1975-02-13

ROUTINE PROCEEDINGS


Mr. Peter Elzinga (Pembina):: Mr. Speaker, under the provisions of Standing Order 43 I request the unanimous consent of the House on a matter of urgent and pressing necessity. This matter concerns the preservation of Canada's national parks. In view of the fact that the federal Department of Indian Affairs and Northern Development, which is responsible for the administration of national parks, has authorized that 42,000 acres of natural parkland be taken from the Wood Buffalo National Park and given to the Cree Indians by way of a land settlement, and because of the fact that both Indian affairs and national parks are administered by one department-an arrangement which may in some instances constitute a conflict of interest-I would request the consent of the House in respect of the following motion, in an effort to ensure that Canada's national parks are preserved and not sacrificed without public debate as an easy method of settling Indian land claims. I move, seconded by the hon. member for Churchill (Mr. Smith):
That the government do now use its authority under the Public Service Rearrangement and Transfer of Duties Act to transfer the administration of national parks from the portfolio of the Department of Indian Affairs and Northern Development.


Mr. Speaker:: The hon. member has proposed a motion pursuant to Standing Order 43. It therefore demands the unanimous consent of the House before it can be debated. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


VETERANS AFFAIRS
Mr. Jack Marshall (Humber-St. George's-St. Barbe):: Mr. Speaker, I, too, have a motion under Standing Order 43. The worsening conditions of Hong Kong veterans and
recent increases in the deaths of those veterans confirms the need for action on recommendations of studies made over the years to increase pensionable disabilities, particularly for those forced out of the labour market. I therefore, move, seconded by the hon. member for Victoria (Mr. McKinnon):
That the House do order that the minister make a statement on motions within seven days to advise what action has been taken as a result of recommendations made by the Standing Committee on Veterans Affairs on October 22, 1974, on the matter of Hong Kong veterans who are being forced out of the labour market because of their conditions.


Mr. Speaker:: The House has heard the terms of the motion being proposed pursuant to Standing Order 43, which requires the unanimous consent of the House before it can be debated. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


NATIONAL DEFENCE
Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker, I rise to propose a motion on a matter of urgent and pressing necessity pursuant to Standing Order 43. It arises from a recent decision by the Department of National Defence to mothball four destroyers. In view of the huge expense involved in such operations and the resultant pre-empting of any possible productivity from these ships, I move, seconded by the hon. member for Victoria (Mr. McKinnon):
That this matter be referred to the Standing Committee on External Affairs and National Defence and that this committee be directed to study the possibility of alternate uses for the ships in question.


Mr. Speaker:: The motion is proposed pursuant to Standing Order 43 and therefore requires unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.

February 13, 1975
Labour and Trades Group EXTERNAL AFFAIRS


GOVERNMENT POSITION ON PERMITTING ENTRY OF VALENTYN MOROZ AND FAMILY AS LANDED IMMIGRANTS- REQUEST FOR UNANIMOUS CONSENT TO MOVE MOTION UNDER S.O. 43
Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I rise to move a motion under the provisions of Standing Order 43, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles). I sent a note of my intention to the Prime Minister (Mr. Trudeau), and if members of the House will listen to my proposal I think they will agree that it is not partisan and is not political in any terms. I hope they will support it. Therefore, I move:
That the Prime Minister and the Government of Canada convey to the government of the U.S.S.R. the feeling of the people of Canada that they are willing to permit entry into Canada of Valentyn Moroz and his family as landed immigrants.


Mr. Speaker:: The motion having been presented pursuant to Standing Order 43, it requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


LABOUR CONDITIONS
Mr. Andy Hogan (Cape Breton-East Richmond):: Mr. Speaker, I rise under the provisions of Standing Order 43 and ask for unanimous consent, seconded by the hon. member for Brant (Mr. Blackburn), to move the following motion:
That this House urges the government to make an immediate offer to the General Labour and Trades Group at least equal to the level of wages paid by municipalities, so that social justice will be enjoyed by those who work for the people of Canada.


Mr. Speaker:: Order, please. Even contemplating my earlier commitment that in matters of this sort which are of urgent and pressing necessity I would be prepared at all times to give every hon. member the benefit of the doubt in that regard, and while I accept the fact that the question the hon. member has put forward is a matter of serious concern, I did not hear him attempt to develop any argument with regard to its urgency.


Mr. Knowles (Winnipeg North Centre):: I rise on a
point of order, Mr. Speaker. Is Your Honour not aware of the fact that this motion relates to a strike situation which could develop at midnight tonight?


Mr. Speaker:: Surely the hon. member cannot expect the Chair to take notice of circumstances which were neither explained nor exposed nor in any way referred to in the hon. member's remarks.


PUBLIC SERVICE
Mr. Leonard C. Jones (Moncton):: Mr. Speaker, I rise under the provisions of Standing Order 43 to move a motion on a matter of urgent and pressing necessity concerning the nation generally and I ask the unanimous consent of the House. I would move, seconded by the hon. member for Cape Breton-East Richmond (Mr. Hogan):
That in view of the imminency of a national strike by federal employees in the General Labour and Trades Group,
(1)	the President of the Treasury Board and other members of the cabinet be instructed and authorized to take immediate steps to intervene and avert the national strike; and
(2)	the President of the Treasury Board and other members of the cabinet and, in particular, those from the Atlantic provinces, intervene to remedy the problem of regional disparity in regional rates of pay placing employees from the Atlantic provinces in a position of second-class federal employees.


Mr. Speaker:: 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.


LABOUR RELATIONS
Mr. Otto Jelinek (High Park-Humber Valley):: Mr. Speaker, pursuant to the provisions of Standing Order 43 I rise to seek permission to move a motion of urgent and pressing necessity, particularly in view of the ever increasing labour unrest and militancy threatening the public interest, partially as a result of fragmentation of union power within a single public service sector. Due to the obvious inability of governments in general to cope with this fragmentation facing Canadians today, and due to the increasing inconvenience and economic impairment being encountered by Canadians as a result of walkouts as well as legal and illegal strikes in different public sectors of our services, I move, seconded by the hon. member for Burnaby-Richmond-Delta (Mr. Reynolds):
That the President of the Treasury Board be instructed to consider introducing forthwith legislation requiring union groups in a single public service sector to bargain with the government on a joint basis only.


Mr. Speaker:: The motion is proposed pursuant to Standing Order 43. Is there unanimous consent to the motion being put?


Some hon. Members:: Agreed.


Some hon. Members:: No.

February 13, 1975


URBAN AFFAIRS
Mr. Tom Cossitt (Leeds):: Mr. Speaker, I rise to ask, under the provisions of Standing Order 43, permission to move a motion of urgent and pressing necessity particularly to my own constituency and to the entire area along the Rideau Canal stretching from Ottawa to Kingston. Arising out of the decision of the government to increase land rentals to all those owning cottages on government land adjacent to the canal by as much as 800 per cent, I move, seconded by the hon. member for Grenville-Carle-ton (Mr. Baker):
That in view of the absolutely unwarranted increases of up to 800 per cent in land rentals being applied by the government to cottage owners along the Rideau Canal, the House considers this move illogical, nonsensical, unjust and inflationarv and instructs the responsible minister, namely, the minister of Indian and northern affairs, to forthwith instruct his officials to cease such increases and to re-examine the situation for purposes of establishing only increases that are fair and equitable to all concerned.


Mr. Speaker:: The House has heard the terms of the motion. It being proposed pursuant to the provisions 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.


THE CANADIAN ECONOMY
Mr. Armand Caouette (Villeneuve):: Mr. Speaker, under the provisions of Standing Order 43, I ask the unanimous consent of the House to discuss an urgent matter requiring immediate consideration.
Since the activities of the lumber industry, sawmills, wood cutting and finishing, have considerably slowed down due to the economic conditions, that the lumber industry in northwestern Quebec is particularly affected by the situation and that hundreds of workers are deprived of their means of livelihood, I move, seconded by the hon. member for Lotbiniere (Mr. Fortin):
That the House urge the Minister of Regional Economic Expansion to examine as soon as possible the possibility of giving assistance to lumber industry through grants or other appropriate measures to help that industry and the thousands of workers who depend on it for their livelihood overcome the present critical conditions affecting the lumber industry.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
Oral Questions


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



CANADIAN BROADCASTING CORPORATION


Mr. Doug Neil (Moose Jaw):: Mr. Speaker, I rise under the provisions of Standing Order 43 to request the unanimous consent of the House on a matter of pressing and urgent necessity to Canada. In view of the concern expressed by the public generally with respect to the program "Ten Lost Years," aired by the CBC television on Sunday, February 2 last, and in view of the fact that programming on CBC increasingly makes use of obscenities and tends to portray Canadians as a culture concentrating on obscenity, vulgarity, violence and sexuality, I move, seconded by the hon. member for St. John's West (Mr. Carter):
That this House go on record as condemning the continuation of programming by the CBC which tends to destroy the moral fabric of our society and insult the intelligence of Canadians.


Some hon. Members:: Hear, hear!


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



EXTERNAL AFFAIRS


Hon. Allan J. MacEachen (Secretary of State for External Affairs):: Mr. Speaker, I should like to table, in both official languages, the text of certain international agreements in force for Canada.



ORAL QUESTION PERIOD


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I have a question for the Minister of Finance, who is very much in the minds of all of us today in view of

February 13, 1975
Oral Questions
the strike of a good many public servants. I should like to ask the minister whether the delay in reporting some progress in his efforts to achieve consensus among the principal elements of the economy is because he now accepts the view that has been expressed by one of the economic advisers to the Prime Minister that it is too late now for a program of co-operative restraint to be effective.


Hon. John N. Turner (Minister of Finance):: No, I do not accept that view, Mr. Speaker.


Mr. Hees:: Wait till Pierre hears about that.


Robert Lorne Stanfield: A supplementary question. Perhaps the minister could give us a revised date as to when we could expect a progress report. He might also indicate whether it is his view and the view of the government that the acceptance of a program of co-operative restraint would make it substantially easier for the Minister of Finance to encourage the expansion of employment in the economy.


John Napier Turner: Mr. Speaker, the hon. gentleman is talking in terms of the traditional, classic economic trade-off between inflation and unemployment or employment, and I am not sure that in the current circumstances that necessarily applies.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: Mr. Speaker, for further clarification may I ask the Minister of Finance whether it is the view of the government that fear of stimulating inflation under current conditions is not a reason for any slowness on the part of the minister in injecting more stimulation into the economy? In other words, is it the view of the minister that there is no particular reason today to be concerned about accelerating inflation as a result of efforts to expand the economy?


John Napier Turner: Mr. Speaker, I think it is important that any economic policy of the government approved by parliament should recognize not only the problem of inflation but the problem of slow growth and the problem of energy conservation, three areas-


Robert Lorne Stanfield: What about the weather?


John Napier Turner: -that are very difficult to reconcile, in economic terms. So at the moment I would not accept the hon. gentleman's emphasis toward any one of those three problems.


CANADA'S SITUATION VIS-A-VIS COUNTRIES IN WESTERN WORLD
Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, I have a supplementary question for the Minister of Finance. In view of the statement made yesterday by Carl Beigie, a group of seven advisers to the Prime Minister, that Canada is "in as near a serious situation as any country in the western world", in sharp contrast to the tranquillizing statements made recently by the Prime Minister and the Minister of Finance that somehow we were better off than most countries in the world, would the minister indicate if he is satisfied with our currency

decline during the three years that he has been in office, a decline of 46 per cent in relation to the Swiss franc, and 29 per cent compared to the German mark? Also, does the minister anticipate that our currency will continue to slide and, specifically, has he taken any steps to end the government's ad hoc approach to long-range economic planning which Mr. Beigie feels will contribute to our deteriorating position in the world?


John Napier Turner: Mr. Speaker, the hon. gentleman did well to read the entire statement; but I want to say to him, without accepting the tone of his preamble, that if I were satisfied with the performance of the Canadian economy I would not be any more use in this particular job.


Some hon. Members:: Come over to the Conservative side.


Some hon. Members:: Oh, oh!


Sinclair McKnight Stevens: Mr. Speaker, I direct my supplementary question to the Minister of Finance. We may not have the chance to put many more supplementaries to him.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: In view of the Prime Minister's and the Minister of Finance's bit of puffery a few weeks ago to the effect that American authorities had taken Liberal government leads in setting U.S. economic policy, and in view of the minister's current statements that our budgetary stance in November was based on the anticipation of a better performing economy in the United States and that our unemployment is not due to-


Mr. Speaker:: Order, please. With all due respect, it seems to me that the preamble has outreached the question. I wonder if the hon. member would put his supplementary question.


Sinclair McKnight Stevens: Mr. Speaker, in view of my preamble, will the minister indicate if he has recently notified the American authorities that if they are still following our lead, they had better know that our lead was based on the presumption of their economy doing better; and if they are not going to do better, we may have to change our lead- but we do not intend to change our lead until we see where their economic policies may lead?


Some hon. Members:: Order.


Mr. Speaker:: Order, please. The hon. member for Winnipeg North.


EXTERNAL AFFAIRS
David Orlikow: Mr. Speaker, I direct my question to the Secretary of State for External Affairs. Has the government given consideration to the intent of the motion I moved earlier this afternoon, notice
February 13, 1975

of which I gave the Prime Minister about two weeks ago, regarding Valentyn Moroz? The motion was suggested to me by people in many parts of Canada belonging to all political parties.


Allan Joseph MacEachen: Mr. Speaker, I did not hear precisely the motion moved by my hon. friend, but I will examine it and give it consideration.


David Orlikow: A supplementary question, Mr. Speaker. Have efforts recently been made by representatives of the Canadian government in the Soviet Union to ascertain the state of health of Valentyn Moroz? If so, what information can the minister give the House on this matter?


Allan Joseph MacEachen: Mr. Speaker, I did raise this question, I think before the Christmas recess, with the Soviet ambassador, who assured me that the information which Mr. Gromyko had provided in respect of the health of Mr. Moroz was still valid, despite the intervening reports about the deterioration of his health; that he had ended his hunger strike and his condition had improved as he had been moved to a hospital. That is the latest information I have and I have no reason to believe it has fallen out of date.


David Orlikow: A final supplementary question, Mr. Speaker. In view of the fact that information being received by Canadians who are interested in this matter is different from the information given to the Secretary of State for External Affairs by the Soviet ambassador, have requests been made of the Soviet government, or will they be made, for representatives of the Canadian government stationed in the Soviet Union to visit Valentyn Moroz so that they can report directly on the state of his health on the basis of what they see?


Allan Joseph MacEachen: Mr. Speaker, I have not agreed to such a move as in the circumstances 1 think it would very likely be counterproductive.


INDIAN AFFAIRS
Mr. Gerard Laprise (Abitibi):: Mr. Speaker, I have a question for the Minister of Indian Affairs and Northern Development.
Since the rise in the cost of building single dwellings also affects the building of houses for natives, does the minister intend to increase the housing budget for natives and terminate the projects which are already underway, as at Fort-George, for instance?


Hon. Judd Buchanan (Minister of Indian Affairs and Northern Development):: Mr. Speaker, there will be a modest increase this year, but what we think is probably more fundamental and more sensible is that we are look-
Oral Questions
ing at the whole method of providing housing for Indian people. We are currently in the process of discussing this with the National Indian Brotherhood and we are optimistic that we will be bringing in a much more comprehensive program in the near future.


THE CANADIAN ECONOMY
Mr. John A. Fraser (Vancouver South):: Mr. Speaker, I have a question for the Minister of Finance. Yesterday the minister said he could not give a figure for unemployment because there are too many variables at play in the figure, yet at the same time he said the government does have estimates now of expected unemployment for the coming year. Will the minister now clarify for this House whether his recent budget was prepared using estimates of projected unemployment, or was it prepared without any estimate of unemployment rates for this year?


John Napier Turner: Mr. Speaker, we took all the economic factors into consideration.


John Allen Fraser: Mr. Speaker, the minister owes it to this House to either answer questions or to absolutely refuse.


Mr. Speaker:: Order, please. With all due respect to the hon. member, the minister owes no such obligation to the House.


John Allen Fraser: With respect, Mr. Speaker, the minister does not have to answer, but if he does he ought to give us an answer.


Some hon. Members:: Oh, oh!


John Allen Fraser: Can the minister advise whether present estimates of unemployment are higher or lower than estimates available to the government when the budget was introduced in November?


John Napier Turner: Mr. Speaker, I said to the House that because of the continued deterioration of the American economy, with its effects on our exports, our forecast for growth of employment would have to be shaded down. I also said to the hon. member's leader that I never hazarded a prediction on unemployment because of the variable factors at play, including participation rates.


John Allen Fraser: Answer the question.


John Napier Turner: It is good of the hon. member to drop in on his tour across the country, but I am answering his question as best I can.


Some hon. Members:: Hear, hear!


John Allen Fraser: When someone does not have an answer, they try to avoid the question. Will the minister do us the courtesy of answering the question I put to him? That last

February 13, 1975
Oral Questions
retort was not an answer to any of the questions put to the minister in the last several days.


Mr. Speaker:: Order, please.


POST OFFICE
Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, my question is for the Postmaster General.


Some hon. Members:: Hear, hear!


Walter Gilbert Dinsdale: I would only comment that we are just trying to keep the Post Office running. Could the Postmaster General confirm or deny the report of an assault on a postal supervisor in the Montreal office yesterday which sent the gentleman to hospital? Could the minister also indicate what action he is taking to deal with these sporadic outbreaks of violence on the part of a small number of employees, which is causing serious damage to the image of the bulk of the loyal employees?


Hon. Bryce Mackasey (Postmaster General):: Mr. Speaker, I think the hon. member is entitled to a full answer. He shares the same belief as I do, that the overwhelming number of postal workers in this country are law-abiding citizens who are quite prepared to do a decent day's work for a decent day's pay provided they are recognized as people and not as digits. Having said that, Mr. Speaker, there is a small nucleus of problem makers in the Post Office. Yesterday an employee did create a certain amount of violence, hitting one of the supervisors and injuring him quite grievously. Obviously, that person was immediately suspended. We have waived all grievance procedures in order that his case may be arbitrated, if he feels like proceeding in that way, and we have encouraged the supervisor to proceed by way of criminal charges. I am considered a fair friend of labour and I think that the Post Office employees of this country deserve to be able to render an honest day's work for an honest day's pay. I will not tolerate violence in the Post Office as long as I am Postmaster General, even if it creates illegal strikes in certain parts of the country.


Some hon. Members:: Hear, hear!


Walter Gilbert Dinsdale: In the interests of improving the efficiency of the Post Office Department, could the Postmaster General indicate whether there is any relationship between what appears to be a continuing boycott of the postal code and the activity of this small number of employees to whom he referred?


Bryce Stuart Mackasey: In all fairness, Mr. Speaker, I have to agree that there is some suggestion, not of a boycott but of a genuine concern about automation by some responsible employees. There is also a very tiny group which is promoting the boycotting of the code in order to destroy the system. Their fellow employees have little use for them. That group shall not succeed. With 10 per cent unemployment the working conditions in the Post Office, although

far from perfect, are not that onerous that I am sure there are thousands of Canadians who would be glad to take their place.


ADMINISTRATION OF JUSTICE
Mr. J. P. Nowlan (Annapolis Valley):: Mr. Speaker, I have a question for the Solicitor General. Has the minister instructed the National Parole Board to review all cases involving people jailed on cannabis convictions in spite of the fact that Bill S-19 has not yet been presented to this House?


Hon. Warren Allmand (Solicitor General):: No, Mr. Speaker. This will be done once the bill is passed.


Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, I have a supplementary question for the Solicitor General. I would like some clarification of his answer. Does the statement made today both inside and outside the House in reference to parole and drug convictions apply to all persons convicted of possession of marijuana or hashish, possession for the purpose of trafficking and unlawfully importing marijuana?


Mr. Guay (St. Boniface):: You are reading.


Eldon Mattison Woolliams: Will the hon. member for St. Boniface be quiet for a moment while I ask this important question.


Joseph-Phillippe Guay: Mr. Speaker, I rise on a point of order. I said the hon. member could read better than he could speak. That is all.


Eldon Mattison Woolliams: I will put my question again in case the minister did not hear it because of the interruption by the hon. member for St. Boniface. He is one of those noisemak-ers you have at New Year's. This was an important statement. My question is, does the statement made outside the House today by the Solicitor General, with reference to drug convictions of people who are incarcerated at the present time or who will be incarcerated, apply to possession of marijuana, possession for the purpose of trafficking, and the unlawful importation of marijuana; and does it apply to marijuana and hashish alone?


William Warren Allmand: When the Minister of National Health and Welfare announced the tabling of the bill on cannabis which is now in the Senate, he mentioned there would be a review of the cases of those in penitentiaries whose offences were in the category for which penalties would be reduced under the new bill. He said their cases would be reviewed by the Parole Board; that they would be given special attention in view of the lighter sentences which might be made applicable under new legislation.

February 13, 1975


IMMIGRATION
Mr.   Sean@: Mr. Speaker, I have a question for the Minister of Manpower and Immigration. During last year's period of immigration amnesty or normalization, did the Canadian government approve for citizenship any individual reported to the government by the Jewish Documentation Centre in Vienna as being Nazi war criminals resident in Canada?


Hon. Robert K. Andras (Minister of Manpower and Immigration):: Not to my knowledge.


Mr. O'Sullivan:: Can the minister tell us what the government is doing, if anything, with the information supplied over a number of years by Simon Wiesenthal, one of those who tracked down Adolph Eichmann, that some 15 Nazi war criminals still wanted in connection with atrocities are resident in this country?


Robert Knight Andras: I am not aware of such information coming to my attention. I will look into the matter. I do not know how far back into the far distant past we should go in these matters, but I will certainly review the hon. member's comments.


SYNCRUDE PROJECT-INCREASE IN CAPITAL COSTS- GOVERNMENT'S LIABILITY THEREFOR
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, my question is to the Minister of Energy, Mines and Resources. It arises from reports in the press this morning that a study done for the Alberta government shows that the cost of Syncrude will be at least $2,900 million, representing a 50 per cent increase in the last nine days. The report points out that the original estimate omitted to include provision for certain interest payments, housing costs and environmental factors. Can the minister tell us whether the government is still committed to pay 15 per cent of the capital costs which would amount, if this estimate is correct, to about $450 million?


Hon. Donald S. Macdonald (Minister of Energy, Mines and Resources):: The 15 per cent figure is correct. I should advise the hon. member that certain of the elements referred to, particularly the cost of housing, are not our obligation at all.


Lorne Edmund Nystrom: Was the minister aware of this study regarding the cost of Syncrude before the deal was made in Winnipeg nine or ten days ago and, if he was, can he tell us why the government did not set up an independent investigation of some sort?


Donald Stovel Macdonald: I would have to check with my officials to determine whether these particular figures were provided to them. I would be glad to do so and report.


Lorne Edmund Nystrom: Do I take it that the 15 per cent investment in terms of equity and capital cost is open-ended?
Oral Questions
For example, if the cost of the project should rise $4 million or $5 million is the government still committed to 15 per cent? After all, the cost estimate has gone up by 50 per cent in the last ten days.


Donald Stovel Macdonald: I think the hon. member is misleading the House by using those terms. We are a 15 per cent partner in the project and, obviously, if there is any substantial cost overrun, not only we but the partners interested in the other 85 per cent will want to review the situation.


CAPITAL PUNISHMENT
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, my question is directed to the Solicitor General. It concerns the plague of killings which is going on against police officers and other officers of that kind. In view of the fact that parliament passed a law providing for capital punishment in cases of this type of murder, I should like from the minister the answer to this question: What is the basis upon which the governor in council decides on commutation when there is no recommendation for mercy either by the jury or by the trial judge and where appeals have been dismissed through to the Supreme Court of Canada? What are the extenuating circumstances which cause the governor in council to grant reprieves in such cases?


Mr. Speaker:: Order, please. With all due respect to the right hon. gentleman and to the minister who may wish to reply, it seems to me this question calls for an answer with respect to general policy as well as for an answer which might deal with hypothetical situations and might, indeed, be a lengthy answer. I do not question the right to seek this information, but I wonder whether it is appropriate to seek it during the short question period.


John George Diefenbaker: This might be a short question period, but life imprisonment is an awfully long sentence for those who have been denied the execution to which they have been sentenced.


Some hon. Members:: Oh, oh!


John George Diefenbaker: All I am seeking is a simple answer to my question in respect of cases where there have been commutations and there has been no recommendation for mercy and where, according to law, the death sentence applies. I know from experience there are often extenuating circumstances which generally bring about commutation: I think there are three. Will the minister name those that apply today?


William Warren Allmand: In the only case in which I have been involved so far there was a recommendation for mercy. No doubt there will be some cases before us in the near future, but I cannot tell the right hon. gentleman right now what all the criteria will

February 13, 1975
Oral Questions
be in considering those cases. In fact, I do not know at this time whether there are recommendations for mercy or not.


John George Diefenbaker: What was the case in which there was a recommendation for mercy? The minister, having had only one, will remember it.


William Warren Allmand: I said there was a recommendation for mercy in that case. If I understood the right hon. gentleman correctly, he wanted to know what were the criteria in cases where there was no recommendation for mercy.


John George Diefenbaker: I am trying to find out the name of the case in which there was a recommendation for mercy in respect of the homicide of a police officer.


William Warren Allmand: I have answered that question, Mr. Speaker. I have dealt with one case where a man killed a police officer and there was a recommendation for mercy. That was the only case which came before us.


HOSPITALS-DIFFICULTY IN RECRUITING STAFF IN EASTERN QUEBEC
Mr. Eudore Allard (Rimouski):: Mr. Speaker, I should like to put a question to the Minister of National Health and Welfare.
Can he tell the House whether he is aware of the problem which hospital staff recruiting poses, especially in the lower St. Lawrence region, where 26 nursery attendants at Rimouski have refused to go back to work because they consider there are not enough of them to ensure the children proper care? Can he tell the House what steps he intends to take to facilitate qualified hospital nursing staff recruiting, and also whether he has looked into the possibility of adopting an isolation bonus to encourage hospital staff and doctors to accept employment in areas located far from major centres?


Hon. Marc Lalonde (Minister of National Health and Welfare):: Mr. Speaker, thanks to the newspapers, I am aware of the facts mentioned by the hon. member, but that whole question falls under provincial administration which has jurisdiction in that field.


PUBLIC SERVICE
Mr. Walter Baker (Grenville-Carleton):: Mr. Speaker, I should like to direct a question to the President of the Treasury Board. It relates to the question I asked him on February 10 dealing with the impending strike of GLT's in the public service. Could the minister let us have an updated report on the present situation and tell us whether he is planning any intervention at the eleventh hour?


Hon. Jean Chretien (President of Treasury Board):: Mr. Speaker, a moment ago I met with the Liberal members from the Maritimes, who made representations to me on that subject. I am pleased to report to the House that in ten minutes the negotiations will resume between the parties. We hope to come to a settlement before the strike begins.


CANADIAN BROADCASTING CORPORATION
Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, I should like to direct a question to the Secretary of State which arises from the airing by the CBC of the program "Ten Lost Years". Some have been so uncharitable as to suggest that somebody lost his marbles in presenting that program. Is it the intention of the government to ask the president of the CBC to appear before the appropriate committee of the House of Commons to explain why Canadian culture is being directed along such permissive lines rather than in the opposite direction?


Hon. James Hugh Faulkner (Secretary of State):: Mr. Speaker, the hon. member has been in this House longer than I have and knows perfectly well that when the estimates of the corporation are before the committee, the president of the CBC will be there. If the hon. member has any views about this program, he should express them then.


Stanley James Korchinski: Mr. Speaker, then I ask the minister whether it is the intention of the government to instruct the CBC to label its programs as fit for family viewing, or vulgar. If they are to be labelled as vulgar, perhaps they should be presented at three o'clock in the morning, if at all. Does the government intend to take a "hands off" policy, or perhaps adopt a line similar to that taken by the NDP government of the province of Saskatchewan where a directive was sent by the government to school teachers to instruct their students to view such vulgar programs?


James Hugh Faulkner: Mr. Speaker, on the general question of the relationship between the corporation and the government, it has been a long established principle, one which I always felt was shared by the official opposition, that the government should not instruct the corporation.


Stanley James Korchinski: Mr. Speaker, may I, then, direct a final supplementary question to the Minister of Justice? I should like to ask whether his department would consider abortion on demand to be a perfectly legal and proper subject for the CBC to have a camera present and televise the operation for public viewing.
February 13, 1975


BROADCASTING
Mr. James A. McGrath (St. John's East):: Mr. Speaker, I have a supplementary question for the Minister of Communications. Is it the intention of the government or the minister to discuss with the CRTC the possibility of formulating a code which would govern the standards of television programs in Canada and prevent the exploitation of sex and violence?


Hon. Gerard Pelletier (Minister of Communications):: Mr. Speaker, that is a proposal I would be glad to consider, but there is no such plan at the present time.


Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, I should like to ask a supplementary question, and would make the observation that supplementaries which follow two or three questions later haven't a hell of a lot of value. I wonder if I could ask-


Mr. Speaker:: Order, please.
* *
*


TOKYO ROUND-GOVERNMENT POSITION
Mr. Claude Wagner (Saint-Hyacinthe):: Mr. Speaker, I wish to ask a question of the Minister of Industry, Trade and Commerce.
Since the minister said in this House last February 4 that the government had not yet decided what the strategy of our country would be at the current talks of the Tokyo Round, can he now tell the House how his government and his department have prepared for that important international forum and what cards they are going to play?


Hon. Alastair Gillespie (Minister of Industry, Trade and Commerce):: Mr. Speaker, the Canadian delegation, headed by Mr. Rodney de C Gray, is in Geneva at the present time. They are meeting with the trade negotiating committee of the various participating nations. During this period of time, say over the next few days, they hope to sort out the committees and the timetable of events. Therefore, I will be in a better position to report later, when those meetings have been completed.


DUMPING OF TEXTILES-GOVERNMENT POSITION
Claude Wagner: Mr. Speaker, I would like to put a supplementary.
In view of the particular situation of textiles at the present time, is the minister prepared to entertain for discussions about the Tokyo Round the request made on February 5 by the CSD president that dumping must again be defined, since some countries are selling on the Canadian market at less than the world prices?
Oral Questions


Alastair William Gillespie: Mr. Speaker, I think that particular representation has already been noted. If it has not, I will convey it to the negotiating committee.


PUBLIC SERVICE
Mr. Maurice A. Dionne (Northumberland-Miramichi):: Mr. Speaker, I should like to ask the President of the Treasury Board if it is the policy of his department to attempt to decrease the wage disparity between public service employees in Atlantic Canada and public service employees in other areas of the country?


Joseph Jacques Jean Chrétien: Mr. Speaker, as an employer I will say that the answer is no. We have a comparability policy governing our employees' salaries within their provinces. This problem has been dealt with by the conciliator, Mr. Hart. He has made interesting recommendations in this regard.


SOCIAL SECURITY
Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Minister of Labour? My question relates to the inquiry into all aspects of railway pensions being conducted by Dr. Noel Hall, the commissioner appointed by the minister. Could the Minister of Labour say when he expects to receive the report from Dr. Hall?


Hon. John C. Munro (Minister of Labour):: Mr. Speaker, my latest information is that Dr. Hall is meeting this month and hopes to conclude his hearings and make his report some time in March, I believe, so it will not be for some time yet.


CANADIAN NATIONAL RAILWAYS
Stanley Howard Knowles: Mr. Speaker, may I direct a supplementary question to the Minister of Transport? Pending the receipt of the report from Dr. Hall, could the Minister of Transport say whether the Canadian National Railways will in 1975 be escalating the pensions of those employees who are already retired and, if so, will that escalation be the full amount of the rise in the cost of living?

February 13, 1975
Oral Questions


Hon. Jean Marchand (Minister of Transport):: Mr. Speaker, I think that the unions are now negotiating with the railways and that it falls to them first to try to obtain a fair settlement. If they do not, perhaps the Minister of Labour will have to intervene. If I become involved, I might say I have a lot of sympathy in respect of their demands as far as pensions are concerned.


Stanley Howard Knowles: Mr. Speaker, I rise on a point of order. I realize that perhaps the minister did not understand my question. The question of escalating the pensions of those already retired is not a subject of collective bargaining, and that is my reason for asking the minister whether the Canadian National will, as it has done during the last few years, provide an escalation in 1975, and this time will it be at least equal to the rise in the cost of living?


Jean Marchand: Mr. Speaker, I know the hon. gentleman knows a lot about labour negotiations. I also know, from my experience-and probably this has been the experience of many others-in the CLC that the union does negotiate on behalf of those who are retired, so as to obtain justice. Perhaps they have opted not to do so, but I am not aware of this. If they have opted not to do so, then this would have to be done either through the Department of Labour or the Department of Transport.


Stanley Howard Knowles: Ten o'clock.


NATIONAL PARKS
Peter Elzinga: Mr. Speaker, I have a question for the right hon. Prime Minister regarding a conflict of interest which I spoke of earlier today. Will the Prime Minister put the national parks under the jurisdiction of another minister, because surely there is a conflict of interest when the minister responsible for Indian Affairs and Northern Development wishes to withdraw park land from a national park that is protected under section 4 of the act respecting national parks?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, I must confess that I do not see what conflict of interest is involved, but I will study the question.


MANPOWER
Mr. G. H. Whittaker (Okanagan Boundary):: Mr. Speaker, my question is for the Minister of Manpower and Immigration, and I would thank him for the written answers he has sent to three previous questions regarding the possible implementation of the cluster program in British Columbia. In view of the concern among
[Mr. Knowles (Winnipeg North Centre).)
employees of the Department of Manpower and Immigration caused by the possible implementation of the cluster program in British Columbia, will the minister assure the House that he will report the results of his study on the reorganization of Manpower and Immigration to the House, when it is completed on April 1, 1975?


Robert Knight Andras: Mr. Speaker, this is a matter of internal organization and administration. I would like to follow the hon. member's suggestion, but I want to examine the implications of it first.


FISHERIES
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, I wish to direct a question to the Minister of State responsible for fisheries.
I wonder if the minister intends to go ahead with the policy he has already made public respecting the delivery of salmon fishing permits within designated zones only, thereby prohibiting permit holders from fishing wherever they please in salmon-rich zones.


Hon. Romeo LeBlanc (Minister of State (Fisheries)):: Mr. Speaker, I shall check the exact gist of the question the hon. member has just asked. Unless I am mistaken, he is inquiring about the possible delivery of permits for special zones. This suggestion had already been made, but this is something on which a final decision is still pending.


ICNAF-JUSTIFICATION FOR INCREASE IN QUOTA FOR CAPELIN
Mr. Walter C. Carter (St. John's West):: Mr. Speaker, I have a supplementary question which concerns the new, increased quota system agreed to by ICNAF with respect to the capelin fishery in our waters. Can the minister tell the House whether Canada took a position against increasing the quota, and is he satisfied that sufficient data and research information exist to justify increasing the quota of this important fish?


Roméo LeBlanc: Mr. Speaker, our position has been that the absolute quota should have been slightly lower than agreed to. On the other hand, we know that some of the nations which have received part of this quota will not fish all of it, so in the last analysis we would have got what we wanted. As for the scientific evaluation, I regret to say that I am never satisfied that our own scientific evaluation is sufficiently funded, but I believe that in this instance we have a fairly reliable case.


Walter C. Carter: Could the minister tell the House whether the countries fishing for capelin last year violated the
February 13, 1975

ICNAF agreement with respect to quotas and, if so, would he name the countries?


Roméo LeBlanc: I will have to refresh my memory, but I will be glad to report to the hon. member soon.


IMMIGRATION
Mr. Jake Epp (Provencher):: Mr. Speaker, my question is for the Minister of Manpower and Immigration. On February 3, when the minister tabled the green paper, he mentioned that within a few days he would be in a position to outline the format of the public debate. In view of the fact that a number of public servants in some of our cities have already been involved in the process of discussion of the green paper, could the minister inform us what plans have been agreed upon?


Robert Knight Andras: Mr. Speaker, there has been no change since the statement that I made and the statement that I tabled. Members of the department are to be available on a responsive basis, when requested, to supply factual information, but are to avoid getting into political or policy discussions about it. As to the motion about the parliamentary committee, I hope to be able to place it before the House in the not too distant future. As hon. members know, there have been conversations about that. I do not think that in the short time available in the question period I could elaborate on it, but I will be glad to do so on the motion that will be put about the committee.


LEGISLATION TO AMEND REGULATIONS-GOVERNMENT'S INTENTIONS RESPECTING TIMING OF DEBATE
Arthur Jacob (Jake) Epp: Mr. Speaker, I have a supplementary question for the President of the Privy Council. In view of the debate that is to take place with respect to the green paper on immigration and the integration of immigrants into Canadian society, as well as the regulations that are proposed with regard to obtaining citizenship-which will obviously affect the acceptance of immigrants by Canadians-could the minister indicate whether the government has any intention to withhold the debate on and the passage of Bill C-20 which amends the regulations respecting the rights of citizenship until such time as the green paper has been tabled and the immigration bill put before the House?


Hon. Mitchell Sharp (President of the Privy Council):: No, Mr. Speaker; I hope that the House will dispose of other business and get to this bill. I think it would be very useful to have a discussion going on in the House at the same time as the debate is going on regarding immigration, because-and here I agree with the hon. member- they are closely related and I think it would help to offset any idea that our immigration policy is directed against any particular group.
Business of the House GREEN PAPER-SHORTAGE OF COPIES


Mr.  R. Gordon L. Fairweather@Fundy-Royal: Mr. Speaker, I am not running for anything, either.


Some hon. Members:: Why not?


Mr. Fairweather:: My supplementary question to the minister is, why is the green paper in such short supply when this is obviously an issue on which parliament and the government will want to have a large measure of discussion? When will the supporting research papers be published? It is my understanding that only 5,000 copies of the green paper have been printed, when there might well have been 25,000 or 30,000.


Robert Knight Andras: Mr. Speaker, I must admit that I based my decision about quantities on the advice from Information Canada.


Some hon. Members:: Oh, oh!


Robert Gordon Lee Fairweather: A stupid organization.


Robert Knight Andras: The decision was made to print 5,000 English and 3,000 French copies. Obviously, events have overtaken us and copies are being bought up fast. There will be a second printing which we hope will be available as quickly as possible. I might add, for the information of hon. members, that a condensed version is being printed now. It is available in offset form to members who wish it, on a free issue basis, and it will be available in large quantities on a responsive basis within the next five to ten days.


Robert Gordon Lee Fairweather: And the answer to the second part of the question?


Robert Knight Andras: The supporting studies are awaiting French translation and will be available within ten days, I believe.


BUSINESS OF THE HOUSE
Walter David Baker: Mr. Speaker, I wonder if I might ask the House leader a question with respect to the business of the House for the balance of today, tomorrow and perhaps next week?


Mitchell William Sharp: Mr. Speaker, the House is still in committee of the whole on Bill C-49. Because of the urgency of this matter and notwithstanding the urgency of many other items on the order paper, we shall continue in committee of the whole until we dispose of this bill. However, on Monday I understand that the hon. member for St. John's East will call his motion on the Canadian Egg Marketing Board committee report.
After Bill C-49 has been disposed of in committee of the whole we will turn to Bill C-46, the housing bill, which is also very urgent. I hope all members of the House realize that there is a great deal of public pressure upon parliament to act with some vigour, and dispatch both with respect to the bill of the Minister of Finance and to the

February 13, 1975
Business of the House
housing bill. Next Thursday, February 20, will be an allotted day.


Stanley Howard Knowles: Mr. Speaker, May I ask the President of the Privy Council two questions regarding the business of the House. First, can he say what has happened to the government's plans regarding Bill C-48, the bill regarding railway costing disclosures, and second, is the government yet in a position to present to the House a motion referring CIDA and NORAD to the Standing Committee on External Affairs and National Defence?


Mitchell William Sharp: Mr. Speaker, with regard to Bill C-48 it had been my hope, which I have had to abandon, that we might have got through the committee of the whole stage by this evening, but I see no prospect of that. If that were to happen, of course we would take the railway bill immediately and get it through because there has been agreement among all parties in the House that there would be at most five speakers. However, I cannot put it on the agenda until there is greater progress on Bill C-49.
As to the reference to the committee, tonight I will put down a notice of a reference of the NORAD question to the Standing Committee on External Affairs and National Defence, and which would also give the committee an opportunity of hearing reports from Canadian delegations to various international organizations.


Mr. Brewin:: Mr. Speaker, the Standing Committee on External Affairs and National Defence was at one time a useful and prestigious institution; however, it has fallen on evil days and has not met since October. Both the opposition parties have indicated to the President of the Privy Council that they would like to discuss not only the question of NORAD, which admittedly is important, but also the question of the administration of CIDA, which is also important.


Some hon. Members:: Hear, hear!


Francis Andrew Brewin: My point of order turns at this stage into a plea that the motion we shall have will include both subjects, so that the committee can decide how to arrange its own business and deal with both of these items.


Mr. Beatty:: Mr. Speaker, on the same point of order referring to the business of the House, I wonder whether the government House leader might be able to indicate to the House when the government will be bringing forward enabling legislation which will allow the government to make regulations with respect to protecting privacy and information stored in federal data banks.


Walter David Baker: Mr. Speaker, with respect to the point made by the hon. member for Greenwood just a few moments ago, the suggestion he made would be perfectly agreeable to us. I think perhaps it is a good one. I would ask the government House leader to consider the question with his colleagues, and perhaps some arrangement can be made with respect to that.


Mitchell William Sharp: Mr. Speaker, may I remind the House that CIDA estimates will be before the House in the future.


An hon. Member:: That's too late.


An hon. Member:: What are you hiding?


Mitchell William Sharp: It is not my intention to put forward in the suggested motion a reference of this kind. Indeed, if I may say to the hon. members opposite, none of the questions I had expected they might have addressed to my hon. colleague, the Secretary of State for External Affairs, who is quite ready to answer them, have been presented. All we had were Standing Order 43 motions.


An hon. Member:: What are you hiding?


Mr. Speaker:: Order, please. Orders of the day.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Wednesday, February 12, consideration in committee of Bill C-49, to amend the statute law relating to income tax-Mr. Turner (Ottawa-Carle-ton)-Mr. Penner in the chair.
The Deputy Chairman:: When the committee rose last evening, clause 1 was under consideration. The Leader of the Opposition.
On clause 1.


Robert Lorne Stanfield: Mr. Chairman, I would like to have the attention of the Minister of Finance for a minute. I will only be a minute on clause 1 of the bill. It is not my intention to cause any delay in moving the bill through the House, but I want to say in all seriousness to the minister that with the economic problems which face the country, I think the opposition is entitled to serious answers to serious questions put to him.


Claude Wagner: Hear, hear!


Robert Lorne Stanfield: For that reason I will make a few comments on clause 1 of this bill. I asked the minister, for example, a question relating to the matter of the appropriate level of income taxation. I asked the minister this afternoon when we will get a progress report regarding his efforts to achieve a consensus. I received no answer at all.
I asked the minister whether the acceptance of his consensus, whatever it may be, by the principal elements of the economy would make it easier for him to pursue policies to encourage the expansion of our economy and, therefore, employment. He said that he did not necessarily accept the trade-off between employment and inflation in the circumstances we find ourselves in today. What does that mean? If it was intended as a serious response to a serious question, there is only one interpretation I can put on that, and that is that in the present circumstances in
February 13, 1975

our economy the minister did not feel that expansion would be any inflationary threat.
But when I sought clarification as to whether the minister's position is that in the present circumstances further stimulation of the economy does not constitute any aggravation to inflationary pressures, I think he said that one had to pay attention to all three. That is no answer at all.
I am not threatening the minister with delays. I am not threatening him with harassment. I say simply in all seriousness that, in view of the serious conditions confronting this country, what is by his own admission the inappropriateness of his budget to conditions which now confront him-and I sympathize with him in that-the inadequacy of his budget, and in view of the emphasis he has put from time to time upon the role that this seeking of a consensus has to play in our economy, I think that we are entitled to be treated seriously by the Minister of Finance.


Some hon. Member:: Hear, hear!


Robert Lorne Stanfield: The minister may think it is satisfactory to make a joke with the hon. member for Vancouver in order to get himself off the hook. I just want to tell him that I do not think that bothers the hon. member in question very much. It may amuse my hon. friends opposite, but it is not an answer, and I would like the minister to tell us the answer in a moment. He can do it in one minute. He can tell us when we are going to get a progress report with regard to consensus. He can tell us quite frankly whether the acceptance of his consensus suggestion does have a bearing on what policy he may adopt with regard to stimulation.
He can tell us also, for example, whether he is suggesting a package to the principal elements of the economy. For example, is he saying to business that we are concerned about inflation, we are concerned about the rate of growth of the economy, we are concerned about unemployment, we would like to approach all these together, and if we could get a consensus with regard to restraint, then we could do thus and thus with regard to expansion and with regard to employment?
These are very simple, elementary but important propositions for us to know and for the country to know, and I think that before the minister asks us to proceed further with the bill, he can answer these few simple questions in just a couple of minutes.


John Napier Turner: Mr. Chairman, the hon. gentleman is now addressing the committee as Leader of the Opposition, and in that capacity I am going to respond to him in the tone in which he addressed those remarks, which I agree are serious. I might just say that he has been a member of the House of Commons a good many years and has been in the legislature of a sovereign province before that for some time. He knows there are two kinds of questions.
A question that is put in the tone of sincerely seeking an answer on a serious subject gets an answer in the same tone. When a question is put in a tone to score debating points, then I feel it is open to me to defend myself and the
Income Tax
party I represent in the same tone. I follow that procedure in trying to seize the mood of the House as best I can.
Since he put these questions to me in a tone that demands an answer, because of the position he holds in the House and the country and the seriousness of the questions, I am going to deal with them in that fashion.
The consensus process brings a lot of people together from various aspects of the economy. Part of the delay in maturing this process has resulted from the fact that we have not been able, on every occasion, to get on a specific committee the ministers required and the men and women from the labour community, or the part of the business community involved, or consumers and so on. Sometimes they were not available on the dates we had hoped.
I am not the only minister involved. I am trying to deal with as many meetings as I can within the restraints imposed upon me. I have not been able to do so within recent weeks because of my prior duties in this House. I have had to spend a good deal of time here, and I do not object to that because the three bills we have had are very important, and this is where I should be. But, as a result, I have not been able to go elsewhere. With me in the process is the Minister of Industry, Trade and Commerce, the Minister of Consumer and Corporate Affairs, the Minister of Agriculture, the Minister of Labour, and on other occasions ministers whose portfolios or regional representation dictate that they should be included.
I cannot give the hon. gentleman or the committee a precise date or target when I will be able to tell the House whether this evolving consensus process has worked. The reason I did not present a package to the committee now is that I wanted it to evolve, if possible, and not be imposed by the government. I believe that one of the mistakes of the 1969-70 exercise was that in the minds of labour a deal was made between business and government, and labour was just presented with a fait accompli.
I want to see something evolve with the legitimate interest of each sector of the economy being properly represented in a way that makes it a mutual understanding and co-operative arrangement-a consensus.
On the second main question, that of the stimulus that is appropriate for the economy at the moment, I have said to the hon. gentleman and to his colleague, the hon. member for York-Simcoe, that although both we and the American administration underestimated the depth of the current United States recession, there were two factors currently in play that I wanted to analyse before I decided whether to recommend to the government, and thereafter to parliament, that further stimulation ought to be injected into the economy.
First of 511 it is not clear that the final package of economic measures presented by the President of the United States to Congress is going to be passed by the Congress, or what compromises are going to be worked out between the administration and Congress-what the interrelation is going to be between the four factors at play in economic terms. These are first, anti-inflationary measures in terms of tax cuts with a stimulus at the same time; second, how much stimulus is to be injected into the personal and corporate economy by reason of the tax cuts; third, what the final amount of borrowing is going to be

February 13, 1975
Income Tax
that is required by the United States treasury against the markets, and what effect that is going to have on interest rates; and fourth, what the timing is in the American economy of the energy measures proposed by the president.
The difficulty lies in trying to reconcile these forces. On the one hand the president is recommending $16 billion stimulus by way of tax cuts, personal and corporate, and on the other hand, is taking virtually $30 billion out of the economy in his energy measures. He has to get that back into the economy by reason of 1975 tax cuts. It is because of these forces at play that I want to gauge how it is progressing before I decide, because of the effect on Canadian exports, what our response should be.
The second reason is that our own stimulus in the amount of $3 billion, which in American terms you multiply by about 12-the ratio of the American to the Canadian economy-which is about a $36 billion stimulus in American terms, is taking place now, contrary to the American experience, because of the tax reductions for the 1974 and 1975 years that are being reflected in current payroll deductions. I want to see just how these two factors are working.
The hon. gentleman asked what effect this would have on inflation. I am not operating on the trade-off principle and I think the hon. gentleman recognizes that, but if the recovery in the American and Canadian economies, particularly the American, is coming in the third or fourth quarter, then I want to gauge just what stimulus is appropriate now because of the time lags involved and whether that stimulus, instead of aiding the unemployment problem which is the first issue on my mind, would only compound the inflationary forces in the third and fourth quarters of 1975.
These are the issues at play, and before deciding I want to analyse them on the best factual and forecasting basis I can. I have tried to be as realistic with the country and the House as I could from time to time. I think it is important not to underrate the seriousness of the situation and, on the other hand, I think it is important not to exaggerate it.
I read stories in the press that we are experiencing the worst unemployment since the depression. That does not happen to be so. First of all, we have no comparable figures for the depression years. The present labour force statistics series only began in 1953, and the labour force is very much higher than it has ever been before.
In reply to an earlier question put by the hon. member for York-Simcoe I said that one million new jobs had been found for Canadians in the last three years. Our labour force is the highest ever; employment is at record levels, and what is relevant is the unemployment rate. It is by no means the highest since the 1930s; it is by no means satisfactory, but the actual rate for January, 1975, is 8.4 per cent, seasonally adjusted to 6.7 per cent. That is the highest since 1962 when it was 8.5 per cent. In the preceding four years it was above 8.4 per cent; in 1961, 10.8 per cent; in 1960, 8.8 per cent; in 1959, 9.5 per cent and in 1958, 5.7 per cent.


An hon. Member:: The Tories-


John Napier Turner: I am not trying to make that point at all. The hon. members in the New Democratic Party can draw whatever conclusions they want. All I am saying is that we have to put this situation in its proper perspective. I think it is important for Canadians to be realistics; I think it is also important that we do not panic. That is the best answer I can give to the hon. gentleman.


Robert Lorne Stanfield: I thank the Minister of Finance for his response. His reference to figures for the 1960s remind one that the difference between that situation and this is that he is confronted with a problem not only of substantial unemployment-I do not say it is the worst since the depression-a problem of actual substantial unemployment and the threat of very substantial unemployment, and he is also involved in a very high rate of inflation. In the sixties inflation was not a problem at all.
I am very interested in finding out what role the consensus approach of the minister is playing in all this. I am prepared to accept what he says about the complexity of the present circumstances, the number of factors that have to be weighed and examined to determine the appropriate fiscal stance that should be taken, but I had assumed that the consensus was somehow related to a fight against inflation. If I am wrong, I should like the minister to say so.
I therefore assume that if the minister were successful in achieving a consensus, the result might be important in terms of lessening the rate of inflation, and also in terms of freeing the minister's options for the expansion of the economy. If the minister achieves a consensus among the principal elements of the economy, does he not feel that he will have taken an important step forward in fighting inflation? Also, I suggest he will feel that by so doing he has established the framework under which it will be easier for him to create more jobs in the country. I am putting the question in its simplest terms.


John Napier Turner: Mr. Chairman, I can accept that argument partially. The consensus, if it were to evolve, would not of course be the sole determining factor. What must be achieved is this: there must be some understanding and moderation on the part of large groups within the economy in their claims against the economy; also there must be a moderate fiscal, monetary, exchange and trade policy which is co-ordinated with other policies. Obviously, this would give us more manoeuvreability.


Robert Lorne Stanfield: That is all I am asking.


John Napier Turner: If we could achieve that consensus, we should have more manoeuvreability.


Robert Lorne Stanfield: Mr. Chairman, may I ask one more question, after which I will leave the minister in peace for the afternoon. Is the minister, along with his colleagues, pointing out to the principal sectors of the economy, that is, business, labour and others, that if they will accept a reasonable policy of restraint he will be freed in his options and be in a much better position not only to deal with inflation but to see to it that business is reasonably
February 13, 1975

good this year? Is the minister pointing these facts out which are part of the package?


John Napier Turner: Mr. Chairman, if the matter is put in those terms, in terms of a trade-off, I foresee some problem. That is why I answered the hon. gentleman the way I did earlier. I would not want the working men and women of this country to feel that I am trading off their ability to keep pace with the economy, and I am speaking in terms of prices, against their job security. The problem put in those terms, is a bit too stark in economic terms, and it is not the way I like to proceed in human terms.


Sinclair McKnight Stevens: Following my leader's questions, Mr. Chairman, may I ask the minister another question. He referred to a policy analysis. This will try to determine the direction which the American economy may take and the effects of other international economic factors. How long will this policy analysis last? Will it be one week, one month, half a year, or how long? When does he think he will have sufficient information in order to permit the government to make a new move, bearing in mind that time may be of the essence?


John Napier Turner: Mr. Chairman, that will be a question of judgment.


Sinclair McKnight Stevens: Mr. Chairman, whose judgment?


John Napier Turner: My judgment and the government's and, if necessary, I will put myself in the hands of parliament.


Mr. Schumacher:: Mr. Chairman, may I ask the minister can he explain, briefly, how the November budget differs from the May budget in its treatment of resource industries? I understand that the federal government says that it intends to leave more money in the hands of natural resource producers, and that it will provide better treatment with regard to exploration expenses. I have studied the budget, and I hope my conclusions about it are wrong. In the new budget, are exploration expenses to be more generously treated? Has the government withdrawn taxing provisions in other areas as well?
It seems to me that there is an additional difference as between the May and November budgets. The government, according to my understanding, wishes to define lease rentals and bonuses paid to provinces in right of the Crown for the acquisition of petroleum leases as royalties, which are to be non-deductible. On the one hand the government is being more generous with exploration expenses; on the other hand it is taking away that which it has given by classifying bonus payments and lease rentals as royalties. I directed a question to the minister about this matter after the budget was introduced, and he said he was not then prepared to answer because the matter was too technical. Can the minister answer my question now in the committee of the whole?


John Napier Turner: Mr. Chairman, the drawback in the federal position as between the May 6 and November 18 budgets was twofold. First we restored the 100 per cent deductibility, that is to say, the one year write-off provision for exploration expenses, both for
Income Tax
mining and petroleum. Second, in respect of petroleum and natural gas, we reduced the federal tax level by increasing the provincial abatement by lowering federal tax down from 30 to 25 points. In other words we gave the provinces half the tax take on the 50 per cent rate. These two measures together represented a return to the table of about $185 million in the 1975 calendar year, and thus succeedingly greater amounts in subsequent years.


Stanley Stanford Schumacher: Can the minister tell us how much land acquisition costs being treated as royalties, and being therefore non-deductible will cost the industry? I am speaking of bonuses which are being paid, and of the payment of lease rentals while companies are holding land for development.


John Napier Turner: We do not have the figures at the moment, Mr. Chairman, but there was no effective set-off. In other words the industry received a good deal back on the table; and when you consider the subsequent Alberta moves you will see that a good deal of additional money was put back on the table.


Stanley Stanford Schumacher: Mr. Chairman, that is not satisfactory. I thought the minister had a computer beside him, so to speak, and could furnish answers immediately. The minister said that $185 million had been put back on the table for the industry. This amount will be reduced because the government is to treat land acquisition costs as royalties, which are to be non-deductible; therefore the amount put back on the table will be less than $185 million. This amount is fairly small in comparison with the $500 million which Alberta has made available. I see the minister shaking his head. I should like the minister, at some stage, to compare what the government did with what the province did. I shall be interested in knowing what information his computer can provide in this area.
I wish to ask the minister now about the comments of Judith Maxwell of the C. D. Howe Institute. Did the minister have any previous warning from the staff of his department that the May budget would, in effect, cause an increasing rate of loss on a barrel produced as the price of oil increased? Instead of giving an additional profit to the producers of oil it would actually cost them money, bearing in mind the schemes proposed by the provinces of Alberta and Saskatchewan and the federal government. Did the minister have any warning of that?
In that connection I would also like to know whether any indication was given to the provinces of Alberta and Saskatchewan to expect the type of treatment they received in May. Was this done ahead of time? I do not mean the details of the budget because I know the minister cannot give any budgetary details to anyone before it is presented in this House. Were those provinces in fact warned that they were paying too much attention to the minister's colleague, the Minister of Energy, Mines and Resources, when he was telling them a few months earlier that they should be increasing their royalties?


John Napier Turner: Of course, Mr. Chairman, that accelerating cost to industry represented by taxes is not a result of the federal impositions, which are a

February 13, 1975
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flat rate. They are a result of the escalating royalties above the base price.


Stanley Stanford Schumacher: Did the minister in fact know that the combined effect of his budget, which removed deductibility, and the provincial action of increasing royalties in the way they have, would cause a loss position to the producers as the price went up?


John Napier Turner: Mr. Chairman, that is true in the province of Saskatchewan. The hon. member asked whether the provinces had received warning. They did, in the form of a letter from the Prime Minister of Canada to the premiers of Alberta and Saskatchewan. This was tabled in the House earlier. I would refer the hon. member to the Prime Minister's speech during the budget debate.


Stanley Stanford Schumacher: I hope the minister will eventually answer my question as to how much he figures Alberta withdrew, and whether my information that it was $500 million is correct. When answering that, will the minister also state whether the provinces of British Columbia and Saskatchewan have made any additional room for the producers?


John Napier Turner: Mr. Chairman, we will not know the final amount of money returned to the producers by the province of Alberta until the year elapses. We will then see what the activity means in terms of volume of revenue against prices. I stated to the House that I welcomed the substantial move made by the province of Alberta. The hon. member alleges that, compared to that, the federal move was peanuts. However, he ought to remember that the revenue taken out of the oil companies from provincial taxation and royalties as compared to that derived from federal tax runs in the ratio, even after the budget, of about two and a half or three to one in favour of the province.


Stanley Stanford Schumacher: I suppose that is the way it should be, seeing they are the owners of the resource. I am a little surprised the minister cannot run through the Alberta program in his computer. He seems to be able to run everything else through, based on certain assumptions. I do not see how he can make the forecasts he does with his computer using assumptions, and then say he cannot do the same with the same assumptions with regard to provincial activity.


John Napier Turner: Mr. Chairman, the computer has to have some information. Alberta has not yet set its rates of escalation, nor has it defined the break-off price between new and old oil. When Alberta comes up with that information we can put it into the computer. Without it, it is a little difficult. We think that the amount returned to the table by the province of Alberta is somewhere between $300 million and $400 million. Until Alberta becomes more precise with its regulations we will not really know.


Stanley Stanford Schumacher: I will leave that area and ask one final question. How much does the government anticipate increasing its revenue from the time of the effects of this
[Mr. Turner (Ottawa-Carleton).l
budget over what was allowed for in the preceding situation?


John Napier Turner: In the May 6 budget we anticipated that extra revenue to the federal government from petroleum and natural gas would be in the range of $410 million for the year 1975. Turning back $185 million by reason of the November 18 budget, the hon. member need only subtract 185 from 410.


Stanley Stanford Schumacher: Always bearing in the mind the effect of the advantage with regard to acquisition costs, which would be a plus on the government side?


John Napier Turner: It is a very small amount.


Stanley Stanford Schumacher: Seeing the minister does not know what it is, I suppose that is very subjective. What concerns me most about this budget bill is the fact that, shortly after the November budget and the ways and means motions were announced, there were a series of announcements by major oil companies in Canada to the effect they were cutting back on their exploration budget. The hon. member for Dauphin made reference to the number of rigs operating in this country. I believe the number has fallen from 240 to 140.
In view of announcements by the government's agencies of an energy shortage coming within a very short time, I am surprised that more interest is not displayed by the federal government in arresting the decline in activity in exploration in this country, whether it be in the provinces of Alberta or Saskatchewan, or lands under its jurisdiction, such as the Arctic and offshore. Are we to assume that these cuts are permanent?
As a result of a further digesting of this budget by the major oil companies, has the minister received any indication that they are now able to restore some of the exploration funds that were cut in their budgets announced at the end of 1974, and which are certainly being reflected by a decrease in the number of drilling rigs that are active?
Have the minister's officials advised him as to the relative attractiveness of exploring for oil and natural gas in Canada compared with that activity in the United States? It appears that the bulk of the loss of drilling equipment has been to the United States. I fail to understand an attitude on the part of this government that appears to say we can have a significantly different financial arrangement relating to oil and gas here from that which exists in the United States.
Can the minister assure us there is still as much attraction in exploring for petroleum products in Canada as there is in the United States? If he does not know what the Alberta regulations are, can he tell us about the situation in the Arctic where the federal government has complete jurisdiction? What is the position there as compared with positions in the United States?


John Napier Turner: I am aware, of course, of the movement of drilling rigs. The drilling operators were down to see me here and I went over the whole picture with them at their request. Taxation is only one of
February 13, 1975

the relevant factors. These people are highly mobile, highly skilled; they can go anywhere in the world, and they go where the action is. It is difficult to compare incentives in the United States with those in Canada because the picture is changing all the time.
As for the frontier, the Arctic, where we have jurisdiction both over the royalty rate and the tax rate, I told one of the hon. member's colleagues in the House the other day that we would ensure that a combination of these two rates was sufficiently attractive to encourage exploration in the north and offshore. The hon. member might recall the earlier submissions made to me by the hon. member for Calgary South, the hon. member for Calgary Centre and, yesterday, by the substantial member for Edmonton Centre, as well as others who have directed attention to this point.


Stanley Stanford Schumacher: These responses are very interesting but they do not seem to answer many of the important questions I have raised. We have been waiting for more than four years now, to hear any definitive statement about what the situation is to be in the Arctic and in offshore areas which fall entirely under the control of the federal government. The government refuses to come to any decision.
I could only say in general terms with regard to the bill before us that it disturbs me greatly to watch the situation developing which makes it increasingly difficult for private enterprise to operate successfully in this country- the consequence of concerted efforts, or perhaps I should say unconcerted efforts on the part of the federal and provincial governments. The Syncrude project has now been saved, apparently by a substantial injection of funds from federal and provincial governments. Nevertheless the prospect for further development of the tar sands appears to me unsatisfactory.
The forecasts for future oil shortages, or their avoidance, were based on the assumption that several plants would be developed and operating in the oil sands. However, following the recent Syncrude crisis which, I believe, was brought about substantially as a result of budgetary measures taken by the government and the reduction in the cash flow to the companies, future development of this resource appears a long way off. As I say, it disturbs me to see an attitude developing, apparently at both levels of government, that it is not desirable that the private sector should take risks and show an aggressive desire to develop Canadian resources.
Governments at both levels seem to think it is desirable to form a partnership between the public and the private sectors on the excuse that it is no longer possible for private corporations to obtain the capital which is required to develop resources. Mr. Chairman, there is only one reason sufficient pools of capital cannot be formed, and it is because government taxation policies at both provincial and federal level make it impossible. I wish the federal government would show some leadership to the provinces which, it seems to me, need some encouragement to reverse the course upon which they have embarked, that of making it impossible for the private sector to develop the nation's resources.
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After all it is private industry which made us self-sufficient in the first place; there is no example in the world known to me of a government agency finding a sufficient energy source, or developing it. I urge the minister that when he is preparing his next budget he should change the direction upon which he has embarked, particularly with reference to the non-deductibility of royalty payments.


Mr. Peters:: I should like to ask the minister why he is not willing to split the bill in two parts and deal separately with the part which affects individuals and smaller corporations. In my opinion the clauses dealing with resources could be treated as a distinct subject. We read reports that the costs of the Syncrude project have increased by 50 per cent in nine days. Events in the resource field are moving so rapidly that it is hard to see why the department insists on dealing with them in the particular bill before us.
The minister should consider reports that the unemployment situation in the United States is much more serious than was anticipated. Here in Canada, in the maritimes for example, unemployment has risen to a figure of more than 16 per cent, amounting to a major depression. Unemployment is worsening in other parts of Canada, and we read in the papers today that there is likely to be a new budget brought in soon after next first ministers' meeting, one which will, I presume, be concerned largely with the resource sector. It would seem to me that the minister is not really in tune with the times, but rather that he is responding to the mandates of his own department in putting this measure together.
It seems to me there is a risk that the budget, when passed, may be relevant only to situations which no longer exist. In these circumstances it would be better for us to consider those measures which are likely to be of benefit to the average taxpayer. The unemployment situation is more important to Canada than whether oil rigs leave this country or not. As the minister says, they are highly mobile; they can go south or they can go north, and if the incentives are placed high enough, they will come back. In any case, most of those rigs are not equipped to drill in the Arctic or offshore, and we must face the fact that the nature and availability of the oil resource has undergone a change.
The minister is well aware that one of the main problems he is facing today is that of unemployment, and the need for a lot of money to be placed very quickly into the economy to increase the purchasing power of those at the lower end of the income scale. If he does not accomplish this very quickly we will find ourselves in the same position as the United States is in today. People will be putting their money in banks rather than spending it on soft goods. If this happens to any great extent we will all be going down the drain along with the resource industries.
It would seem to be sensible for the minister to put aside those portions of the budget which deal with the resource industry. If he were to do this there would be less reaction from the provinces, and less opposition from political parties to the passage of this bill. I am sure the minister
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February 13, 1975
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would find co-operation in respect of the passage of the remaining parts of the bill.
The bill before the committee is immense and I am sure it affects every citizen in the country, probably to a greater extent than it does the resource industry, although its impact on the resource industry might be much greater in the long run. It seems to me that the minister might gain public confidence by bringing forward the 60 or 70 amendments required rather than bringing forward another budget in April, which he is apparently contemplating.
This bill will probably be the most amended bill in history. It has only been kicking around for a little while, but if we keep it around for another two or three months it will end up with more amendments than the original bill.


Stanley Howard Knowles: Shades of Edgar Benson!


William Arnold Peters: Yes, shades of Edgar Benson, and shades of Pickersgill as well! He put through a bill that he understood was going to create a job for all time, but he got tired of it and went into a totally different field. He thought he had crossed all the "t's" and dotted all the "i's", and that the matter would never require change, but that did not turn out be the fact.
If the minister really wants to make his mark he will have to make it so that people know he is doing something for those who have saved and are trying to live on their savings. He will have to do something for those who are unable to live with inflation today. The minister must make some changes that will bolster our economy. The minister must make changes in order to put more purchasing power in the hands of people who will spend the money for short and long-term benefits, and the most obvious area in this regard is housing. If the minister makes funds available in this way he will do more to eliminate unemployment in our major cities than by anything else he might do.
I have some sympathy for the minister's position in wanting to retain some federal control in the area of resources. I am not entirely sure I agree with some of my colleagues who believe the provinces own the resources. Because somebody draws an arbitrary boundary, that does not necessarily put me as a Canadian in the position of not being able to take as much advantage of these resources as anyone else in the country.
I do not think the approach taken by the minister is totally understood by the people he is dealing with, or totally understood by his officials. Perhaps when they understand the situation fully things will change. This resource business is an on-going proposition. As the profit picture changes, and as the amount of subsidization required lessens, the whole proposition will change. The minister realizes that the provinces require some of this resource money to continue to develop resources. This is obvious from the fact that the minister changed his original intention regarding the deductibility of expenses from taxation.
I wonder what would happen if the Department of Natural Resources of Ontario took over all the mines in Ontario. What would happen if the province took INCO and some of the other mining companies under its wing?

Would there be any resource money available for taxation by the federal government? I doubt it very much.


An hon. Member:: There would be no resources.


William Arnold Peters: Someone says there would be no resources. But let there be no mistake, whether INCO comes under the jurisdiction of the provincial department or a department of the federal government, there will be development of the resources. I suggest there will be development whether or not INCO makes a profit. We do not have enough resources for these people to sit like old hens on top of these nest eggs, particularly when the world is so desperately in need of resources. That may be a red Tory proposition, but it sure as heck isn't the fact. I may be mixing my metaphors because I really do not know what this means, or how it applies.


An hon. Member:: It's a red herring.


William Arnold Peters: It's not a red herring either. In any event, I am sure the budget is the subject of considerable consideration over a long period of time. Since the minister's officials originally put the proposition together it has been modified many times. That section of the budget which relates to the resource sector is still fluid and subject to amendment. I am sure it is still subject to negotiation. If that is not the fact then the minister is really telling the first ministers there is no point in meeting again because there is nothing to talk about. To be fair to the minister let me say that I am sure he is not taking that position.
There is still a fluidness in respect of the resource field which will allow the minister to continue negotiations. While the subject of resources is a matter that concerns members of this place, there are other subjects of great importance dealt with in the budget. I suggest the minister could gain considerable ground by splitting the budget into several different parts. In this way we could concentrate on the various sections which are intended to help the average citizen who is paying most of the taxes. We could deal with those sections and increase the purchasing power of those who are at the bottom end of the economic structure. In this way the Minister of Finance, without becoming socialistic, would be in a much better position to cope with the problems we have in Canada. The minister could do more to solve inflation in Canada than those in authority are doing in the United States to solve that country's problems.
The minister, however, is not likely to split the budget and bring in several parts simply because that has never been done before. The minister has lost a number of competent people from his department, for one reason or another. He might lose more if he attempted to split the budget. I suggest he might also have difficulty in bringing in another budget in April if those people who are helping him in getting this bill passed are not soon released from attendance here.
I would strongly urge the minister to realize that we are facing a totally different situation than the one we have faced for many years. The minister would be well advised to postpone discussion on those portions of the budget which deal with the resource industry so that we can get on with those other matters in the budget that affect the individual Canadian. I am sure the minister would have
February 13, 1975

co-operation in passing those parts of this bill. We might kick the rest of it around until the minister and the first ministers finally decide on what should be done in respect of the resource question. I would strongly urge that this division be made. I suggest that the minister give consideration to splitting the bill. I think he would then have a much better chance of having this bill passed in the next two or three weeks.


Mr. Ritchie:: I should like to ask the Minister of Finance a few questions regarding the resource industry and timing. In introducing the last budget the minister stated that the projected tax increase for oil and gas amounted to $10 million, and said that the provincial taxes and royalties had eaten into the tax base of the federal government and thus undermined the federal position. However, the Minister of Energy, Mines and Resources in the fall of 1973, only a few months before, suggested to the provinces that they were not charging the resource industry enough. I should like to ask the minister when he and the government reached the conclusion that something would have to be done because the provinces were taxing the resource industry too heavily and undermining the tax base.


John Napier Turner: I dealt with this matter rather fully on second reading on the bill. Perhaps the hon. member would be good enough to find it in Hansard and see whether I have answered it sufficiently, perhaps not to his satisfaction but at least to cover the parameters of his question.


William Gordon Ritchie: I read the minister's statement two or three times, and I saw that at one time the government must have decided that the provinces were taxing too heavily. Presumably there was a change at some time.
Now I would like to ask the minister whether he has consulted with his counterparts in the provinces on the general matter of resource taxation, and how much consulting was done. Were the provinces canvassed extensively, and was the position of the federal government regarding this matter made known to them?


John Napier Turner: Concerning the details, yes of course it has. However, as I have said before, budgetary items are not telegraphed to the provinces, nor do the provinces telegraph their budgets to me or give me notice of their budgetary intentions. But certainly the views of the federal government, to the effect that unilateral resource taxation of both mining petroleum on the part of several of the provinces was eroding the federal tax base, were communicated to them at the level of the Prime Minister of Canada to the premiers.


William Gordon Ritchie: I should like to ask the minister whether any general discussions have been held. I suggest that the reason that we have this trouble is that until recently resources have not generated enough revenue for either the government or the provinces to have become very excited about it. We have had to give away too much to get them going.
I should like to ask the minister whether, in his discussions with his counterparts in the provinces or with provincial premiers, any consensus was arrived at regarding
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what is a fair and reasonable division of tax revenues from the resource industry and, if not, does he hope to reach such a consensus, and along what guidelines will this and future governments deal with this vexing problem?


John Napier Turner: We had a very thorough discussion of this matter at the level of ministers of finance on December 9 and 10 in Ottawa. What parliament might think on this matter might not be the same as what individual provinces might think, but there was a thorough discussion of the matter and I think that, as in the past, evolving federalism is working out a consensus. We drew back on November 18, Alberta made some positive substantial moves later, and B.C. has shown some flexibility regarding taxation of natural gas.
I hope there will be give and take on matters of price and market when the first ministers meet in April and that the impasse, now largely softened, will become resolved.


William Gordon Ritchie: If I heard the minister right, a few minutes ago he suggested that the provinces were getting approximately three times as much money out of the resources as the federal government. I would like to ask the minister if this three to one ratio is based on the last budget or on the May budget, and perhaps he can give us a rough approximation of what he considers to be the division of the take between the federal and provincial governments, before and after the two last budgets.


John Napier Turner: I set out the figures fully in my speech on second reading, and in the remarks I made to my colleagues from the provinces in December. Those remarks were circulated to every member of parliament. Roughly, before the May and November budgets the province of Alberta was taking about six times as much revenue out of petroleum as was the federal government. Subsequent to those two budgets it runs now between 2Vi and 3 times as much.


Mr. Lambert (Edmonton West):: Nonsense.


John Napier Turner: The hon. member for Edmonton West reminds me that the figure excludes the export tax. I excluded it for the reason that it is a diminishing factor and, of course, cannot be considered in the medium and long term relationship.


Some hon. Members:: Oh, oh!


William Gordon Ritchie: Madam Chairman, I would like to ask a question regarding the attitude of the Minister of Finance on the principal business clause, with which I believe the hon. member for Calgary Centre dealt yesterday to some extent. I believe that by and large this principal business clause only applies to oil and hobby farming. I remember the days in 1951 when investment in the oil industry was deductible. It seems to be the case that because the capital invested in Canada in the oil industry is mainly American, the Americans own a large part of our oil industry and they have an advantage over Canadians under the principal business provision.
In the debate on the white paper on taxation it was made obvious that much of the drilling was undertaken with American money and by very small investors. Now
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February 13, 1975
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that we are so anxious to increase oil production in the short run, is the minister seriously considering removing the principal business clause, or raising the amount so that it is in line with inflation, as a better business practice?


John Napier Turner: Madam Chairman, I dealt with that question fully in response to the hon. member for Calgary Centre yesterday.


Gérard Laprise: Mr. Chairman, I rise for the first time in this debate on Bill C-49, and realize the problem faced not only by hon. members, but indeed by the officials that wrote such a bill.
This bill was introduced with 37 amendments. By the time the committee stage is completed, further amendments will probably be introduced to amend those already moved.
I therefore wonder if the officials are not now preparing amendments to the next bill, that is to the bill that will follow the minister's next budget, during the next session.
The bill proposes some income tax reductions, and this drew my attention. However, the people are being hoodwinked. Recently, newspaper reports indicated the Minister of Finance (Mr. Turner) looked favourably upon wage indexing, noting however that every pay increase given the workers brings a new rise in income tax deductions.
When Justice Rand suggested trade unions should have compulsory union dues collection, I believe he invented nothing. Indeed the government had already started applying such a formula, forcing employers to deduct part of the worker's wages to feed the public treasury.
As we know, computations show each time daily wages, or even hourly wages are increased by $1.25, the federal and provincial governments will take at least a $1 share.
Small wonder then the minister is interested in having wage indexing accepted by workers and employers alike.
I would ask the Minister of Finance to what extent the government intends to tax the income of those individuals, those workers, those people who produce something for society, who build and develop our country because out of what is left of their salary after the government has taken its share, they still have to pay for countless taxes every time they spend their money, thereby contributing to increase the government's revenue. Inflation is actually meant to increase governmental incomes. Even if governments say they are introducing tax cuts here and there, they still manage to make a profit with the help of inflation.
I want the Minister of Finance to tell us what he intends to do for the individual, specially the worker who earns a living for himself and his family through his own labour instead of deriving interest from investments, which is a different kind of income altogether. What does the minister intend to do to enable those who strive for a living to keep a greater part of what they earn, so that they can meet their liabilities and have a decent living without always having to crawl to finance corporations and mortgage their next salary? In fact, I would like personal income taxes to stop growing, and I would like to know what the Minister of Finance has in mind in that respect.


John Napier Turner: Madam Chairman, I believe we have increased personal exemptions, family exemptions for the greater benefit of workers. On two occasions for the year 1974-75 we have introduced considerable personal income tax reductions, 66 per cent of which applied to people earning $10,000 or less a year. I am therefore deeply aware of the point made by our Social Credit colleague, and I wish to assure him that I will bear in mind the relevance of his point.


Marcel Joseph Aimé Lambert: Madam Chairman, I must say that I found it rather interesting to contemplate the reasoning of the minister in reply to the hon. member for Dauphin with regard to the rationale of the Government of Canada moving into the field of disallowance of royalties, licences, leases, fees, and so forth, in that it wanted to restore a certain balance of revenues from natural resources in the country, which it felt it had to have. Bluntly that is what it is.
The government has said time and time again that Alberta and Saskatchewan, in their changing the royalty formulae with regard to petroleum, had arrogated unto themselves far more revenue than they were entitled to, and that the federal government had to have a share. That is what it was. My inclination was to accept the export tax because that far exceeds all of the revenues of the provinces with regard to those resources, and so therefore that has to be established once and for all.
On the question of a declining commodity the minister is taking a pessimistic view. As a matter of fact he is taking the view that this budget is destined to bring about the killing of the industry.


John Napier Turner: On a point of order, Madam Chairman-


Marcel Joseph Aimé Lambert: If the minister will let me have my opportunity-


B. Keith Penner: The Minister of Finance on a point of order.


Marcel Joseph Aimé Lambert: Order, now, not argument.


John Napier Turner: On a point of order, Madam Chairman, I did not say declining commodity, I said declining phenomenon; the export tax was a declining phenomenon.


Marcel Joseph Aimé Lambert: A declining phenomenon. I do not know that the minister has a crystal ball or some forecast which will guarantee that the price of oil on the world market will decline, or the converse, that Canada will actually be forced to suspend its exports to the United States to the point of zero, or almost zero.
I will say that this budget is guaranteed to make darn sure that the conventional oil industry has platformed. Certainly a ceiling has hit it right now, again by bungling amateurs who do not understand the workings of the oil industry. This applies all through the government. It is just something that is to be despoiled. They see some
February 13, 1975

government making money beyond what the government of Canada says should be its share. What does the government say to the utilization by provinces of other resources such as water power through Crown corporations and making a profit thereon? The Government of Canada gets not one blessed penny from that.
Why does the government not move in on the production of electricity by Crown corporations if it is going to use the same rationale and if it is going to be logical? If the provinces are making too much money through their Crown corporations and there is no federal share, I invite the government to be logical and insist that it can tax B.C. power, Saskatchewan Power, Quebec Hydro, Ontario Hydro, and New Brunswick Hydro. All of that exploitation of natural resources is by Crown corporations, and no tax is payable to the Government of Canada. The government of Canada derives no revenue from it as with regard to the oil industry.


Lorne Edmund Nystrom: Marcel the Red.


Marcel Joseph Aimé Lambert: Whatever happens if a province-Saskatchewan included-the province in which these light-hearted interrupters reside-finds that it is being denied? The government may say "You are making too much money out of these resources and we are going to take a great big share". 1 say that in order to be logical and fair the government should apply what it is doing to Saskatchewan and Alberta, in regard to the petroleum industry, to the exploitation of natural resources in other provinces. That would be fair.
The hon. member for Sudbury does not understand the difference between royalties-


An hon. Member:: Nickel Belt.


Marcel Joseph Aimé Lambert: What is the
difference?


John Napier Turner: All the difference in the world.


Marcel Joseph Aimé Lambert: He cannot distinguish between royalties payable to the provinces and royalties payable to individuals, foreign corporations or Canadian corporations who happen to own the freehold. Those are all permitted.


John Napier Turner: One is a tax and one is
contractual. You know that.


Marcel Joseph Aimé Lambert: Nonsense. That is only what the minister's rationale is in order to pick on this particular thing. I am going to suggest to the minister something that might reinforce what my colleague, the hon. member from-


John Napier Turner: I will introduce you two guys.


Marcel Joseph Aimé Lambert: -the hon. member for Qu'Appelle-Moose Mountain. The names of all constituencies are not as easy as that of Edmonton West. The suggestion that the hon. member made to the minister the other
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day merits more mature reflection than it has received up to the present. He proposed that those provisions which deal with royalties, lease fees, or any fees payable to the provinces with regard to the development of natural resources-this does not apply only to Alberta or Saskatchewan but to all provinces-be grouped and not proclaimed until after the conference of first ministers in April.
A few moments ago the minister indicated that the government had modified its position with regard to exploration expenses in the budget of November 18. It did not have the right to do what it had in the May budget in any event. That was voted against. The minister then came forward and modified it with regard to exploration expenses, but the development expenses could be written off only on a 30 per cent declining basis. The exploration expenses could be written off in one year. I suppose he thought he was being generous. Then, having moved into a field where I suggest the federal government has no business on this basis, it had the gall to say to Alberta, "Modify your position; we modified ours." Two wrongs do not make a right. The fact that the government of Canada went out on a limb in May does not mean that the province of Alberta should now make a concession because, presumably, the government of Canada was making a concession. The government's move is worth nothing.
I suggest to the minister that if he and his colleagues have any confidence in their ability to resolve the impasse between the government of Canada, the government of Alberta and the other provincial governments with regard to their resources, they should start here. I am sure the minister does not disregard entirely the almost unanimous view of the governments of the provinces expressed last September when the mines ministers all expressed opposition to even starting with these provisions in clause (4) and all through the bill, with regard to resources. Why does the minister insist that this bill be passed now and so present a fait accompli to the provincial premiers, particularly the Premier of Alberta? How can he hope for any accommodation with regard to the increase in the price of oil? He wants his pound of flesh now, and again in April.
I find the government's attitude incomprehensible unless it wants to grab everything for itself. Of course it has been on the grab since May 6-indeed since September, 1973, as far as this industry is concerned. It just could not stand to see these Canadian businesses-all of them paying taxes-deriving a benefit. Because of the desire for the quick buck and the desire to centralize power on the part of certain of the minister's colleagues, this is what has happened to the industry. There is nothing more abominable in this budget and the budget of May-which was voted down-


John Napier Turner: And reinstated by the Canadian people.


Marcel Joseph Aimé Lambert: Nonsense. Not all the Canadian people. Let us put an end to that canard. The people of central Canada did it, the people who feel they are not affected. As a matter of fact more than half of them derive direct benefit from the export tax which comes off the backs of operations in the province of Alberta. It is the oil industry of Saskatchewan, Alberta and a

February 13, 1975
Income Tax
small portion in British Columbia that pays the whole of the export tax-that says a subvention to the province of Quebec and eastern Canada. Talk about a transfer of funds! We will see how this government moves in future when we have a similar situation involving other resources. That is where its support came from in the election. Of course Ministers knew they were on to a good thing, and they are still on to a good thing.
The Alberta oil industry is the holstein cow of the country. And what is happening? Drill crews are moving out and drilling operations are closing down. Certain people in this country just do not understand that if exploration, development and production of oil and natural gas in this country decline, so will the subsidy they receive decline. The subsidy they are getting will disappear, unless the government can find the money elsewhere. But the government is unwilling to adjust. It may be unwilling to find the money from other sources.
I suggest that the minister should provide for the coming into force of this section only after the first ministers' meeting-


B. Keith Penner: Order, please, I regret to interrupt the hon. member but his time has expired.


Marcel Joseph Aimé Lambert: Madam Chairman, may I finish my sentence?


B. Keith Penner: Order, please. The hon. member for Nickel Belt is recognized.


John Napier Turner: On a point of order, Madam Chairman, I think the hon. member for Edmonton West was about to conclude. Perhaps with the consent of the hon. member for Nickel Belt he can finish what he had to say.


B. Keith Penner: Does the committee agree to allow the hon. member to finish his remarks?


Some hon. Members:: Agreed.


Marcel Joseph Aimé Lambert: Madam Chairman, I thank hon. members. All I would say is that I am satisfied the remainder of this bill will pass by the end of the week without difficulty if our suggestion is heeded. However, if matters remain as they are, I cannot guarantee anything, nor can my colleagues.


Mr. Rodriguez:: Madam Chairman, can the minister say what the effective federal tax rate was for the resource industry in 1974?


John Napier Turner: What does the hon. gentleman mean by the effective tax rate?


John R. Rodriguez: What was the rate paid in federal taxes, after deductions for exploration and depletion allowances, etc.?


John Napier Turner: Madam Chairman, we do not get those figures until we work out all calculations

necessary, to do with incentives, and so on; we do not get those until two or three years after the taxation year.


John R. Rodriguez: Has the minister figures for 1971, 1972 or 1973?


John Napier Turner: We will try to get figures for 1972.


Sinclair McKnight Stevens: Madam Chairman, may I follow up something I raised yesterday. Hopefully we may conclude discussion on clause I before five o'clock. I will be brief. Yesterday, as recorded at page 3159 of Hansard I asked the minister if he could supply the House with information on a fiscal year and calendar year basis concerning the net effect on revenue of indexing and of the reductions in taxes as provided for in this bill. The minister said he would read my submission carefully and see if he could provide those estimates. I ask him now if, overnight, he has been able to arrive at a decision with respect to the matter I raised?


John Napier Turner: Mr. Chairman, the hon. member stated yesterday that in my November 18 budget speech I indicated that the reduction in personal income tax liability in 1975, as a result of indexing, would be $950 million, while on Monday I indicated that the reduction would be $750 million. That is how the question came up. The hon. member asked which figure is correct. In response I indicated that one figure was for the calendar year and another for the fiscal year. In so doing I misunderstood the question and perhaps misled hon. members. I ought to have responded that both figures are correct.
The $950 million reference in the budget speech was the total tax saving attributable to people in 1975 because of indexing; the $750 million figure is part of that $950 million which is attributable to the federal treasury. The other $200 million is attributable to provincial treasuries.
To sum up, the revenue reduction through indexing for the calendar year 1974 was $400 million for the federal treasury and $125 million for the provinces. In 1975 the saving to the taxpayer is expected to be $750 million from the federal treasury, and $200 million from the provinces. We do not ordinarily calculate these figures on a fiscal year basis.


Sinclair McKnight Stevens: Madam Chairman, would the minister reply to that part of my question concerning the net effect of the tax reductions contemplated in Bill C-49? That was the second part of the question I asked yesterday.


John Napier Turner: I think I gave that figure to the hon. gentleman. I think it is $1.5 billion. In any event he can find it in my response to his earlier speech on the amendment of the hon. member for North-umberland-Durham. I replied to the hon. member's remarks and, in my four points, I think I gave him the figure. If he looks it up, I think he will find it.


Sinclair McKnight Stevens: Madam Chairman, perhaps the minister did not understand my question. I am simply asking him to reply to the second part of the question I asked yesterday. It is recorded at page 3159 of Hansard. I want to know what will be the gross tax deductions, as a result of the
February 13, 1975

provisions of this bill, in the fiscal and calendar years 1974, 1975 and 1976.


John Napier Turner: Madam Chairman, I think I said in response to a question put to me by another member that we do not have, except for major measures, any tax reduction or tax implication forecast. The Department of Finance has to adopt an over-all view of the government's fiscal position and policy. It is important that we look at the total revenue and total outlay picture rather than simply at personal income tax, on which the hon. member for York-Simcoe is concentrating. By the same token we must look not only at budgetary expenditures but also at non-budgetary expenditures and at the total outlay, including old age pensions. In other words we look at the over-all financial requirements of the government and consider the implications of both receipts and outlays. These are set forth fully in the budget papers.


Sinclair McKnight Stevens: Madam Chairman, I will return to this point later. We are not making many yards in our effort to obtain figures. Without question, hon. members are entitled to know them.
Also yesterday, I dealt with the budgetary deficit, and then with the surplus as predicted by the Minister of Finance. Does the minister not agree that in his May 6, 1974, national accounts basis forecast for 1974-75 he predicted a deficit of $160 million, but that in his November 18, 1974, national accounts basis forecast for 1974-75 he predicted a $275 million surplus on a national accounts basis?


John Napier Turner: Madam Chairman, I do not want to speak off the top of my head, but the hon. gentleman can look at the forecasts and at the figures. I think he is right, but I think he can compare the forecasts for himself.


Sinclair McKnight Stevens: Madam Chairman, I was referring to what I raised yesterday. I am greatly disturbed by the minister's suggestion, as recorded, I think at page 3065 of Hansard, that I misled the House. At that time the minister stated:
This afternoon the hon. gentleman said that I had projected a cash deficit of $1.6 billion for 1974-1975 and $3 billion for 1975-76. Yet he looks at the current budgetary account and says we have a surplus. He is comparing a surplus account before the final drawdown with a total cash deficit which includes both non-budgetary and budgetary expense items. In other words, he is comparing apples with oranges and is misleading the House. If hon. members read the record of the debate, they will see exactly what he has tried to do.
I sincerely hope members have read the record because, if they did, they will have seen that the Minister of Finance has had a hallucination or something. There is absolutely no reference in my remarks of that afternoon to the figures or the concept to which the minister referred.
Yesterday I gave the minister an opportunity to review his statement and apologize, or state clearly that he had misunderstood my remarks or that he had made a mistake. He declined to do so. I realize the minister is under great pressure. I realize he is being besieged by the "Group of Seven" and that he has some international problems to deal with in addition to dealing with the national picture.
Income Tax
However, I suggest it is unforgiveable for a Minister of Finance to so distort the facts in the name of truth.
As far as the minister's remarks are concerned, the only connection I can see is my comment which appears on page 3065 of the debate of that day where I said:
In the earlier budget of May, the Minister of Finance indicated that we would be in a deficit position this year. By November he had changed his opinion, saying we will have a surplus of $275 million.
Yesterday I asked the Minister of Finance if he would agree that on a budgetary basis he, in fact, shifted from a deficit to a surplus forecast. He agreed that was correct. Today I asked him the same question concerning a change from a deficit position in national accounts to a surplus position. He said if you have read from the budgetary reference and that is what is shown, that is true. His memory seems to be a little more forgetful today than yesterday. The fact is that in the November 18 budgetary speech and the May 6 budgetary speech, the figures that I gave are exactly correct.
I again ask the Minister of Finance to admit that he made a mistake on Monday, that he misunderstood the remarks I made and withdraw the suggestion that I misled the House in the fashion he stated at page 3066 of Hansard.
I hope the record will once again show that the Minister of Finance has declined to admit a serious mistake that he has put on the record of this House, and which reflects on a member of this House. It is intolerable. It is disgusting.


Some hon. Members:: Oh, oh!


Sinclair McKnight Stevens: If I still have time, Madam Chairman, I intend to deal more fully with the position of the minister concerning this matter. However, at the present time, as I stated, I hope we will be able to make progress on clause 1.
If I may I will put a couple of questions of a general nature to the minister. One is with regard to the tax accounting now applicable to corporations and businessmen generally. It concerns the handling of their inventories on an accounting basis prior to income tax being chargeable and to the prevalent tax law concerning the depreciation allowances in business.
Under existing tax law businesses are put into the awkward position where they cannot accurately reflect their position, certainly as far as real estate and inventories are concerned, because of a tax system that does not allow inflation to be accounted for prior to the determination of profit in a corporation.
Can the minister explain why there is no provision in Bill C-49 to relieve businessmen from the inequity of their present accounting tax-wise procedures which do not allow for a suitable inflationary increment in both inventory and real estate value in property?


John Napier Turner: Madam Chairman, we consulted widely in the accounting profession and the tax executive institute. There was no unanimity as to how we should deal with the problem of inflation accounting. We may well have reached the stage in the cycle where to amend the act to allow inflation accounting, that is to say, revaluation of inventories and revaluation of depreciation, would work to the disadvantage of the very businesses that now in terms of accounting may, because of inflation,

February 13, 1975
Adjournment Motion
not be representing the proper picture in real terms as accurately as they might.


Sinclair McKnight Stevens: Madam Speaker, can I assume from the minister's comments that this matter is under review and that possibly a consensus or agreement can be worked out with the legal accounting people so that there could be an amendment forthcoming?


John Napier Turner: The matter is under active review, Madam Chairman.


Sinclair McKnight Stevens: I might now get to a second "inflationary" question. It is with respect to capital gains. Can the minister indicate if the possibility of indexing capital gains is also under review in order to avoid the confiscation of property which may occur as a result of inflationary increases?


John Napier Turner: Madam Chairman, there is no intent to extend the indexing principle further in the act at this stage.


B. Keith Penner: It being five o'clock it is my duty to leave the chair in order that the House might proceed to the consideration of private members' business.
Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mrs. Morin):: It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Regina-Lake Centre (Mr. Benjamin)-Canadian National Railways-Sale of part of hotel system; the hon. member for Vancouver South (Mr. Fraser)-The Canadian Economy-Estimates used to project unemployment figures in budget.


Mr. Caccia:: Madam Speaker, perhaps there may be agreement to revert to motions in order to permit the chairman of the Standing Committee on Indian Affairs and Northern Development to table its third report.


The Acting Speaker (Mrs. Morin):: Is it agreed that we revert to motions?


Some hon. Members:: Agreed.



ROUTINE PROCEEDINGS


[Stage Direction]
Third report, in both official languages, of Standing Committee on Indian Affairs and Northern Development-Mr. Cyr.
[Editor's Note: For text of above report see today's Votes and Proceedings.]
The Acting Speaker (Mrs. Morin):: It being five o'clock the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, private bills, notices of motions (papers), public bills.



PRIVATE MEMBERS' PUBLIC BILLS


Mr. Albert Bechard (Bonaventure-Iles-de-la-Madeleine) moved: that Bill S-18, respecting International Air Transport Association, be adopted.


[Stage Direction]
Motion agreed to, bill read the third time and passed. [English]
Mr. McKinley:: Madam Speaker, I believe there is an arrangement among all parties in the House that we call the motion for the production of papers standing in the name of the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall) and we can probably have the vote.



PRIVATE MEMBERS' MOTIONS FOR PAPERS


[Stage Direction]
The House resumed from Thursday, February 6, consideration of the motion of Mr. Marshall:
That an order of the House do issue for a copy of all material resulting from the first meeting of the VLA senior management team convened by the Director-General of the Veterans' Land Administration in Ottawa from March 26 to 29, 1973 as follows (a) operational plans in the periods before and after March 31, 1974, deadline for new loan applications (b) further implementation of MBO as the VLA style of management.
February 13, 1975
The Acting Speaker (Mrs. Morin):: I have to advise the House that if the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall) speaks he will close the debate.


Stanley Howard Knowles: Agreed.


Jack Marshall: Madam Speaker, I am glad to note the co-operation which is given me when I move any type of motion. May I say I regret that the papers are not to be produced, thereby making it difficult for us to determine whether it was to the best advantage of veterans to phase out the Veterans' Land Act by March 31, 1975. Nevertheless my formal motion to that effect did give the House an opportunity to debate the subject of the Veterans' Land Act.
Everyone knows that many veterans would still like to be in a position to qualify for benefits under that legislation, but however that might be, the relevant papers were not produced. In conclusion may I say I appreciate the contributions made from benches opposite by members of the Standing Committee on Veterans Affairs. I am sure that when the vote is taken my motion will be carried unanimously.


Some hon. Members:: Question!


Mr. Deputy Speaker:: Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Nay.


Mr. Deputy Speaker:: All those in favour of the motion will please say yea.


Some hon. Members:: Yea.


Mr. Deputy Speaker:: Those opposed will please say nay.


Some hon. Members:: Nay.


Mr. Deputy Speaker:: In my opinion the nays have it.
And more than five members having risen:


Mr. Deputy Speaker:: Call in the members.


Mr. Speaker:: I declare the motion defeated. Do I presume-


Some hon. Members:: Six o'clock.


Mr. Speaker:: May I call it six o'clock?


Some hon. Members:: Six o'clock.


Mr. Speaker:: It being six o'clock, I do now leave the chair until eight o'clock this day.
At 5.45 p.m. the House took recess.

February 13, 1975
Income Tax AFTER RECESS
The House resumed at 8 p.m.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration in committee of Bill C-49, an act to amend the statute law relating to income tax-Mr. Turner (Ottawa-Carleton)-Mr. Laniel in the Chair.
Gérald Laniel: Order, please. House again in committee of the whole on Bill C-49, an act to amend the statute law relating to income tax. Shall clause 1 carry?


Some hon. Members:: Carried.
Clause 1 agreed to.
Clauses 2 and 3 agreed to.
On clause 4.


Mr. Hamilton (Qu'Appelle-Moose Mountain):: Mr. Chairman, my remarks will concern something which has occupied the minds of members on my side of the House. Many of us doubt the wisdom of passing at this particular time clause 4 of this bill and clauses related to it. It provides, in effect, that royalties and taxes paid by resource industries to provinces shall not be deductible for purposes of income tax.
I oppose this type of legislation on grounds that it is constitutionally incorrect. It is clear to me as a layman, and is clear to every schoolboy, that the resources of this country, whether land or mineral, belong to the people of the provinces, to be used by them as they see fit. This is what the British North America Act provides. The provinces have the right to all the emoluments which accrue from these resources, and may use them for their own purposes as they see fit. This is what the provinces agreed to in 1867. This undertaking was renewed when Alberta and Saskatchewan passed their resource bills in 1930. There is one thing which our constitution makes clear: Resources belong to the people of the provinces in which the resources are found.
Last fall, when we debated the petroleum administration bill, I said that we must be careful as parliamentarians not to interfere with the longstanding prerogatives of the Crown. I meant, we must not interfere with the rights of the people of Saskatchewan, the rights of the people of Ontario, or the rights of the people in any other province. If parliament interferes with rights over resources, it is interfering with the prerogatives of the people of the provinces.
On the constitutional issue, I do not think there is any question that this particular type of legislation, which appeared after the May 6 budget, was turned down by this House and then popped up again after the November 18 budget, is a clear infringement on what we call our consti-
[Mr. Speaker.)
tution. In plain, simple terms, the province has the legal and moral right to take all the wealth that comes from these resources. When we, the federal parliament, unilaterally challenge that right, we are challenging the constitution of this country.
It is agreed that the federal government has power to control trade between provinces and across our national boundary. It is agreed the federal government has the right to tax all forms of wealth that come from corporation taxes and any other type of tax. However, when you have a body of jurisprudence collected over the years of existence of this country as a nation that has always held where the law stands in relationship to the rights of a province to its own resources, any government, and that includes this government, should consider very seriously what they are trying to do in this unilateral action.
It might interest the committee to remember a case in Saskatchewan where a company or series of companies challenged the right of the province of Saskatchewan to take all of the increased value of oil which resulted from the oil increase in price in 1973. That case was heard. The federal arguments were all presented by able counsel, who argued that the provincial government in raising its royalties and taxes was interfering with the federal right to tax and with the federal control over trade. After a long deliberation, the judge turned down the federal case and gave his decision to the province.
At this very moment, the federal Minister of Justice is helping these companies in Saskatchewan appeal their case to the Court of Appeal in the province of Saskatchewan. The Minister of Justice has accepted the fact that if this case goes through to the Supreme Court and the federal government loses, then the arguments we have heard presented by the government on the right to do what they are doing in this area are null and void.
We know it will take at least all of this year to get the case before the Court of Appeal in Saskatchewan. If that appeal goes against the federal government, it will take another two or three years to get it through the Supreme Court, unless we ask for a special hearing in the national interest. The laymen across this nation who are not lawyers or judges but have an ordinary sense of justice and equity, when these facts are laid before them, will question the wisdom of this government deliberately attacking the whole foundation of the constitution and deliberately interfering with or ignoring what seems to be the decision in the courts of our land.
The second point I wish to make deals with legal jurisprudence about which I as a layman know as little as most. However, I have read some of these cases. Put into my words, they simply tell me this. If a government at any level goes ahead and taxes or does something that is purely within its constitutional right to do, then when another government at another level introduces a tax or does something purely within its constitutional provisions and rights, and that second act of either taxing or doing something interferes with, nullifies or voids the actions that the previous government took on the particular subject, that second action is null and void under the law. Even if that action by the second government is disguised in any form whatsoever, the judges of this land have held that if it interferes with the original act or tax of the
February 13, 1975

original government that moved within its constitutional rights, the act of the second government is thrown out.
The third point I want to make is that in this particular bill the federal government has taken unilateral action. This means only one thing, that it is going to force the provinces to take protective action. They can do this within their own province by several devices. It is not for me to outline all the ways they can get around what this government plans to do in this budget with putting in this non-deductibility of provincial taxes and royalties. However, any provincial government determined to protect the rights of the people of that province against the federal government's unilateral action against them, such as it is doing in this budget, regardless of its political face, would be inclined to take that resource and put it under the control of a provincial agency or a provincial crown corporation, turn over the management of that company to private enterprise on a fee basis, and then challenge the right of the federal government to tax that crown corporation.
I would not like to see any province forced against its political doctrine to take this type of action. Most of them know that with the record we have with crown corporations at both the federal and provincial level in the last 35 or 40 years that rare indeed is a crown corporation that can act in an industry such as the resource industry and either produce it efficiently or survive the risk factor. However, I suggest this unilateral action will stir up several of the provinces to move in this direction. That is the next point I want to make, that we are endangering the type of economic base that we need in the development of our resources.
This is not a subject that is remote. I recall that in the early days of the oil industry in the west we had an NDP government in Saskatchewan. It had to decide what it was going to do. The government of that day was headed by a premier who is now a member of this House. He looked at the situation, looked at the amount of money that was needed in that risk enterprise, looked at the people of Saskatchewan, and he faced reality. He decided to write a letter, backed by a letter from his provincial treasurers, to all the oil companies stating that as long as he was premier of Saskatchewan there would be no takeover or socialization of any of the resource industries, on the ground that it was too risky. What he said in his letter was that the government of Saskatchewan could serve its people best if it could get a share which would correspond to the best return from royalties it could get for the benefit of the people. Since that decision the government of that province has collected in royalties a higher percentage from the oil industries than neighbouring provinces.
We are up against the same situation as a nation. We have to acknowledge that over the next 25 years, for energy related products alone, we shall have to raise $250 billion. The requirement in the United States is about four times as great. These are sums of money far beyond the ability of even the largest corporations to provide even when profits are running three or four times as high as they were a few years ago. They cannot raise one-tenth of the money we shall need. It will mean a united effort on
Income Tax
the part of government, companies and people as individuals to meet this heavy capital requirement. I would think that in the interest of resource development, and in the interest of secondary industry which follows resource development, every government in Canada, every business in Canada and every individual in Canada should be asking: how are we pulling together to meet this tremendous challenge?
I suggest to the minister that by his actions as evident from the petroleum administration legislation last April, the budget of May 8 and the budget of November 18, this government has done more to break apart co-operation than any other in the last 25 years. Ultimately the benefits of co-operation would flow to all individuals in Canada- to all those who want ownership as individuals, not state ownership. On the basis of these arguments I say the clause before us is the optimum of all that is wrong with the government's actions.
The attitude the government is taking is simple to understand if one word is used to describe it. That word is "confrontation". Canadian history, Canadian nature, demands consultation, because regardless of our political affiliation or ethnic background we are all Canadians. We are one country. The concept of confrontation is not a new one in the world but most of us hoped we had got rid of it and were moving toward an era of co-operation, not only within this country but in our relations with countries abroad. Yet here we find the government of Canada deliberately following a policy of confrontation.
As I said yesterday, every time there has been a major confrontation between the federal government and the provinces, the federal government always lost the battle when the provinces united and stood fast.
There are on the statute books of this country laws which are not good laws. I could mention, for example, the Canada Pension Plan. That plan was not the result of the initiative of the federal government; it came from another source. When all the provinces united and the federal government capitulated, the Canada Pension Plan was the result. I can only describe it as stealing from the young people of this country, because I know that when today's young people reach the age at which they are entitled to draw their pensions, there will be nothing there. Sure, it benefits those who are old now, but we have sold out our young people to achieve a purpose which is not good for the country. All right is not on the side of the federal government, neither is it on the side of the provinces. That plan, which was forced on the federal government by the pfovinces, is a bad one.
Let me relate this to the events which will shortly be taking place in the field of natural resources. If the government goes into the conference with the premiers on April 9 and 10 without the disposition or the means of making the slightest compromise, it will inevitably make for stronger provincial unity; and I warn the committee with all the emphasis I can muster that if those provinces unite and stand firm the result will not necessarily be good for the country. I would hate to see the provinces forced to rush pell mell into the creation of crown corporations as the only means by which they can develop their resources. There is a place for crown corporations but there is also a place for the type of efficiency character-
28626 -68'/i

February 13, 1975
Income Tax
ized by private enterprise. I happen to believe that the people of Canada as individuals should own this country, not the people as a mass through a state organization.


Some hon. Members:: Hear, hear!


Francis Alvin George Hamilton: I know my history as well as most and I know no party can match the Conservative party-


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


Walter David Baker: Truth is truth!


Gérald Laniel: I regret to interrupt the hon. member but I do so because his time has expired.


An hon. Member:: We've got to hear this!


John Napier Turner: On a point of order, I think all of us on this side of the House are wondering how the hon. gentleman intends to complete his sentence. I think we should allow him to continue.


Gérald Laniel: Does the committee agree?


Some hon. Members:: Agreed.


Francis Alvin George Hamilton: I think the minister is wise, because he knows that if somebody intervenes I could go on for a further half hour. But I will spare him by concluding in all seriousness that the hon. gentleman is in a desperate political situation. He knows that if a party in opposition makes a proposal which does not deprive him of bargaining power but merely allows him a greater degree of flexibility, it is the type of proposal all the parties can support even though they might not agree upon what ought to be done at the conference.
What we need for a good parliament is that when a positive construction or proposal is made by any person or party in this House it should be taken seriously. The members of the cabinet should look at the proposal and if they think there is merit, and it does not require the giving away of any of the government's position, they should accept it. That is what makes the parliamentary system work. It is only occasionally that the opposition gets the government to agree to a slight change. I am suggesting that this is one of the occasions when parliament would look better to the people of Canada if the minister did accept this moderate suggestion, namely that we move a small amendment-and this has been done before on many occasions-in which it is stated that clause 4, and all the related clauses which are cross-indexed to it, will not be proclaimed except by order-in-council.
It is understood that this would mean the portion dealing with the non-deductibility of provincial tax on royalties would not be proclaimed until after the Prime Minister's meeting with the premiers. That is a moderate proposal which is not taking anything really away from the government, but it does add a little bit more flexibility to this coming meeting with the premiers. It also takes away the feeling of confrontation. The Prime Minister

would be going there to consult freely about the same dollars from the same people, and would be in a better position to arrive at an agreeable solution. I think parliament would then look a lot better.
Above all, I would suggest to the Minister of Finance that, if I am right and this is a moderate proposal, and if he is under duress or instruction from the cabinet or the Prime Minister, then he has a duty to himself and his future political survival to go to the Prime Minister and his colleagues and say that he thinks the opposition has made a moderate proposal and that he is going to look darn silly if he does not accept it. He should tell his colleagues that the government is going to look silly. Perhaps we should change the word "darn" a little bit.
If the Minister of Finance puts that proposal to the Prime Minister and he does not accept it, then the minister has every right, as a politician with a future, to say that he cannot stay in a cabinet that is not flexible enough to agree to a moderate suggestion like this. This point is more vital than just winning a debate in this House. We are talking about the future of this country as a federal state consisting of a federal government and ten provincial governments. We have to work in an atmosphere of harmony in order to make the system work.
I do not think this proposal is unreasonable. I indicated to the minister on January 30 that I was going to put this proposal forward. I made reference to it two or three days ago and I have repeated it tonight. If the minister wants goodwill in this House, now is the time to make the move that will engender this goodwill.
There are many parts of this bill on which many of us would like to speak. Under the circumstances, with so much at stake at this conference on April 9 and 10 with all the mining provinces, the forestry provinces and the oil provinces, if this type of goodwill was demonstrated in this House I am sure it would help a lot in arriving at successful conclusions. Above all, it would help the Minister of Finance, because we would then know that he was a powerful individual in the cabinet willing to put his views on the line for parliament and the people. He does not have to soften his bargaining with the provinces. All he has to do is agree to the amendment, which will be to the effect that these related parts will not be proclaimed until after the conference. I think the minister should not only take the time to consider this, he should stand up to his colleagues and take a stand for all Canadians.


Lorne Edmund Nystrom: Mr. Chairman, the issue we are debating at this time is clause 4 of the bill. This is a very lengthy bill and, in many ways, it is extremely controversial. I am sure the minister as well as all of us in the House will agree to that. This particular clause touches the root of federalism in this country. I do not say this in a political sense but as one who comes from the prairies. I am sure the Quebec members understand this issue as they have had disagreements before with Ottawa. In the past the disagreements Quebec has had with Ottawa have been basically on social, cultural and linguistic issues.
We now have an issue in respect of which the prairie provinces in particular and the west in general have a disagreement with Ottawa. It seems to me that the Minister of Finance would be very wise to take up the sugges-
February 13, 1975

tion of the hon. member for Qu'Appelle-Moose Mountain. A similar suggestion was made a week ago by the hon. member for Regina-Lake Centre and other members in the House. They have suggested that we either split the bill and deal with the resource section after the first ministers' conference, or we follow the precedent we have in the Foreign Investment Review Act, taking the part dealing with resources and proclaiming that section after the first ministers' meeting.
Since the meeting with the first ministers is in April it would seem to me that if we pass this bill very quickly the Prime Minister will go to that meeting with a virtual club in his hands which he can hold over the heads of those first ministers. We in this House know the federal government is supreme and has a lot of power. This government now has a majority and can pretty well do what it likes. It can push this bill through the House if it wants.
We also know that the federal government has immense taxing powers in respect of the resources in this country. I do not see why it needs this part of the income tax bill passed by the House before that meeting in April. Federalism in this country was established in the first place after a great deal of consensus and compromise and a lot of give and take by the various regions of the country. We have five or six very distinct regions divided by economics, geography and allowances. If we are to keep this country together we must have a spirit of co-operation, consensus and a lot of give and take on the part of the regions.
We have all heard a great deal about the independence movement in Quebec and western separatism or nationalism in the prairies. When the government rams through a bill like this, all it is doing is feeding those fires and agitating the people who would like to see this country fall apart. In this way the government would be pitting the people in one part of the country against those in the other. Action of this kind is fuel for those who would have differences between various regions of the country, and I do not care whether it is the east against the west or Toronto against the rest of the country. If the government ram this bill through the House before the first ministers' meeting all they are doing is accentuating the suspicions that already exist in various parts of this country.
Let me consider the export tax portion of this bill, and I want to refer to this in a non-partisan way. I think the Minister of Finance knows what I am coming to. If we make the calculations suggested in this bill, we find that Saskatchewan now produces about 70 million or 80 million barrels of oil per year. About half of that oil is exported to the United States. There is an export tax on oil of $5.20 a barrel.
We also have a freeze on the price of domestic oil. If you take the $5.20 per barrel, which is what we are losing in Saskatchewan, and multiply that by 75 million barrels of oil you will see that Saskatchewan is losing annually some $400 million. That is a substantial contribution for a have-not province, or a province with an income below the national average, an income which fluctuates according to farm economy. Provincial politicians cannot control farm economy because of national grain prices, the weather and many other factors, but that province contributes $400 million annually from the sale of oil to the people who live east of the Ottawa Valley. This is a contribution the
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people are willing to make as long as there is some kind of trade-off.
I think that is an adequate contribution for a province the size of Saskatchewan. What we expect is to have some consideration in respect of the things we use in our province. For years we have suffered freight rate discriminations. The hon. member for Battle River made reference to this earlier. One can ship a live cow from that area to Toronto cheaper than he can slaughter that same cow and ship the meat to Toronto.
What we are saying is that we are willing to have a two price system for oil and a two price system for wheat, which we already have, if some consideration were given to some of our gripes and grievances about confederation. If you use some of that $4 million annually in terms of removing some of the anomalies in the freight rate system, then the province of Saskatchewan will be much happier to agree with the government regarding the structure of oil prices in this country.
There are many other grievances that we in the prairies have. We produce raw materials, we produce food, and we export raw materials to central Canada and the United States. We do this largely because of the lack of an industrial strategy in the country, because of deficiencies in our freight rate system in Saskatchewan, Manitoba or Alberta, and also because of the type of hinterland philosophy that exists in northern Ontario, north eastern Quebec and the Atlantic provinces.
If the government wants us to make a contribution with regard to oil, they will have to listen to some of our grievances. After all, that oil is a non-renewable resource. How much more oil do we have in Saskatchewan? You cannot grow oil on trees. That oil is in the ground, not for some bureaucrats or federal politicians in Ottawa or for some oil company executives to decide where it should go and who should get the profits. The oil was there for the people of this country and particularly for the people of Saskatchewan. I think that the oil should be used for the welfare and benefit of that province.
There can be an argument over how much the federal government gets and how much the provinces get. I admit that it is a difficult problem to resolve, but I want to remind hon. members that under the constitution of this country land and resources such as gas and oil are under provincial jurisdiction. So long as they are under provincial jurisdiction I do not think we should have a bill such as the one before us today that tries unilaterally, without any consultation, to bring in measures that will take from the provinces much of their taxation power which they rightfully have.
As the former Liberal cabinet minister, both federal and provincial, Eric Kierans, said the other day-this matter was brought up in the House a while ago-if this clause passes, the federal government will take from the provinces much of the taxation power they need in order to plan their provincial economies and their social programs. He said that if he were to meet the premier of Ontario or the premier of Quebec after this bill was passed, he would say "Hello, Mr. Mayor" because they would have no more power and influence than a mayor of a large city. I think

February 13, 1975
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Mr. Kierans is very knowledgeable about resources. Obviously he was knowledgeable when he sat in the House and when he sat in the legislative assembly of the province of Quebec, so what he is saying about resources is certainly valid.
Let me go back to the specific issue of non-deductibility. I have a difficult time comprehending why the government is going ahead with this provision. Royalties are a proper business expense, and if you can deduct other business expenses, why can you not deduct royalties? I think that the only reason that the federal government is disallowing deductibility of royalties is that they are afraid the provincial governments, regardless of the party in power, will tax the resource companies too highly. It seems to me strange that you can allow the deduction of a royalty paid to the Hudson's Bay Company, the CPR or a foreign government, but you cannot allow deduction of the royalty of the people of Saskatchewan. I think it is like telling a farmer who rents land that he cannot deduct payments made to his landlord. He can do that in accounting his income tax, but an oil company cannot do it in accounting theirs. It is also like telling a farmer who owns land that he cannot deduct from his income tax returns the municipal tax he paid to his local municipality. Both of those are legitimate operating business expenses and that is how they should be viewed.
There are a number of other points that could be made. A number of us have made the point that the premiers of some provinces have been unhappy about this provision being put forward unilaterally. In March we had an agreement to set the price of oil and to set the export tax, and not once did the Prime Minister or any of his officials say at the time that they were considering disallowing deductibility of royalties. I think all the premiers in this country would agree that that is so. I can quote at length from a speech made by the premier of Saskatchewan, Mr. Bla-keney, in which he documents letters he received from the Prime Minister, as well as from statements made by Premier Lougheed.
If the Prime Minister did raise this issue at the meeting, then it seems to me very strange that not one premier realized what he was talking about. Perhaps all the premiers in this country have bad hearing, but I would be surprised if that were so. It seems to be strange that the Prime Minister is the only person who recalls what happened at the meeting in March as well as at the meeting back in January.
So I appeal once again to the Minister of Finance that he consider seriously the proposal put forward in the House a week ago by the hon. member for Regina Lake Centre, and more recently by the hon. member for Qu'Appelle-Moose Mountain, that we split the bill or that we move a simple amendment, such as we did to the Foreign Investment Review Act, that the government have the authority to proclaim this section after the first ministers' meeting. Then the minister can go to the meeting and say to the premiers that the government is willing to negotiate to try to arrive at a decent price for oil, that the government is willing to make fiscal or taxation arrangements that will be acceptable to all Canadians. If the minister does not do that, he will heighten suspicion in this country and

increase the economic discrimination that we have known for so many years.
As other hon. members have said in this debate, it is not just this particular issue that is important but also the future development of the oil industry. As all of us know, the Syncrude consortium is exempt from many of the provisions that are in the bill before us today. It seems to me that it is very unfortunate that one consortium should be exempted while other companies are not, because there will be many other companies wanting to develop the tar sands. If we allow tax exemptions for some of them, we will have to consider exemptions for others.
In discussing this clause we should also consider Syncrude. Just this morning I read a report in the newspaper that in the study that was commissioned by the Alberta government it is stated that the cost of Syncrude will go up to $2.91 billion. It was $2 billion eight or nine days ago. How much will that project cost? How much will we have to pay from the federal treasury or the treasuries of Ontario or Alberta and still not maintain control over the development of the tar sands?
These are questions that will have to be answered in this House. They are questions that not only those of us in the House are concerned about but that concern the people of Canada and the provincial governments which represent them. We are thinking now about the first ministers' meeting which is only two months away. I do not see why this government cannot delay this part of the bill for another two months. The oil will still be there. We are dealing with billions and billions of dollars. We are dealing with future planning by provincial governments, by the people of those provinces, by municipalities and so on. Why can we not delay this for another two months until the first ministers have had a chance to come to Ottawa, meet the Prime Minister and come to an agreement that is acceptable to them all?
As I said at the outset, as a person coming from Saskatchewan, a province that traditionally has below the national average in terms of income, we would be very happy to accept a lower price for our oil if in return we had a quid pro quo or trade-off that would benefit Saskatchewan. We are paying the world price for the cars we import from Ontario. We are paying the world price for farm machinery imported into Saskatchewan to farm our land to bring us income. If we had some kind of trade-off or a better deal on the materials we need for production, then we would be much more willing to sell oil at a lower price or be more conciliatory in terms of our negotiations with Ottawa.
I think these are very serious arguments which should be looked at in a serious way. We have a country now where there is no planning, where there is no forethought whatsoever, where people are living in two or three large cities, where they live in urban sprawl conditions without proper transportation and with all kinds of urban pollution. There are people in those cities who do not want more urban growth, and yet we have regions of this country like the prairies, the Atlantic provinces, the northern parts of Canada and eastern Quebec which could use more growth. These are areas where the raw materials
February 13, 1975

could be processed, and this growth would make a lot more sense for all Canadians in those areas as well as people living in Toronto, Vancouver and Montreal.
I look forward to the Minister of Finance being very co-operative with this House and decent to the Canadian people and separating this bill, or making some kind of accommodation so that the first ministers in April can sit down with the Prime Minister with a deck which is not stacked, which does not have a joker inside it. I look forward to the Minister of Finance exhibiting that leadership in this House. If he does not do that, then perhaps the hon. member for Timiskaming was right when he said this bill may not pass for three or four months.


John Napier Turner: Mr. Chairman, I
answered the hon. member for Qu'Appelle-Moose Mountain yesterday on his proposal, and it can be found at page 3163 of Hansard, but I tabled an amendment which I said I would introduce at this stage. It is a technical amendment adding the words "by a taxpayer" to line 22 on page 4. Without those words the ownership of the Canadian resource property was not identified with any person.
I would like to move an amendment, and I am going to rely on Beauchesne, citation 204 (2), which I think will save the time of the House. The amendment has already been tabled, but the motion is:
That clause 4 of Bill C-49 be amended
(a)	by striking out line 22 on page 4 and substituting the following:
"ownership by a taxpayer of a Canadian resource"
(b)	by striking out line 42 on page 5 and substituting the following:
"6, 1974 to November 18,1974 paragraph"
(c)	by striking out line 33 on page 6 of the French version and substituting the following:
"sonnablement etre considere comme dependant de la production au Canada".


Gérald Laniel: Shall the amendment carry?


Some hon. Members:: Agreed.


Lorne Edmund Nystrom: I just wondered whether the minister could perhaps explain the amendment. It is very difficult to get the purport of it when I have not seen a written version.


John Napier Turner: We tabled the amendment, but I can assure the hon. gentleman that it is merely a technical one. Unless the words "by a taxpayer" are added, there is no way of attributing the taxability to anyone. It is merely a technical amendment. It does not change the substance at all, I can assure the hon. gentleman of that.


An hon. Member:: Maybe that is the way it should be, John, attributing it to no one.


John Napier Turner: If the hon. gentleman wants some good legal advice he can turn to the hon. member for Broadview. You will recall the advice I was giving was that advice is only worth what you pay for it.


Mr. Saltsman:: I would like to ask the Minister of Finance whether the necessity of inserting "by a taxpayer" arises from the fact that, in the case of some Crown corporations, they are not going to be taxpayers and there-
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fore are exempt from these particular provisions. Was it inserted for the purpose of exempting some Crown corporations or people or organizations who do not pay taxes?


John Napier Turner: Mr. Chairman, this does not deal with that particular problem. That is hypothetical.


Mr. Benjamin:: Mr. Chairman, I am sorry. If you are dealing with the amendment I will rise later.


John Napier Turner: Let us deal with the amendment and then allow the debate to continue. Could we have the question on the amendment, Mr. Chairman?


Gérald Laniel: Shall the amendment carry?


Some hon. Members:: Agreed.
Amendment (Mr. Turner (Ottawa-Carleton)) agreed to.


Leslie Gordon Benjamin: Mr. Chairman-


John Napier Turner: You are driving your own boys out, Benjie.


Leslie Gordon Benjamin: I know. Mr. Chairman, my own boys have to go through this much more often than hon. members opposite. This clause is obviously the most contentious one in the whole bill. I was hoping that members from all sides of this House would start thinking a little further about things like confederation and national unity. This has not been the case to date. As I said last week, I will not take a back seat to the Minister of Finance or anyone else in terms of a strong federal government and a strong confederation, but that is not accomplished by confrontation. That is not accomplished by arbitrary decision making. You only accomplish that and make it succeed and continue with some measure of agreement, accommodation and discussion and so forth. I am hopeful that my good and hon. friends to my right who come from all provinces in this country will take some part in the debate on this particular issue unless-and I hate to say this-their priorities are more on the side of multinational oil companies than they are on Canada's confederation and national unity.
If their concerns are more on that side, then I can understand why they may not particularly care. They may not particularly care if this clause carries readily. If they do care about what confederation is all about, then what is being attempted in clause 4 flies in the face of what they and hon. members on the government side have been saying since 1867.
Saskatchewan is perhaps one of the "Johnnie-come-late-ly" provinces in this country, but it still happens to believe that the provinces own their natural resources and are custodians of those resources. On behalf of the residents of their provinces they have the right to charge a reasonable-I repeat for the benefit of the Minister of Finance, a reasonable"-or fair market value for the extraction and exploitation of the resources that lie within their boundaries, particularly those resources that are exploited by the private sector. We have heard a great deal from the minister and the premiers about fair market value and reasonable shares, and I should have liked to ask the minister a question. I do not blame him for being

February 13, 1975
Income Tax
tired of listening to me, but "If you gotta go, you gotta go". It does not matter if the minister has left or not; I am going to say what I have to say although I would rather he were here.


An hon. Member:: He can read.


Leslie Gordon Benjamin: I find him to be a very fine fellow to discuss things with, although overly stubborn. I have always worried about him because even when he knows he is wrong he has a great deal of difficulty in reaching an accommodation. If I may return to my main point, this matter of accommodation and discussion and agreement is an essential part of a nation that is a federation of provinces.
The talk about fair market prices and fair shares of our resources has mostly been on the part of the Minister of Finance and the Minister of Energy, Mines and Resources in support of their position of disallowing royalties as a deduction from income for tax purposes. Let us look at what a fair share is. There are some wells in Saskatchewan that produce only ten, 20 or 30 barrels of oil per day. The hon. member for Battleford-Kindersley can confirm this because some of them are in his riding. The Prime Minister and the Minister of Finance talk about fair shares but let us see what happens in cases like this.
The international price of the oil is $10.62. The federal government takes export tax of $4.70 so that leaves $5.92. Take 60 cents per barrel lifting costs and you have $5.32 left. The federal corporation tax is $1.47, so there is $3.85 left. Then come provincial royalties of $3.04, which is 28 per cent compared to the 58 per cent the federal government has already taken. After that there is the provincial share of income tax, another 27 cents per barrel. The net back to the producer, Mr. Chairman, is 54 cents on that barrel of crude oil.
The Minister of Finance can talk all he likes about fair market value and fair sharing, but the figures I have come from both federal and provincial authorities. The minister and his officials feel that 58.1 per cent for the federal government out of the price of that barrel of oil is unfair sharing. The provincial government gets 31 per cent and we are left with a net takeback of 5.2 per cent for the oil companies, which I feel is more than sufficient.
When the Minister of Finance is lying in bed looking at the ceiling tonight, wondering what to do next with this particular clause, I should like him to think again about fair sharing and the 80 million to 100 million barrels of oil produced in the province of Saskatchewan in any given year. Saskatchewan and Alberta agreed on a national price of $6.50 per barrel. This has cost Saskatchewan $200 million in annual exports, and the $6.50 per barrel domestic price meant that we gave up for the benefit of Canadians-which we are not complaining about-another $200 million. Surely, Madam Chairman, that is a fair and reasonable share from the province of Saskatchewan.
I am informed by my note senders that there is some disposition to stand this clause until tomorrow; I suspect that is because they all know I will not be here. I know I have almost used up my 20 minutes, and I have another 40 minutes worth to go yet. However, I want to close on a 
more serious note and add to what the hon. member for Qu'Appelle-Moose Mountain said yesterday and what I and others said earlier. In this attempt to arrive at an agreement and accommodation, I sincerely plead with the minister again that he delay any decision, either by proclamation, by splitting the bill, or by whatever technique he chooses, until after the first ministers' conference, or even in the absence of a meeting, so that he and his confreres in the provinces, and the Minister of Energy, Mines and Resources and his confreres in the provinces, can sit down together again and take another look at this.
X0)
If they do not do that, we shall run into a great deal of difficulty in months ahead. I hope the minister will agree to standing this clause. Let it lie in abeyance for several months, until federal and provincial ministers arrive at a mutually agreeable understanding which is not confined merely to words. Let it be acted on by both sides, and let federal and provincial ministers understand the agreement before they head back to their respective governments. Otherwise, misunderstandings can arise again. Unless something like this is done, we shall run into great difficulties in future.


Lorne Edmund Nystrom: Madam Chairman, I wonder if the minister would consider standing this clause this evening so that we may all reflect on it.


M. Turner (Ottawa-Carleton):: Madam Chairman, I am agreeable to standing clause 4, subclauses (1), (2) and (5), which relate to the matters we are talking about. I hope we can deal with subclauses (3) and (4), which deal with other matters. I understand that the hon. member for Edmonton West wishes to raise a question relating to subclause (3).


Marcel Joseph Aimé Lambert: Madam Chairman, subclause (3) does not deal with royalties, it deals with the accrued interest of financial corporations and would implement paragraph 18 of the income tax motion. It is a tidying up provision, but I suspect the effect on financial institutions will be stringent.
I wish to make two points. We often ask the minister why he is bringing in a proposal. The explanatory note merely refers to the income tax ways and means motion. Sometimes it refers to the act, as it now stands. But not once are we told the reason for the amendment. The explanatory notes are thus not explanatory notes, as they do not detail reasons for changes.
I think we have the right to ask the minister, why is he doing it this way? I should like to know if a financial corporation, as mentioned in the bill, includes a taxpayer who is, among other things, "a . .. life insurance corporation ... that borrows money from the public in the course of carrying on the business the principal purpose of which is the making of loans, or whose principal business is the making of loans." Since when has the principal business of a life insurance corporation been the borrowing of money? Surely a life insurance corporation carries on the business of life insurance. Is the payment of a premium by an insured who is, in Canada, a mutual shareholder, considered as the making of a loan to the company? How can the principal business of a life insurance company be the
February 13, 1975

making of loans? Of course, I am referring to definitions. Perhaps I am denser than some others, but to my way of thinking in no way does the definition, as contained in the explanatory note, of a life insurance corporation fit the definition of a financial corporation.


John Napier Turner: I wonder if the definition to which the hon. member is referring might not be considered as reading this way: "... include a taxpayer that is a bank, credit union, life insurance corporation, trust company or any other corporation that borrows money from the public in the course of carrying on a business the principal purpose of which is the making of loans, or whose principal business is the making of loans." In other words, it is every corporation to which that principal relates. In that sense I think the hon. gentleman can be relieved of his anxiety.


Marcel Joseph Aimé Lambert: Madam Chairman, I do not agree with the minister's interpretation. If I may paraphrase, the meaning of this definition is this. A financial corporation may be a life insurance corporation that borrows money from the public in the course of carrying on a business the principal purpose of which is the making of loans, or whose principal business is the making of loans. Is this not another way of saying that a financial corporation may be a life insurance corporation that borrows for these purposes? What kind of life insurance corporation carries on that kind of business?


John Napier Turner: Madam Chairman, according to my interpretation, the qualifying phrase is "any other corporation." I will confer again with the Department of Justice to make sure that my interpretation is right. I have been advised surreptitiously that we cannot stand a subclause. We are standing the entire clause. But I will check the hon. gentleman's point.


B. Keith Penner: Is it agreed that we stand clause 4?


Some hon. Members:: Agreed.
Clause 4 stands.
On clause 5.


John Napier Turner: Madam Chairman, I wish to move an amendment, which I have circulated and tabled. It would amend lines 5 to 11 on page 7 of the bill of the French translation, and make it correspond with the English version.
I move:
That clause 5 of the French version of Bill C-49 be amended by striking out lines 5 to 11 on page 7 and substituting the following:
que le gouvernement du Canada s'est engage a payer (autre qu'un montant d'interet, de prime ou de principal dont le paiement a ete convenu a la date d'emission de l'obligation conformement aux conditions de l'obligation) il inclut, dans le calcul de son revenu pour l'annee.
Amendment (Mr. Turner (Ottawa-Carleton)) agreed to. Clause, as amended, agreed to.
On clause 6.


Marcel Joseph Aimé Lambert: Mr. Chairman, the part of the act to which this clause relates deals with
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depreciable property. The amendment, however, talks about a timber resource property of a taxpayer. Why has this change been introduced? Why has this change been made with regard to the disposition of depreciable property of a prescribed class? Is this provision limited to timber property?


John Napier Turner: Madam Chairman, I am advised that this is the reason, that during the past few years, because of changes in licensing techniques and arrangements and cutting rights for timber, the existing income tax regulations have proven to be inadequate in providing for the amortization of the cost of timber rights, or cutting rights, and for the recovery of depreciation through amortization of subsequent dispositions. We need this authorization to provide for a substantial amendment to the income tax regulations which will provide for a rate of depreciation of 15 per cent on the reducing balance of timber resource property. In other words, the techniques and new techniques have outgrown the existing regulations. We need a wider authority.


Marcel Joseph Aimé Lambert: My only comment is I read the new language of the amendment as compared to the language of the original section. I am just wondering what is the purpose. Is it to allow the regulations to be brought up to date, or are they just merely muddying the water much more? The language is difficult.


John Napier Turner: It is not the best Shakespearean prose we can devise, but it does not change the burden of the tax one way or another. It just extends the present situation in new words because of the changing arrangements of the leasing of timber rights and cutting rights for timber.


Marcel Joseph Aimé Lambert: On that point, when was the general classification of the depreciable property of a prescribed class changed merely to a timber lease? Are there not sand and gravel leases which might come under the same category? After all, a sand and gravel lease is a depreciable property in the same way as a timber lease.


John Napier Turner: We have not had the
same innovation in gravel leases as we have had in timber leases. These were representations to us from certain quarters.


Marcel Joseph Aimé Lambert: National Revenue.


John Napier Turner: No, from the industry. The regulations were no longer effective because of the new arrangements. I have an amendment, Madam Chairman, which I have tabled and circulated to all quarters of the House. The purpose of the amendment is to amend line 48 on page 13. It merely corrects the French translation to correspond with the English. I move:
That clause 6 of the French version of Bill C-49 be amended
(a)	by striking out line 48 on page 13 and substituting the following: "avant le ler juillet 1975 ou non paye conformement au"
(b)	by striking out line 21 on page 16 and substituting the following:

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"(10) Subsection 13(7.1) of the said Act as enacted by subsection (4) is applicable in respect"
and
(c)	by striking out line 27 on page 16 and substituting the following: "assistance, and subsection 13(8) of the said Act as enacted by subsection (4) is applicable for the 1974 and subsequent taxation years."
That has already been circulated.


B. Keith Penner: Shall the amendment carry?


Some hon. Members:: Agreed.
Amendment (Mr. Turner (Ottawa-Carleton)) agreed to.


B. Keith Penner: Shall clause 6, as amended, carry?


Marcel Joseph Aimé Lambert: Oh, no, Madam Chairman; I am going to suggest that a more careful examination of the subclauses will be of benefit. Frankly, what sections of the act affect a number of subsections throughout the Income Tax Act. The subject matter can be as different as candies and cows. We have just been talking about timber leases. Now we are going to talk about insurance and compensation proceeds. We are going to talk about acquisition or the value of properties on which Treasury Board has approved a certain grant. We are going into all sorts of things. I am going to ask seriatim why there are these changes. For example, in subparagraph (3) I had a marginal question: "Why?" That is what I want to know.


John Napier Turner: I will be guided by the committee. Just explaining clause 6(2), the expropriation and insurance proceeds, the revised subsection 13(4) of the act is a relieving amendment providing that recaptured depreciation which is normally added back to a taxpayer's income at the time of expropriation of the property or destruction of the property will not be taxed until the taxpayer's proceeds are finally determined by a court or competent authority and received. At the moment, without this amendment he could theoretically be taxed on recapture before he receives the proceeds. He might be arguing the value before a court or-


Marcel Joseph Aimé Lambert: That is all right. I have no problem there.


John Napier Turner: Subclause (3) deals with undepreciated capital cost. It is a new section 13(7) (e). It is a technical rule which establishes the time when undepreciated capital cost is to be calculated whenever a property is lost, destroyed or expropriated. It is consequential to subclause (2) of clause 18 of the bill. In other words, you have to take a point in time as to when theoretically the undepreciated capital cost is calculated. It relates to subclause (3), expropriation.
With regard to clause 6(4), this amendment adds a new subsection 13(7.1) to the act. First, it clarifies the forms of government assistance that will reduce the capital cost of depreciated property. Second, it clarifies that a reduction in capital cost will also apply to reduce the adjusted cost base of the property for all purposes of the act, particularly in the calculation of capital gains or losses. This amend-

ment is also relieving, but provides that in calculating capital cost of depreciating property after 1971, any payments before or after that time of the particular government assistance concerned will produce an increase in capital cost.


Marcel Joseph Aimé Lambert: Subclause (8) is all
right; it is consequential.


John Napier Turner: Subclauses (5) and (6) provide for an extension of one year for the reinvestment of proceeds and disposition of commercial investment. The hon. member is familiar with that. It is a further extension.


Marcel Joseph Aimé Lambert: Why do we get into this habit of yearly extensions? It is like the Customs Tariff Act. I have been looking at the customs tariff for 15 years. Year by year we have been relieving against the imposition of duties on aircraft engines under a certain weight. Why do we not eliminate it altogether? For 15 years we have been going through this charade. I hope we are not starting the same here.


Mr. McCain:: Madam Chairman, I wish to ask the minister if the position of the lumberman has changed in respect to the amount of tax he will have to pay as a result of this change in the act.


John Napier Turner: The answer is it extends the regulation making authority to incorporate new styles of leases and timber cutting and timber leasing. On balance, it is probably a relieving measure.


Fred Alward McCain: Is a stumpage fee paid to the crown or the government of a particular province considered a royalty, and is it an expense of a lumberman?


John Napier Turner: At the moment stump-age is considered as an expense and is deductible.


Fred Alward McCain: The Minister says "at the moment". After this bill is passed, will it still be an expense?


John Napier Turner: Yes, Madam Chairman.
Clause 6, as amended, agreed to.
On clause 7- Royalties, etc.


Lorne Edmund Nystrom: Madam Chairman, because of the decision made on clause 4, I am just wondering whether clause 7 should stand.


John Napier Turner: I would agree to that, but I should like to get a technical amendment out of the way and then stand it, if hon. members would agree. Again, I have circulated this amendment. It is a technical amendment at line 31 on page 17. It adds the words: "property, or a property that would have been a Canadian resource property if it had been acquired after 1971, or"
These words are necessary since by definition a Canadian resource property is a property that was acquired after 1971 and this provision is intended to apply to all properties whether acquired before or after 1971. Then the amendment goes on to relate to lines 18 and 19 on page 20,
February 13, 1975

adding the words "or the fair market value of any property".
It is necessary to include these words referring to the fair market value of any property paid or payable as well as amounts paid. It is merely technical, it does not interfere with the substance. In the light of those explanations I therefore move:
That clause 7 of Bill C 49 be amended
(a)	by striking out line 31 on page 17 and substituting the following: "property, or a property that would have been a Canadian resource property if it had been acquired after 1971, or"
and
(b)	by striking out lines 18 and 19 on page 20 and substituting the
following:
"(5) Subsection (1) is applicable to amounts paid or payable or the fair market value of any property paid or payable after May 6, 1974 in respect of"


B. Keith Penner: Shall the amendment carry?


Some hon. Members:: Carried.
Amendment (Mr. Turner (Ottawa-Carleton)) agreed to.


Marcel Joseph Aimé Lambert: On a point of order, Madam Chairman, I note that the minister made one amendment to clause 6 but I wonder whether he made a second one to subparagraph (10) on page 16. I have one posted for that area.


John Napier Turner: I think so.


Marcel Joseph Aimé Lambert: Did you make it? I do not think so.


John Napier Turner: Yes.


Marcel Joseph Aimé Lambert: At line 21?


John Napier Turner: Yes, we got that.


Marcel Joseph Aimé Lambert: Have you made it?


Stanley Howard Knowles: It was carried.


Marcel Joseph Aimé Lambert: It has not been moved.


Stanley Howard Knowles: That is in clause 6.


Marcel Joseph Aimé Lambert: But it was not moved.


Stanley Howard Knowles: We are on clause 7, now.


Marcel Joseph Aimé Lambert: I know.


B. Keith Penner: Clause 6, as amended, was carried.


Marcel Joseph Aimé Lambert: Madam Chairman, there was one amendment of which I am fully aware, that which applied to page 13, at line 46; it was a correction of the French. Then there was an almost completely new paragraph or subparagraph at line 21 on page 16. I was not aware that the minister had read that out or that it had been moved and accepted.
Income Tax


John Napier Turner: Yes, it was. I did not give an explanation of it, though I am prepared to do so.


Marcel Joseph Aimé Lambert: It does not matter about the explanation. I just wanted to make sure it had been dealt with.


B. Keith Penner: Shall clause 7, as amended, stand?


Sinclair McKnight Stevens: Madam Chairman, we have no objection to clause 7 being stood, especially since it relates to the royalty provisions, but before we do so would the minister give us an explanation concerning carrying costs for development land which are found in clause 7? Many of us on this side of the House believe this provision will result in serious damage to the housing industry. The intention may be good but it seems to have been put together in the minds of civil servants who are totally lacking in knowledge as to operations in the real estate field. They hope to bring on stream land for the development of homes, but I do not believe this would be the result. In fact, I believe it would hinder the development of land for housing by driving up the value of lots. Would the minister tell us why he is maintaining this arrangement with respect to the carrying cost of development land?


John Napier Turner: Well, Madam Chairman, I gave a fairly full explanation on two successive budget nights. The hon. member is aware of the existence of a land speculation tax in Ontario. I do not know whether he wants to attribute that tax to bureaucrats in Queen's Park. In any event, this was a conscious political decision.
The thinking behind the amendment is that the incidence of such carring costs will make land banking more expensive and encourage developers to bring land on to the market more quickly. The intention is to counteract speculation in land, to decrease the amount of land being held for speculative purposes, and thereby to increase the supply of land brought to the marketplace. This tax will now be added to the inventory cost of land and will only become deductible in the year the land is disposed of or at the time a building is constructed. In other words, costs are not allowed while the land is held for speculation or is not brought on to the marketplace. They will be allowed as a legitimate inventory expense when the land is developed or when a building is put up.


Sinclair McKnight Stevens: Has the minister given consideration to making the wording of the clause clearer so that it is evident it applies to speculators and not to true land developers? Is he trying to ensure that he does not catch the bona fide home builder who, I am afraid is being caught at the present time, bearing in mind that home building in this country is a small business operation? About 90 per cent of home builders in this country are small businessmen and I suggest that the impact of this clause will drive many of them out of business.


John Napier Turner: We have reviewed this very carefully in the light of a good many representations from those interested in the business of real estate. We find it extremely difficult to define a speculator or to separate him or her from land developers. Moreover, we

February 13, 1975
Income Tax
are not only trying to catch the speculator; we are trying to force development land on to the market.


Marcel Joseph Aimé Lambert: If it is a question of forcing development land on to the market or forcing a speculator on to the land market, I think the minister is just whistling Dixie. At the end of the road, when the land is sold, at a higher value because it is being developed, all these costs that pile up during the years are added to the inventory costs. So what is the difference? A higher price is obtained in the end. There may be a capital gain. The inventory cost is a deduction as far as computation of capital gain for income tax purposes is concerned. What you have is a big exercise, a lot of show, a lot of people easily satisfied; yet the figure below the line is still the same.


Mr. Gilbert:: Madam Chairman, I must commend the Minister of Finance on this clause. I am sure he has had the experience of many of us in respect of what is happening concerning land speculation in this country. The evidence is quite clear from Central Mortgage and Housing Corporation-not from private corporations or studies- that land around the main cities across the country, such as Halifax, Montreal, Toronto, Winnipeg, Regina, Calgary and Vancouver, is controlled by about five or six large land-holding companies. This is the evidence of CMHC, as I am sure the Minister of State for Urban Affairs agrees. He is familiar with that situation and has attempted to obtain the release of some of that land so the price will drop and it will become available for building purposes.
I recall hearing the hon. member for York Centre and others make a tearful plea to the minister on second reading, suggesting that these expenses should be allowed. These land speculators across the country have milked the public of a tremendous amount of money because of the price of land, and they have been able to take advantage of these provisions in respect of deducting these costs, with the result that they have paid little or nothing in the form of taxes. When I look at the profit and loss sheets of companies like Cadillac in Toronto, I am saddened, particularly when I note that these companies have made millions of dollars and have not paid a penny in tax.
I must give the minister credit for this clause, and I would like to see the Minister of State for Urban Affairs rise in his seat and support the minister in this regard. Perhaps he could outline what the impact would be if much of this land was released across the country. That minister is concerned with the situation. He realizes that his reputation is at stake. He is aware of the 17 per cent drop in housing starts in 1974, and he has suggested that the target for 1975 is 210,000 housing starts. I am sure he must feel that this will be difficult to achieve. This is one step the minister has taken to alleviate the situation. I suggest it is a necessary step and I would like the minister to explain to the House the impact of this legislation.


John R. Rodriguez: Before I give the minister any credit I should like him to clarify one point. I listened to his explanation about this clause and what it was supposed to do, and then I listened to the hon. member for Edmonton West. I am wondering if what the minister is accomplish-

ing by this clause is postponing these write-offs until the land comes on the market rather than letting the holders of the land write off the costs each year. Is the minister not allowing them to accumulate the write-offs so that when the land does come on the market they will be able to write off those accumulated costs? I should like the minister to tell us if that is in fact what is happening. Can these people write off the accumulated costs when the land is sold?


John Napier Turner: They recover the costs when they sell the land, but because of the pressure of the non-deductibility during the time they hold the land they are more likely to sell it. This is a legitimate cost of doing business, and I refer to carrying charges; but these are not deductible for income tax purposes until the land is put on the market.


John R. Rodriguez: I should like to ask the minister whether, if this land appreciates, when it is sold the owner can write off all the costs.


John Napier Turner: It may or it may not, but since the cost of carrying it in interest and taxes is not deductible, the pressure is on the developers to put the land on the market.


Sinclair McKnight Stevens: Madam Chairman, it is always very interesting to hear comments from the NDP. I think we have just had an illustration of how those people talk about something they know nothing about. The hard fact is that this clause is not going to catch the speculator, as the minister suggests. It is not going to catch those demons the NDP envisage. It is going to catch the relatively small homebuilder in this country who builds 90 per cent of the homes. Surely the Minister of Finance is not so naive as to accept from his advisers the suggestion that, because these taxes will now be charged against the carrying costs of the land, somehow the builders are suddenly going to sell the land. That is ridiculous rot. That is not going to happen.
Most developers do not carry their land because they want to; they carry it because of a lot of governmental red tape at all levels. Governments are not inclined to open up land for development, and to suggest that because a man is carrying 50 acres or 100 acres for future development-


An hon. Member:: That's not the small homebuilder.


Sinclair McKnight Stevens: All right, let us take the man who is holding ten acres.


An hon. Member:: Make it one.


Sinclair McKnight Stevens: Does the hon. member want to make a speech?


Mr. Stollery:: Would the hon. member accept a question? I would like to hear the hon. member's comments about city parking land in Toronto, the holder of which is the largest landowner in the country. That land is all tied up in parking lots and the government has now used the provisions in the tax laws to stop this holder from writing off his expenses while he holds that land, during which time the land increases in value. I would like to hear the hon. member's comments on that.
February 13, 1975


Sinclair McKnight Stevens: Madam Chairman, of course I am not familiar with the wealthy friends of whom my hon. friend speaks, but if he feels his wealthy friends in the city parking operation are doing something in respect of which the law should be changed, I suggest that by all means he should make that recommendation to the Minister of Finance. While the minister is attempting to stop that, I would urge him not to do something at the same time which would kill the building of homes in this country.
The hon. member may represent a downtown Toronto riding and not know this fact, but I would suggest to him that home prices in this country are out of the reach of the average would-be homeowner, and this is partly due to the inept actions of this federal government. It is mostly because of its actions, or the lack of them, that we have this problem in the country. I simply suggest that if the minister takes a careful look at the suggestion proposed he will find it is going to complicate home building in this country rather than relieve it.


An hon. Member:: Let's hear from the Minister of State for Urban Affairs.


Sinclair McKnight Stevens: I would certainly yield the floor to the Minister of State for Urban Affairs, because I am curious to know whether he has been tainted by the same ridiculous attitude concerning home building that is generally reflected by clause 7 of this bill.


Leslie Gordon Benjamin: I am also anxious to hear from the Minister of Finance. The hon. member for York-Simcoe made reference to the individual homeowner and the damage that this clause will do to him. I should like to ask the minister to elaborate in greater detail for my edification, as well as that of the hon. member for York-Simcoe, on the clause as it relates to the individual homeowner who has owned the lot for X number of years before building his home. Will this clause hurt him or not?


John Gilbert: Before the minister answers the question may I point out that the Minister of State for Urban Affairs, who has a very intimate knowledge of this subject, is here. Perhaps he could explain to us the impact of this clause and what happened prior to introducing it. How much tax does Cadillac and some of the companies in Toronto pay as a result of taking advantage of the clause?


John Napier Turner: Madam Chairman, the answer to the hon. member's question is that the homeowner who has his own lot cannot write it off because he is not in business, so there are no penalties on the homeowner at all. The hon. member for Regina-Lake Centre can draw his own conclusion as to what the hon. member for York-Simcoe was trying to say.


Mr. Malone:: Madam Chairman, I had not intended to speak on this clause this evening, but after listening to some of the comments, I have come to the conclusion that this is certainly an issue that concerns me. As I listen to the debate going back and forth, the gist of what I am getting is that land will be more available and somewhat cheaper for prospective home owners. Certainly it appears
Income Tax
on the surface to be a very positive move and we must give it some support.
However, there is one comment that I would like to make to which I hope the minister will pay particular attention. I think that if this clause will make land more available, the factor that I will bring forward will have to be considered. I understand this relates to agricultural land.
There is an assumption in Canada that we have lots of good soil in our country. The fact of the matter is that the cultural way in which Canada has developed has put our citizens where the best soil is to be found. One can ask how it is that some of the larger cities in the prairies, such as Winnipeg, Saskatoon, Regina, Lethbridge, Red Deer and Edmonton, are all built right in the middle of old geological lake beds. Everyone of those cities is built right on silted out soil; almost all of them are on soil internationally rated at from one to seven, right in the middle of class one and two soils.
We assume in this country that Canada has all kinds of food producing resources. But the fact of the matter is that if Canada's population continues to increase at the projected rate-and I am now quoting a soil scientist-this country will have great difficulty in feeding itself by the year 2000. In the United States they lose more agricultural land, almost 100,000 acres of soil a year that is good agricultural land. If we take a look at the Niagara Peninsula, the Okanagan Valley, and the shore lines along the various coasts, while I appreciate the fact that an attempt is made to try to make land available, the very fact that this provision is being put forth by the minister will create a tremendous negative factor in our society.
If I can get the minister's attention I should like to ask him whether or not any consideration has been given in the cabinet to protection of land, so that we do not continually use for housing and development the small amount of agricultural soil that is left.


John Napier Turner: There is a good deal of concern in the cabinet about the gradual erosion for urban purposes of our agricultural land, relating primarily to zoning laws and usage of land laws within provincial jurisdiction. The Minister of Agriculture, the Minister of State for Urban Affairs and others have been in touch with their provincial counterparts to see what can be done on a national basis to preserve agricultural land. This is primarily a provincial responsibility. Through our demographic and urbanization policies we will do whatever we can to supplement wise provincial use of land.


Arnold John Malone: Madam Chairman, I appreciate the main part of the minister's response when he said that, generally speaking, soil and other resources are under provincial jurisdiction. But I would like to put this question to the minister: If that is a provincial resource, then what is happening with the projected airport at Pickering? More important, with the decision that has already been made, obviously within federal jurisdiction, what is being done about the airport in Edmonton?
When they decided to build a satellite airport there, they chose three sites. When it was narrowed down to two, one of those sites was on 45 per cent class seven soil and on 50 per cent class six soil. One of those is considered non-

February 13, 1975
Business of the House
agricultural, the other is non-improvable permanent pasture. But the site they finally chose was all on class one and two soil. This is a federal responsibility. The amount of land that was used up amounted to 1,444 acres, and there is no one who knows anything about agriculture who can claim that that is an insignificant amount of soil.
I think that the federal government certainly has an obligation to pursue programs which encourage building and so on, but I am curious what specific federal thrusts there are in this development.


John Napier Turner: The hon. member sounds very knowledgeable about the subject. I find I can always learn something here, Madam Chairman, even as ten o'clock approaches. I would think that the federal Department of Public Works, the Department of Transport and the Department of Urban Affairs, in so far as land banking is concerned, should take what the hon. member has said as a prime consideration, namely, the preservation where possible, as a priority, of our prime rural soil for agricultural purposes. So without pretending in any way that I can fully appreciate the facts that he has brought before the committee, let me say that he has a point.


Arnold John Malone: I want to take the opportunity to express my thanks to the minister for taking this point into consideration. I want simply to add the following comment. Obviously the federal and provincial governments would not allow any kind of development over any other resource that is so important to us. For instance, we would not build cities over iron, over tar sands or over nickel mines. But at a time when the emphasis is on the production of food to feed the hungry of the world, and when we think of the fact that there are only two sources of food, soil and water, we must take account of the statistics before us and pay far greater attention to the use of good soil for agricultural purposes. I appreciate the response of the minister that that matter will be considered.


B. Keith Penner: Shall Clause 7 stand?


Some hon. Members:: Agreed.


Sinclair McKnight Stevens: I wish to speak on clause 7 as amended just as long as it is not stood. I do not wish it to stand.


B. Keith Penner: It being ten o'clock, it is my duty to rise, report progress and ask leave to sit again at the next sitting of the House.
Progress reported.


BUSINESS OF THE HOUSE
Stanley Howard Knowles: Madam Speaker, I rise on what I call a point of order simply because there have been many discussions tonight as to what we might be doing tomorrow. Even though some of us may know, could it be announced so that everyone will know?


John Napier Turner: I know how much the hon. member and his party enjoy this bill, so I think we will continue with Bill C-49 tomorrow.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Leslie Gordon Benjamin: Madam Speaker, yesterday I raised with the Minister of Transport (Mr. Marchand) the matter concerning the attempted sale of a major portion of the ownership of Canadian National hotels to a new company in which the Hilton hotel chain and the Trizec Corporation are involved. The minister in his final answer said:
There is no doubt in my mind that CN cannot make a deal with the hotels without the approbation of the Government of Canada.
I had earlier asked the minister whether the government had been informed of this, whether it had been asked for its opinion, whether it had given any advice or guidance or instruction to Canadian National or Air Canada, to which he failed to respond. I find it incredible that CN and Air Canada, which are both publicly owned corporations, would even consider dealing away, let alone attempt to deal away, a large portion of the properties which it is their responsibility to operate on behalf of the owners, the people of Canada. It is bad enough that these Crown corporations would attempt to turn publicly owned property over to private corporations, but surely it is even worse when those private corporations are foreign owned.
This proposed deal is symptomatic of the sickness which pervades our whole transportation system. Our transportation companies, even the Crown corporations in transportation, remain insensitive to our legitimate needs and our proper national goals. The fact that the government would let the CNR even take part in discussions to turn over publicly owned property to foreign corporations shows again its supine loyalty to the foreign owners of much of Canada's economy.
If the Canadian National Railways need better management of its hotels, it should hire whatever expertise is required and not do it by depleting publicly owned Canadian assets. If Air Canada needs assured hotel accommodation in other countries, there are other and much better methods of acquiring it than through the deal they have proposed.
I want to ask the parliamentary secretary if he or his minister has been party to, or had prior knowledge of, a Crown corporation attempting to sell off a major share of the ownership of publicly owned property to form private corporations for their own internal requirements without the knowledge of, or having consultation with, the govern-
February 13, 1975

ment or parliament of Canada. I suspect that is the case, Mr. Speaker.
Hilton Hotels Ltd. and Trizec Corporation may be very good operators in the corporate sense, but they need not have been invited into a deal with Canadian National. I am informed, Mr. Speaker, that a Canadian owned hotel chain made inquiries of Canadian National and Air Canada to arrange for assured hotel accommodation for their customers, but got short shrift. Why is there this sudden rush by Canadian National, a Crown corporation, to sell properties that Canadian taxpayers have paid for? Any attempt to do this without being answerable to the government or parliament of Canada is reprehensible. If that is the kind of management there is of Crown property, I submit the government should replace that management with one that would operate according to the needs and goals of Canadians.
The daily press in Montreal and the employees of the two corporations involved are to be congratulated for bringing this matter to the attention of the public. They were wise enough to look behind what was going on. The Minister of Transport (Mr. Marchand), although he is a nice fellow, was allowing this to go on and I find this particularly disturbing. That he did not instruct the management not to make this kind of deal is particularly disturbing and I hope the parliamentary secretary can tell us this evening that these corporations have been so instructed.


Mr. Cliff Mclsaac (Parliamentary Secretary to Minister of Transport):: Mr. Speaker, first of all, to allay some of the fears expressed by the hon. member for Regina-Lake Centre (Mr. Benjamin), there is no truth, of course, to the inference or charge that public property such as Canadian National hotels will be given away or turned over completely to foreign corporations. As the hon. member is undoubtedly aware, the CNR has statutory authority to operate hotels and indeed may manage them as they see fit, again subject to statutory obligations. I believe that
Adjournment Debate
representations have been made by Skyline Hotels, a Canadian chain, on this matter to the Minister of Transport (Mr. Marchand) and other ministers of the Crown. I am sure that all Canadians are very interested in the developments surrounding discussions which have taken place in this respect.
The Canadian National has taken steps to examine alternative management proposals for the CN hotels and these proposals include possible participation by Air Canada.
As I am sure the hon. member knows, the experience of several major foreign air lines has shown that considerable commercial advantages are possible if an air line is able to offer prospective passengers a service which includes hotel reservations at their destination. To some extent, I suppose, a hotel chain is more useful to an air line today than to a railroad.
As the hon. member is aware, I am sure, the CN has management contracts with Hilton for the hotels in both Vancouver and Montreal. The results of this association have been satisfactory. But this does not imply that the Hilton Company is taking over the management of other CN hotels. The government is aware of the concerns expressed over a possible proposal for a change in the management of the CN hotels and has conveyed these concerns to the company. Should the CN decide that some alternative method of management of its hotels is in the best interests of ensuring that Canadians will be able to continue to benefit from the public investment, the company will bring forth its proposals for the government's consideration. At that time the government will ensure that Canadian employees, institutions and Canadian investments are adequately protected.


Mr. Deputy Speaker:: Order, please. The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 11 o'clock a.m.
Motion agreed to and the House adjourned at 10.14 p.m.

Friday, February 14, 1975