the consumer could learn to understand each other's problems it should be possible to co-operate on the basis of that understanding.
That is why the government is launching a program of consultation with various interest groups across the country. Before any program of shared national restraint has a chance of success, Canadians in different power groups must come to know each other, understand each other and trust each other a lot better than we do now. No group can be expected to scale dov/n its demands upon the economy unless it has reasonable assurance that the effort of scaling down will be shared equitably with other groups, with none going backward but some going forward somewhat less than they might otherwise have liked. Obviously, the federal government must take the lead in bringing together competing interests to serve the national interest. We are not shrinking from that challenge. We were given a mandate to lead and we are exercising that mandate-


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: -both here at home and in our international efforts to restore stability to the world marketplace. The budget is the proof of our determination. We are saying to business and to labour, "The federal government is willing to reduce its take of the national income by $2.2 billion, in the hope that you will moderate your claims for increasing profits and wages". We are saying to corporations, "The budget is giving you generous write-off allowances, lower sales taxes on building materials and construction equipment, capital cost allowances, pollution control assistance and general encouragement of investment. If you didn't get this assistance your costs would be higher, so you would have to push your prices up. So when you're setting your prices, when you're calculating the
1734

November 27, 1974
The Budget-Mr. Trudeau
amount of profit you need to finance new investment, remember the budget; remember the ways in which we have reduced your costs."
We are saying to the working man, "Here's an income tax cut which gives you this year between $150 and $500 extra take home pay, non-taxable, and even more next year. That could take care of your increased food costs in the run of a year. We're helping you through reduction of various sales taxes. We want you to take this into account when you're making your wage demands. You don't have to get as much more pay as you otherwise might, because we're giving you a portion of it. And remember, if we're allowing you to keep $250, for example, through the tax cut, it's really equivalent to about $380 if you had to get it through taxable income from your employer."
Canada, Mr. Speaker, is a country which has become a great country because of the willingness of its people to work out their differences in a spirit of fairness and mutual respect.

That respect, Mr. Speaker, is fundamental, if the structure of our country is to remain intact, if the strength of our people is to keep on increasing. That is why today I have quite extensively spoken about the problem of inflation, particularly in the oil field, why I have tried i to explain the problem and its solution. Of course, Mr. Speaker, in a conflict of interests opposing ten provinces, specifically consuming and producing provinces, and also opposing these provinces to the federal government, since, after all, it is always the same taxpayer who has to foot the bill at all levels of government, in this type of tension which I should hope would be creative between the various levels of government, it is important that citizens and parliamentarians alike understand the true nature of the problem and the solutions we are proposing.
That is why I mentioned two things, Mr. Speaker. I have talked somewhat regretfully of the bitterness which marked this debate and which I have found again in the mouths of the Leader of the Opposition, some of his colleagues, and also, unfortunately, of many people, especially in western Canada, a bitterness which results from a lack of understanding, Mr. Speaker, and also from the fact that we ourselves had not explained fully the principles on which I elaborated today and which cause all Canadians to wish to share in these resources which belong to them. That is why I have asked the opposition parties to put forward, not only criticisms of our policy, but alternatives as well which thgy might feel are superior, and which we ourselves would be happy to adopt if in fact they are. But, I beg of them, let them drop the tone of bitterness, of peevishness, which has permeated this debate as well as those that preceded and followed the budget speech, and which does great harm to this country. That is the first point I wanted to make.
I am happy to say, Mr. Speaker, that the accusations made in bad faith did not come from the premiers of the western provinces; but, unfortunately, they came from hon. members opposite. I am also happy that, down deep, in spite of our disagreements, the Alberta and Saskatchewan premiers do not accuse us of bad faith, of misunder-

standing; they do accuse us of having interests that conflict with their own; but, I say it again, Mr. Speaker, bad faith does not belong in our debates.
The second point I wanted to bring up is this: what strikes me, as the lack of seriousness-if I may use that gentle expression-shown by some of the leaders of other provinces which benefit considerably from the oil policy we adopted in March, and who, probably for reasons of political or interprovincial solidarity, manage to give reason to Alberta and Saskatchewan in the current debate, against the federal government and the budget of the Minister of Finance, giving them reason in theory, while pocketing in practice the benefits accruing to them through our budget.

The spirit of equitable compromise among differing interests is the glue which holds us together. We are a nation, not because of the borders which surround us but because of our common resolve to live together in peace, tolerance and justice, sharing both the burdens and the benefits of this bountiful land. I am confident, Mr. Speaker, that the current problems of which I have spoken today can be resolved by Canadians, whether in public or private life, working together in a spirit of compromise and co-operation toward greater social and economic justice for all. To that spirit and toward that goal I commit the Government of Canada.



THE ROYAL ASSENT

Mr. Speaker:: Order, please. I have the honour to inform the House that a communication has been received from the administrative secretary to the Governor General which is as follows:
Government House November 27, 1974
Sir:
I have the honour to inform you that the Honourable Wishart F. Spence, O.B.E., Puisne Judge of the Supreme Court of Canada, in his capacity as Deputy Administrator of the Government of Canada, will proceed to the Senate chamber today, November 27, at 5.45 p.m.-


Gerald William Baldwin: Mr. Speaker, a point of order.


Mr. Speaker:: This is a point of order also. One at a time.
-for the purpose of giving royal assent to certain bills.
I have the honour to be,
Sir,
Your obedient servant,
Andre Garneau Brigadier General Administrative Secretary to the Governor General



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Turner (Ottawa-Carleton) that this House approves in general the budgetary policy of the government.
Gerald William Baldwin: Mr. Speaker, I rise on a point of order. I have never seen a more disgusting display of bad faith regarding matters which are the subject of an agreement.


An hon. Member:: You are afraid to listen.


Some hon. Members:: Oh, oh!


Gerald William Baldwin: The Prime Minister (Mr. Trudeau) took an hour and a half, and outside of some pablum dealing with inflation which he fed to the open mouths of his devoted followers his speech was filled with nothing but glaring inaccuracies and deceptions.


Some hon. Members:: Oh, oh!


Mr. Lambert (Edmonton West):: It was not even his own speech.


Some hon. Members:: Sit down.


Mr. Andre (Calgary Centre):: Arrogance in the extreme.


Mr. Speaker:: Order, please. I understood that the hon. member who was just on his feet was to be the next participant in the debate, which would have given him the opportunity to make the kind of interjection he has just made.


Gerald William Baldwin: Mr. Speaker, on the same point of order I would ask how it is possible within the space of 12 minutes to answer this mass of inaccuracies and deceptions.


Some hon. Members:: Oh, oh!


Gerald William Baldwin: I suggest that it is absolutely impossible, and I should like to know-


Some hon. Members:: Order.


Mr. Speaker:: Order, please. In the ordinary course hon. members will realize that the message will probably not disturb our procedures until closer to six o'clock than 5.45. If the hon. member for Peace River (Mr. Baldwin) commences now, he will perhaps enjoy his full 20 minutes. I assume there are others who will be addressing themselves to the same type of complaint, for example the hon. member for Winnipeg North Centre (Mr. Knowles).


Stanley Howard Knowles: Mr. Speaker, in rising on this point of order I would make the plea to the House that we practice fairness. There was an understanding earlier today that the debate would not end at 5.45 but, rather, would end at six o'clock. When we made that
The Budget-Mr. Baldwin
agreement we felt there would be adequate time for at least two 20-minutes speeches following that of the Prime Minister (Mr. Trudeau). I do not complain about the fact that the Prime Minister spoke for an hour and a half, but I think we should now revise the arrangement for today and make it clear that the hon. member for Peace River (Mr. Baldwin) and the hon. member for Oshawa-Whitby (Mr. Broadbent) shall each have 20 minutes.


Some hon. Members:: Hear, hear!


Stanley Howard Knowles: To facilitate this, I would suggest that the Gentleman Usher of the Black Rod be asked not to knock on the door until after the two next speakers have had their full 20 minutes.


Mr. Speaker:: In light of the challenge that has beep put forward by two hon. members in respect of the speech of the right hon. Prime Minister, there seems to be a general spirit of accord that each of those members somehow be provided with 20 minutes in which to make their speeches. I am not able to govern the conduct of the Gentleman Usher of the Black Rod. In any case there seems to be agreement to make an order of the House that however these proceedings finalize today, those two members shall each be granted 20 minutes before the conclusion of the debate.


Some hon. Members:: Hear, hear!


Gerald William Baldwin: Mr. Speaker, 20 minutes will not permit me to deal with all-


An hon. Member:: Come on, stick around.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. It was abundantly clear to all members, despite some stimulating comment, that the speech of the right hon. Prime Minister, although an hour and a half in duration, was listened to very attentively and I think hon. members ought to pay the hon. member the same attention.


Some hon. Members:: Hear, hear!


Gerald William Baldwin: Time will not permit me to deal with all the inaccuracies; certainly I could never deal with them all in 20 minutes. Never in an hour and a half have we heard so many inaccuracies and so many deviations from the true facts as we heard from the Prime Minister in the course of his speech. Within the time allowed me I will limit myself to dealing with only the most glaring inaccuracies and those areas in which the Prime Minister made a 180 degree departure from the true facts.
I first want to nail down the right hon. gentleman on his statement on the discussion between the first ministers on March 27 of this year, which he said was strictly limited to the question of pricing and dealt with no other issue at all. I have in my hand Hansard for March 28 in which is recorded what the right hon. gentleman said in very unctuous words: "We have been great statesmen, I and the other ten first ministers, and have come to an agreement with regard to petroleum products which affect us nationally." He said that the first ministers had displayed extraordinary patience and co-operation and he paid trib-
28543-4l!/2

November 27, 1974
The Budget-Mr. Baldwin
ute to the spirit of generosity of the ten premiers. Included in the issues which the Prime Minister brought out at that time and related to this House were these which he stated as recorded at page 933 of Hansard:
It was apparent that if we wished to assure the huge investments necessary for adequate future supplies, somewhat higher domestic prices would be essential; that the oil producing provinces-mainly Alberta and Saskatchewan-must be assured a fair return.
That is something more than just the question of pricing. On the next page of Hansard the Prime Minister said, talking about the provinces:
... to assisting them on a national basis to develop unconventional new oil sources such as the Alberta oil sands; and to helping them ensure alternative economic development so that future growth can be sustained and diversified in western Canada.
The Prime Minister is convicted by his own statement to this House on March 28, and what he said today is inaccurate and does not correspond to the facts.


Some hon. Members:: Hear, hear!


Gerald William Baldwin: With regard to the Leader of the Opposition (Mr. Stanfield) the Prime Minister said;
The price level and the duration of the price at that level are temporary, as he has described them. They comprise a stage in the ongoing process, and I believe that is the proper way to have proceeded.
The Prime Minister is convicted of not having told us the facts, of not having recorded what did happen and not having given this House the views and opinions of the premiers, by these words that appear in Hansard. He said there was merely an acceptance of the price agreement and that this was the proper way to proceed. I think the Prime Minister should be somewhat less selective if he is to come into this House and make speeches which he expects the House and the country to accept. I suggest he should adhere much more closely to the truth. As a matter of fact, and I do not know whether it matters, his general characterization of this country is well known.
As I was coming to the House today I was not sure whether I was to speak and a Latin phrase kept running through my mind. I remember it well from the days I studied Latin. I think perhaps it should be put both in Latin and in English and hung high in the office of the Prime Minister, the offices of cabinet ministers and the offices of the national federation of the Liberal Party. I am sure some of my friends of the legal profession will remember the phrase suppressio veri et suggestio falsi, or "the suppression of the true and the suggestion of the false". That is the way the right hon. gentleman operates.
I regret that this difficulty has arisen in respect of the meeting of the first ministers on March 27; I regret it very much, because this country in which we live is a difficult one to govern. We have a constitution, albeit a constitution with difficulties, and in order to make it work in any way at all it has become necessary to supplement the written words of the constitution with the actions and agreements of those charged with responsibility-parliament, the legislatures and, particularly, governments. There always will be conflicts, division, arguments and disagreements. There must be trust, which can survive only when agreements made are fully and frankly kept. That has not been the situation here. I shall come to that in a moment.
I say that on March 27, when the first ten ministers and the right hon. gentleman gathered at that meeting, there was a light hanging over 24 Sussex Street. It was not the star of truth; it was not the cross of understanding; it was the double-cross of deceit and dissimulation. It will be exceedingly difficult for provincial premiers to meet with the Prime Minister hereafter with regard to this and related matters. If I were a provincial premier I would not leave a meeting until I had everything down in black and white under the signature of the Prime Minister, the Minister of Finance (Mr. Turner) and the Minister of Energy, Mines and Resources (Mr. Macdonald), because there was deceit when that meeting was over.
Let there be no doubt about this, because the facts lie within our knowledge. I intend to deal with a few of these facts in the time I have left. The clear purpose and intent of the federal government has now emerged from an overall survey not only of its proposed legislation but of the words and conduct of the Prime Minister, the Minister of Finance and the Minister of Energy, Mines and Resources. Beyond any shadow of doubt they propose, under the guise of very questionable legislative proposals-and I certainly do not intend to take any part of the time allotted to me to deal with constitutional issues-to confiscate property clearly belonging to the provincial governments.
There is no question that a combination of certain of the clauses of the petroleum administration bill and the amendments to the Income Tax Act which are contained in the ways and means motion are calculated to interfere with the right to ownership of natural resources to such an extent that to all intents and purposes the provinces involved at this particular time can be said to have lost effective control. There is a legal definition of theft. It means taking and converting to your own use without any power of right. That is what this government is attempting to do with these legislative proposals. The purpose of this legislation will be to so alter the right of the provinces to deal with their natural resources, not merely those things over which they have jurisdiction but that are their property, that it will be beyond their capacity to deal with them adequately within the scope of the constitution as it was intended they should.
That is what has emerged from this debate up to the present time. This certainly has been confirmed by the words of the Prime Minister tonight. I suggest that when a federal government, in exercising the very sweeping powers of taxation which it has, conducts itself so as to act in a way to do violence to the spirit of the constitution, there must be some avenue open to the citizens of the provinces affected. The Minister of Finance stands up in this House and appears on radio and television programs and says that the provinces are entitled to royalties, but that he, the Minister of Finance, will be the sole judge and jury concerning what will constitute the extent of the royalties, and if in his opinion the royalties go over a certain figure, he will say what the royalties shall be.
These are royalties in respect of resources which were plainly given to the provincial governments. They belong to them. These are rentals on property which belongs to the provincial governments. The Minister of Finance says
(Mr. Baldwin.]

that he will determine what is an adequate royalty, and if he thinks it is too high he will disallow it in his capacity as lord justice and high executioner. Let me tell you, Madam Speaker, there is a spirit abroad in this country which takes offence at the words contained in the speeches of the Minister of Finance, repeated tonight by the Prime Minister, and this will do little to allay the spirit of frustration, anger and annoyance throughout western Canada and parts of the Atlantic provinces. Hon. members opposite may jeer at me, but I say to them that they are fooling with forces lying beyond their control and it would augur well if they would heed what the situation is. If they do not want to be known as the godfathers of confederation, let them take heed of their actions.
Let me now turn briefly to the issues surrounding the meeting of March 27 and the statements made by the Prime Minister. During the winter and fall of 1973, issues had arisen in this country involving the supply, transportation and cost of petroleum products. There had been concern, anguish and great anxiety. Threats had been made by the provincial governments and the federal government. There had been concern on the part of a great many people and the oil industry. As a matter of fact, it is rather interesting to note that at a meeting of the committee on natural resources in November, 1973, the Minister of Energy, Mines and Resources urged the provincial governments to increase the extent of their royalties. He suggested they were the judges of the extent to which they should be increased. I shall not go into that matter to any great extent; however, that statement appears on the record.
Prior to the meeting of March 27 there had been concern and anxiety. This is not contradicted by the Prime Minister. The Prime Minister met with the premier of Alberta on March 4. At that time the Premier of Alberta told the Prime Minister that it was his intention in due course, not too long from then, to increase royalties. He indicated specifically the extent to which he intended to raise them. That was made quite plain. I suggest that if the Prime Minister had the gumption and honesty he should have, he would have said categorically to the Premier of Alberta that this was not satisfactory. He should have said that he would not accept this attempt to increase royalties to such an extent. He should have added that the government did not agree with it and would not allow it.
Surely this is what first ministers have meetings for, so that they can honestly and frankly lay their cards on the table. In the words of an insurance contract, it is not enough not to be deceitful; it is essential to be completely frank and truthful and to tell all the facts. There must be the utmost good faith. In the name of heaven, how can anyone in this House, after hearing the Prime Minister and reading the contents of the letters, say that he accorded anything like good faith to the Premier of Alberta in these discussions? If we need any corroboration on the issue of equalization, we have the discussions with the Premier of Saskatchewan. I am not as well acquainted with the Premier of Saskatchewan as I am with the Premier of Alberta, but from what I know of him he is an honest, reasonable and truthful man. Each of the leaders of these provinces, the premier of Alberta and the premier of Saskatchewan, has said they were deceived and that there was dissimulation on the part of the Prime Minister and the Government of Canada.
The Budget-Mr. Baldwin
They have said that when they emerged from the meeting of March 27 they had every reason to believe they had reached agreement and knew what the facts were. When I hear these gentlemen make such statements, even if I were not an opponent of the Prime Minister but were an unbiased observer I would have to say that the balance of credibility goes against the Prime Minister. On March 27 the government had in place the petroleum administration bill. Four days later they introduced it in the House for first reading, including four provisions which were entirely contrary to the agreement reached on March 27.
The Attorney General of Alberta, appearing before a committee of the House earlier this year, said, "Here are the things we agreed to about Bill C-18, and here are the things we disagree with." He enunciated them clearly and categorically. He said that these were not subject to the agreement and they were not discussed. In fact, the agreement, to the extent it was discussed at all, was contrary to the provisions to which I have referred. So at the very time the Prime Minister was standing in the House after saying goodbye to his friends, the ten provincial leaders, at the last supper, he had in place a legislative proposal which was contrary to the views of the ten provincial premiers. Just five or six weeks later the budget was brought down.
I read the letter of March 12 to which the Prime Minister referred today. Any reasonable person can search that letter to find anything by which the Prime Minister suggests it is the intention of the government to disallow provincial royalties. Of course, the Prime Minister said that the federal government intended to exercise its right to tax corporations as it saw fit. But that is far different from the frank, forthright, honest and decent treatment which the ten provincial premiers are entitled to receive from the Prime Minister. The very evening he had discussions with them he had ready budgetary proposals which destroyed the whole basis of their discussion. That is what he did. Legislation must be prepared ahead of time. The income tax Act amendment is very thick, and the ways and means motion, translated into French and English, is a lengthy, formidable document not prepared overnight. I do not believe the Prime Minister for one moment when he says that he was not aware, on March 27, of what the Minister of Finance and his government intended to do with regard to royalties. He knew it.


Jack Sydney George (Bud) Cullen: He said he did not.


An hon. Member:: Are you kidding?


Gerald William Baldwin: You can take your choice-ignorance or deceit. That is not dealing in honesty and good faith. How can you have meetings of the first ministers of the provinces and the Prime Minister in order to carry forward the essential business of this country under circumstances of this kind? Any first minister dealing with the federal government will have holes in his head unless in the future he has the most categorical assurance in writing, and if I were him I would have it sworn to as well. That is why I spoke about the Bible.
I do not have much time left, Madam Speaker, but I want to make this statement. There are many things I

November 27, 1974
The Budget-Mr. Broadbent
would like to say, but let me make this point. The world is in a difficult state. One need only travel outside Canada, outside the scope of government publications, to know that there is a great deal of pessimism abroad in the world today and much of it is justified. No matter what we do in the country, even if we give the government credit for doing the things we would like to see done, we are not immune from the difficulties that will wash over Canada. We will have to deal together, the people, the government of Canada and the provinces, in good faith, honesty and forthrightness if we are to come anywhere close to surmounting these problems.
I suggest to the government that in view of its record of deceit and dissimulation it should withdraw that part of the budget relative to taxation. The government should not withdraw these provisions completely but should put them to one side, do what the Postmaster General (Mr. Mackasey) used to say and what the Minister of Labour (Mr. Munro) says, namely, go back to the bargaining table. That is the place where this issue should be settled between the provincial premiers, the Prime Minister and the federal ministers. I suggest that this can be done in spite of what has happened. It is not too late yet. I would suggest to the government that if they want this country to rise above the sea of troubles that will confront us, they should embark now on a program of frankness and honesty. They should deal in good faith with the provincial governments, otherwise I am afraid we will be in serious trouble.


John Edward Broadbent: Madam Speaker, at the outset, because the Prime Minister (Mr. Trudeau) spent so much time on the Liberal Party's oil policy, as he described it, generated as he said by the Liberal backbenchers, I would like to make a very brief comment on the origin of that so-called Liberal oil policy. First of all I want to say that in so far as the Liberal government has a policy that is in any way substantial or worth while, it is entirely the product of negotiations that took place between the NDP and the Liberal Party last December.


Some hon. Members:: Oh, oh!


John Edward Broadbent: I hear howls from the backbenchers. Let me document this.


Some hon. Members:: Oh, oh!


John Edward Broadbent: May I have the attention of members, please? We listened to the Prime Minister for a considerable length of time.


Some hon. Members:: Oh, oh!


John Edward Broadbent: Can I have the attention of the House, Madam Speaker?


The Acting Speaker (Mrs. Morin):: Order, please. The hon. member for Oshawa-Whitby (Mr. Broadbent) has the floor. The Chair would appreciate it if he could enjoy perfect silence.


John Edward Broadbent: Briefly stated, there are four essential aspects of that policy. There is a uniform national price for

oil which the Liberals had rejected until last December. There is the export tax that they mysteriously accepted last December and which during the previous nine months or so was denounced around the country by the Minister of Finance (Mr. Turner) and the Minister of Energy, Mines and Resources (Mr. Macdonald). There is the acceptance of the need for a national pipeline, which the Liberal Party had denounced for many months in 1973. Finally, there is the establishment of a national petroleum corporation. These were the four points which were dismissed out of hand by that wonderful, smug cabinet and by a set of backbenchers who were so laudatory in their support of the policy enunciated here today. All those points were proposed, argued for and forced upon a reluctant minority government by the NDP.
Some hon. Members; Hear, hear!


John Edward Broadbent: Apparently the Prime Minister has trouble reading even the daily newspapers, but he quoted from today's Ottawa Citizen. He attributed to Premier Blakeney of Saskatchewan a view and a policy that is entirely incorrect, and all the Liberals cheered. This part he attributed accurately, and I will read it:
... as a matter of principle the provinces should get everything over and above a fair return for the corporations.
This is with reference to the corporations operating in the provinces in the resource field. The implication the Prime Minister left with this House and country was that Mr. Blakeney was saying that the federal government should have no access to the corporate taxes of those corporations.


Some hon. Members:: No.


John Edward Broadbent: It is a clear implication. The Prime Minister did not quote further, as he should have if he had wanted to be fair to Premier Blakeney. I will get to some of the serious omissions in the correspondence to which the Prime Minister referred. I will not quote what Premier Blakeney said at length, but would refer hon. members to page 9 of the Ottawa Citizen. The Premier of Saskatchewan makes it clear that the federal government is entitled to and should have tax benefits from profit derived by corporations operating at the provincial level. That is surely a totally supportable position. It is one which the Premier of Saskatchewan has taken for some time, but this afternoon the Prime Minister deliberately distorted it beyond recognition.
I want to say, Madam Speaker, that as a thoroughly committed federalist I was dismayed, as were my colleagues, to see a provision in last May's budget which prohibited corporations from deducting provincial royalties from federal taxes. Such provision strikes at one of the basic roots of Canadian federalism. As a constitutional expert, the Prime Minister knows very well, and the New Democratic Party agrees, that in Canada we need a strong federal government to deal with many of the problems which are national in scope. That is beyond argument. The Prime Minister also knows that the surest way to produce disunity and undermine the authority of the central gov-
November 27, 1974

ernment is for that government to move arbitrarily and unilaterally into a major area of provincial jurisdiction.
In our view, the federal government's position on resource taxation is such a move. For the first time in our history the federal government is saying to the provinces that provincial royalties on resources will no longer be deductible by corporations for taxation purposes. In case there was the slightest doubt about that, the Prime Minister dealt with it at length this afternoon.
It is important to note, Madam Speaker, that this issue is not simply a matter of the federal government versus the oil producing provinces of western Canada. I think it is important to stress this point particularly in this budget debate because during the past eight or ten days that has been the principal focus, aided and abetted, I would suggest, by the Prime Minister himself. It is a posing by the federal government in respect of national interest, in opposition to the western provinces. That is the way the Prime Minister would like to see the issue go. This is a matter which affects all the provinces, Madam Speaker, and it is one upon which all the provinces have made their views known to the Prime Minister. In the communique issued following the annual conference which took place in Toronto on September 12 and 13, the premiers expressed their strong opposition to the federal government's then recently expressed position on resource taxation. I quote briefly from the communique:
The premiers were unanimous that the non-deductibility of provincial royalties and mining taxes in determining federal income tax was contrary to the spririt of confederation.
That was a unanimous declaration by Canada's ten provincial premiers. They described this action of the federal government as a blow to federal-provincial relations and strongly urged the Prime Minister to remove the non-deductibility provisions from his forthcomimg budget; that is to say, from the budget they knew was coming within a month. In complete disregard of this sensible and constitutional request, the Prime Minister and the Minister of Finance reintroduced the objectionable proposals in the budget that was presented to this House last week. That was done with the full knowledge that such action would produce confrontation and prevent co-operation from all our provinces.
Why are the provinces united in their opposition to the federal government's non-deductibility policy? Perhaps this is the most serious question that has to be faced. It was not faced in a serious way this afternoon by the Prime Minister. The provinces object because such a policy impinges in a financial way upon one of their traditional domains, ownership and control of their natural resources. They ask why a royalty paid by one company to another should be deductible when a royalty paid to a province is not. The second and related basic question is why a royalty paid by a Canadian company to a foreign government should be deductible from federal tax, but one paid to the province of Ontario or Quebec is not. That is an important question which the Prime Minister dealt with this afternoon. The government's sole justification for federal incursion into provincial rights is its contention that all Canadians should have a right to share in the benefits of the natural resources of this country. The Prime Minister tried to make that point this afternoon. This is so self-evi-
The Budget-Mr. Broadbent
dent and so simple in principle that no one, including the provinces, argues against it. The Prime Minister has created a straw man to attack. He thinks he has made a substantive policy decision by destroying the straw man he himself has created.
The point in dispute nbw is not the right of all Canadians to share directly or indirectly in our natural endowment; rather, the point in dispute is the means of achieving this goal. To begin with, you do not get a determined spirit of co-operation on this issue by the ten provincial premiers by taking away a right they have correctly assumed has been theirs since confederation.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Surely that should be self-evident. Such an approach produces only resentment, anger and noncooperation in the premiers of all the provinces, not just the premiers of the two oil producing provinces. What is required is a frank reassessment of our approach to equalization in Canada. This is essentially what Premier Bla-keney, among others, has been saying for many months now. Until such reappraisal takes place and new ingredients are added to a mutually agreeable formula, it is fundamentally wrong, in the view of the NDP, for the federal government arbitrarily to change the existing rules of constitutional practice.
What is so reprehensible about the government's action is that it has produced, entirely on its own initiative, an atmosphere of distrust and suspicion from a foundation last March, to use the Prime Minister's words, which was one of good will and deep commitment to Canada. That is the atmosphere he described and reported back to the House last March. The Prime Minister's disregard of a solemn commitment has led to the present situation. I say that with care and deliberation. His disregard of a solemn commitment has led to the current constitutional problem on this issue.
During the many months of last winter's energy crisis a series of meetings at every level of government took place. Finally, in March, an agreement was reached concerning oil prices and related taxation policy control, again referring to what the Prime Minister said this afternoon, pertaining in particular to the establishment of capital funds. This agreement would not have come about but for the provinces of Alberta and Saskatchewan.


An hon. Member:: And Ontario.


John Edward Broadbent: Those two provinces sacrificed millions of dollars, in the national interest, by accepting a lower Canadian price for oil than the market situation would have permitted. All of us in other parts of Canada owe a debt of gratitude to the people of Alberta and Saskatchewan for this direct and costly sacrifice. On March 28, following that meeting, the Prime Minister (Mr. Trudeau) said in this House:
Yesterday was a great day for federalism ... the national oil agreement would surely not have been possible without the goodwill and deep commitment to Canada of the premiers of Alberta and Saskatchewan.

November 27, 1974
The Budget-Mr. Broadbent
The March 27 meeting of the first ministers was primarily a formalization of agreements reached earlier in the month between the Prime Minister and the premiers of Saskatchewan and Alberta. This is an important point, and it is one which is made clear in the correspondence which was tabled in the House on Monday by the Prime Minister. Two points are crucial to the understanding of the substance and process of the unilateral breaking of this commitment by the federal government. First, in his two letters to premiers Blakeney and Lougheed dated March 12, the Prime Minister refers to the "one year accord" reached between him and the premiers. Second, in both these letters, in addition to the agreement on price- and contrary to what the Prime Minister said this afternoon, this was not simply an agreement on price-there was a specific commitment not to consider for equalization purposes oil revenue placed by the provinces in special capital funds to be used for the development of future energy sources. I quote from the Prime Minister's letter to Premier Blakeney, dated March 12:
I understand that it is intended that the funds shall be used to develop sources of energy to replace the diminishing oil reserves. Under such circumstances we would propose that these capital amounts would not be included in the revenue base for equalization.
Nothing could be less unambiguous. The same commitment was made in the Prime Minister's letter to Premier Lougheed. In his reply on this point, Premier Blakeney concurred and requested an assurance that-and I quote- "this approach will not be abandoned to our detriment after the interim agreement expires." What Mr. Blakeney did not know was that the federal government would not wait until the one-year period of the agreement had expired before taking action. The budget presented by the Minister of Finance last week completely reneged on this commitment. The provision which stipulates that one-third of the additional oil revenues in the oil producing provinces would be considered for equalization purposes clearly revokes the commitment made by the Prime Minister last March. The Saskatchewan government has calculated that this will cost them about $40 million.
The New Democratic Party opposes, in the strongest possible terms, this course of events. We urge the government to live up to its commitments to the oil producing provinces by withdrawing the provision that one-third of the oil revenue be considered for equalization purposes. Further, and of equal importance, we urge that it live up to its obligations to all the provinces by withdrawing the
provision for non-deductibility of provincial royalties for tax purposes as applied to corporations in the resource sector. Such steps are not only compatible with a strong and stable federal government, but under present circumstances they are essential to its realization.


Mr. Speaker:: Order, please. It is my duty at this point, pursuant to the order made earlier this day, to interrupt the proceedings forthwith and put the question on the motion now before the House. Is it the pleasure of the House to adopt the said motion?


Stanley Howard Knowles: On division.


Gerald William Baldwin: On division.
Motion (Mr. Turner, Ottawa-Carleton) agreed to.



THE ROYAL ASSENT

[Stage Direction]
A message was delivered by the Gentleman Usher of the Black Rod, as follows:
Mr. Speaker, the Deputy Administrator of the Government of Canada desires the immediate attendance of this honourable House in the chamber of the honourable the Senate.
Accordingly, Mr. Speaker with the House went up to the Senate chamber.
And being returned:
Mr. Speaker informed the House that the Deputy Administrator of the Government of Canada had been pleased to give, in Her Majesty's name, the royal assent to the following bills:
Bill C-17, an act to amend the Army Benevolent Fund Act-Chapter No. 3.
Bill C-22, an act to amend the Canada Pension Plan-Chapter No. 4. Bill S-4, an act to amend the Customs Act-Chapter No. 5.
Bill C-27, an act to amend the Customs Tariff-Chapter No. 6.
Bill S-7, an act to authorize federal trust companies and loan companies to increase the monetary limit of their borrowing power and to issue subordinated notes-Chapter No. 7.
Bill C-4, an act to amend the War Veterans Allowance Act and the Civilian War Pensions and Allowances Act-Chapter No. 8.
At 6.33 p.m. the House adjourned, without question put, pursuant to special order made this day.
[Stage Direction]
Thursday, November 28, 1974