1975-01-31

ROUTINE PROCEEDINGS


Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Recent reports both within and outside of this House indicate that CIDA, the Canadian International Development Agency, is presently embarked on a $117 million capital expenditure program designed to facilitate the elimination of a budgetary surplus for the current fiscal year. This surplus, constituting as it does 16 per cent of the agency's $733 million approved expenditure for 1974-75, engenders the clear possibility of fiscal mismanagement or irregularity. I therefore move, seconded by the hon. member for York-Simcoe (Mr. Stevens):
That this House request forthwith an examination and scrutiny of budgetary expenditures and allocations for 1974-75 of the Canadian International Development Agency by the Standing Committee on External Affairs and National Defence.


Mr. Speaker:: Order, please. The House has heard the terms of the motion. It being proposed pursuant to the terms of Standing Order 43, it cannot be debated without the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: There not being unanimous consent, it cannot be presented at this time.


AIR TRANSPORT
Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker, under the provisions of Standing Order 43 I request the unanimous consent of the House to propose a motion on a matter of urgent and pressing necessity.
This matter concerns the recent ban on the transport of certain types of dangerous cargo on United States airlines. In view of the fact that Canadian airline pilots have expressed the fear that as a result of this ban dangerous and radioactive cargo may be transrouted through Canada on Canadian airlines under improper labelling, I move, seconded by the hon. member for Okanagan-Kootenay (Mr. Johnston):
That the government act immediately to upgrade its surveillance of air freight to control or prevent the shipment of cargo that endangers the life and safety of the public and airlines personnel.


Mr. Speaker:: Order, please. The House has heard the terms of the motion. It being proposed pursuant to Standing Order 43 it cannot be debated without the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: There not being unanimous consent the motion cannot be put at this time.


PROPOSED PROHIBITION OF SALE OF CANDU REACTORS TO COUNTRIES NOT SIGNING NON-PROLIFERATION TREATY-REQUEST FOR UNANIMOUS CONSENT TO MOVE MOTION UNDER S.O. 43
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, I rise under the provisions of Standing Order 43 to propose a motion of urgent and pressing necessity.
The impending sale of a CANDU nuclear reactor to South Korea, a country which has not ratified the International Nuclear Non-Proliferation Treaty, makes possible the further spread of nuclear weapons. Therefore, I move, seconded by the hon. member for Oshawa-Whitby (Mr. Broadbent):
That this House instruct the minister responsible for Atomic Energy of Canada Limited not to approve any CANDU reactor sales to any countries which have not ratified the non-proliferation treaty.


Mr. Speaker:: Order, please. The House has heard the terms of the motion. It being proposed pursuant to Standing Order 43 it cannot be debated without the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: There not being unanimous consent the motion cannot be put.
28626-42!d

January 31, 1975
Airport Inquiry Commission Report [Translation]



THE CANADIAN ECONOMY


Mr. Armand Caouette (Villeneuve):: Mr. Speaker, pursuant to Standing Order 43,1 seek the unanimous consent of the House to move a motion on a matter of urgent and pressing necessity.
The Canadian economy these days is in a serious state of stagnation. According to Royal Bank of Canada economist Robert Baguley, "unemployment should increase and the rate of our economic growth fall below average for the first half of 1975". Urgent legislation must of necessity be introduced and applied as soon as possible. I move therefore, seconded by the hon. member for Lot-biniere (Mr. Fortin):
That this House consider the possibility of establishing a consumer price compensated discount system, to reduce retail prices and start the Canadian economy rolling again, before the closing of industries and the increase in unemployment precipitate our country into an economic crisis.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


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



AIRPORTS


Hon. Jean Marchand (Minister of Transport):: Mr. Speaker, pursuant to Standing Order 41(2), I should like to table two copies of the Airport Inquiry Commission Report in English and two copies of chapters 3 and 5 in the French language. The other chapters of the report will be tabled in the French language as soon as they are translated. I think I must have the consent of the House to table the reports under the circumstances, and I would ask to do so because it is such an important report I think it should be tabled at this time.


Mr. Speaker:: Is it agreed that the hon. minister shall have leave to table the report under those conditions?


Some hon. Members:: Agreed.



ORAL QUESTION PERIOD


Miss Flora MacDonald (Kingston and the Islands):: Mr. Speaker, given the fact that provincial housing ministers estimate that at least 260,000 housing starts are needed to rescue the declining construction industry, and the fact that the Minister of State for Urban Affairs stated yesterday that the biggest problem is in respect of spending priorities established by the federal Cabinet, I should like to ask what new proposals, other than the current restrictive programs which he estimates will only produce 210,000 starts, the minister is prepared to make to Cabinet?


Hon. Barney Danson (Minister of State for Urban Affairs):: Well, Mr. Speaker, I think the question is based on a false premise of what was said at the conference of ministers. The federal government's position is that 210,000 starts is the minimum objective.


Flora Isabel MacDonald: Given that the minister has stated that he is prepared to go back to the cabinet relying on what he calls his record of success, which includes a 46 per cent drop in housing starts in urban centres in December, what assurance can he give that he will be any more successful than he has been with his lone stand over Pickering airport?


Mr. Speaker:: Order please.


Flora Isabel MacDonald: Since the minister is not prepared to comment on Pickering airport, I wonder if he would say whether his reply indicates that he is willing to leave any additional initiatives for housing production up to the provinces, or is it the position of the government that it will remain with its goal of 210,000 housing starts in 1975 rather than try to achieve the 260,000 starts that the provinces and the Economic Council of Canada say are necessary?


Barnett Jerome Danson: Mr. Speaker, we are making realistic projections and setting realistic targets. The policy of this government is to provide the most housing possible for Canadians, particularly those in lower income groups, at prices they can afford. It is still our policy; we are pushing forward with it, and we are doing everything humanly possible in cooperation with the provinces to keep these objectives which must be in the realistic terms of today's evolving economic circumstances.


ALLEGATION DECREASED BUDGET WILL NOT PERMIT INCREASE IN NUMBER OF STARTS
Mr. Edward Broadbent (Oshawa-Whitby):: To follow up the minister's suggestion that his projections are realistic, since his budget for the coming year represents a drop in real dollars by some 20 per cent below the budget for last year, may I ask him how he can plausibly present to the House and to the people of Canada the argument that he will construct as a minimum 210,000 units when that is
January 31, 1975

well above the 20 per cent difference in the two year's budget difference? If he will have considerably less money than would be required to achieve his goal, how does he pretend that that will come about?


An hon. Member:: By prayer.


Barnett Jerome Danson: We have an increase capital budget of $1,420 million, which is an increase over last year when we produced 222,000 starts, also in tough economic circumstances. In addition, we have subsidy moneys which are expected to bring close to $1 billion more into the market for housing for Canadians of low and moderate income means.


Some hon. Members:: Hear, hear!


John Edward Broadbent: I said to the minister "in real dollars" which takes into account his increase in budget. In my supplementary, I asked the minister honestly to deal with that question: Is there or is there not a decline in his budget in real dollars by some 20 per cent?
However, my supplementary question refers to part of his answer as well. He said he hopes to entice $1 billion from the private sector. Since legislation was designed to do that and in 1973 we provided fewer than 5,000 units, even if the minister achieves a 100 per cent increase in the number of units that his program is aimed at he will not come anywhere near achieving his goal. Will he explain that?


Barnett Jerome Danson: If I can understand a rather convoluted question, the first part dealt with a drop in real dollars. I do not acknowledge that there is a drop of 20 per cent in real dollars; it is an increase of 12.5 per cent in the budget itself, plus an increase in subsidies which will bring additional funds.
I did not understand the questions and how they related to drops. My projections and the projections of my officials and other responsible economic advisers indicate that we can indeed reach this objective.


John Edward Broadbent: To make it clear even for the minister I am referring to section 15 of the act which his private incentives are supposed to stimulate. It was that section in 1973, the period for which we have the most recent figures, which produced fewer than 5,000 units. It is construction under that section which, if I understand him, he is trying to stimulate. Even if we could get 100 per cent improvement in production under that section, how we are going to come near his minimum goal of 210,000 units?


Barnett Jerome Danson: Mr. Speaker, the budget under section 15 for limited dividend rental accommodation built by entrepreneurs has been increased to $200 million plus incentives to bring another half a billion dollars to a billion dollars in from the private sector to stimulate that section of the economy, something which was viewed with favour by some of the hon. member's colleagues from other provinces.
Oral Questions


INCOME TAX
Mr. Gerard Laprise (Abitibi):: Mr. Speaker, in view of the absence of the Minister of National Revenue, I should like to put a question to the Minister of Finance.
Will he tell the House whether it is true that an agreement had been reached with the Quebec Revenue Department on the transfer, from Ottawa to Quebec, of the tax levied at the source in another province on the income of Quebec residents and, if so, why that agreement was not respected by the federal Department of National Revenue?


Hon. John N. Turner (Minister of Finance):: I shall take the question as notice and transmit the reply directly to the hon. member.


GOVERNMENT ACTION TO STEM DECLINE IN EXPORT
Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, I have a question for the Minister of Industry, Trade and Commerce. In view of the speech made last week by his predecessor the Hon. Jean Luc Pepin in Vancouver, of which the minister is well aware, in which Mr. Pepin said that the Prime Minister of Iran came to Canada with his shopping list but went home disappointed that Canadians do not really seem to want to trade and that Canadians must present a comprehensive package of goods and services when foreign shoppers come to buy Canadian goods, I would ask the minister if in view of these very wise suggestions by his predecessor he is going to accept these suggestions and thereby help to stem the very serious decrease in the volume of Canadian exports which has been going on for many months?


Hon. Alastair Gillespie (Minister of Industry. Trade and Commerce):: Mr. Speaker, I think we have made some real progress in our trading relations with Iran and the Middle East over this past year. The hon. member may remember a very important trade mission which I led to the Middle East earlier last year, which was followed by the visit of the Prime Minister of Iran just a few months ago. At that time we decided to set up a Canada-Iran economic commission, and I would expect that that economic commission will be meeting at the ministerial level in Ottawa in the very near future. I also expect that out of that and other efforts of this kind we will be able to expand Canadian exports into markets where we have not previously conducted business.


George Harris Hees: Mr. Speaker, a supplementary question. In view of the remarks made by the Prime Minister of Iran when he was here in Canada about his disappointment at not being able to buy the things that he wanted to buy, and obviously they are the people with the do-re-mi and

January 31, 1975
Oral Questions
can buy, would the minister advise the House when he intends to stop trying to shrug off this whole situation and stop this country's being led, by a decreasing volume of exports months after month, into a very serious recession, which is what we are heading into right now?


Alastair William Gillespie: Mr. Speaker, it is true that our trade balance surplus in 1974 will be smaller than it was in 1973.


George Harris Hees: That is the understatement of the week.


Alastair William Gillespie: The economies of our customers are not as strong as the Canadian economy. Unfortunately, Canadian buyers are buying at a more rapid rate than our foreign purchasers. For that reason, we have launched a whole series of measures in an effort to support the Canadian export effort this coming year, and I would be very pleased to detail some of those if I could have the time of the House.


George Harris Hees: A final supplementary, Mr. Speaker. In view of the fact that foreign countries are finding it more difficult to buy these days, is it not that much more important that the minister follow the suggestions of his predecessor and see that there is a comprehensive shopping list ready for prospective buyers, of the quality of the Prime Minister of Iran, with the money to spend when they come to Canada and want to buy Canadian goods, and stop just acting as though we are conducting business as usual?


Alastair William Gillespie: Mr. Speaker, we are making every effort and I think we have had some great success. Last year Canadian exports were up by close to $7 billion. That was an increase in Canadian exports.


George Harris Hees: Imports are up twice as much and the volume is down in exports.


Alastair William Gillespie: That increase was greater than the total exports when the hon. member was minister.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


George Harris Hees: And inflation has more than doubled-inflation has tripled. If our trade has not tripled we are away behind.


Mr. Crouse:: That was a stupid answer.


REGIONAL ECONOMIC EXPANSION
Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I have a question for the Minister of Regional Economic Expansion. Can the minister indicate to the House what additional studies he had in mind when he said in the House on Wednesday, after having spent the better part of an hour with the Minister of Transport discussing the effect of transportation costs on regional
development, that he had asked for work to be initiated in that direction? The minister had talked about some assistance to industry on a selective basis. Can the minister tell the House what additional initiatives he requested? Yesterday the Minister of Transport indicated that he was taking no additional initiatives but was simply maintaining the position he had indicated in the House previously, that a federal-provincial committee was prepared to hear applications for help from industries in the Atlantic provinces that were severely affected.


Hon. Donald C. Jamieson (Minister of Regional Economic Expansion):: Mr. Speaker, I have not had an opportunity to read the Hansard report, but from what I have been advised there was not any inconsistency between the statements of the Minister of Transport and myself on this matter. As to the initiatives we are taking, I mentioned to the hon. Leader of the Opposition that between a year and 18 months ago we got a list from the Atlantic provinces of specific products on which the Maritime Freight Rates Act and the Atlantic Region Freight Assistance Act were extended from 30 per cent to 50 per cent. When I mentioned that I had asked for, and was in the process of getting, additional studies, these have to do with a more detailed measurement of what I described as locational disadvantages for those who are seeking to establish industries in the Atlantic provinces.
I had conversations with the Premier of Nova Scotia on this question yesterday. Basically, what we are looking at is where there are applications for incentives in the Atlantic provinces, we take, as the hon. Leader of the Opposition knows, a number of factors into account. I have asked that the freight factor and the transportation factor be added in relation to the size of the incentive we would be prepared to offer.


Robert Lorne Stanfield: A supplementary question. We realize that the Minister of Transport recognizes it is a mess but he really does not understand the problem in the Atlantic provinces and the Prime Minister either does not understand or does not care. I had hoped that the Minister of Regional Economic Expansion would take some initiative in this matter. Am I to understand that when he said on Wednesday that he had asked for some work to be initiated in that direction, he was not actually asking for anything new to be undertaken by the Department of Transport but he simply goes along with the position of the Minister of Transport?


Donald Campbell Jamieson: Mr. Speaker, I am going along with the position of the minister but not in the manner outlined by the hon. Leader of the Opposition. When the list was initially compiled of items eligible for the increase of 20 per cent in subsidy, the Minister of Transport made it clear at that time that it was not a fixed list. If the provinces wished to suggest additional products to which this should apply, they would be considered. I understand that subsequent to that, in his meeting in Halifax last week, he indicated that he was prepared to look at so-called hardship or special difficulty cases. Those two things are obviously tied in with my own examination of this matter.
On the comment I made, if I may elaborate for the hon. Leader of the Opposition, the position is that if we have

January 31, 1975

an application, as we do in many instances, which is designed for exporting to central Canada, we are taking a very close look at what the transportation disadvantages may be with a view to having those disadvantages covered to some degree by an increase in the incentives. This will be done, as it always has been, in consultation with the Department of Transport.
* (1130)


EFFECT OF INCREASED FREIGHT RATES ON INDUSTRIES IN ATLANTIC PROVINCES-ACTION BY MINISTER TO COUNTERACT
Robert Lorne Stanfield: Mr. Speaker, may I ask a further supplementary question. In view of the recent report by APEC, issued yesterday, I think, indicating the very serious prospects for the economy of the Atlantic provinces in 1975, and as it must be obvious to the Minister of Regional Economic Expansion that this increase in freight rates in these circumstances will largely offset any work his department may have done to encourage expansion in the area and will result in the money the department has spent there being substantially poured down the drain, is the minister prepared to sit back in these circumstances and leave the economy of the Atlantic provinces to the tender mercies of the Department of Transport or is he prepared to intervene and take some initiatives.


Donald Campbell Jamieson: Mr. Speaker, replying to the substantive part of the hon. Leader of the Opposition's question, I agree that there are problems in the Atlantic provinces and, of course, in other designated areas of Canada, those of slow growth. Of course, we are taking initial initiatives and, I repeat, I met with the premiers of the provinces. There are presently in process, and have been conveyed to a number of firms, offers of incentives which are an attempt to develop additional job opportunities. There is one of significance in Nova Scotia and one in New Brunswick, of which I can think immediately. In both cases I repeat, in analysing the levels of incentives, levels of assistance, we have taken the transportation question into account and done that in consultation. I am not suggesting nor accepting that transportation is the total problem. As the hon. member knows, he having been premier of a province, transportation rates are not the only detriment to getting business to the Atlantic provinces. We are doing the best we can.


EFFECT OF ELIMINATION OF LCL RATES ON INDUSTRIES IN THE ATLANTIC PROVINCES-GOVERNMENT ACTION
Mr. James A. McGrath (St. John's East):: A supplementary question, Mr. Speaker. Has the minister satisfied himself that the elimination of the lcl rates in the Atlantic provinces will have no impact on the growth of smaller service type industries in the region. Will he not agree that the elimination of these rates will very seriously aggravate an already critical unemployment situation by bringing about lay-offs in service industries.


Donald Campbell Jamieson: Mr. Speaker, in the first instance, I
Oral Questions
agree with the hon. member. As I believe, I stated in the House on Wednesday, that, certainly, the change in the lcl rate is one which must be carefully examined. I would have been as happy as I suspect the Minister of Transport would have been if this had not been proposed by the railways. Although I have not had an opportunity to examine the matter in detail, let me say that I am receiving some information now which will indicate what the real impact will be and I am prepared, in so far as my own responsibilities are concerned, to use every effort to correct any disparities which may result from the lcl rates by whatever appear to be the best means for doing this.
Let me point out that, essentially, there is a problem to do with whether we are to subsidize the industry of central Canada in terms of consumer goods and the like, to help the consumer of eastern Canada. This is an admirable prospect which, as I must also point out, acts to the detriment of the competitors of these same industries who are located in Atlantic Canada. This involves the very difficult balance we are trying to achieve.


TRANSPORT
Mr. Robert Muir (Cape Breton-The Sydneys):: Mr. Speaker, may I direct my question to the Minister of Transport. As the minister, when replying to the request of the Atlantic provinces for a 12-month phasing in period for the 25 per cent rail freight increases, or for any roll-back of such increases, stated that he does not fix rates, the CTC fixes them and that the final decision does not belong to him, will he indicate whether he is aware of the provisions of section 64(1) of the National Transportation Act which, in so many words after legal jargon is eliminated, says that the Governor in Council may at any time in his discretion vary or rescind any order, decision, rule or regulation of the Commission, and that such order by the Governor in Council is binding upon the Commission and upon all parties. Does he not agree that this language indicates beyond a shadow of a doubt that the final decision rests with the Minister of Transport, who is a member of the federal cabinet.


Jean Marchand: Mr. Speaker, I think it is pure coincidence that the hon. member directed his question at me, as this matter is being considered right now before the Supreme Court of Canada, following the decision of the CTC and the appeal of the railways. The matter is being considered by the Supreme Court of Canada, which will determine exactly how far CTC powers go. So, if we wait for perhaps another day we will have some information. I am not in a position to interpret the section to which the hon. member referred.
If I may complete what I have to say, yesterday the Leader of the Opposition asked me what had been done in order to follow up on what I stated in the Atlantic provinces. I now have a report. The day following my visit, a federal-provincial committee meeting was held and there was a decision on the procedure to be followed in order to correct the injustices which could be created

January 31, 1975
Oral Questions
by the lifting of the rates. They decided that each province will submit some cases for consideration, or receive them directly from the employers. According to the report I have here, all firms are aware of this right. The mechanism has already been set up and is working.


Robert Muir: A supplementary question, Mr. Speaker. Did the minister, in his reply, suggest he is not prepared to make any further effort on behalf of the people of the Atlantic provinces with respect to the freight rate issue, a neglect which could lead to the strangulation of the economy? Is he telling those people to go to hell, as he has always told them in the past?


Mr. Speaker:: Order, please. The hon. member for Prince George-Peace River.


FREIGHT RATES-POSSIBLE EXTENSION TO WESTERN PROVINCES OF STUDY OF INDUSTRIES AFFECTED BY INCREASES
Mr. F. Oberle (Prince George-Peace River):: Mr. Speaker, my question is also for the Minister of Transport. In view of the government's reluctance to strive for a further extension of the rail freight freeze, will the program the minister developed and announced yesterday and today for the support of Atlantic provinces industry and commerce apply to western Canadian industries as well, namely, some sections of the farming and lumbering industries?


Jean Marchand: Mr. Speaker, no. The commitment was made to the Atlantic provinces and I received no requests from other parts of Canada along those lines. If I receive them, I will be happy to tell the House exactly what we can do.


Frank Oberle: A supplementary question, Mr. Speaker. Has the minister discussed with the Minister of Agriculture, for instance, or the Minister of Industry, Trade and Commerce some of the problems of western Canada, and has he asked for submissions from western Canada, in light of the freight rate increases and particularly in light of increases in steel prices which are hampering the construction industry severely in western Canada?


Jean Marchand: Mr. Speaker, there is some confusion. I know some people are ready to play politics with anything. Steel was not covered by the freeze. Even if we lift the freeze, it will not change anything.


SOCIAL SECURITY
Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, may I direct my question to the Minister of National Health and Welfare. During the last election campaign, the Prime Minister promised that spouses of recipients of the old age pension will also be eligible for a pension. The Speech from the Throne mentions this. It has been mentioned ever since October, 1972. I wonder if the minister might

consider doing something useful, particularly for women, many of whom are married to recipients of the old age pension, and possibly advance the introduction of this legislation, because increasing inflation is bringing hardship to all these people. If he will not consider doing this, why will he not?


Hon. Marc Lalonde (Minister oi National Health and Welfare):: Mr. Speaker, the government will keep its commitments as set out in the Speech from the Throne.


Stanley James Korchinski: A supplementary question, Mr. Speaker. The minister is apparently marking time. While he is marking time many people in the categories just alluded to will reach the age of 60, and more, and they are suffering great hardships because of inflation. Will the minister bear in mind that time is passing and study the possibility of including those under 65 in the scheme. In other words, would he consider lowering the age from 65 to 60 for such people.


Marc Lalonde: Mr. Speaker, there is now in existence a whole series of social measures some of which are administered by the provinces and the others by the federal government, the purpose of which is to help needy Canadians. As I have often said to the House, we are now in the process of reviewing all those measures with the provinces and I trust that, when this review is completed, present services will be even more greatly improved.


SYNCRUDE PROJECT-POSSIBILITY OF OTHER COMPANIES PRODUCING FROM TAR SANDS BEING GRANTED SIMILAR CONCESSIONS
Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, may I direct a question to the Minister of Energy, Mines and Resources arising from his statement yesterday that the government has agreed to allow Syncrude to charge Canadians what the minister calls an internationally oriented price for its product. Will this provision apply only to Syncrude, or will other companies, as they go into this type of production, be allowed the same concession. In view of the fact that Shell Oil, Home Oil and now Petrofina have all been approved, are we likely to see different prices set for oil from the tar sands? Will each company play this poker game with the minister and hold the country up for ransom for different price levels? What is the policy of the government with respect to this situation?


Hon. Donald S. Macdonald (Minister of Energy. Mines and Resources):: The decision affects Syncrude only. As the hon. gentleman knows, this is the only project at the present time which is anywhere close to construction. Naturally, we shall have to consider the merits of each of the cases as they come forward.
January 31, 1975


Thomas Clement (Tommy) Douglas: With reference to the concession which is also being given, I understand, by way of a letter from the Minister of Finance to allow Syncrude to deduct from income tax certain payments which will be made to the government of Alberta, may I ask whether this type of concession, too, will be granted to other companies? Or is it the intention to work on an ad hoc basis with each company which is seeking to go into oil production in the tar sands?


Donald Stovel Macdonald: I think it was really an interpretation of the tax law which was involved in this particular case. If the arrangement made between the government of Alberta and any particular participant coming forward in the future is different, then, naturally, the arrangement will have to be scrutinized in relation to tax law; if the transactions differ, then, obviously, the legal effects might differ.


SYNCRUDE PROJECTED-SUGGESTED GOVERNMENT TAKE-OVER OF PROJECT
Thomas Clement (Tommy) Douglas: Since it is becoming increasingly apparent, as the minister carries on this poker game with Syncrude, that in the end, by way of tax concessions and exorbitant prices for oil, the Canadian people are going to pay for the construction of this project, I want to ask the minister why the government does not step in and itself develop the Syncrude project?


Some hon. Members:: Oh, oh!


Donald Stovel Macdonald: As I have intimated to the hon. gentleman in the past, there are limits to the financial capacity of even the government of Canada.


HYDROELECTRIC PROJECT AT GULL ISLAND, LABRADOR-REQUEST FOR ESTIMATE OF COST AND POSSIBILITY OF CONSTRUCTION OF CABLE TUNNEL
Mr. Jack Marshall (Humber-St. George's-St. Barbe):: Turning to the funding for another source of energy which shows great potential, would the Minister of Energy, Mines and Resources, in addition to the information he gave me yesterday for which I thank him with reference to the 50-50 cost-sharing arrangement affecting the Gull Island site on the Lower Churchill, tell us whether he has any estimate of the cost of this project? Would the minister also tell us whether the line is to be taken across the Strait by cable tunnel? Has a decision been reached on this aspect?


Donald Stovel Macdonald: Mr. Speaker, I have to apologise to the hon. member; I do not have the figure with me this morning. The proposal is now before cabinet for consideration. Speaking from memory, I believe that the cable, rather than going by tunnel, would be laid across the floor of the Strait of Belle Isle. However, I would have to confirm this; there may well be an alternative.
Oral Questions


REGIONAL ECONOMIC EXPANSION
Jack Marshall: A supplementary to the Minister of Regional Economic Expansion. In addition to the consideration of funding for the development of the hydro energy resources of the Lower Churchill, has the minister consulted with the province in regard to providing other support by way of infrastructure-roads, airports and means of transporting the basic materials needed at the site?


Donald Campbell Jamieson: Yes, Mr. Speaker. I have taken part in a number of meetings with the minister of intergovernmental affairs, with the premier, and other representatives of the Province of Newfoundland with regard to precisely that subject. There is no specific request before me at the moment because the planning is not complete, but I have indicated that if there is an appropriate role for regional economic development to play in that area I shall be pleased to co-operate as soon as we can get a clearer picture of what is needed.


AIR TRANSPORT
A. Daniel McKenzie: Mr. Speaker, I have a question for the Minister of Transport. In view of the fact that the United States Federal Aviation Administration has recommended that airlines be required to modify a defect in the Pratt and Whitney jet engine used in the Boeing 727, 737 and DC-9 aircraft, which is reported to cause engine failure as the engines accelerate to take-off thrust, and since this defect has reportedly caused engine failure in at least ten cases, would the minister inform the House whether or not Canadian airlines have complied with this recommendation?


Jean Marchand: I recall discussing this matter with the President of Air Canada. He told me they had complied and that there had been no accidents. I will check again to ascertain whether or not they really did.


A. Daniel McKenzie: The minister says he has checked with Air Canada, There are a number of other airlines in Canada. Will he check with them, too?

January 31, 1975
Oral Questions AIRPORTS


MALTON-GOVERNMENT POSITION ON IMPLEMENTATION OF GIBSON REPORT RECOMMENDATION FOR EXPANSION
Mr. A. C. Abbott (Mississauga):: Mr. Speaker, my question, too, is directed to the Minister of Transport. In view of the fact that he has tabled the report of the Gibson Commission, and since it appears that the Commissioners are recommending a substantial expansion at Malton, and bearing in mind that thousands of residents of Mississauga are already suffering gravely under the impact of noise and pollution from the present airport, 1 ask the minister whether there will be an opportunity to debate the report in this House-


Some hon. Members:: No!


Anthony Chisholm Abbott: -prior to a declaration of policy being made?


Jean Marchand: The only thing I am prepared to say at this time is that the report will be studied by cabinet before a decision is made. One thing I can assure the hon. member is that we do not intend to increase the noise at Malton or to expand the facilities at Malton at this moment.


AGRICULTURE
Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, I should like to put a question to the Minister of Agriculture.
Since the media report that there is a new problem with regard to egg marketing, could the minister tell the House whether he discussed the matter with CEMA authorities and the National Farm Products Marketing Council, and what is now the real situation in that Canadian body?


Hon. E. F. Whelan (Minister of Agriculture):: Mr. Speaker, I don't think there is any new problem; it is just that the same old problems are still there.


Some hon. Members:: Oh, oh!


An hon. Member:: The same old bull!


Eugene Whelan: And the same old guys are yelling over there, too. Mr. Speaker, in answer to a question answered earlier in the week, I outlined details of the meetings which have taken place. The chairman of the Farm Products Marketing Council will be returning to Ottawa. If he has not returned by the end of the day, he will be back here on Monday afternoon. To all the provincial authorities concerned with the marketing of eggs-the basic jurisdiction is still in their hands-I have said that in the absence of some kind of new plan we would have to take drastic action. I have already outlined that action to them.
[Translation


Joseph Adrien Henri Lambert: Mr. Speaker, I would like to ask a supplementary question.
Since the Minister of Agriculture just said that all problems are the same, I think he is right, because there is a noise problem in airports and in the House, it is also difficult to hear one another.
My supplementary question is the following: Must Canada import eggs at the present time to meet domestic demand and if these imports are not necessary and are even prejudicial to egg marketing in Canada, will this serious problem be reexamined so that a solution can be found?


Eugene Whelan: Mr. Speaker, I can answer that very shortly by saying that if imports of other products would solve the marketing problems of Canada, it would be very easy to use our act to impose import controls. That is certainly not the only problem we are faced with; there appears to be a total lack of co-operation between the provincial boards.


TRANSPORT
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, I should like to direct a question to the Minister of Transport, who has been a most popular fox in the last two or three days with the questions that have been asked of him. I want to get clear from him a question regarding the Crowsnest pass rates. Yesterday afternoon, in the course of a question asked by the hon. member for Sas-katoon-Biggar, he stated somewhat indefinitely "I am a human being. But the matter is not under study and there is no reason for the hon. member to be nervous". I ask the minister whether or not any recommendations have come to him from the Western Grain Council, a group that was apparently appointed on the general recommendation of the Minister of Justice. Has he received any recommendations from this group concerning the Crowsnest pass rates?


Jean Marchand: Not to my
knowledge, Mr. Speaker. I can check with the department and see whether they have received such a representation, or perhaps the representations were made to the Minister of Justice, I do not know. Personally, I am not aware of any.


John George Diefenbaker: Mr. Speaker, we are getting things cleared away. The Minister of Transport has not received this report and it went to the Minister of Justice. It deals with transport and rates. This strikes me as evidence of what we have all suspected, that the minister is being circumvented. Therefore, since he is the minister and the Minister of Justice has nothing to do with transport, I ask him to be more clear than he has been up to now. Is it a

January 31, 1975

Oral Questions FINANCE
fact that he can give an assurance to the farmers of western Canada, who are deeply concerned about this question, that the Crowsnest pass rates will not be interfered with so long as he is Minister of Transport?


Jean Marchand: Mr. Speaker, I think I said yesterday that, to my knowledge, nobody is looking into the Crowsnest pass rates.


Mr. Benjamin:: Oh, come on. Look behind you.


Jean Marchand: No one recommended to me that I should change the statute to that effect. I am speaking as of this moment, of course. Certainly, I have no intention of changing the act, but I am not going to make a promise for the rest of the century.


John George Diefenbaker: A further supplementary question, Mr. Speaker. With due respect to some of the statements being made and thrown out by the Minister of Justice, who ought to know better, I thank the minister very much for that assurance. He always clears matters up, and I hope that what he said will come to the ears of the Minister of Justice.


EFFECT OF TRANSPORTATION POLICY ON ATLANTIC PROVINCES-SUGGESTED NEED FOR NEW POLICY
Lloyd Roseville Crouse: Mr. Speaker, I wish to direct my question to the Minister of Transport. As the minister is aware, Canada's railways have moved to impose immediately a full 25 per cent freight rate increase, which is a staggering blow to the economy of Atlantic Canada, especially to Nova Scotia. Those of us who represent the area are getting considerable representations asking that it be removed. In view of the energy shortage and the need to get Canada back on the rails- which is really the most economical way to move people and large quantities of freight-and since the railways are not an open market but are controlled entirely by the federal government, when is the minister going to accept the full responsibility and put a stop to the present transport policy which is crushing industry, large and small, in Nova Scotia?


Jean Marchand: Mr. Speaker, this is the kind of statement that does not help anybody. First of all, with regard to the lcl technique which is now being phased out in the Atlantic provinces, I have a full report from the Maritime Transportation Council to the effect that not one single firm has suffered from the phasing out. No complaint has been received, and the same applies to the increase in the rates. Right now all firms have access to the federal-provincial committee through their provincial government, but not a single one has made a claim, although the hon. member says we are crushing the economy of Nova Scotia. We all know that Halifax has never been as prosperous as it is now, the average salary in Halifax being higher than wages in Montreal. I think the hon. member should reconsider what he says.


POSSIBILITY OF EXTENDING TAX CONCESSIONS TO OTHER COMPANIES SIMILAR TO THOSE EXTENDED TO SYNCRUDE
Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, I should like to put a question to the Minister of Finance. Before doing so I want to congratulate him on accepting my viewpoint regarding the tax situation of Syncrude. My question is twofold. Is the minister now considering giving the same tax consideration to companies engaged upon what I call the orthodox method of finding crude petroleum by drilling so as to stimulate exploration and development? Secondly, in light of the suggestion of the hon. member for Nanaimo-Cowichan-The Islands that the federal government get into the oil business, has Mr. Blakeney of Saskatchewan suggested that they form a provincial company to help drill for oil, since at the present time they are losing seven cents on every barrel of crude petroleum produced in Saskatchewan?


John Napier Turner: Mr. Speaker, my understanding is that Saskatchewan already has that type of company. In so far as the tax regime is concerned, the tax regime in effect before the two budgets is the one that applies to the Syncrude operation, as I explained to the hon. member yesterday. As for future explqration, the inter-reaction of the November 18 budget and the positive moves made by the province of Alberta have put the companies in a cash position where they ought to be able to do the job. In so far as the frontier areas are concerned, the federal government has, of course, jurisdiction over both taxation and royalty rates, and arrangements will be made to encourage that incentive and exploration.


Eldon Mattison Woolliams: A further supplementary question, Mr. Speaker. Would the Minister of Finance comment on the fact that since he has a discriminatory tax policy, he is giving one thing to one type of development and exploration and nothing to the other. Why does he have this discriminatory policy?



EXTERNAL AFFAIRS


Mr. Perrin Beatty (Wellington-Grey-Dufferin-Waterloo):: Mr. Speaker, my question to the Secretary of State for External Affairs arises from the November 26 contract solicitation sent out by John E. Dougherty of the CIA for a secret study of transportation technology in several western countries including Canada, which is to include the names of institutions and scientific personnel involved in developing transportation technology in each country representing potential technological or economic threats to the United States. Has the government requested an explanation from the United States about the nature of and reasons for this secret study and, particularly, if this study is innocuous, why is it to be conducted

January 31, 1975
Oral Questions
by the spy agency instead of the departments of commerce or transport?
Hon. Allan ]. MacEachen (Secretary of State for External Affairs): Mr. Speaker, I have made some inquiries about a newspaper report alleging such a study. It may be the same research project or study to which the hon. member refers. The study or research project has to do with information that is unclassified and publicly available.


Henry Perrin Beatty: Mr. Speaker, I would be glad to lend the minister a copy of the letter which Mr. Dougherty sent out. It. stresses that the submission is supposed to be considered top secret, in some cases, and that the personnel working on it have to be United States citizens, that no foreigners can be involved, and that if the companies which receive the contract solicitation do not apply they must send the letter back and treat it as confidential. In light of the fact that tenders were to have been submitted by January 15, surely the minister should check to see whether a contract has been awarded.
In light of the fact that de Havilland Aircraft, which is a ward of the Canadian government, is perhaps the most advanced in the world in STOL technology, has the Minister of Industry, Trade and Commence expressed his concern to his colleague the Secretary1 of State for External Affairs, over the fact that the CIA solicitation specifically request a report on STOL technology?


Alastair William Gillespie: Mr. Speaker, I am unfamiliar with that particular reference to the CIA.



KNOWLEDGE OF GOVERNMENT OF CIA INTELLIGENCE GATHERING ACTIVITIES

Henry Perrin Beatty: Mr. Speaker, may I ask the Secretary of State for External Affairs whether, to the best of his knowledge, since 1970, there have been any representatives of the Canadian government, particularly any who are stationed in Washington, D.C., who facilitated, encouraged or have given their tacit approval to, or have known about CIA intelligence gathering activites in Canada, other than the liaison people attached to the U.S. Embassy in Ottawa?
Hon. Allan ]. MacEachen (Secretary of State for External Affairs): Mr. Speaker, the answer to that is yes, there is no knowledge of any CIA activity in Canada, except that of the well-known liaison officer who is established here as a liaison officer only.



FINANCE


Mr. Max Saltsman (Waterloo-Cambridge):: Mr. Speaker, I should like to direct my question to the Minister of Finance, and it relates to what appears to be bad faith on

the part of chartered banks regarding loans to small businessmen. Since 1973 the chartered banks have maintained a differential of between one and 1per cent in the prime interest rate as between small and large businesses. Now that the prime rate is dropping the chartered banks are closing that gap so that the differential is now only one-quarter of one per cent. Is the minister aware of this and, if so, does he intend to make representations to the bank to maintain the differential for small businesses?


John Napier Turner: Mr. Speaker, the differential has not always been as wide as the hon. gentleman alleges. In any event, I am going to be attending my weekly meeting this afternoon with the Governor of the Bank of Canada, and that is one of the subjects I am going to bring up.



CANADIAN NATIONAL RAILWAYS


Mr. John A. Fraser (Vancouver South):: Mr. Speaker, in view of the fact that many Canadian National workmen are now back at work, for example in my own province of British Columbia, and in view of the concern as to whether whole scale legal actions for damages against these workers who have returned is conducive to easing the situation, could the Minister of Labour advise whether his officials are now prepared to discuss the matter with the CN and union executives with a view to limiting legal actions to those areas where there is continued defiance of the terms of the collective agreement?


Hon. John C. Munro (Minister of Labour):: Mr. Speaker, I do not believe the Canadian government should dictate to the CNR in respect to the manner in which it should proceed legally against employees they feel are in breach of our Canadian labour laws. I might say, however, that the hon. member's representations will no doubt be noted by the CNR.


John Allen Fraser: Mr. Speaker, could the minister advise whether his officials have now determined exactly which officials of the Brotherhood of Locomotive Engineers actually encouraged their membership to strike illegally?


John Carr Munro: Mr. Speaker, again I would advise the hon. member that the CNR might well take note of the hon. members representations, but it would be a function of the CNR to investigate matters of that kind.



AIR CANADA


Mr. Jack Murta (Lisgar):: Mr. Speaker, I should like to direct a question of a somewhat supplementary nature to the Minister of Transport. In view of the fact that Air Canada has deemed it necessary to cut approximately 145 flights per week from its schedule because of the forecasted deficit of some $9 million for the year ending 1974,
January 31, 1975

reportedly caused by increase in fuel costs, despite the fact that Air Canada has carried more passengers and has received fare increases during that period, does the minister feel that an investigation or, at the very least, an inquiry into the airline's operations would be warranted at this time?


Jean Marchand: Mr. Speaker, the operations of the public airline is followed on a daily basis by the Air Transport Committee of the Canadian Transportation Commission, so I think what the hon. member is asking already takes place under the law.


Jack Burnett Murta: Mr. Speaker, since I am not in a position to ask the Air Transport Committee of the Canadian Transportation Commission what it is going to recommend, or what it intends to do, and since the minister has said that we lack an over-all national policy, what corrective measures does the minister and the CTC envisage as far as Air Canada's economic position is concerned? Will we just carry on with increasing air fares as the only remedy in so far as the total operations of Air Canada are concerned?


Jean Marchand: Mr. Speaker, I do not think that Air Canada is the only airline to increase its fares. I think they have all increased their fares. They must file these increases with the CTC; that is the normal procedure. If this House is ever asked to discuss the Transport Act, and changes it, maybe at that time it would be possible for me to intervene.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Thursday, January 30, consideration of the motion of Mr. Turner (Ottawa-Carleton) that Bill C-49, to amend the statute law relating to income tax, be read the second time and referred to committee of the whole.
Flora Isabel MacDonald: Mr. Speaker, the bill before us must be judged as one of the significant measures designed to implement the government's budget proposals announced last November 18. The Minister of Finance (Mr. Turner) has declared that the essential objective of the budget is to deal with the twin problems of inflation and slow growth, and he has certainly pinpointed the problem. In an extraordinary feat once believed impossible by economists, the Canadian government has managed to achieve both high inflation and rising unemployment simultaneously. This has the appearance of an apparent paradox but its effects are real enough. Nowhere is this more evident than in the field of housing. Figures released last week by Statistics Canada show that the price of a new house rose by over 80 per cent in many major Canadian cities in the last three years, yet at the same time housing starts were down 18 per cent last
Income Tax
year, from 1973, and starts in urban areas last December were 46 per cent lower than in December, 1973.
This great reduction in housing starts means that acute housing shortages will be experienced in Canadian cities throughout the whole of 1975 and well into 1976. The Canadian Conference Board predicts we will achieve only 180,000 starts this year, compared with 268,000 two years ago. What has the government done? The Minister of State for Urban Affairs (Mr. Danson) seems oblivious to the crisis proportions of this situation, since his only response so far has been to revise his departmental objectives down to the 210,000 level, a target he considers within the realm of possibility. This is in spite of the fact that the Economic Council of Canada estimates that Canada needs to build at least 250,000 new houses a year from now to 1981 to meet the demands of a growing population.
The minister must be aware of the emphatic statement by the provincial housing ministers yesterday that 260,000 new homes must be built next year to meet the current need. They declared that the initiative in this area must come from the federal government. A slump of this magnitude in the residential construction industry has disastrous consequences for all other sectors of the economy. It directly relates to the lumber, textile, furniture and other ancillary industries. We have seen the tragic repercussions, socially and economically, in other areas as a result of the slowdown in construction. This has led to disruption and dislocation, slowdowns and lay-offs in other sectors of the economy.
Because the construction industry is highly labourintensive, the slump has fed rising unemployment, with a resultant lowering of income and expenditure. This multiplier effect has had a dampening impact on the rest of the economy. Housing has a major influence on capital flows. Construction contributes $21 billion to the gross national product, and with the current decline in this industry there is less growth in the economy, less productivity, less employment, less consumer spending. The situation is serious, yet the proposals in this budget and bill are completely inadequate to meet the problem.
We were presented with a budget in which every measure is a half measure, every step to stimulate the economy is a half step for fear of an inflation which the government refuses to tackle head on. The most charitable thing that can be said about the measures relating to housing in this bill is that they completely lack direction. To be less charitable, their goals are contradictory and the tools they employ are inefficient. Consider the goals. On the other hand, with the $500 grant for first-time home buyers, the opening up of the high ratio mortgage loans, the reduction of the building materials sales tax and the subsidies on mortgages, the government appears to be attempting to increase demand for housing; yet on the other hand, the registered home ownership savings plan provided for in this bill is aimed at deferring demand. In short, we have another ad hoc mixture of proposals working one against another with no clear direction.
Consider the $500 grant for first-time purchasers of new homes. This grant has severe limitations as the restric-

January 31, 1975
Income Tax
tions on the maximum housing price make it inaccessible to the majority of Canadians trying to purchase a home. Many, many Canadians have found this to be a discriminatory proposal since it applies to new housing only. The great majority of first-time buyers look to existing housing, which is normally less costly for this first purchase. The proposal motivates those persons better financially established to look to the higher-priced, newer homes. Incentives to continue this upward mobility would do much more to stimulate housing starts than trying to direct first-time purchasers to new homes. We urge the minister to consider seriously revising this proposal introduced last autumn to make it applicable to existing as well as to new homes.
AHOP has the same kind of restrictive measures and its lack of success is borne out by the number whose applications have been approved. There is no denying that there have been a great many applications but the approval rate is negligible. Take the figures for October 1974: 14 approvals in Halifax; 235 in Montreal; 42 in Hull; 52 in Regina; 32 in Vancouver; 14 in Winnipeg. But zero in Toronto; 7 in St. John's; 2 in Victoria; zero in Thunder Bay; zero in Kingston; zero in London; zero in Ottawa; zero in Moncton; zero in Oshawa; zero in Windsor. What I want to impress on the minister is that because of financial restrictions in these programs, they provide little or no impetus to the building industry.
The reduction of the sales tax on building material to 5 per cent was another half measure. Why was it not completely dropped, resulting in greater savings to the home buyer, more stimulation of the housing industry and, equally important, elimination of the elaborate and costly machinery required to collect that tax?
Just as the over-all goals of this budget are contradictory, so are the tools which it uses. Let us look at the carrying costs of land. There are several contradictions in the proposal, which eliminate the possibility of charging carrying costs on undeveloped land against other income for tax purposes. The Minister of Finance declared that both he and the Minister of State for Urban Affairs are persuaded that this measure will assist in bringing more land on to the market quickly to increase residential construction. But I am not nearly as persuaded as the minister. In fact, this kind of measure, by imposing an additional burden on the already severely strained requirements of many small builders for working capital, could force large numbers of them out of business.
The residential construction industry is now entering a period of severe economic distress. This provision will considerably exacerbate the existing liquidity problems, and while the large, well-financed development companies will undoubtedly survive, this measure could well force out of business many small builders who build the bulk of Canada's housing stock. In this case, the measure would have exactly the opposite effect of that sought by the minister, namely, it will decrease Canada's capacity to build homes just at the time when we need an increasing number of them.
Clearly, this provision should be applied in its present form only with regard to land speculators, and not with respect to land developers. This measure is particularly hard on small developers who make up about 90 per cent
[Miss MacDonald (Kingston and the Islands).;
of the market. Under this legislation, many of them will be penalized for delays in the development of land which are often caused by the lengthy processes involved in obtaining approval at the complex maze of municipal and provincial levels in servicing land and permitting development.
The second measure touched on in this bill and to be spelled out in regulation-that is, the proposed tax shelter with respect to apartment construction-is also a model of inefficiency. In the words of the Minister for Urban Affairs himself, the measure whereby capital cost allowances on rental construction can be charged against income from other sources is designed to "provide a quick and strong incentive to the construction of new rental housing units." That is an admirable goal, but this is a very ineffective tool with which to achieve it. This tax shelter is proposed to apply only to new, multiple-unit residential buildings begun before December 31, 1975. Unless a builder is virtually ready to proceed now with a building planned and already cleared through municipal and provincial authorities, it is unlikely that the building will be under construction by the end of 1975. It is not unusual for municipal and provincial building clearances to take up to two years. Far from encouraging the construction of new units, the timing of this proposal is such that it will barely apply to projects already under way. To be meaningful, this provision should apply for a much longer term.
On the whole, the provisions in clause 100 of this bill to set up the registered home ownership savings plan must be viewed as a step in the right direction. They set a good precedent of making tax deductions available for young couples to offset the cost of buying a home, but the plan in many ways is badly drafted. The thrust of the program is to discourage people from purchasing a home for some time; hence it will have a negative effect on the housing industry in the short term. The crisis is upon us now: we cannot wait for three, four or five years to tackle it.
Secondly, according to the legislation, the deadline for beginning such a plan this year would be March 1, just over a month away, yet it is unlikely that the government will be able to examine and approve the plans which each bank and trust company may have for implementing this bill, in time for many people to deposit their $1,000 before March 1. I hope that the government and the minister will take this into account and extend the deadline past March 1 this year. I want to make it clear, however, that we view the plan as only the barest beginning of the series of steps which should be taken to assist moderate and low-income groups to buy their own homes. A much more effective measure, and one this government could well afford, would be to make municipal taxes and a portion of mortgage payments tax deductible for those families whose income is low enough that they are spending more than 25 per cent of it, the accepted standard, on shelter costs. This is where the government should be directing its attention. Instead, we have in this bill piecemeal measures without clear direction and without the strength adequately to stimulate the housing market. It looks more like a public relations gesture than an economic program.
January 31, 1975

The government appears oblivious to the fact that the problems in the supply and demand aspect of the housing industry are caused by high interest rates and a subsequent shortage of mortgage money. Until direct measures are taken to reduce current mortgage rates and to make mortgage money available, housing starts will continue to decline and housing will continue to be priced beyond the means of many thousands of Canadian families. Moreover, by restricting AHOP and other programs exclusively to the buyers of new homes, the government has completely ignored the many families who can afford to buy only an older house. They have done virtually nothing to ease the impact of inflation on existing home owners. The proportion of public housing in this country remains at 2 per cent, one of the lowest in the western world, and there is little or nothing in this budget to ease the impact of inflation on the shelter costs of low and middle-income earners.
Instead, once again the Minister of Finance is using residential construction as a convenient safety-valve through which to manipulate the level of investment in the economy. Instead of co-ordinating residential construction through an over-all plan for housing, the government has put together another series of ad hoc measures which from time to time it calls a housing policy. Both the Economic Council of Canada and the Canadian Council on Social Development have warned against this approach. By stimulating demand for housing in fits and starts, the government simply makes an already volatile industry more unstable and unnecessarily raises the price of houses, which becomes increasingly difficult to reduce.
It is time the Canadian government developed an overall policy for housing which would guarantee consistent and continuous growth over the long term in that sector. Many economists, including John Kenneth Galbraith, have pointed out that the greatest concern of industry today is not so much immediate profits as stable growth over the long run. To achieve this there must be a certain consistency and regularity of investment in each sector of the economy, and there must be a certain predictability about where and how the government intends to encourage investment. To date we have had no such consistency from this government; we have had no over-all plan. This is particularly grave in the area of housing, where what is being affected by this ad hoc series of government policies is the basic need of Canadian families for shelter.
An emphatic condemnation of the housing policies of this bill and this budget comes from Professor T. A. Wilson, who is director of the Institute for Policy Analysis at the University of Toronto. If these are not credentials enough, he is also a member of the famous group of seven economists who personally advise the Prime Minister (Mr. Trudeau) on economic matters. Professor Wilson estimated that investment in residential construction would be down by over 17 per cent in 1975. Then, after careful examination, he estimates that these budget measures will change that figure by only 1.23 per cent-a negligible amount-for a total decline this year of over 16 per cent in residential construction. The need is already great and this is bad news for the Canadian economy and for the thousands of Canadian families who will be seeking homes and apartments this year.
Income Tax
I urge the minister to re-examine the restrictive measures he proposes to ease the crisis in the construction industry, and to recognize the critical demand for stimulus to housing starts, particularly for people in the lower and middle-income brackets. If my plea is not sufficient, I would urge the minister to pay attention to the remarks of his colleague, the Minister of State for Urban Affairs, yesterday when he stated that the biggest problem he has to face is the government spending priorities established in cabinet. I would urge, indeed I would plead with the Minister of Finance to rearrange those priorities so that housing is placed at the top.


Eldon Mattison Woolliams: Mr. Speaker, we have just listened to a very learned speech ably presented by the lady member of the opposition. I think all hon. members would agree with me, particularly the male members, that it is unfortunate that we do not have more ladies in the House of Commons. Today, in speaking to this bill, I would like to deal with a question which was very ably dealt with last night by the hon. member for Qu'Appelle-Moose Mountain (Mr. Hamilton). It was also dealt with by the hon. member for Waterloo-Cambridge (Mr. Saltsman). I speak of the question of tax policy as it affects the exploration and development of crude petroleum and natural gas and security of supply for Canada. At the outset I would say that we are in a very fortunate position in Canada. We are one of the few nations in the world, if not the only one, that is self-sufficient in crude petroleum and natural gas. Not only does this guarantee us a fairly high standard of living, but it enables us to speak in various groups and conferences, in confrontations with our neighbours and people who are not so neighbourly, in a way that will maintain the economic welfare of the nation and also guarantee peace and security.
Mr. Speaker, it was my good fortune recently to attend a NATO conference in Europe with members of the Conservative Party and the Liberal Party. We all came away with the impression that the supply of crude petroleum, which today is the main economic thrust in the western world, is more important in the world than armaments. Fifteen countries were represented at the NATO parliamentary session which met in London. We then proceeded to Lahr and Baden-Baden in Germany where Canadian troops are stationed. At the parliamentary sessions in London and in Germany, the Canadian members of parliament, of which I was one, together with the delegates of other nations, were briefed on the economic, political and defence positions of the western nations and, indeed, the economic, political and defence positions of the communist bloc nations.
The point I wish to make is that the question of energy supply and energy security was the main subject discussed. It was really the main thrust in reference to the economic and political welfare of the western world and its ability to continue to create and maintain the image of strength which has been the major factor in its ability to negotiate world problems and avoid a third world conflict which would certainly spell the destruction of our civilization. Security of supply of energy is so important to this

January 31, 1975
Income Tax
point that the tax policy of this nation in the very near future will determine whether we shall continue to have adequate supply and to be the only nation in the western world to be self-sufficient in energy.
The most important decision the cabinet of Canada has made in the last few years, in my opinion, is the decision to retreat from the hard position they took on taxing resource companies. As a result of that initial decision, exploration and development was brought to a halt. Geologists and economists predict that by 1980 Canada might be dependent on the Arab nations for oil. They are now charging $10 and $12 a barrel for petroleum, while western Canada receives only $6.50 either in the domestic market or the export market.
I want to direct my few words today to the question of security of supply of energy, its importance and its guarantee of economic health for Canada. The balance of power in the world no longer depends on armaments alone; energy has become equally important as the main factor in determining whether we are going to have war or peace, depression or prosperity. In the United States right now there is not only a recession in most states but a depression. We are doing better in Canada because of our self-sufficiency in energy. In passing, I might mention that the third dominant factor about to emerge is food supply and its availability. However, time does not permit me to go into this third factor today.
Economists point out that under the present tax structure it costs the producer in Saskatchewan 7 cents a barrel to produce oil. I do not know whether this is correct, but I have been advised that the pumps move slowly in Saskatchewan in the hope that some day this policy will be revised or the government will be defeated and we will have a reasonable and sane tax position that will encourage production, exploration and development.
The indictment against the Trudeau administration and some provincial governments will be that in 1974 and 1975 their leadership lacked the vision to see that Canada's prosperity had resulted in our being one of the few nations in the world that is self-sufficient in energy; that is, self-sufficient in oil and natural gas. We have been self-sufficient for a number of years because our resource corporations have had enough cash flow to explore and develop the petroleum industry. The indictment will be that the Trudeau government, for the purpose of purchasing votes, for pride, or for just plain cussedness, planned a tax policy to drive the capital flow, the personnel with know-how, the technology, the tools and equipment out of Canada to explore and develop petroleum elsewhere, leaving us in a situation where we must now live on our proven reserves until they run out.
This tax policy must be brought to an end. I congratulate the Minister of Finance (Mr. Turner) in reference to the Syncrude project, but I say it is discriminatory and that a policy must be brought in to cover all companies engaged in exploration and development to include not only the tar sands but also the finding of oil by the orthodox method of drilling. If we want to assure that corporations shall use their profits for development and exploration, surely rules and regulations could be incorporated into the tax structure to make sure that they do not put the profits in their jeans, as it were, but for further

exploration and development. This federal tax policy must be abandoned.
The three men who must take responsibility at the federal level for this lack of vision are the Prime Minister (Mr. Trudeau), the Minister of Finance and the Minister of Energy, Mines and Resources (Mr. Macdonald). The latter two may be Trudeau's puppets, but whatever they are they are going along with a policy that in the very near future will wreck the economy of this nation. No wonder the Minister of Finance is thinking of quitting and going to the World Bank. Security of supply of energy in the western world does not only promote peace but also economic stability. Canada faces a major depression if this tax resource policy is not abandoned.
The confrontation between the provinces and the federal government on the right to tax, the right to gouge the resource cash flow, has driven out drilling rigs, technical know-how, personnel and capital so that exploration and development are quickly coming to a standstill.
I have a clipping here from the Financial Post of November 30, 1974, which confirms what I say. Time does not permit me to read all of it, but the headline is pretty explicit:
Wind-down begins for frustrated oil industry
The article begins:
The Canadian oil industry, one of the fundamental economic forces in the country, seems about to blow its gasket.
The pressure on the industry became critical last week with the federal budget decision to disallow provincial oil royalties as deductions in figuring federal income tax-double taxation, in effect.
This was followed on the same day by a defiant constitutional battle-cry-
It goes on to point out that 96 per cent of the drilling rigs-and the companies are owned by Canadians-have left Canada to go to the United States, the North Sea and elsewhere to drill for oil. This will leave us in the position that in the very near future we will have to import oil from other areas. One of the most striking articles on this subject appeared in Time magazine on January 6 this year. Mr. Speaker, I do not know what my friend behind the curtains said just now, but whatever it was does not matter. This is too serious a problem for me to digress. This is the financial situation in which we find ourselves. The article in Time reads:
[DOT] <1240)
Moreover, Saudi Arabia's new wealth is simply the most spectacular symbol of the rising fortunes of the OPEC nations.
The oil cartel, composed of oil producing nations, is gouging industrialized nations to such an extent that Britain, France, the United States, Japan and Italy are heading for a slump. I continue reading from this article:
With their surplus of some $60 billion last year, they took in $164 million more each day and $6.8 million more each hour than, by best estimates, they can currently spend. At that rate of accumulation, the "Economist" of London calculates, OPEC could buy out all companies on the world's major stock exchanges in 15.6 years (at present quotations), all companies on the New York stock exchange in 9.2 years, all central banks' gold (at $170 an ounce) in 3.2 years, all U.S. direct investments abroad in 1.8 years, all companies quoted on stock exchanges in Britain, France and West
January 31, 1975

Germany in 1.7 years, all IBM stock in 143 days, all Exxon stock in 79 days, the Rockefeller family's wealth in six days-
We can be sure that the fortunes of Canada will be affected, as well. The point is this: we must be self-sufficient in energy. This must be our objective. Let me put forward the most serious point I have brought forward in my 15 years in the House of Commons. We have about 300 billion barrels of crude petroleum locked up in the tar sands, far more than the 60 billion barrels of crude oil in the Arab countries. If we can introduce tax policies which will encourage the activities of consortiums like Syncrude, we shall all be better off. Let us avoid confrontations between provinces.
The Minister of Finance can do nothing more important than encourage the development of our resources. I have criticized him in the past. Members on my side have not always agreed with my position. We in the Tory Party do not always think alike, because when everyone agrees it shows people are not thinking. Nevertheless, I have encouraged the minister to implement policies which will lead to the production of more oil. Questions have been raised concerning the production of petroleum-type fuels from natural gas. Let us remember that it costs $9 to produce one barrel of oil from the tar sands. I think it makes sense to try to find oil from conventional sources, as such oil can be produced at $3 or $4 per barrel. Remember that at one time it cost $600,000 to drill an oil well; now it may cost up to $2 million. What I am driving at is simply this, that security of energy supply from western Canada is important to Canada's economic stability. The Syncrude project, an important project for the extraction of some of our potential 300 billion barrels of oil, is threatened. Tax policy which is stopping development must be abandoned.
Having referred to the article in Time magazine, let me now review some of the history of the oil industry. We have come a long way since 1946. In that year, crude petroleum production in western Canada had declined to a measly 18,000 barrels a day and nearly 95 per cent of Canada's oil needs were imported. Today, on the other hand, we are self-sufficient. We use about one million barrels of crude petroleum per day. In eastern Canada we export a similar amount. We need two million barrels of oil per day. Pursuant to the national oil policy which was devised in previous years, the needs of eastern Canada were met by imports from Venezuela and Arab countries-that being the cheaper way to provide eastern Canada with oil-and the needs of western Canada were met by western crude. We export one million barrels to the U.S.A. and we import one million; hence we are self-sufficient.
Let me review the history of the oil industry. In 1946, drilling had come to a halt. Imperial Oil had drilled 133 dry holes, each costing approximately $600,000. The directors of the company met in Calgary, to call a halt to the spending of money. They had almost decided to build a plant which would produce synthetic gasoline from natural gas. The geologists attending the meeting convinced the directors to drill another well, even though 133 had already been drilled. The directors agreed and south-west of Edmonton, at Leduc, a successful well was drilled which at once caught fire. Americans were brought in to put the fire out. But that fire lit was an economic fire for
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Canada. More important, that directors' meeting in Calgary, historically almost as important as the meeting leading to confederation, led to Canada becoming self-sufficient in energy.
We play around with the subject of energy as if it is not important. We must avoid confrontation between Alberta and the federal government or between the provinces. After all, the energy we produce in the west is important to Ontario and equally important for the maritimes and Quebec. It is important to us because it means we can be self-sufficient in energy. The United States, under President Ford's proposals, may implement gasoline rationing. We do not hear that kind of talk in this country. The meeting in 1946 in Calgary historically was just as important as Columbus's discovery of America. He saw a light and said he would sail on-" A light. Sail on, sail on"-He gave the world the grandest lesson, that is, do not quit just before success.
I ask the government to take another hard look at its policies. Let it, as the hon. member for Qu'Appelle-Moose Mountain suggested so eloquently last evening, come to an agreement with the provinces in order to encourage exploration, to prevent the leaving of oil rigs as described by the Financial Post-drilling rigs that are leaving Canada for elsewhere.
At present, production in Saskatchewan is threatened because of the royalty policies of the Saskatchewan government and the federal government's tax on royalties. The extra cost of producing oil which has already been found is undermining the viability of the industry in Saskatchewan and this, in itself, would be enough to defeat any government if an election were called right now. Therefore, the national development of our energy resources is of top priority for Canada's continued economic health.
We talk about increasing benefits for pensioners, those on fixed incomes and those on social welfare. Why can't the people realize that much of our wealth can only come from the development of our natural resources? Our industry depends on energy. The government should consider, again, its taxing policies and leave the average wage earner of this country more take-home pay. After all, what counts is not the gross wage but what is left after taxes. My daughter is a secretary in a law firm in Edmonton and works-Liberal members may be interested to hear this-for the only Liberal candidate in Alberta who did not lose his deposit in the last federal election. She did not work for him at that time. She cannot take credit for that. The answer is this: I have looked at her pay cheque, and when you see the federal deductions one must appreciate it is impossible for her, with a husband going through law school, to live on the net pay. The same applies to the girls who work for my firm, as well as for firms all across the nation.
Let's get with it. It is possible, if we follow proper economic and financial policies. We were ridiculed during the election for our stand in favour of wage and price controls. I was told that in St. Catharines, when the Liberals spoke in criticism of Conservative policy, they talked about wage controls to the wage earners and price con-

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trols to the farmers. As a result, three or four of my good friends, including men like Trevor Morgan and Ken Higson, were defeated. They were beaten by that kind of propaganda.
I beg the government to take a sane look at the tax policies of the nation as they affect individuals and corporations. I notice we do not hear anything today about corporate bums from hon. members to my left. The words of Mr. Lewis are forgotten. Today, he is like a lawyer with a closed-out file. And why? Because the unions in Oshawa are saying, "Give the corporations a tax cut or else their employees will be out of work." Broadbent has bent the policy because he realizes the economic reality behind the politics. Oh yes, it was a beautiful song at the time, because it was useful to be able to blame the corporations to win votes. For my part, Mr. Speaker, I am thankful for the kind of system we have. Behind the scenes I talk to members of all parties, especially when we get away from the House of Commons and go to a conference. I find we all think alike. We all have Canada at heart. Let us not, out of pure cussedness and politics, break the economics of this country.


Donald W. Munro: May I call it one o'clock, Mr. Speaker?


Mr. Speaker:: There seems to be agreement that we might call it one o'clock. The hon. member will have the floor at two o'clock this afternoon.
At one o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
Donald W. Munro: Thank you, Madam Speaker. It is a privilege for me to take part in the debates when you are in the Chair.

In rising to take part in this debate, I wish to indicate first of all that I very strongly endorse some words which were used by the Minister of Finance (Mr. Turner) in his budget statement. With your permission, Madam Speaker, I should like to quote these words because I think they are very important and have given the keynote to the approach that my party takes to the bill before us. In his budget speech, as reported at page 1422 of Hansard, the Minister of Finance said:
-the fiscal stimulus should come primarily from a further cut in taxes rather than from an additional increase in expenditure. I believe that tax cuts can help to reduce prices and costs directly or indirectly, and thus slow down the upward momentum of inflation. An indiscriminate or excessive increase in expenditures would exacerbate the pace of inflation.
That is what he says, but methinks our Minister of Finance speaks with forked tongue.


Mr. McKinley:: And the parliamentary secretary.


Donald W. Munro: The parliamentary secretary is not even speaking. The minister talks about
(Mr. Woolliams.]
reduction in expenditure. Last evening, in preparation for this debate, I made some simple calculations extending from 1968 to today in relation to the expenditures of this government, adjusted in accordance with one of the measures of inflation, the consumer price index. I found that in 1968 government expenditures amounted to $10.7 billion. If they were adjusted by the then operative consumer price index, they would have amounted the following year to $11,085 billion, or more or less $11.1 billion. The following year they would rise to $11.4 billion; then $11.8 billion, $12.8 billion, $13.8 billion. Finally, this year we could have expected, on the basis of the straight inflationary features to which we have unfortunately had to accustom ourselves, expenditures amounting to $14.9 billion-almost $15 billion.
But what do we actually find, Madam Speaker, over this particular period from 1968 to today? I know it cannot all be laid at the door of the present Minister of Finance, but certainly the latter figures show very clearly that a large portion can. I would say that by 1971 he had reached this magical $14.9 billion. By then this Minister of Finance was on the treasury bench as Minister of Finance and things started to take off. Instead of the $14.9 billion or $15 billion expenditure, we see today figures showing $26.3 billion. So the minister says on the one hand that we need to cut expenditures because this is going to depress inflation, yet this is the course he has been following through his three years in office. If this is not inflationary budgeting-almost doubling since 1972, from $14.8 billion to $26.3 billion, during his term of office-I have yet to see what is. And the minister makes comments like this!
It is evident that the government must pull in its belt, that it must cut expenditure. In this current budget he proposes to agree to reduce the tax levy by 3 per cent. My colleague from York-Simcoe (Mr. Stevens) has already commented on this aspect and said that the figure must be much higher. I, too, feel that the tax cut must be much more than that. However, I do not like to criticize without coming forward with positive, workable, practical alternatives and in my remarks this afternoon I am going to zero in on one particular sector of the economy in our society, namely, personal income tax and a special sector of our society subject to this form of income tax. In addition, I have another objective in view besides just cutting down government expenditure. I should like to see restored in this country the saving ethic which has been withered away. Others of my colleagues, and the parliamentary secretary as well, will be dealing with other aspects but I am going to confine myself to this particular sector of our community.
I have no patience with what I think can be described as the "leaning society"-those who lean on other people. I refer to a society whose citizens are encouraged to lean on governments for all their wants and requirements. This was not the way I was brought up and it is not the way I want to go on living. At the same time, I hasten to add that I strongly approve and firmly and heartily support every social service-and they must be available-for the needy in the community. The needy will long be with us and we must make provision for them. I do not criticize that aspect at all. But to make the whole of society lean on government for its requirements is, to my way of thinking, deplorable. We should never overlook the needy. But
January 31, 1975

in providing for them we must not lose sight of that other class of citizen, if you like the fortunate, the provident, those who have laid aside support for their later years so that they can enjoy them.
What is happening now to that class of society? What they have put aside has no value any more. It is being taxed out of existence and what is left to them is being withered away by inflation, fuelled-if I may use a term which has become rather common in these days of energy problems-by excessive government expenditure. I therefore feel that we must commend and encourage saving for one's future. But no encouragement is being given to savers today. Why is this so? Is it the desire of the government to make everyone dependent? Thankfully, there are still in our society those who are unwilling to become dependent and who still want to enjoy the independence for which they have striven. In one way or another we must encourage savings and see that there is value in those savings when the time comes to use them.
My proposal this afternoon is that taxes for all over 65 years of age be waived; that is, income taxes, capital gains taxes, taxes on superannuation, annuities, bonds, revenues from stocks and other investments, taxes on all revenue from all sources, and sales tax as well, should be waived for any person over 65 years of age. What I am anxious to do is put back in the hands of those over 65 years of age the funds that they have put aside and have been looking forward to using when they are no longer able to fit into the industrial life of our country. This would restore purchasing power in the hands of those who have struggled to lay aside savings in those days when savings earned more than Brownie marks. Saving was a virtue that was instilled in us in those days, a virtue which today is eroded and often even scorned. This is done by the manner in which the government more and more forces dependency on us.
This is one way to restore that virtue which, to my way of thinking, has much more value than this government is prepared to accord it. In short, what I seek to do with my proposal is increase the disposable income for the elderly, those who are no longer able to work full days in industry and who are living on fixed incomes, sometimes meagre fixed incomes but always dwindling fixed incomes, thanks to this government. I received a letter the other day from a pensioner in my riding about extra costs. I found it very moving. I suppose I should have thought of this before, but he put it in writing for me. He mentioned the repairs he needs to keep his house in order; to keep the rain and the wind from coming in. He referred to the difficulties he is having in paying for these repairs at current wage levels, and the difficulty he is having in using his savings to pay for these extra costs. He can no longer do the repairs himself. He once did them, as we all have done in our time. This government is depriving people of that sort of means to pay these extra costs, both by reducing their incomes and by allowing inflation to outstrip their capacity to pay.
I am sure the minister or his parliamentary secretary is going to say that the load has been reduced by extending the income tax deductions to all taxpayers and by permitting the first $1,000 of interest to be free of tax. At the
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1974 bank short-term loan rates, this would be the equivalent of the interest on about $10,000. I suggest there are many people brought up in the work ethic who have worked for 35, 40 years and even more, who have been able to lay aside a bit more than that. They may in one way or another have an independent income exceeding that $1,000, but anything in excess is going to be taxed.
Furthermore-and I would like to point this out very clearly-there are a number of gimmicks in respect of this particular allowance which perhaps the Canadian people have not yet appreciated. They will become aware of this when the time comes to fill out their income tax forms three months from now. They will find that the total entitlement to that $1,000, if it is their due, is to be reduced by a number of interest charges. For example, if they already claim they are paying interest on their mortgages, the amount they are paying as interest will have to be deducted from this $1,000. This is a gimmick, a nice easy way of fooling the public, but the public has to be warned before it is too late.
Also, the minister or his parliamentary secretary, if he is talking to the minister these days-they may have to talk to that select group in the Prime Minister's office for this purpose-ought to get together with the Minister of National Health and Welfare (Mr. Lalonde) to persuade him to lift the ceiling on earnings of pensioners so that pensioners may, through part-time work, supplement their incomes without penalty or fear of losing their guaranteed income supplement. This would serve a variety of worth-while purposes. It would restore to the pensioner his feeling of usefulness in society. Too often our pensioners feel they have been cast aside and can no longer fill a role in society. They can, and they should be encouraged to do so. They want to do so; but if they do, what happens? They get into an income bracket and either lose their guaranteed supplement or, worse, the Minister of Finance gets on their tails and requires them to pay income tax.
We should exempt these pensioners from taxes. This would enable pensioners to supplement their incomes without penalty and would help them to meet their daily needs. Because of the type of work to which pensioners might be limited, this would free others to work more productively at full-time jobs. I just pick this out of the hat as one example: pensioners might very well look after child-care centres, so that those who are now working in these centres could earn more wages for themselves and their families. This could be a part-time job for pensioners. This is what we must search to do for them.
There is another area I commend to the parliamentary secretary and, through him, to the minister, and that is the example of consumer price indexing which I used in my calculations last night. The minister has already borrowed a number of good features from this side of the House which he has put into the Income Tax Act. He borrowed the idea of indexing income taxes. This is fine, and I hope the minister is not immune from borrowing or accepting other good ideas when he hears them. Let me give him another good suggestion. The consumer price index is being used at the present time to index pensions so they will increase in accordance with inflationary pressures, and it is used in a variety of other ways. Let us look

January 31, 1975
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at its effect on pensions. Is the minister aware that the current consumer price index, as revised in 1969, is designed to deal with specific classes of persons as set forward in a study prepared by the Dominion Bureau of Statistics, which I feel I still have to call it?
It is designed to meet the following three criteria: first of all, those living in Canadian urban centres with metropolitan populations exceeding 30,000; second, families ranging in size from two to six persons, consisting of any combination of adults or of adults and children-think of this in terms of pensioners-and third, those with annual incomes in 1967 ranging from $4,000 to $12,000. That is a fair spread, but there is an acknowledgement that it leaves out about 12 per cent at one end and about 14 per cent at the other end of the community. It is the 12 per cent at the lower end that I am concerned about today. These criteria fit only vaguely the class of persons I am concerned about today-sometimes two pensioners, sometimes only one; very seldom is it a matter of children. It is rarely a family of six to which these criteria are geared.
The other feature of the CPI which I find inapplicable to pensioners and those on limited and fixed incomes, and which I want to draw to the attention of the minister, is the weighing of the commodities in the index. I went to the trouble of finding out how the index was made up, and I got the shock of my life. Thinking of it from the perspective of the pensioner, I find it shocking. We find here 25 per cent allowed on food, 31.4 per cent on housing, 11 per cent on clothing and 15 per cent on transportation of which 3 per cent is for gasoline. I am thinking of the pensioners in my riding who have not been near a gas pump for a long time, unfortunately.
The following is ridiculous, laughable: 4 per cent on health and personal care, 6.8 per cent on recreation, education and reading, and 5.9 per cent on tobacco and alcohol. That is how it is broken down. You have to be kidding! The facts of the situation for pensioners are quite different from that particular breakdown. I see the hon. member for Winnipeg North Centre (Mr. Knowles) is walking out. I hope he is not doing so because he thinks I am accusing him of spending 6 per cent on tobacco and alcohol. In fact, he is probably saving that amount on tobacco and alcohol.


An hon. Member:: A little more, now.


Mr. Knowles (Winnipeg North Centre):: Others must be pretty high to make up for my zero.


Donald W. Munro: There is another element in this particular breakdown. One-third is supposed to go on housing. If they are renting then they may possibly be paying a third of their income, perhaps even more; but if that section applies to house owners-and many pensioners are house owners-I suspect that the proportion would be entirely different. Their houses are probably paid off and they only have municipal taxes to deal with. Almost the same amount is allowed for recreation, education and reading as for tobacco and alcohol. In the breakdown we find that 15 per cent is allowed for transportation and 4.5 per cent for health and personal care. The whole formula is wrong for pensioners.
(Mr. Munro (Esquimalt-Saanich).]
Let us look at it even more closely within some of the items of the breakdown. Under the item for food, for example, 21 per cent is presumed to be spent at home and 4 per cent away from home, eating in restaurants. That I cannot accept. That is not possible on a pensioner's income. In the breakdown, 7 per cent is spent on meat, 3 per cent on dairy products and 3 per cent on fruit. That does not add up, either. The high cost of meat may account for that, but we are not talking about that. It is presumed that 7 per cent of the disposable income is spent on meat. If they are eating meat at all, I suspect that they are spending a good deal more on it; but I fear, having been in some of the supermarkets in my riding and having watched some of the pensioners in my constituency shopping for their groceries, that they are not spending 7 per cent of their income on meat. They are looking at meat, thinking it would be very nice to take it home, and then putting it down and going to another counter.
Then, how much baby food do pensioners buy? Do they spend the same amount on it as they spend on sugar? That is what the consumer price index suggests. Here is another funny item. Do women on pension spend almost 4 per cent of their income on clothes and allow the men less than 3 per cent on clothes?


An hon. Member:: That is probably true.


Donald W. Munro: This is women's year. I think we should go back to equality at least. Do they need to spend anything at all on children's wear, although there is a provision here for 1.5 per cent of income on children's wear? Footwear for children is not to be included in that 1.5 per cent because it appears under a different heading. There is another breakdown for recreation on which 1.3 per cent is allowed, which includes bicycles, cameras and toys. Perhaps toys may be for grandchildren but I suspect they are not buying many toys for themselves, and very few bicycles.
One can study this index in considerably more detail. I have more particulars here that I would be very happy to bring to the attention of the government, but I think I have indicated enough so far to suggest that if we are to go on using the current consumer price index, we must weight it in favour of the lower and fixed income sectors of our population. I would prefer a pensioners' index which would adjust pension incomes in accordance with pensioners' needs in inflationary times. That, I think, is the ultimate objective-a pensioners' index.
I am not a statistician and therefore cannot reshuffle the weightings to create a pensioners' index at this moment, nor would it be possible in the time during this debate to work one out. I do submit, however, that the task must be done eventually. I suggest, meanwhile, that we should have soon, but preferably now, a weighted CPI favouring the lower income sectors of our society and discriminating against the higher income sectors, so that instead of being applied as a straight 10.8-if that is the annual increase in CPI-that it be, say, 14 per cent for the lower income people and down to 7 per cent for those on higher income.
I suggest that such a weighting of the CPI be used for all purposes, for indexing pensions, income tax levies,
January 31, 1975

superannuation benefits, pay increases in the public service both civil and military and, finally, that in the long run we work toward the compilation of a new and distinct pensioners' index tailored especially to the needs and the consuming pattern of pensioners. These are some of the positive ways which we might use to relieve the lot of the disadvantaged without burdening the treasury. So I am back where I started. Indeed, probably on balance we would be reducing the charges on the treasury by a considerable amount, thereby reducing government expenditures.
In summary, my plea is for a substantial cut in government expenditures, restoration of the saving ethic and elimination of the cult of dependency that is being nurtured in our society by this government, waiver of all federal taxes for pensioners, taxes on all forms of income, capital gains tax and sales tax, and an adjustment of the CPI or the development of a pensioners' index. Finally, in order to increase disposable income to pensioners, we should lift the ceiling on earnings of pensioners to allow them to supplement their income without fear of losing that little increment which they receive, the guaranteed income supplement.


Mr. Andy Hogan (Cape Breton-East Richmond):: Madam Speaker, the purpose of the bill before us is to effect changes in the personal and corporate income tax proposals in the November 18 budget. Before commenting on these changes I would like to say a few words about the assumptions which underlie that budget. You do not have to be an economist or a highly educated person to understand that when the Minister of Finance (Mr. Turner) proposes a budget, he has to operate under basic assumptions which really amount to forecasts by members of his department concerning, for example, growth possibilities, employment and unemployment in Canada.
One of the most important assumptions underlying the finance minister's budget of November 18 was that Canada would have a real growth rate of 4 per cent for 1975 and this would produce, in his words, approximately half a million new jobs. His budget made no forecast about the expected unemployment rate, but his deficit forecast for this year strongly suggests that we are going to have an unemployment rate considerably higher than the approximate 5.4 per cent which was being experienced when the minister and his staff presented the budget.
I think it is safe to say that we will have in the vicinity of 7 per cent unemployment in this country, which will bring us back to the days of 1960 and 1961 as an average unemployment figure adjusted for changes. Despite all his recent ballyhoo about the budget, that it has been designed to fight inflation and increase growth, the minister and those advising him are still old-time religionists regarding fiscal and monetary matters.
In fact, inflation is going to be fought by the minister by creating unemployment, but not so obviously as the government did during 1970 and 1971. They have at least learned that lesson; that was obvious in the budget. Nevertheless, the government is using monetary and fiscal tools up to a certain level, and it is going to talk
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about restraints in various sectors of the economy in order to control inflation. But in reality the policies and the lack of policies create increasing unemployment and you fight inflation by increasing unemployment and hope that prices will come down in this way. It is a beautiful game where you have your neighbour, the giant, who is able to play and has been able to play the same game until very recently. Of course, the stimulative measures taken in the United States recently will take at least six months to affect that economy.
I fundamentally disagree with the assumptions underlying the minister's budget. Many countries have organized in the Organization for Economic Co-operation and Development, known as OECD. The research people for this organization make forecasts for many countries in the world, including Canada. The Minister of Finance, in making his assumptions, has forecast our expected growth rate at 4 per cent. The OECD's most recent study suggests that instead of having a 4 per cent real growth rate in terms of output in Canada for this year, the best we could hope for would be a 1 per cent or possibly a 2 per cent growth rate. This would mean practically no new jobs created in Canada, and much higher levels of unemployment.
All of us can expect to hear in the next year from the Minister of Finance and from the cabinet that this increase in unemployment will be the result of an increase in the labour force rather than because of deficiencies in their own policies, unless they are corrected very soon by a mini-budget that will recognize that in the short run we can no longer fight the evil of inflation by creating more unemployment, and that fiscal and monetary tools must be used by the minister in the short run to correct the increasing level of unemployment which can rise to 7 per cent very quickly. While he and others are pushing up the level of full employment to 5 per cent, the fact is that they will create the 7 per cent unemployment that I am talking about, and that will create an immense hardship for people and distort the economy more than we have seen in recent years.
There is more disturbing evidence emanating from recent figures released by Statistics Canada which, while it makes for dry reading, is very suggestive in terms of what we can expect in regard to employment and unemployment in the Canadian economy this year. I would go so far as to say that those figures suggest that we are already well into a recession. The Minister of Finance has difficulty with that word, and that is understandable in human terms. He prefers to talk about inflation, on the one hand, and lack of adequate growth on the other, instead of calling a spade a spade and telling the Canadian people that we are now in a period of stagflation, or slumpflation in which we have, for the first time in peacetime Canadian history, double-digit price increases which are very strongly embedded in the economy at a time when we are approaching 7 per cent unemployment in this country on a seasonally adjusted basis. If that is not recession, what can it possibly be? How much unemployment must we have before the government will admit that, instead of talking about a period of inflation and slow growth?

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As far as the recent figures are concerned, there has been a decline or a stagnation in the growth figures which have been released. Most economists see the trend I have been describing as evidence of poor economic performance. That is not peculiar to this country, of course, but sometimes members on the other side, especially the Minister of Finance, are inclined to stick out their chests too far because of our success in comparison with other countries.
We know very well that the things we are rich in- wheat, oil, pulp and paper-have demanded a tremendous price on international markets in the last few years and this has given us an advantage. Thank God we have had it. But it is not through the policies of the government. I suggest that if they stick their chests out too far on this issue, they might find themselves eating humble pie in the next few months when the export figures become avail: able and we run into serious trouble because of the decline in housing starts and the state of the economies of the United States and other countries. I mentioned that the minister had failed to forecast the unemployment rate for 1975-76 in the budget. I have already mentioned that independent researchers are predicting a norm of 7 per cent. I should like to look at some of the individual items, Madam Speaker, as they refer to the bill before us. Many of them show that the legislation is geared to the rich and the large corporations rather than people in the low and middle-income categories. If that sounds like an NDP line, let me try to buttress it with some evidence.
Let us ask ourselves about these tax cuts and what there is in the budget for the ordinary taxpayer. There is the tax cut which was in the budget of last May. I think the minister was trying to fool the House when he suggested there was a minimum cut of $150 in taxes. All he did was add the $100 that was in the mini-budget of February, 1973, to the $50 proposed, making it look like a tax cut of $150 instead of the $50 it actually is. We know that a tax cut of $50 works out to about 97 cents a week. That is some tax cut when you consider there is nothing in this budget to control the cost of living! The hon. member for Windsor West (Mr. Gray) put my thinking in cogent form yesterday when in the course of debate he said:
This bill and the budget seem to be saying that inflation hits the higher income person harder than the one earning a low income. But surely it is just the opposite. Lower income people spend a greater proportion of their income on food than those earning more. Therefore, why should a man earning $6,000 be given only $214 more, while the man earning $30,000 will be given $622 more through tax reductions? This is done in both cases to meet "part of the increase in the cost of food". This is the purpose of the tax cut, according to the budget speech.
The bill proposes that no one would get a tax reduction of less than $200 or more than $750; that is, the cut would have a floor of $200 and a ceiling of $750.
We could quarrel with that, but that is his interpretation.
One could ask, therefore, why the proposal did not call for a higher floor and a lower ceiling. In other words, why was there not a higher minimum tax reduction and a lower maximum tax reduction to ensure that the lower and middle-income Canadian would get even more disposable income through tax reductions
(Mr. Hogan.]
and the imbalance toward the higher income earner would be less than it would otherwise be?
As I mentioned, Madam Speaker, that puts my thinking on the tax cuts in very cogent form. We should be pledged to help the low income earner in this country, considering the gross inequities that still exist in the distribution of income. Now let me say a word about the pensioners. The government even failed in this budget to mention an increase in the basic old age pension. It is true that they made an exemption for the first $1,000 for extra pension moneys other than pensions which are universal in this country. We in the NDP always welcome any improvement made in the position of senior citizens. Accordingly, we welcome even this anaemic improvement for senior citizens announced in the budget, some of which applies to the year 1974 and some to 1975.
However, this is an important point: all of these benefits apply only to 40 per cent of persons over 65 who have income other than their old age pension and general income supplement. These 40 per cent get their benefits through tax relief, (a) by means of $1,000 interest income exemption starting in 1974; (b) the $1,000 private income exemption in 1975; and (c) the right of one spouse to claim the special exemption for both spouses. But the fact is, Madam Speaker, that between 50 per cent and 60 per cent of Canadians over 65 rely completely on the old age pension and the general income supplement. What they need-and this applies to more than a million old age pensioners in this country-is a substantial increase in the basic amount of old age security, which should be at the very least $200 per month per person. Year after year, as hon. members know, the hon. member for Winnipeg North Centre (Mr. Knowles) of the NDP has a motion on the order paper concerning this matter. His motion really ought to be accepted.
We think that a $200 payment for each woman and man over 65 years of age should be made available in the next few years, so that brought down one year at a time it would reach age 60 within a decent length of time. We have still a long way to go toward correcting the inequities that exist when we have 60 per cent of our old age pensioners living on the old age pension and the supplement. The budget and the bill before us do nothing to correct the situation.
What about housing, Madam Speaker? We have had a debate on housing. I will not repeat a lot of the arguments that have been advanced, but let us talk about the registered home ownership savings plan. The provisions of a registered home ownership savings plan in this budget is a carry-over from last May's budget. This means that people who can afford to put money aside will put $1,000 annually into a savings plan for the purchase of a home, or furniture with which to furnish that home. This program will probably be effective for many in Canada. But how many low-income people will benefit? How many members can go back to their ridings and count great numbers of people who can set aside $1,000 annually? I know my riding is relatively poor, and I also know that this program will help only a very small percentage of my constituents.

January 31, 1975
It is obvious, as any statistician will tell you, that only the wealthier people in our society will be able to take advantage of this program, not those on middle or low-incomes whose housing needs are scarcely being met by this budget. I am surprised at the suggestion of the Minister of State for Urban Affairs (Mr. Danson), that the government's housing program will meet the needs of our people. The pot-pourri the minister is offering will do little to satisfy the housing needs of the middle and low-income people of this country. Surely he learned his lesson yesterday when talking with provincial ministers. I know that many Canadians live in centres like Toronto and Montreal, but many others who ought to be considered live in smaller centres, such as those in the Atlantic region.
It is true that we should encourage more private ownership of homes, but we must also encourage greater expenditure on public housing, condominium housing, co-operative housing and the like. The budget does little in this area. We must recognize that although market forces have a role to play, the social needs of the Canadian people must be met. Therefore, the government and the decisionmakers in the cabinet must act for the good of the many in need. If that means that there is to be a redistribution of income, so be it. When will this country have the guts to do something like that? How many more Croll reports do we need to convince the powers that be that we need more equitable distribution of incomes in this country, either through the income tax process or through special services like housing? In my opinion this budget does little to help low-income people meet their present housing needs.
A new provision in the budget allows people to deduct from income funds to be used in the building of apartments. For medium-sized and large cities this provision makes sense, but what is the advantage of it to smaller communities?


Mr. Gilbert:: Very little.


Andrew Hogan: In my riding, where the average income is $6,800, this provision is not worth a damn. We need more money from Central Mortgage and Housing Corporation directed to the Nova Scotia housing commission and other provincial housing commissions for putting up cooperative housing, condominiums, public housing and the like. I suggest, again, that the ordinary citizen will not benefit from this measure. It will help those in higher income brackets. Admittedly, they need help, too; but our first concern should be for those in the lower income bracket. Surely that is obvious.
Let me say a word about distribution of incomes and wealth in this country, because the income tax changes proposed under this bill fail to encourage real redistribution of incomes. Remember, behind these dry figures are human beings who are suffering in this country which enjoys, according to the figures one uses, the second or third highest standard of living in the world. I shall refer to the incomes of families in the period 1965-72. According to Statistics Canada, in 1965 the bottom 60 per cent of Canadians earned 34.2 per cent of the income of this country; the top 20 per cent earned 41.4 per cent. In 1972, according to the latest official figures available, the
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bottom 60 per cent saw a drop in their income; they earned only 32.2 per cent of the national net income, while the top 20 per cent earned 42.9 per cent. Again, these are not my figures; they are the figures of Statistics Canada. They show that during the so-called years of the just society under the Liberal government, the income gap between rich and poor widened.
The disparities in wealth are even more startling. According to the most recent figures I have seen in 1970, the top 50 per cent of families or individuals in this country owned 93 per cent of our wealth, the top 10 per cent of families or individuals owned 41.8 per cent, and the top 1 per cent owned 12 per cent. Clearly, we have a long way to go before wealth in this country is distributed equitably. There is no reason for us to stick out our chests about what we have done in the post-war period. Do the figures I have mentioned show that in this country there is greater equity than before? No. Are we moving toward more equitable distribution of income? No.
I mentioned, in passing, the Croll report. When will the cabinet heed the message? According to the Croll report, between 1945 and 1971, or 1972, despite welfare measures introduced by the Liberals, which were first suggested by our party, the gap between poor and rich in this country remained as wide as ever. The poor, in terms of their share of income and wealth, are still relatively as far behind the rich as they were in 1945. Why? The main reason is that the tax system is stacked against the poor. As Senator Croll pointed out, even if our poor people are given a break under our progressive income tax system, they are hit with property taxes, excise taxes of all kinds and sales taxes. In total, these taxes are so regressive that the income growth of our poorer people has not kept pace with the income growth of the people at the top of the income scale.
Surely this cannot go on forever, even though our poorer people may be regarded as invisible and do not have much political power. Surely a government which says we should share our wealth with the rest of the world will agree that we should share wealth with the rest in this country more equitably. The time for action is now. Under our political system, the best time to do something is when you need not immediately consider political consequences. If that sounds like political cynicism, we must be realistic. The government may be reluctant to make changes in the tax structure immediately before an election. But when it has a majority and an election is not imminent, surely it should be able to move towards revolutionizing, if you like, the tax structure of this country for the sake of our low-income groups.
Coming from the Atlantic region I want to make this point. I want to say, along with the other criticisms I have made, and which I think are justified, about the budget and the proposals facing us in this bill, that there is nothing in that budget, as there was nothing in the May budget, about regional disparities in this country. And that is the basis of our difficulties in trying to stay loyal to the Canada which we love. We all realise that the regional problems facing this country are very severe, but when in the political situation you have underlying economic disparity continuing as it has done for so long in the Atlantic

January 31, 1975
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region, and when we have a chance to correct it through budgetary measures, then, I think, Madam Speaker, that we should take advantage of that opportunity.
When I look at the figures concerning the Department of Regional Economic Expansion-and I am a member of the standing committee dealing with that department- and when I see the increase in the expenditure for this year, there is little or no improvement when the factor of inflation is taken into consideration.
The Atlantic region, in my opinion, is once again being neglected by the powers that be. Some time some of us are going to have to get together and demand our rights with all the force and power that the western provinces are now using. Hopefully, Madam Speaker, we won't have to wait until we have two or three NDP governments in the Atlantic region to get action.


Some hon. Members:: Hear, hear!


Andrew Hogan: Otherwise, Madam Speaker, we could end up in the year 2,000 with the same or a worse relative economic position in this country. And that has been the story throughout our history in the Atlantic region.
Now I would like to turn to some comments I have to make relative to the discussions which have taken place in this House during this week. Yesterday, in reply to a question from the member for Vancouver South (Mr. Fraser), the Minister of Labour (Mr. Munro), in trying to defend his colleague the Minister of Finance, said that the Minister of Finance, when giving his famous speech last Monday in which he defended his position in trying to bring about voluntary wage and price restraints, didn't put the load on any one sector when he talked about the changing nature of inflation. And, as you recall, I got up in the House and quoted from what the Minister of Finance said.
He said in that speech that you had a change in the type of inflation, which by the way during the election campaign was an imported inflation, but now it seems it has changed so that you need to go to all of the different sectors in the economy. But he says it has changed from being what we call a demand-pull type of inflation, including the importation of inflation, to what we call a cost-push type of inflation. He doesn't use these words, but he says that the inflation which we have now, the major cause of it-and he used the word "major"-is due to the "rapid escalation of wages and salaries", and that inflation now is different from the inflation that was in the past.
The Minister of Labour tried to deny that the Minister of Finance said it was a major or a principal concern. Now it is true that in another talk that the Minister gave he mentioned that he was concerned about other sectors sharing the burden with labour on this thing, but he did say that wage and salary increases were the culprit, and I think there is nothing wrong with that as long as you've got the guts enough to back it up in the end.
If this is true and if the minister has the evidence to show in terms of statistics-and of course we can all battle about this-then he should confront Joe Morris, who is head of the Canadian Labour Congress; he should confront him with his statistics and say, "Look, the ball-
(Mr. Hogan.]
game has changed." But we have the Canadian Labour Congress the next day and Stan Little of CUPE coming out, and the third man, Bill Mahoney of the Steel Workers Union, saying they still have to catch up. They have said it isn't any kind of a wage-push inflation under the cost-push interpretation in which they were the culprits, but their members still have to catch up. We can understand that they are political animals like ourselves, but there must be some objective evidence that the minister has to show them, because there is a direct contradiction, one against the other, despite the attempt of the Minister of Labour to try to say that there is not.
We recognize that there is immense difficulty in bringing these groups together; there is an immense difficulty involved in trying to stabilize an economy which is fighting the problems of inflation as well as a condition of high unemployment.
We need honest answers and I cannot understand why, just after an election when you are facing a full four years in office, if you have firm convictions on such matters and they are based on firm evidence and criteria, if, for example, there is evidence of loss of productivity and therefore higher unit costs in the manufacturing sector, which is much more easy to measure than the service sector, ministers should come out and say it. Nobody is just going to go out and defend labour at this special time in our history if the evidence to the contrary is there. The ministers concerned owe it to the Canadian people, and they owe it to us all to do that type of thing.
I just want to suggest in closing that I don't want the Minister of Finance to listen to something which some of the Tory speakers during this debate are telling him to do, that is, be principally concerned about the rate and level of expenditures in this country. But even though they are personally convinced of this, the minister should avoid their advice when unemployment is likely to rise to 7 per cent or more. When you put the Atlantic region into the picture it could go from 10.7 per cent in December to probably 15 or 16 per cent. It is tough, and we have to fight that short-run unemployment problem. The Finance Minister has to come here in April or May and say, "Look, my budget cuts weren't deep enough; we've got to ease the money supply and we have to get together with the provinces and put on special public works." On the other hand, we have to avoid saying we have to restrain ourselves and then cover over with a veneer that refuses to call a spade a spade on income shares. He will have to come up with some hard evidence as we suggested he might.
It will be unpopular for me to say this, but I will say it anyway: the finance minister has two strikes against him now. The first is the psychological effect of the introduction of the notion that a 50 per cent increase was going to be taken at one point by us, and the fact that there seems now to be a feeling amongst the labour leaders in this country that he says one thing before them and another before the business community. That is the reason I think he has two strikes against him. But I and others will support him if he will just come out and give us the facts. Let us interpret the facts, and if wage increases generally outstrip the cost of living increases, let us see the statistics. If the productivity ratio is going down in the manu-
January 31, 1975

facturing sector let us see the figures, and this will form a basis on which we can judge.
I also refer to a response the minister made to someone's question this week that the people of Canada, by not putting the Conservatives in power in July, had voted against a wage and price freeze. I refuse to accept that non sequitur of the Minister of Finance. There can well be other reasons which we don't have to document now and make a great production about as to why they lost the election. One thing in relation to this matter is that during the election they did a darned poor job of explaining what they meant by a wage and price freeze, and they were even helped by the press during the middle of the campaign who started calling it an all-embracing incomes policy.
An all-embracing incomes policy is different from a wage and price freeze. An all-embracing incomes policy has been approved by George Meany and by many of the Democrats in the United States because it includes wages, interest income, rental income and dividends. Therefore it makes for equity and the burden doesn't go just on the wage-earner and the salary-earner. I think this has to be reconsidered, though probably not for the immediate future.
I suspect that the Minister of Finance is still really relying on what I call the old time religion. My evidence of that is that no one in this House can deny that increasing unemployment is being used to fight inflation in this country. We are heading for 7 per cent unemployment which will result in prices having to come down, even in an economy so much controlled by the large corporations of this country.
Mr. ]. Robert Howie (York-Sunbury): Madam Speaker, once again I should like to congratulate you, sitting in your accustomed place, and to say that you are certainly the most attractive Speaker this House has ever had.


Some hon. Members:: Hear, hear!


Mr. Howie:: I should like to make a few brief comments on matters relating to Bill C-49. I should like to begin by expressing, on behalf of the people of York-Sunbury, my best wishes to the Minister of Finance (Mr. Turner), who has displayed the good judgment to visit New Brunswick and enjoy the outstanding natural advantages of St. Andrews-by-the-Sea. While I disagree with a number of the minister's ideas as to the best way to fight inflation, I realize that his heart is in the right place, and that he is performing the duties of his difficult portfolio to the best of his ability.
I would like to discuss three matters of immediate concern. The first item of concern is the government's intention to move into the field of resource taxation. The eleventh annual review of the Economic Council stated at page 113:
The problem of ensuring adequate and secure future supplies of energy in Canada is not a new one, nor did it begin with the events of late 1973, when Arab oil producers imposed a selective embargo and crude oil prices were increased at unprecedented rates. The actions of the major oil producing countries have, however, forced Canadians to re-examine their plans for development of
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their energy resources, to revise policy, and to implement new measures at a pace in line with the ever-changing international situation.
Perhaps it was for this reason that the federal government decided to move into the field of resource taxation. As a member of parliament from the Atlantic provinces I am very much interested in seeing a strong central government that shares the good things our country has to offer with all Canadians, and acts to remedy regional disparity. I believe that the central government has been strong and had done much to distribute tax revenues and fight regional disparity, but I feel that in dealing with Alberta it has not always been just. The lack of consultation with the provinces before November 18, 1974, goes against the spirit of co-operative federalism. The Prime Minister (Mr. Trudeau) has stated, referring to the west: "If they feel alienated, let them participate". I suggest that this would be an excellent opportunity for such participation.
The finance minister on January 28, as reported in Hansard at page 2694, quoted the Leader of the Opposition (Mr. Stanfield) as saying:
The federal government must retain a sufficient portion of the tax fields in Canada to enable it to discharge its direct constitutional responsibilities and to assist provinces with low tax potential so as to enable them to furnish a national standard of services to the Canadian citizens residing within their boundaries.
The minister said that he agreed with those words. I compliment the minister on his excellent and apparently improved reading habits. The question is not the words used but, rather, the meaning and their implementation. I suggest that if the Minister of Finance understood what the Leader of the Opposition said when he spoke those words, we would have no problem now. Today we do have a problem; we have strained relations between Ottawa and Alberta. We have a loss of confidence in our economic climate. We have the possibility of the Syncrude development failing. And Canada and the free world need the Syncrude development.
I feel that the government does not understand the west and the fears and anxieties of western Canadians. The west wants and needs to use its oil revenues, which may last only another four years, to develop an industrial base. For years industrial development has been encouraged and subsidized in Canada by tariff protection and taxation policies. All Canadians have paid more for manufactured goods to help develop our country. The west and the east have not directly shared in very much of this development. Yet when the opportunity arrives for the west to develop, the federal government seems to diminish it and, in so doing, argues that it is protecting easterners in respect to the price of oil, and will help the west develop as time goes on.
As it now stands this increased taxation and the way it was imposed would be very detrimental for not just the industry but the country as a whole. The eleventh annual report of the Economic council of Canada goes on to state at page 140 that:
The amount of rent (tax) collected, at a given resource selling price, will likely affect industry motivation; that is, increased rent will tend to discourage industry exploration and the development of new energy sources. To the extent that the rent collected by governments is used to promote further exploration, disincentives
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January 31, 1975
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to industry may be partially or wholly offset. However if these funds are not used this way, while some other sectors of the economy may benefit in the short run, the resultant reduction in the volume of proved energy resources will affect the entire economy in the longer run. Any short-term advantage to present consumption will be realized at the expense of future consumption in the form of higher prices. The amount of rent collected by governments must not be such as to discourage adequate development of higher cost energy sources, which will gradually replace conventional reserves, unless governments are prepared to either accept exceptionally steep price increases at a later date or to rely upon important supplies ...
Clearly the allocation of rents from existing resources is a complex one that must be considered with a view to both short and long run consequences. It cannot be settled by any one body, but it must take into account the interests of federal and provincial governments, industry, and consumers, both in the short run and over the long term.
By 1980 Canada will likely be a net importer of oil unless new reserves are found and developed. This will require planning and co-operation. If the government had given indications in the past not only that its word was good but that its performance was good, we would not be in the position we are today. However, all that is now behind us. What we need now is a show of good faith on the part of the federal government. It is better to light a small candle than to curse the darkness.
I suggest to the minister that he postpone taxation of oil royalties and give an unmistakable signal of good gaith by amending this section of the bill to provide for it to come into force on a date to be fixed by the governor general in council. He should indicate that he does not want to disallow the reduction of oil royalties, that he wants to use reason and not force, that he is the spokesman for a just government.
The second item I wish to discuss is old age pensions. As it now stands, a married couple receiving old age pensions is in a worse position, as far as paying income tax is concerned, than two single people living together receiving old age pensions. I ask the minister, rather than arrange a complicated formula to correct this inequity, to give our senior citizens a real break and remove money received from the old age pension and supplement from taxable income. Our senior citizens deserve at least this much so that financial problems will not be a real difficulty for them.
My final point, Mr. Speaker, refers to the registered home ownership savings plan. All I wish to say on this is that when the minister feels the need to fulfil an election promise, could he please ensure that the program is ready to be set up before it is announced? The Canadian taxpayers have a right to know how they can benefit from this program on their 1974 income tax returns, rather than be told that "Yes, the program applies to 1974, but you will have to wait until the end of February to find out how it works".
Finally, I should very much like to endorse the tax reduction program that has been, recommended by my colleague, the hon. member for York-Simcoe (Mr. Stevens). I feel such an imaginative and substantial reduction in income tax would be reflected by greater employment and more taxpayers, and that our revenues would not be seriously impaired. I believe this is a good incentive, and an idea the minister should very seriously consider.


A. Daniel McKenzie: Madam Speaker, I should like to speak briefly about a specific aspect of the Income Tax Act. I refer to the much publicized $1,000 clause which supposedly permits a person to reduce his or her taxable income by $1,000 providing that person has earned at least $1,000 in interest from Canadian investments. As outlined in Item 35 in the 1974 income tax guide, a taxpayer's eligible interest must also first be reduced by the total of all interest deductions claimed in the computation of income from other sources reported on the return. This all sounds pretty good at first reading, but closer examination reveals some apparent shortcomings, and even discriminations.
First, it would appear that if an individual owns an apartment building and has a mortgage or bank loan against the property on which he is paying interest charges, then the interest charges must be offset against the exemption under the $1,000 interest earned allowance. If this is actually the case then I feel there are a number of reasons why the situation should be rectified.
The purpose of other main points in the budget was to encourage investment in rental accommodation and property. The above-mentioned situation would do the opposite. Furthermore, the purpose of the $1,000 exemption was to produce investment income, the net of which is taxable. I feel, therefore, that bank or mortgage interest paid in connection with the operation of a business should be considered as having to be deductions from the $1,000 exemption allowance.
Another apparent discrimination in this section of the Income Tax Act is that, in order for a married couple to receive any benefit of exemption on the wife's earnings, it would appear that she would have had to earn over $1,806 during the taxable year and, therefore, not be a deduction herself. This is, of course, when the husband has earned the bulk of the couple's income.
This appears to be a strong discrimination against the spouse of a taxpayer, and would in most cases be a discrimination against women. Because of the fact that many times it is the spouse who acquires the savings of a married couple, this loophole would be a sizeable detriment to investments. I call it a loophole because I am giving the Minister of Finance (Mr. Turner) the benefit of the suggestion that this slip-up was inadvertent.
With the cost of living as high as it is, and rising at the unprecedented rate that it is, the low and middle income people of this country need all the tax relief available to help them make ends meet. This does not mean introducing a much ballyhooed tax exemption that is comprised of a bunch of promises and fine print. The intent of the legislation, meagre as it might be, has to be effectively met. To ensure this we must be certain that all Canadian taxpayers will be eligible to claim the full benefit of the $1,000 deduction. Therefore these discrepancies must be investigated and rectified.


Mr. Alex Patterson (Fraser Valley East):: Madam Speaker, in availing myself of the privilege of participating in this debate I do so not only because we have the opportunity of discussing the policy of the government, but also because we can give some thought to the role of parlia-
January 31, 1975

ment in relation to government expenditures. Just before I move into that aspect of my speech I should like to make a reference or two to statements made by the hon. member for Cape Breton-East Richmond (Mr. Hogan). I am glad he is still here as I would not want to say this while he was out of the House.
I should just like to point out that no member of this party proposes any cut in expenditure that would adversely affect the wellbeing of the people of this country. That has never been proposed, and it is not our intention. I just want to make that correction because, although I realize that the implication was not deliberate, it could appear to be if left in the record without a statement of this kind. We believe there are plenty of areas in which the government can reduce expenditures without -adversely affecting the services provided the Canadian people.
Perhaps I should refer to the recent facts brought out in relation to CIDA. Here again I want to make it abundantly clear that I am in favour of aid to those nations that need it and can use it effectively, but I am opposed to the indiscriminate spending of taxpayers' money under circumstances that will not bring the desired results.
There was one other reference made by the hon. member for Cape Breton-East Richmond to which I should like to respond. He was attempting to conduct a post-mortem regarding the last election campaign. Perhaps it would be more profitable if he were to look at his own party and try to ascertain why it was that it was so drastically reduced numerically in this parliament as compared with the last parliament. Perhaps having made those two comments I can now proceed to what I had intended to say in this debate.
I referred to the fact earlier that this debate gives us the opportunity to discuss the role of parliament in relation to government expenditures. I am sure we all agree that the struggle for parliamentary supremacy in matters of finance historically parallels the struggle for democracy in our western society. These two struggles are closely linked.
It is consistently true that in a nation where the people or their representatives do not control, or at least oversee the expenditure of public moneys, democracy suffers and democratic institutions die. In those circumstances the democratic process is replaced by some form of totalitarianism. If this consolidation of power over the purse in the hands of the few is coupled with incompetence, dishonesty and deliberate manipulation of information, then democracy cannot last very long.
In Canada I am afraid that over the last six and a half years, since this administration took the reins of government, the people's control over the purse, and their representatives' check on public expenditures both have slipped very badly, resulting in a definite downgrading of the democratic process. It used to be that ministers of the Crown had to stand in their places in this House and defend any expenditure contained in their estimates. I can look back possibly on more years than I sometimes care to remember.
Over 20 years ago, when I first came into this House, I can remember how the estimates were brought before the
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committee of the whole. When the estimates of a particular department were called the officials were seated immediately in front of the minister and the minister could be grilled in depth by the opposition, or in some cases by supporters of the government, on the reasons for the expenditures and the advisability of various projects included in the estimates.
But I was amazed and shocked when I came back, after a brief respite, in 1972 to find out that this control had been eroded, and that the rules implemented by the administration from 1968 to 1972 did away with all that, and authorized the expenditures of literally billions of dollars under the new House rules, in sometimes just a matter of a very few hours. I said I was shocked to see the erosion that had taken place, and as we compare the two systems I feel that we, the representatives of the people, have to quite an extent lost control over the purse strings or even the opportunity of discussing government expenditures in the House of Commons.
Since 1968, when the present crowd gained control of the purse, they have been spending like drunken sailors, and let me apologize to the sailors, of course. Federal spending has increased 140 per cent in only six and half years.
In 1968 the federal government cost each man, woman, and child in Canada $590 a year. Today it costs each one $1,300 a year. This increase has been from $12 billion in federal expenditures in 1968 to $30 billion in 1974. That increase is bad enough, but what is worse is that this staggering increase has not included one major new social or economic program. I know that other programs have been improved, but no new major social or economic programs have been brought forward.
Between the years 1973-1974 and 1974-1975 the total government expenditures on a national accounts basis, as recorded at page 1431 of Hansard, increased from some $23 billion to $30 billion, or some 30 per cent, again not because of any new social or economic program but primarily because of the waste, duplication and inefficiency of the government.
The most noteworthy example of this spending spree is the one that hit the headlines over the last few weeks. I am, of course, speaking about CIDA. This is one area where it has been documented that the government is spending the public's money like the drunken sailor I mentioned earlier. The agency found the fiscal year coming to a close and had to scramble head over heels, literally, to try to spend the last $117 million of its allocation for the fiscal year. This fact was not denied by its president, Mr. Gerin-Lajoie, at a recent news conference in Halifax, and I quote from the Ottawa Journal's front page of January 29, 1975:
"While charges of inefficiency against CIDA are totally incorrect", he said he accepted criticism that the agency "scrambled to spend a $117 million surplus of budget before the end of the fiscal year".
The president of the agency does not even try to deny what the government has been denying ever since this story hit the papers, thanks to the investigative reporting of Bob McKeown and Chris Cobb of the Journal staff.
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CIDA has been called a sick joke, a state within a state, an empire presided over by a dictatorial president with an imperial style. To quote the Ottawa Journal of January 11, 1975:
Critics of Gerin-Lajoie start with his imperial style. His vanity is an Ottawa in-joke, from the personal staff of six aides-larger than that of any cabinet minister-to the one-third of his time spent travelling abroad to be introduced as "Le President", a title easily misunderstood.
I could go on and on about this agency. There certainly have been enough charges made against it and its president to warrant a special investigation of its and his activities.
It is really incredible to me why the government does not permit a parliamentary inquiry. It would seem to me that if these facts are not as related, if the facts are not as stated in the newspaper reports, if the allegations are incorrect, the government would be glad to have an inquiry and to clarify the whole thing and bring to light the true facts in order that people will retain some semblance of confidence in this organization that could be of tremendous benefit on the international scene.
Here is an agency that spends about $850 million a year, and there is no direct parliamentary control over it. According to reports the Prime Minister (Mr. Trudeau) indicated that he had no intention of bringing it under parliamentary control. So we see how control over government expenditures by parliament has been eroded, and is still being eroded. More than that, it is being supported by the government and by the Prime Minister personally when he refuses to have an inquiry into the various aspects of these expenditures. No wonder democracy in this country is suffering when this type of activity goes on and the government, first of all permits it, and secondly, tries to hide it by refusing an investigation! To carry out this activity, I suggest, is complete and utter incompetence; it is mismanagement of public money.
Two reasons can be found for this psychology of spend, spend, spend. One reason, and this is the most obvious and has been a concern for the opposition in parliament for years, is the intense rivalry between various government departments to increase their proportion of total government spending. What deputy minister or other departmental official wants his budget cut or frozen? He, to use the words of one writer, would be the object of scorn, whereas the hero in the whole process is the one who can boost his department's spending by a greater percentage than the federal total is increased.
Another reason, and one that may be less obvious but which nevertheless is well documented, is that the government is each year receiving an embarrassingly large amount of income from the taxpayers of the nation. In the first place the much discussed tax reform of 1970-1971 really contained a massive tax increase for which the people of this country have yet to be compensated. This really, according to an article in the Ottawa Journal of September 3, 1974, is the outgrowth of another intense rivalry, namely, the one between different levels of government for the tax dollar. It reads:
Rather than reduce the tax levels and thereby provide more tax room for the provinces and municipalities, the federal government finds ways to spend-though usually wastes it.
I could go into details on further expenditures by the present government that are completely irresponsible, but I do not think that there is any need to document this particular aspect of the problem any more today. This is one reason why I think that municipal property taxes, or some proportion thereof, should be made deductible on personal income tax. I hope the minister will consider that.
When I was speaking in the debate on housing yesterday I made reference to some other ways in which I believe the government could assist in the home ownership program. It is incomprehensible to find the government continually re-affirming its belief that each and every citizen of Canada has the right to decent and adequate housing, while all the time it continues to implement policies that destroy that capacity and keep people from owning their own homes.
In the second place the government induced inflation is bringing more and more taxpayers' money into its coffers than ever before. The one-year lag in the implementation of my leader's proposal for indexing personal incomes to offset the impact of inflation on personal income has resulted in what surely must be a surprising amount of income tax revenue for the Minister of Finance. I ask, just because it was an unexpected amount, whether that means that the government has a right to spend it? I ask whether the minister could not rebate the tax money which is received in that way?
The hon. member for Edmonton West (Mr. Lambert) pointed out in the budget debate the fact that in his May, 1974, budget the Minister of Finance forecast a deficit of $450 million. Last September it was announced that there was a budgetary surplus of revenue amounting to $560 million, for a total of about $1 billion. To my mind this is an exercise which would not inspire public confidence in the Minister of Finance, or in the government. If the minister were the head of a business firm and made that kind of error, he would be out of a job very quickly. Rumours are that he is heading that way.


Mr. Baker (Grenville-Carleton):: The old slide rule has a lot of rubber in it.


John Napier Turner: At least I could read it, Wally.


Alexander Bell Patterson: The minister is the head of a household. I ask him in all honesty and sincerity whether he would turn the books over to his wife if he had made this type of error in his family finances?
Again, just because there is a surplus in budgetary revenues, does that mean that the government must spend it indiscriminately, haphazardly, and without regard to sensible priorities?
The minister in this bill has proposed what he calls tax cuts from personal income tax. That again is complete and utter nonsense when you look at the minister's own figures. On the basis of the supposed reductions and the additional exemptions we should find the income tax yield for 1974-75 is lower than 1973-74. Even taking inflation into account, even taking new taxpayers and higher

January 31, 1975

numbers taken off the tax rolls into account, the total revenues from personal income tax should be lower. But what do we find? We find that the tax yield for 1974-75 will be 27 per cent higher than it was in 1973-74 simply because of an unjust and oppressive tax system, and inflation which the government does not even try to control.
The total tax revenues of the government will increase 32 per cent, by about $51 billion, on the basis of the tables of budgetary revenues introduced by the minister on November 18, 1974. Revenues from corporation income tax will increase, as will all revenues from all other sources, for a total of $5,730 billion in added government revenue.
Personal income tax alone will net the government an extra $2.1 billion next year, and the minister has the colossal nerve to talk about tax cuts. It seems that the more he cuts taxes, the higher they go. It does not seem to be logical or reasonable no matter how you look at it.
I would think, in view of all of this, that the minister should reconsider his proposals, give the Canadian taxpayer a break, and make the tax cut which he talks about mean something.
We find, when we look across the border, that President Ford has realized the necessity for this type of program, and I believe the minister referred to that when he was speaking the other day. I wish he would take it seriously as a challenge, and implement something of a similar nature here. Inflation is at such a rate now that a tax cut of $100, which the minister has been talking about, really is a loss for the taxpayer through a loss in purchasing power.
There are a couple of items in this budget which may help ease the burden somewhat. The $1,000 interest exemption provision is only fair, and has long been overdue. Previously if a person had to borrow money, he had to pay interest. This interest was tax deductible, but if he happened at some stage in the year to have money earn interest for him, that money was taxable. I suggest that this is unfair. It was even more unfair in relation to those who owned mortgages.
Some people pay out thousands of dollars each year on residential mortgages by way of interest payments. At least part of this should be deductible from personal income tax, but to date that has not been done. Yet if a person paying out all this money happened to earn a few dollars' interest on bonds or savings, then it is added on to his personal income and taxed. I suggested that this is oppressive in principle and in practice.
I suggest that the government's statement relative to tax policy is confusing and misleading. In effect it amounts to confiscation, and in application it is certainly inconsistent and discriminatory.
It has just been brought to my attention today that a very strange situation exists with respect to income tax and deductibility clauses. It was pointed out to me that commercials on the media urge that citizens take flying lessons and the cost can be listed as a tax deductible item. On the other hand, medical expenses can only be deducted on the basis of the proportion of expenditures above 3 per cent of one's income. How, in the name of common
Income Tax
sense, can these inconsistencies be perpetrated? One can take flying lessons and receive a deduction, yet when the taxpayer pays his medical and dental bills, he does not receive any deduction unless it goes beyond 3 per cent of his income, and then only the amount in excess of 3 per cent.
A further anomaly is found in the fact that if one qualifies and is in receipt of welfare benefits-and I am not implying that it should be otherwise-his medical expenses are taken care of; but if a person is in receipt of an income a little above that which qualifies him for welfare, he must pay his own medical, dental and other costs.
I have pleaded on behalf of those in the category usually referred to as the working poor, but so far nothing has been done to compensate them for their initiative either in the way of tax deductions or supplementary income.
I believe I mentioned before that I met with a group of single parents who were endeavouring, to the best of their ability, to get along without dependence on welfare benefits. They were working for a very low rate of pay. They were paying their own medical and dental bills, and they were finding it absolutely impossible to make ends meet. Could I obtain any help for them? No, not a cent. I suppose the government would rather have them quit their jobs and go on welfare so that it could support them wholly, rather than give them a little to help them over the hump and still retain what they believe is their integrity and their dignity.
In saying this I am not casting aspersions on those who are receiving welfare or other assistance because of incapacities of various kinds or inability to obtain work, but I am speaking on behalf of those who can find work but are not sufficiently well paid to enable them to live in dignity. I challenge the minister and the government, if they honestly care about this group of people, to do something to help. If they do not, a lot more of them are going to quit and become dependent on the public purse. I make a plea on their behalf. I trust the Minister of Finance, the Minister of National Health and Welfare (Mr. Lalonde) and other members of the government will give consideration to those who are desperately trying to make their own way in life.
My hon. friend, the member for Esquimalt-Saanich (Mr. Munro), mentioned the people who have been able to save for their declining years and now find, because of inflation and taxation, that their savings have been eroded. They wonder whether it paid them to try to provide for their retirement, and some feel it would have been better if they had spent as they earned. That way they would have received more from the public purse than they can get now. These are inconsistencies to which the Minister of Finance should direct his attention very quickly.
I suggest we should start all over again, Mr. Speaker. A voluminous tax reform bill was introduced in 1971, and now here comes Bill C-49 with 287 pages. I suppose that looks better. The so-called tax reform bill was not reform at all, but was a bill that raised taxes. In spite of all efforts to make it simple, it remained incomprehensible to the majority of Canadians. Even people competent in the tax

January 31, 1975
Income Tax
field had great difficulty analysing and explaining it. I suggest we start all over again and devise a tax structure that provides more equitable participation by all Canadians in the task of financing collectively what we individually cannot provide for ourselves.


Some hon. Members:: Hear, hear!


The Acting Speaker (Mr. McCleave):: The hon. member for St. Boniface (Mr. Guay).


Mr. Guay (St. Boniface):: On a point of order, Mr. Speaker, I just want to point out that when I hit my table a while ago it was not necessarily because I was in agreement with the member of the opposition who was speaking but rather in response to your taking over the chair once again. I wanted you to know that it is nice to see you back there once in a while. It was also very nice of Madam Speaker to ask you to take the chair this afternoon.


Some hon. Members:: Hear, hear!


Mr. J. R. Ellis (Hastings):: Mr. Speaker, with four minutes left before four o'clock this afternoon I will not launch into my fairly lengthy speech in which, frankly, I have nothing very good to say about the Minister of Finance (Mr. Turner) and some of his colleagues and their programs. Instead, I intend to spend two or three of those minutes saying how happy I am to see the hon. member for Halifax-East Hants (Mr. McCleave) back in the chair.


Some hon. Members:: Hear, hear!


John Raymond Ellis: In his absence we have certainly had a little more beauty, a little more charm, and perhaps a little more graciousness in the chair, but nonetheless all of us have missed the wit of one who was deputy speaker in the twenty-ninth parliament. We are delighted to have you back, Sir, and those of us who stick around on Friday afternoon to keep parliament alive look forward to seeing you in the chair once in a while.
As I know I will be cut off shortly, and so that we may get on with private members' hour, I will call it four o'clock, and begin my speech at the next opportunity.


The Acting Speaker (Mr. McCleave):: Order, please. The hon. member for Hastings (Mr. Ellis) suggests we call it four o'clock. Is this agreed?


Some hon. Members:: Agreed.


Walter David Baker: On a point of order, Mr. Speaker, I wonder if I could ask the hon. gentleman if he could confirm that we will continue with this legislation on Monday?


John Napier Turner: On that point of order, Mr. Speaker-which I will use as an opportunity to say to the hon. member who just sat down that I have been here constantly to listen to the eloquent debate which has been sincere, even if some of it lacked a modicum of common sense-I can confirm to the acting House leader of the Conservative party that this bill will continue on Monday and Tuesday at least.


An hon. Member:: And on Wednesday?


John Napier Turner: Mr. Speaker, we will be here as long as necessary.


Stanley Howard Knowles: On the same point of order I should like to tell the Minister of Finance (Mr. Turner) that that is not the way we behave on Friday afternoon.


John Napier Turner: Mr. Speaker, I learned a long time ago from the Honourable J. W. Pickersgill that the best time to get legislation through was on Friday afternoon.


The Acting Speaker (Mr. McCleave):: It is agreed it is four o'clock.
It being four o'clock the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, notices of motions. Is there agreement as to the particular one which is to be debated?


Robert Elgin McKinley: Yes, Mr. Speaker, it has been agreed among the parties that motion No. 22, standing in the name of the hon. member for Okanagan Boundary (Mr. Whittaker), shall be the subject of discussion during private members' hour today.


Stanley Howard Knowles: Mr. Speaker, if I may speak for the third, fourth and fifth parties, that has been agreed.


An hon. Member:: There is nobody there.



PRIVATE MEMBERS' MOTIONS


Mr. G. H. Whittaker (Okanagan Boundary) moved:: That, in the opinion of this House, the government should give consideration to bringing in an amendment to the Old Age Security Act to ensure the Canadian veteran with overseas service that such service be counted for time in Canada for the purpose of the Old Age Security Act whether or not he has resided full-time after discharge in Canada.
He said: Mr. Speaker, on January 7, 1974, I received a copy of a letter written to one of my constituents by the regional director of old age security in Victoria. It reads as follows:
For our purpose we cannot consider you as physically present in Canada when we have confirmed that you were overseas with the Canadian armed forces from June 8, 1940 to March, 1946 and in addition left Canada again in November of 1946. The Old Age Security Act does not permit us to consider overseas service as physically present in Canada for old age security purposes.
When I read this letter I was outraged. Here is a man who has served his country. He joined the armed forces very soon after World War II broke out and was immedi-
January 31, 1975

ately sent overseas. That was not his choice. Now it seems he is not considered a Canadian citizen.
He came to Canada in the early 1920's, went overseas with the Canadian armed forces where he served for at least six years, and returned to Canada in 1946 for discharge. He spent six months in Canada, then went back to England where he pursued his occupation. For most of his time in England he worked for the Canadian government.
When he returned to Canada he found he did not qualify for the old age pension because the time he had spent overseas 'was counted as time when he had not been present in Canada. In other words when he went overseas it was determined that, for the purposes of the act, he could no longer be considered as a citizen resident in Canada and therefore could not qualify for the old age pension, even though he had served in the Canadian armed forces.
If I had done what he did-and I served in the Canadian armed forces but did not go overseas-I would, on returning to Canada, have been eligible for my old age pension. Yet this man, who had served in the Canadian armed forces, was told that the time he had spent in the service of his country outside his country did not count. That, really, is what prompted me to bring forward this motion.
I am against this type of discrimination which works to the detriment of people who served overseas in the armed forces. That is why I asked questions in the House of the Minister of National Health and Welfare (Mr. Lalonde), and then brought forward a private member's motion and a private member's bill. The government has repeatedly said that it will act on this matter and bring forward an amendment to this act which will take care of my complaint.
This question was debated in the previous parliament, but nothing Was done. When the present session of the new parliament opened I immediately brought forward the same motion. I am beginning to wonder whether the promise previously made was hollow. My constituent and others similarly placed in Canada are being discriminated against in not being entitled to their old age pension. That being so I brought forward my motion again, and I wish to propose an amendment to it.
I hope the promise that something will be done to remedy this situation was not a hollow one. I hope it was not like the promise recently made by the Minister of State for Urban Affairs (Mr. Danson) to the effect that many people in Canada will benefit from $500 home ownership grants. It is now apparent that very few will qualify for such grants.
When this question was debated in the last parliament, the hon. member for Thunder Bay (Mr. Penner) spoke for 20 minutes. In his rambling speech he referred to what had happened as long ago as 1908. The hon. member for Winnipeg North Centre (Mr. Knowles) said that his speech touched on what had happened in pensions, almost since the day of his birth. But the hon. member for Thunder Bay did not deal with overseas service and time spent overseas in the service of this country counting as time spent in this country. The second speaker in the debate,
Old Age Security
who now is the Minister of State for Urban Affairs, referred to me as an apple picker or peach picker. Perhaps such wise observations led to his appointment as minister. But he did not touch on the roots of the problem.
Being concerned about this question, I have brought forward the motion moved this afternoon. I am pleased to learn that the minister will accept the motion if there is a slight amendment, to which I am more than willing to agree. I therefore wish to move an amendment.


Joseph-Phillippe Guay: The hon. member cannot move it.


George H. Whittaker: I am endeavouring to do this on behalf of my constituents and others in Canada who will benefit from this measure. I only hope they need not wait too long for the government to act. It is you, Mr. Speaker, who must rule on whether or not our present procedure is acceptable, not the hon. member for St. Boniface (Mr. Guay).
I would move that the words "as presence" be inserted immediately after the word "counted", so that the amended motion would then read:
That, in the opinion of this House, the government should give consideration to bringing in an amendment to the Old Age Security Act to ensure the Canadian veteran with overseas service that such service be counted as presence in Canada for the purpose of the Old Age Security Act whether or not he has resided full-time after discharge in Canada.


Joseph-Phillippe Guay: On a point of order, Mr. Speaker, the hon. member referred to me by naming my constituency. Let me say, nevertheless, that I am in favour of his proposed motion.


The Acting Speaker (Mr. McCleave):: The hon. member did not raise the point of order which I thought he would raise. I think the hon. member for Okanagan Boundary (Mr. Whittaker) wishes to change one or two words in the motion moved this afternoon. He may do this himself if he has the unanimous consent of the House; otherwise the amendment must be moved by somebody else. Is there unanimous consent for the hon. member to move the amendment?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. McCleave):: Is it agreed that the motion shall be amended by changing the words, "for time in Canada" to "for presence in Canada"?


Mr. Cullen:: On a point of order, Mr. Speaker, I think the change should read "as presence". I discussed this with the hon. member.


The Acting Speaker (Mr. McCleave):: Is it agreed that the substitution, as suggested, be made and that the amended motion may now be moved by the hon. member for Okanagan Boundary (Mr. Whittaker)?


Some hon. Members:: Agreed.


George H. Whittaker: I so move.


Jack Sydney George (Bud) Cullen: Mr. Speaker, let me compliment the hon.

January 31, 1975
Old Age Security
member for Okanagan Boundary (Mr. Whittaker) for his persistence in pressing the subject matter of his motion. What he has done shows that his interests are not selfish, as there will be but one vote in it for him if the motion succeeds, although others in a position similar to that of his constituent would also benefit.
The hon. member's original motion is similar to the one moved this afternoon and the government has said that it agrees with the intent of the motion proposed by him. It is willing to accept the motion, with the one small amendment agreed to by the mover of the motion. Actually the minister will introduce legislation embodying the suggestions contained in the motion during the life of this parliament.


Stanley Howard Knowles: Will it not be in
the present session?


Jack Sydney George (Bud) Cullen: I cannot commit the government, and the hon. member cannot blame me, as there is no way of knowing when the session will end. It could end on our next sitting day and a new session could begin immediately afterwards.
Let me explain the reasons behind the amendment. A person may qualify for the old age pension in one of three ways. He or she may:
(1)	have resided in Canada after the reaching the age of 18 for periods which total at least 40 years, or
(2)	have resided in Canada for the ten years immediately before approval of the application; or
(3)	have been present in Canada after reaching age 18 and prior to the ten years mentioned above for periods which equal, when totalled, at least three times the length of absences during the ten year period and have resided in Canada for at least one year immediately preceding the approval of the application.
It is with respect to this third requirement that the situation referred to by the hon. member for Okanagan Boundary (Mr. Whittaker) arises. I might say in passing that the hon. member for Winnipeg North Centre (Mr. Knowles) often criticizes my profession for the obscurity of the language, and I can tell him that there are a lot of lawyers who would like to see legislation put into better or less complicated English.
As the minister has stated on previous occasions, the old age security regulations provide that certain absences from Canada of a resident shall be deemed not to have interrupted that person's residence in Canada if certain prescribed conditions are met. These include absences while a person is employed or engaged by the United Nations, one of its specialized agencies, a Canadian firm or corporation, the federal government, as a member of the Canadian armed forces pursuant to and in connection with the requirements of his duty, as a missionary, or other similar employment or engagement.
However, the regulations do not provide that periods of absence under these circumstances may be deemed not to have interrupted that person's presence in Canada in determining his eligibility under the presence requirement. The Minister of National Health and Welfare (Mr. Lalonde) is of the opinion that such periods should be counted as presence in Canada, as he indicated some time

ago when the matter arose in connection with an application for old age security by a person who had been overseas in the Canadian army during World War II. In this case, the date on which he became eligible was set back because his period of overseas service could not be counted as presence in Canada.
The minister then sought advice from legal experts who determined that an amendment to the Old Age Security Act was required before a regulation could be made to deem absences of this kind as not interrupting presence in Canada. The point I am making is that the Act will have to be amended before regulations could be made giving effect to the amendment suggested by the hon. member for Okanagan Boundary.
In conclusion I might say that an investigation has revealed that the number of cases where a resident of Canada could not qualify for the pension on the normal date of eligibility because he was unable to count an absence from Canada while a member of the Canadian forces as presence in Canada, is very small and has occurred only in the context of extended periods of other absence from Canada. Although the number is small the government appreciates the difficulty which a delay in becoming eligible for the pension may cause the person concerned. If I might put my personal oar in, may I say I agree with the hon. member for Winnipeg North Centre. I hope this will be achieved this session.


Stanley Howard Knowles: Mr. Speaker, I commend the hon. member for Okanagan Boundary (Mr. Whittaker) for having raised this issue in the last parliament and for having pressed it again in this first session of this parliament. I underscore the point made by the parliamentary secretary that this applies to a very few people; this particular constituent may go back to Britain to live and may not be able to vote for the hon. member or anyone else. However, it seems to me that parliament is at its best when it is doing things that are right regardless of the political effect they may have.
Both of those who have spoken have sought to explain what we are doing. Perhaps I might join the club and do it my way as well. As the parliamentary secretary has pointed out, there are certain basic ways in which one qualifies for old age security benefits. The standard way is simply to have been in Canada for ten years immediately preceding one's 65th birthday. There are, however, other arrangements for persons who do not meet this basic qualification. If they are not here for the ten years between the ages of 55 and 65, they can make up for any years that are missing by having been in Canada three times that number of years between the ages of 18 and age 55. In addition, of course, they must be here for the final year.
This appears to be a sensible arrangement and most people who ought to get a pension do meet these qualifications. The case the hon. member for Okanagan Boundary has produced is one which shows that even well-thought-out laws or regulations do not invariably cover all the points. The veteran to whom the hon. member has referred missed the capacity to produce the three times the number of years he has to produce, because for some of that time he was a Canadian serviceman residing in England.
January 31, 1975

I think it is proper that the proposed change should be made, and if the law officers say it requires an amendment to the act I am glad that such an amendment is to be made. Therefore, I commend not only the hon. member for Okanagan Boundary for raising the issue but I commend the government for its willingness to accept a private member's motion even though it was raised by a member on the opposition side of the House.
I notice that the parliamentary secretary, in doing what he was given to do officially, made the statement that the minister hoped to bring in the necessary amendment during the life of this parliament. As hon. members will realize, this parliament could last until 1979, and this is why I was particularly pleased to hear the Parliamentary Secretary to the Minister of Finance (Mr. Cullen)-that is a pretty important post, and maybe he has some influence on the Minister of National Health and Welfare (Mr. Lalonde)-say it was his personal hope that it could be done this session.


Eldon Mattison Woolliams: Where is your quorum today, Stanley?


Stanley Howard Knowles: I am here.


Eldon Mattison Woolliams: I often see you standing alone there and I am proud of you.


Stanley Howard Knowles: It is a pleasure to see the hon. member here, together with a good many others, for a Friday afternoon. Sometimes we scarcely have a quorum at this hour, yet there are about 40 members here now.
I should be out of order, Mr. Speaker, if I tried to use this motion as an opportunity to make a speech calling for an increase in the amount of the pension and the lowering of the age of eligibility, though hon. members know this is on my mind. Nevertheless, I think it is in order to suggest that when the minister is considering an amendment to the act with respect to residence qualifications he should take a look at the other residence requirements in the legislation. There is one in particular, and the parliamentary secretary alluded to it this afternoon. I refer to the provision which affects persons leaving Canada before having reached the age of 65. Such a person can still get the pension if he has been in Canada for 40 years after the age of 18.
As a result of that there are individuals-I have had a case or two, and again we are talking about just a few cases, and they are persons away from Canada, but we are talking about what is fair-who were born in this country, have lived ih Canada for 57 years, but still do not get the pension because they have gone elsewhere.
On the other hand, I am proud of the fact that we have relaxed the residence requirements so that a person can come to Canada at the age of 55, live here for ten years, and get the pension. But I think there is an element of unfairness if someone can be here for only ten years and get the pension, whereas someone else who was born here, and who lived here for 57 years and 11 months, still does not get the pension. That is why I ask that all these residence requirements be looked at again.
Old Age Security
I am asking for something to be done in a field that has been amended several times. It has been done, if I may say so for the benefit of my hon. friend from Calgary, when parties on both sides have been in power. The length of time that one has to be in Canada has been reduced. Provision has been made for getting the pension after a certain number of years, even though a pensioner lives elsewhere. If these sort of changes have been made, I suggest that a further improvement can be made in respect to a number of elements in the residence requirements.
I commend the hon. member for Okanagan Boundary for having persisted in this matter, and I commend the government for agreeing to this proposition. I hope the bill that this motion calls for will be presented at an early date, and I am sure it will not take the House long to pass it.


Mr. Heath Macquarrie (Hillsborough):: Mr. Speaker, I am happy to see you in the Chair; you have always presided over our deliberations so well. I should like the preceding speaker to know that Friday between the hour of four and five is the very peak of parliamentary attendance; it is one of my favourite days. There is such an intimate gathering of good people here that I hate to miss the Friday afternoon show. It is almost as agreeable as the late night show, another aspect of our parliamentary schedule that I like very much.
I want to begin by congratulating most heartily, as I did in the previous parliament, the initiator of this very fine piece of what I would describe as remedial legislation, which is what it amounts to. The first time that the hon. member for Okanagan Boundary (Mr. Whittaker) came here, he noted an anomaly in the legislation. Indeed it was not an anomaly but in fact an outrage, a very grave injustice against certain people, and he has been persistent and assiduous in trying to correct it. I commend him for his leadership, and I commend the spokesman for the government for its response. I think even its amendment is an improvement.
I have noted that the President of the Privy Council (Mr. Sharp) not long ago led a most prestigious group of solons and archons over to Westminster to discuss the ways of that ancient place. I would say that this afternoon demonstrates one way in which we can improve our proceedings, and that is by a more frequent attitude of acceptance on the part of the government toward the private members' hour. I think it is an extremely good attitude in the performance of parliament when a private member introduces a motion or public bill; there is nothing in the world to prevent the government from saying that it is a good idea, that it is a measure whereby service to the people may be improved or a piece of legislation may be improved. This should happen much more often.
I note that in another section of private members' business there stands a bill in the name of the hon. member for Windsor-Walkerville (Mr. MacGuigan) regarding heritage day. I also had a bill with reference to a holiday, and I would have been glad to withdraw mine in favour of his. Had that been done before Christmas we might have been able to have a holiday on heritage day this year, a measure which would have emanated from this particular hour in our proceedings. So I commend the government
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January 31, 1975
Old Age Security
for this demonstration today, and I hope it will do it more often so that private members' hour may become more meaningful.
I think the hon. member for Okanagan Boundary has shown he is a good legislator, because there are so many aspects of our legislation, and indeed of the regulations built thereon, which are ridiculous. I have told the House before about a constituent of mine who wanted to qualify for the residence period for purposes of old age security. He went to the office of the Department of National Health and Welfare and they said to him: "Sir, if you come back in 33 and one-third years we can qualify you." The gentleman came to me and said: "I am 88 already!" What kind of suggestion is it to make to a man of 88 that he come back in 33 'A years and the department will qualify him? Through my intervention we got the period down to nine years, but at 88 he was not even sure that would help very much.
As I say, there are many other items we could look at, but the hon. member for Okanagan Boundary must be
commended for his leadership. Through his efforts, and through the acceptance of the government, an injustice will be removed. May I tell the learned and venerable hon. member for Winnipeg North Centre (Mr. Knowles) that I am sure that when the government has all the details ready and wants to bring forward the amending bill, there will be no disposition to do otherwise than to proceed with expedition so that a little more justice will be extended to a few more of our people.
Motion, as amended, agreed to.


Some hon. Members:: Five o'clock.


The Acting Speaker (Mr. McCleave):: It is suggested that the Chair see that it is five o'clock. Is that agreed?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. McCleave):: It being approximately five o'clock p.m. this House stands adjourned until Monday next at 2 p.m.
At 4.31 p.m. the House adjourned, without question put, pursuant to Standing Order.

Monday, February 3, 1975