1975-01-30

ROUTINE PROCEEDINGS


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


Mr. Eudore Allard (Rimouski):: Mr. Speaker, pursuant to Standing Order 43, I seek the unanimous consent of the House to move a motion on a matter of urgent and pressing necessity.
In view of the fact that the Canadian economy is in a state of complete stagnation, that industries are closing because they cannot sell their products, that unemployed workers lack the necessary money to buy products readily available and start the economy rolling again, considering that it is imperative under these circumstances to act immediately and provide consumers with the necessary purchasing power, I move, seconded by the hon. member for Bellechasse (Mr. Lambert):
That the House consider without further delay the possibility of establishing a guaranteed annual income for all Canadians indistinctively, for the purpose of setting in motion again the hard pressed Canadian economy.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: There is not unanimous consent; the motion therefore cannot be put.



AIRPORTS


Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, under the provisions of Standing Order 43 I request the unanimous consent of the House to propose a motion on a matter of urgent and pressing necessity.
It concerns the reported recommendations in the Report of the Airport Inquiry Commission concerning a second international airport in Toronto. In view of the fact that the latest estimated total cost of this airport to the public is $1.5 billion, an amount which will undoubtedly increase if current inflationary pressures persist, and because both domestic and international airline associations state that [DOT] projections for future passenger and freight growth are uncertain-and made even more so by doubts about the future cost and availability of energy supplies-I would move, seconded by the hon. member for Kingston and the Islands (Miss MacDonald):
That the government now table the aforementioned report and refrain from taking any action thereon until such time as a clear decision can be made as to the ultimate costs, and traffic growth can be accurately determined.


Mr. Speaker:: The House has heard the terms of the motion which is proposed under Standing Order 43. It cannot be put without unanimous consent. Is there unanimous consent?


Some hon. Members:: No.


Mr. Speaker:: Then, the motion cannot be put.



ORAL QUESTION PERIOD


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I have a question for the Minister of Transport. In light of the statement made yesterday by the Minister of Regional Economic Expansion, who is not in the House, that he recognized the serious effect of increased transport costs on regional development, and because of this asked that some work be initiated to determine which industries might be most suited for this

January 30, 1975
Oral Questions
kind of attention, can the Minister of Transport tell the House whether the request was made to the Department of Transport, or is this a study to be conducted by the Department of Regional Economic Expansion?


Hon. Jean Marchand (Minister of Transport):: Mr. Speaker, I think I stated in the House that this committee has already been set up in the maritimes to study the impact of the freight rate increase on certain firms. We have receivd no requests from any other part of Canada, but I know that some provinces are before the CTC with respect to changing the decision that has been made.


Robert Lorne Stanfield: A supplementary question, Mr. Speaker. Yesterday the Minister of Regional Economic Expansion said that he and the Minister of Transport had spent the better part of an hour discussing this problem. The Minister of Regional Economic Expansion said in the House that he had then asked that some work be initiated to determine which industries might be most suited for this kind of attention. This was a request made by the Minister of Regional Economic Expansion. Which department is doing this work, and is it a request made to the Minister of Transport or something that the Minister of Regional Economic Expansion is doing himself?


Jean Marchand: Mr. Speaker, transport is doing it in co-operation with the Atlantic provinces.


FREIGHT RATES-DATE OF COMMENCEMENT AND COMPLETION OF STUDY OF INDUSTRIES AFFECTED BY INCREASES
Robert Lorne Stanfield: A final supplementary question, Mr. Speaker. Would the Minister of Transport tell the House when this study was launched, briefly what the scope of the study is, and finally when it will be finished?


Jean Marchand: Mr. Speaker, barely ten days ago, I believe, I went to Halifax to meet the Ministers of Transport of the Atlantic provinces.
At that meeting it was agreed that our officials would meet precisely to look into possible special cases and determine what industries might be threatened as a result of the decision taken by the railway companies to increase their rates. I do not know how far these studies have progressed but I shall ask for a report and advise the House of the results as soon as I have a reply.


GOVERNMENT ACTION TO ENSURE MOVEMENT OF GRAIN
Mr. Jack Murta (Lisgar):: Mr. Speaker, I have a supplementary question for the Minister of Transport. In view of the fact that grain exports in western Canada are suffering from the disruptions in our transportation system caused either by labour disputes or derailments, and in view of the commitment made in the throne speech to the effect that steps would be taken to facilitate movement of grain this winter, may I ask the Minister of Transport what the government is doing at the present time to take 
steps to make sure our grain is kept moving and is in position during the winter months?


Jean Marchand: Mr. Speaker, as far as strikes, slowdowns and disruptions of that kind are concerned, this is part of our way of life and I cannot-


Some hon. Members:: Oh, oh!


Jean Marchand: If hon. members do not accept that, then it means they do not know what is going on in Canada. I think it is about time that some hon. members learned there is something called the right to strike in Canada. I do not accept the suggestion that anybody here in this House, without hearing the case, should pass judgment and say that this is wrong or that the workers are taking an illegal or legal step. I do not think that conforms with the rules of the House of Commons. I cannot make any promise that the trains are going to run 24 hours a day without any stoppage. I cannot do that, and if somebody here can make this promise, please come and take my seat.


An hon. Member:: We are all coming.


Some hon. Members:: Oh, oh!


SUGGESTION TRANSPORT DEPARTMENT PAY DEMURRAGE CHARGES ON GRAIN IN VANCOUVER
Jack Burnett Murta: Mr. Speaker, I should like to ask the minister whether he is aware that there has been a situation of continuous demurrage charges being made in the Port of Vancouver since early in 1974? Since these charges must be paid by the Canadian Wheat Board, hence the grain producers, I am wondering if the Minister of Transport has given serious consideration to providing funds to cover these demurrage charges, particularly if what he says is correct, that strikes and disruptions are to be a way of life under this government? Is the minister giving consideration to helping pay some of these demurrage charges?


Jean Marchand: Mr. Speaker, I think I have mentioned that all those problems relating to transportation in western Canada are under consideration by a committee of ministers that was formed for this purpose. That is where policy is elaborated. As soon as we reach an agreement on all these problems, not only this one but in respect of all the bootlenecks in Vancouver, and after everything is studied by this committee, the minister and the officials, I am sure everybody will be satisfied that the utmost is being done so that this system works well.


SYNCRUDE PROJECT-GOVERNMENT ACTION TO ENSURE DEVELOPMENT
Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, I should like to put a question to the Minister
January 30, 1975

of Energy, Mines and Resources regarding the Syncrude project and the fact that the sponsors have set a deadline which expires tomorrow. In view of the fact that the National Energy Board has said that unless we get oil from the Athabasca oil sands on schedule this country will face very serious problems in respect of oil supplies in the early 1980's, and in view of the fact that the Minister of Energy, Mines and Resources was not able to reach any satisfactory agreement with the consortium during his meeting yesterday, I should like to ask what action the government proposes to take to ensure that the Athabasca oil sands development will be proceeded with in order that Canadians can be assured of oil supplies in the future?


Hon. Donald S. Macdonald (Minister of Energy, Mines and Resources):: Mr. Speaker, perhaps I could correct the hon. gentleman to this extent. The government of Canada has set out its position with regard to this project to the partners in Syncrude, and indicated that we would be prepared to participate in respect of additional costs along with other parties. At this point the difficulty with regard to coming in or not coming in rests with other parties, private and public, to whom the Syncrude partners have addressed themselves. The decision as to further participation does not rest at the moment in our hands.
The over-all position the government is taking is, as I said, that it will be responsible for some of the additional costs, but we do not feel that the federal public sector should have to bear the full burden. At this point while the discussions are going on, for example this afternoon, between the partners, the government of Alberta and potentially other parties, I would not draw the conclusion that a transaction may not be put together. This is really impossible to say at this point.


SYNCRUDE PROJECT-REQUEST FOR DETAILS OF CONCESSIONS GRANTED
Thomas Clement (Tommy) Douglas: Mr. Speaker, may I ask the minister what are the concessions the Syncrude Company has requested? I understand it has already been assured by the Minister of Finance that the project and plants will be exempt from the resource tax, but that Imperial and Gulf are also asking that they be exempt from resource taxes on all their operations and be guaranteed the international price. Are these the concessions they are asking for or are there any others they want? What concessions has the government agreed to?


Donald Stovel Macdonald: Mr. Speaker, the Syncrude partners sought assurance on four points, on several of which they have already had assurance. The first was that production from the plant would not be pro-rated in the event of a general pro-rationing of Alberta production in the future. To the extent that the jurisdiction of the government of Canada extends, we have given them that assurance.
The second was that the interpretation of the tax law which was made known to the consortium in the fall of 1973 remains the government's view of the tax law at present, and my colleague would be in a position to con-
Oral Questions
firm that to them. My colleague has written to them, in fact, confirming that.
The third was that the price to be obtained for Syncrude oil in 1979 when the plant, all things being equal, would be in operation, would be an internationally oriented price. We have indicated to them that for the purpose of this project only, and for the purpose of attracting other participants to it, we would be prepared to agree to that price for the Syncrude product. The agreement was that they would find other participants. We have indicated that we would be prepared to undertake participation ourselves, but not total participation.
The suggestion that there should be a further tax concession to one or any of the other companies on any aspects of its operations is not one that has been put to me or, to my knowledge, to my officials. That is not under consideration.


SYNCRUDE PROJECT-GOVERNMENT POSITION ON FIFTY PER CENT PARTICIPATION
Thomas Clement (Tommy) Douglas: The officials of Syncrude have indicated that what they would prefer would be to have a participant who would take up 50 per cent of the equity. I want to ask the minister if that proposal has been made to the government, and whether the government itself or in conjunction with the Province of Alberta or any other province is willing to take up the 50 per cent equity. If the government has rejected this, what is its reason for doing so?


Donald Stovel Macdonald: We have not given the undertaking to take up 50 per cent, but we have given an undertaking to take up all or in part an equity participation in the project. One of the alternatives, of course, is by way of convertible debenture which, in the event of the success of the plan, the government could convert to an equity position. I would say that other private parties to which the consortium have directed themselves would be primarily coming in as equity investors.


SYNCRUDE PROJECT-REQUEST FOR TABLING OF LETTER FROM MINISTER OF FINANCE CONCERNING TAX CONCESSIONS
Mr. Eldon M. Woolliams (Calgary North):: I should like to ask the Minister of Finance, in light of the answers of the Minister of Energy, Mines and Resources which were pretty hard to follow, what actual concessions were made, if any, and what were the letters that were referred to which, I believe, were written by the Minister of Finance to either the syndicate groups or to the provincial government involved. Is he prepared to table those letters at this stage?


Hon. John N. Turner (Minister of Finance):: Mr. Speaker, I would have to consult with my colleague from Alberta.


Some hon. Members:: Who?

January 30,1975
Oral Questions


John Napier Turner: My colleague the Minister of Finance from Alberta, the Hon. Gordon Miniely.


An hon. Member:: Colleague?


John Napier Turner: Yes, within our Confederation, my colleague.


Some hon. Members:: Oh, oh!


John Napier Turner: Basically, the vocabulary used by the hon. member for Nanaimo-Cowichan-The Islands to the effect that these are concessions is not quite right. They are not concessions. What I undertook to do, both to Mr. Miniely and the government of Alberta as well as the other partners to the Syncrude agreement, was to allow the tax regime then in place at the time the agreement was signed to be sustained, despite the resolutions that were made in the May 6 budget and the November 18 budget.


Eldon Mattison Woolliams: I appreciate the fact that the minister would have to obtain leave from his colleague in Alberta, but I was wondering if the Minister of Finance would be prepared to table the letters he has written to the syndicate groups, that is the corporations. I do not think he needs their consent.


An hon. Member:: They are your colleagues.


Eldon Mattison Woolliams: Would the minister be prepared to file them?


John Napier Turner: Let me look into that, Mr. Speaker.


TRANSPORT
Eudore Allard: Mr. Speaker, I should like to put a question to the Minister of Transport.
Can he tell the House why there has been a delay in putting into service the ferry-icebreaker Camille Marcoux between Matane and the north shore? Can he also tell the House when this ferry will be in a position to run between the two shores of the St. Lawrence river?


Jean Marchand: Mr. Speaker, the hon. member must be aware that this ferry comes under provincial and not federal jurisdiction since it links two points within the province. I am willing to look into the matter with the Quebec authorities to find out exactly what the situation is.


THE CANADIAN ECONOMY
Mr. Heward Grafftey (Brome-Missisquoi):: Mr. Speaker, my question is directed to the Minister of Finance. Since most economic experts agree that excessive government spending is the chief factor in rising inflation, and since government spending has increased in six and a half years from $12 billion to $28 billion, or 140 per cent, what specific measures does the minister have to put his own house in order before he continues his lecture tour-


Some hon. Members:: Oh, oh.


William Heward Grafftey: Is this the House of Commons, Mr. Speaker?


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. I certainly hope it is the House of Commons. A direct question has been put to the minister concerning specific proposals. The minister has been asked that question several times in this session since the budget speech. He has answered specifically that a rereading of the budget speech would illuminate that. I do not know if he has any further answer.


William Heward Grafftey: With all due respect, Mr. Speaker, I have not had a chance to put my question. I ask the minister, because circumstances have changed since the budget, what specific measures he has to put his own house in order before he continues his lecture tour to the private sector, namely, management and labour, asking them to practise restraint in combating inflation.


John Napier Turner: Mr. Speaker, the President of the Treasury Board and I, under the authority of the Prime Minister, are examining all new spending programs and doing our best to orchestrate those within the limits of the economy, and, as I indicated to the hon. gentleman and other hon. members on November 18, to attempt to keep spending increases this year in the 15 per cent to 16 per cent range over that of last year. I think the figure was 15.5 per cent or 15.6 per cent, and it will be in that range if we continue to have the co-operation of our colleagues.


HYDROELECTRIC PROJECT AT GULL ISLAND, LABRADOR-POSSIBLE FEDERAL FUNDING OF PROJECT
Mr. Jack Marshall (Humber-St. George's-St. Barbe):: Mr. Speaker, I have a question for the Minister of Energy, Mines and Resources. In view of the difficulties being experienced in other parts of Canada with regard to sources of energy, I wonder if the minister would indicate whether any progress has been made with regard to the availability of the alternate source of hydro power at the Gull Island site in Labrador and, following his consultation with the province of Newfoundland, whether any



*HBnmnfflHnHHm
January 30, 1975

formula has been worked out toward funding that resource.


Donald Stovel Macdonald: Mr. Speaker, the province of Newfoundland has taken advantage of one of the policies announced at the January 1974 energy meeting in making application for federal financial support for one half of the cost of the transmission line from the Gull Island site on the lower Churchill River through to the island of Newfoundland. That proposal is now before the government and before my colleagues, and I would hope that I could make a response within the next ten days.


AIR TRANSPORT
Mr. J. Robert Howie (York-Sunbury):: Mr. Speaker, my question is for the Minister of Transport. Is the minister prepared to use the resources and funds of his department to explore and expand regional air services as a development tool within the Atlantic provinces and if necessary to make grants where subsidies are inadequate?


Jean Marchand: Mr. Speaker, those grants are given by the CTC, not by the Department of Transport. We have been working with the government of Manitoba on the improvement of regional carriers. We have been doing the same thing with the province of Ontario and the last time I met with the ministers of transport of the Atlantic provinces we discussed the subject. Regional transportation by air is one of the things we are trying to improve.


J. Robert Howie: A supplementary question, Mr. Speaker. I am concerned with remote areas like the north shore of New Brunswick where existing grants and subsidies are not enough. I wonder if the minister would look at this as a development tool in areas where they are not economically justified and consider additional grants in those specific instances?


Jean Marchand: Mr. Speaker, to a question in as general terms as this one is, the answer is yes. I would prefer, however, to have a specific case raised before I would say what we would do about it.


MONTREAL OLYMPICS, 1976-POSSIBILITY OF FEDERAL SUPPLEMENTARY FINANCING
Mr. Roch La Salle (Joliette):: Mr. Speaker, I have a question for the right hon. Prime Minister.
It seems almost certain that Premier Bourassa will meet the Prime Minister of Canada this weekend, and I would like to ask the right hon. Prime Minister whether the
Oral Questions
purpose of that meeting is to look into potential further financing towards the success of Canada's Olympic Games?


Right Hon. P. E. Trudeau (Prime Minister):: It is true, Mr. Speaker, that my counterpart from Quebec-or my colleague, to speak as does the Quebec Minister of Finance-and myself are to meet probably this weekend. No agenda has been established. I for one can assure the hon. member that I do not intend to raise the matter. It is possible that the Quebec premier will do so.


Roch La Salle: Mr. Speaker, I have a supplementary.
I would like to ask the right hon. Prime Minister whether he is ready to discuss that matter with the premier of Quebec?


Pierre Elliott Trudeau: I have just answered affirmatively, Mr. Speaker. I said I would not raise the matter myself but, of course, if the Quebec premier wants to discuss it, I will be pleased to listen to him.


TRANSPORT
Mr. James A. McGrath (St. John's East):: Mr. Speaker, my question is supplementary to the question the Leader of the Opposition put to the Minister of Transport. I want to draw on his experience as Minister of Regional Economic Expansion and ask the minister if, in the interests of allowing a full study of the impact of freight rate increases on the Atlantic provinces to be completed, and in view of the fact that freight rates will run seriously counter-productive to regional development policies and subsequently further aggravate the very serious unemployment in the region, he would agree to extend the freeze on freight rates until the stage which he referred to and which was referred to by the Leader of the Opposition, has been completed?


Jean Marchand: Mr. Speaker, I think I answered that question very clearly-


An hon. Member:: You have never answered clearly.


Jean Marchand: I answered this question yesterday.


Mr. Speaker:: Order, please. Whatever opinion hon. members may hold on the quality of the minister's answer, I have to hold that the same question has been asked of him before and if there is no change in his answer it is difficult to allow another question.


James Aloysius McGrath: Mr. Speaker, the question I posed to the minister was based on a reply given in the House yesterday subsequent to the answers by the minister's colleague the Minister of Regional Economic Expansion who referred to a study that was under way. My question was, in the light of that information, if the minister would

January 30, 1975
Oral Questions
consider extending the freeze until the study was completed?


Jean Marchand: Of course, Mr. Speaker, I am not the best man in this House-


Some hon. Members:: Right!


Some hon. Members:: Hear, hear!


Mr. Marchand (Iiangelier):: -to make-


Mr. Hees:: I think you are, Jean.


Jean Marchand: I know I am the second one.


Some hon. Members:: Hear, hear!


Jean Marchand: Maybe I did not express myself properly, but what I intended to say was that we are ready to study each case submitted to us by any company that would be seriously adversely affected by the decision taken by the railways. I did not say we were undertaking a general study in the Atlantic provinces. We see each firm that feels affected seriously because some firms, without any reason, might ask for a subsidy, for example. We want to look into each case. This is not a general study of the impact of the increase because we have all we need on this. We have the federal-provincial committee on transportation which, on a permanent basis, is looking at the problem raised by the hon. member.


Robert Lorne Stanfield: A point of order, Mr. Speaker.


Mr. Speaker:: The hon. member for Mississauga.


Robert Lorne Stanfield: A point of order, Mr. Speaker.


Mr. Speaker:: The hon. Leader of the Opposition on a point of order.


Robert Lorne Stanfield: Mr. Speaker, I want to know what the ministers of the Crown mean. Yesterday the Minister of Regional Economic Expansion said in this House, and I quote him:
... I have asked that some work be initiated in that direction-
That is in finding out what industries are affected.
-to determine which industries might be most suited for this kind of attention.
He said he had asked that certain work be initiated. Today the Minister of Transport says that his department is simply ready to receive complaints, to receive petitions from industries. That is exactly what he said. My point of order, Mr. Speaker, is that I want to know whether we can take seriously and literally what ministers say to us in the House or whether ministers are engaged in a game of trying to pull the wool over our eyes and the eyes of the people.


Jean Marchand: Mr. Speaker, I discussed the matter with the transport ministers of the Atlantic provinces. They understood perfectly what I said. I told them the same thing I said here. We spent several hours together and they were quite satisfied. I do not see why the Leader of the Opposition, who was not present, tries to

make assumptions simply to confuse an issue that is entirely clear.
Mr. Speaker, in front of cameras, in public and in the presence of the transport ministers of the Atlantic area, I said exactly the same thing and there is not one company I know which could be irresponsible enough not to submit a problem it would have, since we stated in the presence of all other ministers that we were willing to listen and that if there were really serious prejudice, we would try together to prevent companies from being affected.


Mr. Speaker:: Order, please. We are now technically on the point of order raised by the hon. Leader of the Opposition on which we have had his contribution and also that of the minister. I do not know that we can carry on with further questions without identifying them as questions. If the hon. Leader of the Opposition wants to ask another question of the minister-


Robert Lorne Stanfield: Mr. Speaker, I want to clarify the point of order. I understand what the Minister of Transport is saying. I want to know why the Minister of Regional Economic Expansion said something different yesterday.


Jean Marchand: Mr. Speaker, I regret that the minister is not here.


Robert Lorne Stanfield: So do I.


Jean Marchand: The minister did not attend the meeting and probably I am the one who can say what I understood. You have many friends there, why do you not phone them and they will tell you?


Mr. Speaker:: The hon. member for Mississauga.


Mr. Guay (St. Boniface):: A point of order, Mr. Speaker.
Mr. Speaker, I rise on a point of order. I was waiting for the opposition to listen to what we have to say so that they can learn something. I believe it is most unfortunate for the Leader of the Opposition to choose to pick on that minister who happens to be out of the House today. The Leader of the Opposition would himself criticize when something similar is done to his group. The minister will be back, and the Leader of the Opposition will have ample opportunity to question him, then he will get his answer. I would not stoop as low as some of his own members to call him boring.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: As far as that is concerned, Mr. Speaker, the parliamentary secretary does not have to stoop to be low.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: I simply wish to say that I, too, regret that the Minister of Regional Economic Expansion is not in the House today as I look forward to getting some clarification, something I was not able to get. The Minister of Transport has further confused the situation.
January 30, 1975


Jean Marchand: Mr. Speaker-


Mr. Speaker:: Order, please. We have now had ten minutes of very welcome relief with some scintillating repartee. However, it has certainly cut into the question period. The beleaguered member for Mississauga, having been recognized ten minutes ago, is still trying to ask his question. I think it might be appropriate to let him ask the question.


Some hon. Members:: Hear, hear!


Len Marchand: Mr. Speaker, this is very serious. I did not have the answer a few minutes ago when the hon. member repeated what the Minister of Regional Economic Expansion had stated. First, no one in this House will understand if when quoting somebody you just read half of the sentence that was pronounced. Here is the sentence that was quoted by the Leader of the Opposition. I quote:
-and I have asked that some work be initiated-
The complete sentence reads:
I believe the Minister of Transport has talked about assistance to industry on a selective basis,-


Some hon. Members:: Hear, hear!


Jean Marchand: The Leader of the Opposition just took one part of the sentence of the Minister of Regional Economic Expansion in order to serve his own purposes.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


AIR TRANSPORT
Mr. A. C. Abbott (Mississauga):: Mr. Speaker, I thank you for your consideration. I wish to ask a question of the Minister of Transport.


Some hon. Members:: Oh, oh!


Anthony Chisholm Abbott: He probably does not need another question, but I will ask a responsible question for a change. In light of press reports concerning the Gibson report and the very real concern felt by residents of my constituency about the grave problems of noise pollution created by air traffic, can the minister inform the House when the authorized version of the Gibson report will be published?


Jean Marchand: Mr. Speaker, we will be having a special cabinet meeting tomorrow morning as we did not have time to go through all of the agenda today. I hope that at the opening of the House tomorrow, I will be able to state the position of the government.
Oral Questions INDUSTRY


UNITED AIRCRAFT-DATE OF TRANSFER OF PRODUCTION TO UNITED STATES-MINISTER'S POSITION
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, my question is for the Minister of Industry, Trade and Commerce. The minister indicated yesterday that he was aware in March of the transfer of production by United Aircraft at Longueuil to the United States which cost Canada thousahds of jobs and thousands, if not millions, of dollars. When the minister became aware in March, was the transfer just about to begin or had it been going on for some weeks? Second, was he simply told or did he give his consent to the transfer of that production?


Hon. Alastair Gillespie (Minister of Industry, Trade and Commerce):: Mr. Speaker, I do not accept the premise of the hon. member's question. The transfer which in fact took place was to protect Canadian interests and Canadian jobs for the development of that engine in order that customers orders could be filled. The second point I wish to make is that in March of last year the company indicated its intentions to transfer work and coupled with that statement, they would provide firm assurance that subcontracting work would be returned to Canada as soon as practical after the end of the strike.


POSSIBLE EXISTENCE OF CLAUSE IN CONTRACTS WITH OTHER COMPANIES PERMITTING TRANSFER OF PRODUCTION TO UNITED STATES
John Edward Broadbent: Since the transfer involved 75 per cent of the production being moved from Canada to the United States, I do not quite follow the minister's mathematics as to how that improved the employment situation in Canada. However, I will leave that and go on to the second question which concerns the more than 80 other companies in Canada which, during 1973-74, were awarded contracts and grants of a similar nature by the government as those awarded to United Aircraft. Does the same escape clause exist in the contracts with these other companies which will permit them to transfer jobs to the United States if and when they so desire?


Alastair William Gillespie: Mr. Speaker, I should explain for the benefit of the hon. member that if a customer cancels his order, that is a threat to Canadian jobs and the future of that company. This is what the issue was all about. The question of other development contracts with other companies of course remains confidential between the government and the companies. Each contract is negotiated around the particular circumstances of the development work of that corporation.


John Edward Broadbent: In order to be clear, will the minister inform the House if in awarding contracts to foreign based or owned companies it is the normal practice of the government to include a clause permitting them to make a decision, for whatever reason, to transfer production, after having been given grants by the people of Canada, back to their own country if they so desire?



January 30, 1975
Oral Questions


Alastair William Gillespie: On the contrary, Mr. Speaker, the other principle is the one which obtains, that is to say that Canadian interests will be protected. Indeed, if the hon. member were to read the documents tabled in the House on Monday of this week, he would see there are express provisions there respecting the interests of the Canadian government and the Canadian people in these development contracts.


ALLEGED THREATS TO MEMBER FOR TEMISCAMINGUE BY CHAIRMAN OF CBC
Mr. Andre Fortin (Lotbiniere):: Mr. Speaker, I would like to direct a question to the right hon. Prime Minister, but since he is not in the House, I will direct it to the Secretary of State. The right hon. Prime Minister having returned to the House, I will ask him my question.
Is he aware of the off-the-cuff statements made by an official, namely the president of CBC, who thundered the corporation's threats at a member of this House, should the latter not act in such or such a way, and could the right hon. Prime Minister say whether this is an established policy within the federal public service or a policy which tends to be established, and finally, can he assure the House that there will be no more of that sort of interference in order that the members of this House can discharge their duties without outside interference?


Pierre Elliott Trudeau: Mr. Speaker, I am sorry, but I must say to the hon. member that I did not look into the statement. I have heard about it. If I am not mistaken, the purpose of the statement was not to prevent members from doing what they want to do, but rather, it seems to me, to protect the CBC employees, something all employers usually do for their staff.
I remember that the CBC president actually resorted to the same tactics against some statements I made myself concerning the employees of the corporation. I find that in this context, the president is right to protect his employees. As regards the core of the issue, the members' freedom, I do not want to take a position. I did not read the statement. So far, I do not see that it interferes with anything.


INDIAN AFFAIRS
Mr. Erik Nielsen (Yukon):: Mr. Speaker, I have a question for my friend and colleague under the constitution-


Some hon. Members:: Welcome back!


Erik Nielsen: -the Minister of Indian Affairs and Northern Development. Have his officials on the negotiating team on behalf of the government come to any conclusion with regard to a proposal to be made by way of a settlement to the Council of Yukon Indians in connection with the brief of the Yukon Indian Brotherhood "Together today for our children tomorrow"? If such a proposal is to be made by the government's negotiating team perhaps the minister can tell us when and where it is to be made.


Hon. Judd Buchanan (Minister of Indian Affairs and Northern Development):: Yes, Mr. Speaker, we have been putting together a proposal of that nature and it is my hope we shall be able to make it in the hon. member's City of Whitehorse in the latter part of this month.


Erik Nielsen: Will it be the intention of my friend and colleague, the minister, to discuss this proposal beforehand with the representatives of the people through the elected council of the Yukon Legislative Assembly?


J. Judd Buchanan: There are two members of the elected council who serve on the executive committee and they are aware of what is developing under the proposed settlement. In addition, there is another member nominated by the council who sits on the advisory group; he, too, is aware of what is developing.


SUGGESTED AMENDMENT TO INDIAN ACT TO GIVE WOMEN EQUAL RIGHTS-GOVERNMENT POSITION
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, my question is directed to the Minister of Indian Affairs and Northern Development. It has to do with the judgment rendered by the Supreme Court of Canada in the last few days in the Canard case. Under this judgment, one which certainly has reactionary implications, Indian women were declared not to have equal rights with respect to testamentary dispositions with those possessed by male Indians.
I refer to this case because a federal court earlier decided that Indian women had the same right as men in this area. The Department of Justice, not satisfied with that judgment, appealed to the Supreme Court of Canada, as they did in the Lavalle case. Is the minister, in the Year of Women, when so many protestations are made concerning the belief of members of the government in women's rights, prepared to assure us that an amendment will immediately be introduced to the Indian Act to ensure that discrimination against Indian women, as declared to be permitted, apparently, according to the judgment of the Supreme Court of Canada, will be ended once and for all?


Erik Nielsen: Why not?


J. Judd Buchanan: The right hon. member raised a similar point the other day with regard to the Lavalle-Cor-biere case. I share his concern in that instance, and in this case, too. The only point is that the government has given an undertaking to the Indian people that it will not alter the Indian Act until they have had full opportunity to make their contribution. We intend to stand by that commitment.
January 30, 1975


John George Diefenbaker: Whatever the undertakings given, I ask the minister a simple question: why should women not have the same rights as men, whether they are Indians or not? Are the protestations that the government believes in the equality of the sexes merely words rather than declarations of policy?


J. Judd Buchanan: I hope we shall be able to satisfy the aspirations of the right hon. member and myself. Really, what is required is that final consultation with the Indian people is completed some time this year. I hope, then, that we can go forward with the proposed changes.


John George Diefenbaker: Is the minister saying that women's rights, denied them by both these judgments which in my opinion are most reactionary, shall be dependent upon whether or not, some time in the year 1975, the Indians agree that changes should be made?


J. Judd Buchanan: Basically, what I am saying is that we intend to stand by the commitment which the government has made to the Indian people that we shall not make changes to the Indian Act in the absence of prior consultation with them.


TRANSPORT
Mr. Ray Hnatyshyn (Saskatoon-Biggar):: Thank you, Mr. Speaker. A happy new year to you.


Some hon. Members:: Oh, oh!


Ramon John Hnatyshyn: I should like to direct my question to the Minister of Transport in case he should feel he is not loved; no question has been addressed to him for at least five minutes.


Some hon. Members:: Question!


Ramon John Hnatyshyn: It arises from the hon. gentleman's statement in the House that neither he, nor, to his knowledge, anyone else in his office or department has made any suggestion about altering the Crowsnest Pass rates. Since the minister is now in the process of devising a new transportation policy, and in the light of disconcerting statements made during the past few days and months, can he assure us that under the new policy there will be no tampering with the Crowsnest rates and that his position today is the same as it has been in the past?


Jean Marchand: I have already stated that nobody in the department has been charged with looking into the Crowsnest Pass rates. We are working on general policy. If the hon. member is asking me to make a permanent, blanket commitment about anything, I shall not do so. I am a human being. But the matter is not under study and there is no reason for the hon. member to be nervous.
Oral Questions


Ramon John Hnatyshyn: Would the minister please convey those sentiments to his colleague in the cabinet, the Minister of Justice?


URANIUM-INQUIRY AS TO POSITION OF MINE AT BANCROFT, ONTARIO
Mr. J. R. Ellis (Hastings):: Mr. Speaker, my question is for the Minister of Energy, Mines and Resources. Would the minister outline current activity with regard to the Farraday uranium mine in Bancroft and indicate what the prospects for production there might be?


Donald Stovel Macdonald: May I thank the hon. gentleman for having given me notice of this question. I can inform him that I have now sent letters to the two interested parties indicating that the rearrangement of their companies is in accordance with the foreign ownership requirements for uranium companies and that their applications will be going forward to the Atomic Energy Control Board for consideration. The Board will have to take into account the licensing situation of the mine so that there can be an initial evaluation of ore, and so it can go into production again. I am looking forward to early production in the Bancroft area.


THE CANADIAN ECONOMY
Mr. Lincoln M. Alexander (Hamilton West):: Mr. Speaker, I have a question for the Minister of Labour relating to a speech he reportedly made to the Regina Chamber of Commerce. He was defending workers' wage claims and talking about the unions. In his words-
They could not and should not be viewed as some sort of pariah nor as a whipping boy for any real or imagined sins.
I do not know whether the minister will bring his comments to the attention of his colleague, the Minister of Finance. Will he say, now, contrary to the view expressed by the Minister of Finance, that wage and salary increases are not the primary cause of inflation?


Hon. John C. Munro (Minister of Labour):: If the hon. member would read the speech made by the Minister of Finance I think he would find that the minister was not laying responsibility for the inflationary situation on labour at all. He was talking about all sectors of the economy having to exercise restraint in order to bring the situation under control.


Lincoln MacCauley Alexander: A supplementary question, Mr. Speaker. In light of the fact that, as I understand it, the minister is reported to have stated that wages and salaries are attempting to catch up, would the minister now advise
28626 - 39)4

January 30, 1975
Oral Questions
whether he believes that wage and salary increases are not the primary cause of inflation?


John Carr Munro: Mr. Speaker, I would not consider them the primary cause of inflation, but I do believe, as in all of these situations, that every element within the economy has to exercise some degree of restraint if we are to bring inflation under some degree of control.


GOVERNMENT POSITION ON NECESSITY OF WAGE RESTRAINTS TO FIGHT INFLATION
Mr. John Fraser (Vancouver South):: Mr. Speaker, my question to the Minister of Labour is supplementary. In view of the fact that the Minister of Finance said on Monday, if I may quote him, that "the major driving force is coming from the rapid escalation of wage and salary costs", would the minister advise whether it was the government's position at the meeting with labour representatives a week ago that wage restraints are necessary, or did the government deliberately leave the impression that it does not believe that wage restraints are a practical solution in today's climate, as appears to be in fact the case according to the statement of Mr. Mahoney of the United Steel Workers of America?


John Carr Munro: Mr. Speaker, I can only repeat, as has the Minister of Finance, that as a result of our discussions with leaders of the labour movement we found the areas of their concern which, after we have further discussed the whole inflationary situation with representatives of other sectors of the economy, will form the basis for further discussions when we meet them again to see whether a consensus can develop as to how best to control the situation.


John Allen Fraser: A final supplementary question, Mr. Speaker. Would the minister advise the House how the government believes that a consensus can be reached when clearly one thing was said to labour and another thing was said to the men's Canadian Club on Monday? Can the minister please tell the House how we can have a consensus if there is no agreement with labour?


John Carr Munro: If the hon. member would read the entire speech of the Minister of Finance, I believe he would find that that is not the situation at all. He did not indicate that the prime responsibility lay in one sector of the economy; he related the necessity for some exercise of restraint, provided the same degree of restraint was exercised in other sectors of the economy.


Mr. Andy Hogan (Cape Breton-East Richmond):: Mr. Speaker, I direct my question to the Minister of Labour and it relates to the answers he has just given in answering for the Minister of Finance. Let me quote from the Minister of Finance's statement: "The major driving force in inflation is coming from the rapid escalation of wage and salary costs for those who work and press for increased income". How can the minister deny that he is saying it is the major thing?


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. Before proceeding to orders of the day, there has been some indication that if we were to revert to motions the Minister of Transport (Mr. Mar-chand) would be in a position to table the Darling report. Is it agreed that we revert to motions for this purpose?


Some hon. Members:: Agreed.



ROUTINE PROCEEDINGS


Jean Marchand: Mr. Speaker, pursuant to the provisions of Standing Order 41(2), I wish to file with the House two copies, one in English and one in French, of the report entitled "The Elements of an International Shipping Policy for Canada".


Mr. Speaker:: Order. The hon. member for Winnipeg North Centre (Mr. Knowles) has given the Chair notice of his intention to raise a question of privilege which depended to a certain extent on the presence in the House of certain ministers who were not here yesterday but are present today. I understand that the hon. member would like to proceed with that question of privilege now. Is that agreed?


Some hon. Members:: Agreed.


PRIVILEGE
Mr. Stanley Knowles (Winnipeg North Centre):: Thank you, Mr. Speaker, and I also extend my thanks to the right hon. member for Prince Albert (Mr. Diefenbaker) for being willing to delay his intervention. My question of privilege relates to the non-tabling of a document which is required by law to be tabled in the House. I refer to the Freshwater Fish Marketing Act, a statute which is chapter F-13 of the Revised Statutes of Canada for 1970. Section 33 of that act requires that the annual report of the Freshwater Fish Marketing Corporation be put in the hands of the minister three months after the end of the corporation's fiscal year, and that a copy of that report be tabled in the House within 15 days of that time or, if the House is not then sitting, within 15 days after the date when the House next sits. I am referring to the annual report for the year ending March 31, 1974. The House has been in session since September 30, 1974, and that report is still not available.
I point out that the statute also requires that a copy of this report be sent to the lieutenant-governor in council of each of the participating provinces. My information is that this has not been done. My point of privilege must be very
January 30, 1975

clear, Mr. Speaker: in what way can we in this House of Commons require Crown corporations and ministers of the Crown to keep the requirements of the law?


Erik Nielsen: Mr. Speaker, before the minister replies, perhaps you would allow me to endorse what the hon. member has just said and to draw to the attention of the House the fact that since the passage of the Northern Canada Power Commission Act that commission has been required by law-and indeed has complied with that law-to table its financial statement, including a plant-by-plant breakdown throughout the commission of its financial affairs. The commission has been following that procedure through the Minister of Indian Affairs and Northern Development since 1948, but for the years 1972, 1973, and 1974 has abrogated the law in this regard and those statements have not been filed.
Perhaps while the minister responsible replies to the question raised by my hon. friend, he might also look into the breach of the legal requirements respecting the tabling of fiscal information by the Northern Canada Power Commission for which the Minister of Indian Affairs and Northern Development is responsible.


Hon. Romeo LeBlanc (Minister of State (Fisheries)):: Mr. Speaker, I wish to respond to the question of privilege relating to the Freshwater Fish Marketing Corporation. I am advised by a note dated January 28 that we will be receiving the Auditor General's report this very week; the rest of the report is being translated. As soon as the Auditor General's report is translated and the reports are integrated, it will be printed; and we expect to be able to table the report within the next couple of weeks.


Stanley Howard Knowles: Mr. Speaker, I have a supplementary point of privilege. Will the minister do something about a corporation that is in arrears to this extent? This action should have been taken by June 30, 1974, by law.


Roméo LeBlanc: Mr. Speaker, I will check into the background of this situation. I understand that the reason for the delay is the audit of the corporation's operation. The report of the Auditor General will be integrated in the annual report.


André-Gilles Fortin: Mr. Speaker, I would like to support the question of privilege raised by my colleague from Winnipeg North Centre (Mr. Knowles), and seconded by my colleague from Yukon (Mr. Nielsen), that Crown corporations, whether they represent Her Majesty or not, have bad distrustful habits regarding the supreme institution which is Parliament. Here now is a typical case where Parliament is disregarded and where there is failure to produce an annual report as required by law.
Yesterday, I raised a similar issue about a high government official who ignores the House's rights. I feel that all hon. members should take interest in the question of the hon. member for Winnipeg North Centre so that Crown corporations may understand that they are not there to run Parliament but that they are nothing more than creations of Parliament to which they must report.
Tabling of Reports


John George Diefenbaker: Mr. Speaker, I do not wish to interrupt the proceedings of the House, but the hon. member for Mississauga (Mr. Abbott) this afternoon asked whether the report in connection with the airways in Toronto was a revised one. I should like to ask the minister if the Darling report which he asked to table in the House is the actual report, or was it revised by his department?


Jean Marchand: It is the report of Mr. Darling, yes.


John George Diefenbaker: It is not revised?


Jean Marchand: It is not a report from the department. Excuse me, perhaps I did not get the question right.


John George Diefenbaker: I appreciate that it is Mr. Darling's report, but was it revised by the government or by the minister's department?


Jean Marchand: Not to my knowledge, Mr. Speaker, but I shall inquire into it further and I will be ready to answer tomorrow.


Mr. Walter C. Carter (St. John's West):: Mr. Speaker, before calling orders of the day I wonder if you would allow the Minister of State (Fisheries) (Mr. LeBlanc) to inform the House what the government's plans are in respect of legislation promised in the throne speech, and subsequently by the Prime Minister, having to do with incentives to farmers and fishermen, including stabilization of the market and price supports for fishermen?


Mr. Speaker:: Order, please.


Walter C. Carter: Mr. Speaker, I rise on a question of privilege.


Mr. Speaker:: Order, please. The question period has terminated and we have called orders of the day except for a question of privilege that has been raised. I am anxious to get on with orders of the day, and we have been trying to tidy up this question of privilege. The hon. member seeks to ask a minister another question, which is a straight and direct abuse of the question period which has now terminated.


Walter C. Carter: On the point of order, Mr. Speaker, Your Honour may have noticed that I have been trying to catch your eye for two days in order to ask this question. I would ask it now because of the urgency of the situation which exists in my province.


Some hon. Members:: Oh, oh!


Walter C. Carter: This might not be important to some hon. members, but to the fishermen in my province who are now on strike this is a very important matter. They are wondering when this legislation is to come in.


Mr. Speaker:: Order, please. I regret as much as the hon. member that in failing to be recognized this afternoon he joins company with 15 or 20 other members. I am sure that

January 30, 1975
Business of the House
the fact of the matter is that each and every one of them has an urgent question relating to his own area. However, even by extending the question period five or ten minutes I was only able to recognize a limited number of members. Unfortunately, if I were to extend the privilege now to the hon. member I would also have to extend it to several of his colleagues.


Erik Nielsen: Mr. Speaker, I saw the Minister of Indian Affairs and Northern Development (Mr. Buchanan) attempting to rise and catch your eye in order to respond to the question of privilege which I raised. I simply suggest that, since the matter must have taken the minister by surprise, perhaps he would prefer to bring an answer to the House tomorrow and provide the information which I requested by way of a question of privilege.


J. Judd Buchanan: Mr. Speaker, I will be happy to look into the breach concerning the Northern Canada Power Commission raised by the hon. member for Yukon (Mr. Nielsen).


BUSINESS OF THE HOUSE
Mr. Baker (Grenville-Carleton):: Mr. Speaker, may I ask the government House leader what business he proposes to call tomorrow and next week?


Mr. Sharp:: Mr. Speaker, I have indicated to the House that the government's first order of priority is the amendments to the Income Tax Act. These, basically, will be the business of the House from now on and for as long as it takes to have the legislation approved. I should add, however, Mr. Speaker, that if tomorrow second reading of this bill was concluded, I would ask for unanimous consent that any vote in that connection be deferred until Monday. In the event that we would be unable to begin in committee of the whole until after that vote, we would take up Bill C-33. If the income tax amendments proceed more rapidly than I anticipate, then the next order of business would be completion of the debate on second reading of the housing bill, Bill C-46.


Stanley Howard Knowles: Mr. Speaker, I would ask the government House leader the same question I have asked several times, with the hope that this time his reply might be more definitive. A long time ago the government said it was ready to proceed with Bill C-48, having to do with the requirement that the railways disclose certain information. Each time the government agrees and says it will be proceeded with some time soon. Could there not be an arrangement, including an agreement to limit the debate, to have that bill put through tomorrow or in the early part of next week or, if the minister wants, right after the income tax bill? Surely it does not need to be stalled any longer.


Mitchell William Sharp: Mr. Speaker, we have no hesitation in proceeding with that bill. I would hope that there could be an

agreement or perhaps even an order of the House in respect of the limitation of time that would be required.


Jack Marshall: Mr. Speaker, last week I asked the government House leader whether he could indicate to the House when we would have legislation on veteran's housing. He said he would have to consult with the two responsible ministers, the Minister of Veterans Affairs and the Minister of State for Urban Affairs. I wonder if he has that information now.


Mitchell William Sharp: Mr. Speaker, I have not yet had an opportunity of consulting with my colleagues. As I have said, the order paper is very full, containing a great many very urgent matters. The fact that I have not yet had an opportunity to consult with those ministers does not in any way interfere with the passage of this legislation.


Walter C. Carter: Mr. Speaker, perhaps I could ask the government House leader what the government's plans are in respect of the promised legislation having to do with income support for fishermen and the provision of incentives, including stabilization of the market, etc.


Mitchell William Sharp: Mr. Speaker, we have been considering this and related questions in cabinet, but I am not yet in a position to answer that question definitively.


André-Gilles Fortin: On a point of order, Mr. Speaker.


Mr. Speaker:: The hon. member for Lotbiniere on a point of order.


André-Gilles Fortin: Yes, Mr. Speaker; I have a question on the business of the House for the President of the Privy Council.
In the Speech from the Throne, a review of the Unemployment Insurance Act has been announced. Mr. Speaker, since no such tabling of a bill appears on the order paper, I would like to ask the President of the Privy Council whether he could inquire, on behalf of the House, from his colleague the Minister of Manpower and Immigration, whether a bill to this effect will be tabled in the near future and whether it will be given priority for study by the House in order to improve the present situation we are in now.


Mitchell William Sharp: Mr. Speaker, I will consult my colleague, the minister.


Stanley Howard Knowles: Mr. Speaker, I rise on a point of order. In response to the minister's suggestion that there be a time limit with respect to the debate on second reading of Bill C-48, I wonder if he might not ask right now for a House order that the debate on second reading on that bill be limited to one speaker per party. We would be prepared to agree with that.


Mitchell William Sharp: Mr. Speaker, I would be very happy to have such an order, that when we call second reading of Bill C-48 each party restrict itself to one speaker and that there be an order to that effect.
January 30, 1975


Walter David Baker: I think we are prepared to agree with that, Mr. Speaker.


Mr. Speaker:: Order, please. It having been proposed that there be an order of the House that when the debate on Bill C-48 is commenced, the speeches be limited to one speaker from each party and that the question then be put, is it agreed? Of course, such an order would require the unanimous agreement of the House. Is there unanimous agreement that it be so ordered?


Some hon. Members:: Agreed.


An hon. Member:: No.


Mr. Speaker:: There not being unanimous agreement, there is no point discussing it further.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order please. There is either unanimous agreement or there is not.


Some hon. Members:: Agreed.


Mr. Jones:: Mr. Speaker, I do like the way it is worded. The wording leaves out the Independent member.


Some hon. Members:: He can speak, too.


Mr. Speaker:: That is not a problem. I am sure the order could include the Independent member of the House of Commons.


Some hon. Members:: Hear, hear!


Mr. Speaker:: I will ask again whether or not the House is prepared to give its unanimous consent to an order that debate on Bill C-48 at the second reading stage be restricted to one speaker per party and the Independent member of the House of Commons. Is there unanimous agreement?


Some hon. Members:: Agreed.


Mr. Speaker:: It is so ordered.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Tuesday, January 28, consideration of the motion of Mr. Turner (Ottawa-Carleton) that Bill C-49, to amend the statute law relating to income tax, be read the second time and referred to committee of the whole.
Sinclair McKnight Stevens: Mr. Speaker, on Tuesday last when I was speaking on Bill C-49 I said we in the official opposition believe that further tax deductions and relief should be given to the taxpayers of Canada. We believe that there is room for a further tax deduction of 5
Income Tax
per cent in addition to the extra 3 per cent proposed by the Minister of Finance (Mr. Turner) in the bill before us. I say this because I feel that to the extent we start limiting government revenue we will start controlling government expenditures. Our Minister of Finance has indicated that he hopes to hold government spending now to a 15 per cent increase. I noticed today, in response to a question, that he is now up to almost 16 per cent. Already the government is starting to give.
Let members of the Liberal caucus look at page 33 of the minister's budgetary papers and they will find that he is forecasting government expenditures to rise from the 1974 fiscal year level of $20 billion to the 1976 fiscal year level of $28.8 billion. It is not hard to see that that is approximately a 44 per cent increase in government spending in two years. That, I say, is an expenditure that could and should be controlled more effectively than the Minister of Finance is indicating in his figures. I suggest that hon. members look at how the government proposes to raise that revenue. I refer members of the House, particularly members of the Liberal caucus, to page 34 of the budgetary papers. There they will find, under budgetary revenues, the first item, personal income tax, which is shown as $7,926 million for the fiscal year 1974. For the fiscal year 1976 it is shown as $11,350 million. Imagine, in two years they intend to tax Canadians an extra $3.4 billion, an increase of over 40 per cent, in personal income tax alone!
If you go on to page 35, you will see that on a national accounts basis the government intends to increase direct taxation, with respect to personal income tax, from $11 billion in the fiscal year 1974 to $15.9 billion in the fiscal year 1976. This is another whopping increase, in excess of 40 per cent-an increase of almost $5 billion in direct taxation of the hard working Canadian public. Let me remind the House that if these big-spending cabinet ministers see that kind of money available, they will think up ways and means of spending it. That is why we in the official opposition say that this revenue should be cut back by at least half a billion dollars and then we would start meaningful control of government spending in this country.
The money is there. Look at the Bank of Canada figures. Right now the government is sitting on almost $5 billion that they have on deposit with the Bank of Canada and other banks. We are saying, "Give half a billion dollars of that money back to the Canadian taxpayers."


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: We are saying, more especially, to the Minister of Finance, or to the group of seven economic advisers-whoever is today calling the tune, economically, today in this country-"You can well afford that", and by giving this money back the government will be taking the first concrete step to ensure that we have less government expenditure, which is increasing so rapidly now. I say that because I believe the economic forecasts for the forthcoming year that are being put out by responsible organizations are alarming.
On Tuesday last I referred to the macro economic effects of federal fiscal policies for 1974-1975 issued by G. V. Jump and T. A. Wilson of the University of Toronto. Oddly enough, Mr. Wilson is one of the group of seven advising

January 30, 1975
Income Tax
the Prime Minister (Mr. Trudeau) on economic affairs. This is what the two gentlemen say after reviewing the effects of the November 18 budget on our economy:
It can be readily seen that Canada's economic performance for the year as a whole will clearly be inadequate in terms of the three main criteria of full employment, reasonable price stability, and adequate economic growth. With a growth rate of 2.6 per cent-about half of our potential growth rate-the unemployment rate will rise through the next few months, reaching a peak of 7 per cent in the third and fourth quarters of the year, and averaging 6.8 per cent for the year as a whole. Inflation for the year as a whole will average 11 per cent-
That is why we are stating that this government has not done enough to stimulate our economy. We believe that a further reduction of 5 per cent would help stimulate the economy, would restrain government spending and would be anti-inflationary. A reduction would have that antiinflationary effect if the funds are returned to the taxpayer rather than if the government retained the money and spent it on some of its fanciful programs. To be specific, when I am suggesting a $500 million deduction for Canadian taxpayers, I am speaking about a deduction that in 1975 would amount to a $60 to $150 tax reduction for most taxpayers in this country. I feel they deserve it. We need that kind of consumer spending power to be put back into the economy. I implore members of this House to press the government to be more generous with the taxpayers and less inclined to hold taxpayers' money so that they can spend it as freely as they have been spending it.


Mr. Max Saltsman (Waterloo-Cambridge):: Mr. Speaker, I am not going to reinforce the Cassandra-like utterances of the hon. member who preceded me, because I think that while we will have some difficulties in the coming year despite the best efforts of the government, the country will do all right. I think the economy is essentially strong and healthy and not even the government can damage it very much. It seems to me that the simple problem we have to face in this budget is how to balance one thing off against the other. There has been a great deal of argument about this. I was trying to follow the hon. member for York-Simcoe (Mr. Stevens). I could not see how the reduction he suggested would stimulate the economy and at the same time reduce inflation. I was having difficulty following that argument.
It seems to me that the central problem is one that we have consistently pointed out from this side of the House, and that is the distribution of income amongst various sectors of the economy. In that regard this budget, like so many of the budgets preceding it, is enormously regressive in the way that benefits are being passed on. For instance, in the last two or three budgets the minister brought in a long list of the number of people who were being knocked off the income tax rolls. He has managed to knock more people off the income tax rolls than we have people in Canada. Yet somehow people go on paying income tax.


John Napier Turner: I wonder if I could ask the hon. gentleman a question. I wonder how he reconciles that statement with the statement he made with regard to the last budget, that it was the most progressive in history with regard to tax cuts.


Max Saltsman: I am not quite sure what the minister's question was. I am not sure where his budget is going, either. I am going to give one example of the kind of thing which masquerades as progressiveness in the minister's budget. When he came out with the opportunity for people to set aside money in a registered retirement savings plans and then to draw from it later on, it sounded great on the surface. But who benefits? How many ordinary people in this country are able to put $1,000, $2,000 or $3,000 into a registered retirement savings plan every year, or into a registered home ownership plan? Not very many.
Mr. Asper, whose credentials I think are reasonably good in the Liberal Party, had something to say about this in a column he wrote recently. I think the implication of his column is that until now we have had a great bonanza for tax consultants in industry finding all kinds of generous little opportunities from which they could benefit. Now we are going to extend this advantage to those who have money and may not be in business as such. Now they are going to be afforded great opportunities for tax dodges whereby they do not have to pay any money out of their savings. I quote from the article which Mr. Asper wrote in the Ottawa Journal of December 2:
The most fertile area for planning is the amendment which allows each individual the right to earn up to $1,000 per year of investment, income tax free. For the 1974 year, the only investments which qualify are interest-bearing securities of banks, trust companies, mortgages, bonds and the like.
But for the 1975 year, dividends from taxable Canadian companies will also receive the tax free treatment. In all cases, the interest or dividend must be paid by someone with whom the taxpayer deals at arm's length. Thus, dividends from the family business, or interest on most shareholder loans to family companies, won't qualify.
It then pays the private business operator to have his company borrow, say, $10,000 from its banker, repay his shareholder loan, or pay him a dividend, and personally invest the money in tax free interest earning securities. The interest his company pays on the borrowed money is deductible while the interest he earns personally is tax free.
But that is not the end of the benefits.
Since the courts have ruled that a father can loan money interest free to his wife and children, provided the money is repayable on demand, family investment portfolios might be reorganized to improve the group's protection against erosion of the value of the unit's savings.
If the father has an investment portfolio of $50,000 earning interest at 10 per cent-
You will notice, Mr. Speaker, that he is referring to the typical Canadian family, the average family.
-he would earn $5,000, of which $1,000 is tax free and $4,000 is taxable. If, instead, he kept only $10,000 and loaned $10,000 to each of his wife and three children, and they invested at 10 per cent, the entire $5,000 of interest would be tax free.
The budget also offers tax planning incentives for those who are willing to save money through registered retirement savings plans.
He goes on to fault a few of the other benefits which the average Canadian taxpayer can claim. Those are typical of the things that appear in the budget. The budget is to a large extent a method of redistribution of income, and I have seen no evidence of a fair-minded attitude toward the redistribution of income in this country. It seems every time there is a suggestion that Canada may be going into a recession and we have to increase demand, the tendency is to give the benefits to the people at upper income levels rather than to pass them on to the lower levels. This is one of the criticisms of the minister's budget which I think he must accept.
January 30, 1975

There is one major area which, at the time the budget came in in its original form in May of 1974, attracted very little attention. I refer to the provision for disallowing oil royalty payments before federal taxation. It seems to me that the government is being terribly sneaky. It is guilty of lack of frankness with the Canadian people in telling them what is ahead. In fact, the government has already made a deal to raise the price of oil substantially in this country in order to get itself out of some serious difficulties. The only thing it is trying to do is box the provinces in and make them look like the villains of the piece when in fact it is the federal government which must shift its methods of taxation from the export tax to the corporate tax in order to take care of the deficit and the one-price system in the eastern provinces.
The government knows what is happening and it is preparing itself, by this method, to maintain the one-price system. My criticism is this. It may be necessary for the government to move in this direction. It may be necessary for royalty payments beyond a certain point to be disallowed. But it is not necessary for the government to take with both hands; to take an export tax with one hand and then to take, by disallowing royalty payments, with the other. What is not acceptable is the way the federal government has approached this issue and imposed strains on confederation. That is not necessary.
Had there been more frankness and openness about the problem facing the federal government and the need to share and redistribute this income, much of the ill-feeling that has been engendered would have been avoided. When you watch the Minister of Finance (Mr. Turner) these days, you have the impression that you are seeing a rerun of an old movie. If old movies are given four stars for a great movie, and one star for something which is not so great, I think this one would receive an apostrophe because it is so bad. It is one of those movies where you recognize the players because you have seen them before. You recognize the plot. Of course, there is a plot, you know that, but you are not quite sure how the movie is going to end, so you are watching it to see if you can identify the elements which tell you what the ending is. You look at the cast, and enter on the left the heroic figure of the Minister of Finance, the knight in shining armour, holding the pass like Leonidas at Thermopylae and saying, "The provinces shall not pass. We shall defend federal rights." He is the hero of all the people.
Enter the villains, as the minister has painted them the provincial premiers, protesting their innocence, saying that they have been shafted and this is not what they had laboured over. Then, of course, there is a fade-back a number of years and you realize it is not quite what the Minister of Finance, the knight in shining armour is saying. That is what fade-backs are: the good becomes bad and the bad becomes good, and it all gets very confused. You find they are really not much different. All you have is a bunch of people fighting over the apportionment of this pile of income. Then you remember how the movie ends: it all comes back to you. You remember the saloon scene and the two antagonists with guns drawn, ready to shoot it out. They then turn carefully and shoot the piano player. That is exactly what both of them intend to do at the present time, the piano player being the Canadian consumer.
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I am persuaded, both by some of the things that the minister has said in his speeches and by the events that have taken place, that the provinces and the federal government have concluded a deal, if not in fact at least in principle, to raise the price of oil to consumers. In that way the provinces would get what they want, the federal government would get what it wants, and the consumers would pay for it. One province will get a slice anyway, but I do not know that Saskatchewan will get very much consideration.
When the occasion has called for it I have been as critical of the provinces as of the federal government, but I think we have to understand the position of the provinces. They have stepped into a vacuum created by the federal government. We have to go back to the time when this House and its committees were considering the white paper on taxation. I should like to think that the minister of finance of that day, Mr. Edgar Benson, seriously wanted tax reform. But what was the consequence? The word was out that the hon. member for Ottawa-Carleton, the present Minister of Finance, was not very sympathetic toward tax reform. Certainly the Liberal backbenchers were the worst enemies of the minister of finance of that day; piece by piece they eroded the meagre tax reforms that were being introduced, not the least of which was taxation of the oil companies. The federal government backed off any attempt to tax the oil companies.
When the price of oil rose, the province of Saskatchewan had a choice: it could let the oil companies apportion the entire amount if they wanted to, or it could move in to fill that oversight of the federal government. This is what it proceeded to do, but then the federal government realized its commitment to the oil industry was going to put it in a bad light, so it got progressive too and moved into the field. That is how we ended up with the present confrontation.
I referred to the fact that the dilemma was resolved by shooting the piano player. The price of oil was around $3.60 or $3.80 a barrel. After we were assured it was going to remain there, it was permitted to rise to $6.50 a barrel. The consumer paid more, but at that time oil exports to the United States were heavy and the federal share of the export tax was sufficient to cover the deficit between the exported oil and oil being imported into eastern Canada. But the return from the export tax is not going to be sufficient now, and unless the federal government finds new sources of revenue it will have to dig somewhere else to cover the deficit. Because of bad planning and the federal government's willingness to listen to the optimistic reports of the oil industry-optimistic when it suited their purposes-our reserves were badly miscalculated, with the result that we must now reduce exports to the United States.
The amount of the export tax depends on the amount of oil shipped to the United States. As that is being reduced, the amount of revenue the government receives from the export tax declines; but at the same time consumption in eastern Canada is increasing, so they have to use the export tax to level out the price. They can only do that as long as the export of oil from Canada is of the same magnitude as the import of oil to eastern Canada. They
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realize they must now get revenue from allowing a higher price and then tax the corporations, using part of that money to redress the difference. If that is the case, and I think it is, then the Minister of Finance has an obligation to be honest with the people of this country and tell them it is the situation. It is not a desirable situation, but the people of this country are not children who need to have things hidden from them. That kind of frankness would have been understood and much of the confrontation between the provinces and the federal government would have been avoided, instead of what we saw, namely, the posturing by the white knight.
We are going through another period of posturing, Mr. Speaker. A report in this morning's paper says that the Minister of Energy, Mines and Resources (Mr. Macdonald) is not very happy as a result of his meeting with the Syncrude partners. They are saying to him in no uncertain terms, "You will give us everything we want or you're not going to get any oil; we want a higher price for oil, tax concessions and guaranteed prices." Mr. Speaker, before we are mad enough to do anything like that, surely we should take the Syncrude plant under federal ownership. If we have to live with this kind of uncertainty and blackmail, we might as well take it over.
Syncrude claims, and I am sure it is true, that its costs have risen from an estimated $750 million for a plant to $2 billion. Just imagine the outcry if the cost of a federal project had escalated like that in the same period. We are dealing with uncertainty here. We do not know what the Syncrude figures are, and indeed I do not think Syncrude itself knows what it is doing. Faced with the obvious fact that we must have the oil, whether under private or public auspices, we know that it is still the people of Canada who will have to pay for it.
The chief executive officer of one corporation had the nerve to say, "We have not got the cash flow, so the price of crude will have to go to $13 so that we can get the money to build a plant." That is a fine business proposition! It would be better to build the plant ourselves than give the money to somebody like that. It would not be impossible for the government to do it, given the technology and the right people. We have done it with hydro and nuclear energy.
As I said earlier, Mr. Speaker, this country survives in spite of the government, but after all this mushing around the time is coming when we must make a decision. It seems to me that the only logical decision at this point, whether it is with the pipeline to Montreal or with the energy industry, is to go to the provinces to see what can be worked with them. Between the provinces and the federal government surely there should be no problem in raising the necessary funds and expertise to ensure sufficient energy for the future. Under those circumstances, if the price of crude oil has to rise, then surely the Canadian people will understand. They will know they are investing in their own future and not just fattening the coffers of some corporation.
I should like to turn now to another question that arises from the federal budget, if only because the budget did not really deal with it adequately. I refer to the need for an incomes policy in this country. It is not as though we have not had an incomes policy in this country, because every

budget is in some ways an incomes policy. We have always had one. We have had an incomes policy that permitted the resource industries to make profits without paying taxes. Every time we bring in an old age pension scheme, family allowance program, corporate tax, industry subsidy, tariff or even a settlement for members of parliament, it is an incomes policy.
The time has come for this government to provide some direction. I do not suggest for a moment that this will be easy or quick. For example, the hon. member to my right spoke about a wage and price control policy for a six-month period-a six-month freeze. We can forget about things like that; they will not work. The Canadian people correctly rejected it because they could see it was not going to work. An incomes policy is not something you wave a wand over and keep for six months. It is something by which you make a commitment for the future. It is a philosophical question, one of income distribution and one that must be approached with caution. Nevertheless, it is one that has to be started.
It has often been argued that labour will not go for an incomes policy. In some ways I can understand the hesitancy of labour in the past to go for an incomes policy, because almost invariably it was labour that was hurt. It is rather interesting to see what is happening now. One of the most progressive elements is, in fact, organized labour. This has always been the case. One of the finest speeches on this subject was made by Joe Morris, president of the Canadian Labour Congress. The speech is of such merit that I should quote it, if not in its entirety at least that part which refers to his attitude toward an incomes policy. This is his New Year's message:
The challenge to the labour movement in the year ahead is to drive hard to protect men and women workers against the blight of inflation, to stop the merciless attack on the purchasing power of their hard-earned wages and salaries.
Apart from the hardship inflation poses to wage and salary earners, pensioners and, in general, all middle-and lower-income groups, there is a definite danger that the problem may, if it is not curbed soon, destroy the very social fabric of our country and other countries almost as radically and surely as violent revolution.
On the international level, the danger is that countries will take steps to protect themselves without any consideration for the damage such isolationist steps may cause other countries and the world as a whole.
In Canada, individual groups may tend to look out for their own interests alone in order to protect themselves from the dangers of inflation, often unconcerned or simply unaware that by doing so they are hurting other groups, thereby ultimately hurting themselves.
Such a return to the law of the jungle may become so divisive and destructive to the social conscience of individuals and groups alike that the things Canadians now share in common may deteriorate and, with them, the orderly and generally peaceful manner in which we live and conduct our affairs.
With them may also go the moral obligation, the understanding and the compassion which our society, if it values itself, must have for all its disadvantaged people.
The Canadian Labour Congress recognizes the dangers of inflation. Most of us realize that these dangers are not temporary but something that will not leave in our lifetime. We will not only have to live with them but deal with them. Yet in the minister's budget very little thought was given to this serious problem. The government's
January 30, 1975

action in suggesting a 50 per cent pay increase for members of parliament was enough to drive the people of this country right up the wall. At a time like this, when the government is asking for restraint, I cannot understand how they could put this kind of package together. I hear that the Minister of Finance liked the package. He said he could sell it to the Canadian public on the basis that we are getting less than other people, only 5 Vi per cent a year over eight years. Who else gets that kind of package? If someone does, there is certainly an uproar.
I realize that in some ways it can be argued there is an element of unfairness. Everyone is grabbing, so why not the MPs? After all, MPs are human; they should grab the same as everyone else; they should take it and run. People would not think any more or any less of them for doing that. I do not think members of parliament are in that kind of position. We have been elected to determine, in an orderly way, the allocation of our resources. We are not entitled to grab in the same way as other groups in society. In fact, I do not think they are entitled to grab, but at the moment there is not a great deal the government is prepared to do about it.
If we intend to move in the direction of an incomes policy, we should start with members of parliament. We should not be setting our own income. At the very least, some kind of board should make that determination. Over the years this party has called for a prices review board which could examine the demands being made in the various sectors of the economy, whether demands for profits, prices of services or prices of goods. Now is the time to set up that kind of board. Its first item of business should be the salaries of MPs. The last thing parliament should do is vote its own salaries. People say that is hypocrisy, we will take the money; we are just talking to make headlines. People will in no way accept that kind of argument. I am in no way proving I am not hypocritical. Either you accept it or you don't. All members must realize that members cannot raise their salaries to this level and maintain credibility in the country. They cannot expect anyone to ever again pay attention to what we say about wage and income restraints.
As difficult as an incomes policy or restraint policy may be, we have entered into it and will continue along that path. When you introduce a two-price system for oil, you establish an incomes policy. When you establish a two-price system for wheat, you determine the income of the wheat farmer. Therefore, it cannot be said that this is something new. We have in fact been doing this, but in a mish-mash manner. In many ways it has been so unfair that the whole concept of an incomes policy has to some extent been discredited. Looking to future politics in Canada, I do not think the debate will be whether this country is to have an incomes policy; it will be about distribution of income within an incomes policy. Parties will be judged on the basis of how they stand, to whom the income is distributed and in what fashion. That will be one of the chief debates of the future.
I have not dealt with many of the specifics in the budget because most of it is window-dressing. It is not of great value except to a select few. I am more concerned about some of the underlying principles of this budget and trying to relate them. It is important that we see a budget
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for what it is-a means of income distribution and a means of resolving various conflicts within society. In these respects, both because of the nature of the budget and in some ways the attitude of the Minister of Finance, this budget is far from being any kind of success.


Eudore Allard: Mr. Speaker, I would also like to say a few words about Bill C-49. This bill tends to drastically alter the provisions dealing with private and corporate income tax. This bill introduces new regulations concerning the new structure of corporations with respect to foreign income.
I think these amendments to the statute law relating to income tax are important to eke out the present act. However, we do not think those income tax reductions are sufficient under present economic circumstances-inflation and unemployment. With a further income tax reduction, we might have lower prices and costs and ipso facto fight the present inflationary trend.
I believe the Minister of Finance (Mr. Turner) is sincere, but I wonder if he is really able to manage that. He will have to improve the income tax legislation. First of all, he should raise the basic exemption from $1,000 to $6,000. This would reflect the national output which amounted to $137 billion in 1974.
Looking at statistics for earlier years, find that in 1926 for instance, the GNP was $5.15 billion, which amounted to $550 revenue per capita. Tax exemption was then $1,500.
Looking at 1940, a war year where the national product reached $6.75 billion, or $600 per capita, there was a tax deductible amount of $750. In 1969, with a national product of $78 billion, that is $3,700, per capita, the tax exemption was $1,000.
And coming to 1974, with a $137 billion GNP or $6,000 per capita, the exemption is still $1,000.
I therefore think that to keep pace with the GNP the tax deduction should be at least $6,000.
Along with other statistics, this comparison based on the number of adult working people shows how much the individual is being increasingly deprived of his personal revenues, as the cost of living increases. Such is the trend given to the economy by human decisions either in government or in big corporations.
At first, the income tax deduction was roughly three times the average per capita GNP. From 1955 to 1965, half or one-third of the average personal income is exempted, and in 1970 only approximately a quarter of the per capita GNP is exempted.
As you can see, Mr. Speaker, a readjustment in tax deduction from $1,000 to $6,000 would be very welcome now by the taxpayer with a family, and every worker facing a day-to-day erosion of his revenues through inflation.
Let us now turn to corporations which, in the period from 1957 to 1966, made $45,112 billion in declared and taxed profits. However, besides that, under profit, hidden and untaxable capital, one finds figures of $96 billion and a few millions. Untaxed profit, capital. That is why compa-
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nies are so prosperous while governments accumulate debts and deficits, and people lack the necessities and live from day to day working for those very compagnies. Yet companies are only instruments of production and administration of material goods and services, to meet the needs of the human being.
Those are in a few words, Mr. Speaker, a few important verifications. I ask the minister to take his responsibilities while there is still time and to increase the tax exemption to at least $6,000 per capita. That is in my opinion the only way to fight inflation and allow price reductions both at the wholesale and retail levels. That will allow the people of this country to be fairly and reasonably well off in a country where we nearly get everything on a plate, and because of the present system several are deprived of that opportunity.
Once again, Mr. Speaker, I urge the Minister of Finance if he really has the power to do so, and I doubt it, to make an immediate adjustment in the income tax exemption, and see to it that companies pay their fair share of taxes accruing to the government.


Hon. Herb Gray (Windsor West):: Mr. Speaker, as we know, the purpose of the bill before us is to implement changes in personal and corporate income tax proposed in the budget of November 18. Today I intend to make some comments and raise some questions about several aspects of the bill and a number of related policy areas. I want to begin by saying that I think the budget is on the right track. Therefore, my questions and comments, though at times critical in tone, are intended to be a positive and constructive nature in the context of my support, generally speaking, for the budget proposals.
In my view, the proposals are the kind required to deal with today's economic situation, marked as it is with both inflation and slower growth. Their policy thrust recognizes correctly the disturbing signs of economic slowdown in the Canadian economy and the signs of even greater slowdown in the United States and world economies- something of great concern to Canada, dependent as it is on external trade for its well-being. Therefore, I generally agree with and support what the Minister of Finance (Mr. Turner) has said about the broad approach that is required and which is reflected in his budget and in the bill. The "first essential" of this approach, he said, is "action to sustain demand".
For this purpose the bill proposes further cuts in personal income tax. While these are helpful and are therefore welcome, it must be said that the measure does nothing for those Canadians whose income is already below the level subject to taxation. The budget speech says a married wage-earner with two children pays no federal income tax in 1974 on an income below $4,830. However, it is the low income earner who is hit hardest by inflation, especially when it comes to increases in the cost of food and increases in other basic expenses. The proposed tax cuts would mean that from 1974 to 1975 a married taxpayer with two children, earning $6,000, would have an increase in take-home pay of $214, but if that same taxpayer earned $30,000 he would have an increase in his take-home pay of $622.

This bill and the budget seem to be saying that inflation hits the higher income person harder than the one earning a low income. But surely it is just the opposite. Lower income people spend a greater proportion of their income on food than those earning more. Therefore, why should a man earning $6,000 be given only $214 more, while the man earning $30,000 will be given $622 more through tax reductions? This is done in both cases to meet "part of the increase in the cost of food". This is the purpose of the tax cut, according to the budget speech.
The bill proposes that no one would get a tax reduction of less than $200 or more than $750; that is, the cut would have a floor of $200 and a ceiling of $750. One could ask, therefore, why the proposal did not call for a higher floor and a lower ceiling. In other words, why was there not a higher minimum tax reduction and a lower maximum tax reduction to ensure that the lower and middle-income Canadian would get even more disposable income through tax reductions and the imbalance toward the higher income earner would be less than it would otherwise be?
One could also ask why, as another alternative, the proposal was not for a single, across the board tax cut of an amount somewhat higher than the minimum $200 available to all below a certain income. The latter approach would be even more progressive in the sense of giving less, proportionately, to the highest income people than the floor and ceiling approach which is being used in the budget and in this bill.
I have said that the tax cuts proposed in the November 18 budget do nothing for those whose incomes are below the level subject to tax. This point is now especially important because of the unfortunate signs of economic weakness which were noted in the budget speech but have become even more evident since it was pronounced. Thousands of people who were working and who earned enough income in 1974 to be subject to tax will not have taxable incomes, or the incomes will be severely reduced, in 1975. This is because they will be unemployed or working shorter hours this year.
Therefore, the benefits for them of the additional tax cuts proposed in the November 18 budget will be, if not non-existent then at least severely reduced. They will, of course, benefit from the smaller tax cuts announced in the May budget which apply to the 1974 tax year and have been reintroduced. There is a strong argument, therefore, to have the additional tax cuts for 1975, or a substantial portion of them, apply retroactively to 1974. This would put additional disposable income in the hands of Canadians now and over the next few months as they file their returns for 1974 and receive the tax refunds for which they will be eligible. This will be helpful especially for those who will not be earning taxable income in 1975 to the same extent as they did in 1974 because of the weakness in the Canadian and world economies.
The Minister of Finance in his November budget speech in effect noted the likelihood of higher unemployment in 1975 when he forecast the creation of 225,000 new jobs in 1975, as contrasted with the 390,000 new jobs which were created in 1974.
January 30, 1975

As I have mentioned, the budget says the proposed additional tax reduction is to pay for "a large part of the increase in the cost of the family's food over the last 12 months". However, this means that this benefit is received in arrears. How will it make up for the food a lower-income family did not purchase during this period because it simply could not pay for it out of current income, and could not borrow the money? How will it make up for the extra cost of any additional debt the family incurred to pay for food? Also, if the tax cut is for the increase in the cost of food over the past 12 months, how will it help meet the increases in food costs the budget statement indicates will be coming during the next 12 months and which have come since the date of the budget?
These questions indicate that there is still a place for other programs in addition to these tax reductions to help sustain demand-to strengthen purchasing power-by Canadians, especially lower-income Canadians. I will have something more to say about this in a few moments. However, I want to say again that even with the questions I have raised about them, the personal income tax cuts should be welcomed as being of some help in bringing about needed increases in the disposable income of Canadian families.
When I spoke in the throne speech debate I said that when it came to cutting government expenditure, the elimination of the subsidy on fluid milk was not the place to start. This is because of the additional burden this action puts on Canadian families and their children, particularly those in the lower income category. I pointed out that both the Food Prices Review Board and the Consumers' Association of Canada had called and continue to call for the government to continue the subsidy. I said that no one in the government concerned with the consumer interest had spoken up publicly in support of the stand of the Food Prices Review Board and the Consumers' Association. This continues to be the case even though the price of milk has been going up due to the elimination of the subsidy.
The government's response to the request of the board and the Consumers' Association to continue this subsidy was that it was unnecessary because of recent increases in social welfare benefits. One minister suggested we could drink more powdered milk since it is cheaper than fluid milk. Another minister suggested, I hope facetiously, that people, apparently including babies, could drink wine instead of milk. Of course, if there were to be a massive shift by consumers from fluid milk to powdered milk, the effects of this could very well be harmful both to the consumer and the dairy farmer. And this is entirely aside from the fact that the price of powdered milk itself has gone up in the past in spite of a federal subsidy on it.
The farmer, I understand, gets a lower return for milk put into powdered form. Therefore, if there were to be an extensive move by consumers to use powdered milk instead of fluid milk, thousands of dairy farmers likely could no longer afford to stay in business unless the price of powdered milk were allowed by the government to rise to the level of the price of fluid milk. This would mean either that consumers would have to pay a greatly increased price for powdered milk, or the government would have to pay greatly increased subsidies to farmers
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to ensure they get the returns they need while at the same time holding down its price to a reasonable level for consumers.
As I pointed out before, the government did not cancel the subsidy on fluid milk immediately upon the increases in family allowance and old age security going into effect. Actually, in his pre-election budget speech of last May, the Minister of Finance referred to the subsidy on milk, along with that on bread, as being part of the government's "strategy against inflation" to "dampen down the price of particular products where this is feasible", and he said that this was done to "help all Canadian consumers". He gave no indication on behalf of the government that the fluid milk subsidy would not be continued indefinitely, in spite of its initial one-year term.
I should point out here that giving the fast write-off on production machinery and initial two-year term, such that it would have ended this year, did not prevent the government from quite correctly proposing in the new budget the indefinite extension of this measure.
The budget of last May made it clear that having subsidies on bread and milk was one element among a number of concurrent elements in the government's strategy against inflation. These included easing "the burden of those Canadians who are most vulnerable" to inflation by increases in social welfare payments and the indexing of these payments. The Minister of Finance stated specifically in his November 18 budget speech that both of these elements and the other elements of the government's strategy against inflation set out in the May 6 budget "continue to be" his "objectives" and therefore, I presume, those of the government as well. His current budget statement described the two elements in question in the following words:
-maintaining the real income of these Canadians least able to protect themselves against the cost of living... moderating the prices of certain products of importance to Canadian families.
These were not put forward last May, nor are they put forward now by the Minister of Finance, as being in any way inconsistent with or as substitutes for each other. Furthermore, I think the continuing of the subsidy on fluid milk and having similar subsidy programs to restrain the cost of other basic commodities is entirely consistent with the finance minister's approach to the important issue of the limitation of government expenditures. Here is what he said about this in his budget speech of November 18:
We must do all that we can in these circumstances to restrain the growth of governmental expenditures, particularly those which do not contribute directly to an increased supply of goods and services, that do not help those Canadians least able to protect themselves, or that do not directly moderate price increases.
His words show that subsidies to restrain the price of basic commodities for consumers should not be among those government expenditures whose growth must necessarily be restrained or eliminated, since they "help those Canadians least able to protect themselves" and they can "directly moderate price increases". Therefore, I think there should be greater convergence between what the Minister of Finance quite correctly said in his last two budget speeches about the need to help Canadians deal

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with increases in the price of basic foods and what the government has actually done and will do in this regard.
An illustration of what appears to be a contradiction in government policy in this area is that while the government cancelled the subsidy on fluid milk last August, a few months later, last December, it created what amounts to a new subsidy program for beef, specifically to improve returns to beef producers and also, supposedly and hopefully, to reduce the likelihood of retail beef prices going up sharply for consumers over the coming months. It also increased the subsidy on powdered milk. Increases in social welfare benefits were not put forward by the government as substitutes for these measures.
The government cancelled the subsidy on fluid milk, but last fall the Minister of Consumer and Corporate Affairs (Mr. Ouellet) apparently proposed, according to numerous press reports, that a new government board should be set up to buy Canada's requirements of sugar in bulk from major sugar exporting countries. This is puzzling, to say the least. I say this because while fluid milk is one of our healthiest and most complete foods, sugar, on the other hand, according to experts on nutrition, is not only unnecessary for sound diets but is actually harmful to health, at least when consumed in sizeable quantities.
However, the Minister of Consumer and Corporate Affairs and the government did not tell Canadians to rely on social welfare benefits to meet the increased cost of sugar, as they did for milk. Instead, according to columnist Richard Gwyn, the minister proposed that a "national sugar purchasing board" be set up to buy Canadian requirements of sugar from the governments of sugar exporting countries and this board would then sell it to Canadian refiners. One could ask why, when we are trying to hold down government expenditure, we would want to set up another board and another layer of bureaucracy? If there was a valid case to be made for buying our sugar in this way, last fall or at present, we already have the facilities to do this through our Department of Industry, Trade and Commerce and our Department of Supply and Services. If there should be a government board to buy sugar, why not a board to buy the fruits, vegetables and other foods we have to import from abroad, the prices of which have also been going up?
What would such a sugar purchasing scheme have accomplished? Would it have enabled Canadian consumers to pay lower prices for refined sugar then or in the future? It is highly unlikely that this would have been the result. The price for raw sugar in world markets last fall was at an all-time high, as was the world demand for sugar. No country would have wanted to enter into a long-term agreement with Canada to supply sugar at less or much less than world prices at that time. Why should any country have done so? It could then have sold all it had at top world prices, or close to them, and no sugar producing country had inventories it was having difficulty getting rid of at those prices; quite the contrary. However, "Business Week" said, in its issue of last November 16:
The price of sugar is expected to decline 50 per cent within a year on world markets.
In fact, since then there have already been declines in Canadian wholesale and world prices of sugar. The Food

Prices Review Board said the major component in the causes of increases in the retail price of sugar in Canada has been the increase in the price of raw sugar on world markets, that is, markets outside our borders. So if Canada had entered into any long-term agreement last fall, it would have committed itself to buying at very high world prices, at the top of the market. It would have locked Canadian consumers into paying very high retail prices for refined sugar for many years to come and well after world prices for raw sugar were likely to have broken.
However, the Department of Consumer and Corporate Affairs proposal outlined in Mr. Gwyn's column went on to say that at the very least, if this new board bought all our requirements for sugar from supplying countries, "we would know the prices that Canadian refineries pay and so the price at which they should sell". We do not need a new board and more bureaucracy to obtain this information. Our Department of Industry, Trade and Commerce was, and is, quite capable of getting any available information on world prices of sugar, and it has very likely been doing this. Also, the Food Prices Review Board already has all the authority of a royal commission to find out and report publicly to consumers and the government just how much profits the Canadian refiners really make and just how much they have actually been marking up the price of the sugar they refine over what they pay for it in its raw form.
The only thing the government does not have as yet is any means of doing anything to change or roll back the prices of sugar in Canada if it finds refiners or retailers are charging Canadians unwarranted prices. In other words, what we do not have as yet on our law books is the anti-profiteering bill I proposed to parliament before the last election. This is a measure that would enable the government to deal swiftly with Canadian sugar refiners or any other industry if their prices were found to be unwarranted and if they were found, therefore, to be gouging the Canadian consumer.
High prices for sugar is a matter of understandable concern for consumers. I agree with those who say that reducing sugar consumption is a good means not only of preserving good health but also, as events have proven, a way of putting downward pressure on sugar prices in Canada. In addition, if existing agencies of government can in fact negotiate now a long-term agreement to purchase raw sugar at prices that are lower, not only than those prevailing at present but lower than or at least equal to prices likely to prevail over the next several years, of course they should proceed to do so as soon as possible.
There may also be a place for an expanded domestic sugar beet industry if this could be accomplished without locking consumers indefinitely into unduly high prices for refined sugar. But the government should not, in an attempt to reduce consumer concern over high sugar prices or other food prices, take any hasty steps which would turn out to mean, not low but high prices for an indefinite period for Canadians.
There appears to have been lack of a sufficiently coherent and co-ordinated approach within the federal government to the problem of high sugar prices. This leads one to an awareness of the need for a better approach by federal government policy to the production and marketing of all
January 30, 1975

kinds of food, particularly those kinds which can be grown in Canada. The necessity for a new approach like this is underscored by a point made by the Minister of Finance in his budget speech. Speaking of the demand for energy and food, he said:
On a world scale, it is not just an economic problem. It is a moral issue, because for many people and for many countries it is survival which is at stake. Many countries haven't enough energy to meet the basic needs of their people. Millions of people haven't enough to eat. For Canadians this is not a question of economics; it is a matter of conscience.
Canada is one of the few countries capable today of exporting a sizeable quantity of food beyond the needs of its own population. The current world food crisis and our own needs mean, therefore, that what we must have is not simply a better agricultural policy but, instead, a new total food policy. By this I mean one that integrates on a systems basis all of our presently existing separate, disjointed and often conflicting policies in this area. The responsibility for this is currently divided among a number of government departments. It must also mean the development of new policy elements in areas where they do not, but should, exist at present and their integration with existing ones. Such a total food policy must cover all aspects of the food chain; the producer, the processor, the wholesaler, the retailer, and the consumer no less than any of these.
The federal government at present has little in the way of programs to improve the efficiency and productivity of the wholesale and retail distribution of food. Also, no government department has any clear jurisdiction assigned to it for developing and implementing these kinds of policies. The Minister of Agriculture (Mr. Whelan) has been saying that he wants farmers to produce to beat the band. But there are already in place national and provincial agricultural marketing schemes based on quotas-that is to say, they are based on restriction of production-and more are being contemplated. The Minister of Agriculture has chastised consumers about the amount of food allegedly wasted by being left on their dinner tables. But I think we should also look at the possibility that waste of food is encouraged by the Department of Agriculture's own food grading system. This is certainly the impression created by reports like the one which appeared in the Montreal Star last fall. That story indicated that Rene Guinois, a farmer of Hemingford, Quebec-
-and other North American farmers like him regularly discard a considerable part of their fruit and vegetable crops as "waste" unfit for the market.
The reason for this is that these crops do not have the size and appearance to be graded Canada No. 1. According to this same story, a federal Department of Agriculture official said:
-an average of between 20 and 30 per cent of carrots and other produce fail to meet federal government's standards.
That is, they fail to grade Canada No. 1 even though nothing is wrong with the produce from a nutritional point of view. This grading system apparently is not based on nutritional quality but, rather, primarily on the appearance of fruits, vegetables and meats covered by it. I think
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it is time we had a thorough examination of this food grading system and parallel provincial systems, followed by any necessary changes in them. This should be done to make sure that they do not prevent food which is healthy and nutritious, although not of prime appearance, being made available at lower cost for use directly by Canadian consumers and by people in other countries as well.
Here is another example showing why there needs to be urgent and intensive work done by the federal government to develop a comprehensive national food policy. In his announcement in the House on Friday, January 24, the Minister of Agriculture said that the government was increasing the price of butter for consumers by 5 cents a pound. His justification for this was that since-
-the price of margarine has gone up substantially in the last twelve months ... this will tend to restore the competitive position between the two products.
How can increasing the price of a product restore its competitive position? Most people would say such a step would have just the opposite effect. Ordinarily, when one wants to make a product more competitive, one reduces its price, or at least one holds it at the same level as the products it is vying with for consumer acceptance. Margarine has always been cheaper than butter and it continues to be cheaper. If one really wanted to make butter more competitive with margarine-that is, to encourage people to buy more butter and less margarine-most people would say the logical answer would have been to reduce the price of butter, or at least keep it at the same level as before. After all, as of January 17 there were 30.5 million pounds of butter in storage, about a million pounds more than a year ago. The increase in price announced by the Minister of Agriculture may well encourage people to buy less, and not more, butter. Canadians can well wonder about a government decision which was presented under the guise of making butter more competitive but which results in higher, not lower, prices for consumers. The agriculture minister's announcement in effect attempts to turn the law of supply and demand upside down.
If the world food situation is as serious as it appears to be, there is indeed a case to be made for having government policies that encourage maximum production of food in Canada no matter what domestic and world market conditions may be. However, a number of problems would have to be resolved in moving in this direction. A basic question is simply to what extent our country can afford such a policy. Farmers would rightly insist on fair returns for their produce even when market prices dropped drastically because of surpluses. Such a policy would involve the cost, not only of ensuring adequate returns for farmers but also of paying for the stockpiling of surpluses and allowing sales to be made for what may have to be very low prices to less fortunate countries. Consumers would ask that the burden of this be borne primarily by government expenditure, rather than having this come almost entirely from higher food prices in the Canadian marketplace.
But to what extent could government revenues at any point in time handle all this? What, then, is the proper balance between having the cost of maximum production come from the marketplace as distinct from government expenditure? Again there is the basic question as to

January 30, 1975
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whether Canadians will believe they can afford this cost no matter how it is divided. We will have to find sound answers to these kinds of questions if we are to move to a policy of maximum production of food at all times in order to deal, not only with our needs but also to enable Canada to play its part in helping to solve the world food crisis.
A coherent, total food system policy approach would certainly mean better ways of getting foods so long as they are safe and nutritious and even if they are not of top appearance, directly onto the tables of lower-income Canadians through new kinds of government programs. I think this would mean creating food stamp and surplus disposal programs for Canada similar to those in existence for a number of years in the United States. Under the food stamp program in that country, stamps are provided at no cost to unemployable people receiving social welfare benefits. They are provided at a low cost that is considerably less than their face value to those who might be described as working poor. The stamps can then be redeemed for their face value for food at any participating retailer. Under the surplus disposal program, foodstuffs are distributed to non-profit community agencies and institutions like day care centres, meals-on-wheels programs and homes for the aged.
I believe we can learn from the American experience and develop programs of this type for Canada that would eliminate many of the problems associated with them in that country. But I think that these kinds of programs, whatever their administrative difficulty, would be preferable to policies that possibly encourage destruction of food for alleged lack of markets or spoilage through faulty storage rather than enabling it to be placed on the tables of Canadian consumers, particularly those with low incomes.
We have been working out a coherent, long-term energy policy. It is now no less urgent to work out a coherent, total Canadian food policy. Our own needs and those of the world call out for this kind of action. However, I think that we should begin developing and putting in place the kind of food stamp and surplus disposal programs I have mentioned without waiting for a total food policy to be implemented. These kinds of programs, along with subsidy programs to restrain increases in the prices of basic commodities, would be consistent with the views expressed in the budget statement as to the kinds of government expenditure that should not necessarily have to be restrained. After all, government revenues remain strong and there are at the same time increasing and disturbing signs of recession in our economy.
As I said during the throne speech debate, putting into law both stages of a reformed competition policy is an essential way of enabling the government to deal directly with the larger concentrations of private economic power which can add to inflationary pressures on prices. In this way we would not have to rely solely on monetary and fiscal policies, constructive though those policies may be, as exemplified by the proposals in the new budget. It is important, therefore, that the government move ahead to get an updated competition law passed as soon as possible.

Also, I believe that it continues to be essential at this time, for these kinds of reasons, for the government to present the anti-profiteering bill to parliament for decision and implementation as soon as possible. I think it may well be of concern to many Canadians to recall that the need to pass this bill at a very early date was stressed by the Prime Minister (Mr. Trudeau) and Liberal candidates generally during the election campaign as one of the prime reasons for the re-election of the government. They said then, and have said since, that the prime reason for that bill not already being law was the election campaign, forced by the actions of the opposition parties who opposed both the May budget and the anti-profiteering bill. Although the Canadian people accepted this argument, re-elected the government, and it has been back in office for some months with a clearly majority, the bill has not yet been reintroduced into the House even for first reading.


Robert Lorne Stanfield: A majority, but not a very clear one.


Herbert Eser (Herb) Gray: The November 18 budget, unlike the May 6 budget, makes no mention of the anti-profiteering bill. The Minister of Consumer and Corporate Affairs says that the bill is "window-dressing" and he hopes that he will never have to use it, according to interviews given to the Financial Post and the Financial Times. However, I believe the Canadian people did not re-elect this government to have this important measure treated as window-dressing. They expect prompt carrying out of the government's commitment in the election to have the measure made into law as soon as possible, and once it is law, to have the will to use it whenever required.
This anti-profiteering bill, in my view, fits in well with the total approach of the new budget and the economic circumstances we are facing. This approach aims at dealing at one and the same time with the problems of inflation and recession. The budget statement refers to the existence of structural causes of price increases. What is the situation to which the budget proposals and the bill before us have to apply? It is one in which economic slack could mean that some profits and prices are falling, while at the same time concentrations of private economic power continue, in spite of pressures of the marketplace, to be able to maintain prices and profits at what could be unwarranted levels.
In my view, therefore, side by side with monetary policy and with the fiscal policy proposed by the new budget and in this bill the government needs to have the kind of weapon for a more direct attack on the structural causes of inflation that the anti-profiteering bill would provide. There is aslo need for a general review of government policies to identify the ones which build structural rigidities into our economy which help to keep up prices. I think a special parliamentary committee would be a most appropriate vehicle for this kind of review.
In this new budget and in this bill the government has shown indications of translating into action the great potential it has of meeting the commitment it gave to the Canadian people during the election campaign. The commitment was that if re-elected, the government would go on to put into effect sound and humane policies serving the interests of all individual Canadians. The government
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said during that election campaign that if re-elected it would reintroduce the May 6 budget. The new budget does carry forward the proposals of that earlier one, together with additional measures aimed at meeting the economic circumstances we are presently facing. But the government must be alert to any signs of increasing weakness in the Canadian economy. It must be ready to move quickly and to go even further than proposed in this budget by way of fiscal policy measures but also through monetary policy, direct employment measures and other programs to help counteract any further decline in our economy.
To conclude, I want to say, as I did when speaking about the bill to implement the changes in the sales tax proposed in the new budget, that on balance I believe the measure before us today should have the support of parliament and the Canadian people.


Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, I welcome this opportunity to speak on Bill C-49 dealing with the changes brought in by the November budget, most of which were held over from the May budget. The Minister of Finance (Mr. Turner) stated on Tuesday in the House that he had the essential objective of the budget in mind, to deal simultaneously with the twin problems of inflation and slower growth. He maintains that it is aimed at stimulating increased output and productive capacity in order to lessen inflationary pressures and to maintain economic performance. He mentioned that he would stem erosion in the value of savings. The government has paid little attention to people who have saved money. I must say that from a very practical point of view, those who are over 50 years of age and saving money in pension plans would do better to buy things now and to go into retirement not with money in the bank but with tangible assets.
The budget has not taken into account the very severe recession that has occurred in the United States and in western Europe, where massive attempts are being made to stimulate their economies. Many knowledgeable economists now foresee that business will improve in the next nine months or so, but it is very likely to be followed by what some people forecast to be severe inflation which will make what we have just gone through seem like a mild shower. It is generally recognized that the enormous amounts of money available and the spending by the three levels of government, mainly federal and provincial, are the main inflationary factors in our economy, factors which we as legislators can do something about. The minister himself, in a speech to the Canadian Club of Toronto on Monday, May 27, on page 13 of his speech said:
-I move to inject additional stimulus into the economy in the least inflationary way by cutting taxes rather than by increasing government spending.
The minister himself has agreed that government spending has become so great that it has lost its traditional stance, which is to stimulate growth by government spending. We know that the minister himself agreed that further government expenditures are likely to reduce growth. The minister in his budget forecast that in 1976 government expenditures will have increased 95 per cent,
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in a four-year period, to $28.8 billion. In view of the enormous increase in revenue earned from income tax, one appreciates the great reluctance of the government to cut this to a realistic level. The minister must realize that when stating that he was giving a 15 per cent income tax cut, he was by no means offsetting the inflation factor which governments love so dearly and in which they have a vested interest because of the enormous tax revenues produced so easily and so simply.
A taxpayer, in considering the tax cuts of the government, can only say that the government's tax cut is a fraction of the effect of inflation on his income. He cannot help being cynical as the government condescendingly refrains from taking quite as much as it could, making no allowance for inflation, and he knows in fact that his real tax liability, his personal income tax, is still relatively greater than it was before.
Madam Speaker, I think that this is the time for the government to make some further judicious cuts in income tax without being accused of overstimulating the economy. Even the minister himself has stated that excess government spending is one of the main factors fueling inflation in our modern economy. Why not allow the individual citizens who work to have some more of their hard earned dollars, particularly those in the lower and middle-income groups? Some will spend it, it is true, but I think they will spend it more wisely than the government would, and more productively.
We have seen the automobile, the electronics industry and, of course, the housing industry hard hit by the recession. More money in the hands of the consumer should help to stimulate some of these durable goods sectors and give more balance to the economy. Some of the money would go, I am sure, into an area that has long been forgotten, an area which is terribly important, in my opinion, and has not received the attention that is necessary both from professional economists and from government spenders; that is, the rewards of savings. Madam Speaker, savings eventually depend on the outlook of the individual concerned. Years ago people saved for their retirement, for their hospital bills, and so on. These things have now been taken care of, and with the advent of increased old age security and the maturing of the Canada Pension Plan, enforced savings through taxation has much reduced the need to save.
Because of spiralling inflation, many people are now becoming sadly disillusioned with their registered retirement funds and with their pensions. There are substantial reasons why at this time the government could give a further modest tax reduction. Government balances are at a comfortable $5 billion, $2.5 billion more than a year ago, due to the Canada Savings Bonds campaign. Tax revenues are running well ahead of projections. There is ample room here for a judicious tax reduction, but this govern-

January 30, 1975
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ment believes that it knows better than the individual how his money should be spent. The imposition of the surcharge on existing tax levels for most businesses, and increases for the resource industries will have the effect, for business generally, of cutting back on the capital spending on which this government is counting to make the economy move this year.
Madam Speaker, the question of savings will become more important as time goes on. There are enormous borrowings in capital investment funds to be made if Canada is to move forward and provide for its people a continuing increase in the standard of living. Even if the best economic conditions that are hoped for happen in the world generally, Canadians face, externally, some unpleasant possibilities. The Minister of Finance is quoted as saying last night in Montreal that the external payments deficit next year is expected to be $4 billion. When this is compared to the United States forecast of $20 billion, it shows how important is this aspect of our economy.
It is likely that for the year 1975, the Canadian economic performance as a whole will be clearly inadequate in the three main criteria of full employment, reasonable price stability and adequate economic growth. Inflation is certainly forecast to remain high, perhaps 11 per cent. The growth rate predicted by many economists is expected to be considerably less than 4 per cent, and more like 2.6 per cent. There will almost certainly be a reduction in the real exports performance, and the real residential construction decline is serious. There are a good many possibilities of reduced exports in the coming year that could be helped by prudent government action. For instance, in the matter of grain exports our main Canadian export of food into the markets of the world, and, incidentally, almost half of the total exports of continental North America, is in a precarious position.
Repeated strikes and interference with the movement of grain into export positions have been occurring with depressing regularity. These are likely to continue all through this coming year. We have already been told that we have lost a good deal of the Japanese rapeseed market. An officer of the Wheat Board has stated that it would require the greatest good luck and good management to export even our modest crop. The weather last fall contributed to what was considered by many to be the lowest quality crop ever produced in the west. It is perhaps fortunate that the world at large so badly needs grain that it is still saleable.
We have to remember that in the last couple of days the Wheat Board dropped the selling price of wheat by a dollar and that the Russians have cancelled many contracts with the United States. All this might indicate that the world grain shortage has eased. Weaknesses are showing up. The poorer countries and the marginal countries are finding the cost of oil so expensive that there is reluctance, and perhaps inability, to buy in quantities that we are used to. Holding over export markets for grain is the doubtful ability of Canada to remain a reliable deliverer of grain and, of course, there is the huge potential of the

United States. Had the United States had a good crop year, it would have been a much tougher year for the Canadian grain producer.
Madam Speaker, the ability of the manufacturing sector of the country to sell has always been limited. We, as Canadians, have always been told that we are not to be hewers of wood and drawers of water. We are supposed to export manufactured goods. The export of manufactured goods grows increasingly clouded when you consider that the United States is now in recession and, basically, that country is the only country that can take our high-priced manufactured goods in quantity. If the confrontation between the two governments continues, our exports are in doubt.
Turning to the resource industries, they have been one of the mainstays of our Canadian economy. Our standard of living and our ability to maintain economic impetus are in the main due to our primary industries and our resource industries. They have been since the beginning of our nation, and I see no real evidence that this will change. The fight between our provinces and the federal government over the taxation of resources can be likened to two owners fighting over a horse; they fought so long that the horse died from lack of feed. A dead horse does not produce much, and that is pretty well what the resource industries have been brought to by this bitter feud.
Madam Speaker, it is no accident that the minister devoted most of his time to defending the federal government's action on the resource question. There is no doubt that this dispute has fractured Canadian unity as no other issue since the language debate. The actions of this administration have made Canadians realize that they have in Ottawa a government that is prepared to go to any lengths to club them into submission. The minister devoted much of his time to arguing that in the matter of resource taxation it was only a question of dollars. But he and the Prime Minister (Mr. Trudeau), whom he represents, made little effort to reach any accommodation with the western provinces.
It is no secret to any western Canadian that had the oil and gas resided in the provinces of Ontario and Quebec, none of this violent confrontation would have taken place. There would have been long, extended consultations, with the federal government taking much less than it did from the western provinces. The province of Quebec alone is now acting as a separate state in dealing with a foreign government in the matter of uranium. The premier of the province described the federal government as merely a gate-keeper and there has been no violent reaction from this government to that statement.
Under the British North America Act the provinces were given control of their natural resources. Had this not been given, I am sure it would have been much more difficult to have kept this country together. Until recently, however, resources were not worth a great deal and we had to give incentives to develop them. As we learned in the discussion of the white paper on taxation and subsequent legislation, without depletion allowances, and so on, we would
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not have developed the oil fields. Whether we should have given these allowances is debatable, but without them we certainly would have been more dependent on the world for our oil and energy.
We may quarrel with whether we took the right course, but it is the one we took. When resource prices rose sharply, the federal government and the provinces rushed in for the spoils. Who needed the money most? I suggest the provinces had first call, because in the last 30 years there has been unbroken erosion of much of the taxing power of the provinces and they have had foisted upon them enormously costly programs in health, welfare and education.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mrs. Morin):: It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Central Noval (Mr. MacKay)-Transport-Desjardins report-Date of decision on implementation-Possible change in status of pilotage authority; the hon. member for Cape Breton-East Richmond (Mr. Hogan)-Transport-Request for outline of new policy; the hon. member for Capilano (Mr. Huntington)-Air Transport-STOL-Request for statement of cost.
It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, private bills, notices of motions (papers), and public bills. There being no item under the heading of private bills on the order paper, the House will proceed to notices of motions (papers).



PRIVATE MEMBERS' MOTIONS FOR PAPERS


[Stage Direction]
The House resumed, from Thursday, January 23, consideration of the motion of Mr. Orlikow:
That an order of the House do issue for a copy of studies prepared for the Advisory Group on Executive Compensation in the Public Service comparing salaries paid to senior public servants and salaries paid to senior executives in private industry.
Lincoln MacCauley Alexander: Madam Speaker, I did not propose to become too involved in this debate because I had occasion to speak on December 19 when the opposition House leader brought before this
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House a very significant private member's bill respecting the right of the public to information respecting public business. The motion was that the bill be read the second time and referred to the Standing Committee on Justice and Legal Affairs. There was considerable debate. Although the matter before us is somewhat different in degree, it still hits upon the same topic, namely, the right of the public to acquire public information.
I was very impressed with the government at that time, something I am not too prone to say. However, they thought there was so much merit in the hon. member's suggestion and the points he made in debate that they looked upon the matter with great favour. I was impressed with the Parliamentary Secretary to the President of the Privy Council (Mr. Reid) who indicated on behalf of the government that this was a very good idea. They felt it was now time to reverse the practice that had existed up to that time.
Bill C-225 respected the right of the public to information concerning public business. This motion reads:
That an order of the House do issue for a copy of studies prepared for the Advisory Group on Executive Compensation in the Public Service comparing salaries paid to senior public servants and salaries paid to senior executives in private industry.
Is there anything confidential about that? Is there something about that motion that can be called offensive? Is it against the public interest that this order do not issue in favour of the hon. member? I really cannot see it. All that this motion, and the bill brought forward by my House leader, is trying to do is reverse the practice that exists, that is, that no information is given by the government unless it sees fit to do so. Whenever we ask for the production of papers or for information, the government, at its option, indicates that it is not in the public interest. I have been here since 1968 and have very seldom seen them do anything other than that. This not only frustrates members but the countless thousands of people whom we represent. Because this information is garnered with the tax dollar, the public should have a right to it.
This government has talked about participatory democracy. How can you have participatory democracy without allowing those who are interested in what is going on here information which is so vital to them? I know there are matters which cannot be divulged. My House leader raised the same concern in his bill. I wish to read some of the matters he believes are of a privileged nature. I will quote from Bill C-225. The hon. member recognized that there are privileges and confidentialities that must be respected. He stated with regard to this right we should always have uppermost in our minds the fact that certain information will not be divulged. He lists these in clause 4. They are any matters-
(a)	touching or concerning the security of Canada;
(b)	where any statutory or other law provides that such record or part thereof shall not be made public;
(c)	made in the course of an investigation or inquiry in the administration of the law or in the course of obtaining or giving legal advice or in contemplation of a legal proceeding;
(d)	where the information on record is elsewhere provided or available or, in the direction of any public official, may be made available under any statutory or other law;

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(e)	where the information on record is so trivial in public interest that the cost to provide or to make the record available is not in the public interest;
(f)	where the application therefor is made for a frivolous or vexatious purpose-
I know we can be charged with being guilty in this regard many times, but I hope hon. members believe that when we seek information we do it in all sincerity. Some of us will take advantage; there is no question about that.


An hon. Member:: You will.


Lincoln MacCauley Alexander: I heard somebody, Madam Speaker, but I did not catch what he said. I want to give that member an opportunity to say it again. I guess it was a facetious remark because I am trying to make a responsible and sensible speech. Surely I have not said anything that would raise the ire of the hon. member to such an extent that it would make him interject during such a brilliant presentation. I again quote:
(g)	where the information on record is of a confidential nature exchanged by public officials within the government or between public officials of the government and any other government and is expressed to be confidential; or
(h)	where the information on record relates to the private affairs of any person or organization and, upon a balance of convenience between private and public interest, it is not in the public interest to provide or to make the record available.
When looking at all those exceptions I ask the hon. member who interjected whether we on this side have a point. All the hon. member's motion does is seek information about a comparison of salaries between senior public servants and senior executives in private industry. Surely that is not the most difficult thing to find. It was readily available when the government made this study, for what reason I do not know. However, what is important is that a study was made and the information was acquired at public expense. Other countries, and I refer to Sweden, believe the public has a right to such information unless it comes under prescribed exceptions. This is what we are hoping for. I understand that a document has already been tabled having to do with the production of information of this kind, but we on this side find it is far from satisfactory in meeting the need to which we are calling attention.
In passing, I find it strange that hon. members on the other side should be so reluctant to take part in this debate by advancing arguments similar to those they used in connection with Bill C-225. After all, are we not discussing the same thing? Bill C-225 was concerned with public information and this afternoon we are talking about documents. The two subjects are interrelated. If hon. members would refer to Hansard of Thursday, December 19, they would find that in the closing minutes of the debate the hon. member for Kenora-Rainy River, who was speaking on behalf of the government, indicated that those of us who supported the bill had made such an excellent case that he would move a motion along the lines that the bill be withdrawn and the subject matter referred to the joint committee on statutory instruments.
Well, Madam Speaker, if that was the attitude taken by members on the other side toward Bill C-225, why the

hesitation now with respect to motion No. 3. on the order paper? Why the inconsistency? We might as well consider the whole subject at one time and refer it to the standing committee. I do not understand the hesitation of hon. members opposite. I hope someone will get up over there and say, "The hon. member has a point. We agreed to it in connection with Bill C-225; it is therefore incumbent upon us to take similar action today and see that the matter is referred to the appropriation standing committee." In this case, of course, it is the committee on statutory instruments.
Every now and then, in any event, there is bound to be a difference of opinion between the public and the departments or agencies of government as to whether a decision to withhold information is taken within the accepted rules-if we ever get satisfactory rules. Under the rules which currently apply, no one can challenge a government decision. If the government says that certain information is on the excepted list, we are in trouble because there is no provision for appeal. This is a matter in which the Prime Minister (Mr. Trudeau) should show some interest. I do not think he is particularly concerned about it, though he ought to be. He wants to reform parliamentary procedure and he should show some readiness to meet the needs of the public.
During the debate to which I have referred, my hon. friend from Peace River (Mr. Baldwin) said that when such a difference of opinion arose the question should be referred to a court-to a judge-for settlement. If hon. members wish, I can quote the relevant passage from Hansard; I have it before me. On the other hand, if they appreciate the point I am making, there is no need for me to refer to the particular passage. All we are contending is that there should be provision for appeal to another tribunal when there is a difference about the interpretation of the rules. The new arrangements would apply to whatever government was in office-not only to a Liberal government but to a Conservative government or one of any other complexion. I do not think this demand is an unreasonable one. Participation in governmental affairs means a lot to the survival of our country. I think we have gone too far in the direction of leaving out of discussion the people we represent.
Politicians are in trouble everywhere today because we do not keep our ears to the ground. The move I am suggesting would be a step in the right direction; it would show that we are responsive to public opinion. The public has great difficulty in understanding what we are doing. In particular, the public does not know what the government is doing. There are questions on the order paper which have great great importance to the public.
I shall not belabour the point. I commend the hon. member who brought this motion forward for discussion. If it is not accepted today, we intend to bring it back again anyway. In conclusion, I wish the parliamentary secretary were here so that he might have the opportunity of repeating his contribution to the debate on Bill C-225. On that occasion, members on the other side accepted what the hon. member for Peace River had to say. Why do they not accept the argument today? I see many members across the aisle following this discussion intently. Hopefully, they will take the same position today as they did
January 30, 1975

with regard to the bill put forward in December, at which time they agreed that the subject matter should be referred to the standing committee for consideration.


Mr. W. Kenneth Robinson (Toronto-Lakeshore):: Madam Speaker, I am pleased to have the opportunity to make a few remarks in connection with this motion. I listened carefully to the hon. member for Hamilton West (Mr. Alexander). He made a number of good points, but I do not think the motion itself is acceptable. On October 1, 1974, the hon. member for Winnipeg North (Mr. Orlikow) asked-
That an order of the House do issue for a copy of studies prepared for the Advisory Group on Executive Compensation in the Public Service comparing salaries paid to senior public servants and salaries paid to senior executives in private industry.
This was really a notice of motion for the production of papers. An answer was submitted as follows:
The studies prepared for the Advisory Group on Executive Compensation in the Public Service contained salary data taken from several surveys concerning the movement of executive salaries both within and outside the federal public service. Data taken from these surveys is considered to be proprietary.
On these grounds, the information was not provided. This answer appeared not to have satisfied the hon. member, hence the debate on the subject which followed. Hopefully, some additional information has been provided during this debate, and I am sure that more information can be provided to the hon. member through questions put on the order paper.
I think it is important, Madam Speaker, to note that there are many reasons why studies prepared for the Advisory Group on Executive Compensation in the Public Service should be exempt from production. As a result of the debate in 1973 on the question of the production of papers, the government at that time, through the House leader, set forth the general principles guiding the government in its policy on the production of papers. I think it is agreed that the papers requested in the motion now under discussion fall under several items, (e), (q) and (s), and should be exempted from production for those reasons, namely, that they are papers containing information, the release of which could allow or result in direct personal financial gain or loss by a person or a group of persons; that they are papers that are private or confidential and not of public or official character, or that the papers requested were submitted or received in confidence by the government from sources outside the government.
Making public the confidential information requested by the government of the private sector would create a lack of confidence in government. Further requests for such confidential data would not be heeded. For example, the information deposited with the pay research bureau is confidential. If it were made public, in future such data would become unobtainable, which in turn would have a serious impact on the collective bargaining process in the public service.
Although the advisory group has not provided quantitative comparisons of salary rates in the public service and other sectors of the economy in their reports to the gov-
Public Service
ernment, the group has made qualitative statements concerning the relationship of executive salaries in the public service and other sectors of the economy, and enunciated and made recommendations on the policies that would govern their recommendations for the revision of public service senior executive salary ranges, and these should be sufficient information. In its first report of December 2, 1968, the advisory group concluded that existing rates of pay for senior executives were too low. Executive rates of pay had not been maintained reasonably in line with those paid for comparable duties and responsibilities in the economy at large.
They did not mean to suggest, however-and I quote- "that the rates of pay for executive personnel in the public service should be fixed on the basis of some mechanical equation with those applying to executive personnel in particular institutions in the private sector of the economy without regard to the important differences that exist in other conditions of employment, including security of tenure. We do not believe, however, that the continued efficiency and effectiveness of the public service, which are of great importance to both the government and the tax paying public, depend in some significant degree on the maintenance of reasonably competitive rates of pay for senior public servants".
In preparing its third report dated May 15, 1973, tabled in the House of Commons October 5, 1973, the advisory group examined the trend in executive salary movement outside the public service and noted that these showed a greater increase than executive salaries in the government. During the years 1970, 1971 and 1972, for example, executive salaries outside the federal public service increased by an average of 21.7 per cent, compared with 13.8 per cent for public service executives. The advisory group considered, as well, the movement of negotiated salary settlements within the various groups in the public service and noted that these also exceeded the rate of increase in executive salaries. They concluded that the then existing executive salary framework must be revised. Their recommended salary structure was implemented in two stages effective January 1, 1973 and April 1, 1974. The current salary structure for senior executives is that recommended by the advisory group in its third report, with the general $500 increase awarded to public servants on April 1, 1974, added to the senior executive officer salary ranges only, and not to those of deputy ministers.
In these two years since the last advisory group report, senior executive salary ranges increased by 7.8 per cent in 1973 for the 15 months January 1, 1973, to April 1, 1974, and 8.8 per cent in 1974, for a compounded total of 17.3 per cent. During the same two years the size of negotiated increases of major collective agreements concluded under all provincial labour jurisdictions combined was an average annual compound rate of increase of 9.8 per cent in 1973 and 12 per cent for the first six months of 1974, a compounded total of 23 per cent. These statistics were compiled by the Department of Labour.
Obviously, in the past two years public service senior executive salary ranges have not increased at as fast a pace as those established by the average negotiated collective agreement. There is nothing automatic about

January 30, 1975
Public Service
salary increases for senior executives. These are provided purely in relation to individual performance, and movement into the new salary ranges provided by the government must be consistent with satisfactory performance. In its third report the advisory group noted that senior executive salary increases had shown a clear tendency to be lower than increases in the salary ranges in the previous two years; this condition has been evident during 1973 and 1974 as well.
In summation, may I say that the Advisory Group on Executive Compensation utilizes data taken from a number of surveys such as those conducted by the American Management Association, H. V. Chapman, Hay and Associates, and the pay research bureau. These surveys provided by Hay and Associates and the pay research bureau are made available to the advisory group on the condition that the contents are not made public, and in fact are reviewed only by those people directly involved in the compensation function. If this information were to be made public, either willingly or unwillingly, the advisory group, and indeed the government, would be denied access to the information in the future. Such a breach of confidence would impair communications with not only the surveying organizations but other elements of the private sector to the extent that the acquisition of data for the purposes of maintaining comparability would be most difficult if not impossible.
To understand the need for the restricted disclosure of salary data one must be knowledgeable of the dimensions of the surveying process. First of all, salaries in the private sector, particularly at the executive level, are extremely confidential and are treated so within their own organizations as well as outside. Secondly, many employers are very reluctant, therefore, to divulge their executive salaries and do so only with the guarantee that the information will only be made available to a restricted group of participating organizations, and then only with the commitment that the information will be carefully guarded. Thirdly, the collection and distribution of salary data constitutes a significant portion of the business of the named organizations. The confidential treatment of this data is a significant characteristic of this business. If the confidence were to be breached, their business would be jeopardized.
These employers make the data available through a third party, that is, the surveying organizations, only in the knowledge that they will receive data on the salaries paid by other companies. Furthermore, I am advised that two of the surveys, being very large and very general in nature, are available to the public. I am sure that most of the information the hon. member requires could be obtained from them. As a result of the foregoing I feel the papers should not be produced, and that access to them should be denied.


Anthony Chisholm Abbott: Madam Speaker, in rising to speak on this matter I recognize that the subject has been cogently dealt with by my hon. friend. In any event I should like to make a few comments. Some time ago, on March 15, 1973, the then President of the Privy Council made some extremely useful remarks in connection with the question of producing documents.


An hon. Member:: Read some of the speeches Liberals made during the Diefenbaker years.


Anthony Chisholm Abbott: Those were gloomy years and I would not want to refer now to the Diefenbaker years. The country suffered enough during those years without going back to them and referring to them unduly.
In spite of the interruption I think it is necessary to review some of the important authorities that surround this matter. I was particularly interested to note that the President of the Privy Council then quoted from Benjamin Disraeli. Certain hon. members might disallow Disraeli, and I am sure he would disallow them now as well. In any event this distinguished British statesman saw fit to express himself on this subject. As one of the great debaters in parliamentary history he had great eloquence and skill, and his words are no less true today than they were at that time. Perhaps I might just read for a moment some of the words of Disraeli:
The system of laying upon the table of the House reports from officers addressed to particular departments of the executive government is most objectionable. And the House ought not to insist upon the production of papers and correspondence which concerned the preparation and preliminary consideration of measures; they would thereby put a stop to that freedom of criticism which was always invited on such occasions, and which contributed so much to the perfection of public measures.
If the House were to insist upon the production of such documents, instead of the government getting what we get now, confidential reports, containing the most minute details of the opinions of officers, given frankly and freely, for the heads of departments, we shall have a system of reports framed for laying upon the table of the House of Commons, and those will be accompanied by "confidential reports for the head of the department alone". There have been cases in which reports of a confidential character from officers of the government have been laid upon the table of the House, to prepare the public mind and also that of Parliament, to consent to some large measure, or perhaps some considerable vote of public money; but, generally, I think it is a course which the House ought not to sanction.
My hon. friend has already cited the guidelines laid before the House by the former President of the Privy Council. These were generally acknowledged in the House to be effective and cogent reasons.


An hon. Member:: By Liberals.


Anthony Chisholm Abbott: "By Liberals", my hon. friend suggests. However, at the time there was widespread approval of these guidelines, and the ones that have been cited by my friend cover exactly the problem we face in this motion.
Certain studies were made by a group of outside consultants with the particular understanding, as part of their contractual relations with the government of Canada, that they were not being prepared to be placed on the table. They would not have been prepared to offer certain confidential information, which was produced by these consultants, had it not been for the fact that the government would honour and acknowledge the terms of reference and the guidelines which had been laid before the House of Commons and approved by this House.
I think it is clear that this motion today must be defeated in order to help preserve the kind of integrity the government of Canada offers those outside consultants who choose and are able to prepare confidential reports for its use.
January 30, 1975

In his speech the then President of the Privy Council made clear that the kind of reports which are couched in that sort of language that is most useful to any government trying to concern itself with policy would be couched in very different language indeed, if it were known that the reports were to be automatically furnished to the House of Commons and laid on the table for public consumption.
I think it is as sensible today as it was in 1973 that this particular type of information be restricted as being proprietary. I realize, as I am sure other members of the House do, that there must be certain grey areas in which information prepared would not fall so obviously into the category into which this information falls. It is clear that there is no justification for the production of this type of material. The studies were prepared and contain salary data-


The Acting Speaker (Mrs. Morin):: Order, please. The time provided under Section 2 of Standing Order 48 for the consideration of this motion has now expired. The Chair should point out that the standing order also permits at this time for an additional five minutes' participation in the debate by a minister of the Crown, or an additional five minutes by the mover of the motion, after which the Chair is bound to put the question. If neither a minister nor the hon. member for Winnipeg North (Mr. Orlikow) wishes to speak at this time-


Mr. Orlikow:: Madam Speaker, I would rise to-


The Acting Speaker (Mrs. Morin):: Order, please. I would point out that the hon. member will close the debate.


David Orlikow: Madam Speaker, I listened to your remarks about who was entitled to speak at this moment. I note that the President of the Treasury Board (Mr. Chretien) is here, and I wish he had availed himself of the time to state his position. He has not done so, therefore I will take a few minutes to make one or two comments.
First of all let me deal with the guidelines put forward by the former President of the Treasury Board, referred to by some Liberal members as if they were akin to the 10 commandments brought down by Moses. The suggestions made by the former President of the Treasury Board were interesting, but I should remind hon. members on the other side that they were not accepted in their entirety by members on this side. My colleague, the hon. member for Winnipeg North Centre (Mr. Knowles), at that time pointed out some very serious defects. While the suggestions were commented on, they have never been debated and have not been accepted by the House.
I do not agree that just because a Liberal minister says something is adequate that makes it adequate. That may be good enough for Liberal members but it is certainly not good enough for the rest of us. I have heard a good deal of nonsense in this Chamber in the years I have been here, but I have never heard such nonsense as I heard from the hon. member for Toronto-Lakeshore (Mr. Robinson) when he spoke a few moments ago.
When speaking on this matter a week ago I did not say that public civil servants were being paid too much. I do
Public Service
not ask now, nor did I at that time, for information as to salaries paid by individual corporations, the private sector of the economy, or by individual municipal and provincial governments or universities. What I did suggest, and I would reiterate today, is that we pay substantial salaries to a large number of civil servants. When I spoke last week I thought there were 850, but I now find there is a group perhaps much greater than that. The only person who would know is the President of the Treasury Board. These are civil servants who apparently are paid as members of the SX category. These are a group who are classed as the senior management complement. We do not know about those. They are hidden somewhere. That is the kind of information that we need to have.
What I said, Madam Speaker, is very simple. I said that we want to know, and I think we have a right to know, how the salaries of the senior public servants compare in broad category with salaries paid to senior executives in private industry, in provincial and municipal governments, and in organizations such as universities. I am not saying we need to know individual salaries, but there is no reason why information such as I have asked for cannot be given, not to me but to the public of Canada as a whole.
It is not surprising that the public get upset when they read about the large increases which are proposed for various groups at the same time as the President of the Treasury Board (Mr. Chretien) is saying that it will be tough going for people who work at the Mint, people who work at the Post Office, and other categories of people who are making relatively low wages and salaries.
I say that the public have a right to have this kind of information in the widest possible manner, and that does not mean in the manner in which the President of the Treasury Board chooses but in a manner which may be worked out co-operatively between all members of parliament. If hon. members on the other side would stop thinking it is their private preserve, that somehow they have been anointed and will always be in government, and if they realize that the information we want is information which should be available to all the public, then this matter could be worked out quite amicably.


The Acting Speaker (Mrs. Morin):: All those in favour of the motion will say yea.


Some hon. Members:: Yea.


The Acting Speaker (Mrs. Morin):: All those opposed will please say nay.


Some hon. Members:: Nay.


The Acting Speaker (Mrs. Morin):: In my opinion the nays have it.
And more than five members having risen:


The Acting Speaker (Mrs. Morin):: Call in the members.


Mr. Speaker:: I declare the motion defeated.
[The Acting Speaker (Mrs. Morin).]
It being six o'clock I do now leave the chair until eight o'clock this day.
At 6.10 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
a (2000)

[Stage Direction]
The House resumed consideration of the motion of Mr. Turner (Ottawa-Carleton) that Bill C-49, to amend the statute law relating to income tax, be read the second time and referred to committee of the whole.
Mr. Bob Kaplan (York Centre):: Mr. Speaker, I wish to take a few moments of the time of the House to address myself to one small but important aspect of the budget, one with which I disagree. I refer to the proposal that the normal land carrying costs of someone holding land for business purposes not be deductible from business income. This clause affects land speculators. I want to make a suggestion about the way in which we can, through the budget, deal with land speculators. This clause also affects the housing industry. In my submission, it affects housing for the worse. It will have the effect of slowing down supply of serviced lots and tend to increase their price.
When I talk about the development and housing industry, I am talking about an industry about which I know a great deal. Wheh I was in the practice of law I acted for land developers and people in the housing industry.


Mr. Gilbert:: And speculators.


Robert Phillip Kaplan: And I suppose for speculators. I want to make it clear that I discontinued my legal practice when I was elected. I also want to put on record,-as all of my constituents are aware because of the fact it was raised during the election campaign-that I have relatives in the housing industry. Having said that, I would also like to add that I know thousands and thousands of people in my constituency who face a very real crisis in not being able to find the kind of housing they want, and in finding that the cost of housing they have, particularly rental housing, is tending to go up and up. I am looking at the proposal the government has put before us in the total perspective of these things that I know.
In dealing with the housing industry I think that we, as a government, are entitled to use a stick and carrot approach. We ought to be encouraging, and we ought also to be tough. For example, I am an advocate of rent controls. On a temporary basis and in a situation where supply is very, very short, rent controls would be a way of keeping the lid on while new housing is created.
It is not the place in this budget debate to elaborate on rent controls, but hon. members may be interested to know that I was in Montreal this morning getting some ideas from officials who deal with rent controls in that province. They are convinced that if housing controls
January 30, 1975

were removed tomorrow, rentals would increase across the board in the province of Quebec by 45 per cent. I do not want to be simplistic in looking at that, but that means, if they are right, that rent controls in Quebec today have the effect of keeping rents 45 per cent below what they would be otherwise. That is a very interesting policy which can produce an effect like that. I urge this government and the provincial government of Ontario to look at it.
On the question of land carrying costs I feel the government is on the wrong track with the policy it has put forward. The theory is that the industry is willfully holding back land and not selling it in order to increase the price. This may well be the case with speculators, and I have no objection to these budget measures being applied to speculators to put pressure on them to turn their land over, putting it back where it can be used by people who intend to develop it for housing and other purposes.
The government of Ontario recently introduced a tax against land speculators. From what I can see, it was a very effective initiative. It had the effect of taking quite a lot of the heat off the land development industry in Ontario.
From my experience in the industry my conclusion is that the bottleneck of getting land onto the market as serviced lost is not at the level of the developer. In fact the efforts of the typical company in the business is to try to put land on to the market as serviced lots as quickly as possible. Their business is turnover, not holding back. In case after case they are the ones who take the initiative in getting an area going, in getting a plan approved, in getting agreement for services and proper zoning. The bottleneck is the approval procedure which requires reference to literally dozens of agencies, municipal, supermunicipal, provincial and so on. It is true this approval procedure has a purpose. I do not deny that the community interest has certainly to be reflected, but the bottleneck could be reduced by streamlining the required procedures so as to shorten the period between the time land is acquired and the time it is marketed as lots.
In the last few months the Province of Ontario has announced its intention to address itself to this prevalence of red tape. This indicates to me that the province itself recognizes that the bureaucratic procedures to which I have referred are in a large measure responsible for the long delays in making lots available.
Since it takes years for housing development to proceed it is obvious that the industry must have some inventory of land with which to work. If the government proposal is adopted the housing industry will be the only industry in Canada, as far as I know, whose inventory costs are not deductible. This will be damaging to the industry just as it would be to other businesses if this principle were applied. We are looking to the industry to produce housing and deal with what may be the number one priority in Canada, yet we are doing things which will damage it and reduce its capacity.
What will be the effects of this policy? First, if the cost of holding land and bringing serviced land to market goes up, the industry will obviously try to pass on the extra
Income Tax
cost to its customers, and in a market like housing, where there is tremendous shortage of supply, I believe the industry is likely to succeed in doing so. The result will be higher-priced lots.
Second, this policy would mean that more capital will be required to enable a company to stay in business. If a company is not getting the deduction, if it has to pay more by way of taxes, additional capital is needed in order to carry on the business. This is bound to lead to increased concentration within the industry; smaller firms will have to do less or drop out all together, and the larger firms, many of which are foreign-owned, will be able to move in, thus reducing competition. To my mind this is an undesirable consequence, yet it is a probable consequence of the measure contained in the budget.
Third, I believe it will lead to an inventory reduction on the part of companies in the industry. If they cannot carry their inventories they will have to sell part of them. I concede that selling land in this way would tend to reduce prices. But what land will the companies be selling? Obviously it would be the land which is relatively remote from the urban areas, not the land which is closest to being sold as serviced land. What will happen is this: the land sold will drop outside the planning process and less attention will be paid to bringing it into use. It is also fairly likely that the remaining inventory a company holds will increase in value, the consequence of which would be to increase its cost. Surely this is not the way to contribute to an increase in housing.
In summary, this proposed policy should be re-thought by the government. It would be easy to introduce proposals which would apply only to land speculators, to those in the industry who do not develop their land, who do not provide serviced lots, who do not provide housing. This kind of distinction is already drawn in the Income Tax Act for another purpose. I am asking that this distinction should be applied in this field. The government should not take the steps it proposes here, steps which will damage the very industry to which we are looking to resolve what is possibly Canada's most serious problem- the shortage of housing and its high cost. The bottleneck is not the industry. The bottleneck is government.


Mr. Frank Hamilton (Swift Current-Maple Creek):: The
bill before us, Bill C-49, is a bill to amend the law relating to income tax and to implement the many changes in personal and corporate income tax proposed in the budget of November 18.
When the hon. member for Windsor West (Mr. Gray) was lauding the United States food stamp program I was interested in the fact that he drove the Minister of Agriculture (Mr. Whelan) over to the opposition side for a few minutes.


Mr. Whelan:: I wanted to hear what it sounded like over there.


Frank Fletcher Hamilton: The essential purpose of the budget is to deal simultaneously with the twin problems of inflation and slower growth. However, one of our main difficulties is that in the minds of a broad section of the public there are now no more opportunities left to do so. I listened carefully to the Minister of

January 30, 1975
Income Tax
Finance (Mr. Turner) defending his position as he spoke in general terms of the measures in the budget which affect the resource industries. I am, of course, particularly concerned about the status of the resource industries of western Canada and the effect the government's policies, or lack of policies, is likely to have on my own area. I shall say more about this later on.
I consider the bill before us to be the most important bill to have arisen so far from the budget speech. It is lengthy and complicated, extending over almost 300 pages. Many of the proposed amendments are technical in nature, but there are some important aspects of this legislation which should be fully debated. One thing of which we can be sure is that the tax forms resulting from Bill C-49 will be even more complicated than in the past. There will certainly be more civil servants appointed to look after us; the number of people employed by the Department of National Revenue rose by some 1,200 last year alone to more than 20,000, and this number is like'y to be increased even further.
Clause 42 provides for the deferring of income tax in connection with grain delivered in one year and paid for in the following year. I notice the draftsmen have been very careful to insert the words "without interest". I cannot understand why a producer who sells his grain in September, for instance, and does not receive payment until the next calendar year, cannot receive interest on the money.
Clause 30 has to do with the deduction of $1,000 with respect to contributions under a registered home ownership savings plan. Again, I cannot for the life of me understand why producers cannot be given the same sort of deal in respect of farms or ranches. In the area I represent Farm Credit Corporation loans now average $50,000. Within a couple of years it will be very close to an average of $100,000. It seems only reasonable in the case of an agricultural producer whose farm is his real retirement plan that he should be allowed to take several thousand dollars before tax and put the money into his operation.
The registered home ownership plan creates several interesting problems. One is that you cannot contribute to the plan in the year you buy the house. Consequently, a person who takes advantage in 1975 of his $1,000 exemption cannot use the funds to buy a house before 1976, which is clearly not much use in helping to curb the falling home construction market this year. It appears that it is possible for both husband and wife to contribute $1,000 each a year, up to $20,000. It also appears that if the home is in only one spouse's name, the other spouse can take advantage of the plan, accumulate up to $10,000, and then, I suppose, use the money later on to furnish the home of his or her spouse.
As the hon. member for York Simcoe (Mr. Stevens) said in his speech, it is, of course, through income tax legislation that the government receives most of its revenue, revenue that it always spends. Also as he said, I believe that to the extent this revenue is lessened, government expenditures are lessened. Control the government's revenue and you control its spending habits. Conversely,

when excessive revenues accrue to the government, they encourage future excess spending by the government.
It is our duty as an opposition to ensure that this government handles public funds responsibly and prudently. Thus, it is fair to ask whether the government's revenue forecasts are reasonable, has there been proper planning, etc.? I also believe, most important of all, we should ask whether ministers know where they are going and do we, as a country, know where we are going?
The $1,000 interest exemption provision has an unfortunate twist in that a farmer, for example, who for business purposes borrows money and pays interest, would have to deduct this interest from any other interest income earned before claiming the credit. As a result many businessmen or farmers will find that the provision is not available to them. It seems to me that the primary producers very seldom get a break.
The minister mentioned many special factors accounting for our problems in Canada, but they do not account for all of our problems and for all our inflation. For a good number of years now our economy has had a serious underlying bias toward inflation, and I believe that the roots of that bias lie chiefly in the rising aspirations of people everywhere. We seem to be in a hurry for more and more of what we consider the good things of life, and I do not question that because, properly directed, this can be s powerful force for our betterment.
Our difficulties arise, however, when people in general seek to reach their goals by means of short cuts, and this is what has been happening in Canada. Our people have been encouraged to take short cuts by the actions of this government. Of late, the government has encouraged individuals to depend less and less on their own initiative and more and more upon government in order to achieve their economic objectives.
Nowadays the public expects the government to maintain prosperous economic conditions, to limit such declines in employment as may occasionally occur, to ease the burden of job loss through illness or retirement, and to sustain the incomes of just about everybody. Unfortunately, in the process of doing so we have seen the government's budget go completely out of control. Wages and prices have become less responsive to market forces, and inflation has emerged as the most dangerous economic ailment of our time. Our businesses, small and large, have seen their costs soar with increasing wage rates and sharply rising prices for materials. Accountants reckon the value of inventories-machinery and equipment used in production-at original cost rather than at current inflated prices, and this practice has created an illusory element in profits, an element that is just not available for distribution or for replacing the inventories and equipment at appreciably higher prices. But, worst of all, this illusory part of the profits is subject to income tax, thus aggravating the deterioration of real business profits.
I think that tax accounting in regard to inventories and depreciation allowances for business is unfair under the present act. A more equitable plan is needed to allow for inflation. We are now at a stage where the distortions and injustices brought about by inflation have contributed materially to the distrust of government officials and of
January 30, 1975

government policies, and even to some loss of confidence in our brand of society.
I think that this can be very well illustrated by the quarrel that took place between Ottawa and the western provinces over petroleum revenues. I can sum up the feeling quite simply by saying that the provinces wanted that money for long-term industrial development, including the development of future gas and oil supplies. They feared, and I feel rightly so, that Ottawa wanted the money for short-term welfare-massive handouts to mounting numbers of unemployed. They feel there will be nothing to show for this welfare spending, spending which not only is totally non-productive but, indeed, counter-productive, though it may help the government buy some public order.
In his speech the Minister of Finance repeatedly argued the right of all Canadians to share in the benefits of the natural resources of this country. We have no argument with that; it is the manner of operation of this government that is unsettling to us.
I think it is worth while looking back a few years. In the second world war we were completely dependent upon the United States for petroleum. We should never forget that the United States government's oil policy treated Canada as if it were another state of the union. They were our great and good friends in those days. Leduc did not become operative until February, 1947. In 1961 Canada's national oil policy reserved the markets west of the Ottawa Valley to western Canadian crude. It freed the markets east to buy at their choice. They imported foreign crude, all for a saving of one and one-quarter cents a gallon at the pump. The cost to Canada in royalties, employment, etc., was $1 billion, according to a 1965 study by Dr. D. E. Armstrong of McGill University.
Repeated attempts to stop this drain on our economy by a pipe line to Montreal were rebuffed. Our balance of payments suffered as imports of foreign crude increased in the Montreal refineries. The government would not force a cent a gallon on the east to help the western oil industry. Even the Department of National Defence supplied the air base at Trenton from Montreal.
In 1967, during the Arab-Israeli war, the flow of foreign oil to Montreal was reduced. We were in a rather tight spot but were saved by the United States, which used its own domestic production to supply us. Now that country, whose generosity saved Montreal in 1967, is to be penalized; exports to the United States are to be cut off altogether.
This government's policies appear to be a deliberate attempt to destroy a necessary Canadian industry. In 1970 the federal government revoked, without prior consultation or notice, federal oil and gas land orders of 1961. For four years the petroleum industry was left without any basis for establishing the royalties and terms under which half of the exploratory permits of the Arctic operated, so most of the activity is confined to commitments made years ago. Now we have double royalty rates on gas and oil from the western provinces, and the Petroleum Administration Act will extend federal price control over natural gas as well as oil.
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In my own little corner of southwest Saskatchewan the oil field service people have withdrawn their services. The oil wells are operating at a production rate of 17 per cent capacity in my area. We used to have 800 people in my area directly employed in oil field operations, but that number is now down to 200 people, and many of them will not be able to hang on for much longer. Managements of those companies out there are quietly going along with this withdrawal of services by the oil field people, because management can be fined $1,000 a day per well if they shut down, and this withdrawal of services of their employees offers a very convenient way out.
When the Minister of Energy, Mines and Resources (Mr. Macdonald) was asked if he would take some initiative with the province of Saskatchewan in trying to resolve the situation he replied only that this was a helpful suggestion. Is it any wonder that the government's record over the past four years with this industry is cause for alarm? With all the tensions we have in Canada did the Minister of Finance have to add to them with his budget? Was this an attempt to divert attention from his own mismanagement? The same can be asked in respect of the minister in charge of the Canadian Wheat Board with his opening up of the Crowsnest Pass freight rates. This appears to be another red herring.
The last few years have seen changes in relation to the government and private sectors in Canada that none of us could have predicted. Who would have thought, even a few years ago, that we would hear a minister of the Crown suggest in this House that we nationalize the Canadian Pacific Railway, or hear another minister of the Crown within the last few months suggest that we nationalize our grain handling industry?
The western provinces have stated quite rightly that they need money from their depleting oil resources to build a broader base on which to support future generations. In my own province of Saskatchewan we only have to go back a few years to look at an agreement between the federal government and Great Britain concerning our greatest resource industry, our grain industry. We had just come through the 1930's when Saskatchewan suffered a shocking decrease in numbers of people. We lost over 250,000 people from the province of Saskatchewan. This alone should give some indication of the fears and social disillusionment created by difficulties there. Then World War II came along and, I suppose, softened us up for what was to come next.
The agreement I mentioned was known as the British Wheat Agreement and was entered into by the government of Canada. It was an undertaking on our behalf to supply 600 million bushels for four years, and was signed on July 24, 1946. To make a long story short, for the first two years the wheat was sold for $1.55 a bushel, No. 1 wheat at the Lakehead. During the third year the price was cut down 30 cents a bushel, to $1.25, and in the fourth year the basic price was down another 25 cents a bushel, to an even $1 a bushel. When this agreement was signed the world price of wheat was around $2 a bushel. You can imagine the immediate reaction of the western producers. To say it was one of surprise would be understating it. The British Minister of Food publicly stated:

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Canadian farmers were selling their 1946 wheat to the United Kingdom at nearly one dollar a bushel cheaper than a price they could get in the open market.
Over the total four-year life of this agreement the estimated loss to western grain producers was upward of $700 million. We still think it was hardly fair to place the burden of Canada's generosity wholly on our grain industry. So much for the government of Canada's intervention in respect of this great renewable resource!
We know that opportunities do not arrive on a platter, but that they have to be originated by creative and imaginative minds. The personal income tax reductions proposed in Bill C-49 are inadequate considering Canada's present economic condition, and I do not think they will spark much imagination and creativity.
Let me give some figures prepared by the Institute for Policy Analysis at the University of Toronto. They show the economic outlook for 1975 as indicating that the Canadian growth in real gross national product will be marginal, probably not greater than half our capabilities; that residential construction will fall by 16 per cent; that exports will fall by 3 per cent; that inflation will remain at over 10 per cent, while unemployment will remain near 7 per cent.
In the third quarter of 1974 personal income tax revenue rose by a startling 28 per cent with no real growth in the economy. Unemployment benefits paid in 1974 amounted to over $2 billion. In the last three years the Unemployment Insurance Commission has distributed $6 billion compared to $2 billion in the previous three years. The unemployment rate, however, has averaged 5.8 per cent in the- Turner years compared to 5.7 per cent in the previous three year period.
We are all familiar with the slogan "The land is strong", and Canada with its abundance of natural resources and primary products has been able to stand the stresses and strains better than almost any other country. Canada is one of the few developed nations which benefits from the worldwide boom in food and raw material prices. However, without such resources Canada would have had a disastrous negative real growth.
I doubt that Canada will be so fortunate in the years ahead. Already we see world commodity prices falling as demand and ability to pay lessen. We will survive all right, but the price we shall have to pay is unknown.
I believe the tax reduction provisions of this bill are inadequate. I hope they will be fully explained at the committee stage. I would like to know why the Minister of Finance refuses to give a substantial tax break to the Canadian public. It is clear from his own figures that he took an unnecessary $1 billion from the Canadian public in 1974 and, as I said before, that was a year when direct personal taxes jumped a startling 27.6 per cent. The cost of operating this government is out of line with our ability to pay.
The bill before us proposes to increase the deductions in respect of personal income tax for 1975 by a mere 3 per cent. I do not believe this is adequate. It is very small relief when we realize what inflation has done to real income. This deduction should be increased by a further 5 per cent, as a minimum, amounting to some $500 million

less in federal income tax. I can assure you that this amount quite properly should be left for the hard-pressed taxpayer.
I would like to see the government take some steps to assure the taxpayer that further burdens on him will be avoided. The government has tried to give the people of Canada the idea that they can live with inflation and adjust to it rather than fight it. This is just not sound or practical. Escalator arrangements are not the answer; they weaken the discipline needed to conduct business and government affairs prudently and efficiently.
Mr. ]ohn Gilbert (Broadview): Mr. Speaker, if the people of Canada knew on July 8 what they know today about the budget proposals of the Minister of Finance (Mr. Turner) we would now probably have a minority government, in all probability with the leader of the Conservative party as the Prime Minister of Canada.


Some hon. Members:: Hear, hear!


John Gilbert: May I say that having the leader of the Conservative party as Prime Minister would probably be far better than having the leader of the Liberal party as the Prime Minister of Canada at this time.
Back on July 8 we had all the signs of unemployment and high inflation, and on November 18 the Minister of Finance gave us his responses. Let me catalogue those responses of the Minister of Finance to high unemployment and inflation in Canada. First of all he says, as a very optimistic projection, that by 1975 we will have a real growth of 4 per cent. We must bear in mind that in 1973 we had a real growth of 7.1 per cent, and in 1974 a real growth between 4 per cent and 4] per cent. Now the pessimistic Minister of Finance is telling the people of Canada that the best they can expect in real growth is 4 per cent.
The second point is that the Minister of Finance said that in 1975 there will be 250,000 new jobs created in Canada. May I say that in 1974 we had 390,000 new jobs created.


An hon. Member:: Under the Liberals.


John Gilbert: What a downtrend we have from 390,000 in 1974 to 250,000 in 1975. May I remind the minister that that 250,000 includes people who have retired and people who have died. They call those new jobs, and it is included in that figure of 250,000. That is the response of the Minister of Finance to unemployment.
In regard to housing starts the minister, in a very eloquent way, said that it is hoped housing starts will be approximately 198,000 in 1975. May I remind the minister that in 1973 there were 269,000 starts, and in 1974 there were 220,000 starts. Now the minister says to the people of Canada that the best that we can hope for is 198,000 housing starts this year. Under the legislation that the government is attempting to pass in Bill C-46 the best that they can hope for is 202,000.
With regard to his response to inflation the minister says that we are striving to get below the two digit level
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next year. Can you imagine that, Mr. Speaker? Anything below 10 per cent, and the minister calls it a remarkable achievement for the government of Canada and his party. This is the response of the minister in his budget speech of November 18.
Then he says that he will give some income tax cuts to the upper income people and to the corporate elite, but he will give little or nothing to the low and moderate income people.


Mr. Nystrom:: No wonder Herb Gray quit.


John Gilbert: This is the minister's response to the income tax approach to inflation. It is abundantly clear that the government intends to rely exclusively on the private sector, and to increase the incentives to those people who operate the private sector. There is little or no government intervention in pricing and investment decisions of large corporations, or increased involvement in the resource and housing sectors. Let me give you two examples.
I am glad that the spokesman for the Conservative Party is here tonight to hear what I have to say with regard to Syncrude. All the studies have indicated that in the early 1980's there will be a serious oil shortage in Canada. What is the response? We have the Syncrude development, which is a consortium of large multinational corporations attempting to develop the Alberta tar-sands, and which have said to the government of Canada, after one of them dropped out because it was no longer financially attracted, that they need money and other concessions in order to operate, and the Minister of Finance has given them concessions which he has not given to the ordinary manufacturing industry in Canada.
He has said to the petroleum industry that the government will give tax deductions ranging from 30 per cent in 1974 to 28 per cent in 1^75, and to 25 per cent in 1976, and that the government will add to that 100 per cent write-off costs for exploration. This is the approach of the Minister of Finance, and he has also said that he will give back the first two year write-off with regard to any machinery, something which was to come to an end in 1974.
These are the three measures that the minister has given to Syncrude in the face of an oil shortage in 1980. I would have thought that a Minister of Finance with any foresight would have said that it is time that the government of Canada took an active part in the oil industry in Canada, and that the government would go it alone with the co-operation of the provinces across the country. I feel certain that if he had gone to Alberta and Ontario, and asked them to join in a joint venture with regard to the development of the Alberta oilsands, we would not have any fears, and we would not have to give the concessions to the oil companies which we are giving today. Further, we would have some assurance that in the years to come the price of oil to Canadians would be a proper and reasonable price. We have no assurance that that will happen today.
The Minister of Finance in his rare rhetorical form spoke to a group in Montreal last night, and he said that Arab oil money would be welcome in Canada for housing provided that it went to the private sector, and that it went to the provincial governments. May I remind the
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minister that yesterday the spokesmen for the provincial housing agencies across the country met at the Chateau Laurier and announced that they were gravely disappointed in the approach of the government to housing, and the lack of financial help from the government in regard to housing.
This is one of the most important sectors of the economy, and we have the Minister of Finance saying no to Arab oil money, unless it is debt money and unless it is going to the provinces and to the private sector. I agree with him that it should be debt money, but surely he should call in the provinces and say that he will deal directly with the Arab countries to obtain moneys to put into housing so that we can have proper and decent housing at reasonable cost. That is what he should have said last night. But no, he put a limitation on it. He said that it has to go to the private sector and that it has to go to the provincial governments. He should have said that the federal government will do all that is reasonable to stimulate the housing industry so that Canadians can have decent and proper housing at a reasonable cost as a basic human right. That is not what the minister did.
The personal income tax deductions in Bill C-49 are regressive in their impact and tend to provide greater benefits to the high income groups and widen the disparity with the lower income groups. Let me give you an example, Mr. Speaker. Under the tax reductions of the Minister of Finance a single individual taxpayer earning $6,000 a year will save $183 as a result of the tax reductions. A single taxpayer earning $30,000 will save $651. A married man with two children under 16 years of age with an income of $6,000 will have a saving of $214. A married man with two children under the age of 16 with an income of $30,000 will save $622. It is like giving a cake to the upper income groups and crumbs to the lower and moderate income groups. That is the substance of the personal income tax reductions of the Minister of Finance, and there is absolutely nothing for people whose income is so low that tax is not payable. Mr. Speaker, it is regressive, not progressive, and it fits into the biblical quotation that "to him who hath, more shall be added; and for him who hath not, even that which he hath shall be taken away." That is the approach of the Minister of Finance with regard to the income groups across the country.
What do the personal income tax reductions do to the purchasing power of the low and moderate income people? They do nothing to strengthen their purchasing power, nothing to increase their disposable income in the light of the two digit inflation that the Minister of Finance has announced.
The Minister of Indian Affairs and Northern Development (Mr. Buchanan) was here at the commencement of the debate and he asked me what I was going to say. I had not intended to talk about the Indians.


John Napier Turner: We are still waiting, John.


John Gilbert: Let me say, Mr. Speaker, that this budget does nothing for the Indian, Eskimo and Metis people in Canada.

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Mr. Allmand:: That is not fair.


John Gilbert: This afternoon we heard the hon. member for Windsor West (Mr. Gray), a former cabinet minister, setting forth in a very persuasive way his ideas in regard to the budget. He spoke of the elimination of the milk subsidy. May I remind members of the House that the milk and bread subsidies were put on prior to May 8 in response to the NDP demand at a time of minority government. What happened? The election took place, and a few months later the government took the subsidy off milk.


Some hon. Members:: Shame!


John Gilbert: The hon. member for Windsor West spoke about the absolute rip-off which took place with regard to sugar prices in Canada. He told us of the response of the government, namely, that if it continued the government would set up a national sugar purchasing board. The hon. member for Windsor West suggested angrily that what should have happened was that the Prices Review Board should have made an immediate study and exposed the sugar companies for what they are with regard to the rip-off to which they are subjecting Canadians.
I think that the Minister of Agriculture (Mr. Whelan) could have stepped in and taken measures to improve the sugar beet industry across the country so that next year we do not run into the same situation. The hon. member for Windsor West summed it all up by saying that one of the difficulties he saw was the failure of the government to implement the anti-profiteering bill. We in the NDP voted against the anti-profiteering bill on the basis that it was a sham and a delusion. After the response of the Minister of Finance on November 8 I think that we would have been a little better off supporting the anti-profiteering bill.


John Napier Turner: You should have. You ran out on that bill.


John Gilbert: I did not.


John Napier Turner: Your party ran out.


John Gilbert: We opposed that bill because it was a sham and a delusion. I thought that the Minister of Finance and his colleagues would have treated it as such, and would not have given it the teeth and the strength that are necessary to enforce such an anti-profiteering bill. The more I hear the Minister of Finance, the more I realize that he would not have given the strength that would have been required to enforce that bill.


John Napier Turner: I have always said nice things about you, John.


John Gilbert: Now I come to the measures that the Minister of Finance, that charming man with the rhetoric of Cicero, announced with regard to housing. This is what he said in his budget speech:
I have already referred to the short-term prospects for construction of new housing. The projected weakness in this sector of our economy troubles me a good deal. It threatens to reduce employment, raise production costs and increase housing prices and rents. Even more important, a reduction in the supply of new
housing could lead to a lower standard of accommodation than Canadians deserve.
I could not agree more with him that the budget proposals that he has announced will do the things that he feared most. When he talks about 200,000 starts in 1975, and we had 269,000 in 1973 and 220,000 in 1974, it certainly gives strength to his argument. In the response that the minister has given, he said he will reduce the sales tax on building and construction materials from 12 per cent to 5 per cent. The Minister of State for Urban Affairs (Mr. Danson) and the Minister of Consumer and Corporate Affairs (Mr. Ouellet) were supposed to set up a monitoring committee to make sure that the difference in the sales tax would be passed on to the purchasers. It is a very safe wager that up to tonight no monitoring committee has been set in place for the protection of purchasers with regard to the reduction of the sales tax.
When I think of the $500 grant to first time purchasers of new houses, I find that it certainly does not apply to people who live in cities such as Toronto and Vancouver, because of the high cost of houses there and the high limits they impose with regard to that $500 grant.
When I think of the withdrawal of the earlier government request to lending institutions to limit high mortgage loans on medium and low priced housing, I find that this will enhance the profitability of the companies but do nothing to lower prices, interest rates, or rents.
One of the main items in the budget was the Registered Home Ownership Savings Plan. He said that this would provide a new source of mortgage funds. I would ask him what was the purpose of the mortgage financing mechanism bill? I thought that that bill was passed, with the support of the Conservative Party, for the purpose of setting up mortgage investment companies to attract more capital to the mortgage market. It has done nothing of that nature, and in fact when that bill was being passed I happened to be speaking to the former president of CMHC and he told me privately that the mortgage financing mechanism bill would have little or no effect. That is precisely what has happened. Now we have the Registered Home Ownership Savings Plan. In that plan there is no commitment that the institutions will direct their moneys into housing. That is a very important direction. All it does is to provide a tax haven or a shelter for the upper income groups to enjoy a handsome tax advantage. It does nothing to help the lower and moderate income people.
The other matter is that the deductibility of capital cost allowances on apartment buildings against all sources of income will attract a significant amount of private equity capital to the construction of new rental housing. That is the reason that the Minister of Finance gave with regard to this measure. It would be fair to wager that this would do nothing to reduce rents.
At the beginning of the debate this evening we heard the hon. member for York Centre (Mr. Kaplan) make two points. One was that it was an advantage to have rent controls, and he recounted the experience of people in Quebec according to whom, if rent controls were taken off, there would be a 45 per cent increase in rents. He said that the government of Ontario also should impose rent controls. The NDP in British Columbia has imposed rent

January 30, 1975

controls as a temporary measure to prevent gouging by landlords.
The other point that the hon. member for York Centre made was a criticism of the government with regard to the non-deductibility of land costs. Madam Speaker, the government has not prevented the deductibility of land costs until such time as the land has been sold. The hon. member for York Centre thinks this is a serious problem with regard to housing in Ontario.
Let me remind the hon. member that in Toronto and other large cities urban land is in the control of five or six developers in each city. He need not take my word for it. In one of its reports CMHC indicated that the large tracts of land surrounding urban centres are in the hands of large developers. What the hon. member for York Centre wants is a deductibility with regard to land costs.
The Minister of Finance knows that companies like Cadillac Construction paid little or no taxes on their developments in the past. It is one of the loopholes that the minister has closed. It is about time they were denied this deductibility of land costs until such time as the land is sold. That is the one thing for which I will give the minister credit.
There are only two significant changes that I can see in the budget; one is the deductibility of $1,000 on private pensions, and the other the deductibility of $1,000 for bank or mortgage interest or dividends. This is a very insignificant step, but the minister gave such a large chunk of deductions to the upper income groups that he would not have been able to sleep at night had he not thrown a crumb to the lower an moderate income families.
The Minister of Finance is what is known as a consensus minister. He attempts to get the consensus of people across the country, and then package legislation to make it attractive to them. What he does, however, is make it attractive to the rich and the upper class, and just slightly attractive to the poor and moderate income people. To allow deductibility of $1,000 on private pensions and $1,000 for bank or bond interest is like giving a handshake to someone who is starving.
It is time we put our house in order, Madam Speaker, and put people first rather than corporations. It is time we had a tax system which implemented some of the proposals made by Mr. Carter, and it is time we had a distribution of income that did not create the disparities that now exist. If we had that as a philosophy then this would be a country in which we could be proud to live, and proud to work-


An hon. Member:: Are you not?


John Gilbert: -rather than a country which I am proud to live in, but where I am disgusted and disappointed with the "divide and con" approach of the Liberal government.


Eldon Mattison Woolliams: Madam Speaker, may I ask a question?


The Acting Speaker (Mrs. Morin):: Order, please. Will the hon. member allow a question?


John Gilbert: Yes, Madam Speaker.
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Eldon Mattison Woolliams: Why is the automobile industry now asking for a corporate cut and being joined by the unions? The unions are asking for a corporate cut in taxes at this time. I should like to hear what the hon. member has to say about that.


John Gilbert: Madam Speaker, I thank the hon. member for his question. I did not know the trade unions were asking the Minister of Finance for a corporate tax cut in order to stimulate production. If that is so, I am surprised. I would have thought the trade unions would be asking the Minister of Industry, Trade and Commerce (Mr. Gillespie) to bring automobile prices in Canada down to parity with prices in the United States. I can appreciate the corporations going after the minister for corporate tax cuts. Why not? He is their friend.
The answer to the hon. member is that what we need to stimulate the automobile industry in Canada is parity of prices with the United States so that Canadians can afford to buy cars. The leader of our party in this House has demonstrated many times the wide differences between the price of motor cars in Canada and in the United States. But what has this government done, Madam Speaker? It has not done a damn thing.


John Napier Turner: You have a hung jury on that one.


Hon. Alvin Hamilton (Qu'Appelle-Moose Mountain):: Madam Speaker, tonight I want to say how much I appreciate the fact that there are several ministers in the House.
On this particular bill I want to discuss those items that deal witn the non-deductibility of provincial taxes and royalties, not primarily on the question that a buck is a buck, which is the fight over a dollar between the two levels of government, but because this particular part of the bill attacks what we call the federal system, and it has put that in great danger. My remarks are not going to be for the purpose of exacerbating this war between the provinces and the federal government, but rather to see if I cannot put forward one or two proposals which point out to governments on both sides of this eyeball to eyeball confrontation that there is light at the end of the tunnel.
We must seek to save our traditional way of operating in the federal system, namely, by consultation, and at the same time achieve for the provinces and the federal government some of what they want in the material sense and in the economic sense.
I do not think I would be accused of being partisan if I were to say that this part of the bill is bad. Not only is it bad in hindsight or looking to the future, it is bad in the constitutional sense, and in the sense that it attacks the traditional Canadian way of consulting our opponents. Further, it is bad for the country in an economic sense.
We are endangering three or four of our most productive industries which have watched the two levels of governments engaged in a war since September, 1973. This war gets hotter and hotter as it forces the companies to sit and wait until they are wiped out, one after the other. This affects not only the owners of the companies but also the workers. Men in my constituency who have been out of work for two weeks are appealing to the two levels of

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government to come together and resolve their differences. I am not talking just about the oil industry but about all resource industries. The mining industry, which was a bulwark in the past, is being openly threatened by the failure of the two levels of government to settle their differences.
To put my remarks into perspective, I know that since World War II federal administrations in Canada have appealed to the provinces at least to tax resource industries a little bit harder. The figures are available which show the level at which the resource industries have been taxed in comparison with other industries.
In the tax reforms of 1970 the federal government announced it was going to withdraw slowly from the corporation tax to a new level, to give the provinces more room to take more taxes out of the resource industries. Generally speaking, the provinces did not do anything. However, in 1973-74 with rising metal prices throughout the world as well as the rising oil prices, the provinces suddenly leaped into action and gave us a tax level of 45 to 55 per cent. That would be a good round figure. That meant a tremendous increase, tripling or quadrupling the tax liability of the resource industries in our provinces.
In Ontario, for example, the mining tax was boosted to 40 per cent. In April, 1974, and again on November 18 in this budget we are now dealing with, the federal government struck back by saying these provincial taxes or royalties are not going to be deductible under this bill, and that we are going back to the 50 per cent rate.
It does not require a great deal of mathematical ability to understand that if a province has a 40 or 45 per cent tax rate and the federal government adds on another 50 per cent tax rate, you have a tax liability in almost every province in Canada today with basic resource industries of 80 per cent to over 100 per cent. It is all very well for us to sit back and say it is an interesting fight between the two levels of government, but we are talking about a large proportion of human beings dependant on the work provided by these plants.
Second, we as a nation are dependant on the great body of wealth produced by the giant resource industries of forestry, mining, petroleum and so on.
This fight I am talking about has been going on since September, 1973. We have this eyeball to eyeball confrontation. I suggest it is our responsibility, regardless of political persuasion, to realize that the whole country is slowly becoming aware that this debate between the two levels of government over tax dollars from the resource industry is completely irrational.
Every Canadian instinctively understands that we have waited for many, many decades for the world to need our resources. That moment of time has come. It gives us great leverage in deciding, in our priorities, how much we want to develop here in Canada and how much we want to export. Either way, the opportunity is there. People keep asking, is there an answer to this problem?
If you examine the thousands of young Canadians who would like to build homes, and look at their problem of financing a home, and if you examine the few thousand

young Canadians who would like to own a farm and realize the tremendous amount of capital you need to own a farm in Canada, the same reasoning applies to industry. A few years ago $10,000, $12,000, $14,000 or $15,000 was the type of capital debt you looked at to buy a home. The amount of capital debt you looked at to own a farm was $25,000, $35,000 or $50,000. The same proportion applied to industry. However, at this time $35,000 in Ottawa or Toronto will only buy a very small home. If you have to borrow money for 30 years at 12 per cent in addition to the $35,000, you are going to require $124,000 in interest payments on top of the $35,000. That is the same problem faced by industry today. There you have the situation.
The answer we are looking for can be put forward in the sense of looking at the problem from the point of view of a person trying to buy a home, a person trying to buy a farm, or trying to get into the capital intensive resource industries. The first answer the economist gives is that we have to change our tax laws to give such tremendous incentives to the savings component of our structure that we all save more money, and this will give us the great capital amount that we need to do all these expensive things and reduce interest rates.
There is another way of getting capital, and I put this proposal to the Minister of Finance (Mr. Turner). That is velocity, in the movement of capital. If there were a way of using this same capital two or three times in the same period we ordinarily use, we could, without increasing the capital amount, get the same effect. My thoughts go to this question of velocity of capital.
I propose to the minister that he seriously consider going to the provinces and industries and suggesting he would like to sit down and put a proposal before them, namely, have them look at the figures he could put down before them. If there were agreement, they could work out a proposal so that there would be more money for both. This has to be a contract arrangement, and it has to be that in the first instance to make it clear and easy to understand for new capital programs or new capital intensive industries.
As an example, if the investor would agree to no dividends, if the two levels of government would agree to no taxes, even a $2 billion oil sands proposal after three years of construction could be paid for in five or six years at rates as high as 10 per cent. To put it so anyone can understand it, if we try to finance a $2 billion tar sands plant at the present time under present techniques of taxation, 10 per cent of the cost would be in the form of operating costs. Capital and interest charges would be approximately 65 per cent for a total of 75 per cent, leaving only 25 per cent for the province which owns the resource, the federal government and the companies to share.
If this same $2 billion proposition were operated on the basis of removing the front end loading charges, the operating costs would be the same at 10 per cent. Capital and interest costs, instead of being 65 per cent, would be reduced to 15 per cent, for a total of 25 per cent. There would be 75 per cent to split between the provinces, the federal government and the investors.
This concept will work in any type of capital intensive industry, but there has to be a contractual arrangement
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for the period of the contract. In other words, every one has to be a specific deal. If you are talking about the great need to have oil sands plants for the national security of this country and you need one every two years, you could get this rotating capital. You could get the pay-outs in five years. The effect would be that capital which is reluctant to tie itself into these long pay-back periods would come in at lower interest rates, and everyone would benefit.
I have been asked what would be the rate of return you could give to industry if they delayed their returns during the period of construction and the period of pay-out? The answer is that no matter how you twist or turn, using a division suggested by the Minister of Energy, Mines and Resources (Mr. Macdonald) that the net shares should be split after the pay-out with 50 per cent to the owners, the province, 30 per cent to the equity, and 20 per cent to the federal government, on the equity side of the equation they would receive from 12 to 17 per cent on their money, which surely is good enough with a fast pay-out.
The provincial government would, of course, get the largest amount, much more than it would get under the present limited share-out. The federal government would get much more; it would profit by the rapid acceleration of capital.
The same principle could be applied to any capital intensive industry in the resource field. With a little thought it could be applied to the owning of homes and farms.
What is necessary? It is necessary for the minister to realize that the eyeball to eyeball situation in which he now finds himself should be resolved. This would place him in a position of leadership in the realm of ideas, which would enable him to get rid of many of his problems. The same reasoning could be applied in the case of the Minister of Agriculture (Mr. Whelan), or the minister in charge of housing. These are issues which require a new attitude to be taken toward the mythology we worship today in the form of taxation.
If we can put forward proposals which are economically viable and morally sound, give rise to this acceleration of capital and lead to lower interest rates, we can extract ourselves from the political impasse, from the disgraceful eyeball-to-eyeball confrontation, and return to the old-fashioned Canadian way of consulting with people and getting a deal worked out. The Prime Minister (Mr. Trudeau) would appreciate this.
There is another aspect which I have not mentioned so far. I have talked about new investment on a contractual basis. We still have oil fields, gas fields, mines in operation whose debts are partially paid. I would think the minister might more easily get out of his difficulties if he went to the provinces and said, "Here is the level of deductibility with respect to royalties and provincial taxes that we would allow; we said bluntly in the political heat of the last election that you cannot get away with raising your taxes three or fourfold-that we will not allow those items as being deductible." But, you know, to make a system such as ours work, the provinces must be given some room in which to live.
Income Tax
If the minister were to put on the table before the mining provinces, or the lumber provinces, or the oil provinces, a figure which would be considered reasonable they could start to work down toward that level. This would constitute a formula for existing mines and existing resource industries, and if, as a result of the system, the provinces got vastly more money, if the federal government got more money, and if the investors got a sufficient return from their investments-I have put forward a figure between 12 and 17 per cent over a 30-year period-it should be enough to get things moving. Above all, costs would be reduced, the ability to pay taxes would be there, and Canada would be a stronger country economically. Even more important, we would be keeping our federal system working in the way it should work.
When I consider the difficulties of the people in the United States where Congress is building up toward mortal warfare between the executive branch and the legislative branch, so busy with the confrontation which is developing down there under the new president that they have no time in which to deal with urgent matters requiring their attention, I would hate to see an attitude of that kind become part of our way of life here.
I would think the minister could prove the quality of his statesmanship by saying, "All right, I see the point. There is some merit in your ideas. I am willing to put these proposals down for qualitative examination. I am willing to check whether industry is prepared to play ball on such a deal. I am willing to go to the provinces and put the figures before them." Then, when the first ministers meet in April it would be a matter of ratifying the homework done by the Minister of Finance (Mr. Turner), the Minister of Energy, Mines and Resources (Mr. Macdonald), and whoever else wants to be brought in on it.
I would think that all Canadians, regardless of which party they support, would be proud of us if we were to put forward a positive, constructive proposal. And if it were proved that we could make more money, no one could hate us for it. Any time one makes a proposal which sounds as if it is the answer to all the questions one feels like a little bit of a kook. But if the idea is sound, and if the minister does make the effort to approach the provinces, and if it does work, ones does not mind being considered an oddball.
With regard to the other proposal I have made, it is surely in the interest of responsible democratic government that before this April meeting of first ministers takes place something should be on the table. A feeling-out operation should go on. It would be wrong politically to force this bill through with this non-deductibility clause in it because, if this were done, ministers would go to that meeting with their hands bloody from taking up the big stick.
I believe there would be no great difficulty if the minister could persuade his colleagues, who, I am sure, are as anxious as we are to get out of this confrontation situation, to divide this bill so that we could debate and vote on, and see proclaimed all the clauses with the exception of those involving deductibility. I think Canada is worth an effort to reach agreement by the technique of consultation rather than confrontation. We did manage to arrive at some sort of compromise in connection with the
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Income Tax
petroleum administration bill, a compromise which I believe will turn out to be for the good of everyone.
Could we not consider the suggestion I am putting forward, look at the figures, and try it on for size? I think there is enough credit in it for all the people here-to have come through a touchy situation with a constructive proposal. I, for one, would be glad to give the minister full credit for this type of leadership, and I am sure the country would do the same.
As a party I am sure we would have some criticism to make of the rest of the bill; we would put forward our points of view and, maybe, even vote against parts of it. But this clause dealing with non-deductibility simply challenges the traditional concept of our constitution that resources belong to the provinces. I would do anything I could to persuade a government of any political stripe to take a hard look before adopting such an approach. If the minister would consider this matter over the weekend and see some merit in my proposal from an economic point of view, based on his own hypothetical cash flows, if he would try it out over the telephone or by letter, the hearts and minds of many thousands of Canadians who are dependant on the resource industries would begin to beat more calmly tonight.
I know it is hard for members here to visualize what it is like to live in a mountain town in B.C., and to realize that your mine has to cease operation at the end of the year because it cannot meet a taxation level greater than 100 per cent. Your home, and all the things you have worked for over the last 10 years, will go down the drain because the government cannot wait any longer. Although there are only a few thousand people in this particular situation, they are being driven into the ground and put out of work. Industries which have produced $5 billion to $8 billion worth of products a year, on which the strength of this nation depends, are being destroyed.
I am making an economic plea here, Madam Speaker, but the answer is a political one. Can two levels of politicians forget their eyeball to eyeball confrontation and do something that will give each level of government a fair share so that everyone will benefit? That is not a new idea; it has been done before. I think it would make this parliament stand out in the minds of the people if we did it once again.


Mr. Elmer M. MacKay (Central Nova):: Madam Speaker, one aspect of tax legislation and reform that needs more attention and research is that relating to capital gains. It has been recently emphasized that our stock markets have become less and less sound and attractive as a place for Canadians to assist with their savings in the development of this country by investing in corporations seeking to do just that. As a result, this important source of equity financing is falling off.
Lack of confidence in the stock market generally is creating hardships in other ways. Pension plans and mutual funds are being put under pressure increasingly by periodic declines in the market value of securities which they hold, and our tax policies regarding capital

gains are in some ways, I suggest to the Minister of Finance (Mr. Turner), responsible for that.
It is not only the large investors who are getting burned, large investors, for example, like the Canada Development Corporation which lost approximately $40 million on paper on their acquisition of shares of Texas Gulf a comparatively short time ago, but small ones as well.
It is interesting to look at some of the theories of contemporary economists with respect to protecting investors in the stock market. Mr. Milton Freedman, professor of economics at the University of Chicago, suggested-a provocative proposition-that there should be built into all forms of financing, such as bonds, bank deposits, loans, mortgages, wages and taxes, an inflation accelerator or decelerator which would automatically compensate all givers and receivers of moneys, goods and services. Mr. Freedman claims that the most badly needed instrument in the investment community is what he calls a purchasing power security that would offer fixed interest rates plus some compensation for inflation.
Mr. Freedman certainly created a controversy with his theory, and he had plenty of reaction when he claimed categorically that the greatest "bucket shops" in the world have been in Washington and other national capitals where funds are raised through government bonds sold to the public. These governments, Freedman said, sell bonds under the guise of patriotism to help the little man to save, and then tax the investment income, which in purchasing terms has been more than eaten up by the inflation that governments themselves were largely responsible for creating.
The solution to this lamentable state of affairs is, I suggest, in some logical way, to control, if at all possible, the mushrooming inflation with which we are faced today. I am pleased to see that the Minister of Finance is moving toward a partial recognition of this fact in some of the adjustments that he has made recently in the budget. But I urge him to look more closely at capital gains tax theories.
Capital gains tax must be more flexible. Canadians must be encouraged to invest in their own country through the stock market, and it must be recognized that if the Canadian citizen is using his or her stock portfolio on a systematic basis for retirement and the eduction of children this person should be taxed on a different basis, when realizing any profits on the sale of his or her securities, and treated differently than a professional stock trader or speculator.
I suggest that if a Canadian Citizen wants to invest in a Canadian corporation, by definition, and he holds the stock for sufficient time to indicate that it is not a speculation pure and simple-a period of, say, three to five years-such person should be taxed less than a man who buys and sells stock within a few weeks or months for obviously speculative purposes.
There would have to be limits placed on the amount involved, and the type of investments designated, which could be ascertained in the same way as guidelines are set up under the Foreign Investment Review Act to control the influence of outside entrepreneurs. This is where we need flexibility.
January 30, 1975

Capital gains tax, to this point, is used by the government like a blunt instrument, even to the point where, initially, family farms were going to be taxed. It is not enough to discourage undue foreign encroachments in our economy through devices like the Foreign Investment Review Act unless we have a positive side to the policy that encourages Canadian investment risk capital to come forward, and I suggest the government is not using sufficient imagination in this regard.
If I might say a word on tax policy generally and as to when a Canadian should pay income tax, I cannot see the point in imposing an income tax on those Canadians who are, by definition, earning less money than would place them in the category loosely described as below the poverty line. This mythical poverty line is becoming harder and harder to define, but one current definition, I understand, is that it is half of the income of the average family in a given region. When assessing or reassessing what is the appropriate tax threshold or deduction exemption limit, I think the minister should take greater account of what is the real poverty line. It makes no sense, I suggest, to tax people who, by definition, are living in poverty.
Returning for a moment to capital gains, to show how small investors have been losing money on the stock market in terms of actual profit-and I emphasize the words "actual profit"-let me quote an example supplied to me by a very distinguished gentleman in Ottawa, Mr. John Y. Rowe, who, on occasion, has made his views known to the Minister of Finance and his officials. Mr. Rowe makes the point that the erosion in the purchasing power of the Canadian dollar has seriously diminished the attraction of common stock as an investment which, of course, is the same point that Mr. Milton Freedman made.
Mr. Rowe points out that 100 shares of Cominco purchased on June 27, 1967, and sold in August, 1973, would indicate a net capital gain of $272.81, if one assumes that the Canadian dollar has had a constant value. However, it is well known and officially stated by the government that the dollar does not have a constant value, as we all know, Madam Speaker. In this regard we could refer to prices and price indices for exact information. As Mr. Rowe points out, during this period between 1967 and 1973 the purchasing power of the Canadian dollar fell from 87 cents to 65 cents; so the apparent capital gain of $272.81 for the 100 shares of Cominco is reduced to an actual net loss of $536.14.
Throughout history human nature has exhibited, I suggest, that people have a real desire to improve their lot in life by diligent work and savings; otherwise there is no incentive to develop ambition or the work ethic. But the power to tax is also the power to destroy. A capital gains tax without some sort of compensating factor such as indexing for inflation or considerations as I outlined earlier, really amounts to confiscation. The government must take into account the serious decline in the average Canadian's ambition to put money aside and to invest in the future of his country.
Tax policies must, of necessity, have flexibility. They are subject to mistakes and the need for changes from time to time. A fairly recent story in the Canadian Press illustrates, for example, that the Prime Minister (Mr. Tru-
Income Tax
deau) was wrong in claiming the support of an authoritative 1967 taxation study for his government's contested plan to make oil companies pay income tax on royalties paid to provincial treasuries. His office acknowledged that the Prime Minister was mistaken in saying that this tax move, denounced as illegal by the provinces, had been recommended in the exhaustive royal commission report on taxation made by the late Kenneth Carter.
In addition, the Carter report does not support the current federal argument that royalty money should be taxable because the provincial oil levies have become taxes based on profits rather than true royalties on the volume of production. The Carter report, I understand, says that money paid to provinces either as royalties or taxes should be exempt from federal taxation.
I want to compliment the Minister of Finance sincerely on his adroitness in respect of some of the many interesting things he has done since assuming his ministry three years ago.


An hon. Member:: Name one.


Elmer MacIntosh MacKay: I should not really give him too much credit, but I will ask the minister tonight to consider seriously having a look at a more subtle and equitable way of utilizing capital gains taxation and, I suggest, to take under serious consideration the provocative suggestions made by the hon. member for Qu'Appelle-Moose Mountain (Mr. Hamilton) who just preceded me.
I hope the minister will not be afraid to depart from conventional tax theory when he sees from time to time that his policies are not living up to expectations. I hope, for the sake of all of us, that the minister will continue to explore every possible way to compromise with his colleagues in the provinces, for the good of all Canada.


Mr. Cecil Smith (Churchill):: Madam Speaker, it is certainly no secret that the cost of living in the northern part of Canada, and especially in northern Manitoba, is at least 25 per cent to 30 per cent higher than the average cost of living in the rest of Canada. The federal and provincial governments are certainly aware of this as they pay civil servants who serve in the north a northern living allowance. This is paid to practically every civil servant north of the 53rd parallel.
The tax refund mentioned in the budget of November 18 is, in my estimation, only a very small drop in the bucket, because up in our remote area with the high cost of living the small refund anyone will receive will not even come close to meeting or helping to cut down that cost of living.
A tax incentive in the neighbourhood of 8 per cent to 10 per cent for all those people who work in northern Manitoba and the northern part of Canada generally is what is required to help offset the high cost of living. It would also encourage people to remain in the north. Not too many years ago a person could move into the north, work in mining or in construction and make himself a good stake, but that is not the case today. A miner or construction worker can go practically anywhere in Canada and make as much money as he could working in
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the north. What we must do is encourage people to stay in the north, making it their home.
We have a high unemployment rate in Canada, running in the neighbourhood of 6.5 per cent. I believe this figure is based on pockets of unemployment, and I am still not convinced that this unemployment rate is a true figure. For instance, I do not know whether it includes all those who are on welfare.
We should be giving the people who are unemployed an opportunity to get off welfare and unemployment, by providing them with an incentive to move up to those areas where jobs are now not being filled. We should encourage those people now on unemployment insurance to be contributors to the tax base of this country.
There is not much hope that the available jobs in northern Manitoba will be filled in the near future without an incentive to the people to move there. Many people would rather stay where they are and draw unemployment insurance. Perhaps the unemployment insurance benefits are too handsome or too attractive to a lot of people. If we provided a tax incentive I am sure we would have no problem filling those jobs so necessary to harvest our natural resources, and really these are the main items in the economy of the country.
As long as the government continues to take the stand that make work projects in high unemployment areas are the solution to the unemployment problem I am afraid we will be faced with higher and higher unemployment insurance and welfare payments. The government now has an incentive program to encourage people to come to Canada from other countries. For example, immigrants can come to Canada, work for two years and get an exemption from taxes. The taxes are collected during the two year period, but when the immigrants return to their own countries they can make application for a refund of those taxes. Why can we not encourage people to move from high unemployment areas to those areas where there are jobs by giving them some sort of an incentive like this?
We must, of course, consider the people who already live in these areas. We cannot bring in people from high unemployment areas and super impose them on the work force of areas in the north. For this reason we must also give the tax incentive to the people already living there. We must make it easier for these people to move to these new jobs. A few people are now moving to northern Canada, but they face untold hardships in getting relocation grants to move their furniture.
If we are really serious about relieving the unemployment situation we should encourage the Department of Manpower and Immigration to speed up the processing of applications by people to move to these areas where jobs exist.
In closing I should just like to emphasize the suggestion that the minister give serious consideration to the provision of some sort of tax incentive for people moving to northern Manitoba in particular, and northern Canada in general, where there is an abundance of jobs at this time. These are not menial jobs but jobs that pay high salaries. We must have some sort of incentive as I do not believe we are living in an age in which we can force people to
[Mr. Smith (Churchill).)
take jobs. There are jobs available today for those who want to work, but there is no bag of oats being held out to interest these people.


Mr. Benno Friesen (Surrey-White Hock):: Madam Speaker, I welcome this opportunity to speak on Bill C-49. I realize that we are dealing with concrete facts and figures, and whenever we talk about money matters it seems as though we were talking about facts. But unless we relate these facts and figures to people we are missing the point of the budget, because ultimately taxes mean people.
The proposals that are put before us in this bill, which is a spin-off from the budget, are based on the assumption that they will help to curb rising inflation as well as rising unemployment. The Minister of Finance (Mr. Turner) said in the House just the other day-and I heard the same figures echoed tonight-that since he has taken that particular portfolio government policies have created about one million new jobs. Perhaps he has the statistics to corroborate that figure, but perhaps they have encouraged moonlighting rather than created new jobs because whenever the government introduces new tax legislation which increases the tax burdens, ultimately it is the taxpayer who has to pay those taxes, and pretty soon he will have to moonlight in order to pay the extra taxes. For many this means hardship.
It is a rather cute psychological trick to increase taxes periodically, and then when you decrease them it feels pretty good. This seems to be the year when we are to feel a little better because the minister has included a decrease in taxes in his budget. The fact is that no government can actually create jobs. It can design make-work programs that increase government deficits, which increase taxes, which in turn place a greater burden on each taxpayer. I saw a recent report according to which the government made a $100,000 grant to a company in order that the company might design a new device for a particular industry. The company gladly took that $100,000, knowing in advance that technology was not sufficiently advanced for the device to be designed.
I suppose that government statistics include the number of companies that have created jobs. Yet we realize that no jobs have actually been created. It would be interesting to know whether, when the government quotes these figures, it can also produce figures that show the level of productivity increase as the result of new jobs that have been created.
I wonder whether the government has been compiling statistics that would tell us how much the productivity of the nation has increased as the result of the one million new jobs that have been created. Actually, jobs are created when the government frees the economy so that industry and agricultural enterprises can increase their productivity. That is when jobs are created. You cannot do it simply by printing more money. You have to free existing moneys, and you do that by encouraging savings, making it worthwhile to save money. The minister has taken a small step in that direction.
January 30, 1975

I note that in the May 6 budget, reintroduced this fall, the minister has proposed that a $1,000 interest income exemption from tax be reintroduced in 1974 and expanded in 1975 to include Canadian dividend income. I think that that is an encouraging inclusion, but as so often happens with government measures, it does not go far enough. What we need is a better break on savings accounts so that people will be encouraged to save more money which would be freed to be invested in our economy. This would create greater independence for their retirement years.
It is a fact that Canada Pension Plan benefits are just not enough for our senior citizens, and there has to be some way of providing an additional income for them. Our nation was built and became strong on the concept that to save money was good, and that we should be independent even in our retirement years. But over the past generation this concept has been eroded. Now we need to get back to that concept of saving and trying to be independent in our retirement years.
I wish to ask the minister whether he would consider increasing the amount of savings that would provide interest income so that senior citizens could become more independent, and so that the younger generation would be encouraged to save money so that they might become more independent in their retirement years?
There is a corollary to this, and that is the matter of government annuity programs. A number of my constituents have written me regarding these programs. The first problem with them is that they are compulsory. I wonder about the morality of any program that makes it compulsory for a government employee to invest in an annuity program which brings in a poor investment.
I suspect that there are many members here today who would not willingly invest in a program that pays only about 3 per cent in dividends. Yet there are many government employees who are forced, because of a government policy, to invest in an annuity program that pays only a 3 per cent or 4 per cent dividend. I request that the minister tie the dividend payments to an escalator clause so that those who, by government policy, have to invest in an annuity program, will find their dividends increasing in relation with increases due to inflation.
In closing I would simply like to encourage the minister to continue to break the dependency syndrome and help our citizens to depend on themselves by saving money for their retirement years. I ask him to do this by providing a better tax break and more funds for investment in our economy by freeing this kind of money.
May I call it ten o'clock?



PROCEEDINGS ON ADJOURNMENT MOTION

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

Elmer MacIntosh MacKay: Madam Speaker, I welcome the opportunity of further debate with the Minister of Transport (Mr. Marchand) over the way my routine interest in the Desjardins report has been heightened by his evasiveness. I will try to be objective and fair this evening in outlining what I consider to be a legitimate grievance.
Time does not permit discussion of the report itself, but I am of the opinion that it tends to show that the investigation was a facade. The same ground was covered by Mr. Marler in a report on the same subject shortly before this. Apparently the Minister of Transport did not agree with the findings of Mr. Marler and had the same ground covered again.
However, to lay a brief background, members may recall that on October 2 last I asked the minister when he was going to make the Desjardins report public, and whether changes proposed by the Laurentian Pilotage Authority varying the basis upon which an individual could hold a pilot's certificate were in the interests of safety and efficiency. He replied that he was going to study it, that it was on his desk, and he would make it public when the study was complete. He made no reference to the safety or efficiency aspect of my question at all.
On October 8 I asked a series of questions about policy regarding pilotage, and why Mr. Desjardins' terms of reference to carry on his investigation dispensed with some customary rules of evidence, and was not to be by public hearings. I also asked whether the constitutional aspect of the proposed changes in the LPA regulations was being taken into account.
Did I get answers to my questions? I certainly did not. The minister said we were discussing security not language. While I was puzzling over this, to my amazement he continued and discussed language, the thing he said we were not discussing. He went on to say that he did not know Mr. Desjardins personally, but that he was not a fanatic who wanted to impose the French language on everyone.
With respect, Madam Speaker, I could not have cared less whether he knew Mr. Desjardins or not. I had no reason to suspect that the man was a fanatic, any more than he may have been a circus acrobat or a guru. I protested that I had not even mentioned language, but the minister rambled on and again did not deal with the topics that I raised.
On October 17 I put the specific question to the minister whether, pursuant to section 14(7) of the Pilotage Act, he was prepared to make a finding on the Desjardins report now. The minister replied, and I quote him: "As you know we received the Desjardins report and issued a public release." How was I to know that, Madam Speaker, when it later turned out, by the minister's own admission, that I had not received the Desjardins report, nor had any release been issued? Later, after questioning whether in fact there had been anything released, the minister's

January 30, 1975
Adjournment Debate
answer was no. He said that he thought he had approved it, whatever it was, and then he said, "I know I did something, but I do not know exactly what it was." Madam Speaker, as a member of parliament what am I to make of an answer like that?
Now X come to the part I resent most. In point of fact the minister had signed the order implementing the main recommendations or, I should say, the raison d'etre of the Desjardins report, and he did so a week earlier on October 10. The operative paragraph said:
I, Jean Marchand, pursuant to Section 14, subsection 7 of the Pilotage Act, approve the proposed amendment to the Pilotage Authority Regulations.
Why did the minister not tell me this? Had he already forgotten?
On October 23 the minister had an opportunity to elaborate, if he wished, on the same matter, when he and I were discussing it again in this House. However, he gave no indication that he had signed the order on October 10 approving the main recommendations of the Desjardins report.
On November 17 I had to resort to using a question of privilege to obtain what now seemed to be a very intriguing and elusive report, whereas in the beginning it seemed to be a matter of routine. Even in reply to my question of privilege the minister gave one of his usual all purpose answers, saying in the same breath that "as a government we have to decide what to do about the report" and then "this has now been decided." That was confusing. It was obviously decided before the order was signed over a month prior to November 17.
What it really amounts to is this: why did the minister not frankly say to me, a member he knows is interested in the subject, that he had signed the order implementing the recommendations of that report concerning the LPA regulations? He could have told me that two days after I first raised the matter in the adjournment debate.
Why the evasion? Why the obfuscation? What is so special about this report? Is the minister ashamed of the way it was put together? On the basis of what I have learned about it, perhaps he should be, but I will discuss that later.
If this is an example of how a member of parliament must pursue an interest in a certain topic under the minister's jurisdiction in order to get a true picture, one can readily see why newspaper editiorials across the country are calling for the minister's resignation.
I would like to inform the minister that the basis of the story which offended him was obtained, for the record, by a Toronto reporter who telephoned me when I was sitting in a dentist's chair in Halifax, and I think the minister knows that it was carried in this one paper. It was not a press release. I had no part in its circulation, nor is it the type of phraseology that I would have used. In any event I feel that the minister has been less than frank. I would like to know how frank he has been with the shipping interests which are concerned about this major change in regulations. When did they know that he had signed it on October 10?
I regret this turn of events, and I have considerable sympathy for the great burdens faced by the Minister of
Transport. It is a demanding portfolio, but as a late president of the United States used to say, "If you can't stand the heat, get out of the kitchen". Perhaps it is time for the Minister of Transport, considering circumstances across the country, to consider doing just that.


Mr. Cliff Mclsaac (Parliamentary Secretary to Minister of Transport):: Madam Speaker, in all fairness I think the best way to summarize this whole discussion is to say there has been a large measure of honest confusion and misunderstanding concerning the whole matter. Some people are talking press release or public statement, others are talking Desjardins report, and others are speaking about amendment to the Laurentian Pilotage Authority Regulations.
On Tuesday, January 28, the Minister of Transport (Mr. Marchand) took exception to an article which appeared in the Toronto Sun dated January 7. I appreciate the explanation that the hon. member for Central Nova (Mr. MacKay) has just given. That article alleged that the minister had lied.
If one looks at quotations from the October 17 Transport Committee hearings as reported in the Toronto Sun, it leads the reader to believe that the minister was talking about the approval of the Desjardins report. Upon a careful reading of the entire transcript of the Transport Committee proceedings it is obvious that he was referring to a press release on the report, and nothing else.
To set the record straight I would like to inform the House of the chronological order of events. The hon. member for Central Nova put some questions to the minister on October 8 which were answered, and which are now on public record. On October 10 the minister signed an order approving the proposed amendment, referring it to the Laurentian Pilotage Authority. This must take place according to the regulations. The board of directors of the Laurentian Pilotage Authority by resolution finalized the amendment on October 31 and forwarded it for approval by the Governor in Council.
The minister signed the amendment to the regulations on November 15, sending it to the Privy Council, and the amendment was approved on November 19, 1974.
It was on December 14, I believe, that the hon. member received a copy of the Desjardins report, and I tabled a copy in the House on December 18.
I hope this will clear up what I believe to be a good deal of honest confusion about the phraseology and the words used here.


TRANSPORT-REQUEST FOR OUTLINE OF NEW POLICY
Andrew Hogan: Madam Speaker, as I mentioned in one of my questions to the Minister of Transport (Mr. Marchand) on January 22, we in the maritime provinces have been waiting since 1867 for an equitable transportation policy-in fact, ever since the promise of the Inter-Colonial Railway.
The minister's answer in reply to my question was to the effect that surely I was aware of the special deal reputedly given us by the Maritime Freight Rates Act and

January 30, 1975

the Atlantic Assistance Freight Rates Act. Indeed, I am aware of them, Madam Speaker.
It was because I knew of the existence of these extant, relatively impotent forms of help-whatever good intention there was in establishing them-that I sympathize with the minister when he said the government's transportation policy was "in a mess."
The fact of the matter is, that these have been prime examples of a federal government that uses "ad hoc and bandaid arrangements" in dealing with the economic problems of the Atlantic region. It is little wonder that some of us from that region have tended toward cynicism as we have seen ourselves being almost constantly treated as a colonial appendage in this federation.
Recently, Madam Speaker, La Belle Province of Quebec seems to be joining Ontario in the "We'll control the heavy industry game" attitude. In a power grab that is vintage central Canadian attitude to the Atlantic region, that province is now trying to acquire a new steel plant for its Gros Cacouna port on the St. Lawrence. If they are successful it could mean the economic destruction of a Nova Scotia community with some 130,000 people in its environs. My advice to the Minister of Regional Economic Expansion (Mr. Jamieson) is to remind them that we in the Atlantic region are fed up with our satellite status vis-a-vis Central Canada.
We, of course, Madam Speaker, are not claiming that the federal government has done nothing for the Atlantic region. We know that it has made a special, even if belated effort, since the middle of the 1960s with such institutions as the Atlantic Development Board, the Area Development Agency, and now DREE. The present Minister of Regional Economic Expansion has succeeded in decentralizing that bureaucracy, and we recognize that he is trying hard to right some of the past inequities.
I must remind the Minister of Transport though, and through him all the cabinet ministers from Ontario and Quebec, that this country and the federal government of it, were one of the last in the non-Communist world to attack systematically the problems of regional disparity through a special agency or department of government. Sad to say, the results are there for us to see, symbolized in the 10.7 per cent of unemployment present in the Atlantic region, as the December figures of Statistics Canada revealed, and they are growing worse.
We still have in our region relatively low per capita and family income, and lower utilization rates of all our human beings as shown by the official labour force participation rates. We had, and still have, an anaemic industrial and manufacturing sector which is supposed to be helped with capital grants and loans from the benign hand of DREE. On the other side, the heavy hand of the Department of Transport allows the railroads to increase freight rates by 25 per cent on many goods moving out of the Atlantic region, and to do away with our special least cost load arrangements which are vital to the small business firms of the Atlantic region.
The Minister of Transport (Mr. Marchand) claims he was helpless to stop such increases. By admitting his powerlessness against the Canadian Transport Commis-
Adjournment Debate
sion he confirms that the tail is wagging the dog in the Canadian transportation mess, which is euphemistically referred to as a policy.
In the short time at my disposal let me give but one example of how the increase in freight rates affects a small firm in my constituency. The firm is a fish processing one called H. Hopkins Limited. It operates plants in my home town of Glace Bay, which is better known for its coal mines, in Morien, which is a pretty fishing village that is known as one of the oldest coal mining sites in North America, and Louisbourg, of fortress fame, so well known in Canadian history.
Hopkins Limited employs about 100 people, not much by standards outside of the maritimes, but very helpful in an area that is accustomed to trying to survive with unemployment often at the 15 per cent level. The firm processes 400,000 pounds of fish annually and ships it to Toronto and Montreal. The new freight rate increases will mean that consumers in Montreal and Toronto will be faced with an estimated increase of five or six cents a pound. No one knows for sure what the market effect will be, but since, in the economist's jargon, there is considered now to be a relatively high elasticity of demand for fish in these markets, it is possible that 25 to 40 jobs can disappear in my constituency, which already has a very high rate of unemployment.
This is just one small example that can be buttressed by many other small businessmen in the Atlantic region. One would think that such problems would have been seriously checked into during the freeze on freight rates and before a decision was made to take off the freeze.
The freight rate freeze of some 18 months' duration was intended to buy time in order for the Department of Transport to come up with a new transportation policy. So far we have the increases in the freight rates and nothing but a promise of a policy. The minister refused even to outline the substance of the policy which he said in Halifax on January 16 would serve as "a weapon to achieve economic development in the Atlantic region"-.
While we waited for the weapon, which will probably produce yet another blank shot in the struggle against regional disparity, we tried to get the minister to continue the freeze. The minister, however, refused to roll back the January 1 increase or stop the proposed March 1 increase. The Federal Court ruling this week against the CTC now makes a reality of this 25 per cent increase. I submit that it is abundantly clear that the court, in ruling that the Canadian Transport Commission only had the right to approve or reject a request for a rail rate increase, is in fact destroying the usefulness of the CTC.
I think the Minister of Transport has to admit that it surely was an unprecedented step for the federal government to associate itself with the railway companies in their appeal to the court to disallow a decision of the CTC, a quasi-judicial tribunal, established and appointed by that same government.
To this arrogant and uncalled for intervention by the government must be added the ping pong game-


The Acting Speaker (Mrs. Morin):: Order, please. I regret to interrupt the hon. member but the time allotted to him has expired.

January 30, 1975
Adjournment Debate


Joseph Clifford McIsaac: Madam Speaker, I do not wish to take a lot of time reviewing the issue of the freight rate freeze which was lifted and which, as the hon. member well knows, applied to only 22 per cent of the goods moved. It was not really solving a number of the problems which the hon. member, as one who represents the maritimes, is concerned about. In addition the case is still before the CTC. I believe it is coming up for review tomorrow.
I welcome the opportunity to speak on the approach we are taking to draft a new transportation policy. As indicated in the most recent Speech from the Throne, transportation must be treated as an instrument of national, political, social and economic purpose. It must be used to overcome Canada's problems of distance and communication, and help to ensure the attainment of federal objectives such as national unity and national equalization of opportunity from one end of Canada to the other.
A cornerstone of that policy, and one which has been in place for some time, is the involvement of the provinces themselves in meaningful consultation in an attempt to reach a common understanding of regional problems. I can assure the hon. member from Cape Breton that the Atlantic provinces are fully involved in this process. Through the federal-provincial committee on Atlantic transportation we have succeeded in adding the maritime region to move goods by rail and truck within the maritimes, and to tap some of the central Canada markets by selectively subsidizing rates to the tune of more than $70 million in the past three years. This, in all fairness, has to be recognized as constituting valuable help in this respect.
In western Canada, through the auspices of a similar committee, we have put in place or will be putting in place several hundreds of millions of dollars worth of rail, highway, port and airport facilities in order to improve communications and realize the objective of bringing about greater opportunities within the various regions. In addition we are analyzing a whole range of western transportation questions some of which are not peculiar to the west alone. So there is a great deal of study and work taking place.
Officials in the Ministry of Transport, in consultation with other federal departments and agencies, provincial governments and the private sector will certainly, I believe, be able to develop the kind of transportation policy for which we are all looking. They will be in a position to assess the capacity which will be required and the steps which will have to be taken in future years. It is obvious, and I am sure the hon. member will agree, that the answers are difficult to come by-


The Acting Speaker (Mrs. Morin):: Order.


AIR TRANSPORT-STOL-REQUEST FOR STATEMENT OF COST
Mr. Ron Huntington (Capilano):: Madam Speaker, a review of statements made by the Minister of Transport (Mr. Marchand) to this House on the subject of STOL yields a credibility gap which should not be allowed to exist. It also appears that a very effective technique is
[The Acting Speaker (Mrs. Morin).]
being used by the government to hide the real cost of the STOL project. I take this opportunity to explain my concerns, seek credible explanation, and request a more open, co-ordinated and honest presentation of the facts to the Canadian people.
I refer the minister first of all to statements he made in rebuttal of the claim by the President of Canadian Pacific Airlines that overall STOL costs would be $158 million. As reported in Hansard on October 3, 1974, at page 69, the minister had this to say in reply to a question by my hon. friend from Central Nova (Mr. MacKay):
I think the hon. member wants to know whether Mr. Sinclair was right in saying that the STOL program cost $135 million. Mr. Sinclair is wrong. Is the hon. member satisfied? As I said previously, the program cost $25 million. That is the correct figure, not the one suggested by Mr. Sinclair. I don't know why he said that. Of course, that $25 million figure does not cover everything carried in the budgets of all the different departments concerned.
At that point, an hon. member asked "What is the total?" and another hon. member commented "You don't know." The minister then went on to say:
I do know, but I am not going to mention it for obvious reasons. I am being perfectly honest. I am telling members the plain truth but I am not going to reveal all the details. I repeat, the figure of $25 million which I mentioned previously is the right one. If Mr. Sinclair contends the STOL program has cost $135 million let him prove what he says. I think he is wrong.
Then, on October 23, in the special debate on estimates as reported at page 670, again in response to a question put to him by my hon. friend from Central Nova, the minister dealt with this matter. My hon. friend is reported as saying:
I would like to stop now and ask the minister to tell us briefly by how much Mr. Sinclair's estimate is in error.
Hansard continues:


Jean Marchand: $125 million.


Elmer MacIntosh MacKay: The minister is then saying that there is absolutely no relevance or accuracy in that estimate of $158 million?
I now refer the minister's parliamentary secretary and the members of this crowded chamber to item 84 of the Auditor General's report under date March 31, 1973. This report was published some 19 months prior to the statements I have just read into the record. The first paragraph of the report indicates some four different departments of government have participated in the project. The third paragraph reads as follows:
The readily identifiable cost to the Crown for the over-all program is therefore about $80 million, but this is not apparent in the Public Accounts because the several major elements are not brought together.
The fourth paragraph of the report reads:
In addition, the government has, by letter to the aircraft development contractor dated October 16, 1972, stated its intention to procure the contractor's products and services for its own purposes and to generate other business for the contractor to a value of $38.5 million during the next five years.
So the readily identifiable cost is $80 million, plus a further commitment in 1972 of $38.5 million, for a total of $118.5 million, and this a year before the Sinclair statement that it was $158 million. It is my conclusion that the
January 30, 1975

Minister of Transport has misled this House and the people of Canada as to the cost of STOL.
What is the true cost of STOL? What is the budget for STOL? Why has this program been fractured over at least four departments of government? How many departments of government are actually involved in the STOL program? Why are the major elements not brought together and presented openly and honestly to the Canadian people and to this parliament? What is the ratio of government servants to civilians who are using this service? Why spend so much money on STOL, which uses over twice the fuel per passenger mile as do modern trains in an era when the Minister of Finance (Mr. Turner) has launched his fantastic taxation program aimed at conserving energy? No other aspect of government has a greater impact on the lifestyle of people than transportation.
I do not have to elaborate upon the importance of this ministry to the Canadian people and to Canadian geography. If I may be forgiven for plagiarism, this important ministry is in a mess. And as in all organizations experiencing trouble and messes, it starts at the top.
I humbly plead, Madam Speaker, for the sake of the Canadian dream, for the sake of keeping this country on the tracks, that the Minister of Transport step aside. It is time for a new, vital and organized type of leadership in this important ministry.


Joseph Clifford McIsaac: Madam Speaker, I am not going to reply to all the allegations made by the hon. member for Capilano (Mr. Huntington), but I should like to refer to some of the words used. I believe there is some confusion over the terminology that has been used in this respect. On October 23 last the Minister of Transport (Mr. Marchand) was asked by the hon. member for Central Nova (Mr. MacKay) whether the alleged statement of Mr. Sinclair, chairman of the CPR, that the total cost of the STOL demonstration project between Ottawa and Montreal was $158 million, and not $25 million as the government contended was correct. The minister answered that the statement attributed to Mr. Sinclair exaggerated the figure by
Adjournment Debate
$125 million. The hon. member will note that I am talking about the STOL demonstration project between Ottawa and Montreal.
The minister again answered questions by the hon. member for Brandon-Souris (Mr. Dinsdale) on the STOL demonstration project, in which he stated that capital expenditures on the STOL demonstration project were $15.5 million as budgeted, and that the total operating costs over the period of the demonstration project were projected to be approximately $9.5 million. Therefore the total cost was expected to be about $25 million.
The hon. member for Capilano, in taking figures out of the Auditor General's report, is correct in saying that the report points out that the readily identifiable STOL cost and commitments by the Crown at that date were $118.5 million. What he failed to point out in using those figures is that the $118.5 million covers all of the costs to that date. However, the only cost in the report attributed to transportation is $15.5 million for the Ottawa-Montreal demonstration project. Most of the other expenditures relate to various other departments, such as the cost of developing the engine, and so on.
Even though inflationary pressures may well have increased the projected cost of $25 million to some extent, the fact is that the figure is not very far off. It is certainly a little far fetched to suggest that these costs could even remotely be related to the estimate of Mr. Sinclair or the figures found in the Auditor General's report.
I am also aware of the very successful twin Otter service between Victoria and Vancouver, and that Air West has taken up options on two Dash Seven aircraft. This is one indication of the fact that the demonstration project has been successful in helping to develop this program, and an indication that this is a good service in the sense that it will assist to return to over-all investment of the government in the project.


The Acting Speaker (Mrs. Morin):: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 11 o'clock a.m.
Motion agreed to and the House adjourned at 10.29 p.m.
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Friday, January 31, 1975