1975-07-03

[Stage Direction]
The House resumed, from Wednesday, July 2, consideration of Bill C-8, to establish a national petroleum company, as reported (with amendments) from the Standing Committee on National Resources and Public Works, and motion No. 4 (Mr. Stevens).
Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, at the adjournment yesterday I was discussing the amendment to Bill C-8, which, of course, is to establish a national petroleum company, Petro-Can. The amendment is to clause 22, which briefly provides that the government may advance money out of the Consolidated Revenue Fund by way of loans for the financing of Petro-Can, such advance to be free of interest. If I may put the amendment on the record, it is to amend clause 22 in the following way:
-by striking out line 34 at page 15 and substituting therefor the following:
"determine,
and any amount so advanced by way of loan on purchase shall bear interest at a rate that is not less than the rate approved by the Minister of Finance for that quarter of the year in which such amount is advanced as the standard rate of interest for loans to Crown corporations that are repayable within a period not exceeding twelve months."
Having heard the hon. member for York-Simcoe (Mr. Stevens) move the amendment last night, I then listened to the minister, who of course opposed the amendment. He took the position that Petro-Can should have a favoured and privileged position in that money should be advanced to it out of the Consolidated Revenue Fund-which is taxpayers' money-without interest. As I said last night, I am going to speak in favour of the hon. member's amendment.
This bill seeks to advance to Petro-Can $1.5 billion of taxpayers' money by way of loan free of interest. I was rather shocked last night to hear the minister, in opposing the amendment, say that private corporations do not pay interest on money advanced on the purchase of shares. Although this is correct, money that is advanced to any private corporation, in the oil business or in any other business, must bear the going rate of interest. The minister ought to know that in many cases money raised by the sale of shares is but a small portion of the capital required by a company for the purpose of exploration and development, in this business or any other.
The private sector raises money by dividends, bonds and debentures. On that money, the going market rate of interest must be paid. In many cases today, as I am sure the minister, who should have some knowledge of business, knows, companies in the oil business are forced to pay a higher rate of interest because they are competing with other endeavours in which the risk is less. Therefore, my first question is: Why the discrimination in this case? Why should this company be put in a favoured position and get capital from the people of Canada without payment of any interest at all? This company will be a charge upon the taxpayers of Canada.
It was my understanding from listening to what the minister said in committee that Petro-Can was being set up as a Crown corporation for two reasons, and I think it is essential that we examine those two reasons in view of the fact that we are advancing such a large sum of money. The minister's first reason for setting up this company, outside of his liking for statism, is to encourage exploration and development. His second reason is to assure that the price of gasoline to the consumers of Canada is kept down.
I guess a third reason which he gave is that the resource industry is foreign-owned and controlled. I think there is a mistake in the thinking of a lot of people in this regard. When a corporation drills a well, whether a gas well or an oil well, it drills on leased land, land that is owned by the Crown and that is subject to regulations and rules contained in the leases. So, in fact, none of these private or international companies ever really control the resources of Canada in the sense of owning them. They may be able to make agreements with the Crown, but as we have seen over the last two years both the federal government and some provincial governments have torn up contracts existing between the Crown and the business community and have started all over again. Their security of tenure is not very great as far as these leases are concerned.
One must ask himself immediately what effect this interest-free money in the amount of $1.5 billion will have on the objectives of the minister. Let us deal with the first objective, to encourage and stimulate exploration and development. It would appear now that the great new fields to be found in Canada are in the north and Petro-Can, a taxpayers' liability, will be asked to compete against the private sector which is forced to pay high rates of interest, partly due to the policies of this government. Hence the long-term picture in my opinion will be one of discouragement to the private sector from the continuation of exploration and development in Canada because of the unfair and unreasonable cost of risk capital to them in competing against a company that does not have to pay any interest on this amount of $1.5 billion. The uncertainty created and the disadvantages imposed on the private

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sector by this and other legislation will, in the very near future, destroy Canada's favourable position of being the only nation in the western world self-sufficient in petroleum and natural gas. Incidentally, I might say that this self-sufficiency has occurred in less than 30 years because at one time we imported about 95 per cent to 96 per cent of our oil and other energy sources.
It is beyond me to imagine how the government could develop such negative thinking. This government, like many other governments, is blinded by statism and control and will do anything to devise any excuse to create new Crown corporation empires, many of which we have seen and were dealt with by the hon. member for York-Simcoe. Many of these Crown corporations are inefficient, expensive and far from satisfactory. I want to emphasize that we are not dealing with ordinary commerce. We are not dealing with that kind of business, but rather we are dealing with a high-risk capital business. I said last night that Imperial Oil had drilled 133 dry holes before they struck oil which led to the discovery of the fields in Alberta and other parts of western Canada, which in turn gave us self-sufficiency.
We are dealing with high-risk capital and we are putting the taxpayers' money into this high-risk business. Apparently, we are to have Petro-Can. I should like to see the idea abandoned, and I do not know why the government is going ahead with it at this time of restraint. The government has said it is going to save $1 billion, and I suggest it could start off by saving $1.5 billion right away if it scrapped this idea. I make that suggestion because the government does not need this company. There are other vehicles. The minister has said the government is putting $300 million into Syncrude. Panarctic has done a pretty good job and we could take advantage of it.


Some hon. Members:: Hear, hear!


Eldon Mattison Woolliams: I am glad that some of my friends in the Liberal party agree with me. I know that some of them disagree with some of their ministers in caucus, because these things leak out once in a while. It is beyond me to imagine how the majority of members over there can think in this way.
The second objective of Petro-Can, to be financed by taxpayers' money without interest, is to keep down the price of gasoline. That is a very interesting objective, to keep down the price of gasoline. The facts are, of course, that because of a tax policy of this government, and because we are dealing with risk capital which likely will be handled inefficiently, Petro-Can will manage to discourage the private sector from development and exploration. Once we lose our self-sufficiency and our security of supply, then gasoline will increase in price. The fact is that the government can and should be named right now the "gasoline buck-boys". It will not be very long before the cost of gasoline at the pumps or at the retail level will be $1 per gallon, and in some areas even higher, perhaps $1.50 a gallon. I sincerely suggest that gasoline will be as high as $1 a gallon throughout Canada by September or October of this year.
We have a situation now in which this government is asking us to advance $1.5 billion interest-free to a Crown corporation, and the same government has just come along

with a 10-cent a gallon tax on gasoline. This government is very kind to the consumer. It has also increased the price of crude oil by $1.50 a barrel. Last week I discussed the situation with some experts in Calgary, and I think it is fair to suggest that Calgary is the capital of the oil industry in Canada. These experts in the oil industry say they will be lucky, if, out of the $1.50 increase per barrel, they get 22 cents. They suggest the rest will go in taxes to the provincial treasuries or the federal treasury.
Taking into consideration this economic climate, together with the money to be advanced putting Petro-Can in a more favourable position, certainly exploration and development will not be encouraged. Without continued exploration and development, we will experience a short oil supply and up will go the price of gas, because then we must rely on the OPEC countries for our imports into Canada or their exports, whichever way you want it. Once we get into that position we will be in the same position as other countries, such as the United States, which is now spending about $30 billion a year, an amount greater than our entire budget, for the importation of crude petroleum and other forms of energy.
If one of the objectives of this company is to bring down the price of gas, that objective certainly is covered by a cloud of hypocrisy because the price of gas is on the rise now, not only as a result of other government economic programs but because of its program to discourage exploration and development. Let me make that point once again, because of its importance in terms of this amendment, As a result of giving Petro-Can $1.5 billion interest free and free of any charge, enabling it to compete with the private sector, which has to pay up to 9 per cent, 10 per cent, 11 per cent or 12 per cent for its money, you will discourage exploration and development. By discouraging exploration and development, you place energy of this nature in short supply and up goes the price.
Not only does this company get this money tax free, the Minister of Indian Affairs and Northern Development (Mr. Buchanan) has refused to produce regulations governing the leasing of land. I ask why this is the case. Spokesmen for this government say they do not want to draft regulations for this department because there are pools of oil and gas to be found in the north and the government wants the private sector to go in and start drilling. I suppose when the private sector finds a favoured field, the government will then pass these regulations, giving this interest-free company a favoured position in order that it can compete against the private sector.
Hon. members may say that sounds good because this will redound to the benefit of the taxpayers. There may be something to be said for that argument. From an academic point of view I can see some people buying that argument. What this will do is drive out the private sector. As a result, other fields will not be found and we will be back in short supply and the price of gasoline will go up again to every consumer in Canada. That is what we are talking about and it does not take much of an economist to figure that out, because the law of supply and demand always works, even when there are controls.
This government's policy is one of watch and wait. The private sector has the know-how and the expertise necessary to discover and find these fields of oil and gas. Once
July 3, 1975

they have done so, then the regulations will be shaped and trimmed to favour Petro-Can with all its interest-free money. Can anyone in his right mind believe that international companies will continue to find oil and gas, only to discover that Petro-Can will take over the fields?
One of the provinces in western Canada tried that and that is one reason Alberta today has about 86 per cent of the known and proved resources in this country. In the 1940's the drilling rigs left Saskatchewan because of a similar policy on the part of that government. It said to the industry that it should find the oil and gas and, if it did, it would then belong to the province. People just do not operate a business on that basis. Even if you tried this on a very small business you would run into the same difficulty. If you are selling hot dogs on the street, and as soon as you start making a profit somebody takes over the business you will find you just cannot do business on that basis. Can anybody in his right mind really believe that the international companies will continue to find oil for Canada on this basis?
This all adds up to one thing. If we are to remain self-sufficient, then the same rules that apply to the private sector must apply to Petro-Can. Why should Petro-Can be given a favoured position? How can the private sector operate in that kind of a climate? In my experience they can only do so on one basis, and this may be the strongest part of my argument. Because of the efficiency of the oil industry, even dealing in risk capital, the industry will out manoeuvre Petro-Can at every stage.
I am unequivocally opposed to Petro-Can, but if we are going to have it thrust on us by this government with the support of those socialists in the NDP, then let us have rules and regulations so that everybody is operating under the same rules, playing the same game. Imagine if you had a baseball league and you gave the Red Sox a different set of rules under which they played than you gave the other teams. This is in effect what you are asking. I suggest that you would soon have the other teams dropping out of the league, and that is what you are going to get from the private sector.
I have spoken longer than I intended to, but those are some of the reasons I support the amendment. I ask the minister and the government to reconsider their position about advancing this money without interest because other Crown corporations are asked to pay interest, except the CBC which borrows money when it has no assets with which to ever repay it.


Mr. Arnold Malone (Battle River):: Mr. Speaker, this bill, when first conceived, of course was a bad bill. It is less evil now than it was in its original form. The fact of the matter, however, is that it is still considered to be wrong. It was conceptually wrong right from the outset. I think previous speakers have touched on the fact that the most serious damage that is being done by the introduction of the Petro-Can concept is the fact that the government is now entering into the petroleum game, but has decided not to play by the same rules as other companies in the private sector. It is a rather serious situation into which the government is entering, a situation wherein the government now enters the petroleum industry with spe-
Petro-Canada
cial and separate rules for itself. It has special rules in terms of the financial structure, in terms of its right to be able to drill for oil and in terms of its right to access to research related to the petroleum industry. All that of course leads to the essential problem which was enunciated with the concept of Petro-Can.
The problem is that we now have a Crown corporation entering into the field with a separate set of regulations for itself. This will cause a degree of trepidation in the private sector. It will certainly stir up and haunt the private people. It will tend to prevent any efficient search for supplies. There can be no genuine search for supplies in this country so long as the government is taking part in this kind of activity. This causes a degree of nervousness in the private sector. That is what is happening. So long as we have a nervous private sector, there will be no increase in supplies in this country. Anyone who analyzes what Petro-Can will do soon comes to the obvious conclusion that it is to be a company quite apart from our traditional companies. If it is to have a separate status there will be a ripple of fear throughout the whole industry. It is that ripple of fear that will damage this country. My argument will be that this will offset any gain that would ever come from the $l'/2 billion being spent by this government.
We might take a look at some of the arguments advanced in yesterday's debate on the amendments. As recorded at page 7200 of Hansard, we note that the hon. member for Nanaimo-Cowichan-The Islands (Mr. Douglas) quoted the petroleum industry as saying:
If we don't get more money we are going to slow down our exploration programs.
Then, he went on to say that the oil companies have been shifting their drilling rigs south of the border. Some members in the Progressive Conservative Party said, of course, that this will only happen if we destroy the profit motive because they will go where the profit is. Somehow the hon. member for Nanaimo-Cowichan-The Islands set the stage to assume that so long as these rigs went where there is a profit, there is something evil or harmful associated with it. What he failed to say was that to the south we have the United States which has no Crown corporations. They are telling us they want to be self-sufficient in energy by the mid-1980's. The fact of the matter is that that country uses far more energy than we do, possibly for no other reason than they have ten times the population we have. The private sector in the United States is moving. Advances are being made and they are talking about self-sufficiency.
Members opposite and members of the NDP have been trying to tell us what is happening in this search for supply. We might take a look at some of the illogical conclusions that have been drawn. I will again quote the same member. He said:
The real tragedy is that a national petroleum company was not set up 10 or 12 years ago.
Then, he continues with this statement:
How can the Canadian people participate in an industry 90 per cent of which is today controlled by foreign oil companies.
Well, if there is a fear about foreign ownership, that does not necessarily lead to the conclusion that therefore there ought to be a government-owned corporation. There
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is no logic in the statement that because you do not like foreign ownership you should nationalize everything. You would adopt the same kind of logic if you were to say that because a duck can swim, then Donald is a good swimmer and therefore he is a duck. This kind of argument simply does not fit. Members of the government say there are some problems; they identify the problems and then come up with some kind of an answer without a connection between the stated problem and the projected solution. That is the kind of illogical thinking we have in this situation.
The Minister of Energy, Mines and Resources (Mr. Macdonald) has told us in the House and the committee that he has been bombarded with questions that he has answered over and over again. If we take a look at some of the statements the minister has made, I think we can establish the fact that he simply does not answer the questions. On page 7,025 of Hansard, in response to the hon. member for York-Simcoe (Mr. Stevens), the Minister of Energy, Mines and Resources is recorded as stating:
... the hon. gentleman's amendment and speech are one of the areas where the technique in committee was to raise a question which would be responded to again and again, and still at the end the hon. member would claim that I had not replied to his question.
That was never the position of members of the opposition. We knew there were replies to the questions we were asking. We also know that the minister, in responding, never gave an answer. There is a difference between uttering words and giving logical reasons.
I might cite another example which adopts itself directly to the same situation. Again quoting from Hansard, the minister said that he wanted the members of Petro-Can to play by the same rules as the other companies in the private sector. I challenge the minister to tell us in this House the name of one private oil company that has received $1.5 billion of interest-free money. If Petro-Can is to play by the same rules, and that is his statement, then let him come forward and tell us the name of any oil company which has received interest-free money. Let him also share with us the name of any company that would be privileged to drill on land under the conditions explained by the Minister of Indian Affairs and Northern Development (Mr. Buchanan) when he said that Petro-Can would have privileges and rights in respect of northern lands. Let him also explain the situation in respect of research whereby the government can collect all the results of the research conducted by the private companies for its drilling program.
If the minister cannot guarantee that the rules of the game are to be the same, then obviously there will be fear in the private sector and the whole object of establishing a national petroleum company, namely to increase supplies, will have the opposite result. A national petroleum company would not necessarily resolve the problems nor put right the evils which have been identified in the industry. There is no doubt that there is a need to increase the supply. The fact of the matter is that this can be documented fairly substantially. It is well known that exploration activities have lagged by 20 per cent in 1974. The production of Canadian crude was down 6 per cent in 1974 and dropped again another 11 per cent in 1975. On January 1 of 1974, there were 334 drilling rigs in Canada. That number has now been reduced to 235, a decline of 100 rigs

or 31 per cent. At the same time, Canada is no longer self-sufficient in oil. That, of course, is partly the premise upon which the government builds its argument for the establishment of a national petroleum company. However, what the government has never considered is the reason for the reduction. The petroleum industry has had a cash flow reduction of $500 million since 1974 due to taxes and royalties, making it impossible for them to raise the required money.
[DOT] (U30)
I think it is important to note the fact that Canada was the only country in the world with a petroleum potential to have shown a decline in activity in 1974 which demonstrates that the problem has not been only in the private sector. If we take a look at all the countries in the world with a petroleum potential we find that Canada was the only one to slow down and the only one to have had the intervention of government policies to such an extent that the private sector simply could not conclude whether the government was suffering from schizophrenia or paranoia. There was no way in which companies in the private sector could make predictions and long-term judgments, and that is necessary. People in the industry tell us that they can work on a narrow margin, but they have to be able to make long-term judgments. When you have rapid changes in policy, long-term judgments cannot be made. It is as a result of the impossibility of making long-term judgments that drilling rigs in the country were reduced in number and consequently exploration activities were reduced. So, the government caused the problem and now is trying to establish a motive for solving it in its own way.
I am sure we all agree that that is a very unfair and unrealistic way to run the country. If we are to establish a national petroleum company, then it is essential that the company play by the same rules as the private sector. One thing that we know for sure is that the private sector cannot obtain money for nothing. That simply does not happen. All that the amendment of the hon. member for York-Simcoe attempts to do is to suggest to the government that it must be accountable for its money, and that if it puts $1.5 billion into some project, the Canadian people should obtain some guarantee in return. If there is no guarantee in return, it is logical to request an accountability for that money. The amendment also provides that if there is some kind of return on the money, then the government should play by the same rules as the private sector.
Perhaps I could quote again the Minister of Energy, Mines and Resources (Mr. Macdonald) as recorded at page 7,205 of Hansard:
The basic response is that we think that a national petroleum corporation should be financed like every other petroleum corporation with the substantial amount of funds being put forward in risk form by way of capital, that it should be put forward in equity form rather than loan form-
I challenge the minister to tell us of any company that has such money straight from the sky. Private companies are not in the same position as the government which, in the last 40 months, printed 40 per cent more money than it had before. Private companies cannot do that. The money they have is money they earned, which has a value
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attached to it, or money they borrowed. To be able to put out into the corporation $1.5 billion interest free simply means, at the rate at which money is going today, other companies are paying between 10 per cent and 12 per cent more. That gives the Crown corporation an option to operate at that much of a loss and still appear as if it were breaking even.
Let us take a look at some other Crown corporations in Canada, some to which the Minister of Energy, Mines and Resources has chosen to refer from time to time. Let us consider some uranium companies. We know that a number of them are inefficient. For example, if we go back to 1964 we note that at that time five different companies operated in the uranium business. They were Eldorado Nuclear, Canadian Faraday, Stanrock, Denison, and Rio Algom. What happened from 1964 to 1967? All those companies showed some profit, but from that time on two companies in the private sector began to show substantial losses, perhaps because they were less efficient in their operations, and by 1971 two of the companies disappeared from the market. However, two others continued to show profit. They remained in the market manufacturing and distributing uranium. As to Eldorado Nuclear, which is a Crown corporation, it obtained $1.5 million as a gift and it also received a loan of $53 million from the federal government. As a result of different rules which the government applies to Crown corporations, we have a company which is operating inefficiently and being supported by the taxpayers of this country because it has no motive to seek to be efficient.
The amendment which is before us puts forward a minimum criterion. It puts a value on the money given to the corporation. It also suggests that the government must live up to a certain standard in financing and if it cannot do that, then it should not be competing with the private sector. If the corporation cannot compete, that means it cannot operate efficiently. The money which the government suggests should be granted to the corporation at no interest amounts to an unprecedented gift from a government to a Crown corporation. Again, I challenge the minister to tell us of any other Crown corporation which has received such money interest free. Certainly, that is not the case of the Central Mortgage and Housing Corporation which has to pay a rate of interest on the money received, nor is it the case of the Farm Credit Corporation, which also has to pay a rate of interest on the money it receives. If the same practice were to be adopted with regard to all Crown corporations, CNR and Air Canada included, many of those companies would operate at what would appear to be a profit.
But the fact of the matter is that there would not be a profit at all because it will not be paying for the value of a dollar. If it is not paying for that, that puts it into a special status, and in part that is what is wrong with Petro-Can. If a separate status is set up and then Petro-Can is put into the same game as the private sector, that simply disrupts and makes a nervous private sector, which in the long run means that the over-all result will be a slowing down of our search for supply, rather than speeding it up, which is the basic objective upon which this bill was put forward. It cannot do otherwise, and so I think that there
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are some explanations owing, and some real answers must be given by the minister. With regard to some of the responses the minister has made in committee and here in the House by saying that he has answered questions over and over again, the truth of the matter is that he has responded over and over again, but he has not given an answer because an answer has some connection with the question asked or proposes some solution which meets it.
As an example one could look at page 7205 of Hansard where the Minister of Energy, Mines and Resources is recorded as stating the following in response to the hon. member for York-Simcoe:
The hon. gentleman says that nobody could point out in the estimates where there was an appropriation for Petro-Canada. Madam Speaker, the bill is an appropriation for Petro-Canada; it does not appear in the estimates. That is the purpose of the bill...
On that basis the government and the Minister of Finance (Mr. Turner) must provide out of cash requirements of the government for a corporation of this kind, and did provide the sum of $15 million during the current fiscal year . ..
If that was the answer, I would challenge the minister, who was asked that same question time and time again in committee, to find that answer previously anywhere in committee and to show it to us. To say to us that he had responded over and over again simply is not so, because that answer cannot be found anywhere else.


Mr. Deputy Speaker:: I regret to interrupt the hon. member, but the time allotted to him has now expired.


Mr.   J.-J. Blais@Nipissing: Mr. Speaker, I would have preferred not to have to speak in this debate.


Some hon. Members:: Hear, hear!


An hon. Member:: Then sit down.


Mr. Blais:: I am sure that that comment will be approved by the opposition to an even greater degree after I have finished. The reason is that all hon. members are ready and willing to see that the whole of the government projects are approved by this House before we take our adjournment. I hoped that, notwithstanding the fact that there was an agreement to debate this bill for two days, we could have shortened the debate. I was justified in that assumption in view of the interminable time which was taken by members of the opposition in 15 or 16 committee meetings to debate exactly what has been debated in the past three speeches.
The amendment which has been proposed is one which has permitted hon. members opposite to parade all the arguments they paraded before the committee, and it is indicative of the fact that they are attacking the principle of the bill. This question of capitalization is a red herring, and what they are really debating is the basic principle. They know the argument that public investment is not desirable does not wash with the Canadian public. They know that the Canadian public is no longer interested in the old Conservative regressive arguments that there ought not to be any public participation in the private sector. But they are ashamed of that argument, and they know that it does not wash with the Canadian public, so they have to find some way of hiding it. What they are doing now is to hide it under the question of capitalization by saying that $1.5 billion is too much to put into a
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corporation interest free. That is an absolute fallacy, and it cannot bear any scrutiny. I invite hon. members and the Canadian public to really consider the arguments of the Tory Party.
Yesterday we had the privilege of receiving a delegation of the Swedish parliament which came to Canada. One of their comments was that they could not understand why there was so much foreign investment in Canada. They indicated that if that were the situation in Sweden, they could not live with it and that there would be a public uproar. However, Canadians have accepted that. What the Swedish delegation did not know was that in the petroleum industry, Canadians participate only to the extent of one per cent. The total Canadian participation in the oil industry is one per cent. The multinationals control 99 per cent of the petroleum industry, and that is a fact. When hon. members speak of competition, what competition is there in the private sector when the multinationals control 99 per cent of the oil industry? This government has chosen to invest in the private sector in order to enhance the position of Canadians within the industry.
The hon. member for Battle River (Mr. Malone) cited Eldorado as an example of a company which is not acceptable, and that proves that there has been a failure by the public sector in enterprise. I would be pleased if the hon. member for Algoma (Mr. Foster) would indicate how public investment in Eldorado has kept alive a community called Elliot Lake over a time when there was softness in the uranium market. This investment has permitted the Canadian nuclear industry, to participate to a greater extent than otherwise would have been the case. Canada now is at the forefront in the nuclear industry with the CANDU reactor as well as with the supply of uranium. At that time there was foresight in the public sector which was not available in the private sector to invest in that industry to keep it alive, and as a result of it being kept alive we now have the possibility of involving ourselves in that sector. I might point out that, although the Conservatives do not want to recognize the fact, as a result of public investment in the nuclear industry we in Canada have a control that is vested in the Canadian people.


Mr. Huntington:: On a point of order, Mr. Speaker, I wonder when the hon. member for Nipissing (Mr. Blais) will speak on the amendment. It is quite a fundamental amendment and I think it is very important to the treasury of this country.


Some hon. Members:: Hear, hear!


Jean-Jacques Blais: Mr. Speaker, I am speaking on the amendment because I am dealing with the arguments which have been advanced by hon. members opposite, mainly the question of public involvement in the private sector. I am trying to indicate that, contrary to the arguments advanced by the opposition, Canada, the government and the public sector, have been successfully involved in the energy field in Canada. Eldorado is one example.
As I pointed out initially. The Tories are drawing a red herring across the path, trying to show in this instance that they do not really have any philosophical disagreement with the involvement of the public sector in the energy field. If we listen to the hon. member for Calgary

North (Mr. Woolliams), who must carry some weight in his party, we learn that he does not accept any investment by the Canadian government and the Canadian people in the energy sector. He completely abhors any involvement of public moneys-that is, the Canadian taxpayers' money-in the energy field. Evidently that is the position of his party, because after going through the disguises and camouflage offered by the speeches of opposition members we see that basically it is a philosophical difficulty; they will not accept the proposition that the Canadian public ought to be involved in a field which is essential to their future, namely, the energy field. They completely reject the proposition that the federal government has an obligation to ensure that in future we shall have the necessary resources in gas and oil.
They know, however, that the Canadian people want Canadian involvement; they recognize the vulnerability of the Canadian people in the area of energy reserves because of the massive influence of multinationals in the field. They were surprised to find, during the October, 1973, oil crisis that there was no knowledge of how much oil was available to Canadian consumers, how much gas would be available to consumers, and-


Mr. Friesen:: I rise on a point of order, Mr. Speaker. I would point out that the amendment is concerned with financing. The hon. member for Nipissing (Mr. Blais) is now questioning the philosophy of Petro-Can, not the financing of it. I would ask the hon. member to get to the question of financing.


Mr. Macdonald (Rosedale):: On the same point of order, Mr. Speaker, the hon. member for Calgary North (Mr. Woolliams) and the hon. member for Battle River (Mr. Malone) went far beyond the terms of the amendment. We listened patiently. The hon. member for Nipissing (Mr. Blais) is the first on this side to speak after about five speeches from the opposition side. It seems to me the rules should apply equally to both sides of the House and we are entitled to have a little debate. If hon. members opposite are upset by it, perhaps they should not be in a parliamentary debating forum.


Mr. Elzinga:: Mr. Speaker, on the same point of order, I hope the Minister of Energy, Mines and Resources (Mr. Macdonald) will remember that when I am making my presentation.


Jean-Jacques Blais: Mr. Speaker, I hope we can dispose of the debate on this particular bill and go on to discuss something else. Obviously, the arguments presented by the opposition are those that have been put forward throughout debate on the bill. Perhaps when we finish with this amendment we can consider the other legislation before the House.
The impression that the Conservative Party has tried to leave is that $1,500 million will be taken from the public treasury today and immediately invested in this corporation. That is hogwash. They apparently did not read the marvellous speech by the Minister of Energy, Mines and Resources (Mr. Macdonald) when he indicated that for the first year only $10 million would be put into Petro-Can.
July 3, 1975

There is no question at all-surely the hon. member for York-Simcoe (Mr. Stevens) is aware of this-that when one creates a corporation, one establishes capitalization. There is no conception of using the total amount of that capital within a definite period of time, or issuing all the shares at the outset.
The minister has indicated time and again that there will be gradual investment in the corporation as the need arises. He has indicated time and again that we are dealing with risk capital. When you speak of CNR, Air Canada, Eldorado or other Crown corporations, you are not dealing with a capital-intensive risk undertaking. We are dealing now with an exploration company, a company that is going into the northern reaches, that is going to explore offshore potential, invest in the tar sands and buy Panarctic. These are all risk enterprises.
It stands to reason that it is to the public benefit that we invest these moneys to discover new resources. Therefore, we ought to be getting risk capital in the same way that Imperial Oil, when it needs risk capital, sells shares on the international market. My hon. friends opposite ask where Imperial Oil or any oil company can obtain interest-free money. Mr. Speaker, it is recognized that the major multinationals have to finance their own exploration. They seldom go to the market unless they have a major exploration program; they finance from their own earnings which they get from the underground resources they have discovered. They are able to finance themselves because of their massive assets.
My Conservative friends say that $1,500 million is a fantastic, an unbelievable sum of money.


An hon. Member:: To throw away.


Jean-Jacques Blais: When we consider that Canada's present underground oil reserves are about eight billion barrels which belong to multinational corporations, we must ask how much that oil is worth. Mr. Speaker, it is worth $8 per barrel. How much is that? To my way of calculating, eight times eight billion makes it worth $64 billion. When we look at Canada's gas reserves which are worth $1.25 per
1,000	cubic feet, we find that we have nearly $70 billion worth of gas underground. We are dealing with $1,500 million to be spent over a ten-year period and we are talking about known reserves under Canadian soil, now available, of roughly $130 billion.
We are dealing with a potential investment in the energy field, between 1975 and 1985, of roughly $115 billion. That is the amount we will have to invest in the energy field. Yet here is the Tory Party saying that they do not want the Canadian people to be represented in that $115 billion even to the extent of $1,500 million. What sort of contribution is that party making to ensure sufficient Canadian energy resources?


Some hon. Members:: Hear, hear!


Jean-Jacques Blais: Mr. Speaker, I am at a loss to understand why an opposition party which says it is interested in the Canadian good is not willing to support the Canadian people in investing in Canadian energy resources.


An hon. Member:: We can't hear you; speak up.
Petro-Canada


Jean-Jacques Blais: Mr. Speaker, I can take all the riding and kibitzing from that side of the House and the hon. members from Alberta. They are sitting on a pot of gold, and they know it. They do not want to look anywhere else, but we in Canada have to look beyond Alberta for our reserves and we need funds to go into those areas. They are talking about $1,500 million as though it were the end of the world.


Eldon Mattison Woolliams: What's a billion? Remember C.D. Howe?


Jean-Jacques Blais: Mr. Speaker, what's a billion, or what's a million-


Eldon Mattison Woolliams: Got you!


Jean-Jacques Blais: -in terms of energy resources and the need for investment?


Some hon. Members:: Oh, oh!


Jean-Jacques Blais: If hon. members opposite think I speak so loud, perhaps I would not have to if they would be quiet.


Some hon. Members:: Hear, hear!


Jean-Jacques Blais: Mr. Speaker, when you are dealing with energy resources and speaking of $1,500 million, the hon. member for Calgary North knows that is less than 1 per cent of the required investment. That amount of money will not supplant private investment. This money is going to support private investment, to be added on to private investment. Members of the opposition have some hesitation in encouraging this additional investment for establishing new reserves because the constituents of the Alberta members are involved in exploration. The only Canadian participation in the oil industry is at the exploration level. Our companies explore and drill; no Canadian company markets, refines and distributes oil. Our companies in Alberta are drilling. It will be the purpose of Petro-Can to establish new reserves.
My second argument is this. In setting up a national petroleum company, Canada is not breaking new ground. Not one of our trading partners is without a national petroleum corporation operating either at the supply or the consuming level.


Mr. Gillies:: What about the United States?


Mr. Stevens:: Mr. Speaker, I wonder if the hon. member would permit a question.


Jean-Jacques Blais: With respect, Mr. Speaker, not at this time.


Some hon. Members:: Oh, oh!


Jean-Jacques Blais: There are national oil companies operating in Austria, Finland, France, Germany, Great Britain, Italy, Norway and Spain. One could include the United States because most of the large oil companies are United States-based. Look at the producing countries, even those which contain only a small share of the industry; they all have national corporations. Abu Dhabi, Algeria, Israel-you name them-they all exercise complete control over their

July 3, 1975
Petro-Canada
production facilities. I say that Canada is the only producing nation which does not control production and distribution within its borders.


James McPhail Gillies: That is absolutely false.


Jean-Jacques Blais: Abu Dhabi has set up the Abu Dhabi National Oil Company.


Mr. Nowlan:: They have a great parliament over there, too.


Jean-Jacques Blais: In Algeria, the national oil company is Sona-trach; in Indonesia it is Pertamina; in Iran, the National Iranian Oil Company; in Iraq, the Iraq National Oil Company; in Libya, the Libyan National Oil Corporation. Kuwait has set up the Kuwait National Petroleum Company; Nigeria, the Nigerian National Oil Corporation; Saudi Arabia has set up Petromin as its national oil company; and Venezuela, the Corporacion Venezolana del Petroleo.


Sinclair McKnight Stevens: Mr. Speaker, I rise on a point of order.


Jean-Jacques Blais: Mr. Speaker, cannot hon. members across the way take the-


Mr. Deputy Speaker:: Order, please. The hon. member for York-Simcoe (Mr. Stevens) has risen on a point of order.


Sinclair McKnight Stevens: Mr. Speaker, did the hon. member include the United States in his list?


Jean-Jacques Blais: Mr. Speaker, of course I include the United States. As my hon. friend knows, many multinational oil companies are United States-based. The multinational oil companies do the best they can in the United States and I understand they do pretty well. The United States Congress has tried to control them but has found it difficult. This country is not the United States. But that country, which operates under the free enterprise system, would not have any difficulty in passing a bill to create a national petroleum company. I suggest they would be well advised to do so. Back in 1952 the oil companies encouraged Eisenhower to cut oil imports and exploit domestic reserves. As a result, their domestic reserves are depleted and they face a shortage. If the American government had not listened to the oil companies back in 1952 and had husbanded American reserves, that country would not be in its present difficulty. That shows what private enterprise has done to the United States.


An hon. Member:: Hear, hear!


Mr. Whittaker:: You have at least one convert.


John Patrick (Pat) Nowlan: Better go to Winnipeg.


Mr. Deputy Speaker:: Order, please. I allowed extra time for interruptions but I think the hon. member's time has now expired. He may continue only with the unanimous consent of the House. Does the House consent unanimously to the hon. member continuing his remarks?


Some hon. Members:: Agreed.


Jean-Jacques Blais: Mr. Speaker, I shall finish in a couple of minutes. In 1973, this government was responsible for the publication of "An Energy Policy for Canada, Phase 1" to which the hon. member for York-Simcoe referred. I suggest that his selection was discriminatory; he referred only to those parts favouring his argument. I wish to refer to other portions of the document. It reads, on page 22:
A "national petroleum company" (NPC) would provide a vehicle by which the government could seek to obtain better knowledge of the domestic and international petroleum industries thereby providing legislators with more valid lawmaking insights.
That, I think, is the basic argument supporting the establishment of the company. I continue:
An NPC could act to stimulate regional development in specific areas of Canada. It could serve as a centre for Canadian research, concentrating on unique Canadian opportunities and on the potential spinoffs in industrial activity.
That is an oblique reference to the tar sands experiments and that statement has proved to be true. I continue:
It could play a role in determining the criteria on which the government might base its policies regarding economic rent collection. It might also play an effective role on behalf of government in relations with other countries where their state companies were active. It could assist in the development of "headquarters" activities in Canada.
Those, basically, are the arguments supporting the establishment of the national petroleum corporation. I think, in light of those arguments and my comments, anything hon. members of the opposition could advance would be completely useless.


Mr. Jim Balfour (Regina East):: Mr. Speaker, largely because of what the minister said to me in committee, I feel obliged to offer a few comments with respect to the proposed amendment to clause 22 which would have the effect of requiring the corporation to pay a charge with respect to its debt to the public treasury. I read with amazement the minister's remarks on this subject last evening and, in particular, his statement which was referred to by the hon. member for Battle River (Mr. Malone), which I shall put on the record again. As reported at page 7505 of Hansard, the minister said last evening:
I am happy to have an opportunity to put on record my response to the financing of Petro-Canada. The basic response is that we think that a national petroleum corporation should be financed like every other petroleum corporation with the substantial amount of funds being put forward in risk form by way of capital, that it should be put forward in equity form rather than loan form-
Are we to assume from this statement that in addition to the $500 million of share capital authorized by the bill, the government intends to subscribe the additional $1 billion interest free in the form of preferred redeemable shares or other forms of equity? If so, I respectfully ask the minister to explain the statement he made to me and other committee members on June 12. On that occasion he said, in response to the following questions from myself:
I take it from clause 22 that the Crown would have the ability to advance funds to the corporation interest free, either by way of direct loan or by way of a preferred redeemable share allotment. Does the minister believe the corporation should have the ability to obtain funds from the revenue interest free, or would you not think it would be preferable that funds so advanced should bear an interest charge? Although I have to recognize it is internal bookkeeping, nevertheless
July 3, 1975

there then would exist a discipline of the interest charge in respect of the use of these funds.


Donald Stovel Macdonald: With regard to loans, certainly the government policy generally is to charge the so-called Crown corporation rate to the Crown corporation. The clause leaves open the alternative as to whether a fixed dividend or cumulative dividend is to be payable on preferred shares. With regard to interest in the normal course-and I do not know if there are any exceptions in Crown corporation practice-the corporation would have to repay funded debt, not only the principal but a sum by way of interest. On the preferred shares that question is left open for decision at the time, as to whether any specific rate should be set on equity in that form.


James Balfour: I am informed that there is no precedent for a Crown corporation to enjoy advances from the revenue interest free.


Donald Stovel Macdonald: I do not know if the question is really dealt with by statute; I think it is dealt with by treasury policy.
Mr. Lyon reminds me that when I talk confidently of a Crown corporation rate, in fact there are a series of Crown corporation rates dependent upon the conditions-I guess, among other things, on the term involved in the loan. In this sense, there is no single rate. The Minister of Finance, I think, prefers to reserve the right to put the conditions on money that he makes available just as a private lender would. I think I would be correct in saying that this is normally not dealt with by statute, it is a matter of Treasury policy.
I then asked the minister squarely:
Would you be prepared to even offer assurance that the intention of the clause is not to make it possible for the corporation to utilize interest-free money from the revenue, but rather that the intention is to provide a reasonable degree of flexibility with respect to negotiating the terms upon which such funds would be advanced?
The minister replied:
Concerning loans, I know of no basis upon which I could expect an interest-free loan from the treasury. I do not know of any circumstance under which that has occurred. For the preferred shares, of course, that is not, strictly speaking, interest; that is whatever rights an equity holder has.
I put the question squarely to the minister: Is it his intention that the $1 billion shall be available to the corporation interest free? If so, why did he leave the opposite impression in committee? If not, why does he resist so strenuously the proposed amendment which serves the purpose of making crystal-clear the terms upon which the borrowed money is to be advanced by Canadian taxpayers? Will the minister respond in unequivocal terms to these questions?


Donald Stovel Macdonald: Mr. Speaker, I rise on a point of order. I have no right to speak again at this point; however, if the House is prepared to give unanimous consent I will deal with the question which the hon. member has raised in his speech.


Mr. Deputy Speaker:: Is it agreed that the minister shall be allowed to respond to the question?


Some hon. Members:: Agreed.


Donald Stovel Macdonald: Mr. Speaker, the remarks I made previously are perfectly consistent with the remarks I made last night. I will repeat them again, for about the fifteenth time, for the benefit of the hon. member and his colleagues. The bill indeed provides a whole range of financial instruments by which this corporation can be capitalized. In the first place, it provides for common shares.
Dealing with the comments made by the hon. member for Calgary North (Mr. Woolliams), you do not pay inter-
Petro-Canada
est on common shares. Common shares are not funds on loan; they are a subscription for capital in which the subscriber takes the chance that he may lose his capital investment altogether. Of course, he has the hope that over a period of time the capital will earn money and he will get a return by way of dividends.
In relation to petroleum corporations generally, very substantially the risk capital that has been put forward for exploration in particular is in the common share form or what has accrued on common shares, namely, the retained earnings of the corporation, and in that sense there is no interest paid. It is not a loan. The investor takes his chances on the success of the operation. This is with regard to the common shares.
I recommend to the hon. member for Regina East (Mr. Balfour) that he read the bill again. The bill clearly provides that the present government and governments in the future can provide an additional $1 billion dollars, as it may decide from time to time, either in loan form or preferred shares form, with no restriction on one or the other within that amount. It does provide for certain conditions under which loans may be made or preferred shares may be issued and subscribed for.
At this time I do not think I should try to tie the hands of this or any other government as to what the split would be between preferred shares and funded debt. From the standpoint of the minister in favour of a corporation engaged in the very high-risk task of exploration for petroleum, very naturally I would hope to get the funds in preferred share form, with the stipulation like that with common shares, that I would not be confined to a periodic payment by way of a fixed cumulative dividend. Really, though, this would be in the form of risk capital.
In order to get the additional funds for participation in auxiliary activities or pipeline projects that might follow from the discovery of petroleum or natural gas by this particular corporation, for example, it may be that public funds would be put forward in a loan form to the particular project, and hence would be an advance by the treasury in loan form. I say to the hon. member that I will not attempt, in this House or outside, to tie the hands of future ministers or governments in this regard. There is no way I can do so.
If a substantial balance of the funds is to go for exploration, the argument I would make is that it should go in equity form and should be in preferred shares. If it is to be by way of lending to a pipeline project as further financing in which the corporation may be interested, it would obviously not only be sensible that it should be on loan, repayable to the corporation, but the corporation in turn should raise these funds from the public treasury by way of a loan at the Crown corporation rate. This will depend on the development of the corporation, the development of its assets as time goes on.
I do not think it is of any particular value for me to give an indication now as to how the government will be lending money to the corporation for operations which at the moment have not commenced, in relation to assets which have not yet been acquired or with regard to possibilities which we hope will occur but have not yet been realized.

July 3, 1975
Petro-Canada


Eldon Mattison Woolliams: I would like the minister to answer one question. The House gave the minister unanimous consent and I wonder whether I could have unanimous consent to ask a question.


Mr. Deputy Speaker:: Is it agreed?


Some hon. Members:: Agreed.


Eldon Mattison Woolliams: As I understand the minister's statement-and I question whether he can substantiate it-the money derived from common shares, the greater percentage is to be derived in that fashion, or under that formula, rather than by debentures and other means of raising money. Does the minister know the percentage that Texaco, Imperial Oil, Gulf and other companies raise by the sale of common shares to explore and develop, in reference to the ratio of money raised by other means? I doubt whether he knows that.


Donald Stovel Macdonald: Mr. Speaker, I agree with the hon. member that it would be difficult to break it down. Of course, they are not just engaged in exploration, if the hon. member has not noticed; they are also engaged in the business of shipping, refining and marketing petroleum products in Canada, on which basis they are not involved in risk capital.


Eldon Mattison Woolliams: You just exploded your argument.


Donald Stovel Macdonald: I will say this, that part of the capital which is expended by the petroleum sector for the exploration of petroleum and natural gas is substantially in risk-capital form. I invite the hon. member to talk to petroleum men in his city, because he might learn something; he would find that each one would say he was prepared to take his chances with equity capital for the purpose of engaging in risk investment. The last thing that they want to do is to borrow with a fixed obligation to repay, without any certainty on the other side that they will be able to develop an asset that will pay off in return. So, yes, indeed that is the general practice in the petroleum sector. In the exploration sector it is based on equity capital, on retained earnings accrued on equity capital, and not on funded debt.


Sinclair McKnight Stevens: On a point of order, Mr. Speaker, I wonder whether the minister would accept a further question.


The Acting Speaker (Mr. Penner):: Is it agreed that this arrangement be allowed to continue?


Some hon. Members:: Agreed.


Sinclair McKnight Stevens: Mr. Speaker, yesterday evening, as reported at page 7206 of Hansard, the minister indicated that the government and the Minister of Finance (Mr. Turner) must provide the sum of $15 million during the current fiscal year, which has been reduced to $10 million as a result of the decision taken by the President of the Treasury Board (Mr. Chretien), for the support of Petro-Can. Would the minister indicate where that provision is made, whether in the estimates or otherwise, and the $15 million is reduced to $10 million?


Donald Stovel Macdonald: Mr. Speaker, as I indicated to the hon. gentleman last night when speaking about the capitalization of this corporation, appropriation for this purpose is provided in the bill itself rather than in the estimates. In the non-technical sense in terms of the estimate of cash requirements that the Minister of Finance had to make, these sums were provided among the cash he will have to make available in addition to the amount required under the estimates procedure. The funds discussed and agreed to and provided for as between my department, the Minister of Finance and the President of the Treasury Board with respect to Petro-Canada for the 1975-76 fiscal year amounted to $15 million, and that amount has now been reduced to $10 million.


Mr. Leonard C. Jones (Moncton):: Mr. Speaker, when this bill was originally introduced I was opposed to the principle of establishing yet another Crown corporation. This country's experience of delegating powers to Crown corporations has shown that this tends to be even more inefficient and excessively expensive than the operation of government itself-and that is terrible, a real burden on our taxpayers.


An hon. Member:: No more DREE grants for your area.


Leonard C. Jones: Someone in the NDP says there will be no more DREE grants for my constituency. If that is the reason behind the rationale of DREE grants, I trust that the government will quit this patronage deal.
In view of the small conservative approach adopted by the Minister of Finance (Mr. Turner) on June 23, I was quite surprised that Bill C-8 was still to be proceeded with and is now before us. I would have thought that the bill would have been withdrawn by now. This nation has gone just too far along the socialistic road; our country cannot afford another Crown corporation, so-called.
Bill C-8 will go down in history as being a bill that was unique in that it just was not right from the beginning. This bill, along with other powers that parliament has already granted the government, could in the long run result in the complete nationalization of the petroleum industry. Some of my friends in this House can foresee this and are very happy and anxious that it should happen. I can foresee it, too, and I dread the terrible and horrendous results. This is another wedge, another way of hurting our economy, another example of poor leadership and foresight and lack of government restraint. Prices of gas and oil have already gone up. When this bill is enacted and this government gets full control, prices of gas and oil will really get out of control.
The amendment in question certainly brings to light a very serious matter in so far as Crown corporations are concerned. If a Crown corporation is to be treated as a business-and it should-each tub should stand on its own bottom. I doubt that this national petroleum company will have a bottom; it will be bottomless. This corporation, with all its proposed powers, should be responsible- responsible to the people and to parliament. It should be able to compete with private enterprise and with corporations that deal in the public market. In fact, it should not only be responsible for paying the interest rate suggested in the amendment but it should be responsible for paying
July 3, 1975
COMMONS DEBATES_______________________
Petro-Canada
all income taxes. I sometimes wonder whether Crown corporations are responsible for income taxes. Do they pay all the sales taxes that are applicable? Do they pay the excise taxes for which we are responsible, and other government levies for which private and public corporations are responsible?
This company, this proposed Crown corporation, should be expected to compete with private enterprise and with public corporations, but it is going to be put in a very favoured position. It is not going to have the same responsibility as other companies. In fact, in so far as the people are concerned, its responsibility is likely to be nil. It will not be fairly competitive.
I suggest that the minister and the government have not done sufficient homework to realize that the consequences of this bill are serious. They have not indicated what will be the long-term cost to the consumers and taxpayers of this country; and goodness knows, it is hard to get results from this government at the present time.
The reason for the amendment is reasonable, sensible, fair and practical. The reason for the bill is not reasonable; it is not practical and it is neither necessary nor sensible. I suggest that the minister should, in the public interest, realize now the serious difficulties and problems that will result from the enactment of this bill and which are unseen at this time. This bill does not really fill any need. On the contrary, it fires up an already fragile situation in our economy.
The government has been talking about government restraint, yet here they are forming another Crown corporation to spend our money inefficiently, possibly wastefully, and duplicating other expenditure. The evidence and presentations submitted by the members of the House indicate quite clearly that the minister should take further counsel and advice if he is willing to do so. The minister should consent now to add the proposed admendment. If he does not, then he should see the wisdom of withdrawing the whole bill here and now. Let us take heed, lest in passing this bill very grave and serious effects result, the consequences of which will have to be borne by Canadian taxpayers and consumers into eternity. Surely the minister cannot agree to pass a bill that ;s so unfair, so noncompetitive, so needless and so useless. If this company cannot be competitive, then it should not exist.


The Acting Speaker (Mr. Penner):: Is the House ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Penner):: The question is on motion No. 4. All those in favour of the motion will please say yea.


Some hon. Members:: Yea.


The Acting Speaker (Mr. Penner):: All those opposed will please say nay.


Some hon. Members:: Nay.


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


The Acting Speaker (Mr. Penner):: Call in the members.
Following the ringing of the bells, Mr. Speaker assumed the chair:


Mr. Speaker:: The question before the House is on motions Nos. 3 and 4.


Mr. MacLean:: Mr. Speaker, in view of the time I have a suggestion to make in an attempt to accommodate the House so that we will not be delayed much beyond one o'clock. I think there may be general agreement that the vote which has been deferred be not a recorded vote but a voice vote. Then we could proceed to a recorded vote on motion No. 4, if that is agreeable to hon. members.


Mr. Speaker:: Is there agreement to that suggestion?


Some hon. Members:: Agreed.


Mr. Speaker:: The question, then, is on motion No. 3 in the name of the hon. member for Calgary Centre (Mr. Andre). All those in favour of the amendment will please say yea.


Some hon. Members:: Yea.


Mr. Speaker:: All those opposed will please say nay.


Some hon. Members:: Nay.


Mr. Speaker:: In my opinion the nays have it. I therefore declare the amendment lost.
Motion No. 3 (Mr. Andre) negatived.


Mr. Speaker:: The question is on motion No. 4 in the name of the hon. member for York-Simcoe (Mr. Stevens).



NAYS AFTER RECESS

[Stage Direction]
Messrs.
Abbott
Allmand
Anderson
Andras
(Port Arthur)
Andres
(Lincoln)
Baker
(Gander-Twill ingate) Baaford Beaudoin B£chard Begin (Miss)
Benjamin
Blackburn
Blais
Blouin
Boulanger
Breau
Brewin
Buchanan
Bussi&res
Caccia
Cafik
Campagnolo (Mrs.) Caouette
(Villeneuve)
Caron
Chretien
Clermont
Collenette
Comtois
Condon
Corbin
Corriveau
Cdt£
Cullen
Cyr
Danson
Daudlin
Demers
Dionne
(Northumberland-
Miramichi)
Douglas
(Bruce-Grey)
Drury
Duclos
Dupont
Dupras
Duquet
Ethier
Faulkner
Fleming
Flynn
Foster
Fox
Francis
Gauthier
(Ottawa-Vanier)
Gendron
Gilbert
Goodale
Goyer
Gray
Guay
(St. Boniface)
Guay
(Levis)
Guilbault Haidasz Herbert Hopkins Isabelle Jamieson Joyal Kaplan Knowles (Winnipeg North Centre) Lachance Lajoie Lalonde Landers Lang Langlois Laniel Leblanc (Laurier)
LeBlanc
(Westmorland-Kent)
Lee
Lefebvre
Leggatt
Lessard
Loiselle
(Chambly)
Loiselle
(Saint-Henri)
Lumley
MacDonald
(Cardigan)
Macdonald
(Rosedale)
MacFarlane
MacGuigan
Maine
Marceau
Marchand
(Langelier)
Marchand
(Kamloops-Cariboo) Martin Matte Mclsaac McRae Milne
Morin (Mrs.)
Munro
(Hamilton East) Nicholson (Miss) O'Connell Parent Pelletier (Hochelaga) Pelletier (Sherbrooke)
Penner
Philbrook
Pinard
Portelance
Poulin
Prud'homme
Railton
Reid
Richardson
Roberts
Robinson
Rodriguez
Rompkey
Rooney
Roy
(Timmins)
Saltsman
Sharp
Smith
(Saint-Jean) Stanbury Stewart (Cochrane)
Stollery
Tessier
Trudeau
Whelan
Yanakis
Young-130.
The House resumed at 2 p.m.


Mr. Jack Marshall (Humber-St. George's-St. Barbe):: Mr. Speaker, I wish to move a motion under the provisions of Standing Order 43 on a matter of urgent and pressing necessity, and I am sure the Minister of State responsible for fisheries (Mr. LeBlanc) will agree to it.
Ice conditions in various fishing areas of Newfoundland prompt the need for government to implement a program of special financial assistance to alleviate the financial suffering of fishermen in those areas, because of their inability to prosecute the fishery this year. The situation is more serious because of the fact that Unemployment Insurance Commission benefits expired on May 15 for fishermen.
I therefore move, seconded by the hon. member for St. John's West (Mr. Carter):
That the government of Canada take immediate action, in co-operation with the provincial government of Newfoundland, to declare a disaster in those areas affected and to provide financial relief through appropriate programs


Mr. Speaker:: Order, please. The motion proposed pursuant to Standing Order 43 requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Donald Stovel Macdonald: that the bill as reported be concurred in.


[Stage Direction]
Motion agreed to.
Mr. Speaker:: When shall the bill be read the third time; next sitting of the House?


Some hon. Members:: Agreed.


Mr. Speaker:: Pursuant to the order of the House made Friday, June 27, I do now leave the chair until two o'clock this afternoon.
At 1.07 p.m. the House took recess.


SOCIAL SECURITY
Mr. Leonel Beaudoin (Richmond):: Mr. Speaker, pursuant to the terms of Standing Order 43, I request unanimous consent of the House to discuss an important and urgent matter.
Because of the growing economic difficulties Canadian citizens are experiencing as a result of the constant rise in the cost of living, and the added negative consequences they will have to bear resulting from the last budget recently brought down by the Minister of Finance (Mr. Turner), especially with regard to the increase in the cost of gas and heating oil, I move, seconded by the hon. member for Champlain (Mr. Matte):
July 3, 1975

That the House of Commons be allowed to discuss immediately the serious problems our fellow citizens must face, as well as the steps the government should take without delay to enable Canadians to fight inflation efficiently, above all by revising the whole social security system with a view to adopting a real guaranteed minimum income and allowing optional retirement at 60 as soon as possible.


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


Some hon. Members:: Yes.


Some hon. Members:: No.


Mr. Speaker:: As there is not unanimous consent, the motion cannot be put.


PENITENTIARIES
Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In view of the announcement of the President of the Treasury Board (Mr. Chretien) that $11 million will be cut from the allocations for the construction and staffing of federal penitentiaries, and in view of the grave concern expressed throughout the country concerning the safety of the public and workers in federal penitentiaries, the commitment of the government to carry out the recommendations of the Mohr report and the statement of the Solicitor General (Mr. Allmand) yesterday that the government is proceeding as quickly as possible with the construction of new maximum security facilities, I move, seconded by the hon. member for Broadview (Mr. Gilbert):
That this House direct the President of the Treasury Board to reinstitute all sums proposed in staffing and construction of federal penitentiaries.


Mr. Speaker:: Order, please. Pursuant to Standing Order 43, the proposed motion demands the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


FINANCE
Mr. Eudore Allard (Rimouski):: Mr. Speaker, under the provisions of Standing Order 43, I seek the unanimous consent of the House for the consideration of a very urgent and pressing matter.
Distinguished Visitors
Since the Bank of Canada is only a mechanism established by the government of Canada with the aim of controlling credit in the interest of our economic life and it is the government which must tell the Bank of Canada how to act, I move, seconded by the hon. member for Champlain (Mr. Matte):
That the government take the necessary measures so that the Bank of Canada can adequately play its role in directing its credit issue policy in favour of the healthy development of the country's economy, by allowing credit issues without interest or at administrative costs in the public and near public area.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


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


SUGGESTED SURVEY OF OIL RESOURCES-MOTION UNDER S.O.
Mr. Rene Matte (Champlain):: Pursuant to Standing Order 43, Mr. Speaker, I seek the unanimous consent of the House to move an important motion which reflects the opinion of a great many Canadians.
In view of the conflicting reports on the true oil reserves left in Canada, and because the public is not aware either of the explorations which are being carried out or the results of these explorations, I move, seconded by the hon. member for Richmond (Mr. Beaudoin):
That the Minister of Energy, Mines and Resources (Mr. Macdonald) make an inventory of all present oil reserves as well as possibilities for immediate development, and report to the House.


Mr. Speaker:: 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 such consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


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


PRESENCE IN GALLERY OF PRESIDENT SUHARTO OF INDONESIA
Mr. Speaker:: Before beginning the question period, I know that hon. members would want me to signal the
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July 3, 1975
Oral Questions
honour which we feel in Canada at the presence among us this week of a very distinguished visitor who is presently in our gallery. I refer to the distinguished president of the Republic of Indonesia, His Excellency President Suharto.


Some hon. Members:: Hear, hear!



ORAL QUESTION PERIOD


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I have a question for the Solicitor General who, following the killing of a prison guard early in the week, said "I agree something has to be done. We cannot tolerate our correctional officers being attacked like this." While he was promising the guards improved security within the prisons, did the Solicitor General explain to them how he was going to achieve this when about $11.5 million is being cut from his spending estimates with regard to additional prison staff?


Hon. Warren Allmand (Solicitor General):: Mr. Speaker, some of the matters we wanted to deal with right away were a tightening of the procedures for taking prisoners on escort and for internal security within the prisons. As I pointed out last week, in the past two years we did a lot to improve perimeter security. Escapes were cut back by about 66 per cent. We would now like to make a major effort in the area of internal security and for security of escorts. The sums being cut, which were referred to by the hon. gentleman, are for the most part for new institutions, I think two. However, we are still going ahead with other maximum security institutions. They are not affected by the budget.


Robert Lorne Stanfield: It has been reported that the Solicitor General promised he would increase prison security and probably hire more guards. Is that a correct statement or is it correct that, as reported by the President of the Treasury Board, estimates for staff in penitentiaries will in fact be cut by some $3.6 million?


William Warren Allmand: Mr. Speaker, there is provision for an increase in staff for next year and the year after. I will have further discussions with the government as to whether we will increase that still further. Treasury Board and the government have already approved of increases, but there may be areas where we will have to increase still further.


REASON FOR FAILURE TO PROCEED WITH CONSTRUCTION OF NEW INSTITUTIONS
Robert Lorne Stanfield: Will the Prime Minister indicate to the House where the truth lies. Are the estimates in fact being cut back, as the President of the Treasury Board suggests, or is this still an

open question, as the Solicitor General suggests? Is it correct, as the Solicitor General says, that the government cannot go ahead with the necessary new penitentiaries because communities are objecting to them, or is it correct as the President of the Treasury Board indicates that the government has cut back on the estimates for the building of new penal institutions?


Right Hon. P. E. Trudeau (Prime Minister):: My understanding, and I believe it was conveyed in the answer given by the Solicitor General, is that some of the new institutions are to proceed and that they have been budgeted for. The cutbacks by the President of the Treasury Board are cuts in spending which had previously been agreed upon and upon which the Solicitor General was planning. We are now telling him he is not to increase expenditure at the rate he planned to increase it.


An hon. Member:: Why?


Pierre Elliott Trudeau: Some one asked why. It is because the budget contained a specific pledge that we would cut down spending in many areas-reduce the rate of growth in the public service. We thought this was an approach that had the support of the House and of the country in general.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: Members opposite will have to co-operate with the government; when they suggest the government is spending too much they should not express shock and concern when the government cuts down some of the expenditure.


COMPATIBILITY OF OFFER OF SUPPORT TO PRISON GUARDS BY SOLICITOR GENERAL WITH REDUCTION IN EXPENDITURES
John Patrick (Pat) Nowlan: My question is directed to the Solicitor General, Mr. Speaker. Does the minister think the assurance given to the guards on Sunday that he is going to give them full support, followed by the unprecedented walkout from the penitentiary system on Monday, is compatible with the statement of the President of the Treasury Board on Wednesday that dollar support is to be cut back?


William Warren Allmand: As I pointed out earlier, the Treasury Board has approved of increases in personnel for the penitentiary service next year and the year after. The cutback has been with respect to two institutions, but we are still going ahead with several other institutions. I do not think the cutbacks will affect the security of the staff on the inside of our prisons. I will try to make sure that whatever the cuts have been they are in areas which will not affect security.
July 3, 1975


ADMINISTRATION OF JUSTICE
John Patrick (Pat) Nowlan: A supplementary question, Mr. Speaker-not on the latter part of the answer given to a question yesterday which I know will be fully explored in a moment or so.


Some hon. Members:: Oh, oh!


John Patrick (Pat) Nowlan: My question is directed to the Prime Minister since he was absent yesterday with an unfortunate attack of flu contracted in Newfoundland.


Some hon. Members:: Oh, oh!


John Patrick (Pat) Nowlan: Without getting into a debate on the priorities of where you cut, but in view of the fact that at the time present law was being debated extending the capital punishment provision to apply to prison guards and policemen if they were killed, the Prime Minister, as reported at page 3842 of Hansard, assured the House that the royal prerogative was used in each instance only after every consideration of individual cases, and since the Solicitor General has stated publicly as a minister that he can only remain in the government if the prerogative is exercised in all cases, I ask the Prime Minister, whether he thinks that the Solicitor General, without casting any aspersions on his sincerity or integrity can stay in a government after stating publicly he can only look at one side of this issue.


Pierre Elliott Trudeau: Mr. Speaker, I do not believe the hon. member has quoted the minister accurately. If I recall what the minister is reported to have said, it is that he would have to reconsider his position if there were some cases of hanging. He has not submitted his resignation to me yet.


An hon. Member:: Yet.


Pierre Elliott Trudeau: That's right.


An hon. Member:: Have you asked him for it?


Pierre Elliott Trudeau: Therefore, the question of the hon. member is hypothetical. I can assure him that the statement I made in the House is quite correct, that there is no blanket commutation. Each case is looked at individually on its own merits and each minister is free to express his opinion on that particular case regardless of what is the recommendation of the Solicitor General.


John Patrick (Pat) Nowlan: Mr. Speaker, I appreciate part of that answer, but in view of the fact the Prime Minister in his Canada Day statement referred to a nation that is maturing, and in view of the fact the Prime Minister has philosophized during the last two or three weeks about a respect for the laws and a respect for the institutions of this land, does he believe that the Solicitor General, in the very sensitive position he finds himself, is not letting
Oral Questions
justice be done but letting it seem to be done to the people of this land in terms of applying the law, particularly when the Solicitor General has stated he would have to reconsider his position? In other words, do Canadians really have the confidence that the Solicitor General is able to look at this question objectively and then exercise his ministerial discretion, which now seems to be rather restricted?


Pierre Elliott Trudeau: Mr. Speaker, I agree that each minister of the Cabinet must make a decision in his own heart whether he can support the decision of the Cabinet. So far, I repeat, there have been no resignations as a result of the position taken by the Cabinet on these matters. I do not know that possibly there will be none, but I can assure the hon. member that the Solicitor General does, like any other minister, express his views in Cabinet and then abides by the decision the Cabinet makes. When the Cabinet exercises the prerogative of mercy the ministers agree to that or they leave the Cabinet. In the contrar's case, which is hypothetical, if the Cabinet should decide on the hanging of somebody each minister would have to decide whether he could stay in the Cabinet, or whether he will support that decision.


COMMUTATION OF CAPITAL PUNISHMENT SENTENCES- NUMBER OF CASES IN WHICH MERCY RECOMMENDED
William Warren Allmand: Perhaps I could take this opportunity to correct an answer I gave yesterday to the right hon. member for Prince Albert. He had asked me how many cases of commutation there have been since 1968 and in how many of those cases a recommendation was made for clemency. I said there were six cases and that there were recommendations for clemency in five. That information had been given to me some time ago, but after yesterday's sitting I was told that instead of six there was only five, and that there were unanimous recommendations for clemency in three of those cases and no recommendations in two others. So, there were five instead of six and recommendations in three instead of the number I gave.


EXTERNAL AFFAIRS
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, may I direct my question to the Secretary of State for External Affairs. In view of the revelations on a CTV program shown on television last night at eleven o'clock in an interview by Mr. Eric Mailing of a South Korean atomic energy official who said that the South Koreans are in fact buying a plutonium separator from France for $50 million, is the government, as promised by the Prime Minister, reconsidering the sale of a CANDU reactor to South Korea?


Hon. Allan J. MacEachen (Secretary of State for External Affairs):: Mr. Speaker, I have not seen the report

July 3, 1975
Oral Questions
to which the hon. member refers. I stated yesterday in connection with the general comments of the officials of the Republic of Korea in respect of their over-all commitment, not to proceed in the direction of a nuclear weapons option. In the case of information which the hon. member is providing regarding a reprocessing plant, if it is to be acquired by the Republic of Korea, that would have to be considered in connection with safeguards we are presently negotiating with the Republic of Korea. We have stated in the House it is our intention to have written into any such agreement a Canadian hold on spent fuel.


Francis Andrew Brewin: Mr. Speaker, in light of these revelations, which I for one happened to hear and see on the screen, and the fact that there are only two possible uses for plutonium separators, namely, the manufacture of nuclear bombs and to recycle plutonium, a process thought to be at least 20 years before it comes into operation, does the minister not think it is a little naive to accept the assurances of President Park that the Republic of Korea has no intention of developing a nuclear weapon?


Allan Joseph MacEachen: Mr. Speaker, what I think is the important factor is that Canada, in negotiating its arrangements with the Republic of Korea, ensure that the political commitment given by President Park is reflected in the general safeguards we secure, particularly with respect to the processing of the spent fuel.


AGRICULTURE
Léonel Beaudoin: Mr. Speaker, I should like to put a question to the Minister of Agriculture.
Since we are now witnessing in Quebec an exceptional season for milk production, coupled with a considerable increase in the quantity of dairy products on the market, and since the Kraft Company of Canada has been importing enormous amounts of cheese and powder-milk from the United States, can the minister tell us whether he is aware of these circumstances and, if so, what steps does he intend to take with a view to preventing dairy product surpluses before April 1, 1976?


Hon. E. F. Whelan (Minister of Agriculture):: Everything within our power, Mr. Speaker.


ADMINISTRATION OF JUSTICE
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, my question is for the Solicitor General but before I put it I express to him my thanks for the correction he made in connection with certain information he
gave yesterday and therefore exemplified a principle that is the essence of parliamentary government, which is when any member makes a statement that is incorrect or makes allegations against any member that are false he withdraws unreservedly. I thank the minister very much for giving an example to other members in this House.


Some hon. Members:: Hear, hear!


John George Diefenbaker: I should like to ask the minister if he could give a list of the numbers today in death row in various penal institutions of our country, and in particular as well, the longest period any one of these prisoners who are convicted murderers has been in that very awkward position of being under the shadow of the gallows.


William Warren Allmand: Mr. Speaker, there are presently nine men who have been convicted of capital murder. This relates to seven cases. In two cases there were two accused in respect of one particular person murdered. There are nine men held awaiting appeal or whose applications are before cabinet for mercy.


John George Diefenbaker: How many?


William Warren Allmand: Three now have applications before cabinet for mercy. The other six are going through various stages of appeal.


John George Diefenbaker: Could the minister say, among those who are under the sentence of death, which of these prisoners has been for the longest period in the position of uncertainty because of cabinet uncertainty.


William Warren Allmand: Mr. Speaker, I do not have that exact information with me. My impression is that Mr. Rheal Chartrand, who recently pleaded his own case before the Supreme Court, is the one who has waited the longest time but his case has only recently been before the Supreme Court and will now go to cabinet.


GOVERNMENT INTENTIONS WITH REGARD TO CARRYING OUT LAW CONCERNING CAPITAL PUNISHMENT
Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, I have a supplementary question for the Prime Minister. As the government has not carried out the law passed by Parliament two and one-half years ago which requires capital punishment for those found guilty of killing a prison guard or policeman while on duty, and as the government shows no indication of carrying out the law as passed by parliament, is it the intention of the government to continue in this vein and ignore this law or obey it?


Pierre Elliott Trudeau: Mr. Speaker, I am afraid that I must point out to the hon. member that he is misreading the law. The law does not make it mandatory on the government to hang people. It provides that under certain circumstances the penalty will be hanging, but it does not remove the prerogative of granting mercy. I must remind the House that in the speech which was referred to earlier by the hon. member for Annapolis Valley I made this clear. The House is always free to put in a statute that it withdraws from the

July 3, 1975

government the prerogative of granting mercy. In that case the hypothesis which concerns the hon. member would be a real one. But in this case it is not. It is based on a false reading of the law which I am sorry the hon. member remembers incorrectly.


GOVERNMENT INTENTIONS WITH REGARD TO VAILLANCOURT
George Harris Hees: Is it the
intention of the government to immediately bring the case of Mr. Vaillancourt before the cabinet and decide one way or the other on this case?


Pierre Elliott Trudeau: I believe that with respect to Mr. Vaillancourt the date has been postponed until some time in the fall. Therefore, the cabinet will obviously have to dispose of this case in due course, but not necessarily immediately.


EXTERNAL AFFAIRS
James McPhail Gillies: Mr. Speaker, my question is for the Secretary of State for External Affairs and it is somewhat supplementary to the questions raised by the hon. member for Greenwood. Can the minister give a categorical assurance to the people of Canada, and to the House that if South Korea proceeds with its purchase of a plutonium separator Canada will not sell a reactor to South Korea?


Allan Joseph MacEachen: Mr. Speaker, the categorical assurance that I can give is that we are seeking safeguards which will prevent the diversion of Canadian materials or the use of Canadian equipment for explosive purposes. The commitment I will give is that we will seek to have that written into an appropriate bilateral agreement.


James McPhail Gillies: Do I understand from what the minister is saying that even though South Korea may acquire the capability of producing a nuclear bomb, as it is reported to have been doing by acquiring this equipment that is used for nothing else but translating plutonium into atomic energy for weaponry purposes, that Canada will still go ahead and sell the reactor to South Korea?


Allan Joseph MacEachen: I have explained the situation quite clearly and I do not intend to be drawn into answering a series of hypothetical suppositions put by the hon. member.
Oral Questions PUBLIC SERVICE


REQUEST FOR DESIGNATION OF OCCUPATIONAL GROUPS TO WHICH REGIONAL PAY DIFFERENTIALS MAY BE EXTENDED
Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, my question is for the President of the Treasury Board and it arises from a letter which the minister was kind enough to send me in the last few days dealing with the matter of regional differentials in pay rates. In that letter, which I will paraphrase rather than quote directly, the minister has indicated quite clearly that the government now believes that there are additional occupational categories to which the principle of regional pay differentials should be applied or extended. I wonder if the minister is now in a position to indicate to the House and to federal government employees what other occupational groups he or the government have in mind with respect to the extention or expansion of this divisive principle?


Hon. Jean Chretien (President of the Treasury Board):: Mr. Speaker, I fear that this question is somewhat technical. Unfortunately, I cannot answer it directly. However, I shall prepare an answer which I will send to the hon. member and, if necessary, table in the House.


J. Michael Forrestall: Perhaps I will rephrase my question. I appreciate the minister's indication that he will prepare a reply because of the importance of this. Can the minister indicate if it is the intention of the government to pursue the expansion of the principle of regional pay differentials to other categories of civil servants, for example, would the armed forces be included among these categories?


Joseph Jacques Jean Chrétien: Mr. Speaker, there is no question of extending that policy to the Canadian Army for the time being. As to other occupational categories, often the regional pay rates are established after negotiations with the unions and I am in no position to anticipate rulings in such cases.


EXTERNAL AFFAIRS
Hon. Stanley Haidasz (Parkdale):: Mr. Speaker, in view of the interest and concern about the implications of the conference on security and co-operation in Europe, can the Secretary of State for External Affairs say whether he would consider making a comprehensive statement to the House or to the Standing Committee on External Affairs and National Defence before committing Canada to any part or all of the agreement regarding future security and co-operation in Europe?


Allan Joseph MacEachen: Mr. Speaker, I will be happy to give that question careful consideration. The matter is now being considered by myself and I will take into account the representations made by the hon. member on that point.

July 3, 1975
Oral Questions ENERGY


PROPOSED ENRICHED URANIUM PLANT AT JAMES BAY-POSSIBILITY OF DISCUSSION BETWEEN PRIME MINISTER AND FRENCH INTERIOR MINISTER
Miss Flora MacDonald (Kingston and the Islands):: Mr. Speaker, my question is for the right hon. Prime Minister. In his meetings later this week with French Interior Minister Poniatowski, is the subject of a proposed enriched uranium plant in the James Bay area on the agenda for discussion?


Pierre Elliott Trudeau: Not in so
far as my discussions with the minister are concerned. I am meeting the minister next week on only one occasion, I believe, at a luncheon, but I rather imagine that the subject can come up at meetings with other ministers. I know that the federal Minister of Energy, Mines and Resources has been discussing this question recently with the Quebec minister of industry.


PROPOSED ENRICHED URANIUM PLANT AT JAMES BAY- GOVERNMENT POSITION FOLLOWING FEASIBILITY STUDY
Flora Isabel MacDonald: My supplementary question is for the Minister of Energy, Mines and Resources. In view of the fact that the minister said on June 10 that he would be meeting with the Quebec minister of industry in the first week of July to discuss the feasibility report of the Canadif project, and that the federal government has a role of prime importance in this matter, would the minister say if he is now prepared to give the federal government's position on this issue?


Donald Stovel Macdonald: Mr. Speaker, I met with Mr. St. Pierre yesterday. We had both received from the James Bay Corporation a copy of the feasibility study and we noted that the study had not addressed itself to a number of questions, including the ones to which I have made reference in the House which we think are most important in that regard. Federal officials will meet with Quebec officials, I think, in about three weeks' time to make a further examination of the question and to see whether it would be desirable from the standpoint of Quebec and of the federal government to have more elaborate studies made of this proposal.


Donald Stovel Macdonald: I have one final supplementary question for the Minister of Energy, Mines and Resources. In view of the gravity of this matter with regard to the export of a nuclear substance, would the minister undertake to report to the House on any discussions that take place with the French interior minister regarding an enriched uranium plant and make clear once and for all the federal government's position on this matter?


Donald Stovel Macdonald: Mr. Speaker, I am not anticipating meeting the French interior minister and I cannot report on discussions that other hon. members may have.


REGIONAL ECONOMIC EXPANSION
Mr. Allan B. McKinnon (Victoria):: Mr. Speaker, my question is for the Minister of Regional Economic Expansion. The once prosperous province of British Columbia has had a 50 per cent increase in unemployment in the last year. At the same time it is impossible to obtain DREE grants or loans in many high unemployment areas. There appears to be a hold-up in the ratification of a general development agreement. Can the minister tell the House who or what is stopping the DREE programs in British Columbia?


Some hon. Members:: Barrett.


Hon. Donald C. Jamieson (Minister of Regional Economic Expansion):: Mr. Speaker, I am sure the hon. member would not wish me to get involved in the first part of his question. It is unfortunate that the jobless rate in British Columbia has gone up, but that, of course, is not our responsibility.


Some hon. Members:: Oh, oh!


Donald Campbell Jamieson: In so far as trying to alleviate that situation is concerned, I have been holding discussions with Mr. Lauk, the B.C. minister of industrial development. We have a number of proposals which I have outlined earlier in the House. The first of these should be ready for submission to the federal Treasury Board some time in the month of July. I mentioned earlier that it had to do with infrastructure support in northern British Columbia. There are two other areas in which we are engaged, namely, some development with regard to certain of the coal field areas in that part of British Columbia, and also an incentives program relating to certain parts of the lumber industry within British Columbia. These are moving ahead. I am not sure that I could attribute blame for the slowness to any one particular place. I can only say to the hon. member that I hope we can move as fast as possible.


REASON FOR LACK OF UNEMPLOYMENT STATISTICS FOR CAPITAL REGION OF BRITISH COLUMBIA
Allan Bruce McKinnon: I was asking earlier about a general agreement. It might be beneficial for the minister responsible for DREE if Statistics Canada were to provide more detailed figures on unemployment in British Columbia. Can the minister explain to the House why there are no unemployment statistics for the capital region district, which contains some 220,000 people?


Donald Campbell Jamieson: If that part of the question is directed to me, I am afraid I cannot give an offhand answer, but I will refer it to the appropriate minister, and we will see what we can do by way of obtaining an explanation. Hon. members opposite were most emphatic in insisting that DREE assistance should not be provided in the lower mainland area of British Columbia.

July 3, 1975


FINANCE
Mr. John Gilbert (Broadview):: Mr. Speaker, my question is directed to the Minister of Finance. In view of the statements of the housing minister of Ontario, Mr. Donald Irvine, that the province of Ontario is considering forcing banks, trust companies and insurance companies to make more money available for housing mortgages, would the Minister of Finance implement similar procedures for financial institutions under federal control to increase the supply of mortgage moneys to ease the housing crisis across the country, and if not, why not?


Hon. John N. Turner (Minister of Finance):: Mr. Speaker, if the hon. gentleman would review the recent figures, he would see that there is a considerable proportion of free funds emanating from banks, insurance companies and trust companies moving strongly into the housing market.


PROPOSED REDUCTION IN MORTGAGE INTEREST RATES AND TRANSFERENCE OF AMOUNT OF CAPITAL BUDGET REDUCTION OF DEPARTMENT OF URBAN AFFAIRS TO CMHC
John Gilbert: In view of the fact that the minister of housing for Ontario also said that mortgage interest rates should be 1014 per cent rather than 11% per cent to 121/2 per cent, what measures will the minister take to lower interest rates so that people can buy housing at a reasonable cost?


John Napier Turner: Through the initiatives of my colleague, the Minister of State for Urban Affairs, we already have a subsidized rate for lower and moderate income people under the AHOP program.


John Gilbert: In view of the fact that there has been a substantial cut in the capital budget of the Minister of State for Urban Affairs, would the minister transfer that saving to the CMHC budget for public housing?


John Napier Turner: There are only two departments which have not been involved in the cuts. One is the department of my colleague, the Minister of Manpower and Immigration, who received a $450 million increase for direct employment, particularly for this winter. The other is my colleague, the Minister of State for Urban Affairs, who received a $200 million increase, increasing the budget of Central Mortgage and Housing Corporation by 20 per cent. His entire budget now is about three times the fund which was in the hands of his predecessor.


Some hon. Members:: Hear, hear!
Oral Questions


ADMINISTRATION OF JUSTICE
Eudore Allard: Mr. Speaker, I would like to put a question to the Minister of Justice.
Following the second acquittal of Dr. Morgentaler and the request made to the government by the Association for the Repeal of Canadian Abortion Laws to withdraw Criminal Code Section 251 and release Dr. Morgentaler, could the minister tell the House what position he will take in this regard?


Hon. Otto E. Lang (Minister of Justice):: Mr. Speaker, I have no reason to change answers which have been given before in the House in regard to that question.


LABOUR CONDITIONS
Mr. Serge Joyal (Maisonneuve-Rosemont):: Mr. Speaker, I have a question for the Minister of Labour.
Can he tell the House whether he intends to meet representatives of the International Longshoremen Association local 375 in the next few hours to discuss the points under dispute concerning job security and other items the arbitrator cannot amend without the consent of both parties, namely the longshoremen and the Maritime Employers Association?


Hon. John C. Munro (Minister of Labour):: Mr. Speaker, I would advise the hon. member that I recently received a telegram from the longshoremen. I am seriously considering the contents of that telegram and seriously considering meeting with them in the near future.



AGRICULTURE


Mr. Don Mazankowski (Vegreville):: Mr. Speaker, I should like to direct my question to the Minister of Agriculture. It arises from a recent announcement by the government of the United States that its council on wage and price stability would be launching a study into the dramatic increases in the cost of farm machinery, which has risen by 22 per cent over the past year. Having regard to the fact that similar increases have occurred in Canada, and in many cases the increases have been in excess of that reported in the United States-


An hon. Member:: It is 28 per cent.

July 3, 1975
Oral Questions


Donald Frank Mazankowski: My colleague claims it is 28 per cent. I am wondering if the minister has consulted with his cabinet colleagues with a view to undertaking a similar cost study analysis or an investigation into the dramatic increases in the cost of farm machinery over the last couple of years. Perhaps he might also look into the cost of chemicals and fertilizer.


Eugene Whelan: Mr. Speaker, I would suggest that the hon. member read "News and Features", Agriculture Canada publication No. 1632, which contains a very good article on farm machinery, cost of fertilizer, et cetera. I think the figures there are more accurate than the figures to which the hon. member referred.


Donald Frank Mazankowski: Am I to take it from the minister's answer that he is satisfied with the pricing structure of farm machinery in this country and that he will not do anything, notwithstanding the fact that the United States considers the issue important enough to launch an investigation? When will the minister start looking after farmers rather than machinery companies?


Some hon. Members:: Oh, oh!


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



INDUSTRY


Mr. Dean Whiteway (Selkirk):: Mr. Speaker, my question is to the Minister of Industry, Trade and Commerce. Last week while he was away talking about STOL aircraft in the land of the rising sun, in Gimli the sun has almost set on Saunders Aircraft. Would the minister indicate to the House if he intends to make a decision on the PAIT application by Saunders and to express to the House exactly why that application has not been decided after two years of sitting on it?


Hon. Alastair Gillespie (Minister of Industry, Trade and Commerce):: Mr. Speaker, we have not yet received evidence that the particular processes introduced by that company meet the requirements of the program for the advancement of industrial technology.



UNEMPLOYMENT INSURANCE


Mr. Lincoln M. Alexander (Hamilton West):: Mr. Speaker, I would like to direct a question to the Minister of Manpower and Immigration, and it is related to unemployment insurance. In view of the fact that the minister has modestly estimated that budgetary revisions in the Unemployment Insurance Act will result in a 20 per cent

increase in premium payments for employees and employers, and since this negation of the 1971 act was carried out as an expenditure restraint, for which it is now apparent that employees and employers will pay, will the minister please inform this House if this innovation was intended as an additional payroll tax?


Hon. Robert K. Andras (Minister of Manpower and Immigration):: Mr. Speaker, I will be commenting on this matter in detail when the bill is presented for second reading, and that will be shortly.


Lincoln MacCauley Alexander: It seems to me that the minister is prepared to advise the press of the thinking of the government in this regard, and I hope the press will give us the benefit of his views. Regardless of what the minister said, the proposed increase in employer and employee contributions to the UIC is nothing but a regressive payroll tax. Would the minister now inform the House if it is becoming government policy to fund income security and maintenance programs through these measures rather than through the so-called progressive Income Tax Act? Will the minister give me a reply to that statement, or do we have to wait again in order to determine what the minister is thinking by way of his speech either on the budget or on the introduction of the bill itself?


Robert Knight Andras: The principle of the sharing of costs by the employer and the employee premiums on the one hand and government cost on the other hand was established in the 1971 amendments. The proposed amendment which was made known to the House in the speech of my colleague the Minister of Finance on budget night indicates a change in the level of the threshold, but not a change in the principle.
As to the hon. member's comment about speaking to the press, that is not totally correct. I responded to one or two questions; I did not make a statement.



FINANCE


Mr. Stan Darling (Parry Sound-Muskoka):: Mr. Speaker, I wish to direct a question to the Minister of Finance. The minister did not indicate to the House any forecasts for housing sector activity in 1975 in his budget speech. Can the minister tell the House whether he is satisfied that his estimate of 200,000 starts given in his November budget is still accurate, considering the economic conditions of the time?


John Napier Turner: Mr. Speaker, I did express some reservations about the change in the economic situation. A most up to date appraisal of the housing situation was adequately covered in the House yesterday by my colleague the Minister of State for Urban Affairs.
July 3, 1975



IMMIGRATION


Mr. Derek Blackburn (Brant):: Mr. Speaker, a question for the Minister of Manpower and Immigration. In view of the fact that the Deputy Speaker of the Quebec National Assembly accompanied a number of Canadian diplomats from Bangkok to a southern Thailand refugee camp and successfully arranged for a group of 30 South Vietnamese refugees to be housed as guests of the Canadian Embassy in Bangkok prior to arranging for minister's permits for all 30 to enter Canada, including the accused embezzler Nguyen Tan Doi, can the minister state that this is normal procedure in view of the fact that these refugees were safe in a country other than their own? Will the minister make a full report to the House on this whole immigration affair before the House recesses for the summer?


An hon. Member:: And what about Chile?


Robert Knight Andras: Mr. Speaker, in reply to the aside about Chile, a full report will be made to the House very shortly to correct some of the extraordinary inaccuracies that have been deliberately or inadvertently spread across the country by some people about the difference in treatment between Chilean and Vietnamese refugees.
As to the comment of the hon. member who asked the question, as usual I am interested in all the information, about the Deputy Speaker in Quebec or anybody else who may have taken part in certain activities, I have no confirmation. I will be glad to look into it and report to the House if it seems appropriate to do so.


Derek Nigel Ernest Blackburn: A supplementary question, Mr. Speaker. I have been asking questions of the minister for the past six or seven weeks, and these questions have contained a lot of information. The minister always says he is interested. As he has a whole army of civil servants behind him, I should like to ask why he has not obtained the information himself?


Robert Knight Andras: Mr. Speaker-


Mr. Speaker:: The hon. member for Fundy-Royal.



AIRPORTS


Mr.  R. Gordon L. Fairweather@Fundy-Royal: Mr. Speaker, I have a question for the Parliamentary Secretary to the Minister of Transport, of which I gave the minister notice this morning. The question is in response to representations made by the people who are sensible enough to want to spend part of this summer in the Maritimes. Would it have been possible to have picked a time more inconvenient for travellers than the last week or two in July to close the Fredericton airport for ten days? Did a task force look at traffic flow patterns and recommend that the closing take place in what is the
Oral Questions
busiest travel period of the year or what is the origin of this awkward plan?


Mr. Cliff Mclsaac (Parliamentary Secretary to Minister of Transport):: Mr. Speaker, there certainly was no plan to undermine the tourist traffic to Fredericton. The contract was awarded to begin work on June 2 and work should be completed at the end of August.


Some hon. Members:: Oh, oh!


An hon. Member:: There goes the summer.


An hon. Member:: Go to the head of the class.


Joseph Clifford McIsaac: The main runway will only be unavailable for a three week period from July 7 to July 28.


Some hon. Members:: Oh, oh!


Joseph Clifford McIsaac: The hon. member well knows that cement cannot be poured down there in the wintertime, either!


Mr. Fairweather:: It can in October and November.


George Harris Hees: Summer in New Brunswick only lasts three weeks!


Joseph Clifford McIsaac: It was timed in order to try to accommodate the peak period. The peak period for traffic down there is August and September.



INCREASE IN TROPICAL DISEASES-REQUEST FOR ASSURANCE PEOPLE PROPERLY TESTED BEFORE BEING ALLOWED INTO COUNTRY

Mr. P. B. Rynard (Simcoe North):: Mr. Speaker, I should like to put a question to the Minister of National Health and Welfare. Is he aware of the resolution passed by the Canadian Public Health Association which has appointed a committee to find out about the rapid increase in tropical diseases because they feel there must be loopholes which permit this increase to occur? Can the minister tell the House if there are sufficient laboratories and personnel to ensure that there are no loopholes and that people are not allowed into the country who are not properly tested?


Hon. Marc Lalonde (Minister of National Health and Welfare):: Mr. Speaker, I am aware of the resolution passed by the Canadian Public Health Association. The incidence of tropical disease is increasing, but this would seem to be due in large part to the increase in visitors to Canada, not immigrants but visitors, and in particular Canadian visitors who come back from warmer climates. This is a cause of some concern. As the hon. member knows, we are subjecting the immigrants to very extensive tests, probably the most comprehensive of any country. As far as visitors are concerned, we are discussing new regulations with the Minister of Manpower and Immigration which would allow us to have even stricter rules than there are at the present time without preventing people from travelling in and out of Canada.
Oral Questions



ADMINISTRATION OF JUSTICE

[Stage Direction]
July 3, 1975

Mr. John Roberts (St. Paul's):: Mr. Speaker, I should like to put a question to the Minister of Justice. I should like to ask the minister whether he intends, when he presents his omnibus legislation, to include provisions which would preclude an appeal court from substituting a sentence for a jury acquittal rather than ordering a new trial?


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Otto Emil Lang: Yes, Mr. Speaker, I have decided I will do that.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: How about that?


Otto Emil Lang: I have made it clear that I did consider that a great deal of the worry on this subject, after reading the Supreme Court decision, was indeed a red herring that was worrying a lot of people. I have also concluded that the best way to deal with a red herring is to dispose of it altogether. I would propose to bury it.


Robert Gordon Lee Fairweather: Or read the judgment of Bora Laskin!


John George Diefenbaker: You should ask for forgiveness.



EXTERNAL AFFAIRS


Robert Lorne Stanfield: Mr. Speaker, the government House leader told me on Friday that he would try to comply with my request for the government to table provisions relating to the contract between Canada and Argentina in 1973 which made allowance for the subsequent negotiations of safeguards. Is he in a position to do so?


Hon. Mitchell Sharp (President of the Privy Council):: Mr. Speaker, I have been talking with my colleague, the Secretary of State for External Affairs, since his return. I understood he was looking into the question but has not yet got all the information together which is necessary to answer the question.



ROUTINE PROCEEDINGS


[Stage Direction]
Eighth report of Standing Committee on Miscellaneous Estimates, in both official languages-Mr. Leblanc (Laurier).

[Stage Direction]
Third report of Standing Committee on External Affairs and National Defence-Mr. Dupras.
[Editor's Note: For text of above reports, see today's Votes and Proceedings.]
Allan Bruce McKinnon: Mr. Speaker, I do not think the House should let today pass without this comment being made concerning yesterday's events. I hope that I will have the indulgence of the House to express the admiration of the House for the manner in which the RCMP and the Canadian armed forces carried out yesterday's difficult operation in taking over, at short notice, the security of our prisons. For many years Canadian troops have been rated as second to none wherever they have served. Yesterday, Canadians had an opportunity to note the cool competence and professional efficiency that makes them our pride and the envy of other nations.


Some hon. Members:: Hear, hear!


CRIMINAL CODE
Mr. John Reynolds (Burnaby-Richmond-Delta) moved: for leave to introduce Bill C-398, to amend the Criminal Code (black powder firearms).


An hon. Member:: Explain.


John Douglas Reynolds: Mr. Speaker, the purpose of this bill is to exempt antique muzzle-loading firearms using black powder from the list of restricted weapons in the Criminal Code. These weapons are of interest only to collectors and are too cumbrous to be a threat to public safety.


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

Mitchell William Sharp: Mr. Speaker, in accordance with section (2) of Standing
July 3, 1975

Order 60, I request you to designate the necessary order of the day for the consideration, at the conclusion of the budget debate tomorrow, of the ways and means motions tabled in conjunction with the budget.


Mr. Speaker:: Is this agreed?


Some hon. Members:: Agreed.


Mr. Speaker:: It is so ordered.


INDIAN AFFAIRS AND NORTHERN DEVELOPMENT
Mitchell William Sharp: Mr. Speaker, two motions on the order paper under government notices of motions deal with the travels of the Standing Committee on Indian Affairs and Northern Development. I believe there is unanimous disposition to deal with both of them today. I therefore move:
That the Standing Committee on Indian Affairs and Northern Development be empowered to travel to Sarnia, Ontario, and vicinity from July 6 to 8, 1975, for the purpose of studying economic development on local Indian reserves and that the necessary supporting staff do accompany the committee.


[Stage Direction]
Motion agreed to.

Mitchell William Sharp: Mr. Speaker, I move:
That the Standing Committee on Indian Affairs and Northern Development be empowered to adjourn from place to place in the eastern
(a)	(b)
Nil Benoit, P.
Beseau, P. D.
Carleton, It. K.
Dent, G. M.
Filion, J. P.
Filion and Degagne Gowling, E. G.
Gowling, MacTavish and Co.
Green, Poulin and MacKinnon Mitchell, Batt and Howard Nicol and O'Connor O'Connor, J. P.
Poulin, H.
Roy, A.
Scott and Aylen Nil Scott, C. A.
Smart and Biggar Tavel, J. I.
Wentzell, J. D.
*In these instances work was assigned during the submitted.
Order Paper Questions
provinces and northern Canada during the coming recess in order to inquire into matters concerning development of the north and the affairs of natives peoples and to view historic sites and parks and that the necessary supporting staff do accompany the committee.


[Stage Direction]
Motion agreed to.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. John M. Reid (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, the following questions will be answered today: 2,389, 2,572, 2,636, 2,682 and 2,693.
Mr. Speaker, would you be so kind as to call starred questions Nos. 2,629 and 2,775?
I ask, Mr. Speaker, that the remaining questions be allowed to stand.


Mr. Dick: For each year 1971, 1972, 1973, 1974 to date, what law firms and/or lawyers in the Regional Municipality of Ottawa-Carleton in the Province of Ontario were (a) retained (b) hired (c) paid a fee and in what amount, for doing legal work on behalf of, or as agents for the government?


Otto Emil Lang: In so far as
agents of the Minister of Justice are concerned:
1971	W 1972	1973 :	1974 to date
281.25	-.			
-	-	237.50	1,472.80747.00	-	225.00	8,798.43	8,571.09	2,802.92	10,430.14*	267.00	*	255.00	-	688.00	3,542.02-	540.00	-	15,563.14	22,290.36	11,330.34	31,170.15-	5,228.10	16,682.35	30,558.35-	-	-	3,946.999,153.75	6,130.25	2,768.00	9,829.00126.00	-	-	22,594.15	9,820.90	-	.13,274.97	1,268.50	2,901.15	15,514.40350.00	200.00	-	653.2014,754.28	6,159.02	9,023.51	54,546.987,264.10	8,544.91	13,533.50	21,589.939.00	-	-	5,988.02	-	-	.-
period in question but accounts have not yet been

July 3, 1975
Order Paper Questions


Mr. Herbert: 1.	What are the total costs included in the 1975-76 Estimates of the Department of National Revenue for language training?
2.	How are such costs divided between (a) salaries of personnel receiving instruction (b) salaries of instructional staff (c) additional or supplementary services to be purchased from the Public Service Commission (d) other costs?


Hon. Ron Basford (Minister of National Revenue):: 1.


[Stage Direction]
2.	(a) Nil; (b) Nil; (c) $1,031,810; (d) $1,097,410.
Mr. Woolliams: 1.	Is the Department of National Revenue assessing a $20,000 tariff on a 100th birthday gift to the City of Calgary made by the Dutch Canadian Centennial Committee of Calgary, of a $100,000 electronic carillon made up of 330 bells?
2.	Has the Department taken into consideration that the gift is for a charitable purpose, being Calgary's centennial year and that the carillon was not manufactured in Canada?
3.	Under what item and for what reason has the Department and the Minister assessed the $20,000 tax?
4.	Has the Department taken into consideration that other gifts made of similar class and kind to churches, etc., have been exempted from such tax?
5.	Does the Department consider that the tax must be assessed and collected and, if so, will the Minister be prepared to pass an Order in Council making the necessary refund in light of the fact that this is Calgary's centennial year and a year honouring the RCMP that held the West for Canada?


John Mercer Reid: Mr. Speaker, the answer reads as follows; 1. Yes. Through its broker the Dutch Canadian Centennial Committee has requested an estimate of the duty and taxes payable in respect of a musical instrument known as a "Schumerich Americana Mark V". This instrument is electronically operated and reproduces the sounds of a carillon but does not possess bells. It has been valued at $58,194.50, and duty and sales tax payable are estimated to be $16,760.02.
2.	The tariff item under which the instrument has been imported does not permit taking into consideration the purpose of the gift or its made-in-Canada status.
3.	The duty and taxes were estimated in accordance with the relevant provisions of the Customs Tariff and the
Customs Acts. The carillon falls under tariff item 59725-1 which provides: "Musical instruments of all kinds, n.o.p." The rate of duty applicable is 15 per cent, to which is added 12 per cent sales tax.
4.	Yes. Tariff item 69605-1 permits churches and universities to import certain types of equipment not made in Canada duty free. However, in this case the gift was not made to either a church or a university.
5.	There is no statutory authority for the Department to waive assessment and collection of the duty and taxes applicable. In the past, requests that duty and taxes on gifts made under similar circumstances be remitted by way of Order in Council have been refused and it is not considered that any deviation from this policy is warranted with respect to the gift to the City of Calgary.


Mr. Cossitt: 1.	What are the names and addresses of all persons who applied for seasonal employment with Canada Customs at the port of Brockville, Ontario?
2.	What are the names and addresses of all persons who were actually interviewed for employment as seasonal officers with Canada Customs at the port of Brockville, Ontario?
3.	What are the names and addresses of all persons who have been hired as seasonal officers with Canada Customs at the port of Brockville, Ontario?


Stanley Ronald Basford: 1.
Under the provision of section 25 of the Public Service Employment Regulations this information is considered to be confidential and therefore cannot be disclosed.
2.	See reply to (1) above.
3.	Mr. H. Cote, 241 York Street, Cornwall, Ontario.


Mr. Marshall: With regard to the Department of Supply and Services Tenders Nos. NEW4-3083A and NEW4-3092A (a) what are the names and addresses of each firm who submitted a bid (b) what amount was bid by each (c) which bid was successful?


Hon. Jean-Pierre Goyer (Minister of Supply and Services):: It is presumed that the reference to tender NEW4-3092A should read NEW4-3082A as it is related to tender NEW4-3083A. The following information replies to parts (a) and (b) of the question.
Name of Firm Tendering	Tender NEW4-3083A Tender NEW4-3082A
Atlantic Derrick & Supply Co. Ltd.	$11,160	$1,005
221 Duckworth Street St. John's, Newfoundland
Heap & Partners (Nfld.) Limited	$37,260	$3,105
87 O'Leary Avenue St. John's, Newfoundland
Foulis Engineering Co. Ltd.	$41,040
P.O. Box 4129 St. John's, Newfoundland


July 3, 1975

Newfoundland Industrial Engineering Limited P.O. Box 39 Stephenville, Newfoundland	$55,224	Order Paper Questions $4,367Industrial Systems Limited P.O. Box 602 Mount Hope Avenue Dartmouth, Nova Scotia	$59,400	$4,542.03John Leckie Limited P.O. Box 8560 O'Leary Avenue Industrial Park St. John's, Newfoundland	$67,740	$5,170Steers Limited Water Street St. John's, Newfoundland	$71,632.68	$5,466.09Job's Industrial P.O. Box 5397 St. John's, Newfoundland	$74,580	$6,340Domac Enterprises Ltd. P. O. Box 1755 St. John's, Newfoundland	$75,804	$5,784
(c) The successful bids were those tendered by Industrial Systems Limited, who submitted the lowest quotations meeting the specifications in the invitation to tender. All tenders were evaluated by the regional engineer of Environment Canada, the customer department. The four lowest tenders were rejected because they offered electric winches with either a belt drive or a combination of belt drive and chain drive. The invitation to tender clearly specified that the winches were to be chain driven.


Mr. Munro (Esquimalt-Saanich): 1.	Did the Canadian Film Development Corporation aid in financing the movie "Sweet Movie" and, if so, to what extent?
2.	Will the movie be presented publicly in Canada at normal commercial outlets and, if not, how will it be shown?
3.	Will it be shown abroad as representative of the Canadian film making craft?


Hon. James Hugh Faulkner (Secretary of State):: I am
informed by the Canadian Film Development Corporation as follows: 1. Yes. 15 per cent of the total budget of the film.
2.	The film has already been shown in Montreal, and is being offered to other motion picture theatres in Canada.
3.	No. The film is presented internationally as a French film produced under the terms of the France/Canada Film Co-Production Agreement of May 8, 1974. The French co-producer is the majority financial party and retained creative control of the picture.


Mr. Howie: What is the total amount of money paid to date in respect of the prosecution of the Irving interests under the Combines Investigation


Mr. Norman A. Cafik (Parliamentary Secretary to Minister of Consumer and Corporate Affairs):: Mr. Speaker, the amount of money spent to date is $155,050. This figure does not include travelling expenses and time of Department of Justice personnel and of officers on the staff of the Director of Investigation and Research.


John George Diefenbaker: Mr. Speaker, I rise on a point of order. Question No. 2,542 is simple and has been on the order paper since May 23. It asks:
Are Canadians employed by the United Nations or any of its agencies or any organizations under its aegis subject to income tax on their earnings?
That question should be easy to answer, unless some pay and some do not, and I see no excuse for the delay. Starred question, 2,543 also has been on the order paper since May 23. It reads:
Have diplomatic representations been made by any government of Canada since 1950 to the government of the United States in support of applications by Canadians for admission to West Point, the United States Military Academy and, if so, who and in what year?
That question should not be difficult to answer. If the government have any difficulty, they might get in touch with the Prime Minister's pet, Michael Pitfield; he will be able to supply the information.


An hon. Member:: Very funny.


Mr. Speaker:: Orders of the day.

July 3, 1975
The Budget-Mr. Horner



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Wednesday, July 2, consideration of the motion of Mr. Turner (Ottawa-Carleton) that this House approves in general the budgetary policy of the government.
Mr. J. H. Horner (Crowfoot):: Mr. Speaker, I am pleased to participate in this debate. One must assess the purpose of the budget. The budget merely reflects the government's appraisal of economic conditions in this country and is a guideline for the government's proposed spending during the coming year.
I suggest that the budget's assessment of the economy is inadequate. In the past, the Minister of Finance (Mr. Turner) has failed to estimate correctly conditions in this country; he has not been able to say accurately how much the economy would grow in the following year. In this budget the minister said he would try to curtail government spending. Apparently the minister takes pride in saying no to his cabinet colleagues. How does he propose to cut $1 billion from government spending? Let me draw an analogy. This is like your wife, or mine, saying, "Look at all the money I saved by not buying that dress." That is how the minister proposes to save $1 billion.
He also said in his budget speech that the government will cut the federal funding of provincially-shared health programs. In other words, the minister gave notice to the provinces that they can no longer trust the federal government; it will cut down its part of the funding of federal-provincial programs. Originally, the federal government forced the provinces to enter into hospitalization agreements. The government is giving the required five-year notice. Originally, the government enticed the provinces to participate in the medicare program even though we all knew the program would be expensive. Those who spoke in the pertinent debates expressed the fear that medical health costs would grow alarmingly and that the quality of medical services would decline correspondingly. I think this has happened. Now the government has given notice of its intention to curtail its spending in this field.
In the budget, the minister suggested that medicare expenditures have increased by 20 per cent and that in the coming year the federal government will limit their growth to 13 per cent, in the following year to 12 per cent and on down until 1978, to 8.7 per cent. I suggest the minister has great confidence in being able to curtail inflation or, as is more likely the case, he is determined to shift more and more of the burden on to the backs of the provinces.
The demand for services is being placed more and more on the provincial governments and the sources of revenue left open to them are diminishing. Outside of new-found resource wealth the provincial governments have used all their sources of revenue. The demand on the federal government for services is far less than the demand on the

provincial governments. However, in this budget the federal government is moving more and more into the taxing field which is normally that of the provinces and is getting out of some of the cost-shared programs into which it in fact enticed the provinces.
I think this is a greedy budget. Some years ago there was a great deal of talk in this House about "co-operative federalism" and how it would work. Looking at this budget, it appears the Minister of Finance has long forgotten that political phrase. The budget makes a sham attempt at dealing with some of the housing problems in Canada today. The minister stated again today that there are an additional $200 million for housing. Housing starts this year are 30 per cent below those of a year ago. Certainly, more than an injection of money must be made into the housing field.
The minister commented on the unemployment situation and said he was going to divert $10 million to assist in the transfer and mobility of unemployed persons to locations within Canada where there is a shortage of labour. The minister also suggested that the Unemployment Insurance Act would be changed. At the moment it merely effects a transfer of funds from regions which have less than 4 per cent unemployment to those with more than 4 per cent unemployment: it is really a transfer of money by the labouring class through their unemployment insurance premiums. The Minister of Finance will eliminate the 4 per cent level and increase the unemployment insurance premiums. All of this is very valid. However, I remember that when the act was changed in 1971 I said the premiums would never equal the pay-out. I said the pay-out would only entice people to take unemployment insurance rather than actively seek employment or would make them a little more choosy in the employment they sought.
We look forward to the next change to the Unemployment Insurance Act to see whether the loopholes have been plugged and whether it is more an insurance program than a welfare program. When the Minister of Labour (Mr. Munro) introduced the last Unemployment Insurance Act changes into this House, he made no bones about it; he recognized it as a social program which took into consideration the whole social aspect of unemployed workers in Canada.
The Minister of Finance said he could not reach a consensus with labour and management with regard to controlling prices, and therefore did not feel that a voluntary or compulsory program would work in controlling spiralling prices and wages. In my opinion the government has set a very poor example with regard to controlling wages and inflation. This House well remembers the spiral of inflation which started after the Pearson government granted the Seaway workers a 30 per cent wage increase. That started a round of inflation and increased wage demands. Last fall this government granted the terminal workers at Vancouver a 61 per cent pay increase. It then attempted to try to reach a consensus with regard to limiting wage increases. After setting a precedent by passing a bill in this parliament to grant one segment of society a 61 per cent increase, labourers all across Canada began to demand similar treatment. The minister has not made a concerted effort to try to reach a better under-
July 3, 1975

standing with labour regarding inflation; in fact, rather than controlling inflation, this budget has spurred it on.
As I have said, this government has moved more and more into the provincial tax field. A glaring example is the ten cents a gallon tax on gasoline. I read the speech of the Minister of Energy, Mines and Resources (Mr. Macdonald). He seemed very gleeful about the fact that the provinces already tax the sale of gasoline. He stated that some provinces already have a tax of 19 cents a gallon on gasoline. That is quite understandable when one considers the origin of the tax. It is the provinces that construct the highways and roads; they impose the gasoline tax to assist the financing of bigger and better roads. The federal government are using the lame excuse that this tax will be used to firmly establish and maintain one oil price across Canada. They believe they will be in a deficit position with regard to the tax on our oil exports to the United States and that the tax will subsidize all oil purchased east of the Ottawa Valley at the international price.
If an increase of $1.50 a barrel will increase the price of gas to the consumer by five cents a gallon, it is logical to assume that a tax of ten cents a gallon would have the same effect as increasing the price of oil by $3 a barrel. The present price of oil is $8 a barrel; if it is increased by $3 it will be $11 a barrel, which is very near the international price. What is the government really doing? It is putting an additional $350 million into its coffers. The Minister of Finance said that in a full year it will amount to $450 million. It is a fact that this tax does not have to be imposed to maintain one-price oil. If we bought at the international price, we would have one price.
Whether the gasoline user knows or admits it, he is paying the same price as that charged in the international market. All one has to do is check the figures. Go to the United States and buy a gallon of gasoline. They are buying on the international market. Prices in the United States are less than they are in Canada. Of course, the gallon is smaller; it is four-fifths of the Imperial gallon. But the price works out at exactly four-fifths of what we are paying and it does not matter in what province it is bought.
Go to Vancouver. Regular gasoline is selling there at a price in the neighbourhood of 82 cents a gallon. Across the border, in the United States, you can buy gasoline-four-fifths of our gallon-at 62 cents which is four-fifths of what we are paying. East of the Ottawa Valley, motorists will be paying $1.05 a gallon for gasoline this fall. Do you think, Mr. Speaker, that they could not buy it for that price if we were buying it on the international market? The tax of ten cents imposed by the Minister of Finance brings the price paid by every Canadian up to the international price in whatever province he happens to live.
It might be said we ought to be paying the international price so as to make more money available for exploration in Canada, in which case we would not, perhaps, be wondering about what would happen in five or ten years from now when we ran out of oil. I heard the Minister of Finance say on Sunday that in five or ten years our supplies would be replenished because the government was now encouraging development. That is a complete
The Budget-Mr. Horner
fabrication on the part of the minister. I say this because of the 15-cent a gallon increase in the price of gasoline brought about by the budget, less than one cent will go to exploration and the development of new oil supplies. The amount might be a little more generous in the case of natural gas because natural gas has been underpriced for so long.
It has been suggested that the changes in taxation will encourage companies to do more exploration work. Well, Mr. Speaker, I have a statement here from a finance company, Draper, Dobie and Company. This is what they say about the minister's resource taxation proposals:
In the new budget, Turner proposed to reduce the corporate tax rate for production profits from oil and gas to 46 per cent from the current 50 per cent, effective January 1, 1976. The special abatement of 15 points of federal tax is to be withdrawn at the same time. The new budget also provided an extra income deduction from income, as an allowance in recognition of provincial resource levies. The resource allowance will be prescribed by regulation to be 25 per cent of resource production profits. For purposes of this allowance, production profits will be calculated after operating expenses and capital cost allowances but before deduction of interest expense, exploration and development and earned depletion. This new resource allowance will become effective also on January 1, 1976.
It is possible that not many hon. members understand what all that means. However, the next sentence is important:
What do these two changes in taxation mean? In essence, the best way to answer that question is, nothing.
That is what a company deeply involved in trying to arrange finance for further resource development within this country thinks of the taxation proposals in the budget. They work it all out and suggest that the changes are of no significance. As one can see from the figures produced, the federal tax rate is reduced by three cents a barrel. That is what the changes in resource taxation mean as the company figures it out. They will lower the tax on oil by three cents a barrel-so the Minister of Finance has really given next to nothing.
The Minister of Energy, Mines and Resources, in his contribution to the debate, addressed himself at great length to the need for higher gasoline prices. As reported on page 7100 of Hansard he had this to say:
I have argued that higher prices are necessary, firstly to bring on stream the oil and gas resources that Canadians will require in the next five to ten years; secondly, to help generate the high volume of savings necessary to find and develop these resources; and, thirdly, to reduce the rate of growth of energy demands to manageable levels.
Let us consider the first of the reasons given-to bring on stream the oil and gas resources Canadians will require in the next five or ten years. Mr. Speaker, anyone who is prepared to listen to the resource companies in Canada, whether Canadian-owned or not, can find no comfort in their words. They see nothing in the budget which will encourage them to explore for more oil. As I have just pointed out, of 15 cents a gallon increase in the price of gasoline, less than one cent goes toward the further development of our resources. The minister is not fooling anyone. Some of his own backbenchers may be fooled, but that is all.
Consider the second suggestion in the paragraph I have quoted, "to help generate the high volume of savings necessary to find and develop these resources". Mr. Speaker, I have just quoted from a paper put out by a financial

July 3, 1975
The Budget-Mr. Horner
house which is attempting to gather money to finance exploration for oil, and they say the tax proposals in the budget mean nothing. I do not doubt that their opinion is an objective one because, after all, they are trying to encourage investment in this field. The Minister of Finance told us a few months ago that Canada would need to spend $100 billion on the development of our energy resources so that we would be assured of sufficient supplies in coming decades. He said we would need to spend $100 billion by the year 2000. Be that as it may, the finance company I have quoted can find no comfort at all in this budget.
The other point the minister made in support of the budget proposals was that the new measures would reduce the rate of growth of energy demands to manageable levels. I need only remind hon. members that when the Minister of Finance was asked by the Leader of the Opposition (Mr. Stanfield) to tell the House how much he expected the ten cents tax would reduce gasoline consumption, the minister said he had really no idea; his department had not made an estimate. We would have to wait and see. I can answer that question right now, Mr. Speaker. It will not reduce gasoline consumption at all. It may cause some consumers to buy smaller cars, or it may encourage others to remove the anti-pollution equipment which was forced upon the car manufacturers by the government, in an effort to get better mileage. But as to the consumer staying home, not driving as much, or walking to work, I suggest the effect will be minimal. There may be a few more bicycles sold, partly because of increasing traffic congestion and partly because of a desire for exercise, but I do not believe it will be the result of the ten-cent tax.
What should the minister have done? It is obvious there is high unemployment in some areas of Canada and a need for workers in other areas. Last weekend a neighbour of mine, along with two boys, one 19 and the other 17, drove up to an oil well which was being drilled. They got out of the truck and the foreman of the drilling rig approached them and asked, "Do you boys want a job? If so, you can go to work right away because we are operating this rig with only half a crew." The boys asked what the pay would be and the foreman said it was between $5 and $6 an hour. The younger of the boys told his father that he had been offered a job right away at $5 an hour. I imagine that his father, a farmer, was not particularly pleased on that occasion, but I can add that the boy's love for agriculture was such that he did not take up the offer.
This story would indicate that some areas of Canada are actively seeking labour, while others have a surplus of people who are unemployed. To my way of thinking, the government has to make a greater effort in readjusting the list of projects on which the minister says the government is going to spend money. The minister said the government was going to spend only $10 million on the transfer of the labour force within Canada. I think that amount could have been stepped up and some of the other expenditures could have been curtailed. We have a country with a number of very definite cold spots-I refer to the lumber industry and the mining and resource industry as examples-and the minister could have made some tax conces-

sions in respect of both these industries to encourage greater expansion and exploration.
Canada today does not have the basic equipment necessary to carry on the required amount of drilling or exploration for oil and gas because much of that equipment has been moved elsewhere. We have not even encouraged the exploration companies to stay at home.
The minister has made no real effort to curtail the growth in the money supply. He might have done what is being attempted in the United States. I know that my socialist friends do not believe this is the way to curtail inflation, but it may help. In the United States, the federal reserve system is presently seeking a moderate rate of expansion in the monetary and credit aggregates. Mr. Burns said:
We believe that the course we are pursuing will promote an increase ... of between 5 per cent and 7!d per cent over the 12 months-
He was speaking of the next 12-month period. This government has printed money at an alarming rate. There are three things in relation to money that can control inflation to some extent. The first is, of course, the amount of money, the second is the speed at which it circulates, and the third is the amount of credit given out which is based upon the money supply at any given time.
It is interesting to note that in answer to a question I put to the Minister of Finance, he said that in the U.S. there has been a curtailment of consumer credit by consumers generally. He said, in a letter he wrote me on June 6, that recent levels are down to $152.3 billion in credit outstanding in the United States. He went on to suggest that in Canada there is no appropriate figure, but on the basis of the figures of 80 per cent of the companies, one could estimate that outstanding consumer credit is continuing to grow; in the first quarter of 1975 it reached a figure of better than $16 billion, and at the end of March it was $16.6 billion. If one makes a rough comparison between Canada and the United States, using the 10 per cent formula, he will readily see that proportionately Canadians have a larger balance of consumer credit outstanding at this time.
The minister, in my opinion, should have brought in some measures of control credit. This might have slowed the circulation of money within Canada and perhaps would have had a beneficial effect on inflation. In my opinion, this would have done less harm to the consumer, and it would be the easiest thing to remove at any time in the future when the country needed some impetus in the form of additional expenditure.
Let me say a word or two about the gasoline tax. I understand that about 50 per cent of a barrel of oil goes to the production of gasoline, so really the tax only applies to 50 per cent of each barrel of oil produced. In the transportation study this government has just produced, it is stated that only 13 per cent of the energy consumed by Canadians today is used in the form of gasoline. If we are going to curtail energy used by a ten-cent tax per gallon of gasoline, we will only curtail 13 per cent of all energy used. That is a very weak argument put forward by the Minister of Finance.
There is growing concern and apprehension on the part of Canadians all across the country about what is going to
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happen next. Normally, the budget reassures the people that everything is in the hands of the Minister of Finance, who has a firm grip on things. One of the interesting revelations in this budget is that the Minister of Finance does not have a firm grip on things. We have all seen in many daily newspapers, in eastern Canada particularly and perhaps all across the country, the suggestion that this government can no longer control government expenditure. That is the thought that has been conveyed by this budget and it does not allay the growing fears and apprehensions of Canadians who feel that the country has run amok and we are headed for big trouble. I think the Minister of Finance could have reassured the people to a greater extent than he did.
Even the Minister of Regional Economic Expansion (Mr. Jamieson), in his speech during the budget debate, suggested that 70 per cent of government spending is already ordained to be spent in such a manner that the government cannot intercede to curtail it. The government should have brought in a measure to curtail credit. It should also have provided the impetus to encourage further resource development in the mining and oil and gas industries.
The government should have brought forward measures to assist house construction to a greater degree. It should also have provided some encouragement to the lumber industry. These are industries where there is a great deal of employment and by encouraging them the government might have taken care of many of the unemployed in this country. The government should also have brought forward a provision extending its participation in the movement of the labour force from high unemployment areas to areas where there is a need for manpower.


Mr. Raynald Guay (Parliamentary Secretary to Postmaster General):: Mr. Speaker, as Parliamentary Secretary to the Postmaster General I would like to begin my comments this afternoon, in reply to the budget speech tabled last week, by a brief history of the current conflict in the Post Office.
The labour contract passed between the Post Office on the one hand and the Letter Carriers' Union of Canada and the Union of Postal Workers on the other hand expired on December 31, 1974. Before the expiration of the contract the Council of Postal Unions, which had represented the Letter Carriers' Union and the Union of Postal Workers since the coming into force of the 1967 Public Service Labour Relations Act, was disbanded by the Public Service Labour Relations Board with the consent of both unions involved.
The Letter Carriers' Union and the Union of Postal Workers were recognized as bargaining agents in the month of January 1975. Negotiations ended in February and the settlement of the conflict was entrusted to a conciliation board presided by Lome Clarke. An agreement in principle between both parties was reached on April 24 last. The new agreement covering 30 months provided an over-all increase of 38 per cent-an average salary of $12,771 for letter carriers. After eight meetings the Union of Postal Workers could not reach an agree-
The Budget-Mr. R. Guay
ment, and on June 19 last Mr. Justice Rene Lippe was appointed conciliator and commissioned to produce a report on the conflict.
The Post Office pursued two objectives and is still pursuing those two objectives-reaching a fair and equitable collective agreement as well as improving the service so it will become the best in the world. The Post Office must fulfill its responsibility which is to offer to the people of this country a modern and efficient service. However, if the Post Office has responsibilities, so does the postal employee, and one of the most important is to understand fully the need for automation and accept it as indispensable and unavoidable. Without automation employees would disappear more rapidly than with automation. We state once again, as parliamentary secretary- and I repeat, as the minister stated previously-that not one employee of the Post Office will lose his job because of automation.
There is another matter, Mr. Speaker, which worries me at the present time and it is the problem of jobs for students. With the summer months, our students have arrived on the labour market. This is the best opportunity, Mr. Speaker, to consider a few moments the situation of students, that is our children, as a result of available employment and consequently to speak about the Opportunities for Youth Program. When the well-intentioned government created that program, it wanted to help students by making available paid jobs requiring creativity and a sense of responsibilities. However, due to its lack of impact on our young people, I will not beat around the bush and suggest the unconditional abolition of the Opportunities for Youth Program, as I had the chance to mention it privately and publicly. We want to help the young people and the government is aware of that. We could do it in many ways and here are a few suggestions. The LIP program, which was created to encourage employment but which does not achieve that aim because it does not ensure the permanence of projects it launches, could be changed so that the more interesting projects be approved and kept alive for periods of one two or three years as necessary, but long enough to allow the continuation of projects on a permanent basis after the withdrawal of grants.
The LIP projects could be organized so as to provide jobs for a number of students in summer. Grants could be made available for this purpose, which on the one hand would have the advantage of bringing new manpower to projects already under way and, on the other hand, of enabling students to hobnob with people from another world than their own. The students would also benefit from the experience gained by the other participants in the projects. Speaking of the LIP program, let me refer now to my letter dated June 21, 1975 to the minister in which the Minister of Manpower and Immigration (Mr. Andras) announced a further program for 1975. Considering the difficulties now faced by municipalities-specially in Quebec-in covering their expenditures, I believe that this year LIP projects be accepted on the basis mainly that they be community projects of municipal nature.
So it is now realized that our young people have no interest in business or economic activities in general. I feel, however, that if businesses, industries, manufacturers,

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shops received the full amount of salaries to be paid to student help, a good number of jobs would be created and young people would get useful experience, which would ensure an ample supply of future applicants.
I would now turn to the New Horizons Program. This program also could be changed to provide summer employment for students willing to care for the aged. Lonely elder people would welcome the opportunity to spend a few months of every year among our youth.
There is no doubt, on the other hand, that young people would benefit tremendously from human contact with their elders. The main problem faced by young people looking for their first jobs is that everywhere they will be asked one, two or three years' experience. But there is no way they could have gained such experience because our present summer employment system gives no training whatsoever for the trade they will be plying. So, less emphasis should be put on inventing programs and more on being practical. Let us all work together to devise ways to find jobs for our young people in their future fields of endeavour and I am sure they will thank us for it later.
Another issue which is of great concern to me and all hon. members of the House is one which was criticized at length by all information media as well as opposition members. Personally, not only do I want to criticize the oil issue, but I should like also to make a number of propositions which seem to me to be quite logical. As I was saying, the last issue which I want to deal with and which is the main feature of this budget, at least as far as the interest it has generated is concerned, is that of energy. Although we all knew that an increase in oil prices was forthcoming, the decisions taken about our energy policy for the current year took everybody by surprise, including I think the members of the ruling party. Faced with a serious dilemma, the Minister of Finance must assure both long and short term production of oil, in order that the consuming public may not have to suffer from the lack of foresight in this area. Of course, achieving that objective will be no easy matter but some of the means to be resorted to in doing so were announced in the budget. The effort is praiseworthy, but I do deplore the fact that in spite of some of the exemptions provided to lighten the burden inflicted upon the consumers, obviously, the low wage-earner will suffer the most from increased prices, that is, the one who has no business, who cannot deduct his travelling expenses, the one who must drive his car to work, the small wage-earner, who has only 15 days off a year and who, now will be unable to spend them visiting his country, as television commercials entice him to do, that activity now having become a luxury.
The second point I found surprising was the incentives the federal government deemed advisable to provide for the oil companies to bring them to invest adequate amounts in prospecting.
Mr. Speaker, I would have thought that since the companies make millions of dollars of profits by taking from our country a non-renewable natural resource, the government would have been entitled to demand that these companies reinvest a certain percentage of their benefits in the exploration for new oil fields. This would have 
pleased me, and I am certain that I am not the only one to think this, because it is quite natural. Mr. Speaker, since we are anxious about future production and reserves, I believe that now would be the time to think very seriously about developing new energy forms, such as nuclear energy, and to invest in this area if possible.
At the last conference of provincial premiers, the premier of New Brunswick insisted on this issue. Unfortunately, its seems that the voice of the western premiers was heard better than his own, since the government shows some reluctance when it should go forward and maybe innovate more. They are afraid of the unknown, of this possible solution. How can they not be fearful of all kinds of disasters: ecological, economic, financial and political brought about by traditional formulas, since these are very evident.
Mr. Speaker, I should like to note that I wanted to be very positive and that I would not like hon. members, even in this part of the House, to think that I simply wanted to criticize. My comments on the issue of energy are not a destructive criticism like those I heard during the five days of the debate. I am still waiting for opposition members to suggest practical solutions. When I have the opportunity to speak in the House, I always wait for the official opposition to really play its role, not simply to criticize, but also to make suggestions.
All this week again, Mr. Speaker, journalists did the same thing as the opposition.
I have here a copy of the budget speech. The only thing people remember about it, Mr. Speaker, is the energy problem. Surely there is more to a budget than that. Some reporters ask me: "What do you think, Mr. Guay, about what is going on with regard to energy and price increases?" I reply: "If prices are increased as a means of assurance or precaution .. . indeed, we have not been elected for a one-year period only, we must not only adopt measures for one, two or three years. We have to draw up an energy policy for the next 50 or 60 years.
Needless to say, a person of 70 doesn't care about the future. But if a person really wants to govern our country and if a minister does as the Minister of Finance (Mr. Turner) did and assumed his responsibilities when he brought down his budget in the House, all will be well. I don't pretend to have a printing press. No member of this House can claim that we can print as much money as we want. We must actually raise money through means which, in our opinion, are the most reasonable and cause the least harm, and I deplored that fact earlier. I am not the only one to feel the pinch of inflation when I fill up my gas tank.
Of course, we could have refrained from raising oil prices, saying: That is all right, we will consume what we have. We still have reserves for ten more years. We will not do any exploration, we will not do any prospection. We will not make any investment to discover new energy sources. That would have been very simple. Mr. Speaker, that would have been the easiest and the most profitable thing to do on the political level, but the Minister of Finance has shown that he had been elected and called into the Cabinet to see ahead, to govern and run this country in the better interest of the people and not only, as I was saying earlier, for two or three years, but to build
July 3, 1975

a country which could really rank among the best in the present world.
Mr. Speaker, very often I take pleasure in attacking newspapermen. As I said the other day, when intervening in a debate when we discussed the estimates of the Department of Industry, Trade and Commerce, we are scaring businessmen and industrialists. We are told-as I was saying the other day to the hon. member for Prince Edward-Hastings (Mr. Hees)-that everything goes wrong here, that everything is wrong in this country. There is nothing we can do about industries and nothing we can do to help. Well, I say that is absolutely untrue. What does the average businessman in the small communities of our ridings, whether he is a shopkeeper, a manufacturer or something else, think when he hears or reads reports in the papers that everything is in a mess? So he won't even inquire with the Department of Industry, Trade and Commerce, he will not even try to obtain information from the Department of Regional Economic Expansion, he just listens to people in the opposition. In the past two or three years, Mr. Speaker, we have heard nothing but criticism about the unemployment insurance program. I myself took part in the debate on the new bill. We realized that a number of things had to be changed, and in this budget we are introducing changes.
Mr. Speaker, no one in Canada, except those who went and got a copy of the budget speech from Information Canada, knows that at least seven amendments have been proposed to the Unemployment Insurance Act to make it more flexible and more responsive to the needs of today's unemployed workers.
Mr. Speaker, I may criticize as a member of parliament, but I believe the duty of any member of parliament in the House of Commons, not only on the government side but also on the opposition side, is to express criticism on behalf of his constituents and of Canadians as a whole. He has to be an information agent.
The public in general know little about the budget. We have heard only about energy. But there are other matters involved. Take housing for instance. No one talks about it. Let us take the one billion dollar cut in government spendings which are to be reinvested in other sectors with a more urgent need for that money. Let us think of LIP programs. I was talking about young people earlier. Funds have been provided, they will increase. We will change some projects for public housing, moderately priced rental housing and other things. That is something the public are unaware of, and it is quite unfortunate. I am definitely not saying that I am the only member of parliament willing to inform the Canadian people.
But I find that there are not enough hon. members, especially on the opposition side, who are playing the part for which they were elected. Their job is not to try to destroy a political party, be it Liberal, New Democratic, Social Credit or Progressive Conservative, but to come here and set up policies for the welfare of every Canadian.
Mr. Speaker, when we look on what is going on in society, we wonder if it is not a little-and I think that today more than ever we must reflect upon that-if all the unrest in our society is not due to a lack of information, if it is not precisely due to the politicians who are not playing the part they should within society.
The Budget-Mr. R. Guay
I may go far in my assertions but I think, Mr. Speaker, that if we wish to play our part-and I approve what the hon. member for Bellechasse (Mr. Lambert) and several other members said the other day-it is important to talk about the business of the House. To be able to give information, we must have the time to go in our ridings and meet our constituents. On behalf of several members on this side I wish to say out loud what others are thinking.
If we consider that we began this session more than 10 months ago we are almost in mid-July and we are still here. If we also consider what happened during the present session, we had debates for several weeks here in this House or in committees on issues that I did not consider essential. Then at the end of the session we are faced with bills that we are supposed to pass in a hurry. Mr. Speaker, I wish to make a suggestion and I think that it will be accepted by several members: first we should establish a fixed date system for the session as was suggested several times. In fact, I know that on this side, on the government side, we are working on several things and I would like to propose a set day for the Speech from the Throne and the adjournment.
But at the time of the Speech from the Throne, the government with the leaders of the House and the leaders of all parties should immediately table all the bills to be discussed during the session. If there are 50 there will be 50 and if there are 60 there will be 60. And immediately, the government leader with the leaders of the other opposition parties should agree to set our priorities and limit the debates on each bill. So, at the beginning of the session there will be less pressure, members will be more rested, calmer and debates will be limited. If there is a bill on energy it is all right. We shall take 15 or 20 days but not 40 or 60 just to have to rush a bill of this importance.
That is what I suggest, Mr. Speaker. We could go back to our ridings, we could also be on holidays during July, just as many Canadians in construction and in shipbuilding are now on holidays just as our children are also on holidays. And there are ever more young Parliament members on this side as well as on the opposite side of the House. We have young children who do not see their father. As far as I am concerned, Mr. Speaker, when I look at the situation-I wonder if I will make a joke that will be well taken-my own children now call me "Uncle" because I cannot be at home very often. But I believe that we must have contact not only with our family, which is quite normal, but also with our own constituents.
When I suggested a moment ago that we should inform our constituents, that would give us much more time to visit our ridings, to inform people in a very calm and relaxed way. We could say to our people: There are some facts. We are coming to meet you, to discuss with you certain bills and some of our plans. We are looking forward to a Speech from the Throne in September. During summer, we could travel around our ridings to meet local officials, chambers of commerce and other social organizations. We could be in a better position to make suggestions to the government which has to prepare the Speech from the Throne as well as a 12- or 15-month session. Therefore, Mr. Speaker, we could be much more effective, we could

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represent our constituents in a much more effective and responsible manner.
Before closing my remarks, I want to talk about a highly controversial matter if the questions asked this afternoon are a yardstick. As I have always said and preached in this House, I have spoken on a number of occasions about capital pubishment, a subject that is always discussed in a highly emotional manner. I think the issue of capital punishment has really been shifted.
Instead of talking about the reasons that have led a murderer to commit a crime, we discuss mostly the future of the murderer. We really should consider the causes for committing a murder. What should be reformed in the judiciary field? Abolitionists often say: Those who are in favour of capital punishment are very often the same who favour abortion. I shall get back to that question later. Those who are in favour of capital punishment often expose themselves to hanging innocent people. Of course, Mr. Speaker, miscarriage of justice has happened before, but what should be changed in that case: the sentence? Or else, is it that our legal system does not allow for adequate evidence? Is it not the full burden of proof, the issue of doubt, is it not all that we have to weigh when we debate capital punishment?
I have always said and I still maintain, Mr. Speaker, that I shall always be in favour of capital punishment. I will always oppose the abolition of the death sentence. It is not the question of sentence we have to discuss in this House. I hope that the debate will take place in early fall, when we want to amend the act, and I will be one of those taking part in the debate. We shall have to talk not about the sentence to be meted out to the murderer, but the whole judiciary reform, the penitentiary reform, the reform of the Criminal Code, particularly as I said earlier, the burden of proof, the issues of doubt and bail.
This afternoon, a bill has been tabled by a member on the other side on the question of carrying firearms. We had been promised all those things when the bill was initially introduced in 1967, and I will have the opportunity to analyze all that when the debate takes place. I wonder how far we have gone from 1967 until now, since capital punishment has been abolished, which improvement we have made in judiciary reform, in penitentiary reform, in the rehabilitation of delinquents and of youth. Did we achieve anything in that field? This is the question I am putting to myself. I do not give any answer now.
Others very often speak of abortion. Recently we had the opportunity to table something in the House. It may be the last subject I will touch on this afternoon, I mean the question of abortion. Abolitionists say: How funny! Most of the people advocating capital punishment are against abortion. I am one of those! Yes indeed, I am in favour of the death sentence and against abortion, because we are justly told: "You want to hang a man, you want to hang a woman, you want to hang somebody who has committed a murder, but you do not want to let innocents be born, people who did not ask to come on earth. Of course, Mr. Speaker! But the only thing I wish, as a member of parliament, would be to take part in a discussion with 4,000 or
5,000	people, as I did recently on Parliament Hill. These thousands of people gathered here to ask that the abortion legislation be amended in order to have the word "health"

defined much more clearly, much more precisely because we have given an overly wide meaning to the word. We will have to amend the Criminal Code.
I had the opportunity to discuss this on several occasions with the Minister of Justice (Mr. Lang) when I was his parliamentary secretary, and it seems to me it would be very simple and that all parties in this House could agree to hold a very short debate on abortion, to amend the act so that it is better understood and particularly better applied. As a matter of fact, the act is not permissive; it does not allow abortion; the act defines and must define the cases and the circumstances in which abortion could be performed. This is simply what the act says and I shall have later the opportunity to be much more explicit, when both question on which I am considerably concerned come back, this fall I hope, or at least as soon as possible. I have tried to be as positive as possible in this short speech, Mr. Speaker.


James McPhail Gillies: Mr. Speaker, the characteristic comment prior to the introduction of the abortive budget of June 23 was that the Canadian economy was probably in the worst shape of any period since the depression, and since the budget came down there has been very little reason to change one's view about that. Not only is unemployment very high, but it is rising, and domestically-generated inflation is not falling as rapidly as inflation in many other countries, particularly in countries with which we trade. Export sales are down, and because of high domestic costs, imports are replacing many Canadian goods on our domestic market.
The net result is we have the most serious deficit in our balance of payments that we have had in recent history. As a consequence, the dollar is floating down and although the government has been protecting it somewhat by the use of the foreign exchange equalization account, the value of the Canadian dollar against the American dollar is declining. The price of our imports is rising, contributing to our inflation, and devaluation is not increasing our exports. On the contrary, devaluation is simply leading to higher costs, which in turn will mean fewer exports, as Great Britain found out to her horror.
So this was the sad picture of the Canadian economy on June 23, 1975, and against this sad picture all the advice the Minister of Finance (Mr. Turner) seemed to get was that he should not do anything at all-and that is apparently the advice he followed. Has there ever been a greater indictment of any Minister of Finance in Canadian history than the present budget? At a time when we are experiencing some of the most serious economic problems we have had, there is a complete failure of intellectual and moral leadership by the government.
The Minister of Finance, clearly, could not decide what the major problems of the economy are-whether they are unemployment, inflation and/or energy. In a traditional, old-fashioned, often discredited approach he tried to deal with all three, and with all three he failed. When dealing with unemployment, he revived the LIP program and some other make-work projects of that sort. They will not effectively deal with the unemployment issue in this coun-
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try which so far is centred in the construction industry, some resource industries and some of our export manufacturing firms. Moreover, the minister did not deal with any reform whatsoever in the unemployment insurance program other than to shift the cost to the private sector.
To immediately work on the unemployment problem in this country, what he should have done was deal with the problem of housing. Housing starts are down, in 1975, to 175,000. On a per capita basis, this is the lowest level of housing construction since 1946. In this country we need
210,000	housing units per year just to stay even with the rate of new family formations.
Why is housing doing so badly? It is, as I pointed out before, because the government has not recognized that the policy it is using to deal with housing simply will not work. Housing in Canada since the end of World War II has always been counter-cyclical in the sense that when the economy was declining interest rates were falling and housing starts began to increase. But now, as the Minister of Finance has failed to recognize that we are not operating in the traditional trade-off position that we had for so many years after the end of the war, we do not have a decline in the rate of inflation as unemployment rises, we do not have a decline of interest rates and, as a consequence, there has been no increase in the amount of housing constructed in the country. The minister still believes the statement that higher interest rates are one of the most effective anti-inflationary policies that we can follow, in spite of all the evidence to the contrary, that the greatest rates of inflation we have had in Canada have been during periods of the highest interest rates.
If the government had any real intention of dealing with housing for social, humane or even economic reasons, it would have introduced a program to subsidize interest rates, as suggested by this opposition party, on mortgages in order to get the amount of housing construction increased and to help solve the unemployment situation. But because the government is limited in its thinking about economic policy to two things that it has done in the past, nothing was done to increase housing.
What about inflation, Mr. Speaker? The strongest antiinflation policy that could have been used in this country would have been to do something about housing. There is no doubt that one of the most inflationary forces that we have in the economy at the present time is the rapid increase in rents and the rapid increase in housing prices. Clearly, if the minister wanted to cope with inflation he would have done something to increase the supply of housing so that rents and housing prices could be brought down.
One of the first things to happen when rents go up is that the person who has to pay the rent seeks a higher wage-and higher wages mean higher costs, and higher costs mean higher prices. By not dealing with the housing problem at all in this budget, we are not dealing with unemployment and we are not dealing with inflation.
What about the consensus program that the minister talked about for so long? After going around the country for months insisting to the people of Canada that the economy was in a healthy state, that nothing needed to be done, that all our problems were coming from abroad, the minister now has the temerity to say in his budget that the
The Budget-Mr. Gillies
people of Canada are not willing to accept any sort of tough proposals to deal with inflation and are not willing to accept any sort of voluntary guidelines.
How astonishing that the minister would find it unusual that the people of Canada would not accept some sort of restraint after he had told them for a year or a year and a half that it was totally unnecessary! One could use an old biblical expression; I am not quite clear where it came from, but over 2,000 years ago the jawbone of an ass was used as a weapon. Now we seem to have the same thing happening in Canada, with just about the same effect. The fact of the matter is, Mr. Speaker, that the Minister of Finance misled the Canadian people about the problems of the Canadian economy. Then, when the situation became critical, he was astonished that the people would not support any sort of program to try to do something about the difficulties.
What does the Minister of Finance say about inflation? Absolutely nothing. He is still misleading the Canadian people that it will probably go away. He says he is cutting expenditures by $1 billion. Of course, he is not. The fact is that expenditures are going up over 12 per cent. To suggest that by talking down his colleagues from their original demands for increased expenditures he is in fact doing something about expenditures is totally misleading. As I suggested, expenditures are going up by 12 per cent and are not going down at all.
Because of his inability to deal with expenditures or to forecast revenues, the deficit is going up by $600 million, to $3.6 billion-a fantastic inflationary force in the economy at the present time. The minister says he is going to get the money to finance this deficit from the capital markets. His cash needs are going from $114 billion to $5 billion, and he thinks he can finance this without a substantial change in interest rates. The fact of the matter is, with these cash requirements because of the huge deficit which the minister has been unable to control, we are going to find that interest rates will be forced up even higher and we will have more inflation. What has become abundantly clear in this country is that our interest rates are inflationary. This budget, that was to deal with unemployment, with inflation and with energy, has had the opposite effect in terms of inflation to what the minister thought it would have. It is a highly inflationary budget- one of the most inflationary budgets to be brought down in Canada in recent times.
Any time the deficit goes from $600 million to $3.6 billion and the cash requirements go from $114 billion to $5 billion it cannot be argued by anyone that it is not an inflationary budget. It will have an inflationary force on the Canadian economy. Most importantly, the effect of the increases brought in by the minister will be on prices and not on production, so the net result will be highly inflationary, without doing anything about the unemployment situation prevailing in the economy at the present time.
The budget has failed to deal with unemployment or with inflation. As an anti-inflationary policy, it has failed. What about energy? As was expected, the price of crude oil at the wellhead was raised by $1.50, to $8 a barrel. No one quarrelled very much with that. Some adjustments were expected, and some adjustments were made in the tax levies to try to bring increased stimulation to explora-

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The Budget-Mr. Gillies
tion. What was totally unexpected in the budget, however, was the excise tax of ten cents per gallon on gasoline-the most regressive form of taxation that the government could have contemplated. It is a tax that bears equally hard on the poor and the rich, a tax that is regressive in every sense.
Why the government would bring in a ten-cent excise tax at this time is beyond comprehension. It is highly inflationary; it will add 1 Vi points to the consumer price index, and it will be an administrative nightmare to try to recover the rebates which the government has promised to provide to people at the end of the year. Most importantly, it goes to a principle that we have never followed in this country, namely, that when we have a national policy, in this case of equalization of oil prices across the country, this national policy should be paid for by some sort of consumer-user cost.
One cannot conceive of any more ineffective, regressive form of taxation than the excise tax, which again demonstrates that the Minister of Finance really does not care about the inflationary situation. This form of taxation, this direct taxation, is the most inflationary type that could have been put on at the present time. It does nothing to contribute to the discovery and development of oil in Canada. It does nothing but add revenue to the coffers of the federal government.
It has been argued by the government that they need this ten-cent tax because of the equalization program. I would ask, as has the Leader of the Opposition (Mr. Stanfield), if it would not be possible to find the money necessary to keep the equalization program going by cutting expenditures. In the $30 billion budget, all that the Minister of Finance had to find to support the equalization program was about a l'A per cent cut in expenditures. He did not do this; he put on an excise tax which is inflationary, difficult to operate and which goes against all sorts of principles in terms of the way in which our country should be financed.
When the Minister of Finance brought down the budget he said he wants do to three things; solve unemployment, reduce inflation, and deal with the question of energy. Any thinking person must conclude that he has failed. Not one of his policies will strengthen Canada's economy effectively, as he hoped. The fascinating question is this: Why should there be such a failure? Why should Canada, a resource-rich country, find it so difficult to provide reasonably full employment for its people, find it so difficult to maintain relative price stability, and find it so hard to operate its economy at close to its full potential? Why are we in this mess? Why have things gone so wrong?
I reject out of hand the minister's defence that we are in our present position because these problems are worldwide. Of course there are worldwide economic problems. Of course there are terribly serious international problems to be faced. That does not mean we cannot do something to solve the problems in our own country. Indeed, it is a generalization to say that economic problems are of a worldwide nature, for such generalizations do not take into account differences between various economies.

The United States and Japan, for example, for a while experienced a higher rate of inflation than ours because they had to pay for oil imported from abroad and we did not. West Germany's performance in terms of unemployment, inflation and balance of payments has been substantially superior over the years to Canada's performance. The British performance has been substantially worse, but that country operates under a planned economy.
It is senseless arguing whether or not this economy or that economy has performed better or worse than our own economy. The point is that for the last few years the Canadian economy has not been operating at its potential. It ought to have performed better than it has. I think any independent observer would concede that in the last three or four years the performance of the Canadian economy, in terms of unemployment and inflation, has been poorer than at any time since the end of World War II.
What are we to do about this? Can anything be done about it? I think everyone recognizes our poor performance, but no one seems willing to act. It must be recognized that economic conditions have changed immensely, that conditions under which the economy operated between 1946 and the 1960s no longer exist. But we are still making economic policy on the basis of past assumptions. We still assume that when there is a rise in unemployment we shall see a drop in inflation rates, or that to slow down the rate of inflation we must slow down the economy and accept unemployment. These ideas are as outmoded in Canada as they are in other countries, and the analysis which flows from these ideas is incorrect. Economic ideas and tools which were used after the end of World War II are no longer appropriate for today's economy.
Why do I say this? Forecasts of economic performance in Canada have been ludicrously wrong for the last three or four years. The forecasts for revenue for this year are incorrect by over $2 billion. Estimates of the rate of unemployment and inflation have been wrong for the last two or three years. Why? The reason is that they are based on an analysis of the economy which is not correct. We need a totally new approach to economic policy-making in Canada. As a nation, we cannot afford to lurch from excessive expansion to excessive contraction; we cannot afford deficit after deficit and error after error. We need to take economic policy-making in Canada out of the back room and debate it effectively, because now there is less debate on economic policy-making in Canada than there is in any other western industrialized democracy.
I have never heard of any other minister of finance bringing down a budget which does not estimate the country's economic rate of growth for the coming year, which does not estimate rates of unemployment or which does not project inflation rates. Only in Canada does the Minister of Finance bring down a budget which does not contain these fundamental facts, facts which need to be considered and debated in an orderly way.
When economic policy is made in Canada, the advice of outsiders is looked on as the advice of intruders. The government does not look on outsiders as people who try to help it formulate an effective economic policy. The involvement of outsiders in economic policy-making in Canada is discouraged, not encouraged. This, definitely, must change because no matter what is said, our economic
July 3, 1975

policies have not worked in the last three or four years, and since they have not worked, obviously we should examine the circumstances in which economic policies are made. We should be asking all people to put their ideas forward as to how our economy should be operated. We should be opening the doors, so to speak, and encouraging the inflow of fresh ideas as quickly as possible. This is important for Canada. Economic policy-making is far too important to be left to politicians, who feel they are doing a fine job if they survive politically. Surely the situation has gone beyond that point.
I hope hon. members will support my private member's bill which, if passed, will require the governor of the Bank of Canada to appear before the Standing Committee on Finance, Trade and Economic Affairs every six months to outline the monetary policies which the bank proposes to follow. The purpose of the bill is not in any sense to limit the authority, power or responsibility of the governor of the Bank of Canada. Its purpose is to bring into the open discussion and debate on how monetary policy in this country is formulated. The bill would require the governor to tell the committee what the economic and monetary policy thrust of the bank will be. It would require him to come before the committee six months later and explain any possible deviation from that policy. The measure would allow us to discuss in the open the manner in which monetary policy is made in this country.
Such a discussion is important for Canada, as the money supply of this country has grown more quickly than the money supply of any other country in the western world, with the possible exception of Great Britain. That growth, of course, is one of the major reasons for our rate of inflation. But my main reason for introducing this bill is that it would bring economic policy-making into the public arena where it ought to be. When I suggest economic policy-making is not carried out in the public arena, I am not criticizing the governor of the Bank of Canada. This is how things are done under our system; but our system is not working. We need to debate; we need to discuss; we need to provide input. Our policy-making in this field must be in the public arena.
I also think it absolutely essential that the report of the Economic Council of Canada should be referred to the Standing Committee on Finance, Trade and Economic Affairs. The committee should be given the outlook for the economy. The minister and his associates should be prepared to discuss the report of the council of economic advisers and say with what parts they agree and with what parts they disagree. In West Germany, the country with the best economic performance in the western world, that is precisely what the minister of finance must do. An economic report is tabled or presented. The minister must respond to it. He must show why it is wrong, if it is, and why his policies are better. The debate is in public-and that country's performance speaks for itself.
People outside the government need to provide far greater input into economic policy-making in Canada than is the case at present. We must use all the ideas we can, and the government must respond. Our policy-makers must be given the chance in public to justify what they are doing. After all, the world is changing, economies have changed, and the Canadian economy has changed
The Budget-Mr. Gillies
immensely. Policies which were appropriate in the 1950s and the 1960s are not working in the 1970s and it is very unlikely that they will work in future. We must find solutions.
The message of the June 23 budget is clear. We must have a basic re-examination of policy-making in this country. If we can have a budget such as the one brought down on June 23 in the face of the difficulties we have in our economy, clearly something is wrong. There are no immediate or magic solutions to the problems of inflation, unemployment, potential growth fulfilment, balance of payments, high interest rates, and so on. No one suggests there are. What I am suggesting is while there are no immediate, easy or new solutions, the old solutions are not credible either. As long as we insist on applying the old solutions to the new problems we will have difficulties such as we have at the present time.
In the forties, after World War II, country after country decided that no longer could the people of their nations stand the ravages of the business cycle such as occurred in western industrialized democracies for over a century. They decided to make it the responsibility of the government to provide a framework, through their economic policies, for ensuring full employment with reasonably stable prices. The science of economics, if it can be called a science, developed sufficiently that they were able to follow such policies for the period 1945 to 1965, and in that period there were no serious depressions such as ravaged the world before 1945. We have now entered a stage where the policies which worked effectively at that time will work no longer.
I would argue that the adoption in 1945 of policies that provided full employment and reasonable price stability was one of the principal reasons for social democracies, such as we know them, surviving. If we had gone through a serious depression in the 1950s like the one of the thirties, the sort of democracy we now know would not be in existence today.
We must find a way of dealing with the new economic situation that we face. It is just as critical as that of the thirties in the sense that we are getting shorter cycles, greater dimensions of inflation and higher unemployment all coming closer together. Unless we find a way of dealing with these problems, it will be difficult for our democracies to survive.
The great post-war period is over, the period when we had such a high level of sound economic performance. Economic structures are different both nationally and internationally. New approaches are necessary. Surely that must be the lesson of the budget of June 23. The old methods of dealing with problems such as unemployment and inflation simply do not work. We must change. As far as Canada is concerned, the first step must be to open up the whole area of policy-making. There must be debate and policy-making in totally new dimensions. While the budget of June 23, by any conventional standard, must be considered an absolute disaster, to the extent that it focused attention on the fact that we need reform in our economic policy making, and soon, because our problems
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continue at such great magnitude, it may in fact have served some purpose.


Mr.   Chas. L. Caccia@Davenport: Mr. Speaker, I am sure Canadians will derive great comfort from the message just delivered by the hon. member for Don Valley (Mr. Gillies) and the alternative he has put forward for our consideration. This will become more clear when we have had an opportunity to read his speech and draw our own conclusions.
I wish to congratulate the Minister of Finance (Mr. Turner) for producing a budget under such uncertain and difficult economic conditions, steering a path between worldwide inflation and recession. I am grateful to the government for having resisted the temptation to adopt wage and price controls. Such a measure would allow too many loopholes and exemptions; it would allow the stronger elements in our society, such as the professionals, to find means of avoiding controls and retain their competitive position, while the weaker elements would remain where they are and continue to be weak.
It is a measure that would be effective with wage and salary earners but not with persons earning other types of income. It would not affect the farmers; nor would it affect the price of imports. It would be an unfair measure because it would apply effectively to wage and salary earners but not to others. It is for this reason that we, as Liberals, reject the notion of controls and believe in the approach of self-imposed restraints as the only sensible measure in a political democracy.
The Liberal government's approach to inflation has been one of encouraging production in order to increase supply, removing tariffs, reducing federal taxes, increasing pensions and family allowances, and making income tax deductions. This government introduced the concept of rolling back excessive profits in the budget of May last year. That measure protects the consumer from price gouging. It is badly needed and we hope it will be incorporated into legislation in the not too distant future.
In the past few days I have been asked many questions about the budget. By and large, Canadians support the idea of moderation-which is the theme that runs through this budget-because they are moderate people. Of course, they do not like the idea of paying more for gas and oil. Who would? However, they understand the reasons this has to be done now. This was the attitude of a man who last Saturday told me his gas heating bill will be about $80 more next winter.
Recently, in Toronto, there was an increase in water rates which means the bill will be almost doubled. In addition, there was an increase in municipal taxes. For those who must drive to work because there is no other means of transportation there is the increase in the price of gasoline. All these increases will put a strain on low income families in particular. These are the people who more than ever before will need the income support program that the Minister of National Health and Welfare (Mr. Lalonde) has been working so hard to produce for those Canadians who are referred to as the working poor. After this budget, the program for the working poor will be more desirable than ever. It must be brought on stream soon.

Like all hon. members, I have followed this debate with interest. There have been many commendable interventions from all sides of the House. I would like to comment on one measure proposed by almost every Conservative member who has spoken so far, namely, that the government should subsidize mortgage rates above 8 per cent to help Canadians buy their own homes. The question that comes to mind is this: Who will benefit from this subsidy? Evidently, it will be the money lender. It is the money lender who will be the great beneficiary of this proposal; he will charge, under such a scheme, any interest rate he pleases-10 per cent, 15 per cent, even 20 per cent. And why not? The sky will be the limit, since the government-that is to say, the taxpayer-will have to pay the difference.
That is what has been coming from the Conservative benches as a solution to high interest rates. I prefer the Liberal approach, whereby the home owner, not the moneylender, is given the subsidy. As a result of this budget we see the subsidy increase from $600 to $1,200- that is, the grant to the home owner under AHOP-and an increase from $600 to $900 for rental accommodation. This approach makes much more sense to me than the Tory proposal.
There are, of course, many other aspects of the budget I should like to speak about, but in the time available to me today I should like to focus attention upon our efforts to bring about the highest possible level of employment in Canada through our labour market policies. If we look at the situation in our country today, we see an impressive arsenal of measures and programs. If we look at the current fiscal year, we find among the better known plans and programs the following: the short-term employment plan known commonly as LIP, which was been allotted $105 million for the current fiscal year. For manpower training, as already announced in the budget, for institutional and job training purposes, a total of $481 million; for mobility programs, $12 million; for special agricultural programs, $4.5 million; for special programs for the disadvantaged, about $20 million; for federal labour-intensive programs, about $10 million.
I am excluding from this list the OFY program because of its particular nature and because I believe it would be better to adjust the school year, the academic year, so that students' summer holidays would coincide with the time when farmers most need manpower, and to use part of the $60 million under OFY for travel and wage subsidies to students who are willing to help farmers, particularly at harvest time. This might enable us to drop the practice- unfavourable, to say the least-of bringing into Canada guest workers who will never have the benefit of drawing from social insurance programs because they will never be landed immigrants and will never have the opportunity to contribute to any worth-while social security program.
I should like to return to my main topic, our manpower policy. Having mentioned those figures and having omitted the OFY figure, I should like to mention one further substantial figure, namely, the amount of benefits which the Unemployment Insurance Commission will pay this year, at present levels of unemployment-a minimum of $3 billion. If we look at these plans and programs as a whole
July 3, 1975

and add their costs together, we reach a total of $3,632 million. I ask you, Mr. Speaker, how many permanent jobs could be created with even half this amount? Let me explain. My view is perhaps shared by many members of the House, at least on the Liberal side. It is that Canadians would much prefer to work than to be unemployed and in receipt of unemployment insurance benefits. We have now reached the point in the development of our labour market program and insurance plans at which it is clear we have the financial resources available to ensure employment rather than just unemployment as we have done so far.
I believe this objective could be achieved through proper utilization of the unemployment insurance fund by turning the unemployment institution through 180 degrees; by giving it a positive and significant role enabling the unemployed to make a choice within a wider range of options than is presently available to them. The funds administered by this institution-funds accumulated by working Canadians on behalf of non-working Canadians-could be used to pay higher training allowances to those who qualify, they could be used to create jobs in the community, or they could be used to pay unemployment benefits to those who have earned in their lifetime unemployment benefits in proportion to the number of years they have served in the labour force. What the unemployed person choosing to use up unemployment benefits would do while receiving those benefits would be entirely up to him to decide.
Allow me, Mr. Speaker, to put it in other words. When Canadians become unemployed because of the faulty functioning of our economy, we depend very largely upon the private sector to create jobs. But when the economy does not perform well, the private sector normally finds its role as a job creator greatly reduced or, indeed, completely ineffective. We then turn to unemployment insurance and expect that program to pick up the fall-out. If we were to develop a program of the kind I have just outlined, unemployed Canadians would be given a broader range of options than at present. This would be made possible because working Canadians would pay a weekly premium into a fund which would serve three basic purposes. These would be, offering an unemployed person who qualified for such assistance a higher training allowance; offering an unemployed person work in his or her own community; or offering unemployment insurance benefits, to those who qualify to receive them, in direct relationship to the number of years they have worked-the longer they have worked, the greater their security in the form of unemployment insurance payments.
Thus, there would no longer be a tug-o'-war between the worker on the one side and the officials on the other, the practice of the so-called benefit control officers trying to determine whether a person is available for work, and so on. The proposal I have in mind would remove myriad similar frustrations which presently vex both the unemployed and the officials charged with administering the system. It is fair to say that in 1975 we are ready to begin rationalizing the use of the various support schemes and programs designed in one way or another to assist our people who are not working. But now we have reached the point in the history of the development of Canadian labour market policies where we are ready to offer Canadians wider and more significant options when the private sector fails to provide them with secure jobs.
The Budget-Mr. Caccia
Security of employment is now, more than ever, a deeply felt desire in the heart and mind of every Canadian.
In this budget there are proposed amendments to the Unemployment Insurance Act about which I have deep reservations; for instance, the one that would double the waiting period without benefits to employees who are dismissed for misconduct. This involves the question of who will decide what constitutes misconduct. Will this be decided by an official of the Unemployment Insurance Commission? Will it be the employer? Or will it be the employee? Will there be a grievance procedure in factories or in other work places where there is no union? How will this system be handled, and who will decide what is misconduct in the assembly line operation or other working conditions?
Another measure about which I have deep reservations is the proposed amendment dealing with workers aged 65 or over. It seems to me that, as we have always attempted to do in the past, we should avoid any laws or measures which discriminate-in this case because of age. There are people in our society who wish to work because they have the energy and the health to do so, or perhaps a need at home which motivates them, but who are well beyond age 65. These people, regardless of age, should be treated like anybody else in our society. I urge the government to reconsider these two proposals. I am happy about the proposed measures that will take into consideration injured workers and people in training. I only wish this concept could be extended to include groups such as exinmates and in this way facilitate their re-entry into society.
In the time remaining I would like to expand on the idea of the creation of permanent jobs through changing the orientation of unemployment insurance to a system of employment insurance. The experience we have had with the LIP program has shown that the Canadian public values, and is prepared to support, a wide range of meaningful jobs which are in the non-profit category and, therefore, not offered by the private sector. These are jobs that basically have to do with the betterment of the community and the environment. The question is whether we are ready to move from the short-term LIP approach to a permanent program of job creation with better salaries and improved administrative practices.
Let me give a few examples of what could be done through a permanent job program. Such a program could be followed in the field of recycling waste materials, in cleaning-up the environment, in carrying out minor or medium-sized public works, particularly in remote communities-for example, the building of a community hall or the repairing of a wharf. It could be used, as well, in the field of reforestation in certain areas, or the restocking of our seas and lakes; in providing, in our urban centres, services for senior citizens; in work for retarded children and for the handicapped; in services for immigrants; in reducing the pupil-to-teacher ratio in our schools by developing a cadre of teachers' helpers; and in alleviating the pressures in our hospitals by developing therein, also, a cadre of nurses' helpers, and so on.
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July 3, 1975
Adjournment Motion
The sky is the limit to the innovations that could be introduced if we wanted to create jobs in this sector for which there seems to be a continuous demand since we modestly began testing this new approach back in 1971. Some may ask how many jobs could be created with perhaps half of the almost $4 billion which I mentioned earlier. Even at the rate of $10,000 per job per year-which is well above what is being paid at the present time to LIP workers-200,000 meaningful, needed jobs could be created for 200,000 unemployed people. It seems to me that the substantial infusion of funds announced by the Minister of Finance in the creation of short-term jobs next winter, plus the considerable funds available this year to the Unemployment Insurance Commission, plus the desire on the part of many Canadians to perform meaningful jobs in their communities, are the ingredients that would permit us to move to a new phase of labour market policy.
What I have suggested today represents only a rough sketch of ideas for discussion and deliberation-to shoot holes through, if you like-and is definitely subject to considerable improvement. I submit these suggestions for the consideration of hon. members, with full awareness of the fact that the majority of Canadians do believe in work and believe there are better things to do in life and for our country than being forced into subsidized idleness.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Penner):: Order, please. I interrupt the proceedings, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of the adjournment are as follows: the hon. member for Brandon-Souris (Mr. Dinsdale)-Indian Affairs-Withdrawal of vocational rehabilitation services from natives in Manitoba-Request for review and report; the hon. member for York Centre (Mr. Kaplan)-Air Transport-Possible establishment of STOL service to Toronto Island; the hon. member for Central Nova (Mr. MacKay)-Supply and Services-Cost of protective services-Alleged warnings against use of Securex agency at Montreal airport.


Mr. Bechard:: I rise on a point of order, Mr. Speaker. I wonder if the House would be agreeable to reverting to motions in order that I might present a report of the Standing Committee on Fisheries and Forestry.


The Acting Speaker (Mr. Penner):: The House has heard the request of the hon. member. Is it agreed?


Some hon. Members:: Agreed.



ROUTINE PROCEEDINGS


[Stage Direction]
Fifth report of Standing Committee on Fisheries and Forestry, in both official languages-Mr. Bechard.
[Editor's Note: For text of above report, see today's Votes and Proceedings.]


[Stage Direction]
The House resumed consideration of the motion of Mr. Turner (Ottawa-Carleton) that this House approves in general the budgetary policy of the government.
Mr. Les Benjamin (Regina-Lake Centre):: Mr. Speaker, I decided to take part in the debate on this budget because in the seven years I have been here it is the worst budget of the lot. I consider it a budget with a large measure of immorality, a budget that attacks the sick and the unemployed, a budget that adds more to the burden of the people on low incomes and the small businessman, and a budget that continues to place overreliance on the so-called private sector, particularly in the area of housing. It is a budget that totally ignores our pensioners.
There is not a nickel in it for the old age pensioners, the veterans, or for the retired civil servants and retired RCMP and CNR employees. In any worthwhile attempt to do something about inflation it seems to me that one of the first things a budget should do, and should have done over the last few years, is protect those who are not only suffering because of inflation but are the first victims of it. These are the people on fixed and low incomes. This budget does nothing in that way.
It would be too much to expect the government and the Minister of Finance to include an increase in the old age pension of the magnitude advocated by my party, but even an increase of $25 a month in the basic old age pension would have been proper in this budget. However, not a nickel was included. Some would say that this would be inflationery. I submit it would not. It would help those people who are the first victims of inflation.
The area in which I think the budget is most deficient is housing. It still leaves a major part of the housing program to the tender mercy of the land speculator and the developer in the so-called private sector. This so-called private sector continually since the end of World War II has failed to meet the housing needs of Canadians. It has failed to provide housing at prices Canadians can afford. It has not been able to do the job. I do not know how many more years this mythology will have to be kicked in the
July 3, 1975

face before the Minister of Finance or the government realizes that they can no longer place their reliance on the private sector in the field of housing.
This budget should contain at least an additional $1 billion for housing in the public sector, in which the federal government itself is directly involved, so that land could be acquired and serviced, and so that housing and low rental accommodation could be built. This money could go to the provinces and municipalties, as well as to organizations such as co-operatives which want to become involved in housing.
I submit that this failure is one of the immoral parts of the budget. The whole area of land assembly and land servicing requires massive funding. There must be a massive attack on our housing problems. I submit this would not be inflationary. In fact it would bring about some deflation in respect of housing and rentals.
I recall about three weeks ago visiting a young couple in the south of Regina who lived in a crummy two-bedroom apartment for which they paid a rental of $195 a month. This, of course, may not be considered a high rental in Toronto, Montreal or Vancouver. They had saved about $3,000 and thought they had enough money for a down payment on a house. However, when they started inquiring in the housing market they found that they would need two or three times that amount of money merely for a down payment.
They also found, with the kind of interest rate that would apply to a mortgage either through CMHC or a private lender, that they would be faced with a monthly payment of $350 or $450. The take-home pay of the wage-earner in this family was $520 a month. So, here is one example of a young couple who, in spite of all their efforts to save and wait patiently until they thought they could buy a home of their own, now find that they cannot buy one. Also the mother now is forced to go to work. She does not want to, but they have no choice because they have two little children, one just reaching school age. The mother is forced to take employment because the take-home pay of that family will just barely allow them to get by while paying rent for a crummy apartment.
The savings they have acquired for the purpose of buying a home are totally insufficient. Even if they were sufficient for a down payment, with the current interest rates the payments they would have to make per month would eat up three-quarters of the wage-earner's take-home pay. Surely the budget should contain provisions in respect of housing that would allow people of this kind to have a home.
The massive attack that is required with regard to this problem is not something that can take place over night. I agree with that, but a start must be made. It seems to me the budget should contain at least another $1 billion for housing in the public sector. There should also be a target of 400,000 starts in 1975. This could not all be completed because we are part way through the year, but 400,000 should be the target. There should be, on the part of this government and this parliament, some direction with regard to investment.
Mention has been made of subsidized interest rates. My hon. friend who just spoke worried that this would allow
The Budget-Mr. Benjamin
the money lenders to get a rake-off, with the public treasury picking up the difference. Surely with any kind of subsidized interest rate there would be interest controls. I want to submit to the hon. member for Davenport (Mr. Caccia) that his worry about the subsidized interest rate program is totally unwarranted. In fact I submit that his argument is somewhat specious.
Surely we could have a system of interest rates that would favour those on low and middle incomes. Anyone with an income of less than $10,000 or $12,000 a year would pay an interest rate of 7 per cent or 8 per cent. The rate of interest would be geared to their income. Anyone who had an income in excess of $20,000, $25,000, $30,000 or whatever, could afford to pay the going price. This surely would cover the greatest number of people who are in need of rental accommodation, houses, or condominiums. I submit that the subsidized interest rate is a practical, worthwhile and civilized way to make sure that people have something that should be considered by all society as a fundamental right. I refer, of course, to a decent place to live, at a cost the people can afford. I also submit that the only way to accomplish this is through a massive public housing program.
The continual 19th century reliance on the private sector has failed year after year to provide housing. A massive attack on the housing problem would also help the unemployment situation because housing is a labourintensive part of our economy. Our objective should be to create a surplus of housing if we want to bring down housing and rental costs.
With a target of 400,000 starts in a year, and with subsidized interest rates for low and middle income people which bear some relationship to income, we would have a program that would create employment in the forest industry and all ancilliary industries which manufacture the items which go into the construction of apartments and homes. If one were to talk to the lumber workers in Quebec or in British Columbia who are laid off, I think one would find there is unanimous support for an additional $1 billion in this budget for public housing which would be channelled by the federal government through the provinces, the municipalities, and other groups of people who want to become involved in housing. If we really want to do something about unemployment and housing then this is one of the things which should have been contained in the budget.
Do you want to fight unemployment and at the same time do something about our environment? The hon. member for Davenport mentioned this, and I agreed with much of what he said in this regard. Why was there no mention in this budget of the start of a five or ten year program which would require something in the order of $5 million to $10 million, under which every city in this country with a population of more than 10,000 would have a tertiary sewage system installed? This would reduce unemployment and improve our environment. Such a program would capture the imagination of our people and would gain the support of the population.
One can imagine the employment that would be created in the manufacture of this equipment and in the installa-

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The Budget-Mr. Benjamin
tion of it. By the time the system was installed in the last city the equipment in the first city would be worn out, and the whole thing could be started all over again. Unemployment and pollution would be attacked at the same time. This budget should have had a proposal of that nature in it.
I submit that such a program would not be inflationary because much of our domestic inflation is caused by misdirected investment, investment in the wrong kind of priorities. We do not need more high rise office buildings, more shopping centres and hamburger stands. We need a change in priorities and a new direction to our investment. People who have money to invest should be told, "You will get a reasonable return on your investment, but we will tell you where it should go. It will go into projects that are socially desirable and necessary. Such projects will receive a higher priority than do shopping centres and high rise office buildings." Investment should go into such priorities as housing.
The whole concept behind the budget leads me to wonder why the Minister of Finance bothered to bring down the budget because it does nothing for the sick and the old, or for the unemployed. It contains no program that would launch this country into rebuilding and fighting unemployment. There is still a paranoia about inflation which, I submit, is not nearly as serious as unemployment and the recession in which we find ourselves.
I also want to mention something about energy. The Minister of Finance in his budget said, among other things, that it is his hope that the higher tax on gasoline and higher crude oil prices would encourage the use of other modes of transportation. At the outset I said that there were some glaring inconsistencies in the budget. On the one hand it is supposed to encourage the use of other modes of transportation, and on the other hand there is a paragraph in the budget in which it is stated that one of the areas where the government proposes to make cutbacks is the Ministry of Transport.
It seems to me that if you want to do something to encourage the use of other modes of transportation, massive public investment in transportation is necessary. Urban transit, intercity transit, rail and bus transportation, and transportation in the north should be encouraged and developed. This is not the time for a cut-back in the Ministry of Transport, especially when the minister claims that he wishes to encourage people to use other modes of transportation, and the Minister of Transport (Mr. Mar-chand) says the transportation policy is in a mess.
I do not know how they can have it both ways. It just means that even if people wanted to use another mode of transport they would find that in many parts of Canada it is not available for them to use. So they have no other choice but to pay these higher costs for driving their cars.
As I suggested, massive investment in transportation should have been proposed in the budget. Also, I find it incredible and inconsistent that while the minister is talking about conserving energy and the need to expand exploration for energy sources of all kinds, he proposes in one of the items in the budget a cut-back in government expenditures on Petro-Can. What I find incredible is that even before legislation on Petro-Can is passed, the government is already cutting back on any expenditures for it.

This tells you something about how much the government believes in real public investment in the development of energy resources, particularly oil and natural gas. It still wishes to rely on the multinational oil corporations to provide us with our energy needs, in spite of the fact that the latter have failed to do so. The minister wants development of and exploration for oil and natural gas, and then proposes cut-backs in the funding of Petro-Can. What a travesty! Again, how can they have it both ways?


Albert Béchard: Tell us when and where you would make cuts.


Leslie Gordon Benjamin: I do not think this is the time, nor is there an overwhelming necessity for cut-backs. It is not so much how much is being spent but rather where and how it is being spent, I submit. Investment is misdirected and the priorities are wrong, I suggest. The budget should have called for much greater expenditures than it does. I suggest that the income tax law needs some revising so that it would tax people much more fairly than it does now. The minister says he needs revenue. Rather than raising the revenue by imposing a 10 cents a gallon tax which will hit low income people the most, and the people who have no choice but to drive their cars to work, why does the minister not pick up a few hundred million dollars in the deferred taxes owed by the corporations for the last 20 years? If he needs money, and he admits that the 10 cents is to raise revenue-that is the first objective, and the second one is to encourage people to use other modes of transport-there are many other better ways of raising this money.
The federal government will be taking 10 cents a gallon in a special tax; it has already been taking 5 cents a gallon in excise tax, and once the crude oil increase of $1.50 goes into effect, there will be another 5 cents a gallon to pay. For example, the refusal of the Minister of Finance and of the Prime Minister (Mr. Trudeau) to allow all royalties to be deducted as legitimate business expense is continued in the budget. That takes about $700 million a year from the provinces and the oil industry.
The increase in the crude oil price will only return about $40 million a year to Saskatchewan out of a possible $100 million, and $35 million of that will have to go back to the oil companies, which in turn will send it back to Ottawa because their royalties are not deductible as business expenses. So of the $1.50 increase, 35 cents will go back to Ottawa anyway. Saskatchewan will lose a further $25 million in the assessment of the tax equalization formula, which leaves about $40 million for the province and the oil industries in Saskatchewan. I submit that is hardly what you would call an incentive to the exploration for and development of energy in my province, let alone anywhere else in the country.
We still believe in our province that these additional funds should go into an energy security fund to which the federal government and certain of the provinces should contribute. Small independent drilling and exploration companies should be financed from that fund in a massive way under public ownership and control, ta encourage the exploration for and development of oil, natural gas and other energy sources. This budget still runs away from that task. It still places a nineteenth century reliance on
July 3, 1975

the so-called private sector, and it failed here as well. The government has continually failed in this regard.
Canadians are recognized the world over for their expertise in exploration and drilling, in the oil and natural gas industries. Small independent companies have had no choice but to follow the multinationals down to Oklahoma, Texas, the North Sea, Indonesia, Nigeria or somewhere else, though they could and should still be working here. I have talked to some independent drillers. They could not care less whether they are drilling at home for Imperial Oil, the Government of Canada, or the province of Saskatchewan, but the Government of Canada refuses to become involved, and it has set up a tax system designed to prevent something like SaskOil from succeeding. These independents either sit idle in Saskatchewan or Alberta, or they follow the multinationals to some other country; they have had no other choice.
I would like to urge that this budget be substantially amended. Surely hon. members on the government side cannot really believe that this kind of budget is either warranted or necessary, and I hope that hon. members opposite will say some of the things the hon. member for Davenport said, and will state some of the reservations he expressed in the area of the unemployment insurance fund. I hope the government will reconsider what it should be doing and what should be in the budget, get rid of some of the paranoia about inflation, and worry more about people. If it does that, it will receive the support of all hon. members of this House. It will receive the overwhelming support of the people of this country.
At the moment the public is disgusted. The government has only brought forth more cynicism and more of the attitude of "why should I worry; I will just look after myself" from too many Canadians. This is the time to be challenging this country, proposing programs and pressures to the people which will get them excited, and which will meet the needs of our population in housing, transportation, energy, and in our environment. Instead we have a budget which is nothing more than an attack on the sick, the old and the homeless. In too many respects the budget is immoral, and I see no reason for me or any other member of this House to support it.


Mr. Gordon Ritchie (Dauphin):: Madam Speaker, in opening my comments on the budget I might say that the Minister of Finance (Mr. Turner) would have been much more plausible and believable had he not attempted to impose on the private economy restraints and restrictions-though some are valid and point in the right direction-and if he had followed through with legislative restraints on federal government spending. This is the greatest weakness in the budget. The minister has attempted to give the impression that he, on behalf of the government, is interested in solid budgetary restrictions on government spending, and suggesting that the private sector should also be restricting its spending. On examination the restraint this budget implies on government expenditure is largely an illusion. The taxpayer no doubt will be the last to know.
The minister has discussed cutting back on defence programs while we do not have any new and modern
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equipment. He also discussed cutting back on non statutory loans, investments and advances. It is very much like the housewife who tells her husband she is saving him money because she did not buy the expensive fur coat or the jewellery she wanted. We are told there will be $100 million in deferrals and cutbacks in transportation, defence, public works, and in many other departments. Then the minister will cut back by deferring contributions to external affairs, industry and the department of the Secretary of State (Mr. Faulkner).
We should know whether the Export Development Bank will receive a cutback. It seems to be able to loan money to the oil countries at quite a bit less than the oil countries receive on the world market. Will CIDA be cut back? Will the Secretary of State, who has been spending much money transferring people on language courses around the country, be cut back? There will be an estimated $350 million lopped off by withholding funds from Petro-Can, the Federal Business Development Bank, the Federal Monetary Exchange Corporation and the Farm Credit Corporation, but Petro-Can has not even been passed by this House. That the federal government considered it important that it be passed post haste makes a mockery out of the government, and it will do more to reduce investment in our energy resources. This is one baby which should be thrown out with the bath water.
The Federal Business Development Bank indicates that it has not made any loans since the act was passed. The Federal Mortgage Exchange Corporation has not been set up, and the Farm Credit Corporation is one corporation where cuts can only be made at considerable risk to our future economy. The minister has said that he will cut another $130 million from planned expenditures of other departments and on limitations on consultant fees, which alone come close to $1 billion and which make the consultant business the fastest growing industry in this country.
The minister also states there will be a 25 per cent salary restriction on the increase in government, but all this seems very doubtful. A headline in the Gazette of Friday, June 27, reads, "Civil Service Likely to Add 6,000 Jobs". Despite the so-called austerity budget, the government had planned to add 9,200 full time positions, for a total of 317,184. This seems to be an illusion of restraint because there are always a number of job vacancies in the government, estimated at 2 per cent. Government departments normally operate at less than their maximum authorized manpower. This is because departments have run short of staffing funds or because they cannot find qualified persons for vacant positions. It is reported that it is a common practice to avoid full staffing and overspending budgets by hiring outside consultants for particular projects, and to use temporary clerical help. There is no apparent indication that the government intends to impose a real employee restriction.
Turning to the make-work programs which are to be extended over two years, of the $450 million which is to be extended, perhaps the $70 million involved in school and job training is constructive. What is doubtful is the $285 million for summer employment and other projects. There seems to be less justification for this. Programs such as these seem to have a multiplying effect on inflationary trends.

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The Budget-Mr. Ritchie
The 5 per cent tax credit may go a little way in helping the private sector with the investment needed to provide further jobs. I might say that is some improvement in that it is fair, and it has given more sectors in the economy a chance to use it rather than the straight reductions for manufacturing and processing, which were features of other budgets. But here again the 5 per cent is closer to 3 per cent because the manufacturer, farmer, or logger who takes advantage of this section will find his depreciation rate reduced by approximately 2 per cent. All in all, the budget indicates that the Minister of Finance created his illusion of budgetary cuts by merely deferring programs, many of which are of doubtful validity.
Our external relationship with the other countries of the world is most important and this budget does little to improve it. We are facing a deficit of up to $6 billion in our balance of payments. Such a deficit is enormously higher than ever before in this country, even when it was at a much lower level of dollar value.
Adding to the problem is the fact that our current inflation rate is much higher than that of our largest trading partner, the United States. Our rate of increase in wage settlements in manufacturing is running between 50 per cent and 100 per cent more rapidly than last year, depending on the time period selected and what part of the year. The minister has observed that this cannot go on without jeopardizing export trade and employment in Canada.
In other words, our attempt to boost domestic demands and combat unemployment by deficit financing will boomerang, if indeed it has not already done so. The reasons for this are straightforward. Inflation attracts people into the labour force who need to work in order to keep up their standard of living. But this kind of employment can only be maintained by further stimulating the aggregate demand, resulting in more and more inflation. Our rate of inflation, if continued, will price Canadian goods out of world markets and will entail loss of our export markets. The details of the budget hardly seem to scratch the surface of these problems.
From the statement of the Minister of Finance and the government, they would have us believe that the Canadian trade deficit and our competitive position are only problems that have arisen recently. While the specific problems may have just surfaced, their origin is more deep seated and rests with the country, the commodity mix of exports, and with government policies as much as with the sharp down turn of world demand by the so-called third option to Canada-United States relations. The increase of our exports to Europe or Japan has not made any significant change in the mix of our export markets. The Prime Minister's pursuit of the elusive "contractual link" with the European market so far has only resulted in the feeling that resource hungry Europe will have another source of raw materials.
The Minister of Industry, Trade and Commerce (Mr. Gillespie) has just come back from Japan, thoroughly rebuffed in his efforts to sell to that country more processed manufactured goods.


Alastair William Gillespie: Not true.


William Gordon Ritchie: The United States still purchases over 66 per cent of our trade. Some would suggest that this trade dependence on the United States works to Canada's disadvantage when the United States is in recession. Such a view does not take into account that world output downturn has been general, and in some cases more severe than in the United States. With the world economy growing progressively more interdependent, efforts to diversify may produce no real economic gains, except some elusive sense of sovereignty.
Much of the gain in exports in the last two years has been due to the price explosion for agricultural products, hydrocarbons and raw materials. Petroleum and natural gas doubled from $1.8 billion in 1973 to $3.9 billion in 1974 in spite of the fact that the volume of exports was actually reduced. Exports in agriculture and resource sectors declined in 1974. Farm and fish products were down by almost 25 per cent, and a large proportion of this can be attributed to strikes at various stages of the export system, as we well know from the grain strike of last fall. It seems that failure to settle the strikes last fall meant that Canada exported about 170 million bushels less grain than it might have exported, and some economists have estimated the demurrage costs alone as high as $270 million. It is not likely that these exports will be made up.
The price trend for Canadian products is all upward for 1974. It might be expected that there will be some reduction in price trends in the agriculture and resource industries. In manufactured goods there was an increase in price in the last quarter of 1974 which amounted to an 18 per cent rise. Since the United States purchases over 80 per cent of Canadian manufactured goods, the concern over competitiveness is certainly important. But it is very difficult to come up with a comparison of wage costs between the two countries. Generally speaking, it seems as though the wage differential has narrowed between Canada and the United States. Canadian manufacturing workers will price themselves out of a job if wage demands are too great.
I think, Madam Speaker, this is one area in which statistics could be much more meaningful. The government could supply better comparison statistics than we have had. We have seen the Minister of Labour (Mr. Munro) quoting from one group of statistics which were refuted by the Minister of Finance, and various economists and labour people have also been getting in on the act. It would help a great deal if the government could improve the quality of its statistics.
There is one area to which the Canadian government must give serious consideration. The automotive trade deficit went from $440 million in 1973 to $1,328 million in 1974. Since 1966 there have been six deficits and three surpluses. The 1974 deficit actually is $440 million more than the 1965 deficit, even allowing for constant dollars. Whether or not the minister is reluctant to open negotiations may stem from his fears, but in fact the government continues to accept this deficit. As has been reported, the deficit this year may reach over $2 billion. I think the Minister of Industry, Trade and Commerce should tell us what is in store in regard to the auto pact because almost certainly this cannot continue indefinitely. Exports of petroleum and hydrocarbons were reduced in value in 1974
July 3, 1975

by $901 million compared with what the 1973 volumes would have brought.
This enormous deficit that we have incurred in our foreign trade was to be covered by inflows of capital, but the government has set up a Foreign Investment Review Board which certainly is a considerable disincentive to those who want to invest in Canada. Failing large inflows of capital, we can expect a devalued Canadian dollar, eventual inability to pay for imports we desire and, in the long run, a difficult time for our economy.
I should like to speak about the action of the government in giving notice of termination of the Hospital Insurance and Diagnostic Services Act and in placing an administrative ceiling on the Medical Care Insurance Act. This has brought into sharp focus very diametrically opposing views with which the country is not faced. For instance, in introducing the prepaid medical insurance plan, the Secretary of State for External Affairs (Mr. MacEachen), who was Mr. Pearson's minister of health and welfare, said on July 12, 1966:
... health is not a privilege tied to the state of one's bank account but rather a basic right that should be open to all.
But this fairy tale, this expansive and motherhood attitude to the problems of health care has now fallen to the position that Mr. Enoch Powell, who was minister of health for Great Britain in the MacMillan government, has said:
... medical care must always be rationed. If it is not rationed by the patient's pocketbook, it must be rationed by the patient's entrance into the medical care system, generally at the physician's office or at the hospital door.
The action of the government is a belated recognition that medical and hospital care have no limits in desirable programs, and that the whole of the national economy could be directed for health purposes and still leave certain desirable things untouched. What is of considerable importance in dealing with the Hospital Insurance Act is what the attitude of the federal government will be as to arrangements for carrying this program. Does the government intend to dump the whole of these programs on to the provinces, albeit with suitable carrots through transfer of financial payments? There is much to be said for the proposal that the provinces which are at the moment administering the programs should decide what programs they want and to what extent they will support them. There is bound to be wide variation between the individual priorities of the provinces.
There also has to be recognition that there will be a change in the mix of our population ages. At the present time we need increased care for aged citizens who should be properly integrated into the system. The re-negotiation of the Hospital Insurance and Diagnostic Services Act will have to be done with care, and negotiations will need to be long and painstaking.
The actions of the federal government in cutting back contributions under the Medical Care Act will create problems. Inevitably the present system of medical care insurance created excessive demands by patients for services. Whether the blame is to be laid at the feet of the patients or doctors is irrelevant. The act encourages the creation of
The Budget-Mr. Ritchie
an excessive supply of doctors in the country, creates excessive expectations on the part of patients, and does little to bring about a proper geographic balance of physicians. Indeed, it encourages physicians to concentrate in certain geographic areas much more than the old system did, under which fees were charged for services.
The government should look hard at its policies for admitting physicians from abroad, and work closely with provincial departments of health and with medical associations, to stabilize the supply of physicians. In most provinces not enough physicians are practising outside the medical plan. This shows that the payment of physicians has been generous enough to keep them abnormally comfortable. The monetary structure under which they work has kept them very comfortably off.
The government's action will force the province to organize their own health facilities. Reluctantly, I believe this is necessary. It has been suggested that this will result in inferior health care, higher premiums, deterent fees and so on. Any system of health care is open to this charge. Indeed there is no assurance that our present system of health care is particularly superior to any other system.
It has been objected that the present system increases the flow of patients to doctors. All patients must be seen, but this does not mean that each patient necessarily receives better care. Nevertheless, although the salary system allows governments to control the money they spend on doctors, it results in patients receiving an inferior level of care.
May I say a few words about proposed changes to the Unemployment Insurance Act? As was obvious to anyone who was involved in studying the act during its setting up-it was obvious to me-the government and its officials had no idea of the eventual cost of the new Unemployment Insurance Act. Nor did they do any real investigation, because I am sure they would not like what they realized they would hear. The old act needed upgrading, but it did not need to be upgraded to the point at which unemployment insurance became an income replacement program.
In the debate I said that the Unemployment Insurance Act would cost us $700 million more than the government had said it would. Those were not my own figures, but were based on figures supplied by competent actuarial people. The government ignored them, and you can see what happened. As I said, the old act needed upgrading. As I recall, the old act provided for payments averaging between 39 per cent and 42 per cent of wages. In rare cases payments were to go as high as 50 per cent of wages in the case of an individual with several dependants. There was an element of welfarism in the old unemployment insurance act but it was biased in favour of the very low income earner.
When the proposed changes to the Unemployment Insurance Act are brought forward, we must study them carefully, but unless they are more substantial than the Minister of Finance suggested during the budget address, I doubt if they will do much good. The proposals will come down heavily against those who leave their jobs voluntarily. The act will discriminate heavily against employees who cannot get along with their employers. We still need
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The Budget-Mr. Ritchie
older people in the work force, even though some think they constitute a problem. When fewer young people, whose birth after the war created a population bulge, enter the work force the services of our older people will be needed; but they are to be turned out of the work force. It is possible that our older citizens will be forced to leave the work force before they reach 65. It should be realized that older people can contribute to the economy. They will be the losers under the government's new proposals.
Not one of the government's proposals will attack the problem of soaring unemployment costs and the many disincentives to return to work. I suggest that providing 66.66 per cent of wages as UIC benefits to an income earner is too much. The payment is too high. It should be scaled down to the neighbourhood of 50 per cent or 55 per cent of wages, particularly if the person is single or a member of a two-income family. High benefits create the necessity for rigid controls and the exclusion of as many claimants as possible] This is done by passing peculiar and unacceptable regulations.
Benefits which are too high make necessary an army of inspectors whose zealousness often leads them to disqualify claimants unfairly. The federal government is changing the rules of the game. It does not want the federal treasury to pick up such a large tab for benefits, so it has introduced an entirely new concept to the Unemployment Insurance Act. It is saying that business and workers will have to pay for unemployment benefits themselves when unemployment rates are about 5.5 per cent or less. In other words, 40 per cent more of the pay-out will come from deductions. Increasingly, those working will directly carry those who are not.
The federal treasury will escape much of the burden that it now bears. Indeed, it will escape 40 per cent of its present liability if unemployment reaches, say, 8 per cent. And make no mistake, all indications show that unemployment on this continent will be between 8 per cent and 10 per cent for some years to come. The great danger in making the federal government responsible only when unemployment reaches higher levels is that the federal government will not consider it necessary to deal directly with the unemployed; further, it will not be so anxious to sustain employment. Thus it becomes increasingly important to make sure that payments from the unemployment insurance fund are not so high as to discourage people from seeking work, nor so high as to lead to the appointment of excessive bureaucratic staffs whose function is to limit claims.
Finally, may I turn to the problems of oil and gas pricing. The government made much of the fact that it intended to maintain a two-price oil system indefinitely. This was supposed to be Canada's ace in the hole and would let us live the good life, while our neighbours for years to come suffered by paying excessive energy prices. Yet already one third of the consuming public, the motoring public, is paying world prices, or North American prices, for gas and oil. Soon the commercial, industrial and home heating sector will also be paying this high price.
The two-price system is now in shreds, and we can confidently expect the government to blunder its way up to the world price before many more months have passed. Soon we shall all be paying the high North American

price. This would not be so bad if drilling and exploration were keeping pace with consumption. Exploration and drilling for oil and gas have sunk to their lowest level in years. Government policies have alienated the western provinces. Government tax policies have created animosities on the part of western provinces which will not soon be forgotten.
In addition, government policies have created in the United States the suspicion that Canada is an untrustworthy nation. Indeed, the defence of El Paso and the proposal that Alaskan gas should be moved by pipeline and tankers is based on the charge that Canada is an untrustworthy neighbour. Our neighbours argue that they can avoid trouble if Alaskan gas is wrapped in the American flag, so to speak. Our position, of course, has not been helped by the actions of the Foreign Investment Review Board.
At a time we have run up a trade deficit of between $5 billion and $6 billion, we have managed to price ourselves out of the American market. We did this by imposing the export tax, and now our oil exports to the United States are falling short of our original target by many thousands of barrels a day. The export tax, which was to cushion the price of off-shore oil imported to Quebec and the Mari-times, no longer acts as a cushion. It merely prevents oil moving across the border. The government has transferred the cost of the oil shelter to the back of the travelling motorist, who must now pay an extra ten cents a gallon. Perhaps the motorist would not mind paying the extra tax if he felt any of it would assure his future supply of oil. But no part of this tax will be applied to exploration. The oil industry will not get any of it. The ten cents a gallon tax may have some value as a conservation measure, but I doubt it.
The government has failed badly to organize our energy policies to meet future needs. The Petro-Can bill, which the government claimed was so necessary for the oil industry, is now before parliament, but Petro-Can is included in the list of budget cut-backs. The Minister of Finance said he would cut certain expenditures, and gave the illusion he would shave $1 billion off government spending. Having for days on end sat on the committee considering the Petro-Can bill, I still do not know how Petro-Can is to function. Clearly, the minister himself has no real idea of its function. The government has been greatly negligent in its handling of the energy problem. It should level with the Canadian people, come clean with them as to how high the world price will go, or how high will be the North American price which they must pay.
To do otherwise will be to create uneconomic and inefficient industries that will eventually be exposed to the full energy problem of the world. The export tax should not have been administered to curtail exports to the United States, but should have been geared to allow exports to the extent that we felt desirable. Certainly
200,000	barrels a day at $11 a barrel, which is about what our exports are short of the permissible level, would earn something like $1 billion in this coming year, and would substantially ease the balance of payments deficit.
July 3, 1975

Again, the government failed to come to any terms with the producing provinces, with the result that exploration and development do not proceed. We are today using up gas and oil which was found ten years ago. What are we going to do ten years down the road? All we hear about are grandiose plans that never seem to materialize. The federal government broke faith with the provinces when it unilaterally declared that provincial control of resources is not desirable.
A report in the Globe and Mail of a couple of days ago indicated that the post-budget price rise of western oil shows that the budget is not really satisfying the oil people with regard to more money being available for exploration.
In conclusion, the budget has failed to come to grips with the most important problem facing us, namely, our deficit in balance of payments which will eventually cause us serious problems.


Alastair William Gillespie: Madam Speaker, I am particularly pleased to have the opportunity this afternoon to participate in this budget debate.
Since the beginning of this year I have criss-crossed the country talking with groups of business leaders about this pervasive problem that confronts us, the problem of inflation and its effect on our industrial structure and competitiveness.
I have also had the opportunity, since the beginning of the year, to meet with many senior economic ministers of foreign governments, European, South American, Caribbean and, as recently as last week, Japanese ministers. I have had an opportunity to examine the approaches that their governments have taken to inflation, to observe the performance of their economies during the last 18 months or so and, more particularly, to discuss with them the outlook for the next 18 months.
The outlook of Canadian business leaders can be divided into short-run and long-run concerns. I would like to deal first with the long-run concerns.
One of the worst features of inflation is its effect on investment decisions. Generally speaking, our socialist friends tend to ignore this feature. They focus on inflationary profits rather than on real profits. They forget that only new investment creates additional jobs. They forget that even to sustain the existing level of employment in a factory it is necessary for a company to re-invest its retained earnings, and they forget that, in an inflationary period, new investment which replaces worn out equipment is infinitely more expensive than the original investment. Canadian businessmen understand this simple but basic truth. The Canadian government understands this simple and basic truth, and the budget reflects that understanding.
This is a time to look forward, to remember some of the lessons of the last cycle. This is a time to assist business to finance its future investment. That is why the budget measures with respect to an investment tax credit are important. That is why the budget measures to assist corporations to borrow abroad by removing the withholding tax are important. That is why the changes with respect to resources taxation are important at this time.
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Let me now take a moment to review some short-term considerations. The future strength and competitiveness of our domestic economy have been seriously impaired by quite short-term considerations on the part of union negotiators. No one can blame them for seeking a fair deal for their workers, but too many groups have sought to make immediate gains at the expense of others. How else does one explain wage settlements of 20 per cent or more in one year?
To project oneself against inflation is reasonable and sensible for any bargaining unit, but when that settlement exceeds the domestic inflationary rate by up to 8 per cent or more, such a settlement itself is inflationary. Such settlements directly and indirectly can undermine the strength of the economy as a whole.
Let me digress for a moment. You are all familiar with the United States experience. Their wage settlement and unit costs have been held down substantially below ours. They did that in Germany also, and Germany had an inflation rate in the last year of just over 6 per cent.
In Japan there were wage settlements in 1974 of 33 per cent. They suddenly realized that their international competitiveness was eroding. This year they settled for 13 per cent.
We should take a good look at the experiences of the United States, Germany, and Japan. In my opinion they are the industrial leaders in this world, the economies which are the most competitive. I suggest we can learn much from their sense of self discipline during an inflationary period, their willingness to face the national interest and to show restraint.
In the balance of my remarks I want to discuss some of the initiatives that my department has taken, new ways of writing new business. I would like to talk a little about some of our new initiatives with our traditional partners, our European and Japanese partners, in connection with establishing new commercial relations. I also want to talk about some of our trade promotion initiatives in the course of this year. But I notice that it is close to six o'clock. I will have to defer those remarks until later.
May I end this part of my speech by saying that, for the longer term, we have to concentrate not only on building the productive capacity of Canada, not only on the scale of longer term, but on assisting the restructuring and modernization of Canadian industry and the development of industry sector strategies. We also have to open up new markets. We have to find new ways of doing business outside Canada.


Mitchell William Sharp: Madam Speaker, I rise on a point of order. There has been some discussion among various parties arising out of the desire of a great many members to participate in this debate, more than can possibly be accommodated. In an effort to give as many as possible the opportunity to speak, there is a disposition to agree that there should be a general rule of a 20-minute limit on speeches for the remainder of this debate, except for ministers. The government intends to have two ministers participate, the minister who is now speaking and one other. I think it is agreeable that they each be given 30 minutes.
29576-46(4

The Budget-Mr. Gillespie


Sinclair McKnight Stevens: Madam Speaker, I think there is substantial agreement. However, will the government House leader agree that we at least have the option to put up one further speaker with a 30-minute limit?


Mitchell William Sharp: That is fine.


Mr. Knowles (Winnipeg North Centre):: Madam Speaker, we are prepared to agree to that proposal. However, accompanying it I think there should be an understanding that no one ask for or be given overtime. Otherwise there would not be much point in cutting speeches so that more members can participate.


The Acting Speaker (Mrs. Morin):: Is that agreed?


Leonard C. Jones: I would agree to that. I have been trying for a long time to get on the list but I do not have a party whip. I am going to get a cracker jack whip one day.


The Acting Speaker (Mrs. Morin):: Is it agreed then, from now on, except for ministers and two other speakers, that speeches be limited to 20 minutes?


Stanley Howard Knowles: Without overtime.


The Acting Speaker (Mrs. Morin):: Without overtime. Is that agreed?


Some hon. Members:: Agreed.


The Acting Speaker (Mrs. Morin):: It being six o'clock I do now leave the chair until eight o'clock this evening.
At 6.03 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
The Acting Speaker (Mr. Penner):: The Minister of Industry, Trade and Commerce.


Alastair William Gillespie: Thank you, Mr. Speaker.


An hon. Member:: I am glad to see he is properly dressed.


Stanley Howard Knowles: The same speech, though.


Alastair William Gillespie: Mr. Speaker, of course I would be very pleased to lead a trade mission with hon. members to sell Canadian garments in period fashion, wherever they might like to go.
Before the adjournment for the dinner hour I was able to outline some of my concerns about longer term questions and longer term threats to the Canadian productivity and competitiveness that the inflationary situation in Canada today poses for us. I referred to the restraint that some other countries had shown when it came to settling their wage negotiations, and I referred in particular to Japan.

In Japan in 1974 the average wage settlement was 33 per cent. Earlier this year I think the Japanese took stock of the situation and realized they were going to lose their competitive advantage in the world, or they could see that competitive advantage eroding, and the settlement this year was an average 13 per cent.
I referred to Germany, another of the industrial nations with which we are competing internationally on an active and aggressive basis. I referred to their inflation rate and the kind of discipline they had shown and imposed on themselves in limiting their wage increases and, therefore, increases in unit costs.
I referred as well to the experience in the United States. Hon. members are fully aware of the comparison between increasing wage costs in the United States and in this country. The United States is our major competitor in two ways, both as an exporter in third markets and as a competitor in the Canadian market itself.


An hon. Member:: Your government promoted the 61 per
cent increase.


Alastair William Gillespie: I think there is a lesson in this for Canadians, and it is simply that unless our wage settlements abate from last year's level very considerably, all Canadians will pay the price for the lost competition in the Canadian economy.
I began in my remarks to outline what I wanted to cover in the balance of my speech. I wanted to maintain the longer term perspective, and I wanted to indicate where I felt some of the longer term imperatives for Canada lie. I referred in my earlier remarks to our need to increase our investment in an expanded productive capacity. I have referred on other occasions in this House to and have emphasized the importance of restructuring and modernizing Canada's industrial plant on an internationally competitive basis, and to the development of sector strategies where appropriate to this end. The major program in developing these policies with the assistance and full consultation of the private sector is now well advanced.
In the balance of my remarks I want to deal with a third longer term imperative, the development of new export opportunities for Canadians. In my view our future economic success will depend on how well we pursue each of these imperatives in combination one with the other.
Our exports in real terms this year are suffering compared to a year ago because the economies of our major customers are suffering. We cannot expect any major change until the United States economy turns up. I think we have reason to hope that the economic indicators are now signalling that the turn-up is about to occur.
There is not much time to detail all the initiatives we have been taking as a government over the past year to improve the outlook, and lay a firmer foundation for long-term future export performance. However, I intend to summarize some of my department's efforts. I want to talk about three aspects. I want to talk about all the new initiatives we have introduced to support new ways of business; I want to talk about new initiatives in economic co-operation with our major partners; and I want to talk about new initiatives in trade promotion.
July 3, 1975

During the past 18 months there have been several missions of Canadian businessmen to the Middle East, Latin America, and the Pacific rim. Many of these countries are at the takeoff point in programs of rapid industrialization. This has opened up important new opportunities for Canadian firms. Foreign businessmen and governments are interested in more than just Canadian manufactured goods and services. They favour as the best technique of obtaining new technology the joint venture, or some form of partnership. It is a good technique for them and it is also a good technique for Canadians. The joint venture in many instances is the only way of protecting existing markets, expanding into new lines in an existing market, or indeed in some cases it is the only way of penetrating a market for the first time. To promote this vehicle for trade I have established in my department a centre for joint ventures. This centre will be an information bank for Canadian businessmen contemplating joint ventures abroad.
I have also discovered a strong demand for Canadian expertise and capital goods in the form of turnkey projects in developing countries. We estimate the world market for such projects as high as $50 billion annually. Individual turnkey projects range upwards from $25 billion. Thus my department has introduced programs to help Canadian companies pursue such projects. As in the case of joint ventures, I am establishing a centre for turnkey projects in my department. It will provide advice and assistance to Canadian companies pursuing turnkey projects abroad.
In addition to the government's programs, the private insurance industry, encouraged by my department, has introduced unique insurance programs to take some of the sting out of the risk. The Export Development Corporation at my request is setting up special facilities to process applications for financing of turnkey projects where needed.
With regard to the Export Development Corporation we passed legislation earlier this session raising the corporation's ceiling to $5 billion. To date this year the Export Development Corporation has authorized more than $900 million in long-term loans.


John (Jack) Henry Horner: For non-Canadians.


Alastair William Gillespie: Only for Canadians. For the benefit of Canadians, those employed in Canadian factories making and using Canadian materials.


John (Jack) Henry Horner: Not so.


Alastair William Gillespie: Mr. Speaker, I regret that the hon. member opposite is so badly informed. I would be very pleased on another occasion to provide him with the information. The Export Development Corporation has approved or extended offers on a further $87 million in medium-term insurance guarantees in support of overseas sales.
Hon. members will recall that just last month we put into place a $500 million EDC financing umbrella, or line or credit, to support Canadian sales of capital goods in the growing Soviet Union market. The hon. member for Crow-
Tile Budget-Mr. Gillespie
foot (Mr. Horner) perhaps should note this because some of the most significant sales which have been made by Canadian firms to the USSR have been made by Canadian firms in Alberta. Earlier we instituted similar credit arrangements for Cuba to the extent of $100 million. Just this afternoon it was my pleasure to participate at the signing of a financing arrangement with the Government of Indonesia which will cover $100 million of Canadian exports; but that is only half of it because the other half will be provided by the private sector, the banking fraternity of Canada and CIDA.
In these three arrangements with the USSR, Cuba, and Indonesia we have noted the response of the private sector financial institutions to our effort to involve them in export financing of Canadian goods and services. These efforts were prompted by the growing demand for EDC financing. With the co-operation of the private sector banks, Canadian exporters have access to credit on terms fully competitive in world markets. As an example, in the Indonesia arrangement EDC has signed for a $100 million commitment. Another $75 million will come from the commercial banks and the remaining $25 million comes from CIDA.
I also hope to announce shortly a national conference on export financing in the Pacific Rim. This conference, with the co-operation of the Canadian Manufacturers' Association, will be held in Toronto in early October. It will cover the financial aspects of doing business in the developing countries of the Pacific Rim.
Let me turn now to new initiatives we have taken to develop and strengthen our commercial relations with some of our traditional trading partners, particularly our Japanese trading partner. We are involved with a number of these trading partners separately and, so far as the European community is concerned, collectively as part of the community-the European Economic Community. In an effort to find ways to strengthen economic and industrial co-operation we are seeking to find how our respective objectives can be furthered by each facilitating and encouraging inter-corporate relationships, including joint ventures and exchanges, mutually beneficial investment, scientific and technological exchanges, and mutually advantageous two-way trade flows.
An important objective for Canada in this sort of cooperation, as it is in the GATT negotiations, is to increase the sale of upgraded and fully manufactured goods. A good example of this co-operation is the successful Canada-Japanese ministerial meetings which I attended in Tokyo last week. There we agreed with Japanese ministers to undertake a joint program of economic co-operation. We instructed officials to proceed quickly to identify areas where co-operation would be feasible and mutually beneficial. I feel that this is a significant step forward in developing a closer relationship with this very important trading partner.
We are also exploring industrial co-operation with the EEC and certain of its member states, and other western European countries. The Prime Minister (Mr. Trudeau) discussed this in Europe last fall and winter, and more recently a group of Canadian officials visited a number of European countries to identify specific industry sectors where scope exists for developing closer ties.

July 3, 1975
The Budget-Mr. Gillespie
During the past month I reviewed the progress we are making with the French trade minister and the German economics minister when these gentlemen visited Ottawa. The contractual link the government seeks with the common market will provide a framework for industrial co-operation with the community as a whole. I am encouraged to note last week's decision by the EEC Council of Ministers on this subject. It means Canadian and community officials can begin the needed detailed discussions later this year. The progress of the contractual link has moved forward very substantially in recent months. Mr. Speaker, I can understand some hon. members opposite being envious of this performance. A long view and success have not always been part of their experience.
I should now like to turn to some points on trade promotion. We are also expanding, as I indicated, our trade promotion program in our non-traditional markets.
Hon. members opposite obviously do not consider trade a very serious or important subject. In this party and in this government we consider trade to be a priority objective. We are not wedded to some of the old ideas. We are prepared to look at new ways to build trade for Canada. That is why we are prepared to look and to try to develop a community link and a new relationship with Japan. That is why we are setting up centres for joint ventures, a turnkey centre and a whole host of other things. At times I get the impression that hon. members opposite are not interested in trade. They are too preoccupied with other questions.
I have already mentioned the trade missions that I have led to different parts of the world. These have been augmented by a series of non-ministerial missions to many countries. Between here and Japan, for example, there have been 80 missions, either incoming or outgoing in the past year, almost as many missions as there are members opposite.


Some hon. Members:: Hear, hear!


Alastair William Gillespie: Indeed, many more than there are present tonight.
We are taking part in trade fairs in some 60 countries. We are mounting solo exhibitions of Canadian goods and services in many other countries. We are holding in-store promotions, and we are expanding our trade commissioner service in important third world markets.
In the Middle East we have doubled our commercial and economic staff in the past ten months, just as one example. We are achieving results. Since my visit to Iran, Iraq and Saudi Arabia last April, our exports to these countries have started to move upward by 150 per cent.
There is still a long way to go, but we intend to pursue the potential that is there for Canada and Canadian businessmen. Let us look at another developing market for Canada in the last year, namely, the Latin American market which is just about ready. For years we have been holding out the promise of Latin America, and in the last year, in 1973-74, we nearly doubled our sales to that market, a 93 per cent increase over the previous year.

In recent months Canadian exporters have won a number of important contracts in North Africa, the Middle East, Latin America and South East Asia. These cover a variety of capital equipment and services. At the present time Canadian exporters are bidding on a wide range of projects in these countries, some of them worth hundreds of millions of dollars each. We anticipate important new business from Indonesia, whose president we have the honour of hosting this week.
Next week we have the first meeting of the Canada-Iran Joint Economic Commission. At these meetings my Iranian opposite number and I intend to agree on a list of specific projects for the supply of Canadian equipment and services to Iran. I expect that we will identify projects in resource development, electronics, telecommunications, educational and urban development areas. I think that there is a multibillion dollar potential for Canada and Canadian firms doing business with Iran. I emphasize to you Mr. Speaker, that these government negotiations are of great importance in the development of economic relations, particularly in the Middle East. In this context we will press ahead as soon as possible to conclude negotiations on trade agreements with both Iraq and Saudi Arabia. We also look forward to developing new trade initiatives in a number of other promising areas such as South East Asia.
At the same time our biggest trading partner, the United States, offers some exciting new sales opportunities. One such area is in the market for replacement auto parts. My department is moving to take advantage of this situation, starting this fall with a seminar in Chicago to help Canadian manufacturers sell into this expanding market. There will be 40 Canadian producers at the seminar, during which eight large U.S. importers will present information on merchandising techniques.
We will follow this by an exhibit, sponsored by my department, in the automobile parts and accessories manufacturers' exhibition in Chicago during October. We are also encouraging manufacturers to enter this exhibition under section C of my department's program for export market development. We expect that the Canadian auto parts industry will take advantage of this assistance to expand their sales in the United States.
There are other important sales opportunities in which my department will be assisting Canadian exporters in the U. S. market over the coming months. We will sponsor exhibitions by Canadian companies in trade shows that include agriculture, fisheries and food products, farm, woodworking and oil field machinery, wearing apparel and consumer products, and furniture and boats.
Meanwhile, in Geneva over the next two years we will take active part in the most important multilateral trade negotiations ever held in the world. We will join other countries to promote a freer flow of goods services internationally.
I feel that Canada will derive maximum benefit if we approach and meet these challenges from the basis of a strong economic position. Without this economic strength, we are a straw in the wind of international trade. Thus we must keep the economy steady while we lay the ground work for a major expansion of productive capacity. We must provide a climate for investment, and a framework
July 3, 1975

on which to build this investment for its most productive uses. We must build our strength today in anticipation of new forms of international economic co-operation with the industrialized countries, the rapidly developing nations of the Middle East, Latin America, and the Pacific rim, as well as with the economically less powerful countries of the so called third world.
In concluding let me say that this is a tall order. To some in government and many in business it must look as desperate as trying to perform an appendectomy on a man carrying a piano upstairs. The operation is required, but we cannot ask the patient to hold still.
In these difficult circumstances we must bring the views of informed Canadian businessmen to bear on the making of trade and industrial policy. We are consulting with firms in every major sector. Businessmen have worked closely with me and my officials in our missions. Business views are actively sought to help define the Canadian position in the multilateral trade negotiations through the Canadian Trade and Tariffs Committee. There is a continuous flow of people and ideas among the centres of business and government. Indeed, I believe there has never been a more active time, as anyone knows who has tried to book a flight into Ottawa on a Monday or out on a Friday. I believe it is the government's duty to assist the private sector, not to do their job for them. I also believe that Canadian businessmen can compete with the rest. We intend to help them in the variety of ways I have mentioned because, when Canadian businessmen succeed abroad, everybody in Canada gains.


Mr. Tom Cossitt (Leeds):: Mr. Speaker, a few brief days ago there was, I believe, a sense of expectation across this land, a feeling that somehow in some long overdue way the government was finally on the verge of awakening from its seven years of slumber. There was a feeling that the government was not just about to acknowledge that Canada has been moving down the road to economic disaster but would also bring in a budget that would attempt to face the stark realities of the situation. But budget day, Monday, June 23, 1975, is a date that may well go down in Canadian history as the occasion when the government faced its last great chance for action and when it utterly failed to seize the opportunity.
One thing is certain. The Prime Minister (Mr. Trudeau) has undoubtedly come very close indeed to gaining his all too obvious wish, namely, the political destruction of the Minister of Finance (Mr. Turner), who has turned out to be the supposed author of a dismal budget which pleases practically no one and infuriates almost everyone, a budget which offers a little of this, a little of that, and not much of anything at all toward grappling with our economic problems.
While the Prime Minister may giggle with personal glee at his success in finally engineering the destruction of Canada's Anthony Eden, and while the Prime Minister may now feel more secure on his throne from the threat of that anxious would-be heir apparent who has been lurking in the wings since 1968, surely the Prime Minister at the same time should be suffering from severe pangs of conscience for the way both he and his government have
The Budget-Mr. Cossitt
failed the Canadian people, and there are absolutely no legitimate reasons or excuses for this failure.
Last July the government received a majority of seats in this House, but it has replied to that mandate from the people of Canada with another year of bumbling inaction and ineptitude. In any enterprise the tone is set at the top, and government is no exception. If the top is isolated from reality, then inevitably that is the atmosphere which will permeate its way down through the entire apparatus. Obviously such a situation clearly exists in the Government of Canada.
Lavish and luxurious living at public expense at 24 Sussex Drive, with no regard for the pocketbooks of the taxpayers, is an example which is followed by every department in this government. Just as the cost of maintaining the residences of the Prime Minister and his office have risen hundreds of thousands of dollars under the present incumbent, so have the costs of operating each government department risen millions and millions of dollars.
Over the last few years the country has witnessed the unfortunate and ghastly spectacle of a Prime Minister on an uncontrolled personal spending spree from the public purse, followed along by a cabinet which occasionally and paradoxically speaks of restraint while at the same time copying its leader by digging deeply into the public cash register for $3 billion, $4 billion, or $5 billion more. If it were not for the disaster all this will bring to Canada, it would be a funny situation: the captain standing on the bridge saying that all is well and his officers gathered around him in "yes man" adulation, while the ship of state heads full speed for the rocks.
But it is not a funny situation. It is a damned disaster for which the government should rightly be charged with gross negligence.


Some hon. Members:: Hear, hear!


Thomas Charles Cossitt: On the one hand we have the average Canadian facing the inflationary increase in the price of gasoline, which is a necessary commodity of modern life, and on the other hand we have the unreal world of the Prime Minister as he drives around in a choice of two chauffeur driven, $80,000, six miles to the gallon Cadillacs, with the taxpayers of Canada, of course, paying all his gasoline bills.
We have the housewives of Canada continuously struggling with ever rising food prices while the Prime Minister eats in an elegant style which, according to actual government figures, is costing Canadians at least $15,000 this year alone. Perhaps he is even dining by candlelight, since in recent years he has purchased dozens of candles and charged them to the public purse, all this while many elderly people in Canada on fixed incomes can scarcely afford some of the bare essentials required for survival because of galloping inflation.
If ever anything demonstrated how far out of touch the government is with the reality of life in Canada today it is the budget presently being debated in this House. It is a budget which fails to face our economic problems. It is a budget drawn up by a government headed by a Prime

July 3, 1975
The Budget-Mr. Cossitt
Minister completely isolated from the problems of the Canadian people.
While average Canadians wonder where they can get the money to build or buy a home, the Prime Minister without any effort whatsoever has spent hundreds of thousands of tax dollars taken from those same average Canadians to remodel and redecorate in extravagant style his publicly owned official residence. Thousands and thousands of dollars worth of the most expensive imported antiques, crystal chandeliers, colour television sets and countless other luxuries have bee'n purchased with public funds for Sussex Drive, and also for Harrington Lake, to please the emperor's palate.
While there are hundreds of thousands in this country who must stay home for their holidays because they cannot afford to travel anywhere, the Prime Minister thinks nothing at all of taking his family at public expense for a Caribbean holiday such as that two weeks basking in the Jamaican sun last winter at a cost of over $11,000 to the taxpayers of Canada.


Some hon. Members:: Shame!


Thomas Charles Cossitt: Against such a background of extravagance, lack of leadership, and uncontrolled government expenditures by all departments-in short, against the background of outright mismanagement of the Canadian economy-it is impossible to give any credibility to the recent ludicrous remarks by the Minister of Finance on the CTV program "Question Period" when he said that the proposed budgetary cut in government expenditures was, and I quote his words, "a posture of self discipline on the part of the government." Even more ridiculous was his statement that the government was trying to set, and again I quote his words, "the climate in leadership and tone for the country." What a leadership, and what a tone it has been.
I am sure that the Canadian people will remember a very widely quoted remark made by the Prime Minister about his own personal wealth when he said, "Let's just say I am a hell of a wealthy man." At the same time I am sure the Canadian people justifiably wonder why a selfdescribed "hell of a wealthy man" cannot set a better example of restraint. If he wants to live lavishly and luxuriously, why does he not pay for his shocking excesses from his own admitted wealth instead of wallowing in the public trough for every last dime? Restraint in spending, so necessary in the fight against inflation, is apparently something only for the people, not for the government, and not for the Prime Minister.
Then, of course, there is the swimming pool, and I would like to devote a moment or two to that subject because it seems to me that it is a perfect example of the trappings of power being more important to the Prime Minister than the use of power to do good things for the people of the country. What is the real story behind the swimming pool at 24 Sussex Drive? That story has yet to be told, and so far the Canadian people have only witnessed a great performance of covering up, of refusing answers to legitimate questions, and of trying to hide what has really happened.
The Prime Minister has asked us to believe that an unknown group of persons, approximately 25 in number,

without anyone whatsoever knowing their identity including the Prime Minister himself, simply out of the kindness and the generosity of their hearts donated almost a quarter of a million dollars so that the Prime Minister can lounge in regal splendour beside his very own Olympic size swimming pool. We are also asked to accept the fact that all this money is being cheerfully given with absolutely no favours expected in return. We are asked to believe that there is absolutely no possibility of conflict of interest improprieties being involved, while at the same time the government and the Prime Minister claim that they do not even know where the money is coming from, and in addition, that no investigation was ever conducted by anyone on behalf of the government into the conflict of interest aspect.
If ever the word baloney suitably applied to anything, it most certainly applies to this entire situation. We are expected to believe that an absolutely unknown group of persons gathered themselves together, put a quarter of a million dollars in a pot, hired a contractor on their own, went on to government property at 24 Sussex Drive, proceeded to blast a huge hole in the ground, and then to construct a swimming pool with no questions asked and with no one whatsoever knowing their identities except, eventually, the clerks who process their income tax returns because of the fat income tax deductions reportedly given them in return for such benevolence to the Prime Minister.
In my opinion the House and the Canadian people have been misled. I cannot accept as fact that neither the Prime Minister nor anyone acting on his behalf, nor anyone at all in government knows the sources from which these funds for the swimming pool have come. I find it equally impossible to accept as fact that construction of this swimming pool has not involved the expenditure of public funds.
Several questions at this point are no doubt appropriate. Why does the Minister of Energy, Mines and Resources (Mr. Macdonald) hesitate to tell us what part the surveys and mapping branch of his department has played in the matter? What has been the part played by the National Capital Commission and by the Department of Public Works?
Even more significant, why does the Minister of State for Urban Affairs (Mr. Danson), or the Prime Minister himself, hesitate to tell us the details of the involvement in this matter by Central Mortgage and Housing Corporation, and in particular the very deep involvement of William Teron, the president of Central Mortgage and Housing Corporation?
For months I have had a series of questions on the order paper of this House similar to those questions I have just mentioned, and I have no doubt that they have gone unanswered all this time on the direct instructions of the Prime Minister, who is deliberately withholding the whole story from both parliament and the Canadian people in what amounts to a most peculiar and shocking cover-up of what should be a perfectly normal matter under ordinary circumstances.
If there is nothing wrong, if everything is perfectly on the level, if there is no serious conflict of interest, then the

Prime Minister should forthwith issue a complete list of donors along with the amounts donated. Failure to do this can only indicate the possibility of serious improprieties existing, or perhaps it might even indicate that there never really were 25 donors and that the delay in disclosure has been made necessary while such persons as William Teron rush around trying to fill in the holes for the Prime Minister.


Some hon. Members:: Oh, oh!


Thomas Charles Cossitt: Another very appropriate question on this matter is why and how was Herbert Brune Construction Limited selected to build the swimming pool? Were tenders not called, and if they were not, why were they not? Furthermore, by what authority can a contractor be hired by supposedly unknown private interests to build something on government property? And is there perhaps any significance in the fact that Herbert Brune Construction must apparently be on some sort of preferred or select list held by the government and the Liberal Party of Canada?
It is perhaps of some interest to note that Herbert Brune Construction has done quite an amount of contract work for the government since the Prime Minister came to office on April 20, 1968. In particular, this construction company has not only been selected on occasions to be among the chosen few invited to tender on certain government jobs without public advertisements being made, but it has also received 35 contracts without tender calls through work orders issued directly by the Department of Pulbic Works during this same period of time. In actual dollars and cents it has received somewhere in the neighbourhood of $3 million from the government in government business. Such preferred status for this company recalls those well known words that perhaps are appropriate here, "Somebody up there likes me".
What a contrast there is between the swimming pool at Sussex Drive and the one being constructed at the White House. Mystery and hiding of the facts compared with full disclosure. A cost of a quarter of a million dollars here compared to a fourth of that amount in Washington. Money from unknown and unexplained sources here with consequent questionable implications, as compared to a limit of $1,000 on donations, and no money at all to be accepted from business corporations in Washington.
The most important thing is, of course, what the emperor complex at 24 Sussex Drive really indicates. I believe it indicates clearly that Canada under the Prime Minister has been moving very quickly toward a presidential system and away from the parliamentary system of government. The clearest illustration of this fact is shown in the tremendous growth of the size and power of the Privy Council and the Prime Minister's offices since 1968. Along with this has been the tendency for the Prime Minister's staff to usurp the powers and duties of cabinet ministers- Ivan Head, for example, in effect replacing the Secretary of State for External Affairs (Mr. MacEachen) in many ways, and along with this the downgrading of parliament to a point where it has become obvious that the Prime Minister regards it as a rubber stamp to be tolerated only as a constitutional nuisance.
Not long ago the United States found out the dangers of persons working in the office of the president-the Halde-
The Budget-Mr. Roberts
mans and the Ehrlichmans-becoming so powerful that they were making decisions that should have been made by elected representatives of the people. Here in Canada we have the Ivan Heads and the Jack Austins, and it is a sad day for democracy in this country when appointed backroom bureaucrats like these have more power in running this country than the elected representatives who sit in this House.


Some hon. Members:: Hear, hear!


Thomas Charles Cossitt: At a time when Canada desperately needs leadership, the Prime Minister-buffered by the Heads and the Austins-is isolated playing with his toys which the taxpayers have bought him-the antiques, the crystal chandeliers, the Cadillacs and the swimming pool-in that unreal world where the bottomless pit of public funds solves all his own problems and makes him oblivious to those of others.


Some hon. Members:: Hear, hear!


Thomas Charles Cossitt: True greatness in leadership is invariably accompanied by humbleness in high places. No need is felt to strut about like a Caesar. There is no clutching and grabbing at material things in an attempt to create an aura of power. On the other hand, little people in high places exude small mindedness, a need for reassurance by surrounding themselves with a gaudy and vulgar display of material wealth, along with arrogance and contempt for the democratic process. No amount of weekend helicopter forays into the far reaches of the country at public expense to give the masses the supposed privilege of viewing their Caesar, can hide forever what we as Canadians have in our high places.
Let us hope for the sake of democracy, for the sake of Canada, that miracles are still possible and that it is not too late for new and proper policies to put Canada back on the good road.


Some hon. Members:: Hear, hear!


John (Moody) Roberts: Mr. Speaker, I do not intend to deal this evening with the specific details of the budget-a budget which I support. I want to look ahead and suggest that given the nature of the Canadian economic dilemma, a different approach to budget making is likely to prove appropriate in the future.
This budget is in the conventional mould. It reflects a belief that the correct approach to economic policy is to use fiscal and monetary instruments to establish the proper over-all context for economic activity. By imposing restraint or injecting stimulus, by expanding or contracting the money supply by expanding or contracting disposable income across the country-as the general situation requires-we guide the economy.
Our approach is, in economic jargon, macro-economic and Keynesian, broad brushed rather than specific, attacking the problems of the economy by over-all measures rather than by intervening at specific points. In a sense it is a method which argues that if we alter the general rules of the economic game we can make the score come out right.

July 3, 1975
The Budget-Mr. Roberts
There is, I believe a growing conviction that this conventional approach to the design of economic policy and to the design of the budget, is no longer appropriate to Canada's economic situation.
The theoretical justification of the conventional approach makes assumptions in its economic model-assumptions of homogeneity and the easy substitution of factors of production which simply do not apply to our economy. It ignores or minimizes at least four important problems which hinder, and perhaps render impossible, the successful application of Keynesian precepts in the Canadian economy.
The first problem is the lag between the decision to use the instruments of fiscal and monetary policy and the time it takes for those policies to begin to have effect. Because of these time lags, effective intervention depends on accurate forecasting. It is extremely difficult do do this forecasting, and government forecasts have been inaccurate as often as they have been accurate.
The second problem is the very high interdependence of the Canadian economy, both in imports and exports, with other countries. To be fully effective in managing our economy, not only is it necessary for the Canadian government to follow appropriate policies, but it is important that our trading partners follow policies complementary rather than contradictory to our needs. Since they are primarily and understandably concerned with their own economic objectives, such correspondence, if it takes place, is likely to be fortuitous.
The third problem is that the Canadian economy is not homogeneous but regionally diverse-in types of economic activity' in levels of employment and in levels of income. The economic policies which are appropriate for southern Ontario are not likely to be the appropriate ones for the Atlantic provinces.
The fourth problem is that there is not an easy interchangeability in factors of production. Some groups in our economy have positions of power which enable them to isolate themselves against the effects of fiscal and monetary policies. This is, to a large extent, the consequence of specialization within the economy. There are, in economic terms, structural rigidities in the economy, which means that the over-all impact of measures of restraint or expansion is not felt homogeneously.
To be blunt, there are two economies, the one which includes the unskilled, the first-time entrant to the work force, the casual labourer and the person on fixed income, and the economy of those who are protected by labour unions, by professional associations, by the rarity or uniqueness of their skills, or by their management of capital. For this reason the brunt of measures, taken against inflation say may be felt by the unprotected economy, while the inflation-which stems from the purchasing power of those who have power to preserve their purchasing power come what may-continues unabated.
It follows, if these objections to our present methods have weight, that if we are to deal effectively with Canada's economic problems, a different approach is required.

Another way of describing the limits of our present methods is to say that policies of economic stabilization are taking precedence over policies of economic planning. That is reflected by the dominance of the Department of Finance and the extraordinary and unnecessary secrecy in budget formation. The Department of Finance's concern is with the over-all need for stimulus or restraint, with the over-all balance of capital flows and current account. By its mastery of the budget process, it is able to impose budget cuts, or budgetary expansion, on a yearly basis, because of the needs of stabilization policy, even if these cuts or increases are unwarranted in terms of longer term cost-benefit planning. There is often-I should say usually-a conflict between the needs of stabilization policy and the need for effective long-term planning.
I am not arguing that we should abandon stabilization policies. But as I have argued, for a variety of factors, stabilization policy alone is not likely to be successful in managing the Canadian economy. Stabilization must be supplemented by much more precise interventions in the economy. This requires, to use a medical analogy, specific corrective surgery as well as over-all exercise for fitness, a proper diet, and other measures which will lead to good health.
I have examples of what I mean by specific intervention. To show why these specific interventions might be desirable let me place them, first, in a more general context. That context is that we must now-even if unwillingly- come to terms with the limits of growth. The limits of growth do not mean the end of growth; they mean, rather, that we must be much more conscious of the purposes for which we seek growth and that we will face increasingly hard choices between competing needs. The danger is not that we are simply going to run out of essential resources. Our world has enough resources, for instance, in sea water alone.
The limits are, rather, twofold. First, the exploitation of these resources at current levels may well consume more energy and produce more heat in the long term than the ecology of our planet can stand. Second, in the short term, the cost of exploiting the world's resources-because of supply cartels in some cases but, more important, because of escalating marginal costs of exploitation,-will produce cost-push inflationary pressures which will surely diminish and may stagnate the rate of real growth.
Traditionally, as a society, we have regarded growth as the magic wand solution for all our problems. We have regarded the function of a liberal economic system as the satisfaction of the wants, whatever they are, which are put forward by the economic market system. The function of government has been not so much to force difficult and unpleasant choices; its function has been to ensure economic growth so that all wants could be met. Our concern has been to expand supply, not restrain demand. Indeed we have based our economy not merely on satisfying wants, but on expanding and stimulating them. The revolution of rising expectations, which we often say is taking place in the Third World, is most virulent in the industrialized, developed economies spurred on by the communications revolution, by advertising, and by our tendency to conspicuous comparative consumption.
July 3, 1975

We are no longer in the position in which we can allow the continual expansion of supply, without regard to the pressure on resources. We are in the situation in which the limits of growth will impose on us the necessity of carefully scrutinizing our wants. That is to say, we will need to choose carefully among competing needs.
The function of future budgets is very likely to be not the stimulation and the satisfaction of demand; rather, their function will be to limit it, to judge it and to assess the objects of demand. The limits to growth will require a much more extensive strategy of planning than we have contemplated up to the present.
When I speak of restraint of demand, I do not mean simply that an over-riding precept should be to cut back spending in the public sector so that the private sector may grow. It is not true that private sector spending is always socially productive; it is true that public sector spending often is socially productive. There are those who argue that the private sector is essentially creative, that it produces the goods and services society wants and requires, and that government spending is parasitic, and diminishes growth. I think it can be shown that this dichotomy is false. Take an extreme example-the money spent to establish a body rub shop is not nearly as productive as the same amount of money spent to establish a school.
In fact, in this country from its beginning, there has been an active and productive involvement of the state in expenditure, in expenditure designed to stimulate growth, for example, to develop transportation. Expenditure in the public sector can be just as necessary, just as socially productive, as expenditure in the private sector. The true test is not public versus private expenditure; it is whether we prefer investment over consumption.
Looking ahead, we see that Canada has enormous capital needs, some to be met in the private sector, some in the public sector, some by a combination of private and public spending. There are very great needs, for example, for transportation development, for resource exploration and for energy development, to name only a few.
We must, during the next decade, devote more of our resources to investment and less to consumption. We must restrain demand so that we can make the investments required to maintain supply, and ensure productivity. We must diminish our expectations of what our economy can produce for us all now, so that we can maintain a longer term satisfactory economic performance.
In some ways this country, economically, has had an easy time of it since the end of the second world war. Well, the easy days are gone. God has not granted us a dispensation from the world's economic difficulties. We cannot get by with an attitude of, "the good life as usual" in the embattled economic conditions which lie before us.
What should be our objectives, as we look ahead? I suggest they should be (1) restraint of consumer demand, (2) an emphasis on investment, not consumption; (3) an emphasis on improved productivity; (4) support for sectors of the economy in which Canada holds a competitive international advantage; (5) restraint of cost-push inflation; (6) diminished unemployment, by emphasis on investment rather than on consumer stimulation, and by
The Budget-Mr. Roberts
much greater assistance for regional economic development.
I suggested earlier that we should not rely on across-the-board use of fiscal and monetary restraint to achieve our purposes. I said that these instruments must be supplemented by more specific forms of intervention if we are to achieve our goals.
I should now like to give some examples of specific proposals which I think deserve consideration. I give these, not as a coherent or exhaustive list of proposals, not as a complete economic policy, but as examples of measures which could be considered as precise interventions for specific purposes. They all relate to one or other of the six general objectives which I just designated.
I suggest that we must establish distinctions over the use and extension of credit. There are a variety of techniques available to bring banks and lending institutions to follow credit policies more appropriate to our economic objectives. We must insist that they distinguish between investment lending and consumer credit-and encourage the former. We could require limitations on the use of credit cards to discourage the mania for consumer purchases on the "never-never". We should make it clear that we expect the banks to divert their capital to Canada's investment needs rather than current consumption.
Second, I think we should consider seriously, as the House of Commons Committee on Tax Reform recommended, a system of tax integration which would provide to taxpayers a credit for taxes already paid on their behalf, as it were, by the corporations in which they hold shares. As it now is, corporate returns to shareholders are subject to a distorting double taxation, and one which discourages equity ownership. I would suggest that we turn to a form of tax integration for the stimulation of the savings and investment we require.
I think we should look carefully at specific industries within this country to see which of them require long term extensive capital investment and which are internationally competitive. One could look, for example, at the Canadian steel industry which is very efficient, but does now require very considerable investment. We should designate those industrial sectors which require assistance to make sure that they have the kind of capital write-offs which will enable them to expand, and maintain .productivity and competitiveness.
I think we should look very seriously at a scheme of compulsory savings. It is no secret that in our economy we face considerable cost-push inflation as a result not only of wage increases, but of general salary and income increases. The kinds of approach that have been suggested to deal with this problem in the past have proved either unworkable or unacceptable.
In the 1970's the government tried to meet the problem with considered fiscal and monetary restraint to diminish inflationary pressures. The result of that was a trade-off in unemployment which I think was clearly unacceptable to the country. An alternative, the proposal for general wage and price controls, was, I think rightly, rejected by the Canadian electorate. I think, however, that there is another method, that of using the tax system to achieve

July 3, 1975
The Budget-Mr. F. Hamilton
the objective of income restraint. It is in effect to limit by a fixed percentage for all taxpayers the amount of increase of income which is permissible in any one year. Any increase taking place above that fixed percentage would be entered in a compulsory savings account to be returned to the taxpayer either upon retirement or when, in the view of government policy, it is deemed advisable to inject purchasing power into the economy. The result of this would be at the same time to provide needed social capital, to diminish consumer purchasing power within the economy, and to moderate pressures for income increases beyond the percentage set by public policy.
I would suggest that we look at advertising costs in the economy not as an ordinary cost of carrying on business, but as a catalyst for the expansion of consumer demand. The tax treatment of advertising costs should be determined in light of whether it is felt to be desirable to encourage advertising and so stimulate consumer consumption or whether it is wise to diminish it and moderate demand.
I would argue further that we should design a regionally varied tax system. There is some merit in, for instance, a lower level of corporate taxation in disadvantaged areas of the country. Certainly we should give strong consideration to providing more extensive, larger capital write-offs for investment which takes place in slow growth areas of the country. We should also look at the Foreign Investment Review Agency as a means of directing needed investment to slow growth areas.
Lastly, I would suggest that we look carefully at our expenditures on unemployment insurance, the objective of which is to provide employment security, and see whether or not some of those funds would not be more effectively spent in a guaranteed job program, or in the expansion community employment programs, so that what we are guaranteeing is not income but job opportunity.
This is hardly an exhaustive list. I suggest it simply as a set of examples for further examination. Some of them may show defects. I think they are sufficient to illustrate my thesis of the need of a different approach, an approach of specific intervention to complement the overall stabilization policies that we have heretofore followed. My basic thesis is simply this, that in a world in which we have become much more conscious of limitations to growth, government must develop an economic strategy,-a strategy of indicative planning-more precise than in the past to supplement the techniques of stabilization policy.


Mr. Frank Hamilton (Swift Current-Maple Creek):: Mr. Speaker, I have an article from the June 24 edition of The Times which I think is very appropriate for this occasion. The author talks about the meaningless ritual of government where political considerations override economic ones, and where dozens and dozens of statements are made about the steps the government is taking. These announcements and steps have the ring of absolute authority, but mean absolutely nothing. The article is titled "Taking steps and getting ready to cheer the Emperor's new suit of clothes".
I quote from the article:
-the government, mindful of the interests of the nation, has been taking steps. Steps, that is to say, is what the government has been

taking; or, to put it somewhat differently, what the government has been taking are steps; in other words, taking is what the government has been doing to steps, and what has been taking steps is the government. Here, you might say, were steps, and there the government; the latter took the former, or (for it comes to the same thing, really) the former were taken by the latter. So that's all right. But is it?
That illustrates the logic used by this government.
The article concludes as follows:
I think we are governed by cowards and knaves, who know what must be done but will not do it, and I think that events will do it instead, in frightful circumstances and with frightful consequences. And the government will announce that it is taking steps.
There are many different kinds of steps. I fear that the budget is a real misstep for the great majority of Canadians.
As the leader of my party said, restraint has gone out of the window. The government has increased its own expenditures on a national accounts basis by some 16 per cent during a year in which there will be no growth in the economy. The Prime Minister (Mr. Trudeau) and his government continue to take the country for a ride, taking more out of the economy than they put into it.
The 10 cents a gallon tax on gasoline will not be used for exploration purposes in a meaningful way, and will place a great burden on people in my area as we have to use private transportation in our wide-open spaces, there being no public transportation. We will, therefore, bear a disproportionate burden of this tax in comparison to others.
I expected the budget to deal with wages and prices. It did not. The whole consensus program of restraint of this government is a farce. As I said before, its own spending is up by 16 per cent. Nothing in this budget will cool wage demands.
Less than a year ago we had a federal election where the need for any radical measures to fight inflation was virtually discredited by members opposite. It is obvious that economic steps are certainly necessary, but they must be part of a coherent policy involving the co-operation of the people. With this budget, the government is losing even more popular support.
Two weeks ago the agricultural committee heard evidence that our western grain industry had lost some $260 million during the past year due to labour demands, demurrage, and renegotiating grain contracts on a falling market because of our inability to deliver; a tragic situation. The government now proposes a western grain stabilization plan, with the federal government putting in some $40 million a year. Absolute nonsense! The money could be better spent in at least half a dozen other areas. Western grain farmers have been ravished by the policies of this government before. They now tell us that they honestly think farmers are consenting once again, and to Bill C-41.
We need a list of priorities for agriculture and the stabilization plan would be well down that list. To encourage young farmers the government should allow them to take up to $5,000 tax free a year that could be credited to a registered retirement savings plan because, in paying off a farm or agricultural enterprise, they are in effect organizing a retirement savings plan. If a citizen, after paying the required taxes during a lifetime, has accumulated assets, there is something basically wrong with taxing again
July 3, 1975

when those assets are disposed of toward the end of that lifetime. Much more use should be made of our tax system to direct the Canadian economy. I see nothing wrong with using the tax system as a means of stabilizing the agricultural industry, for example on a direct, individual pay out basis.
Since the Minister of Finance (Mr. Turner) took office the cost-of living has increased in a 40 month period by more than 32 per cent, and there is nothing in the budget to reverse this dangerous trend. In fact I consider the budget to be inflationary. Our export trade is vital, yet this year we will have a deficit of $4 or $5 billion.
As the hon. member for York-Simcoe (Mr. Stevens) said, and I quote:
How can the minister, in all sincerity, talk in terms of hopefully restraining inflation when he has allowed the monetary growth in this country to increase by 46 per cent during the 40 months in which he has been in office-a 46 per cent growth in the basic money supply of the nation compared to a growth in our real product of 16 per cent? Those are the facts. Is it any wonder that during the same period we have experienced 32 per cent inflation?
He further stated, as reported on page 7058 of Hansard:
Income taxes at the personal level in this country have risen a frightening 41 per cent.
The government's proposal to shift the burden of financing the payout of $3.75 billion from the unemployment insurance fund on to those who are working and their employers is a shameful hidden tax. It is the government's responsibility to ensure fuller employment.
The government proposal to put $1.5 billion, free of interest charge, into Petro-Can is really something. If this amount were put out at 10 per cent interest it would return $150 million a year in revenue. This $1.5 billion of free money, if used under the same policy for the Farm Credit Corporation, would mean that farmers across this country could borrow from that corporation interest free. The same, of course, would apply to loans from the business development bank. Instead, we see a cut in the budget of the Farm Credit Corporation to the extent of $20 million, a $40 million cut in the funds available to the Canadian Dairy Commission, and a further cut of $2.5 million in connection with exhibition facilities.
We have the government's bungling and ineptitude where self-styled experts rule in the name of science and efficiency, where we have a high interest policy, high inflation, negative real growth, high unemployment, a $4 billion trade deficit, low housing starts, utter confusion in transportation and no national agricultural program. In fact, Mr. Speaker, no industrialized nation which is an exporter of petroleum and which has the resources we have, has done worse than Canada in the past four years. I defy the government to name one. It is not a pretty picture.
Now I should like to quote from a letter I received from a constituent, a gentleman who, when he retired, thought he had enough to make ends meet, only to find that the government had moved the ends further apart and so he finds himself in serious trouble. He writes:
The Budget-Mr. F. Hamilton
I am very concerned about a few things which are taking place in the nation today, and feel quite certain that there are a great many who share my concerns.
First of all this conversion to the metric system is very disturbing. I believe that this is one of the most costly and unjust things that was ever perpetrated upon the country... We were led to believe at the beginning that the United States was going along with the conversion but from what I've heard this is not so. The U.S.A. is our neighbour and the nation we do the most business with. If conversion does come to pass, most of the people in the mainstream of society today will never totally use it. The only people it won't affect are the children who haven't started to school or who aren't yet born. The farmers of today will never use it as the land is already in sections and will always be figured by acres. Thousands of seed drills and discers will still be in use after the conversion and they already have the acreage setting on them. A similar situation will exist with cars and trucks. There will be thousands still in use with distance measured in miles on the odometers on kilometer marked highways.
It is absolutely foolish to think that it is necessary to convert for the sake of trading with other nations. The people selling our grain convert it to metric tons without upsetting the whole nation ...
There has already been too much money spent on conversion and the expense hasn't even started. I understand that it is already over $700 million. It's not too late to turn back as it wouldn't be the first time that a government has squandered money.
This is all coming out of the taxpayers' pockets and they are already getting a raw deal. This is another grave concern of mine. The income tax is killing us. The personal exemptions have always been too low, but with today's inflation, $1,700 per individual is a joke when you people in government are raising your pay and getting large tax free exemptions. Our exemption should be at least $2,000 each for a man and wife, plus at least $500 per child up to 16 and increased up to as high as $1,000 over 16 when totally dependent.
I farmed all my life and semi-retired in 1968 when I sold my farm. I didn't realize until I sold what a raw deal the wage earner without exemptions of any kind was getting. This applied to me with income tax on my investment income and no source of protection. I resorted to renting some land as a bit of a tax shelter. The farmer is fully justified in being able to write off his expenses, but what about the wage earner? He should also have exemptions such as taxes on his house plus a portion of the upkeep on his house and at least a portion, say a third, of his automobile expenses. Private transportation is a necessity today in a large percentage of cases. For example, take a place like Glidden where there are no services of any kind. We have to drive for everything, including trips at times to Saskatoon for dental and doctor appointments. There is no train or bus service from here and the bus service is such from Kindersley (our trading point) that you would have to stay over in the city to get anything done. The wage earner who can't or doesn't care to own his own home should be able to claim a portion of his rent-say the equivalent of an average of what a home owner could claim-for taxes and a portion of the upkeep.
The purchaser of a home should also be able to claim the interest involved each year in the buying of the property the same as the farmer who can write off all his interest on the purchase of land. To give the wage earner a third of his auto expenses as an exemption you could take away a portion of what the farmer is getting on his car allowance. All of these benefits to the wage earner should be given without any change in the tax structure.
Another big issue is inflation, which government isn't doing anything about. In fact, they are promoting it to some degree to try and avoid a depression. The way I see it, a depression couldn't be much worse than continued inflation. At least everything would come down and we could start all over again. In a period of two years the home which I had some day planned to pay approximately $20,000 for has gone up to $35,000 or $40,000. This is Saskatoon which I'm speaking of, and it is still the lowest of any city.
I'll have to live in Glidden for the rest of my life if I want to enjoy a half decent standard of living at today's inflationary prices. I can still buy the house in Saskatoon but my standard of living will come away down and I'm still five years away from pension and I just don't want to sit around waiting to die. There is no use dwelling on hindsight but if I could have foreseen what was going to happen the past two years, I would have reinvested most of my money back into land three years

July 3, 1975
The Budget-Mr. Kaplan
ago when it was a decent price. I would have at least had something to pass on to my boy who is just 19. Now he will have to work out the rest of his life unless some government does something about helping the people who really need help. I planned on helping him get started on a farm some time in the future if he decided it was what he wanted to do. However, that is impossible now if land and machinery costs stay as they are. The only possible way for a young man would be low cost government loans and have the government buy the land.
The prices for the grain which we experienced in this country the past two years is the worst thing that could have happened. For the 1972-73 crop year we received a total of $1.94% for No. 1 Red Wheat to $2.65 for No. 2 durum. For the 1973-74 crop year the same No. 1 Red brought a total of $4.37% and No. 2 durum brought a total of $6.39%. This is more than the grain is worth. Flax as high as $12 is ridiculous. There is no way a beginner can compete with the bg landowners when it comes to tendering on land today. They have the collateral and easy availability of loans. This price fluctuation has never happened before in all my years of farming ... This has created a situation where land values this spring have shot up to over $300 per acre for the land in this area and with prices for grain going down. The bigger farmers have gone land crazy and it appears to me they are heading for a big bust.
Another thing that bothers me is the bilingual issue. The Liberal government has squandered untold millions of dollars over same and again at the taxpayers' expense. I voted Liberal when Trudeau became head of the party but not since then and never will again as long as he heads the party. I have no quarrel with the French Canadians as a people but leave the French language in Quebec ... The Liberal Party has always used Quebec for political gain and I've heard rumblings that your party was looking for a French Canadian Leader. It's time some party comes to grips with the real issues confronting our nation and do what is right for the betterment of all people ... Just using some of the topics which I've discussed would be a step in the right direction. Beating inflation and a revision of the Income Tax structure, which I brought up, would go a long way towards victory...
My only hope is that you and others in your position will take them seriously.
This is one of a number of letters in the same vein that I have received, Madam Speaker. Although the country's leaders are supposed to be the custodians of the ideals of the nation, I can take great comfort from the fact that the real strength of Canada is in our people and in our Christian homes because that is where the process of character moulding is silently, lovingly, and successfully carried on, and this is where society's long-term goals are safeguarded. Unfortunately, this budget will do very little for those Canadians.


Mr. Bob Kaplan (York Centre):: Madam Speaker, I guess the first thing one notices about the budget the Minister of Finance (Mr. Turner) tabled last week is that, perhaps for the first time in my memory of budgets, it is a budget that offers no goodies at all for the Canadian people.


An hon. Member:: You are right on.


Robert Phillip Kaplan: As I listened this afternoon to the hon. member for Regina-Lake Centre (Mr. Benjamin), who referred to this as the worst budget he has ever heard, it came to me that this is precisely the attitude of him and his colleagues. They advocate goodies of hundreds of millions of dollars in extra expenditure now; $200 million for this and $500 million for the other. One can see this was not the kind of budget that would be in tune with what the NDP, or at least that hon. member, feels is needed.
But this is not a time for goodies; this is a time for a budget that seriously confronts three urgent problems

facing the Canadian people, namely, the energy problem, the problem of unemployment, and the problem of inflation. The policies that are put forward from all sides of this House so blithely have to be tested by the question: Do they meet the needs of the Canadian economy and of the Canadian people at this time? I support and approve of this budget.
I should like tonight to deal with some of the budget features which are causing the most concern to the people of York Centre. Let me look first at housing. There has been criticism that the increase amounts only to $200 million, and the question is asked, what is $200 million? Of course we would all like to see more than $200 million added to the $1 billion that is already committed for housing in this period, but let us remember that this $200 million increase, when you consider it is to be spent over the six months, is the largest single increase in the expenditures proposed by the Government of Canada. This was one departmental estimate, along with job creation programmes, that was not cut but was allowed to expand, but still in keeping with the requirement for restraint at this time.
I would like to have seen more in the budget for housing, but let us remember that according to the Minister of Finance, we are now spending in taxpayers' money on housing three times the amount that was being spent on housing when the Department of Urban Affairs was set up back in 1969. That is quite an increase; it is the kind of increase that shows the commitment this government has to the important priority of housing.
Let me make another point in respect of spending for housing. I think spending is important. I think the money has to be there. It should also be remembered that money is not the main problem in this area of housing these days. The funds are available. The problem in respect of housing is that the Canadian people cannot afford the cost of the housing being produced in Canada today. If more money were available and more expensive housing of the kind being produced today were built, this would not meet the needs of the Canadian people.
I agree with an editorial that appeared in the Toronto Star on June 21, on the real problem, and I should like to read part of it as follows:
The provincial governments must see to it that the houses get built. They must make the land available, they must speed up the process of approval of developments, they must enforce building codes to assure that the low-cost house is not also a jerry-built house, and they must set zoning standards so that local municipalities cannot block the development of the much-needed housing.
On the part of municipal councils and local ratepayers there may, at first, be some objection to such a massive building program. The provinces, who have the authority, must overrule any objections.
That to me is a big part of the problem today. These are provincial matters. There are bottlenecks, redtape, and standards that require builders and the industry to put up Cadillac type houses when people who are looking for houses can only afford Volkswagen types. We need less red tape and more opportunities for good, basic housing to be built that people can afford. And extra bales of money tossed into the market in one way or another will not bring down the cost of housing.
Let me turn now to the problem of energy. There are certainly no goodies for Ontario in the proposals in respect
July 3, 1975

of energy, at least not in the short run. No one likes to pay an extra 10 cents a gallon as a federally imposed excise tax. Of course nobody likes it. The fact that rebates will be available in respect of any gasoline that is consumed for work, and the fact that the tax will only be borne in areas of personal consumption are very small comfort, and there is a lot of complaint about this.
But why do we have this excise tax? Let us look at the basic facts and at the problems we face as a country.
We are committed, and the Canadian people have indicated that they support the policy of a single price to the consumer for energy across this country. In the west we produce a little more than we need, and in the east we have no production. The east gets its oil from foreign sources, and the world price for oil right now is over $10 a barrel-$10.40 a barrel.
The Canadian people as a whole have been subsidizing the eastern consumers of foreign oil, partly by imposing a tax on surplus western oil which so far has been exported to the United States and sold at world prices. We do not have much of a surplus and we are not able to send south as much as would be required to pay for the entire subsidy to the eastern consumer. That subsidy has to be provided from somewhere. It is a subsidy that will increase further in cost. We are going to need more and more money to pay that subsidy over the years ahead.
What we are sending to the United States at world prices just does not cover that increasing subsidy, so a new source of revenue had to be found for that amount. There is something like a $300 million shortfall this year at present prices, and if world prices go up, as they are projected to do, and if our surplus goes down, as it is projected to do, we are going to need $1.1 billion next year in order to continue to provide that subsidy. The decision taken and proposed to this parliament by the Government of Canada is that the subsidy be funded by an excise tax on personal consumption of gasoline, an excise tax of 10 cents a gallon. It could have chosen an increase in income tax, but such an increase would then have had to be borne by all Canadian taxpayers whether or not they consume gasoline.
It strikes me, and it has appeared to the government, that the fairest possible place to put the tax is on the very people who consume the energy, the travelling public. One does not need to be a genius to recognize that an extra ten cents a gallon on gasoline is inflationary. It is moderated somewhat, it is true, by refunds for commercial use, but it is inflationary. However, it obviously is necessary because somewhere or other that revenue must be raised to maintain the single price for oil in Canada.
There are complaints that this tax is unfair and unjustifiable, but when one looks at it to see who is making gasoline expensive in the province of Ontario I hope people will look at the federal excise tax which has been three cents a gallon, which is now going up to 13 cents a gallon, and compare that with the provincial tax which is now 19 cents a gallon.


John (Jack) Henry Horner: Who builds the roads and highways?
The Budget-Mr. Kaplan


Robert Phillip Kaplan: I do not intend to argue that that 19 cents a gallon is a frivolous tax. It may be necessary, but let us realize that it is a bigger ingredient in the high price of gasoline than any federal excise tax people complain so much about. A second aspect of the energy price increase is that the price of domestic oil will go up from $6.50 a barrel to $8. As I have mentioned this is still far below the world price of $10.40 per barrel. We still get cheaper energy, if not as cheap as before, with the proposed increase of $1.50 per barrel. What is the reaction in my province? The Ontario Minister of Energy made his position very clear in the legislature on June 13 when he said:
The Government of Ontario is absolutely opposed to price increases at this time.
It could not be much clearer than that. But I would suggest there is an air of unreality about this Ontario reaction as appears from the very lips of the Ontario Minister of Energy when speaking four days later at York University. After saying there should be no increase he went on, four days later, to say that Ontario energy consumers cannot continue business as usual. He said that energy is too rare, costly, and precious to waste. He said further:
We may prove incapable of managing and controlling the direction of change if we wait until serious energy shortages develop and change is imposed upon us.
Then again he said:
At all costs, we in the western world must reject the kind of thinking in which we tie our hopes for the future to a fleecy cloud in the great, blue sky.
I again quote the provincial Minister of Energy:
The first and obvious one is that the cost of producing energy from thesenon-conventional
-sources may be very much higher than the costs that we tolerate today.
He said again:
A corollary is the capital cost of energy-related facilities, whether it is multi-billion dollar pipelines or the $24 billion in generating facilities proposed by Ontario Hydro between now and 1982.
Later he said:
There are strong arguments against deciding to rely on the world market, and placing ourselves in a position where we have no appeal from that decision.
What does that add up to? Does that not indicate that something must be done to deal with the following problems? How can he ask for a price freeze when he recognizes that we are running out of conventional sources, that the substitutes for conventional sources are very expensive, and that industry needs big capital to bring non-conventional sources on stream?
Let us remember that my province of Ontario would be the first to suffer and would suffer worst if we do not provide for the future and ensure that there is even expensive energy available when there is no alternative. Let us also remember something which I think in fairness Ontario ministers should be reflecting on more often, that is, that even at $8 per barrel energy is still cheaper to Ontario than it is in any other industrialized country in the world.


An hon. Member:: Plus ten cents a gallon.

July 3, 1975
The Budget-Mr. Kaplan


Robert Phillip Kaplan: Not ten cents a gallon in production; just ten cents a gallon for personal consumption. There is a very big difference. So, if we are looking for an advantage in world trade and in manufacturing in Canada, and are looking to energy for this edge, then we are getting it even at $8 a barrel. We are still giving the manufacturing sector of Ontario and the rest of the country an important economic advantage over world competition. Let us not grumble about it; let us take advantage of it. We have kept for ourselves an advantage; let us use it.
I referred earlier to the taxes imposed on gasoline by the federal government compared to the tax imposed by the consuming province of Ontario. I wish to make another comparison between the take in a producing province by the federal government and by the provincial government. When we look there the contrast is even more remarkable. The producing provinces get over three times as much revenue from every barrel of oil as the federal government. It is a complicated formula and depends somewhat on the price and cost of extraction, but in some cases it is substantially more than three times as much revenue as is received by the federal government. Some people would like to blame the federal government for the high cost of energy, but when we look at the facts we see that it is the provinces which take far more.
Finally, I should like to deal with an issue which to me is one of the most important thrusts of the budget. I refer to the proposal for government restraint. I think this is an extremely important part of the budget. The government has the responsibility to set the example. It must set an example in two ways. First, it must keep the public sector from growing any more rapidly than absolutely necessary in the national interest. Second, it must keep wages within the public sector and other costs from increasing in a way that will signal greater increases in the rest of the economy.
In making sure the government fulfils its two responsibilities I do not think it is only up to the opposition. I have made this point before and intend to continue making it. Every member of parliament represents taxpayers and every member of parliament on whatever side has a prime responsibility to make sure that the expansion of the Government of Canada is kept at this particular time within limits which indicate restraint, and within limits we can defend as being in the public interest. We must watch every increase to make sure the federal government is not setting the pace for inflationary increases elsewhere within the economy.
One area in which big cuts have been proposed is in the unemployment insurance program. I am looking forward to seeing the legislation. During the last budget debate when I had an opportunity to speak I pointed out that I thought quite a lot of fat could come from the unemployment insurance program.
I think quite a lot more can come out of the unemployment insurance program than has been proposed by the government, and I am looking forward to the time when the government's concrete proposals are before us in the form of amendments. I will then be looking for an opportunity to find ways to save even more in that very important but very expensive government program.


Mr. Peter P. Masniuk (Portage):: Mr. Speaker, I am very pleased to be taking part today in the budget debate, one of the most important of all parliamentary events. And yet, paradoxically, on this occasion no specific legislation is actually here before us who have been elected first and foremost as legislators. At budget time we are simply asked to approve in general the budgetary policies of the government.
It is fortunate that the resolution refers to "policies" because in the budget which was presented to us on June 23 by the Minister of Finance (Mr. Turner), there is very little of which to approve. I do not mean by this that I do not find anything in the budget that I like; I mean that the budget contains very little of real substance. It is all padding, like the presentation kit which we received from the finance minister's office: five books filled with words and repetitious tables, when the entire budgetary package, on this occasion at least, could have been presented in one book, or possibly two.
My primary feeling about this budget, Mr. Speaker, is one of disappointment. I had such high expectations for this budget, the first major spring budget of this new majority government. This is only the second majority government that we have had in this country in 17 years, and the first in that same period of time which was elected by the Canadian people after due consideration of its probable ability and competence to govern, and not on a wave of some personal mania or other. How disappointed the Canadian people must be today, less than 12 months later; how quickly has the bright, new government of last summer faded, and how soon have the eager expectations of the electorate become dulled.
I think that expectation is the appropriate feeling to mention at this time, Mr. Speaker, because this has been the prevailling feeling with regard to the budgetary performance of the Minister of Finance on this occasion perhaps more than on any other. We were expecting so much; the minister led us to expect so much; indeed, he conditioned us by his stalling and delays. In the late spring the minister told us that a budget would be brought down soon. Then he told us that one would be forthcoming in May. May came and went, and still no budget. The month of June was nearing its end before the new budget was brought down. When one has to wait that long for something, it is usually because it is worth waiting for.
The reasons for the minister's waiting game are not hard to see. Unemployment in Canada has now reached 715,000, a far higher number than anything that we have experienced since the depression, and on a percentage basis it surpasses even the high figure reached during the recessionary period of 1961. The situation with regard to our gross national product, similar to the unemployment situation, is only rivalled by that in the depression-four consecutive quarters of no growth, and an actual decline of 1.45 percent during the first quarter of this year. Our skyrocketing inflation rate has had no rival in recent or in past times. Something clearly had to be done; just what was not at all clear. The disappointment that I spoke of a moment ago is in fact quite inexcusable. On reflection it becomes clear that this miserable budget, this minuscule budget which the finance minister laboured so mightly to
July 3, 1975

bring forth, should have been the expected response of the government to the problems that we are facing.
The budget concerns itself with the financial affairs of our Canadian society; it is a social as well as an economic document. This point has been made before, of course. But primarily this budget was supposed to be an inflation fighting budget. Usually it is not appropriate to criticize something for what it is not rather than for what it is. However, today is one of those occasions when such criticism is justified because of the unique circumstances surrounding the introduction of the budget. This budget was preceded by a prolonged period of time during which the finance minister himself identified and singled out inflation as the number one consideration and the most important problem facing Canadians. But on budget night he flubbed it.
Mandatory prices and incomes controls were of course categorically rejected at such length and with such vehemence that one is almost tempted to quote Shakespeare and say "The gentleman doth protest too much!" The explanation advanced for their rejection was that they would never work because Canadians are not ready to accept them, an assumption that may or may not be correct, and which at any rate is probably irrelevant in so far as their imposition is concerned. Canadians would probably prefer not to have all manner of taxes, tariffs and surcharges either, but that does not make them any less useful, necessary, and perfectly legitimate fiscal techniques.
A voluntary consensus on wage and price guidelines had not been reached either, the finance minister admitted, and in all honesty it must be said that it was not for lack of trying on his part, nor do I think because of any particular intransigence on the part of labour. The search for a voluntary consensus was conducted in such a clumsy fashion, and was weighted so heavily against labour that it was bound to fail. Each of the other remaining options was systematically eliminated on budget night as either "unthinkable" or tending to "provoke administrative nightmares".
The only option finally remaining open to the finance minister was for him to announce in effect that his elusive search for a consensus would continue, and that to set a good example the government would cut spending by $1 billion. Mr. Speaker, many other speakers before me have pointed out what a sham this so called restraint exercise is, so I do not feel that I need to develop it any further, except to say that only the present government could budget for a deficit increase of 177 per cent and then call it an example of restraint. With this budget the Minister of Finance has achieved a consensus that he was not able to achieve after months of consultations. It surely must be the consensus among almost all Canadians that as an anti-inflation document this budget is a miserable failure.
Before concluding my remarks today I would like to say a few things about some of the budgetary policies in the energy and resources fields and the related effects that some of them will have on transportation in Canada.
The 46 per cent taxation rate for petroleum and mining corporations, which will replace the present 50 per cent rate, and the extra 15 point abatement system on January 1 of next year, are a welcome and worthwhile revision.
The Budget-Mr. Masniuk
Combined with the 25 per cent resource allowance deduction these will hopefully remove some of the present confusion in the resource development sector of our economy and spur new development.
Nothing is either black or white, all good or all bad in this fallen, imperfect, but not yet quite completey lost world of ours, Mr. Speaker, and the works and plans of man and the budgets of finance ministers are no exception. The great grey areas of compromise and reconciliation between the black and the white have become almost a Canadian characteristic during the 108 years of our national existence, and this latest financial exercise by the Minister of Finance is characteristically Canadian in this regard.
On the lighter side of the spectrum is the 5 per cent tax credit for oil producers, miners, loggers, farmers and fishermen, for new investment in machinery and equipment. This, too, should hopefully spur capital investment in these vital sectors of our economy. The removal of the 5 per cent sales tax on insulating material is similarly a good measure, and is presumably meant as a conservation measure designed to increase the use of insulating materials in new construction, although whether it will actually achieve this is not exactly clear. The removal of the 5 per cent tax on all building materials, not just those used for insulating, would have been the most obvious response, and is what should have been done as just one of many measures to assist relieve the desperate housing situation in this country.
Next to the budget's worthlessness as an anti-inflationary vehicle, the biggest disappointment is the insignificant help that it provides for the housing industry. The Progressive Conservative party's proposals for housing are well known, so I will not do any more here than just mention them briefly. Some method must be found to alleviate the crushing burden of overly high mortgage interest rates for the individual borrower, and we have suggested that this might be done by permitting the deductibility from income tax of mortgage interest in excess of a certain amount, perhaps 8 per cent, up to a maximum of $1,000 per householder. Some other suggestions which we have made are for tax credits for investment funds which will be used specifically to finance residential mortgages, and low interest and long term loans to municipalities to finance the development of serviced land.
It is with respect to oil and gas pricing that this budget really gets into the great grey area I spoke of earlier. The dilemma of the Minister of Finance is the dilemma of all of us today in an increasingly energy short world. Our smug satisfaction of 18 months ago in knowing that we were at that time the only industrialized country in the western world which was self sufficient in energy has been replaced today by despair.
We have seen our oil imports rise while at the same time we have had to cut back on our exports, or risk the possibility of a severe shortage much sooner than we had expected. The oil import compensation program, which pays eastern Canadian importers a subsidy out of revenue collected from a surcharge on western Canadian oil

July 3, 1975
The Budget-Mr. Masniuk
exporters, has permitted us one domestic oil price in Canada lower than the world price, and has worked as long as exports matched imports, but that is no longer the case. The rise in crude oil and natural gas prices is one aspect of this budget of which I cannot be too critical. Certainly price rises for any commodities which are under priced relative to their value are almost inevitable.
The price of any valuable commodity in short supply is bound to rise. That is logical. It is this budget's 10 cents per gallon excise tax on gasoline used by the private motorist which departs from logic. According to the Minister of Finance, the revenue collected from this excise tax is designed to pay the oil import compensation program deficit, and the tax is also designed as a gasoline conservation measure. It is a most unfair way of doing either. This tax is unfair, not because it is designed to pay the cost of heating the homes of eastern Canadians. After all, if we live in one single, united country and not in a collection of squabbling, semi autonomous states, which sometimes seems to be the case, this is not an unreasonable sacrifice to make. Nor is it unreasonable to ask Canadians to try to conserve on their consumption of gasoline. This tax measure is unfair because it does not give back to the Canadian consumer anything for his sacrifice. There is no fair exchange.
On budget night the Minister of Finance pointed out that the price of gasoline in West Germany, Sweden, Switzerland, Britain, Japan and France ranged from between $1.60 and $2 per gallon. What he failed to mention is that almost every one of these countries has a well developed, highly integrated, fast, efficient and inexpensive national and urban transportation system. What have we in this country? We have a transportation system which has become increasingly inadequate, and there is a total absence of anything in the way of a transportation policy except promises.
In the extreme eastern portion of my constituency of Portage there has developed in the past 10 years, as housing has spread farther and farther beyond the Winnipeg city limits, a suburban or suburban fringe residential corridor extending northward of the metropolitan area. The highways through this corridor have in the past few years become increasingly congested, with the residents of this corridor driving to their jobs in the city in the morning and home in the evening. This tax will hurt these drivers particularly hard and unfairly. These residents have no alternative form of transportation to get to their jobs, and there is no way that they can cut down on their consumption of gasoline as long as they live where they do. Unlike motorists in some other parts of the country, these motorists have no alternative to driving their cars to work, but they might have had if the government had carried through on the election promises of last July.


Some hon. Members:: Hear, hear!


Peter Paul Masniuk: At that time the government announced that it would soon introduce an urban transit program which, among other things, would pay up to 100 per cent of the cost of new commuter vehicles made in Canada and up to 50 per cent of the cost of new stations and platforms, and which would utilize existing track and rights of way as much as possible. What is of interest is that through

this new residential growth corridor I have just mentioned there now exists a railway branch line running from the city of Winnipeg to the town of Arborg, which is now slated for abandonment pending investigation as to its possible future usefulness. The track is already there. Here is an ideal opportunity for a commuter rail service. Here is a genuine chance for the government to give back to the Canadian motorist, who is driving his car of necessity, something in return for the additional burden of substantially higher gasoline costs and help to alleviate the feeling that he has been unfairly had.
Taxes aimed at conserving energy are only fair and are only successful when they are part of an over-all allocation and rationing program which, in turn, is part of a comprehensive prices and incomes policy, which the government eschews. To be worthwhile and equitable as a gasoline conservation measure, any price manipulation must be tied to the development of realistic urban and intercity transportation systems alternative to the use of the private automobile. Without the provision of these alternatives there is no real incentive to rely less on the private automobile, and in our mobile society price alone, without rationing, will not cut down on the mobility which the private automobile has come to mean to most of us.
I would like to conclude my remarks this evening by returning to the resolution which we have been asked to consider in this important debate: that we approve of the budgetary policies of this government. Time and the normal limitations of debate do not permit me to give detailed consideration to every aspect of the budget, and I do not think this is necessarily expected, nor would hon. members desire it.
There are many aspects of the minister's budget of June 23 which are very worthwhile measures, and I have mentioned some of them. Similarly, there are aspects of the budget which I find undesirable. I have mentioned some of those and tried to deal with the two or three about which I am particularly concerned.
In summary I must say that this budget is a small budget. It deals in small ways with many big problems which demand to be dealt with in big ways. This is the fundamental failure of the budget. It is too little, but I am willing to give the minister the benefit of the doubt. Perhaps it will be sufficient, and we shall be O.K. after all. For all our sakes I most sincerely and profoundly hope so. It will give me absolutely no satisfaction at some future time to add to the observation that this budget was too little that it was also too late.


Mr. Claude-Andre Lachance (Lafontaine-Rosemont):: Madam Speaker, Canada as most countries in the western world is now facing difficult economic conditions and it is the duty of the government in such a troubled period to act quickly by advocating direct and persuasive steps to try as much as possible to lessen the evil effects of a generalized recession.
Madam Speaker, I see that it is ten o'clock.
July 3, 1975



PROCEEDINGS ON ADJOURNMENT MOTION

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

Robert Phillip Kaplan: Madam Speaker, yesterday I asked the Minister of Transport (Mr. Marchand) whether the government was for or against the recent expression by Air Canada that it would like to operate a STOL service based on the Toronto Island airport. I asked that question because developments are occurring which are of great concern, and because the Department of Transport has very recently announced that it ought to have a far more aggressive posture toward the development of a transportation system for our country. I agree with this new sense of responsibility.
One must start with the fact that we now have developed in Canada, through Canadian technology and with great support of the Canadian taxpayer, a new short take off and landing plane, the Dash 7, which opens the door to the possibility of establishing, for example, in the region of southern Ontario a whole network of STOL service in which small airplanes can carry passengers between such relatively small southern Ontario communities as St. Catherines, London, Owen Sound, Cornwall, Orillia and Sarnia, just to name half a dozen. One could go on and name a dozen and a half.
This kind of system, which I think is highly desirable, should not be considered as a substitute for a railway system. We need better railway systems in Canada. But the communities I have just described will probably never be connectable by a good railway system. They are not going to have the kind of traffic load in the foreseeable future which would justify frequent, reliable and fast service. In other words STOL offers them an opportunity for small volume traffic that is not otherwise available.
In Toronto the logical base for a STOL system is the Toronto Island airport. I do not want to get into the arguments in favour of it, but it is a use that is compatible with all the things that are the highest aspirations of the people of Toronto for the development of their waterfront-for parks, for recreation, for living, for commercial centres, for a great port-the STOL port would fit in with all these uses. The question is how should the potential be handled? I want to urge on the government that it take this matter in hand and give consideration to the kind of base that will create the system of STOL service for southern Ontario that I have described.
The newspaper have reported that some third level carriers are applying to the CTC for permission to run service among some of these communities-some, but not all. I welcome that. I think it is highly desirable that the third level carriers do it. It appears to me, however, that they are doing it on their own initiative and not as part of an over-all plan that will assure that southern Ontario has
Adjournment Debate
the best possible service. I welcome the third level carriers.
I also noticed in the newspapers a few weeks ago that Air Canada wants to establish a STOL service for Toron-to-Ottawa-Montreal based at the STOL port on Toronto island. I oppose this. That triangle is known in the air transportation field as the golden triangle. Today Air Canada loses money on it. But it is the kind of route, the kind of circuit, that is really a dream for an air transport system. I want to suggest that Air Canada not be given the golden triangle for STOL service for those three communities. If Air Canada is given it, it may or may not make money, but whether it does or not, that golden triangle would become part of the economic base of its over-all service.
What I would like to argue is that the golden triangle ought to go to regional carriers and the third level carriers so that it could establish a viable economic base which would make possible the whole of the network that I described among the other communities of southern Ontario. Give it to Air Canada and we lose all of the benefit of the golden triangle for a good regional system; give it to a regional carrier, and the third level carriers and I would say we could really develop an important and useful transportation system for the people of southern Ontario.


Joseph Clifford McIsaac: Mr. Speaker, I am afraid I cannot add a great deal to the reply of the Minister of Transport (Mr. Marchand) when this question was raised earlier. As the minister indicated, the department's policy is to reach no final conclusions on the desirability of permanent STOL services or on the location of possible future STOL ports until the demonstration service between Ottawa and Montreal has yielded further data. Given that the very purpose of that experiment is to provide much of the essential information to evaluate the merits of STOL, it would make little sense to reach a conclusion while the results remain as incomplete as they are at present.
That is not to imply any doubt about the success of the demonstration project to date. On the contrary, the project has fulfilled all expectations and is yielding valuable data on the technical and economic aspects of STOL operations every day. The point is merely that more of this information is required before a decision on the long run feasibility of STOL operations is taken.
As another consideration, I should also add that it remains far from clear whether the municipal authorities in Toronto would be prepared to see the island airport transformed into a STOL port. Their approval of such a step is indispensable.
Finally, it will be evident from what I have just said that there has also been no decision as yet as to which carriers might eventually be chosen to operate STOL services to and from Toronto. This decision will be taken as part of the government's over-all policy with respect to STOL.

July 3, 1975
Adjournment Debate


SUPPLY AND SERVICES-COST OF PROTECTIVE SERVICES- ALLEGED WARNINGS AGAINST USE OF SECUREX AGENCY AT MONTREAL AIRPORT
Mr. Elmer M. MacKay (Central Nova):: Madam Speaker, over one month ago I asked the Minister of Supply and Services (Mr. Goyer), the former Solicitor General, about a Montreal-based company which provides guard protective services. This company, called Securex, had aroused my interest and I considered it my duty to ask certain questions in the House and in the Standing Committee on Justice and Legal Affairs about it.
I was intrigued because two former RCMP officers, Gilles Brunet and Don McLeery, were part of this organization. They had been dismissed by former RCMP Commissioner Higgett late in 1973 as one of his last official acts.
Because of information I had about certain aspects of the affair, and also because of the increasing use of companies like Securex, and the current problem to do with smuggling, as well as for other reasons, I considered it my duty to investigate further.
Word of my interest reached Messrs. McLeery and Brunet who, together with some associates, came to Ottawa and met me and one of my colleagues. At this meeting these men offered to answer without hesitation all questions we had, and to open their records for inspection in order to set the record straight; for they stated emphatically that considerable harm was being done to them and their company by the impression that some of my questions were creating in the minds of certain people, including those of their clients.
These men said flatly that their company had expertise and competence in their line of work, had always co-operated with and assisted police and other authorities, and they denied that they, or any of them, or their company, Securex, had ever acted in an unlawful or improper fashion. I was impressed by the forthright way these people came forward and, after .listening to them, I thought it my duty to pursue the matter further.
Messrs. McLeery and Brunet are very disillusioned about the way their association with the RCMP was terminated. I suggest that they may have some reason for their opinion and that perhaps an injustice has been done.
Let me assure the former solicitor general and the present Solicitor General (Mr. Allmand) that I have neither evidence, nor reason, on the basis of present information, to justify any concern about the activities of Messrs. McLeery and Brunet, or of Securex. And, since my questions may have created unfair suspicions, I want to set the record straight. I also want the Solicitor General to clear the record, from his point of view.
These men were discharged pursuant to section 173 of the Royal Canadian Mounted Police Act. They were given no proper hearing, in the conventional sense. They were never pronounced to be unsuitable for their jobs. They had many years of experience in a highly technical and demanding branch of the force, which apparently did not entitle them to much consideration. Their case, I suggest strongly, ought to be reviewed by an independent commission, or by some such procedure.

At present the Solicitor General has a lot on his mind. I suggest that, at the first opportunity, he should acquaint himself thoroughly with the background of this affair. I might say, for the record, that I had a chance to speak with him briefly about it this evening. He should find out why these men have never even received their discharge papers after all this time. He should inquire into what special interest, if any, Inspector Belanger of the RCMP has in these men and their company, Securex.
Frankly I feel obligated, as I hope all members of the House feel, to look into all the background of this matter, to discover why Messrs. Brunet and McLeery, who were police officers not without distinction, were dismissed without being given a hearing, without being given an opportunity to answer fully any charges which were the alleged basis for their being forced to give up their careers. The Solicitor General has the authority, the resources and, I am sure, the desire to do the right thing.
I want to make the matter clear by saying, in conclusion, that an injustice may well have been done, an injustice to which I may have contributed by re-opening circumstances which caused those concerned embarrassment. But, having done so, and having stated that I have no evidence to indicate any reason as to why Securex ought to be under suspicion, I ask the Solicitor General to come forward, on his part, and confirm or deny my conclusions, and to give Brunet and McLeery something which it appears they have not received, a chance to vindicate themselves.
I realize that the Solicitor General is somewhat concerned about this matter because, as I understand it he appointed a commission, under distinguished Judge Rene Marin, to look into certain aspects of the RCMP. I would like to commend him for this. I have every confidence that in due course he will look into all of the background of this matter. To do less would not be in the parliamentary and legal traditions that we in this country hold so dear.


Joseph Clifford McIsaac: Madam Speaker, in response to the question raised by the hon. member as it relates to the Ministry of Transport, I can only convey some of the points he made this evening to the Solicitor General (Mr. Allmand) for further comment.
Securex was hired by Air Canada on behalf of all carriers at Montreal International Airport in March, 1973, mainly to provide screening security services. At that time there were no security firms in Montreal prepared to take on this job immediately without hiring and training a relatively large number of additional people.
There was some urgency to get a security system set up as quickly as possible, and it was decided to hire Securex without recourse to tenders. No contract with Securex was ever executed because Securex apparently could not entirely agree with one of the clauses in the proposed contract. However, Securex performed well and there was no cause for dissatisfaction.
In August, 1974, Securex advised that they would have to increase their costs, and at this stage Air Canada and the other carriers decided to invite bids for the job. Securex was not excluded from bidding, but a lower bid came
July 3, 1975

Adjournment Debate
in from Fleet Security Incorporated and a contract was Accordingly, this House stands adjourned until tomorrow signed with that company effective April 15, 1975.	at 11 a.m.


The Acting Speaker (Mrs. Morin):: The motion to adjourn the House is now deemed to have been adopted.
Motion agreed to and the House adjourned at 10:15 p.m.

Friday, July 4, 1975