1975-02-18

ROUTINE PROCEEDINGS


Mr. Sharp:: Mr. Speaker, there has been discussion amongst the House leaders about the desirability of proceeding as quickly as possible with Bill C-48 to amend the Railway Act. In order to expedite consideration of that bill, it has been agreed-and I hope it will be made an order of the House-that tonight at 9.30 the committee of the whole will rise and report progress on Bill C-49, the House will then take under consideration Bill C-48 and the debate thereon will be continued at this sitting until the conclusion of second reading. It is also agreed that there shall be no debate on the adjournment motion if the debate on second reading of Bill C-48 extends beyond 10 p.m. I would remind the House, Mr. Speaker, that there is agreement that there shall be, at most, five speakers on Bill C-48.


Mr. Baker (Grenville-Carleton):: Mr. Speaker, as the government House leader said, there have been discussions and the proposal is agreeable to us. We want to remind the hon. gentleman that the opposition is always prepared to assist the government in proceeding with its legislative program, under proper circumstances.


Some hon. Members:: Hear, hear!


Mr. Knowles (Winnipeg North Centre):: Agreed. [Translation]


Mr. Gauthier (Roberval):: Mr. Speaker, we have agreed to this arrangement, but we do trust that the debate will not extend too far beyond ten o'clock this evening.


Mr. Speaker:: Is it agreed by all members that it be ordered that the House proceed at 9.30 p.m. along the lines and the terms outlined by the President of the Privy Council (Mr. Sharp)?


Some hon. Members:: Agreed.


Mr. Speaker:: It is so ordered.


FEDERAL-PROVINCIAL RELATIONS TABLING OF &quot;OPPORTUNITIES FOR CHOICE&quot; AGREED UPON AT FEDERAL-PROVINCIAL MEETING
Hon. Donald S. Macdonald (Minister of Energy, Mines and Resources):: Mr. Speaker, pursuant to Standing Order 41(2) I should like to lay on the table copies of the document "Opportunities for Choice", in both official languages, that was agreed upon at the federal-provincial ministers' meeting last December.


INDUSTRY
Mr. Derek Blackburn (Brant):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of pressing and urgent necessity with respect to the critical unemployment situation in the Canadian automotive industry and, in particular, with respect to the Canadian automotive parts industry. I move, seconded by the hon. member for Oshawa-Whitby (Mr. Broadbent):
That the Minister of Industry, Trade and Commerce make immediate provision to increase the percentage of automobile components made in Canada for Canadian-made cars and trucks.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



INCOME TAX


Mr. Arnold Malone (Battle River):: Mr. Speaker, I rise to propose a motion under Standing Order 43 on a matter of urgent and pressing necessity. This matter concerns published statements by a self-styled petroleum landman who resides and has an office in Ottawa and a post office drawer address in Calgary, Alberta. These statements by this oil executive allege that the Prime Minister of Canada (Mr. Trudeau) and the Minister of Finance (Mr. Turner) consulted him about the government's oil policy, that he has influence with the cabinet and a voice direct to the

Finance
highest levels of government in Ottawa. If there is consent, Mr. Speaker, I move, seconded by the hon. member for Red Deer (Mr. Towers):
That the government take immediate steps to apply the appropriate provisions of the Income Tax Act to the financial affairs of one Earl Adam Hastings.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


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



FINANCE


Mr. Eudore Allard (Rimouski):: Mr. Speaker, under the terms of Standing Order 43, I request unanimous consent of the House to deal with an urgent matter requiring immediate action.
Considering that the Canadian public debt, in 1975, will exceed $55 billion, that servicing this debt will cost almost $3 billion in the same year-over $8 million a day-and that this debt is an increasingly heavy burden which the Canadian taxpayers are no longer able to carry, I move, seconded by the hon. member for Bellechasse (Mr. Lambert):
That this House study the possibility of setting up the financial mechanisms required to finance the paying off of the public debt through new credits issued by the Bank of Canada on the guarantee of the overall real wealth of the country, this, with a view to freeing Canadian taxpayers from the burden the public debt represents.


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


Some hon. Members:: Yes.


Some hon. Members:: No.


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



CANADIAN BROADCASTING CORPORATION


Mr. Rene Matte (Champlain):: Under the terms of Standing Order 43, I request unanimous consent of the House to move a motion.
In view of the fact that hockey is Canada's national sport and that professional hockey has become almost exclusively American, as far as the National Hockey League is concerned since only three Canadian teams out of 18 are competing in it; in view of the fact that, a division of the World Hockey Association is exclusively Canadian and that this division is the most stable of the association; and considering that the calibre of play in those two leagues is almost identical, it is deplorable to find that CBC is exclusively concerned with NHL publicity and that no World Hockey Association's game is televised on the national network. I therefore move, seconded by the hon. member for Richmond (Mr. Beaudoin):
That this House enjoin the Canadian Broadcasting Corporation not to discriminate any more against the WHA and to televise this league's games, particularly those involving the Canadian division.


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


Some hon. Members:: Yes.


Some hon. Members:: No.


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



AIR CANADA


Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker, I rise to request leave of the House to present a motion on a matter of urgent and pressing necessity pursuant to Standing Order 43.
Last night the Ministry of Transport ordered Winnipeg International Airport closed from 5.15 p.m. to 7.25 p.m., because of dangerous snow conditions on the runways. At approximately 6.45 p.m. Air Canada flight 253, a Lockheed L 1011 from Toronto, landed at the closed airport. In view of the fact that Air Canada spokesmen have stated unequivocably to broadcasting station CKY of Winnipeg that there was absolutely no problem with the aircraft, and in view of the potentially disastrous situation that this suggests, I move, seconded by the hon. member for Dauphin (Mr. Ritchie):
That this House does instruct the Minister of Transport to launch an immediate investigation into this matter and report the findings to the House at the earliest possible date.
February 18, 1975


Mr. Speaker:: The motion has been proposed under Standing Order 43 and therefore cannot be moved without the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: Order, please. There not being unanimous consent the motion cannot be moved at this time.


Mr. Paproski:: Joe Guay said no.


Mr. Guay (St. Boniface):: I said yes.



ROYAL CANADIAN MINT


Mr.   C.-A. Gauthier@Roberval: Mr. Speaker, under the provisions of Standing Order 43, I request the unanimous consent of this House to discuss an important matter requiring immediate attention.
The strike of Royal Canadian Mint employees has caused a coin shortage which is getting worse every day. Several businesses are already unable to complete transactions because they do not have enough change to give back to the buyers. We know that coins are "the poor people's money" and that the poor are the main victims of this shortage. I therefore move, seconded by the hon. member for Bellechasse (Mr. Lambert):
That this House instruct the President of the Treasury Board (Mr. Chretien) to report to this House on the protracted conflict between Royal Canadian Mint employees and the government to bring this conflict to an end as soon as possible so that the population may obtain the coins required to make normal business transactions.


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


Some hon. Members:: Yes.


Some hon. Members:: No.


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



WOMEN IN INDUSTRY ACT


Mr. Bob Kaplan (York Centre) moved: for leave to introduce Bill C-378, respecting women in industry.


Some hon. Members:: Explain.
Oral Questions


Robert Phillip Kaplan: Mr. Speaker, this bill will require contractors tendering for government business to file a statement describing in detail, as set out in the bill, the status of women working in their firms. This will create certain competition among firms to improve the status of women and produce higher standards than are obtained by laws which set minimum requirements.


Mr. Lawrence:: Mr. Speaker, I rise on a point of order. Would I be in order if I asked the hon. member if the bill will cover that great body of contracts for which there are no tenders?


Some hon. Members:: Hear, hear!


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


Mr. James Gillies (Don Valley):: Mr. Speaker, my question is for the Minister of Energy, Mines and Resources. No one in this House would dispute the right and propriety of the government and the National Energy Board to regulate export of natural resources, particularly gas to the United States. In view of reports that have been circulating recently, more particularly in the press today, that the United States government might make serious retaliations if any major changes are made on long-term contracts for the export of natural gas, have any special representations, either of a formal or informal nature, been made to the Canadian government stating that in fact the United States government will take such retaliatory action?


Donald Stovel Macdonald: Before responding, may I welcome back the hon. member from his illness. I hope we will see a lot more of him.


Some hon. Members:: Hear, hear!


Donald Stovel Macdonald: With regard to the report today that there have been allegations of statements by State Department spokesmen [DOT] of retaliation against Canada if there is a reduction in gas exports, I will preface my remarks by reminding the House that the National Energy Board is engaged in a hearing on precisely this question. In any response I make, I want to avoid in any way prejudicing that hearing.
Having said this, I can assure the hon. member that in my meetings to date with senior members of the administration and of the Congress I received no such representations. There has been concern about gas supplies but no suggestion of retaliation and no official representations to

February 18, 1975
Oral Questions
the Government of Canada in this regard. I think I can say to the House that on the basis of our good friendship with the United States over the years we shall do our best to assist them in any such problem, but perhaps this willingness to be of assistance might be diminished rather than increased by any suggestion of retaliation.


NATURAL GAS-GOVERNMENT VIEW ON POSSIBLE RENEGOTIATION OF CONTRACTS WITH UNITED STATES
James McPhail Gillies: Is it the position taken by the government that the long term contracts which have been signed with respect to natural gas could be the subject of renegotiation?


Donald Stovel Macdonald: I should probably not give a legal opinion, but the terms under which the gas is exported from Canada are under the National Energy Board Act, and are that the gas should be surplus to the reasonable requirements of the Canadian market and the National Energy Board Act does provide for the amendment of any such permit. This would have the effect of amending the contract by force majeure.


James McPhail Gillies: In the course of the meetings which are going on at the present time, has the question of long term contracts for natural gas been an important factor?


Donald Stovel Macdonald: United States officials have been aware of the extensive board hearings which have been going on and have expressed, in general terms, concern about the supply of gas to the U.S. market, but of course they recognize that the question remains hypothetical until the board has made its determination and the government in turn has made its decision.


OIL-GOVERNMENT ACTION TO OFFSET POSSIBILITY OF INCREASED IMPORTS
Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I have a question for the Minister of Energy, Mines and Resources on the same general subject. Has he now had an opportunity to inform himself as to the extent to which our export of crude oil will fall below imports in the latter part of 1975-the projected figure is some 200,000 barrels a day, as I understood the minister to indicate some months ago? If this prediction is unchanged, is it now the policy of the government to accept this situation and the very large consequent deficit in our balance of payments which will follow, or does the government have any plans to offset this effect?


Donald Stovel Macdonald: As the hon. gentleman knows there is a level now set of 800,000 barrels a day being exported to the United States. I suggested at the time of publishing the Energy Board report that the government would consider moving down to a level of 650,000 barrels a day as of July 1, subject to consultation with the provinces. There has been discussion at the official level with the provinces. Because of its fiscal consequences, this will be a matter to come before the first ministers in April. It will depend very much on the outcome of that meeting whether the

level remains at 800,000 barrels a day. However, subject to any sudden or unforeseen increase in imports, I would say the account should remain roughly in balance.


Robert Lorne Stanfield: May I ask, then, what is the intention of the government, subject to consultation with the provinces? Is it to seek the approval of the provincial governments to reduce exports to some 650,000 barrels a day by mid-1975? Is this still the policy as it seemed to be when the minister last spoke on the subject?


Donald Stovel Macdonald: Having set the figure of
650,000	barrels a day, naturally, we will discuss it with the two provinces most affected before making a final decision.


PUBLIC SERVICE
Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I should like to direct my question to the President of the Treasury Board. In view of the serious effects of the continuing strike of public service employees, I wonder whether the negotiations are continuing and, if so, whether there is a basis to the claim of the employees that most of those who were receiving wages when collective bargaining started a few years ago comparative to the wages paid for similar jobs in private industry are now being offered in many cases an increase which will bring their pay to not much more than half the pay of employees in private industry.


Hon. Jean Chretien (President of Treasury Board):: My
answer to the first part of the question is that I hope the parties will meet again tomorrow. We are willing to sit down at the negotiating table and try to come to an agreement. As for the second part of the question, I do not think the allegation is true.


STRIKE OF GENERAL LABOUR AND TRADES GROUP-SUGGESTED TABLING OF ANALYSIS BY PAY RESEARCH BUREAU
David Orlikow: I wonder whether the minister, if the negotiations are not brought to an amicable conclusion in the next few days, would make a statement in the House or table for members of the House the analysis done by the pay research bureau comparing wages paid to these employees with wages paid to workers doing similar work in the private sector of the economy.


Joseph Jacques Jean Chrétien: Mr. Speaker, I think that it would not be advisable to start negotiations in the House of Commons. I think that those people have the right to strike, a right which has been given to them by the parliament of Canada and which we respect.


Some hon. Members:: Hear, hear!
February 18, 1975


CRIMINAL CODE
Eudore Allard: Mr. Speaker, I have a question for the Minister of National Health and Welfare.
Following a decision made by a Boston jury that Dr. Kenneth Edelin is guilty of involuntary manslaughter for the destruction of a foetus during a legal abortion, does the government intend to use this verdict to amend the provisions of the Criminal Code as concerns abortion in our country?


Miss Coline Campbell (Parliamentary Secretary to Minister of National Health and Welfare):: Mr. Speaker, may I take notice of that question.


SUGGESTED CONSULTATIONS WITH AUTOMOTIVE INDUSTRY ON MEASURES TO CONSERVE GASOLINE
Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, my question is directed to the Minister of Energy, Mines and Resources. Following his recent statement that efforts should be undertaken in order to conserve energy, has the minister had discussions with the automotive industry to recall certain vehicles that do not meet a certain standard of performance, such as for example, half ton pick-ups which use gasoline at the rate of seven or eight miles to a gallon, which is not a good performance?


Donald Stovel Macdonald: Personally I have not, although my officials have been and are in the process of contacting industry with regard to ways in which industry can be of assistance. With regard to the automobile industry in particular, given the parallel goals that the United States administration has had over a period of years, we would seek to direct the auto industry to less wasteful means of propulsion systems in automobiles, thereby significantly conserving energy.


Stanley James Korchinski: May I ask the minister whether discussions are also being held with the automotive industry to encourage them to design anti-pollution devices in such a way that they may be turned off, particularly in rural areas where pollution is not a problem, because these devices are great gas consumers.


Donald Stovel Macdonald: Mr. Speaker, we recognize the problem and in conjunction with my colleague, the Minister of the Environment, we will be pursuing that question as well.
Oral Questions PUBLIC SERVICE


STRIKE OF GENERAL LABOUR AND TRADES GROUP- GOVERNMENT POSITION ON INCLUSION OF COLA CLAUSE IN CONTRACT
Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, I have a supplementary question for the President of the Treasury Board with respect to the negotiations that are going on. I wonder whether or not he accepts the Acting Prime Minister's statement of policy yesterday, in as much as he rejected the comment of the Minister of Finance with respect to the COLA clause, and whether the inclusion of the COLA clause in the negotiations is acceptable to the Treasury Board.


Mr. Speaker:: Order please. I do not want to restrict the hon. member's right to ask a question, but I have great difficulty in relating that question as a supplementary one to the question on gas consumption.


J. Michael Forrestall: Mr. Speaker, I did try to catch your eye with respect to a question asked by the hon. member for Winnipeg North. Mine was supplementary to his.


Joseph Jacques Jean Chrétien: Mr. Speaker, I will just reply by saying that it would not be advisable to negotiate in the House of Commons.


Some hon. Members:: Oh, oh!


TRANSPORT
Mr. Lincoln M. Alexander (Hamilton West):: Mr. Speaker, I should like to direct my question to the Minister of Transport and it relates to the St. Lawrence Seaway. I am well aware, as is the minister, that many telegrams and letters have been received in respect of the 10 per cent increase in tolls and the need for a public hearing. Has the minister received representations to that effect and what was his answer?


Hon. Jean Marchand (Minister of Transport):: Yes, Mr. Speaker, I receive representations and the department is now working on a paper for cabinet in order to see whether we can refinance the whole seaway, and I will have to discuss this matter with the Minister of Finance.


An hon. Member:: Is that a further policy statement?


Jean Marchand: You know what the seaway debt is. I think it amounts to $30 million per year. They do not collect enough money to even pay the taxes, so I think we must have a new scheme, and I hope that I will be in a position shortly to make an announcement.


Lincoln MacCauley Alexander: In light of the fact there has been some concern about this government moving in a unilateral direction on this matter, and keeping in mind that there has been concern registered regarding our export trade, Canada-U.S. relations and a concern on the part of pri-

February 18, 1975
Oral Questions
mary and secondary industry, would the minister now give some assurance that he will implement a policy of holding public hearings prior to the cabinet making a decision? In other words, will he attempt to get all the input possible on the economic factors involved before the cabinet makes a decision on this extremely important matter?


Robert Lorne Stanfield: Like Pickering.


Jean Marchand: Yes, it was very useful.


Some hon. Members:: Oh, oh!


Jean Marchand: When the hon. member says that we are acting unilaterally, perhaps I should point out that the United States did the same thing. One day they decided to maintain their tolls in order to reduce the debt, and they did that without consulting us. We were just informed of it. We may have to do the same thing, or find some other formula. As to whether it is necessary to have a public inquiry, I submit that if we can avoid it we will.


Some hon. Members:: Oh, oh!


Lincoln MacCauley Alexander: Mr. Speaker, I do not know whether the minister realizes that this is an extremely important and sensitive matter which he should not be treating lightly, and I do not think that he is, but I should like to ask one final question in order to get some assurance from the minister in respect of the direction he is going. Can he assure the House at this time that when he eventually makes a refinancing decision in respect of the St. Lawrence seaway he will make every effort to prevent increases in tolls which would seriously affect our export trade, Canada-U.S. relations and primary and secondary industries in Canada?


Jean Marchand: Mr. Speaker, I can assure the House that this is something I will have in mind from the very beginning to the end.


AGRICULTURE
Mr. Gordon Towers (Red Deer):: Mr. Speaker, in view of the fact that the Food Prices Review Board investigation in the meat industry did not reveal any significant facts, with the chairman stating that the current inquiry into beef marketing will accomplish very little, and in view of the statement of the chairman of the Quebec police commission that organized crime has even cost the teenager a little more in respect of the price of a hamburger, will the Minister of Agriculture strengthen the terms of reference of the commission to include the services of the RCMP in order to conduct an in depth investigation?


Hon. E. F. Whelan (Minister of Agriculture):: Mr. Speaker, I am sure the commission will use all the people it thinks can help it in carrying out a proper investigation.


Thomas Gordon Towers: Mr. Speaker, will the terms of reference provide that witnesses can be issued subpoenas and questioned under oath?


CANADIAN BROADCASTING CORPORATION
Mr. Bob Brisco (Kootenay West):: Mr. Speaker, in view of the fact that the National Film Board has produced and shown on national CBC a so-called documentary film entitled "Where are you going Company Town", which is a biased, distorted, profane and unfavourable representation of the city of Trail, will the Secretary of State request a national showing of a previously produced unbiased film to be shown to Canadians to at least in part redress the wrong perpetrated on Trail by the CBC and the National Film Board?


Hon. James Hugh Faulkner (Secretary of State):: Mr. Speaker, I will make those representations known to the corporation.


AGRICULTURE
Mr. James A. McGrath (St. John's East):: Mr. Speaker, I should like to ask the Minister of Agriculture what he proposes to do regarding the charges raised by the Food Prices Review Board in its report on the broiler chicken industry to the effect that the price spread between what the producer gets and the retail price cannot be justified?


Eugene Whelan: Mr. Speaker, there is no national broiler chicken marketing board. There are provincial marketing boards such as the one here which has its authority vested by the province of Ontario. We do grant them the authority to operate inter-provincially. They may be operating in a fashion that some hon. members would question, and if hon. members can give me some real evidence of that other than what Mrs. Plumptre presents I will look into it.


BROILER CHICKENS-INCREASED AMOUNT IN STORAGE-POSSIBLE USE IN FOREIGN AID PROGRAM
James Aloysius McGrath: Mr. Speaker, I would then ask the minister what he proposes to do about the growing cold storage surplus of broiler chickens in Canada, which I understand has increased from 31 million pounds in September to 34 million pounds today? Perhaps I could also ask the minister whether he intends to pursue his plans to set up a broiler chicken marketing board, notwithstanding the recommendations of the Food Prices Review Board?
February 18, 1975


Eugene Whelan: Mr. Speaker, the National Farm Products Marketing Council held hearings last year in respect of whether there should be a broiler marketing agency for Canada. Hearings were held and views were expressed. The council then proceeded with a draft agreement, but the agreement has gone no further. I think that is probably because of the inquiry into the national egg marketing agency called CEMA. I am not prepared to go ahead at this time until there is more federal authority, or until more federal authority can be vested in such an agency because I do not see how it could properly be run without it. The fact that there is a surplus of broiler chickens in storage has nothing to do with any national marketing program. These provincial marketing boards run their own systems at the present time. Such a federal or national agency would require a proper supply management program, and that would have to be put into effect before I would sign any agreement that required a federal authority as a signatory.


James Aloysius McGrath: Mr. Speaker, I would ask the minister whether, in the absence of a national agreement, he proposes to carry out his responsibilities as the Minister of Agriculture for Canada, in meeting with his provincial counterparts to see whether a plan can be devised to get these chickens out of cold storage to be used as part of our foreign aid program, or put on the market to the advantage of the Canadian consumer?


Eugene Whelan: Mr. Speaker, I would say that the poultry producers have a certain cost involved in the production of poultry, and if society as a whole wants to put the poultry on the market or into some foreign aid program, that would be the job of society as a whole. Society as a whole should have the total authority for putting them into foreign aid or on the market. There is no sign of waste. We have investigated the storage facilities in which these broilers are stored at the present time and I am told there is no chance of waste at the present time. I am also told that producers are voluntarily cutting back on production. This is a free wheeling type of operation and there is no real federal jurisdiction or control in respect of production at the present time.


BILINGUALISM
Mr. Rod Blaker (Lachine-Lakeshore):: Mr. Speaker, my question is directed to the Acting Prime Minister. Will he confirm that the Governor General and the Privy Council, through the office of the Prime Minister, have received a petition from the Quebec Association of Protestant School Boards, containing some 47,000 signatures, asking the government to refer Quebec's bill 22 to the Supreme Court of Canada and, if so, what is the intention of the government in response to this petition and request?
Oral Questions


Mitchell William Sharp: Mr. Speaker, I can confirm that such a petition has been received. It will of course be studied, as it deserves to be, by the cabinet. I can only say by way of answer that on the questions of policy the Prime Minister has indicated on certain occasions the general attitude the government would take in these matters, namely, that disallowance is a procedure which has not been in effect fer many years, and we are most reluctant to employ it, and also that if there were to be a private action against bill 22, the government might be disposed to participate. These questions will all be considered in the light of the petition which has been presented.


SYNCRUDE PROJECT-REQUEST FOR INVESTIGATION OF COST BY COMMITTEE
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I have a question for the Minister of Energy, Mines and Resources. In view of the vast amount of federal funds committed to the Syncrude project, and considering as well that the cost estimate given to the public and hon. members of the House escalated from $2 billion to $2.9 billion, I wonder if the minister would agree, prior to the government signing a final set of contracts on the project, to the establishment of a special committee of the House to investigate the commitments of the government and all costs related to the Syncrude project with a view to reporting back to this House prior to any signing of final contracts by the government.


Donald Stovel Macdonald: With relation to the allegations made last week by the hon. member's colleague about a cost escalation, I would advise that the $900 million alleged escalation is made up of a $226 million escalation in the cost of the utility plant, which is not the responsibility of the Syncrude partners but of the government of Alberta; of mortgage financing for housing of $100 million, which again is the responsibility of the province of Alberta; of $500 million interest during construction which, because it is all financed by equity funds, is not relevant; and the sum of approximately $30 million in relation to saline water disposal anticipated in part under the contingency fund already provided for.
The estimated costs are still estimated at the level of $2 billion. There will be in the final supplementary estimates coming forward an application for a supplementary estimate of appropriation for this, which would provide an initial forum, at least, where we could have a discussion of the details of the transaction which I personally would welcome.

Oral Questions


SYNCRUDE PROJECT-INCLUSION IN COST ESTIMATE OF ENVIRONMENTAL COSTS-REQUEST FOR TABLING OF COST ESTIMATES WITHIN AND OUTSIDE GOVERNMENT COMMITMENT
John Edward Broadbent: Would the minister inform the House in the current estimate of $2 billion, which he says is still the one held by the government, whether environmental costs are included. When he answers that would he also consider tabling for hon. members of the House and for the public all of the aspects of the Syncrude project which are to be included in the estimates of the government and those cost estimates which will be outside the purview of the commitment of the federal government?


Donald Stovel Macdonald: Mr. Speaker, I would be glad to make that clear. As I indicated in answer to a previous question, the studies done by the government of Alberta of course are its property rather than that of this government, and if there is to be a tabling, they would have to be translated. We would be glad to put before the House and before the committee the details of the nature of the obligations being assumed by the partnership and that being assumed by the government of Alberta.
With regard to environment, as I indicated, there is involved in the $2 billion figure a contingency amount for environmental problems of the kind referred to.


John Edward Broadbent: I have a final supplementary, Mr. Speaker. Due to the fact that by the time the House considers the estimates the agreement will already have been reached and therefore serious consideration of the policy would be too late, is the minister saying that the government does not intend the House to have the opportunity to investigate all aspects of the Syncrude project thoroughly prior to its making a commitment?


Donald Stovel Macdonald: Mr. Speaker, I would anticipate having some difficulty executing a contract in relation to the Syncrude project without first having the approval of the House for the appropriation to enter into the transaction.


CRIMINAL CODE
Mr. Real Caouette (Temiscamingue):: Mr. Speaker, I wish to direct a question to the Solicitor General of Canada.
A policemen congress from the Maritime provinces took place recently where a resolution was adopted recommending the restoration of capital punishment in Canada. Is the minister aware of this resolution, did he receive a copy of it and did he follow it up?


Hon. Warren Allmand (Solicitor General):: No, Mr. Speaker, I have not yet received a copy of the said resolution, although I have read about it in the press. On the

other hand, when I was invited to this meeting, I told the organizers that I already had a commitment for that particular day but that I would be willing to meet with representatives or the executive following the meeting to discuss the issues with them, but I have not yet heard from them.


David Réal Caouette: Mr. Speaker, I have a supplementary question.
The minister says he had a previous engagement, but if it had not been the case, can he affirm that he would have attended the congress?


William Warren Allmand: No, Mr. Speaker. I receive many requests for engagements in this country, and I had made a commitment on this occasion. I promised to meet representatives from that meeting, or their executive and so far I have not heard from them. If they wish to meet with me, I would be quite willing to do so.


PENITENTIARIES
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, my question is also addressed to the Solicitor General. Is the Solicitor General aware that last evening 12 newsmen, including cameramen, who had gone to the B.C. penitentiary to get a news story in regard to a hostage being held at that time were invited inside and locked up-penned up, one might even say-and held incommunicado for over two hours, even half an hour after the hostage had been released?


William Warren Allmand: Mr. Speaker, I was only advised by a newsman of this matter after I came into the House this afternoon, and I promised him that I would look into it immediately.


An hon. Member:: Why did they let them out?


William Warren Allmand: I might say that I received information this morning about the hostage case, but I was not told about this incident with respect to the press.


Donald W. Munro: Mr. Speaker, when the minister makes his report, would he let us know upon whose orders this particular action was taken and also the action that he proposes to take to ensure that this does not happen again and that those responsible will be dealt with appropriately?


William Warren Allmand: Yes, Mr. Speaker.
February 18, 1975


FOREIGN INVESTMENT REVIEW ACT
Mr. Lloyd R. Crouse (South Shore):: Mr. Speaker, 1 wish to direct my question to the Minister of Industry, Trade and Commerce. In view of the opinion expressed by the premiers of the Atlantic provinces that Canada's Foreign Investment Review Act is placing restrictions on foreign companies and investment in Atlantic Canada at a time when unemployment in our area is 11 per cent or more and rising, is it the intention of the minister to propose that the controversial second part of this legislation be shelved when he meets with the provincial industry ministers on March 10 and 11?


Hon. Alastair Gillespie (Minister of Industry, Trade and Commerce):: No, Mr. Speaker, but I do intend to meet with those ministers on that occasion to discuss with them the operation and consultative mechanisms set up by my department and with their departments.


INQUIRY OF THE MINISTRY
Allan Frederick Lawrence: Mr. Speaker, my question is for the government House leader. Where is the Prime Minister, what is the matter with him, and is it serious?


Mitchell William Sharp: Mr. Speaker, I am very glad to see that the hon. gentleman is just as concerned as the rest of us about the health of the Prime Minister. The Prime Minister has the 'flu. I gather that he was very anxious to come into the House today, but his doctor said it would be advisable that he remain home for another day. I will pass on to the Prime Minister the concern of the hon. member. I know that he will appreciate it very much.


PUBLIC SERVICE
Mr. Ray Hnatyshyn (Saskatoon-Biggar):: Mr. Speaker, I would like to direct my question to the President of the Treasury Board with respect to the strike of public service employees now taking place. In view of the fact that at the time of the grain workers strike in the fall of 1974, the Canadian Wheat Board indicated that if the strike lasted for six weeks it would take until mid May, 1975 to fulfill foreign grain commitments, and because there has been at least one other work stoppage, I wonder if the minister is in a position to indicate whether there are any contingency plans to move grain if this current strike persists in view of the very detrimental effect it may have with respect to our foreign commitments.
Oral Questions


Joseph Jacques Jean Chrétien: This aspect of the problem does not come under my responsibility, Mr. Speaker. The employees involved have the right to strike. Parliament has given them this right and I believe we must respect it. Of course, any strike creates problems in various sectors of the economy, but Parliament did allow these employees to use this weapon, and I respect this wish.


STRIKE OF GENERAL LABOUR AND TRADES GROUP-POSSIBLE FORMATION OF PUBLIC INTEREST DISPUTES COMMISSION
Ramon John Hnatyshyn: Mr. Speaker, I accept the position the minister takes with respect to the right to strike but in view of the fact that this matter has some serious consequences for the producer in western Canada and across the country, I wonder if he is in a position to indicate whether the government will give consideration to the formation of a public interest disputes commission in order to ensure that Canadian grain producers will not be subject to sales losses as a result of future strikes, slowdowns or work stoppages?


Joseph Jacques Jean Chrétien: Mr. Speaker, I now have no indication that the strike has seriously disrupted the movement of grain to ports, or the shipping of grain to our customers. In any event, I do not see why, when grain is concerned, the right to strike should be withdrawn and other sectors of the economy allowed to use it. The right to strike is either respected or it is not!


IMMIGRATION
Mr.   Sean@: Mr. Speaker, my question is directed to the Acting Minister of Manpower and Immigration and concerns the very disturbing circumstances involving one Roosevelt Douglas who is a criminal convicted in the 1969 burning and smashing of the computer at Sir George Williams University. His appeal against deportation was turned down after the minister and the Solicitor General last year signed a rarely used form which indicated that it would be "contrary to the national interest" to allow this professional troublemaker to stay in Canada. Can the acting minister advise why such a person, considered by the court to be a security risk, is still in Canada and last week surfaced to publicly criticize the green paper on immigration?


Mr. William Rompkey (Parliamentary Secretary to Minister of Manpower and Immigration):: Mr. Speaker, I will take that question as notice.

February 18, 1975
Oral Questions EXTERNAL AFFAIRS


PROPOSED SALE OF OFFICE FURNITURE TO CUBA BY LITTON EQUIPMENT-ACTION BY UNITED STATES
Mr. Alan Martin (Scarborough West):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. Could the minister indicate if the government has received any response from the government of the United States of America with reference to the concern registered by the Canadian government over the proposed sale of office furniture to Cuba by the Scarborough based firm of Coles Division of Litton Equipment?


An hon. Member:: It is all settled.


An hon. Member:: That is old news.


Hon. Allan J. MacEachen (Secretary of State for External Affairs):: Mr. Speaker, the answer is yes. I believe in this particular case a waiver was granted to allow the sale to go forward. I certainly regard it as a positive development in the situation.


CYPRUS-GOVERNMENT VIEW OF DECLARATION OF TURKISH CYPRIOT STATE
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, my question is also for the Secretary of State for External Affairs. In light of the recent unilateral declaration by Turkish Cypriots of a separate state in Cyprus while negotiations were going on between Turkish and Greek Cypriots, will the government of Canada express its disapproval of this action based as it is on military force and a defiance of the unanimous resolution of the United Nations Security Council on November 1 which called for speedy withdrawal of all foreign armed troops, and the continuation of negotiations with a view to reaching a free and mutually acceptable settlement?


Allan Joseph MacEachen: Mr. Speaker, the government of Canada has learned with concern of the statement by the Turkish Cypriots on that island. We have, as you know, considerable peacekeeping obligations there and for that reason have attempted to avoid taking sides. We have urged the parties to negotiate however, and of course formal negotiations began earlier this year. There can be no doubt that the announcement made by the Turkish Cypriots must be regarded as a serious setback to the success of those negotiations. I might add to my hon. friend that we must note that the Turkish Cypriots have not gone beyond asking for a federated state, and therefore the Canadian policy of supporting the independence and territorial integrity of Cyprus has not been breached by this statement. I do, however, regard it as a serious setback to the success of the negotiations. I believe that now all countries must urge the two parties on the island to resume negotiations, even though this complicating circumstance has intervened.


Francis Andrew Brewin: A supplementary question, Mr. Speaker. I should like to ask the minister whether the setting up of a separate state entirely outside the negotiations is a prelim-

inary move toward the partition and destruction of the integrity of the Republic of Cyprus?


Allan Joseph MacEachen: Mr. Speaker, the statement itself does not constitute a request for partition or for an independent state. To that extent, it meets the concern of my hon. friend and to that extent it ought to be greeted with a certain amount of satisfaction.


BILINGUALISM
Mr. Roch La Salle (Joliette):: Mr. Speaker, I wish to put a question to the President of the Treasury Board.


Mr. Marcel Prud'homme (Saint-Denis):: Mr. Speaker, I should like to ask a supplementary.


Roch La Salle: May I go on with my question, Mr. Speaker? Considering that since last Thursday the Unemployment Insurance Commission offices on Montreal island refuse to answer in English, that employees classified as French unilingual must answer many inquiries made in English and also that those employees have asked to be entitled to the 7 per cent bonus since they must give information in both languages, can the minister now say whether he is willing to comply with the request?


Joseph Jacques Jean Chrétien: Mr. Speaker, the government policy on the bonus for bilingualism does not apply to this category of employees, but to a special category of secretaries, here in the House of Commons and in Ottawa, who receive this bonus. We are not projecting to extend this bonus to other categories of federal public servants. I could not agree to this demand, and I hope the employees concerned will do their duty and answer government customers in both official languages.


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


Marcel Prud'homme: Mr. Speaker, I rise on a question of privilege.


Mr. Speaker:: I shall recognize the hon. member later, but for the moment, the hon. member for Victoria has the floor.

The hon. member for Victoria.


NATIONAL DEFENCE
Mr. Allan B. McKinnon (Victoria):: Mr. Speaker, my question is for the Minister of National Defence. Can the minister confirm that Canadian Armed Forces bases have

been ordered to set up meetings between armed forces personnel and salesmen from Canada Trust Company for the presentation of a registered retirement savings plan and that in remote areas where it is difficult for the Canada Trust salesmen to reach the bases, commanding officers have been ordered to pass on instruction with the sales kits?


Hon. James Richardson (Minister of National Defence):: Mr. Speaker, it is correct to say that Canada Trust is setting up a retirement savings plan for those who may wish to join it, but I cannot confirm or deny the actual arrangements which have been outlined.


Allan Bruce McKinnon: Mr. Speaker, if the minister will refer to National Defence Headquarters message 071815Z he will see what I am referring to. Does he see nothing wrong with his department's shilling for Canada Trust in the high pressure sales world of registered retirement savings plans?


Steve Eugene Paproski: Shame!


James Armstrong Richardson: Mr. Speaker, I think the retirement savings plan will be of benefit to the individuals within the armed forces who participate in it.


Allan Bruce McKinnon: A further supplementary question, Mr. Speaker. As a message has gone out to all bases clearly saying that Canada Trust alone has been selected by the department to act as trustee, does the minister not consider this an improper position for the department to take?


James Armstrong Richardson: Mr. Speaker, the members of the armed forces, as individuals, are entitled to join any retirement savings plan they wish. This is an attempt by the department, after long study, to select a company that can be of service to the individuals of the armed forces who wish to participate in a retirement savings plan. There is absolutely no compulsion of any kind. It is a benefit to the armed forces.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. There is time for one more question.


EXTERNAL AFFAIRS
Steve Eugene Paproski: Mr. Speaker, my question is for the Secretary of State for External Affairs. Will the Minister advise the House if he will be accepting the invitation to visit Africa in April, whether he is going under the auspices of the Canadian International Development Agency and whether Paul Ger-in-Lajoie will be accompanying the minister on this "fun-in-the-sun" excursion.
Privilege-Mr. Peters


Allan Joseph MacEachen: Mr. Speaker, I have just had a suggestion from one of my hon. friend's colleagues to join the "fun-in-the-sun", so he ought not to be scandalized at the prospect of that happening. I am planning to take a working visit-


Some hon. Members:: Oh, oh!


An hon. Member:: Are you taking your bathing suit?


Allan Joseph MacEachen: -which I look forward to with a certain amount of trepidation.


Robert Lorne Stanfield: Are you going to Uganda?


Allan Joseph MacEachen: I have not decided on my travelling companions, as yet.


Mr. Speaker:: Orders of the day.


Marcel Prud'homme: Mr. Speaker, my question of privilege is related to the fact that I mentioned three times that I would like to ask a supplementary of the Secretary of State for External Affairs. [English]
With your permission, now that I have been recognized I wish to direct a supplementary question to the Secretary of State for External Affairs. My supplementary-


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please.


Mr. Nowlan:: You have not been here long enough.


Mr. Speaker:: Order, please. The hon. member must realize that he joins some very impressive company in the House in this regard.


Mr. Peters:: Mr. Speaker, I rise on a question of privilege on behalf of all members of this House. It seems to me that the practice of the House has always been, and I think it is borne out by Roberts and other authorities on procedure, that a question of privilege or point of order shall take precedence over other business being debated. Your Honour has recently seen fit not to hear a point of order or question of privilege at the time of its being raised and to hear it only after the conclusion of a series of discussions.
Apart from whether the point raised just now had merit, I suggest, on behalf of all hon. members, that Your Honour should hear a question of privilege as soon as it is raised. It has always been the practice of the House that we interrupt whoever has the floor in order to allow an hon. member to put his point of order or question of privilege. I suggest that we would be better served if that practice were to continue.


Some hon. Members:: Hear, hear!


Mr. Speaker:: With respect to the hon. member's point, I have tried, when points of order or questions of privilege have been raised, to indicate to hon. members who are raising them that I see them and recognize that they have a question of privilege or a point of order to raise. In some
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February 18, 1975
External Affairs and National Defence cases hon. members have seemed to agree, at my urging perhaps, that their question of privilege or point of order would be as well served if they did not interrupt the hon. member who was in the midst of a particular line of questioning. In other cases hon. members have indicated that their point of order or question of privilege had some urgency in that it related to them personally.
The fact that a question of privilege or point of order is recognized as being in order is, I submit, adequate. There is nothing, it seems to me, in the practices or precedents of the House which says that the raising of a point of order or question of privilege ought to stop, in mid-sentence, a member who is in the course of developing a supplementary line of questioning. I am simply trying to combine the two points of view and to be fair to all members at the same time.


David Réal Caouette: I rise on a question of privilege, Mr. Speaker.


Mr. Speaker:: The hon. member for Temiscamingue on a question of privilege.


David Réal Caouette: Mr. Speaker, with all due respect to the Chair, I think that under standing orders the hon. member for Timiskaming (Mr. Peters) is perfectly right when he says that a question of privilege must interrupt all parliamentary proceedings and allow all hon. members to hear that question of privilege. The Chair decides whether there is a question of privilege, but first the right to raise it must be recognized anyhow.


Mr. Speaker:: With all due respect to the hon. member for Temiscamingue, I shall point out that I tried to explain that it is because of that and of well established precedents that I recognized the hon. member for Saint-Denis on his question of privilege. I suggested that the oral question period go on for the other two members. But had the hon. member for Saint-Denis insisted on raising his question of privilege at that time, I would have heard him, but if he permits me to recognize the other two members to finish the oral question period before he asks his question, the House and the Chair agree.



GOVERNMENT ORDERS


Mitchell William Sharp: That the Standing Committee on External Affairs and National Defence be empowered to hear evidence on and to consider Canadian policy with respect to the question of continuing defence cooperation with the United States and in particular the future of the North American Air Defence agreement (NORAD); and That the Standing Committee on External Affairs and National Defence be empowered to hear reports from Canadian delegations

which have met with delegations from foreign parliaments or attended interparliamentary assemblies.


[Stage Direction]
Motion agreed to.

[Stage Direction]
The House resumed, from Friday, February 14, consideration in committee of Bill C-49, to amend the statute law relating to income tax-Mr. Turner (Ottawa-Carleton)- Mr. Laniel in the chair.
The Chairman:: When the committee rose last Friday, February 14, 1975, clause 28 had been carried. The committee will now proceed to the consideration of clause 29.
On clause 29.


Mr. Cullen:: Mr. Chairman, there is a technical amendment to be moved here. I would ask the Minister of Energy, Mines and Resources to be good enough to move this amendment.


Donald Stovel Macdonald: I move:
That clause 29 of Bill C-49 be amended
(a)	by striking out lines 36 to 42 on page 49 and substituting the following:
"receivable."
(2) Subsections 59(2) to (5) of the said act are repealed and the following substituted therefor:
"(2) There shall be included in computing a taxpayer's income for a taxation year any amount in respect of
(a)	a Canadian resource property,
(b)	a foreign resource property,
(c)	any property described in paragraph (1.1) (b),
(d)	any property described in any of subparagraphs 66(15) (c) (i) to (vi) that is not property described in paragraph (1.1) (b), or
(e)	any property described in any of subparagraphs 66(15) (c) (i) to (vi) if the references therein to "in Canada" were read as references to "outside Canada",
that has been deducted as a reserve under subsection 64(1) in computing his income for the immediately preceding taxation year.
(2.1) There shall be included in computing a taxpayer's income for a taxation year any amount that has been deducted as a reserve"
(b)	by striking out line 9 of the French version on page 49 and substituting the following:
"a) d'un avoir minier canadien, ou"
(c)	by striking out line 43 of the French version on page 50 and substituting the following:
"biens vises a l'alinea (l.l)b), les"


Robert Lorne Stanfield: Explain.


Donald Stovel Macdonald: Mr. Chairman, I cannot give a legal opinion.


Gérald Laniel: Hon. members have heard the minister's proposition.
February 18, 1975


Mr. Nystrom:: The Minister of Energy, Mines and Resources cannot possibly give an opinion. I wonder whether the parliamentary secretary could explain the purpose of the amendment.


Jack Sydney George (Bud) Cullen: Of course, Mr. Chairman, I think that in English, for the hon. member's information-

Explanatory note (a), the words "in that year" were deleted at line 36 on page 49 since they are not required. Subsection 59(2) has been amended at lines 37 to 39 on page 49 to change the previous reference because of other changes to subsections 59(1) and 59(3). The amendments in subsection 59(2) are only technical and there is no change in policy or application of the section.
The words "deducted as a reserve" have been added at line 42 on page 49 to the previous subsection 59(2.1). These words are consistent with other sections in the act where the deduction from income is in the form of a reserve. With regard to 59(l)(b), this amendment at line 9 on page 49 merely corrects the French translation to correspond with the English. Appropriately enough, (c), the amendment at line 43, page 50, merely corrects the French translation to correspond with the English.
Amendment (Mr. Macdonald, Rosedale) agreed to.
Clause as amended agreed to.
On clause 30.


Lincoln MacCauley Alexander: Mr. Chairman, I wonder whether the parliamentary secretary can advise me on this matter. I notice a change here, as a result of underlining, as follows:
-or as a payment to or under such a plan under which his spouse is the annuitant, as permitted by section 146-
In my ignorance, I ask whether in fact we can start now, in terms of International Women's Year, to bring in an amendment regarding "his or her spouse." Second, I want to know whether in fact this means the spouse is entitled to two deductions. I believe there is something like $4,000 or $4,500 now. Does this mean the husband can be involved with the plan, and if his wife is involved or has the right to be involved with it there is a further reduction amounting to something like $8,000 which would be involved under this section? Perhaps the parliamentary secretary would answer my first question regarding "his or her," amending the whole act accordingly, and my second question as to whether there is a double deduction in this regard.


Jack Sydney George (Bud) Cullen: Mr. Chairman, I understand they are each entitled to the deduction, but he can contribute to hers if she is not working. Therefore, the total is there. There is not a duplication, if that is what the hon. member is worried about.


Lincoln MacCauley Alexander: What about my first question? Perhaps the parliamentary secretary does not think it is important. It is with regard to an amendment adding the words "or her" and the whole act being amended accordingly.
Income Tax


Jack Sydney George (Bud) Cullen: Mr. Chairman, I believe one of my colleagues in the back bench raised that very point. Under the Interpretation Act "his" does mean "her". If the private member's bill of my colleague is carried, perhaps we will have it the other way around. However, under the Interpretation Act "his" does mean "her".


Mr. Neil:: Mr. Chairman, I would like further clarification. Is the parliamentary secretary saying that if you are working and your spouse is not, you can donate $4,000 to your own plan and $4,000 to your wife's plan, or $2,500 and $2,500 if you are on salary?


Jack Sydney George (Bud) Cullen: I am advised that one cannot have more than $4,000.


Douglas Charles Neil: If one spouse is not working and the other spouse is, can he or she put in $4,000 for himself and $4,000 for the spouse, amounting to two exemptions?


Jack Sydney George (Bud) Cullen: You could take the one $4,000 and put it in for yourself, or you could take the $4,000 and divide it.


Lorne Edmund Nystrom: Why is the government taking this route at all? It appears to me that those able to take advantage of this concession would be the middle class or the wealthy; a person in receipt of an average income would not be able to do so. Why does not the government set aside money to establish, for example, a pension plan for housewives? This proposal seems to cater basically to the wealthy.


Jack Sydney George (Bud) Cullen: The quick answer is that this is simply an extension of the law as it presently exists; we are taking it one step further.


Lorne Edmund Nystrom: I realize it is an extension of the present law, but I wonder why we are moving in this direction instead of doing something for the poor people. If we stopped doing all these things that help the middle class, we could perhaps establish a pension plan which would help the poor, the ordinary working people.


Jack Sydney George (Bud) Cullen: If the hon. member would consider not only what we have done for the middle class but also for those in the lower and middle income groups, he would find that a very fair balance has been struck. What the hon. member is suggesting may have merit, but we can only go so far at one time. There is a limit to the funds which are available to go around.


Mr. Ritchie:: Will this be classified as a gift by those provinces which presently tax gifts? Has the hon. gentleman received any legal opinion on this point?


Jack Sydney George (Bud) Cullen: I am sorry, I did not hear the hon. member's question.


William Gordon Ritchie: I know that in Manitoba, for example, if a husband gives his wife more than $5,000 it becomes taxable. Would the $4,000 proposed here add up to part of a gift as far as that province is concerned?


Jack Sydney George (Bud) Cullen: The point is well taken. However, the provinces are aware of what we propose to do in this legisla-
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February 18, 1975
Income Tax
tion and they would have to react in order to give effect to the changes set out in the bill, changes which I am sure the hon. member would wish to see.


William Gordon Ritchie: Presumably, then, this would be tested in court.


Jack Sydney George (Bud) Cullen: It is not a question of testing it. The hon. member mentioned Manitoba. The law would apply and a provincial tax would be payable. I think we would want the provinces to amend their legislation so as to give the full benefit to their residents.


Lincoln MacCauley Alexander: I see that in subclause (2) there is reference to the Unemployment Insurance Act and to the Unemployment Insurance Commission. There is something here, too, with respect to computing income tax; provision for deducting fees and expenses incurred in preparing, instituting or prosecuting objections to rulings of the commission, and so on. I see the former minister of labour sitting over there. He has more wisdom in this field than I have. These are not familiar words to me. Are they to be found in the Unemployment Insurance Act? What do the words "instituting or prosecuting an objection" mean? Are we talking about a lawyer who acts on behalf of a disgruntled applicant? I may say I am in agreement with this provision, being familiar with all the bureaucratic red tape surrounding the monstrosity we now have.


Jack Sydney George (Bud) Cullen: This covers the expenses of an appeal against a decision of the Unemployment Insurance Commission. It is a relieving amendment related to paragraph 60(o) under which a taxpayer when computing his income may deduct expenses incurred in appealing a decision of the Unemployment Insurance Commission, a board of referees or an umpire. It is, in effect, a relieving section. The hon. member might be interested to know that it does include lawyers' fees.


Lincoln MacCauley Alexander: Mr. Chairman, I am tempted to rise on a question of privilege. I was merely seeking information. However, since the hon. member has given me that information I can understand members of the legal profession taking greater interest in these matters.


Jack Sydney George (Bud) Cullen: I never think of the hon. member as being a lawyer, but always as a member of parliament.


Some hon. Members:: Hear, hear!


[Stage Direction]
Clause agreed to.
On clause 31.
Donald Stovel Macdonald: Mr. Chairman, I move:
That clause 31 of the French version of Bill C-49 be amended by striking out lines 27 and 28 on page 53 and substituting the following:
"60.1 Quand, apres le 6 mai 1974, il est intervenu un"


[Stage Direction]
Amendment agreed to.
[Stage Direction]
Clause as amended agreed to.
Clauses 32 and 33 agreed to.
On clause 34.
Jack Sydney George (Bud) Cullen: We have an amendment here, Mr. Chairman.


Mr. Mackasey:: Mr. Chairman, I move:
That clause 34 of Bill C-49 be amended as follows:
(a)	by striking out line 47 on page 54 and substituting the following: "virtue of the disposition of a property to"
(b)	by striking out line 10 on page 55 and substituting the following: "taxation year, there may be deducted as a reserve in"
(c)	by striking out line 23 on page 55 and substituting the following: "the property that is not due until a day"
(d)	by striking out line 27 on page 55 and substituting the following: "(i) the amount deducted"
(e)	by striking out line 29 on page 55 and substituting the following: "(a) in respect of the property in computing the taxpayer's income for the immediately preceding taxation year, and"
(f)	by striking out line 31 on page 55 and substituting the following: "amount in respect of the property that is not due until a day"
and
(g)	by striking out line 33 on page 55 and substituting the following: "year and for greater certainty, no deduction may be made in respect of any amount or portion of any amount referred to in paragraph (a) or (b) by virtue of paragraph 20(1) (n)."


Gérald Laniel: Order please. Just for the sake of clarity, let me point out that the minister has moved the French version of the amendment.


Steve Eugene Paproski: Mr. Chairman, I rise on a point of order. I notice that in the English version it reads "line 47" but in the French version it reads "line 46". Is there a reason for this?


Bryce Stuart Mackasey: It sometimes happens in the translation that one version takes a little more space than the other. Amendment (Mr. Mackasey) agreed to.
Clause 34 as amended agreed to.
On clause 35.


Jack Sydney George (Bud) Cullen: Mr. Chairman, the Minister of Finance proposed an amendment to clause 35 on February 10, 1975. I would now like to move a new amendment to this clause and propose that we not proceed with the earlier amendment. The amendments were tabled earlier as a courtesy to hon. members. The Postmaster General will move the amendment to clause 35.


Bryce Stuart Mackasey: I move:
That clause 35 of Bill C-49 be amended
(a)	by adding thereto immediately after line 24 on page 56 the following:
"(1.1) All that portion of subparagraph 66(3) (b)(ii) of the said act preceding clause (A) thereof is repealed and the following substituted therefor:
"(ii) the amount, if any, by which the aggregate of"
(b)	by striking out lines 34 to 41 on page 56 and substituting the following:
"(D) the amount included in computing his income for the year by virtue of subsections 59(2) and (2.1) exceeds
February 18, 1975

(E) the amount deducted under section 64 in computing his income for the year,"
(c)	by striking out line 3 on page 60 and substituting the following: "66.1(2) or deducted under subsection 66.1(3)"
(d)	by striking out line 18 on page 60 and substituting the following: "deducted or deductible, as the case may be, by the joint exploration cor-"
(e)	by striking out lines 47 and 48 on page 60 and substituting the following:
"deducted by the joint exploration corporation under subparagraph 66.2(5)(b)(iv)"
(f)	by striking out line 16 of the French version on page 61 and substituting the following:
"laquelle elle a repris l'exploitation active"
(g)	by striking out line 8 on page 62 and substituting the following: "paragraph 59(2) (a), (c) or (d) or a share"
(h)	by striking out line 16 on page 62 and substituting the following: "him after 1971 and before May 7, 1974) or a Canadian explora-"
(i)	by striking out line 29 on page 62 and substituting the following: "paragraph 59(2) (a), (c) or (d) or a share"
(j)	by striking out line 51 on page 62 and substituting the following: "by him after 1971 and before May 7, 1974) in respect of that field"
(k)	by striking out line 37 of the French version on page 62 and substituting the following:
"66.2(5)b) (vi) le montant qui est devenu"
(l)	by striking out line 4 of the French version on page 63 and substituting the following:
"66.1(6)b) (vi); et"
(m)	by striking out line 44 on page 59 and substituting the following: "expenses as were incurred by it during a period, before the"
and
(n)	by striking out line 28 on page 60 and substituting the following:
"expenses as were incurred by it during a period, before the"
I could repeat the French, Mr. Chairman, which is a precise translation, or I could carry on in my Gaelic, whichever you prefer.


Gérald Laniel: The committee has heard the amendment moved by the minister.


Steve Eugene Paproski: Mr. Chairman, I have just one question in respect of clause 35, on page 66, regarding expenses. I would ask the parliamentary secretary whether this paragraph, which refers to the production or marketing of sodium chloride or potash, or a business which is involved in manufacturing products involving the processing of sodium chloride or potash, is a "once in a lifetime" deal similar to the Syncrude project in Alberta, or do the potash companies in Saskatchewan have these private deals of which we are not aware?


Jack Sydney George (Bud) Cullen: Mr. Chairman, I am advised that this is a consequential amendment to subparagraph 66(3)(b)(ii) incorporating a reference to paragraph 59(32) (a) or (c) which determines the amount included in income by virtue of Canadian exploration expenses and Canadian development expenses as amended by subclause (29) (2) and (36) (1) of the bill. The inclusion of this income increases the amount of deduction by an individual of Canadian exploration and development expenses within the limitations set out in revised subsection (66)(3). I am
Income Tax
sure if the hon. member reads that and makes the reference he will find the answer to his question.


Steve Eugene Paproski: Thank you.


Donald W. Munro: Mr. Chairman, I rise on a point of order. This bill is sufficiently complicated as it stands, with 287 pages. It has been printed and circulated and we have all had it in our hands for several weeks. Now we are being asked to approve amendments being brought forward and read quite clearly, I grant you, but there must be 15 or 20 of them to this particular clause. With all due respect, 1 suggest that with the approval of the committee we should have these amendments circulated so that we can place them beside the existing text. Perhaps we could stand this clause. We are assured that these are technical amendments, but things have happened before, when technical amendments have been accepted, that have resulted in substantive changes in the law. With all due respect, I suggest that we proceed in this manner on this clause and any other clause that has so many amendments.


Gérald Laniel: Before I recognize the hon. member for Calgary South I should perhaps deal with the point raised. I suggest it is a valid point, but to be fair to the parliamentary secretary I should point out that he indicated he was ready to suggest that clause 35 be stood in order to allow hon. members to look at the amendment. This may not prevent further discussion, but if hon. members feel the clause should be stood, that is the committee's decision.


Jack Sydney George (Bud) Cullen: Mr. Chairman, in response to the hon. member-and I think his point is well taken-I would indicate that all the amendments that have been put forward were tabled on February 10 in order that the action he is suggesting could be taken. I was going to indicate that these changes, quite frankly, involve corrections to the translation. This particular amendment is a new one and involves a series of changes, but all the others were tabled for precisely the reasons indicated by the hon. member. I would be quite prepared to go through these in the interests of getting the clause passed, if that would help.


Mr. Bawden:: Mr. Chairman, I would support the remarks of my colleague as they relate to the amendments we are hearing about for the first time today. It is clear that the parliamentary secretary and the minister are reading from a prepared text, and it is also evident from the way they are reading that they do not know what they are reading. They have with them in the House a deputy minister who is backed up by a cast of thousands. The assistance they have in the form of the deputy minister is vast in that he has been working on these amendments and on the budget for many, many months. I would suggest that if the action is taken as suggested, the opposition should be provided with copies of these amendments in order that we can more closely scrutinize them.
I should like to know from the minister or the parliamentary secretary what sort of support might be provided members of the opposition who are generally staffed with a first and second secretary, in order that they might probe into the effects of these amendments. In this way they could go through the bill clause by clause and line by

February 18, 1975
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line with a better chance of understanding what they are being asked to deal with and pass today.


Jack Sydney George (Bud) Cullen: Mr. Chairman, I would point out to the hon. member, as I did earlier today, that we have endeavoured to do just what he has suggested in respect of this income tax bill. These amendments were tabled and have been available for study for some time. When we indicated we had these amendments, they were discussed with hon. members opposite and were all tabled with the exception of the latest one. It does involve a series of amendments but, as I have said, they are for the most part technical.
In so far as the study is concerned, funds have been made available both to the hon. member's side and to our side for the provision of research staff. I would hope that he is using more than just the staff he has in his office for the purpose of research, because if he is doing just that I do not think he would be too well informed. Knowing the hon. member as I do, I rather think he has access to other sources for research. In any event, if hon. members are disturbed about this amendment to clause 35 and would like to read the amendments and check them, we will give them copies, stand the clause and go on to the next one.


Gérald Laniel: Is it agreed that clause 35 be stood? [Translation]


Mr. Bechard:: Mr. Chairman, although I have no wish to be sarcastic, I hear complaints about amendments moved this afternoon. It has been indicated twice that these amendments were all tabled on February 10. Members with an interest in Bill C-49 could therefore have gotten a copy as I did myself. I even copied into the bill the amendments to the clauses. While not an expert in fiscal law, far from that, I believe it is easily understood for example that on page 62, "66.2 (5)b) (vi)" was an error. "(4)" should read "(6)".


Steve Eugene Paproski: Mr. Chairman, the hon. member is trying to filibuster.


An hon. Member:: You don't know what you are talking about.


Steve Eugene Paproski: Mr. Chairman, we do not need a political speech in the House at this time. That is a filibuster. We want to get ahead with this debate.


Gérald Laniel: Shall clause 35, with the amendment thereto, stand?


Some hon. Members:: Agreed.


Lorne Edmund Nystrom: Just one short question before we do that, Mr. Chairman. I wonder if the parliamentary secretary or the minister could tell us whether there is anything of substance in the clause which we should be contemplating, or are they in his opinion strictly technical amendments?


An hon. Member:: He doesn't know.


Lorne Edmund Nystrom: If he does not know, it does not matter. He can tell us if he does not know.


Bryce Stuart Mackasey: When I do not know, I seek advice. When I do not know, I will ask the deputy minister.


Jack Sydney George (Bud) Cullen: Mr. Chairman, in response to the hon. member I would say that the clause has substance but the amendments are all strictly technical, correcting varying language versions, and that sort of thing. We have asked that the clause be stood so the hon. member may look at it.
Clause 35 stood.
On clause 36.


Jack Sydney George (Bud) Cullen: We have an amendment, Mr. Chairman.


Bryce Stuart Mackasey: Mr. Chairman, the parliamentary secretary has pointed out that there are some minor amendments to clause 36. In clause 36 of the bill the amendments are to pages 68, 73, 74, 75, 76, 78, 80 and 81. I therefore move:
That clause 36 of Bill C-49 be amended as follows:
(a)	by striking out line 6 on page 68 and substituting the following: "112 and 113".
(b)	by striking out line 26 on page 73 and substituting the following: "expense of that other taxpayer or was, by virtue of subpara"
(c)	by striking out line 46 on page 73 and substituting the following: "est, paid by him after May 6, 1974, and before that time"
(d)	by striking out line 16 on page 74 and substituting the following: "paid to him after May 6, 1974, and before that time"
(e)	by striking out line 3 of the French version on page 75 and substituting the following:
"59 (3.2)c), la fraction, s'il en est,"
(f)	by striking out lines 12 and 13 of the French version on page 76 and substituting the following:
"cumulatifs engages au Canada, ou"
(g)	by striking out lines 25 to 39 on page 78 and substituting the following:
"in Canada for the disposal of waste liquids from an oil or gas well,
(B)	drilling an oil or gas well in Canada, building a temporary access road to the well or preparing a site in respect of the well, to the extent that the expense is not a Canadian exploration expense,
(C)	drilling or converting a well in Canada for the injection of water or gas to assist in the recovery of petroleum or natural gas from another well, or
(D)	drilling for water or gas in Canada for"
(h)	by striking out line 19 on page 80 and substituting the following: "expense of that other taxpayer or was, by virtue of subpara-"
(i)	by striking out line 22 on page 80 and substituting the following: "taxpayer; and"
(j)	by striking out line 38 on page 80 and substituting the following: "paragraph (v) or (vi) that is estab-"
(k)	by striking out line 21 on page 81 and substituting the following: "paid to him after May 6, 1974, and before that time"
(l)	by striking out line 32 on page 81 and substituting the following: "al Grants Program"
(m)	by striking out line 39 on page 81 and substituting the following: "expense incurred by him."
Mr. Chairman, if we can dispense with reading it in French, I promise to read the next one in French and save reading it in English. I am told that the French version is precisely the same.


Mr.   Chairman@: Is it agreed?

February 18, 1975


Some hon. Members:: Agreed.


Peter Colwell Bawden: On a point of order, Mr. Chairman, I would like to ask the minister if he would explain in some detail what he has been reading to us.


Jack Sydney George (Bud) Cullen: In answer to the hon. member for Calgary South, I might say that this amendment was tabled on February 10 and passes on Canadian exploration and Canadian development expenses. Amendment (a) is a technical amendment at line 6 on page 68, deleting the reference to subsection 66.2 which was previously included in error. It is simply deleting that particular subsection. Amendment (b), the addition on line 26 at page 73 of the words "of that other taxpayer", is merely for clarification purposes.
Amendment (c), the words "and before that time" have been added at line 46 on page 73 since the calculation of the cumulative Canadian exploration expense is done at a specific point in time, and therefore any amounts paid by the taxpayer have to be determined before that specific time. Amendment (d), the words "and before that time" have been added at line 16 on page 74 since the calculation of the cumulative Canadian exploration expense is done at a specific point in time, and therefore any amounts received by the taxpayer have to be determined before that specific time. Amendment (e), the amendment at line 3 on page 75 corrects the French translation to correspond with the English version.
Amendment (f) at lines 12 and 13 on page 76 corrects the French translation to correspond with the English version. Amendment (g) is a technical amendment at lines 25 to 39 on page 78 specifying that the deductible expenses have to be incurred in Canada. Amendment (h) is a technical amendment at line 19 on page 80 which adds, for clarification purposes, the words "of that other taxpayer". Amendment (i) at line 22 on page 80 corrects a previous error. The word "and" was previously omitted by mistake. Amendment (j) at line 38 on page 80 merely corrects incorrect references.
Amendment (k) is a technical amendment at line 21 on page 81 to clarify that the amounts concerned must be paid after May 6, 1974, and before the particular time: it is necessary to add the words "before that time" since the calculation of the cumulative Canadian development expense is made at a specific point in time. In regard to (1), this amendment at line 32 on page 81 corrects a previous error. The word "development" has now been deleted as was previously intended. In regard to (m), the amendment at line 39 on page 81 corrects a previous error. The words "incurred by him" were previously omitted by mistake.


Peter Colwell Bawden: Mr. Chairman, I wonder if the parliamentary secretary, when he is reading from his voluminous notes, would consider reading the page number first. He reads so quickly that by the time he gets to the page number, having quoted the paragraph, subsection and subsection of subsection, it is almost impossible for us to get the page open before he is on to the next amendment. It would be helpful if he would start with the page number.
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I should like to ask whether the amendments the parliamentary secretary is reading off so quickly and ably from his notes include recommendations which came to the minister late last week from the Canadian Petroleum Association and the Independent Petroleum Association relating to these special areas of oil and gas exploration?


Jack Sydney George (Bud) Cullen: Mr. Chairman, I think it is traditional in this House not to say that such and such a group came before us and as a result an amendment was made. Individuals who have made representations will know from the legislation whether their recommendations were carried out.


Mr. Gilbert:: Perhaps the hon. member can tell you.


Peter Colwell Bawden: I should like to ask the parliamentary secretary whether the amendments he is giving us today were drafted subsequent to a detailed study of the suggestions from those two associations, by the sizeable staff of the Department of Finance.


Jack Sydney George (Bud) Cullen: As I have indicated, Mr. Chairman, the amendments were tabled on February 10.


Peter Colwell Bawden: Mr. Chairman, I am specifically interested in knowing whether any of the amendments that are today being proposed were drafted after consideration of the recommendations that came from the Canadian Petroleum Association last week.


Jack Sydney George (Bud) Cullen: Mr. Chairman, I tried to answer the first time the hon. member raised the question. First of all, the amendments were tabled on February 10 and, second, I think it would be inappropriate to make that kind of comment.


Mr. Stevens:: Mr. Chairman, with respect to the amendments that the parliamentary secretary is proposing to clause 36, he has repeatedly stated that the amendments were in our hands on February 10. I think it would be fair if the parliamentary secretary went further and indicated why they were not in our hands before February 10, bearing in mind the fact that the clause was substantially contemplated when the May 6, 1974 budget was brought down. I think we should have an explanation of why such extensive amendments were not forthcoming much earlier.
In particular, I should like the parliamentary secretary to explain what prompted the amendment. Was it simply faulty draftsmanship on the part of the department, or were the amendments agreed upon after overtures were made by the private sector concerning those parts of the resolutions which gave them problems?


Jack Sydney George (Bud) Cullen: Mr. Chairman, as I have indicated, some of the amendments are corrections. In some cases, where a word or date was previously included it now has been taken out. In other cases, it was a question of having the French version correspond with the English version, and vice versa. Some amendments were in response to recommendations made to the department. We received some excellent representations and some of them have been carried forward in amendments.

February 18, 1975
Income Tax


Sinclair McKnight Stevens: Mr. Chairman, the parliamentary secretary did not answer my basic question. Why did it take from May 6, 1974, to February 10, 1975, to discover that these amendments were needed?


Jack Sydney George (Bud) Cullen: Mr. Chairman, I think it is appropriate to remind the hon. member that in May we had a ways and means motion and not the bill. The bill did not come forward until December, and then there had to be reaction to it from industry and private enterprise. Bearing in mind the size of the bill, I think many of the amendments and changes that were tabled on February 10 are not significant as far as policy is concerned; they are simply correcting amendments.


Sinclair McKnight Stevens: Mr. Chairman, that is the answer I was looking for. There were mistakes that became apparent on December 20 when the bill was finally put into form, and they are now simply trying to catch those mistakes which the department or outside consultants or advisers indicated would cause problems. This being such a big section, possibly one of the most important sections in these amendments, I wonder if the parliamentary secretary could indicate to what extent it reflects the current definitions concerning expenditures that are commonly used in the United States for this type of activity.


Jack Sydney George (Bud) Cullen: Mr. Chairman, rather than copying the Americans, we have endeavoured to use Canadian nomenclature.


Sinclair McKnight Stevens: Is the parliamentary secretary denying, Mr. Chairman, that the wording he has used is almost identical to that used to describe mineral exploration expenses under the United States code, sections 616 and 617?


Jack Sydney George (Bud) Cullen: Mr. Chairman, we look at the legislation adopted south of the border, we look at the current Canadian practice, we list the representations made to the department, and out of all that available information we endeavour to draft legislation appropriate for the Canadian tax program.


Sinclair McKnight Stevens: Mr. Chairman, the parliamentary secretary is almost as evasive as his minister. My simple question was, is it not true that the wording being used concerning exploration expenses is almost identical to that in the United States code, sections 616 and 617?


Jack Sydney George (Bud) Cullen: I have answered that question once, Mr. Chairman. I am sure the hon. member has the definition beside him. We try to adapt, adopt and improve: this might be a good way to answer the hon. member's question.


Peter Colwell Bawden: Mr. Chairman, I was very interested in the parliamentary secretary's remarks on this question. It is rather interesting that the Postmaster General is now here, helping the parliamentary secretary to read many of these complex amendments. I would suggest to him that if something were mailed from Ottawa on February 10 to western Canada, there would not be time to consider it and mail it back in time for it to be discussed in the House eight days later. Maybe we should have some comment on that. Eight days is not enough time for return mail, much less for deliberation.


Bryce Stuart Mackasey: Mr. Chairman, the reason the parliamentary secretary is answering the questions rather than the Postmaster General is that he is much more knowledgeable in this particular field than I will ever be. He is one of the better members of the House.


Some hon. Members:: Hear, hear!


Bryce Stuart Mackasey: We are not talking about postal legislation now; but I have brought in labour legislation and accepted amendments right up to the final moment, from the Canadian Labour Congress. As long as an amendment improved a bill and was in line with the philosophy of the bill, I accepted it. Representatives of the petroleum industry were present when the bill was tabled and had a copy of it 2V2 minutes after, when it was made available to the public. I imagine that members of the petroleum industry have had, since February 10, ample opportunity to meet the Minister of Finance and other ministers, including the Postmaster General. These various ministers may or may not, depending on one's viewpoint, have contributed positively to the final version of the bill. Without being hypocritical, let me say that I do not think anyone in this country has not been given the opportunity to make his views known. The fundamental point is that after hearing what these people had to say, we brought forward a bill reflecting as nearly as possible their constructive viewpoints. That was the whole intent of the exercise.
Let me refer to what has been happening today. We have been correcting translations. Nobody can render a translation from English to French so perfectly that it does not need revising or clarifying. Some printing errors have been discovered, even though the bill has been proofread umpteen times. But that is not unusual, as anyone who knows the printing industry will testify. Between February 10 and the present the bill has been improved and modified on the basis of recommendations of the Department of Justice and possibly of legal officers of the Department of Finance as well as others. Possibly some last minute amendments have further improved the bill.
If the hon. gentleman is objecting to this procedure, he is objecting to a parliamentary process which has existed for 50 years and will continue for another 50 years. He should not be under the impression that any vested interests forced the government to water down the bill, because the government is above that.


Jack Sydney George (Bud) Cullen: Mr. Chairman, speaking to the matter of amendments, as I am not a member of the treasury benches I do not have authority to move amendments to this income tax bill.


Mr. Leblanc (Laurier):: Mr. Chairman, it appears we have difficulty in this part of the House in drawing your attention, or the Speaker's for that matter, when he is in the Chair, as indeed happened during the question period.
The member for Central Nova (Mr. MacKay) pointed out that when the parliamentary secretary gives explanations on amendments, he speaks too fast. A clear indication is that the people doing the interpretation-which they do with a high degree of expertise-of the parliamen-
(Mr. Cullen ]
February 18, 1975

tary secretary's terms are experiencing a good deal of difficulty, so we unfortunately missed in the French interpretation a major part of explanations on the tabling of amendments. The parliamentary secretary might wish to take note of it. When he explains the amendments he will move, maybe he could do so somewhat more slowly, in order that French-speaking members may enjoy full interpretation.


Mr. Symes:: Mr. Chairman, we are considering an important clause which allows oil companies in Canada to write off 100 per cent of their exploration costs. In an earlier budget the Minister of Finance wanted to reduce writeoffs from 100 per cent to 30 per cent. Now that the government has a majority, the write-off provision has been increased once more to 100 per cent. I find it hard to follow the reasoning which allows a 100 per cent write-off to oil companies, in view of the recently increased price of crude oil and the subsequently increased profits of the subsidiaries of multinational oil companies operating in this country.
Mr. Bawden. The hon. member cannot be referring to companies in Saskatchewan.


Reginald Cyril Symes: At one time the oil companies, which can hardly plead poverty, were content to explore in western Canada when oil sold for $2.80 per barrel. They explored before the world price rose to $6.50 per barrel. The price of crude oil in this country has more than doubled, and later this spring will rise from $6.50 to $8.50 per barrel. Oil company profits will, likewise, soar to unprecedented levels.
The concession given to oil companies therefore seems discriminatory, especially when one considers profit levels of manufacturing industries in this country which are labour-intensive. In 1974, manufacturing profits, on average, increased 38 per cent. During the same period, oil refining profits rose 68 per cent and profits for western oils rose 109 per cent. Imperial Oil and Gulf made after tax profits of hundreds of millions of dollars. I think the time has come for the government to cease giving concessions and to collect taxes on these high profits. This clause is a retrograde step as it will allow rich subsidiaries of oil companies a 100 per cent reduction. From my reading of the bill, it would be possible for Imperial Oil, for example, to apply the provisions of this clause to the Syncrude project. For example, if Imperial Oil invests $300 million in Syncrude, it can, under the tax regime which will be introduced, apply that amount against the profits of its other operations. Oil companies will make unprecedentedly high profits. The government has not recognized this and has increased write-off allowances to 100 per cent from 30 per cent. What is the reasoning behind this move?
The minister has argued that oil companies need incentives because the amount of exploration has declined. We are not fooled by that argument. The Minister of Energy, Mines and Resources has argued that Syncrude can be our salvation. The companies need not explore for the Syncrude oil as they know where the tar sands are. If the companies are blackmailing the government by saying they will not explore unless they are given a 100 per cent write-off of exploration costs, I suggest that the govern-
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ment itself should enter the exploration business through PetroCan. Let it award contracts for exploration and find oil for Canadians. I oppose the government's backing down and allowing the oil companies a 100 per cent writeoff, and urge the committee to vote against this provision.


Peter Colwell Bawden: Mr. Chairman, as the parliamentary secretary has the benefit of the advice of the deputy minister, I would like to ask him a question with respect to subclause (3) of clause 36. The subclause would permit Canadian taxpayers to deduct 30 per cent of their cumulative Canadian exploration expenses from taxable income. Would the parliamentary secretary explain how the 30 per cent figure was arrived at?
I would also like to know whether Canadian taxpayers can deduct land acquisition costs and whether any other incentives have been provided for Canadian taxpayers who are not principally in the petroleum business. Is there some incentive to take the step of becoming engaged in petroleum exploration? Some step has been taken in this clause. What other initiatives are there in this bill?


Jack Sydney George (Bud) Cullen: Mr. Chairman, I will answer the questions in reverse order. We feel the package provides the over-all incentive. There is nothing magic about the 30 per cent figure: it has been the traditional figure.


Peter Colwell Bawden: Why not 40 per cent?


Jack Sydney George (Bud) Cullen: Ask the fellow who invented baseball why four balls and not three. It has been the traditional rate; there is probably no more explanation for it than that.


Peter Colwell Bawden: Mr. Chairman, the parliamentary secretary really did not answer my question. I think it is a very important aspect of legislation in this country. Since the petroleum industry came into being, Canadian investors, by reason of the punitive tax laws in Canada, have been excluded from investing in that industry on an equal basis with foreign investors in the United States. This government has continually gone about this in a negative way, trying to artificially exclude investment and change these patterns. There is no question about it, this is the most important factor in bringing foreign ownership of Canadian oil reserves to its very high level at the present time. There is nothing in this budget to significantly turn this around.
I will rephrase my question to the parliamentary secretary. He said 30 per cent is traditional. The first time I saw the 30 per cent figure was in the May 6 budget. I suppose if something has been around for the better part of a year, to this government it has become traditional or long-term policy. I would like to know if the parliamentary secretary considers 30 per cent to be traditional.
Looking at the complexity and the vast number of clauses and changes in the bill, it is only fair that the parliamentary secretary should outline for members what other aspects of the bill can be considered to slant toward incentives for Canadians, if in fact it is the intention of the government to truly have Canadians invest in this industry; or do they want to continually put them at a
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February 18, 1975
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disadvantage while at the same time moving to exclude foreign capital in this area?


Jack Sydney George (Bud) Cullen: Mr. Chairman, the hon. member is probably more familiar with the bill than I am with regard to this particular enterprise. I would think that after a careful reading of the bill, which he has obviously had, he would be prepared to concede there are clauses wherein there is that particular kind of incentive to the point where we are criticized on one side for doing too much and on the other side for not doing enough.


Peter Colwell Bawden: Ignore them.


Jack Sydney George (Bud) Cullen: The hon. member waves and says we should ignore the NDP. However, they speak for a fairly large number of people in Canada and represent a particular feeling in this country. We have to be pragmatic politicians and endeavour to find which will achieve consensus in the House.


Peter Colwell Bawden: Mr. Chairman, I still cannot get an answer from the parliamentary secretary. He suggests that members should read the bill and draw their own conclusions. I say the parliamentary secretary has an obligation to outline this to the House or admit that he does not understand the bill and does not have these answers.


Lorne Edmund Nystrom: To further add to the confusion, I wish to direct a series of questions to the parliamentary secretary which I am sure his officials can answer. It is my understanding that the May 6 budget proposed lowering the amount which companies could write off for exploration from 100 per cent to 30 per cent. We have had the November 18 budget and there are now two categories. First, there is the category for the principal business corporation. My understanding is they can write off 100 per cent of their exploration costs. In the May budget, that was proposed to be 30 per cent. In the bill before us today, a corporation that is not a principal business corporation can write off 30 per cent of its exploration costs. Am I correct in that?


Jack Sydney George (Bud) Cullen: Yes, Mr. Chairman, with one change. It has been said that we backed down. I would not say we backed down; we backed off.


Lorne Edmund Nystrom: The parliamentary secretary says they backed off. I wonder if that was as a result of having a majority government. In any event, by backing down, how much money will the Canadian treasury lose? How much money would this actually involve per year, going back the last few years and anticipating for the future, if they had written off only 30 per cent of their exploration costs rather than 100 per cent? How many million dollars are we dealing with?-1 realize this would be a guesstimate.


Jack Sydney George (Bud) Cullen: Replying first to the hon. member for Calgary South, as I tried to indicate we have been chastised by the party to his left for the 30 per cent figure. The fact that we now allow 100 per cent exploration costs, and that the new tax abatement has had the effect of reducing the federal tax rate by 25 per cent, demonstrates initiatives that have been taken and which we hope will have a positive impact on this industry.

In reply to the hon. member for Yorkton-Melville, in the budget speech of November 18 the minister indicated, as recorded at page 1425 of Hansard:
For the year 1974,1 estimate that the changes I am proposing tonight will improve the position of the oil and gas companies by about $100 million and of mining companies by about $15 million as compared with my May proposals. This saving for the resource companies affected is a full 25 per cent improvement over the May position.
The hon. member may disagree with the word "improvement", but those are the figures given on budget night.


Lorne Edmund Nystrom: Those are the figures for one year. I take it that was based on the current rate of exploration. Exploration is now down. If exploration increases, that could skyrocket in the next few years. Hopefully, that is what the government envisages. What is meant by a "principal corporation"? Is Exxon a principal corporation in most of the undertakings they have? Which are the nonprincipal corporations? Does this by chance discriminate against small Canadian corporations? I suspect it does. This is a point the hon. member for Calgary South has made in the past. If this is so, why is there the double standard?


Jack Sydney George (Bud) Cullen: Mr. Chairman, I am advised this is a question of tax status and "principal corporation" is a definition that is well known. It has been founded in history for this particular enterprise. We would not know the specific corporations; it is a question of interpretation. With regard to the hon. member's use of the expression "skyrocket", I must dissociate myself from that. We certainly hope exploration will take off, but whether it will take off like a skyrocket is something we really do not anticipate.


Reginald Cyril Symes: I rise on the same point, Mr. Chairman. It is important that the parliamentary secretary tell us what is meant by "principal corporation". We want to know just how much discrimination there is against Canadian companies. By principal corporations, does the parliamentary secretary mean Imperial, Gulf, and so on; subsidiaries of American companies? We have the fantastic situation of the Canadian government giving subsidiaries of multinationals tremendous tax breaks compared with Canadian companies in the field. I cannot for the life of me figure out the reasoning, considering the capital pool and the amount of money these major subsidiaries in the oil industry in Canada can draw from their parent companies. When we think of Exxon, the parent company of Imperial, making profits last year of over $3 billion, we must ask why the Canadian government is not insisting that Imperial draw from Exxon some of the funds necessary for exploration, rather than giving them the incentive of a 100 per cent write-off.	(
Figures for the decade of the sixties show the parent corporations gave to the oil industry in Canada only some 17 per cent of the capital needed by the subsidiaries to expand and explore and, in return, received in the form of dividends 18 per cent of the revenues raised in this country. So the parent companies are not financing the subsidiaries in Canada; in effect, the taxpayer is doing so. An analysis of the funds raised in the sixties shows that about 38 per cent of the capital raised by subsidiaries was
February 18, 1975

derived from tax concessions and write-offs of the kind we see in the bill before us. Are we giving these corporations advantages which they really do not need?


Jack Sydney George (Bud) Cullen: There is probably a basic disagreement between us as to whether they are getting advantages they do not need. But the short answer to the hon. member's question is that principal corporations are companies whose principal business is resource development. Under section 66(15)(h), a principal business corporation is defined. I do not intend to read the whole of the paragraph, but a principal business corporation means a corporation whose principal business is the production, refining or marketing of petroleum products or natural gas, or exploring or drilling for petroleum or natural gas. There are six further subsections and I refer the hon. member to them. It does not simply say that "a company" is the principal corporation. It could be an all-Canadian corporation, for that matter.


Reginald Cyril Symes: Considering that 90 per cent of the oil industry in Canada is foreign-owned and that 99 per cent of the refining industry is foreign-owned, the parliamentary secretary is really saying that we are giving the bulk of the tax concessions to the foreign, multinational corporations operating in this country.


Mr. Hamilton (Qu'Appelle-Moose Mountain):: Mr. Chairman, the discussion of this item prompts me to put forward a thought or two leading up to a question. I believe the hon. member would accept my view that over the last 30 years a large number of Canadian oil companies have gone down the drain. One of the reasons has been referred to specifically by the hon. member for Calgary South who sits behind me. It is that these write-offs, though well-intentioned on the part of the government, are in fact one of the major reasons Canadians have lost control of their own resources. The great bulk of the small companies have never been able to get into a position where they were sufficiently in the black to take advantage of these write-offs designed to encourage exploration.
As I go over the history of events in the industry since the war, I see that well-intentioned parliaments thought they were helping the oil industry by making provision for write-offs. The intention is fine, but in practice the majority of the oil companies have not been able to survive because they never got themselves into a position where they could take advantage of these write-offs. The wildcatter trying to find oil knows that the chances against him vary between 8 to 1 and 20 to 1. I have seen many groups of Canadians pool their limited capital and enter this risky business of trying to find oil, encouraged by the thought that if they succeeded they would be able to write off the expenditures incurred. But they never found themselves in a position to take advantage of this particular concession.
I should like to ask the parliamentary secretary this question: Have there been any representations from the smaller, independent oil producers and gas producers asking that the government allow them to pass these losses through to the shareholders since the company itself cannot take advantage of the write-off provision? Under this arrangement the revenue department would simply allow a proportionate amount of the loss to be
Income Tax
passed through to the shareholders in order that individual shareholders might get the advantage of what the government is trying to do. If this concept had been in effect in the past, some of these companies might have been saved. Some of them might, indeed, have become big companies able to compete with the internationals. Thus, the question I have raised is an important one and again I ask whether there have been any representations from independent oil or gas producers for this type of concession.


Jack Sydney George (Bud) Cullen: I am advised that the representation or suggestion just made by the hon. member has not been addressed to the department. Most of the individuals who have made representations have set themselves up as syndicates to take advantage of existing provisions, instead of asking that losses be written off against shareholders' profits.


Francis Alvin George Hamilton: If a syndicate were formed and took a loss, could that loss be written off against other income if it were not derived from the principal business? Is that what the parliamentary secretary is suggesting?


Jack Sydney George (Bud) Cullen: I am advised that within limits this is precisely what is taking place, because the other opportunity, the one proposed by the hon. member, is not available to the shareholders.


Lorne Edmund Nystrom: I just want to make a few comments on this clause before it is voted on. In my opinion, you have a couple of choices when it comes to dealing with oil companies with regard to exploration and any other kind of tax write-off. The reality of the situation is that you are dealing with an industry which is basically foreign-owned, and whether or not it is contributing to Canadian corporations is really immaterial. If it is 90 per cent foreign-owned, then basically it will benefit foreign-owned corporations and there is no guarantee that Exxon or any other foreign company will reinvest those extra profits or extra capital in Canada. Quite often the funds raised in this country are invested in other countries.
When we are dealing with huge corporations such as these in the free market economy or the free enterprise economy, I think we have one of two choices. The member from Calgary South and members in his party have opted for one choice and our party has opted for the other. One choice is to keep it in the traditional free enterprise world and allow the corporations to develop the enterprise, to develop the oil. In order to do that you have to make all kinds of tax concessions, and the federal government recently-


An hon. Member:: What about Saskatchewan?


Lorne Edmund Nystrom: I am getting to Saskatchewan right now. The government recently increased taxes on some of the extractive industries. Alberta, Saskatchewan and British Columbia have done the same with regard to royalties. As a result, there has been a fall off in exploration and development. The reason is the immense incentives in the United States in the form of low taxes and low royalties. The rigs are being pulled out of western Canada and are going down to the United States to explore and develop.
28996-6'/2

February 18, 1975
Income Tax
That is a natural phenomenon in the free enterprise system. Anyone in that system will go where they can make profit with the greatest ease and where they can have the greatest number of shares with the highest dividends for their shareholders.
If you play that game, which is what the federal government is doing, you have to offer incentives to match what the Americans are doing-write-offs to the tune of 100 per cent for exploration-in the hope of attracting capital. I do not think that will happen. The incentives we offer in this country and the type of oil we are going after will still make it more attractive than what they are doing in the United States. If you are going to offer incentives, you will have to reduce taxes on oil to such a low level that there will be a massive sell-out. So my party has been suggesting that we take another route. Why cannot gas and oil be publicly owned, as is electricity in most parts of Canada today? That is the situation in almost every country in the world. For example, in Britain all future energy developments are at least 51 per cent publicly owned. In France, Japan, most of the OPEC countries and many of the small developing nations, energy is publicly owned.
The same should be done in Canada. This cannot be done exclusively in one small province in the country because you will have one province being played off against the other. If you take oil as an example, Saskatchewan owns 10 per cent and Alberta 85 per cent. If Alberta develops oil under the traditional corporate system where all kinds of write-offs and incentives are offered, while Saskatchewan imposes heavy taxes on this resource, naturally it will be difficult to develop oil through the free enterprise market. That is why, if you impose heavy taxes on the oil industry, you must establish a national petroleum corporation which would have the co-operation of all the provinces. You cannot play just half the game. One cannot be just half pregnant, as someone said. You have to go one way or the other.
That is why I object to this clause. I do not want to see further write-offs being granted to oil companies. I know why it is being done. The government is trying to hand out a larger number of candies to them than is the United States. The time has come to develop this industry under public control, including exploration, development and refining. This is a non-renewable resource and it should be treated as a public utility. It is for that reason I object to this clause and other clauses which give greater incentives to the oil industry.


Peter Colwell Bawden: Mr. Chairman, I will take only a moment; however, I cannot help but say a few words in case the minister and the parliamentary secretary were listening to the last speaker. I think it is a very simple thing: either incentives will be provided in Canada and this country will have at least a shot at being self-sufficient or, if we continue to follow the rules that the government is proposing in the budget, we will find that our country will fall far short of self-sufficiency. That is what this debate is all about.
Many of the important clauses in this bill which affect the natural resource industries can be dealt with in a number of ways. There are all kinds of questions that can

be put. It is simply a question, when the final figures are totalled, as to the kind of return an exploring company can get in Canada as against the kind of return they can get somewhere else. I think the key question, as suggested by the hon. member to my left, is that of public ownership, and I would like to put forward the following facts. Today, Canada is facing strikes in many critical areas where a few people, such as air controllers and others, can virtually shut down this whole country. I suggest to the members on my left and to the parliamentary secretary opposite that we could envisage one of the most serious situations that could be imagined in our country, with our cold climate, were we to concentrate all of the ownership in Crown corporations or public utilities so that by the simple turning of a valve by striking employees the country could be put up to ransom in such a way that it could not even operate for 12 hours.
In these situations, a strike within any number of independent or even large companies has its limits. The fact is that these employees know that in bargaining there is a limit to which a company can go and maintain its viability, and these limits are certainly recognized by labour and by management as well. Strikes against the government and strikes against public utilities, when unlimited funds can be provided simply by running the printing presses, provide an opportunity for a small segment of the population to hold the country up to ransom.


Reginald Cyril Symes: Mr. Chairman, I cannot let the comments of the owner of an oil drilling concern go unanswered. He has made a very interesting case for destroying labour organizations and unions in Canada by bringing out the red herring of a possible strike among the employees of a Crown corporation whereby they could hold the country up to ransom. A wildcat strike among any of the employees of any company that exists today, including Imperial, Gulf or any other, could do the same thing. But the hon. member ignores the major factor of who is blackmailing whom in this country, who is holding whom up to ransom. Of course, the most recent example is the Syncrude operation where a group of multinational oil companies beat this government into the ground.
A couple of Mondays ago at a meeting in Winnipeg some oil companies manoeuvred Canada into a position of facing shortages and misled the government in their reports to the National Energy Board by telling Canadians that we had enough oil for 200 years, that we had nothing to worry about and that we could export millions of barrels of oil a year. But suddenly this government woke up to find that we do not have all this oil. As a result, the multinational oil companies have this government and the Canadian people on their knees, and they say, "You will do things on our terms before we will go looking for more oil".
Syncrude is the best possible example of this. A couple of Mondays ago the Minister of Energy, Mines and Resources said he would go to Winnipeg to convince the partners of Syncrude to postpone their decision to pull out by January 31. That is all he was going to do. Suddenly we found that the Canadian government had committed $300 million to that project. The cost has continued to escalate. There were four reports prepared by the government of Alberta. The federal government received one of them on
February 18, 1975

Saturday afternoon, another on Sunday evening and the third on Monday morning. On that same fateful Monday a decision was reached committing millions of dollars to a project that is still in the hands of the multinational corporations which sold out Canada in the past and will continue to do so in the future.
It is time we ended this farce of multinational companies looking after Canadian interests. They look after their own interests. Let us not be fooled by them. It is time we looked after the development of Canada's oil supplies ourselves. Only in that way can we guarantee production and exploration in the interests of Canadians and at prices that suit the Canadian economy.


Peter Colwell Bawden: Like Saskatchewan, where nothing is happening.


Lorne Edmund Nystrom: Mr. Chairman, I have another comment or two to make in response to the hon. member for Calgary South. He said that our concern in this country should be self-sufficiency. I think that is a very important argument. People are interested in what will happen with regard to gas and oil. When you go around this country you find that this is the main concern.
I agree we should be self-sufficient in this country. There are two ways of doing it. One is through the private enterprise method, which we have done in the past through multinational corporations-that is the hon. member's way, the corporate enterprise way; that type of system is being subsidized massively by the government and has been for years and years-and the other is through public ownership. In the first case, most of the profits that the multinational corporations make are reinvested in various countries. This clause will give them another $100 million this year, more money next year and still more in the years to come. What we are saying in our party is that we should develop public ownership as other countries have done. You can hire the same technicians, the same scientists, the same economists, but the enterprise is owned by Canadians.
I was very happy to note that the hon. member for Calgary South did not try to refute any of the arguments about public ownership except to suggest that the labour unions would be more difficult to handle through public ownership than private ownership. I do not think that argument holds water. I think you will have the same relationship with labour whether it be a Crown corporation or a private corporation that is involved. The federal government should set the example in dealing with labour. I do not think that argument is relevant to the basic question of whether you should have public development. This is an important issue when we have a clause like this and when we are giving hundred of millions of dollars to foreign-owned oil companies. I do not think the taxpayers want us to do that.


David Orlikow: Mr. Chairman, I am constantly amazed by the tremendous inferiority complex of members of parliament, particularly those who belong to the official opposition. If you look at the international oil companies you will see that in virtually every country which has large pools of oil, including the OPEC countries, the govern-
Income Tax
ments have taken over 75 per cent, 90 per cent or 100 per cent ownership of that oil. I could list all these countries, but whether it is Venezuela in South America, or Iran-


Mr. Andre:: How many of them are democracies?


David Orlikow: The question of whether they are democracies is completely irrelevant to the question of who owns the oil resources in those countries. Whether it is Venezuela, Iran, Iraq or Saudi Arabia, the oil has been discovered by the multinational corporations. These corporations have drilled the wells, built the refineries and the gathering lines and have paid a very small price to these countries for their oil. Speaking from memory, it seems to me that the Shah of Iran said some time ago that all they were getting was 12 cents a barrel for the oil being pumped out of that country.
Most of these countries are still in the feudal age, with very few highly skilled or qualified technicians, but all of them who supposedly could not carry out the development themselves have taken over the oil. They have made an arrangement to have this oil purchased by the multinationalists. The multinationalists are dealing with these countries and shipping the oil to western Europe, to North America and to Japan. They are still living in these countries. They have not pulled out their technicians or their expertise, because they need the oil.
These multinational companies have, through negotiation, arrived at a price with which they can live. They have said to these countries that if they compensate them they will continue to do business, and that is what they are doing. When it comes to Canada, a country which has a great number of highly educated people, with engineering schools from which we have turned out thousands of engineers in the last 25 years, we are suddenly told we cannot do what the OPEC countries have done. I have a great deal more confidence in the know-how and ability of Canadians than, obviously, members of the official opposition. When the OPEC countries can take over the oil resources and operate them or make a deal with the multinationals to supply the expertise in return for oil at a price with which they can live, I do not believe that we cannot do the same; I do not accept that for a moment.
If we accept that suggestion, we are in effect saying that everything we have done since the end of World War II to upgrade the knowledge and skills of the Canadian people has been in vain. We have spent hundreds of millions of dollars in increasing the number and size of our universities, technical and community colleges and every year we are turning out thousands of well trained people, yet members of the opposition drag out this red herring, saying that we do not have the know-how to develop our own resources.
The hon. member for Calgary South wants to know about capital. These multinational corporations are not supplying the capital. The capital to develop the oil resources in this country resulted from the tax concessions and unconscionable write-offs which the people of Canada gave the oil companies through their governments, Conservative and Liberal. I am not blaming the oil companies for trying to get the best deal thay can. When they see that the country has a government composed of a bunch of suckers, they take every advantage they can. I suggest we

February 18, 1975
Adjournment Questions
have the resources and we have the capital to do the job ourselves; we have the know-how. But if we were short of know-how, we should make a deal with the oil companies, with which they can live, to develop our resources just as the OPEC countries have done.
I noticed this morning that Guinea, a country in Africa which has virtually no trained people, is increasing its tax on bauxite in one shot by $40 million a year. We will not see Alcan, Reynolds, Kaiser or any of the other corporations producing aluminum moving out of Guinea, because they need bauxite and they will pay the higher price. The same thing is happening in Jamaica: They know that the resources are needed and they can get a better price for their people.


An hon. Member:: You should think about democracy when you suggest that.


David Orlikow: This has nothing to do with democracy. In the waters off Norway there are tremendous oil resources and that country is controlling the way in which that oil will be developed and how much ownership it will keep. Great Britain has oil resources in the North Sea and has stated that 51 per cent ownership of the oil will rest with Great Britain. This has nothing to do with democracy. I want to say one more thing with reference to this red herring which the hon. member for Calgary South drew across the trail. He suggested there were no strikes in private industry, but there would be unlimited strikes in that sector. That is so ridiculous I cannot imagine anybody who knows anything about our society making such a statement. The fact is that there have been massive strikes in all major, privately-owned industries in this democratic society.


Steve Eugene Paproski: Mr. Chairman, before calling it five o'clock perhaps we could carry clause 36 in order to show some progress on this bill.


The Deputy Chairman:: Shall the amendment carry?


Some hon. Members:: Agreed.


Some hon. Members:: No.


B. Keith Penner: Order, please. It being five o'clock, it is my duty to rise, report progress and request leave to sit again later this day.
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 Victoria (Mr. McKinnon)-National Defence-Inquiry whether Canada nego-

tiating with Brazil in purchase of armoured cars; the hon. member for York-Sunbury (Mr. Howie)-National Defence-Disbanding of military bands-Request Government review decision.
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, public bills, private bills, notices of motions.


Walter David Baker: On a point of order, Madam Speaker, I understand that the items which precede No. 23 on today's order paper will not lose their place in the scheme of things as a result of calling No. 23.


The Acting Speaker (Mrs. Morin):: Is it agreed that those bills be allowed to stand?


Some hon. Members:: Agreed.



PRIVATE MEMBERS' PUBLIC BILLS


Mr. Leonard Hopkins (Renfrew North-Nipissing East) moved: that Bill C-223, to amend the Criminal Code (domestic and foreign flags), be read the second time and referred to the Standing Committee on Justice and Legal Affairs.
He said: Madam Speaker, during the course of the twenty-eighth parliament I had two private members' bills on the order paper of the House of Commons. Bill C-197 was a bill to amend the Criminal Code, and the purpose of that bill was to make it an offence to insult, in any way, a Canadian or provincial flag.
The second, Bill C-198, was a bill to amend the Criminal Code with regard to foreign flags, and the purpose of that bill was to make it an offence to insult, in any way, the flag of a foreign country lawfully represented in Canada.
Neither of those bills came to second reading prior to the end of that particular session of the twenty-eighth parliament.
The bill before us today, Bill C-223, encompasses in its present form all three of the points in the previous two bills. When proposing legislation of this nature it is important to make certain that the law being proposed is practical and can be enforced in the courts. If this is not the case, passing such a law would merely be window dressing instead of something realistic, practical and meaningful on the statute books of Canada. With regard to this latter point I would like to express my appreciation to hon. members in all parties with whom I have had consultations with reference to this bill. I wish to make it quite plain that they have been most co-operative and understanding.
I have also had several discussions with legal authorities who are concerned about the implementation and
February 18, 1975

protocol of a law of this nature. Because of these latter discussions, and other research I have undertaken on the subject, I have this afternoon decided to make a major change in this bill by making it less complicated and, it is to be hoped, more practical. It is my personal wish to request the unanimous consent of the House to withdraw three words from proposed section 49.1. Those words are "or Provincial flags."
In addition I wish to withdraw proposed section 49.2 in its entirety. This would make the bill deal with Canadian flag legislation only, and it would then read as follows:
1. The Criminal Code is amended by adding immediately after section 49 thereof the following:
"49.1 Every one who destroys, disfigures, mutilates, defaces, defiles, desecrates or casts contempt upon the Canadian flag is guilty of an offence punishable on summary conviction."
My reason for wishing to withdraw these two items is that I hope their withdrawal will ensure easier passage for the remaining part of the bill, plus the fact that we would be dealing with the ramifications of enforcing one particular piece of legislation instead of three at the same time.
For example, if the House were to approve the bill this afternoon in its present form, the Standing Committee on Justice and Legal Affairs could be faced with representatives from provincial governments across Canada who might wish to comment on the bill. The committee could also be faced with many representations from groups across the country in regard to the foreign flag section of the bill. Then, of course, there may well be people wishing to comment on the Canadian flag section of the bill. After considering all the ramifications of the present form of this proposed legislation, I have come to the conclusion that both the provincial and foreign aspects should be removed from the bill.
I am advised by legal experts that it is normal procedure for the provinces to recommend to the federal government the changes they wish in the Criminal Code as it applies directly to them. Therefore, if I were to retain the part about provincial flags I might end up stepping on the toes of some provincial legislatures. That is certainly not my intention.
Similarly the foreign flag section presents a problem in that many foreign flags of countries legally represented in Canada are on the various embassy properties which are excluded from Canadian jurisdiction. If such a foreign flag is insulted in any way, the Department of External Affairs extends an apology on behalf of the Government of Canada and ensures that the matter is brought to police attention for action under the appropriate law. Many people have expressed views to me, and I am sure that other hon. members have had the same views expressed to them, that they are quite often disgusted when they see a flag being torn down, burned, or insulted in any way-and I mean with intent to insult.
I do not consider it an insult to or desecration of the Canadian flag if people wish to wear a sweater of T-shirt with the Canadian flag on it, if they wish to wear a Canadian flag on the hip pocket of a pair of jeans, or if they wish to sew a Canadian flag on their knapsack when travelling. This is simply a way for people to express pride in their country and their very definite identification with Canada.
Criminal Code
By bringing this bill forward today I wish to make quite clear to hon. members that if it becomes law I would not wish to have it used to charge someone where the intent is simply to express pride in Canada. If this bill passes I would want the resulting law to be used against those who wilfully damage a Canadian flag or insult it in any way, or where there is clear evidence that there was intent to do so.
Any time that I have seen a Canadian flag being desecrated or insulted, my first thought was that the person or persons involved had no pride in the nation. There is also the underlying feeling that citizenship in this country carries with it not only rights and privileges but also duties. I hope that this bill will help such individuals to realize that Canadian citizenship is something in which Canadians take a great deal of pride, and that citizenship carries with it certain duties and responsibilities, and not just rights and privileges.
Regardless of what human frailties we may have, as members of the House of Commons or indeed as members of the Canadian community as a whole we surely must agree that we live in a country with great potential. We live in a country with great institutions, and we live in a country that presents all kinds of challenges and frustrations. The latter we must tackle, and while doing so we must display a reasonable amount of patience and perseverence.
[DOT] <mo)
A flag is a very important symbol to any nation, and by insulting the flag you are indeed insulting a nation and its people. If we, as Canadians, are able to treat that important symbol with the dignity and decorum that true Canadian citizenship has a right to demand from us, then it will make us look that much bigger in the eyes of other nationals. By doing so we are not in any way merely paying lip service to or worshipping a piece of cloth, as some agnostics might wish to have us believe; instead it should be interpreted as an act of respect and loyalty to our nation and to the people who occupy this nation.
I suppose all of us in this House of Commons had many occasions over the years to visit the Cenotaph on Remembrance Day, November 11. There we see the ceremony carried out with decorum and respect by those who fought to retain our nationhood, while at the same time we pay our due respects to those who made the supreme sacrifice on the battlefield to preserve it.
We are also well aware that the Canadian Armed Forces wherever they are around the world consider any ceremony dealing with flags, and with the Canadian flag in particular, as something that must be carried out to the nth degree of perfection along the lines that protocol demands. They have been responsible to a very large degree for portraying the Canadian image around the world, and the Canadian flag has become clearly indentifi-able in the international community.
I wish to thank this House for its patience and consideration during the course of my remarks and before I sit down I should like to ask unanimous consent of the House to remove the two parts of the bill that I have mentioned or, if not, I will give the House a commitment that if the

February 18, 1975
Criminal Code
bill receives formal second reading today I will see to it that those amendments are moved at the committee stage.


Some hon. Members:: Agreed.


An hon. Member:: No.


Mr. Leonard C. Jones (Moncton):: Madam Speaker, I would certainly not agree that the items the hon. member has suggested be deleted. I think the manner in which his bill was framed was good, no matter what his constitutional experts or the Department of External Affairs may have told him.
There was an instance not too far from my own constituency in the summer of 1974, where an organization obtained moneys from the federal government and an incident took place when the Union Jack was desecrated and insulted. I think section 49.2 should remain, and I certainly would not consent to withdrawing it.


Mr. Jacques Guilbault (Saint-Jacques):: Madam
Speaker, it gives me pleasure to say a few words on this bill, and to congratulate in particular the hon. member who introduced it. Indeed it seems that if one considers what the Canadian flag represents one realizes immediately how important it is for Parliament to pass official legislation to protect it and particularly explain clearly to the people of this country what the flag truly represents.
Those who sat here a few years back during the very difficult debate which then certainly divided Canadians for a while must understand that step must now be taken to avoid another division of Canadians on the flag issue, a flag which now, quite on the contrary, unites Canadians from coast to coast. It seems important to me that the bill be enacted because I had myself opportunities to wish that it were so.
I come from the heart of Montreal, a part of our country which is particularly noisy and which is represented at the provincial level by a member who advocates breaking up Canada and who certainly managed to gain a few supporters. I already received representations from certain people in my riding asking to be protected because they wanted to fly the Canadian flag but felt threatened. I think it is absolute nonsense that a citizen of Canada-such a free country-should even feel threatened when he wants to fly the flag of his country, the national emblem. That is why I think the bill introduced by the hon. member is excellent, and I will support it.
I would also like to make the following remark: It seems to me that respect for law and order in a society such as ours can only be enhanced if there were respect for its symbol, probably the most important, at least the most known, in that society-its flag.
That is why I congratulate the hon. member and I will support his bill.


Mr.   C.-A. Gauthier@Roberval: Madam Speaker, I thought the two parties of the opposition were going to speak on this bill. First of all, let me congratulate its mover. To my mind, deleting the words provincial flag and foreign flag is an excellent idea, because we would otherwise be intervening somewhat in someone else's responsi-

bility; what we are concerned with now is the national flag.
As the preceeding speaker said a while ago, we have had enough discussions about the national flag. When we voted, I was a member of the joint committee on the flag. I still remember the terrible discussions we had for months. Some will doubtless say that this bill is not necessary. I feel that if we limited ourselves to the spirit of Canadian citizenship, we would, at first glance, be inclined to say: Offhand, we would say this bill is not needed because those who do not respect the national emblem have no love for their country. Whether they have reason is another story.
The national emblem is in my view somewhat in the nature of a family picture, for instance. Children have a love for family emblems because they were brought up to respect authority, to love their parents. Laws will never be needed to prevent them from tramping on their parents' picture. This is something inherent that cannot be imposed by statute. But since we have in Canada different tendencies, I believe a bill to that effect is really needed, unfortunately, to prevent unseemly acts across the country.
If someone has reason not to love his country and to make it known by tearing up or destroying the national emblem, we are entitled to ask ourselves why they tend to do so. It is certainly because they were not impressed by the behaviour of parliamentarians and the authorities in the country, or probably because they were disappointed by the administration of justice or witnessed shortcomings. These are questions that come to my mind when I think of the bill.
I suggested it should be a natural thing to respect one's national emblem, to the extent that all citizens love their country. Who is going to induce them to do so? People in authority. If citizens see only gangsterism in the government, in the Cabinet, and in every parliamentary organization, how can they love their country?
I believe primary responsibility rests with parliamentarians. We, as members of parliament, should learn to show dignity, and especially in the course of these debates, knowing we are here to represent the people of Canada and we alone can make citizens love their country. They will love it to the extent they feel free and happy to live here.
I am not ready to put immediately the blame on the groups who are going to rebel against the flag or any other emblem of this country. Instead, I wonder if this action was not provoked by people who should set a good example. This is why respect for the flag should not be forced by legislation, but should come from the pride that the citizens have of their country, from the confidence that they have in their administrations and from the security that they can enjoy in their country.
I support this bill somewhat reluctantly since I would have liked that this Parliament promulgate more humane laws so that all Canadian citizens could be happy to live in Canada. In this way, Madam Speaker, we would be sure never to have to legislate to insure respect for the Canadian emblem.


Walter David Baker: Madam Speaker, although the hon. member who introduced this bill did not obtain unanimous consent for his amending proposal, he gave a certain undertaking. I think the House agrees with the bill in principle, and perhaps we could give it second reading and refer it to the appropriate committee without delay or further debate. As unanimous consent was not given for the hon. member's proposal, perhaps the committee might deal with it.
This matter deals with questions of propriety, and some may think that the federal parliament is not displaying good manners if it deals with the matter, as some provinces may be offended. I say this because of certain opinions which have been expressed in the past by the Department of External Affairs. I remember one occasion when the Department of External Affairs gave an opinion about the propriety of flying the flag of the Ukraine in front of City Hall. That opinion was not an opinion in the legal sense so much as an expression of belief. The department suggested it would be improper to fly the flag, and great difficulty resulted. Eventually the city decided not to heed that dubious advice of the Department of External Affairs and flew the flag of the Ukraine on Ukrainian national day.
Perhaps we ought to commend the hon. member for Moncton (Mr. Jones) for withholding unanimous consent. The hon. member who introduced the bill gave an undertaking; consequently, as I think there is general agreement, the subject matter of the bill should be sent to committee.


Stanley Howard Knowles: Madam Speaker, the hon. member for Roberval (Mr. Gauthier) was surprised because representatives of the official opposition and of my party had not taken part in this debate. The reason has now been given by the hon. member for Grenville-Carleton (Mr. Baker). We know that some genuine questions could be asked about this bill, but we think that the idea that we should make sure respect is shown for the emblem of this country is good, and we support it. Therefore, we think it would be a good idea to read the bill the second time and send it to the committee.
The hon. member who introduced the bill has indicated the changes he will make. He was not given consent for those changes to be made in the House, but this can be done in committee if the committee is so disposed. That was our reason for not participating in the debate, lest the bill get talked out. We are prepared to allow the bill to be read the second time and be sent to committee.


The Acting Speaker (Mrs. Morin):: Is the House ready for the question? Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the Standing Committee on Justice and Legal Affairs.
An hon. Member:: Six o'clock.
Income Tax


The Acting Speaker (Mrs. Morin):: Before we call it six o'clock does the House agree to revert to committee of the whole for the consideration of Bill C-49?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration in committee of Bill C-49, to amend the statute law relating to income tax-Mr. Turner (Ottawa-Carleton)-Mrs. Morin in the chair.
An hon. Member:: Six o'clock.


B. Keith Penner: As the committee has agreed to call it six o'clock, I do now leave the chair until eight o'clock.
At 5.30 p.m. the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 8 p.m.
B. Keith Penner: When the committee rose at six o'clock, it was considering the amendment to clause 36.


David Orlikow: Mr. Chairman, I wish to take a few moments to complete the argument I was advancing when the committee stopped discussing this matter. In particular I want to comment on the suggestions made by the hon. member for Calgary that not only will it be bad business for the people of Canada if the oil corporations [DOT] are operated through public ownership, but there would be many strikes and this would really drive the industry to the wall.
There is no evidence, in this or any other country, that people who work for the government or crown corporations are more likely to strike than workers in private industry. There have not been many strikes in the oil industry. That industry has not been highly unionized. It has been an extremely efficient industry in terms of finding oil and selling it at a high price. There is no evidence that under public ownership the workers in the oil industry would be more likely to strike than at present.


An hon. Member:: What about British Railways?


David Orlikow: I would be very happy to discuss the sorry plight of Great Britain with the hon. member on a more appropriate occasion. If he wants to look really at Great Britain, he should look at how little Conservative governments, which have been in power for most of the last century, have done to force British industry to modernize its equipment and management techniques. Therefore I do not think we need to look at Great Britain to see what they have done. We are talking about Canada.

Income Tax
We do not believe it is necessary for the people of Canada to give the fantastic concessions which the minister proposes to give to the oil and gas industries. This clause proposes that the entire cost of exploration and drilling for oil can be written off by the companies. When you do that, you virtually take away all the risks from the companies which are engaged in the oil business. If you drill a hole, regardless of whether it is dry or not, you can write off the cost against your profits. If you find oil, you are permitted to charge a very substantial price per barrel. You can make a lot of money. You can use the accelerated depreciation, the fast write-offs and everything else. We do not accept that that is necessary.
I go back to what has been said many times by many people in this country. There is no need to develop all our resources just to give them away at bargain basement prices. Our resources will be needed much more in ten, 15 or 25 years from now. The value of our natural resources will be much higher at that time. We need not go out of our way, as the minister seems to be doing, to give the oil companies just about everything they want. That being the case, we cannot accept the basic proposal in this clause.


Mr. Hogan:: Mr. Chairman, I want to say a few words on this clause. The debate before dinner seemed to have gotten off on an ideological strain. That means this clause is terribly important for what it says. It is symbolic in terms of the attitudes the Conservative party has in defence of what it calls private enterprise as against the socialist way of looking at this.
As with a lot of other things, we are using terminology in a different way. The Alberta members seem to be talking in terms of the defence of private enterprise which is relevant to a small sector of the economy owned by one or two family businesses or a few entrepreneurs, in the old sense of the word, that still exist in our economy and make a great contribution. However, in describing corporate capitalism they are using the same terminology. They are using a folklore of 19th century capitalism to describe corporate capitalism which has just as much planning as any socialist state, only the planning is done by the corporations in co-operation with any government that will co-operate with them.
For a very long period of time it has been the policy of the Liberal government and the Conservatives, when they were in power under the right hon. member for Prince Albert, to play ball with these large corporations. They not only give them an enticement to help get over a risk period, but take away any chance that there could be losses. When talking about Imperial Oil, Exxon and what have you, there is no profit and loss situation. The government gives them depreciation allowances.
These corporations are given 100 per cent write-offs as envisaged in this clause. There is no possible way these large corporations will suffer losses over a period of time, although it is true that with the way they keep their books, this may appear to be so for a given period of time. But they have a planned way of getting what they expect with regard to dividends and internal financing. It always works out because government plays the game that is envisaged in this clause.

The Minister of Finance, who is in the chamber this evening, should take a few minutes to explain to us why he has gone from a 30 per cent to 100 per cent write-off. Why not a 50 per cent write-off? Why must these large corporations have a 100 per cent write-off?


B. Keith Penner: Is the committee ready for the question?


Reginald Cyril Symes: Can the Minister of Finance answer a question which my hon. friend and others put this afternoon when he was not in the House? In view of the increased profits being made by the oil companies, in view of the fact that the minister was quite prepared to allow only a 30 per cent write-off on May 6, and in view of the fact that the 100 per cent write-off now proposed applies to foreign-owned corporations, why is the minister backing off and taking the position that the 100 per cent write-off for exploration is now justified?


Mr. Turner (Ottawa-Carleton):: I gave those reasons fully in the budget speech on November 18. Because the risk is so high in both the mining and the petroleum industry I felt it would be in the interest of the country to allow a 100 per cent write-off for exploration.


Reginald Cyril Symes: Why has no consideration been given to the effect of the reduction in the provincial royalty rate which is now to be only 35 per cent as opposed to 65 per cent? The companies are getting an extra incentive from the provincial government yet the minister is still listening to the pleas of poverty from the oil companies by giving them 100 per cent. In the light of the concession the Alberta government is making, why does the minister still feel it is necessary for him to change his position?


John Napier Turner: I have made that judgment and I have nothing further to add.


Some hon. Members:: Hear, hear!


Mr. Benjamin:: The minister says he changed his mind because of the high risk involved. Would he explain to the committee what is the risk? If there is a loss there are no tax penalties, and when exploration is made in or near proven areas the risk is, anyway, minimal. Certainly, in a situation like the tar sands or oil shale, or where there are known deposits of minerals, it is difficult to understand why a risk which was worth 30 per cent is now worth 100 per cent.


John Napier Turner: Well, Mr. Chairman, if we knew where it all was there would be no problem at all. But we don't.


Leslie Gordon Benjamin: Since the minister confesses that we do not know what the risk is, or how much it is-


Some hon. Members:: Oh!


Leslie Gordon Benjamin: Why does he not provide that if they can prove that a risk was taken, and if a loss was incurred, they could write it off? Why not wait until they can show in subsequent years that a risk was, in fact, taken and a loss sustained?
February 18, 1975


John Napier Turner: The explanation would probably not be undertaken because of the high risk involved unless there was a commitment in the law that the expenditure could be written off against current income.


Lorne Edmund Nystrom: Why was the minister willing to do it for 30 per cent last year and why does he now believe 100 per cent to be justifiable? What is the reason for this startling change?


John Napier Turner: Because I have taken part in intensive conversations with representatives of the provinces and with people who have to try to find these resources, including the independent companies, and I have concluded that in the light of the diminishing reserves of petroleum in the country this was the proper thing to do.


Some hon. Members:: Hear, hear!


Reginald Cyril Symes: I find the minister's explanation incredible in the light of the profits the oil companies have received in the past and those they are getting now. Oil companies were content to explore when the price was about $2.80 per barrel. Today, although it is true provincial royalties have gone up, the price per barrel has also increased and the oil companies are making even greater profits. So the argument that they need extra incentives is impossible to accept.
I should like to draw the attention of the committee to some figures on the cost of producing a barrel of oil and on the profits derived from its sale. Between 1965 and 1969 the average wellhead selling price was $2.58 per barrel. The finding and development cost was 52 cents per barrel, of which 13 cents went into exploration. The cost of production, including the operation of gas plant, averaged 35 cents a barrel, and the provincial royalty averaged 30 cents a barrel and federal taxes 14 cents a barrel. So there was a profit in percentage terms of 49.2 per cent.
When the price went up to the current figure of $6.50 a barrel the cost of finding and development did not rise-it is still 52 cents a barrel. The cost of production is still only 35 cents a barrel. Provincial royalties have increased from $1.27 to $2.22 on the average, and federal taxes amount to 60 cents compared to 14 cents under the old regime. The profit derived by the oil companies, despite the higher taxes, is $2.81 per barrel, or 43 per cent, only slightly below the original profit of 49 per cent. And when we look at it in real terms, profits in dollar terms are much higher, the increase ranging from 60 per cent to 100 per cent last year, or gross figures in the hundreds of millions of dollars. Despite all this the minister says a 100 per cent write-off is needed.
It is so obvious. If the people of Canada could only see how the tax laws are made they would realize who it is the government really cares for, that is to say, the multinational companies and their corporate friends. These are the people for whom the laws are designed. Meanwhile ordinary Canadians pay higher prices while, at the same time, losing revenue because the government continues to subsidize the oil companies through tax concessions and write-offs.
Income Tax
I believe the minister is out of tune with the people, or at any rate out of tune with the people I talk to in all walks of life. They are outraged over what has happened to our oil industry, over the Syncrude sell-out, and the lack of initiative on the part of the government in failing to take over the resources of this country and develop them in accordance with Canadian priorities.
Clause 35 in the bill is just one further example of the sell-out on the part of the government to multinational companies, and it is also indicative of the change of attitude now that the government is in a majority in parliament and thinks it can ram this clause through to the detriment of all Canadians. I think the minister has failed to explain the change from the 30 per cent to 100 per cent, hoping that he had secured the majority of votes and that a mildly reasonable explanation would suffice. I think it is a national disgrace.
Amendment (Mr. Mackasey) agreed to: Yeas, 63; Nays, 9.


B. Keith Penner: Shall clause 36, as amended, carry?


Some hon. Members:: On division.
Clause 36, as amended, agreed to on division.
On Clause 37.


John Napier Turner: Mr. Chairman, we tabled an amendment which I would like to move. It is intended to clarify the application of the fair market value rule where the taxpayer sells petroleum or mineral products to a government agent. I move:
That clause 37 of Bill C-49 be amended by striking out line 20 on page 84 and substituting the following: contract.
(8)	For the purposes of subsection (6), the fair market value at the time of disposition of a unit of any particular quantity of petroleum, natural gas or related hydrocarbons or metal or industrial minerals disposed of by the taxpayer referred to in that subsection to a person referred to in any of paragraphs (6) (a) to (c) shall be deemed to be the amount by which
(a)	the average proceeds of disposition that became receivable in the month that included that time by that person for the disposition of a like unit from a person other than a person referred to in any of paragraphs (6) (a) to (c)
exceeds
(b)	the average aggregate of all expenses (including depreciation) incurred by that person in respect of that month for each such unit that may reasonably be attributed to transmitting, transporting, marketing or processing thereof to the extent that such expenses are reasonable and necessary and do not include any cost of acquisition thereof.
(9)	For the purposes of subsection (7), the fair maket value of a unit of any particular quantity of petroleum, natural gas or related hydrocarbons or metal or industrial minerals acquired by the taxpayer referred to in that subsection from a person referred to in any of paragraphs (7) (a) to (c) shall be deemed to be equal to the amount, if any, paid or payable to the taxpayer by that person in respect of that unit.
(10)	For the purposes of subsection (8), where a person referred to in any of paragraphs (6) (a) to (c) disposes of a unit of any particular quantity of petroleum, natural
Fair
market
value
of
resource output disposed of to Crown
Fair
market
value
of
resource
output
acquired
from
Crown
Certain
persons
deemed
to be
same
person

February 18, 1975
Income Tax
gas or related hydrocarbons or metal or industrial minerals to another person referred to in any of those paragraphs, those persons shall be deemed to be the same person."
The purpose of this rule is to ensure consistent treatment, whether the resource is marketed by a government agency at a mark-up, or by the taxpayer subject to government royalty. In each case the revenue from the resource which is taken as mark-up or royalty will be included in the tax basis. In order to achieve this objective, where the government marketing agency is involved the taxpayer is deemed to have sold petroleum or a mineral product at fair market value.


Francis Alvin George Hamilton: I have a simple question for the minister. Has Clause 37, and the amendment to it which the minister has just moved, any connection with clauses 4 and 7 which are controversial, and which we are standing?


John Napier Turner: Yes, it determines fair market value for the purpose of the deductibility or nondeductibility of a royalty. So it does relate.


Francis Alvin George Hamilton: Is it understood then that we will be standing this clause after discussing the amendments?


John Napier Turner: Yes, if that is the wish of the committee at this stage.


B. Keith Penner: Is it the wish of the committee that Clause 37, and the amendment thereto, be stood?


Some hon. Members:: Agreed.


Reginald Cyril Symes: Mr. Chairman, I should like some clarification on a small point. I wonder if there is a typing error in the amendment. In the second to the last line of (9) we find the words "to" and "by". I wonder if those two words have been inadvertently reversed by the typist. Should that phrase not read "payable by the taxpayer to that person"?


John Napier Turner: We will look at that when it is stood.


B. Keith Penner: It is agreed that Clause 37, and the amendment thereto, stand.
Clause 37 stood.
On Clause 38.


John Napier Turner: Mr. Chairman, we have a technical amendment to Clause 38 which I would like to move, as follows:
That clause 38 of Bill C-49 be amended
(a)	by striking out lines 31 to 33 on page 84 and substituting the following:
'inventory of a business or a property described in any of paragraphs 59(2) (a) to (e)." '
(b)	by striking out lines 37 to 42 on page 85 and substituting the following:
"owned by him or deemed to have been owned by him on December 31, 1971, and thereafter without interruption, that was a property referred to in subsection 59(3) or (3.1) and shall be deemed to have"

(c)	by striking out lines 3 to 6 on page 86 and substituting the following:
"amount included, by virtue of subsection 59(1.1) or paragraph 59(3.1) (a), in computing the amount referred to in subparagraph 66.2(5) (b) (v) from property in"
(d)	by striking out lines 20 to 22 on page 86 and substituting the following:
"property referred to in any of paragraphs 59(2) (a) to (e) has, on or after the death of the"
(e)	by striking out line 53 on page 86 and substituting the following: "66.2(5) (b) (v), as the case may be, in"
and
(f)	by striking out lines 1 and 2 on page 87 and substituting the following:
"subsection 59(1), (1.1), (3) or (3.1), as the case may"
This is a series of technical amendments primarily to correct previous incorrect references to other sections.


B. Keith Penner: Shall the amendment to clause 38 carry?


Some hon. Members:: Agreed.


[Stage Direction]
Amendment agreed to.
B. Keith Penner: Shall clause 38, as amended, carry?


Donald W. Munro: I rise on a point of order, Mr. Chairman. The point was made this afternoon about trying to follow amendments as they are introduced, and it was suggested in this connection that the page number be read first rather than the line number. This is a small point, but when one is going through a document of this thickness and learns that there is going to be a change on line 17, and then finds it is on page 86, which may be four or five pages past where the last amendment was made, it is very difficult. It would simplify matters, I suggest, if the page numbers were read first and the line number after that. Then we could follow it much more easily.


John Napier Turner: We will try to accommodate the hon. member. I might say that the amendments were all tabled, and if the hon. member really wants to follow them he can get a copy from the Chair.


Mr. Hargrave:: Mr. Chairman, I would like to make a comment on clause 38(7) at pages 89 and 90. This clause deals principally with the intergenerational transfer of farm land from an individual farmer to his children. It has nothing to say about the subject which I think a good many farmers in Canada are keenly interested in, and that is why this same intergenerational transfer could not apply to incorporated family farms and farm partnerships.
If it is in order I should like to make a few comments on that.
First of all I want to say that I think family farm partnerships and corporations should be entitled to this roll-over provision. There are two other provisions included within the same clause, and they are the provision for five year averaging and the provision for principal resident exemption under the capital gains tax provisions. Those three items as they relate to the family farm corpo-
February 18, 1975

rate set-up and the family farm partnership are the items in which I am particularly interested.
I should like to remind the minister of what I felt was a very useful meeting which took place in the minister's office almost a year ago now, on March 13, 1974. At that time he was good enough to meet with the tax committee of the Canadian Cattlemen's Association. Most of our conversation was directed to this subject I am raising this evening. At that time the minister was good enough to include myself and the hon. member for Kamloops-Cariboo in the meeting because of our obvious interest in the cattle industry in Canada. I thought we came away from that meeting with the feeling that the minister was genuinely interested. We felt our points were well taken, and that something might come from that.
I made some remarks on this subject during the second reading debate and I should like to go back to two short paragraphs because I think they state in a nutshell the arguments which are pertinent. I said:
It is important to remember that while only some 7 per cent of our Canadian farms are incorporated, they account for 28 per cent of our total farm production. These figures do not include farm partnerships. We should also take note of the fact that while we have some 336,000 farmers in Canada, about one-third of this number, 113,000, produce 80 per cent of our total farm production. It is a personal view, of course, but I make a clear distinction between a so-called family farm corporation and a business corporation in a non-farm sector of our society. Surely the fundamental reason for farm incorporation is to enhance and preserve the family farm as a meaningful farm unit.
I should like to add that there seems to be a sense of responsibility on the part of the federal government and many of our provincial governments in that over the years they have encouraged this type of family farm set up in order to preserve the interests of families, keeping them interested in the family farm approach. Then I went on to say during second reading debate, in reference to the meeting with the minister in March of 1974:
-there appeared to be genuine interest and sympathy from the minister with respect to this matter. He suggested to our tax committee that because of the implications of our request, the so-called small business side of our society had to be seriously considered and he could make no decision at that time. He also suggested that his department must determine, in fairness to small businesses, if the roll-over provisions for small family businesses should also apply to them. To use the current phrase, I ask sincerely, why not? Surely a suitable definition of the term "small business" or "small family business" could be arrived at. This possibility could be given serious consideration. I think the minister has got into difficulty because he cannot adequately define a small business. In summary, I suggest that clause 38(7) of Bill C-49 has indeed done justice to the individual family farm, but at the same time it has drawn attention to a remaining injustice to other family farm businesses which do not enjoy this privilege.
It seems to me that the term "family farm corporation" suggests something insidious or sinister about a big business type of project. This is a necessary type of operation that has to be recognized. It is not in the category of a million dollar enterprise that bears close tax scrutiny or anything like that. Since that meeting with the minister a year ago I hope the minister has given this some thought and can make some comment on the situation. I would invite him to do so now.


John Napier Turner: Mr. Chairman, I recall the meeting to which the hon. member for Medicine Hat referred. The hon. member for Kamloops-Cariboo was there, and also an old friend of mine, Gordon Parks, who is
Income Tax
now the president of the Canadian Cattlemen's Association. He went to university with me in British Columbia.
Subsequent to that meeting I was with the hon. member in the Kamloops-Cariboo constituency, both in Kamloops and Quesnel, where we had further discussions about this problem, so I have been doing a great deal of thinking about it. I have not been able to resolve the problem to the satisfaction of either the hon. member for Kamloops-Cariboo or the hon. member for Medicine Hat.
We were concerned about persuading more people to stay on the land and produce food. We recognized the difficulty in respect of a family farm in the current economic structure, and we eliminated the capital gains tax on the transformation of a family farm from one generation to another as long as the land remains in agricultural use. The difficulty is that since the land is so illiquid, the payment of capital gains tax on the value of the land is very difficult, particularly in those areas of the country where there might be an artificial effect as a result of suburban sprawl. In this event the land is drawn out of agricultural production because the children cannot raise the money to pay the tax on the death of the father or mother, and it is the land, that is liquidated.
In the case of an incorporated farm there is not that type of liquidity because the shares, by reason of estate planning, can be transmitted over a period of time within the lifetime of the father and mother, and the same problem of liquidity does not arise.
There is also the fact that it is very difficult to ascertain whether the incorporated farm or the corporation to which the farm has been sold, or which holds the farm, does not also on behalf of the shareholders hold other property, shares, investments, other businesses and so on. From an administrative point of view trying to segregate the holdings of the corporation, the farm, from the other assets, would be extremely difficult indeed. On the question raised by the hon. member for Medicine Hat, there is very little logic in segregating the incorporated family farm as a business from any other incorporated business in the country-of which there are hundreds of thousands-so that in fairness, if one were to allow capital gains, free transmission from one generation to another in an incorporated family farm, there would be little argument for resisting that transmission on a tax free basis from one generation to another in any incorporated family business.
I have not been able to overcome those problems, and when the hon. gentleman mentions small business, I might say that we did try to accommodate small business in the last budget by increasing cash flow available to small businessmen incorporated in this country by raising the limit from $50,000 to $100,000 against which the 20 per cent or 25 per cent rate applies. I say those two different rates because it would be 20 per cent in the case of a manufacturer or processor, and it would be 25 per cent in the case of any other small business, and would raise the accumulated surplus against which those lower rates could apply from $400,000 to $500,000. That means an increase in cash flow for every small incorporated small business in this country of $11,500 per year.

February 18, 1975
Income Tax
I am conscious of the problem the hon. gentleman brings to me, but I have not been able to surmount the hurdles I have just described to him.


Herbert Thomas (Bert) Hargrave: Mr. Chairman, I would just like to raise the last point again about this so-called small family business. The minister raised the point of the similarity between that and the small family incorporated farm. Why not treat them both the same? Is there anything wrong with giving the same option to the small family farm and non agricultural business below certain levels?


John Napier Turner: The hon. member for Broadview said it would never end. I was thinking the same when I heard him and his colleagues earlier this evening. I do not want to tempt the hon. gentleman at all. I say that in a spirit of good humour which we all share at 8.45 p.m.
The revenue consequences would be too extreme for fiscal absorption at this stage. Again, it is getting very hard to segregate the holdings of those incorporated entities as between the farm, the farmland, the principal farm residence and other investments which are held by that corporation. I have not been able to overcome those difficulties. I have not closed my mind to the suggestion, but there is nothing I feel I can do to respond affirmatively to the hon. gentleman at this stage.


Herbert Thomas (Bert) Hargrave: Mr. Chairman, in view of the fact that the minister has not closed his mind to this, would he be willing to stand this particular clause for an interval in order to give us an opportunity perhaps to help him come to a conclusion?


John Napier Turner: Since I have been thinking about it for a year, Mr. Chairman, I feel that all I can do at the moment is advise the hon. gentleman that I do not have a remedy for him, and the standing of the clause would not improve the situation.


Thomas Gordon Towers: I think that if the Minister of Finance does not resolve this problem it will be with him to haunt him for the rest of his days because he promised to do this when the capital gains tax was first introduced. At that point in time he said that he would go along with it and try to resolve the problem. The question that I have for the minister is whether there is any plan of indexing capital gains for the first time turnover of the family farm as there is in the first time turnover of a home.


John Napier Turner: No, Mr. Chairman.


Francis Alvin George Hamilton: Mr. Chairman, I want to add a few words to what the hon. member for Medicine Hat has said, but first I would like to congratulate him for raising this point and also the minister for taking the time to speak to people actually in this predicament. I am going to come at it from a different way in the hope that I can add enough weight to the concern the minister is showing in this problem so that he will make some serious efforts to make the adjustment we all know is fair and equitable.
Ever since I have been around here we have received this same answer from ministers of finance that nothing of this nature can be done for the family farm because

immediately the same privilege would have to be given to those in small businesses. I would like to relate to the minister what I think is the most terrifying experience a rural member can have these days, and that is to go visiting the farms of this country and to talk with the woman of the house. Perhaps I could add something new to the arguments the minister could use with his officials who hold adamantly to the idea that nothing can be done.
This is the year of women. I see these buttons on the lapels of some hon. members asking: "Why not?" I am asking the Minister of Finance why not? This is what I find when I go to a farm home today. Because of the shortage of labour, whether the farm is in the east or the west, farmers cannot get people to work on farms. The only way they can keep their operation going with the type of expensive equipment they have to obtain is to find someone who is responsible to look after that expensive equipment and the only person the farmer can turn to is his wife.
Particularly at this time of year when farmers are filling out their income tax forms, it is more than the ordinary risk a politician should have to take to go into these farm homes, because the wife is just fuming. She has a long list of the hours she has spent driving the truck, running the grain loader, operating the tractor, running the combines, loading grain into the bins. She has a list of hours that would make a hired man in my day envious at having such a claim to send in to the boss.
The farmer's wife sits there and watches her husband go through this detailed business of filling out his income tax form, and she cannot even claim for the wages she has earned the hard way, in addition to doing the ordinary chores expected from the distaff side in looking after the family, the house and so on.
The husband sits there with his shoulders hunched in mortal terror, like the politician who is visiting, fearing that the wife will go beyond the bounds of sanity and really let loose. When I sit there and try to explain that the advisers to the Minister of Finance keep saying that it will cost the treasury a lot of money if we give this to farm families because they might have to give it to small businesses as well, it will not wash.
This is the problem the rural politician has in this situation. It is not the revolution of women's liberation in the cities that terrifies the politician; it is the deep anger of a woman who has worked 3,000 or 4,000 hours in a year and cannot even collect the wages she should be getting.
The lawyers get on television and hold out to these farm families the promise that, if they incorporate, then the woman or the children who work on the farm can be paid. Of course this can be done for a small legal fee. They are told that if they incorporate they pay lower taxes on the first $100,000 and pay their legitimate labour fees on the farm. But if they pass the farm on to the next generation they lose the tax free provision in this section.
The minister lives in a city riding where it is pretty hard for a husband to find 2,000 or 3,000 hours of hard labour for his wife to perform during the year. Some of us, however, have to go out and meet those ladies on the farm, when they are tired and worn out, and give them the explana-
February 18, 1975

tion the minister has given us tonight. I think that is more than a politician should have to do. It is putting him at a level of danger that an ordinary mortal should not have to face.
I suppose I should be speaking more solemnly, Mr. Chairman, but I am simply saying to the minister that equity demands that we tackle this program. I talk to the wives of small businessmen in our towns who work long hours with their husbands, and then they get hit with this at income tax time. The younger people are all leaving for the towns and cities today. In this House we have the hypocrisy to stand up and pay great obeisance to the ladies. This is their year, yet we will not even make a simple amendment to let them have the advantages of incorporation without losing the advantage of being able to pass the farm or store on to the next generation.
I do not think the excuses we are getting from the Minister of Finance make sense; they threaten the survival of those of us who come from rural ridings. He is condemning us to a fate that is so awful that most of us do not dare face it.
I know the minister cannot change this in a short time, but I hope that if he brings in another budget, in this year of the women, he will make this amendment. If not, there are going to be a lot of casualties among rural members of parliament of all parties. These women do not think we are doing our job here when we cannot persuade the minister to accept a simple amendment. It could be done if the minister would just take the initiative. It would not be too difficult to put down the conditions that would prevent the provision from being abused in the area of small business. I would like to see us maintain the family businesses in our country, and also the family farms. We are going to need all the production of these people in Canada and the world, and I would like to see the House override the objections raised by the minister and insist on this amendment.


John Napier Turner: Mr. Chairman, I think the committee ought to recall that the only exception to tax free transmission of property from one generation to another is the one I introduced in the previous budget for the family farm. The hon. member is not going to catch me up on emotion on that situation. We brought it in because of the importance of the family farm and the partnership between man and woman on the farm.
The hon. member for Medicine Hat is trying to suggest to the committee that we should extend that exception to incorporated family farms. I am saying to the committee that we cannot do that without extending it to every incorporated family business, and that I am not in a position to do.
The hon. member for Qu'Appelle-Moose Mountain calls me a city slicker because he feels I represent a city riding. He knows this town pretty well, and he still canoes on the Rideau river between my riding and that of the hon. member for Grenville-Carleton. He knows there are a lot of good beef and dairy farmers in Cumberland and Gloucester townships. I want to assure the hon. member that the women of those townships are very well adjusted, liberated and fulfilled!
Income Tax


Francis Alvin George Hamilton: Mr. Chairman, all I can say to the minister's last remark is that I am not responsible for them being fulfilled.


Some hon. Members:: Oh, oh!


Francis Alvin George Hamilton: I am
simply pointing out in flat contradiction to what he said, that if he cannot do this for the family farm without doing it for small business then he should do it for both. If he does not do it for both it is not morally equitable, and I do not think we have the right to stand up and brag that we are doing justice to women in this year 1975.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: Mr. Chairman, I am curious about why the minister says so definitively that he cannot do it unless he does it for the small businessman as well. Is there any particular reason why this cannot be defined to apply to a small business farm?


John Napier Turner: Mr. Chairman, it is because it is not the definition of the corporation that counts, it is what the corporation can hold. Once the corporation is incorporated there is no limit on what it can hold.


Sinclair McKnight Stevens: Would the minister agree that the draftsmen of income tax legislation are usually adroit enough to define what is the main business of the corporation? If the main business is farming according to the definition, then you have a family farm situation and you go ahead and include them in the provision. I think the minister has drawn a red herring across the situation when he says we have to go the whole way or not at all. It is possible to draft a provision that would apply to an incorporated farming business without any suggestion it should apply to all personal small businesses.


John Napier Turner: Mr. Chairman, the difficulty is not just the mechanical problem, it is the equitable problem. I can distinguish, and I think members of the committee can, between an unincorporated farm and another kind of business because of the illiquidity of land-the difficulty of mustering the money to pay succession duties, and now capital gains tax on land. I cannot draw that distinction between an incorporated family farm and an incorporated ordinary business because the shares are not illiquid and they can, in any family planning situation, be transmitted over the course of a lifetime of the owners of those shares. That is the difficulty. Once you attempt to incorporate the family farm there is no logical reason why the same tax free transmission should not be granted to any family business. That is the problem as I put it to the committee.


Sinclair McKnight Stevens: I take it the minister agrees that from a drafting standpoint and legal standpoint it could be done, but he just feels that in equity it should not be done.


John Napier Turner: In equity it is difficult to justify without going further. In terms of drafting it is difficult because you have to provide for some limitation on the holdings of the corporation. From an administrative point of view that would be very difficult to enforce.

Income Tax Clause 38, as amended, agreed to. Clauses 39 to 42 inclusive, agreed to.


John Napier Turner: Mr. Chairman, I am prepared to have clause 43 carry but I want to introduce a new clause 43.1 which I will explain.
Clause 43 agreed to.


John Napier Turner: Mr. Chairman, I should like to circulate an amendment I intend to propose. I have not given it to the committee. It is a technical amendment to paragraphs 18(1) (m) and 12(1) (o) of the act, and is intended to clarify the application of the provisions in this bill concerning resource royalties and resource taxes levied by government.
As part of the provisions affecting the petroleum and mining industries, this bill provides that government levies such as royalties and resource taxes would not be recognized as a deduction in computing the income of the taxpayer. It has become evident, however, that the French wording is not sufficiently clear to cover cases where one taxpayer reimburses another for such government charges. If, in such cases, the relief or levy is clearly being borne by the taxpayer who is making the reimbursement, the government will make it clear that this taxpayer's income is adjusted.
The taxpayer being reimbursed-usually a freeholder- will be put in the position as if he had neither received nor made a disbursement with respect to the royalties or mineral taxes for which he was reimbursed. In this way it is clear that the owner of the freehold land who happens to pay a province an annual payment for that land which is leased to an oil company or resource company will not be penalized. If the oil company or resource company pays him rent for the use of that land, this provision will cover the tax which he would otherwise have to pay to the government. Unless we make it clear that the non-deductibility provision does not apply to the owner of the freehold land but applies to the oil company or the resource company which is using the land, the wrong person will wind up paying the tax. There are hundreds of owners of freehold land in western Canada who have leased out their land to oil companies, independents and otherwise, and they would be caught unless we bring in this amendment. It is clearly our intention, if the committee will entertain the amendment, to have it stood with the rest of the resource clauses until they can be dealt with. May I put the amendment to the committee. I move:
That Bill C-49 be amended by adding immediately after line 20 on page 95 the following clause:
'43.1 (1) The said Act is further amended by adding thereto the following section:
Reimbursement by taxpayer for payment to Crown deemed paid direct to Crown
"80.2 Where pursuant to a contract between a taxpayer and another person (in this section referred to as the "payee") any amount is paid or payable by the taxpayer or any property is transferred by the taxpayer to the payee as reimbursement in respect of any amount paid or payable referred to in paragraph 18(l)(m) or the fair market value of any property paid or payable referred to in that paragraph by the payee to any of the persons referred to in any of subparagraphs 18(l)(m)(i) to (iii), for the purposes of this Act the following rules apply
(a)	the taxpayer shall be deemed to have paid the

amount or property, as the case may be, to a person or persons referred to in any of those subparagraphs,
(b)	the payee shall, to the extent of that reimbursement, be deemed not to have paid an amount or property, as the case may be,
(c)	the payee shall be deemed not to have received any reimbursement from the taxpayer, and
(d)	paragraph 12(l)(o) shall not apply in respect of the amount or property paid or payable, as the case may be."
(2) This section is applicable in respect of amounts or property paid or payable on or after May 6, 1974. '


Sinclair McKnight Stevens: Mr. Chairman, as the committee has not seen the amendment, perhaps we could stand the entire clause as well as the amendment.


Gérald Laniel: Order, please. I understand clause 43 has been carried, and the amendment just put will introduce new clause 43.1. The amendment does not amend clause 43. It introduces new clause 43.1.


John Napier Turner: Mr. Chairman, I understand clause 43 carried, and I propose that new clause 43.1 should stand.


Gérald Laniel: Does the committee agree to stand new clause 43.1?


Some hon. Members:: Agreed.
Clause 43.1 stood.
Clauses 44 to 46 inclusive agreed to.
On clause 47.


John Napier Turner: Mr. Chairman, I intend to move a technical amendment to clause 47, found on pages 98 and 99 of the bill. I move:
That clause 47 of Bill C-49 be amended
(a)	by striking out lines 31 to 33 on page 98 and substituting the
following:
"tion and,
(a)	at any time before the debt was incurred, any particular
person, or the group"
(b)	by striking out line 43 on page 98 and substituting the following:
"(b) at any time before the particular time, the particular person
or group of"
and
(c)	by striking out lines 14 to 16 of the French version on page 99 and substituting the following:
"sonne donnee ou a tout membre de ce groupe de personnes, ou
(D) toute combinaison de person-"


[Stage Direction]
Amendment agreed to.
Clause 47, as amended, agreed to.
On clause 48.
John Napier Turner: Mr. Chairman, I wish to propose a technical amendment and a correction to the French version of clause 48, which is found on pages 103 and 104 of the bill. I move:
That clause 48 of Bill C-49 be amended
February 18, 1975

(a)	by striking out line 51 of the French version on page 103 and substituting the following:
"tous les biens vises a l'alinea e), l'alinea d) ou e), selon le"
and
(b)	by striking out line 46 on page 104 and substituting the following:
"would, subject to paragraph (c), be deemed to be an amount that"


[Stage Direction]
Amendment agreed to.
Clause 48 as amended, agreed to.
Clauses 49 and 50 agreed to.
On clause 51.
John Napier Turner: Mr. Chairman, I wish to move a technical amendment, already circulated, to clause 51. The amendment would affect pages 115 and 122 of the bill. I move:
That clause 51 of Bill C-49 be amended
(a)	by striking out line 31 on page 115 and substituting the following: "(5) Paragraphs 87(2)(p) and (q) of the said Act and"
(b)	by striking out line 36 on page 115 and substituting the following:
* "(p) for the purpose of computing a deduction from the income of the new corporation for a taxation year under section 64, any amount that has been included in computing the income of a predecessor corporation for its last taxation year or a previous taxation year by virtue of subsection 59(1) or (3) or paragraph 59(3.2)(c), or by virtue of subsection 83A(5ba) or 5(c) of this Act as it read in its application to a taxation year before the 1972 taxation year, shall be deemed to have been included in computing the income of the new corporation for a previous year by virtue thereof;
(q) for the purpose of computing the '
and
(c)	by striking out line 6 of the French version on page 122 and substituting the following:
"et les paragraphes (1), (3) et (10) s'appli-"
This stands for "s'appliquent", I imagine.


[Stage Direction]
Amendment agreed to.
Clause 51, as amended, agreed to.
On clause 52.
John Napier Turner: Mr. Chairman, we circulated an amendment to clause 52. The amendment is found on pages 123 and 128. I would like to propose it. I move:
That clause 52 of Bill C-49 be amended
(a) by striking out lines 5 to 24 on page 123 and substituting the following:
Consideration '(3) All that portion of paragraph 88( 1)(d) of the said Act preceding subparagraph (ii) thereof is repealed and the following substituted therefor:
"(d) the amount determined under this paragraph in respect of each property that was a capital property (other than a depreciable property) of the subsidiary is such portion of the amount, if any, by which the aggregate determined under subparagraph (b)(ii) exceeds the aggregate of
(i) the amount, if any, by which
(A)	the aggregate of amounts each of which is an amount in respect of any property owned by the subsidiary immediately before the winding-up, equal to the cost amount to the subsidiary of the
Income Tax
property immediately before the winding-up, plus the amount of any money of the subsidiary on hand immediately before the winding-up,
exceeds the aggregate of
(B)	all amounts each of which is the amount of any debt owning by the subsidiary, or of any other obligation of the subsidiary to pay any amount, that was outstanding immediately before the winding-up, and
(C)	the amount of any reserve (other than a reserve referred to in paragraph 20(1 )(n), subparagraph 40(1) (a) (iii) or subsection 64(1)), deducted in computing the subsidiary's income for its taxation year during which its assets were distributed to the parent on the winding-up,
(1.1)	the amount of the subsidiary's tax-paid undistributed surplus on hand at the time it was wound up, and
(1.2)	the amount of the subsidiary's 1971 capital surplus on hand at the time it was wound up,
as is designated by the parent in respect of that capital property in its return of income under this Part for its taxation year in which the subsidiary was so wound up, except that"
and
(b) by striking out line 13 on page 128 and substituting the following:
"6, 1974, except that subparagraphs 88(1)(d)(i.l) and (i.2) are applicable for the purpose of computing the adjusted cost base of a property after February, 1975, and subsection (8) is applicable in'


Walter David Baker: Mr. Chairman, I rise on a point of order. Now that the minister has given us the amendment in ordinary layman's language, would he like to put it into legal language for us?


Some hon. Members:: Oh, oh!


Gérald Laniel: Order, please. Before doing that, the amendment should be put to the committee.


Steve Eugene Paproski: Mr. Chairman, we would like to see this amendment stand.


An hon. Member:: Why?


Steve Eugene Paproski: It has consideration for resource property disposition. We would like to make a little further study on it.


John Napier Turner: Mr. Chairman, I understand what the hon. member for Edmonton Centre is saying. I wonder whether he would allow the amendment to carry and just stand the clause.


Steve Eugene Paproski: That is fine, Mr. Chairman.


[Stage Direction]
Amendment agreed to.
Gérald Laniel: Is it agreed that clause 52, as amended, be stood?


Some hon. Members:: Agreed.
Clause 52, as amended, stood.
On clause 53.
for
resource
property
disposition

February 18, 1975
Income Tax


John Napier Turner: 
Mr. Lambert (Bellechasse):: Mr. Chairman, I consider all these amendments to Bill C-49 extremely important. I understand that the Minister of Finance (Mr. Turner) is particularly familiar with the provisions which concern taxation since his role consists in ensuring that money is coming in to finance government expenses.
With all due respect, I would like to suggest that the amendments be read more slowly so that we may follow them very closely. I make this suggestion with all due respect so that we may really follow tonight's procedure.


John Napier Turner: Mr. Chairman, I understand the hon. member and I sympathize with him. I distributed all the amendments about two weeks ago so that the committee could examine them. However, I shall try to read carefully and clearly, and the hon. member could perhaps ask the Chair for a series of copies of these amendments. I see that you have them.


[Stage Direction]
Amendment agreed to.
Clause 53, as amended, agreed to.
On clause 54.
John Napier Turner: I have one more amendment to this part of the bill, after which there are no amendments for a while. Perhaps the committee would
[The Chairman.]
turn to page 142 the bill. These are relieving provisions. I move:
That clause 54 of Bill C-49 be amended
(a)	by striking out line 24 on page 142 and substituting the following: "tion that has, before November 19, 1974, become"
(b)	by striking out lines 30 to 34 on page 142 and substituting the following:
"1971 capital surplus on hand if the paid-up capital of the corporation in respect of any class of shares of its capital stock at the end of its 1971 taxation year was the amount determined under clause 89(l)(c)(ii)(A) in respect of that class at that time,"
(c)	by striking out lines 39 and 40 on page 142 and substituting the following:
"hand if the paid-up capital of the corporation in respect of any class of shares of its capital stock at the end of its 1971 taxation year was the amount determined under subparagraph 89(1)(c)(ii) without reference to this subsection in respect of that class at that time,"
(d)	by striking out line 45 on page 142 and substituting the following:
"at any time after November 18, 1974 shall be"


[Stage Direction]
Amendment agreed to.
Clause 54, as amended, agreed to.
On clause 55.
Sinclair McKnight Stevens: I think the Minister of Finance might help the committee by giving us some explanation of clauses 55 and 56, which I believe are related. In particular I would be interested to know what he feels would be the revenue implications.


John Napier Turner: We do not have the revenue figures. The purpose of the amendment is to allow Canadian parent companies to operate abroad and only be taxable on that part of the income which is brought back into the country or not used in the legitimate business of a subsidiary. Revenue is very difficult to estimate since it depends on economic activities in the various countries in which the companies operate.
Clause 55, agreed to.
Clauses 56 to 68 inclusive agreed to.
On clause 69.


Robert Hylton Brisco: I should like to ask the minister for clarification of this clause-I do not altogether follow the complexities of the tax structure. What is the deduction for which provision is made in paragraph 1 of Clause 69? Is it in the amount of $1,000, or is it more than that figure? It has to do with deductions for handicapped people.


John Napier Turner: This includes as a deductible expense amounts paid in respect of an individual, the taxpayer, his spouse, or a dependant, to a school, institution or other place equipped to provide training to persons who are handicapped. At present, the subparagraph restricts the deduction to amounts paid to a school or institution which takes only persons so handicapped. It is now being extended so as to apply to any school which may, among other things, deal with handicapped people.


Gérald Laniel: Shall clause 69 carry?


Sinclair McKnight Stevens: I believe it is the intention that we should turn to other business at 9.30. We have some comments to make on clause 69 and I see it is now 9.30.
Clause 69 stood.


Gérald Laniel: Then pursuant to the order made earlier this day I request leave to rise and report progress.
Progress reported.


RAILWAY ACT
Jean Marchand: that Bill C-48, an act to amend the Railway Act, be read the second time and referred to the Standing Committee on Transport and Communications.
He said: Mr. Speaker, the purpose of this bill is to provide for the disclosure of railway cost information on a confidential basis from the federal government to the provincial governments. While this legislation was promised by the Prime Minister (Mr. Trudeau) at the Western Economic Opportunities Conference, it is not restricted only to the western provinces but applies to all provinces.
The railways had not in the past been required to disclose information on their cost of operation unless the Canadian Transport Commission held that this disclosure was in the public interest. This left the provinces without the necessary information for the formulation of all policies.
To date, considerable cost data has been made available to the federal-provincial Committee on western transport for its major studies. As well, where certain cost data have been requested by the provinces for policy formulation purposes, the federal government has arranged to provide this information through the Canadian Transport Commission. Western ministers have nevertheless pressed to have provisions for disclosure of cost information included in the Railway Act. The prime purpose of the legislation is to ensure that the federal government will be able to continue to fulfill its commitments in this regard to the provinces.
I should add that this proposed legislation is an interim measure pending the introduction of a transportation information act which will take in the whole transportation system and all modes.
Let us look now at the four new sections to be added to the Railway Act.
331.1	This section implements the undertaking of the Prime Minister given at WEOC for disclosure of information on railway costs to a province on a confidential basis. For this purpose the information on costs is defined as costs of "transportation services and operations" or "costs of a specified movement of a specified commodity", for example, a car load of cattle from Edmonton to Montreal.
Railway Act
331.2	This section provides that the minister for his own use can request information on costs of any kind from a railway company. This provision does not arise from the WEOC commitment.
331.3	This section provides that information on costs cannot be communicated to or published by any person, except that such information can be communicated to ministers of the Crown-federal or provincial-or public servants-federal or provincial-required by their duties to receive this information.
Subsection 3 provides that information on costs furnished to a provincial government or the minister under this act that is relevant to a proceeding under specified acts may be published or communicated by the province or the minister. This subsection implements the second principal undertaking on railway costs given at WEOC.
331.4	This section ensures compliance by a railway company with a request from the minister. If a railway company does not comply, the minister can use the powers available to him under section 82 of the National Transportation Act.
Section 82 of the act provides in part that the minister has the power to summon witnesses, enforce their attendance and compel them to give evidence and produce books, papers or things that are required to be produced, as is vested in any court in civil cases.
This, Mr. Speaker, is the gist of our proposed legislation. [Translation]
Mr. Speaker, what we want to do actually by the proposed amendment to the Railway Act is to be able to get all information pertaining to freight rates and their justification when requested by the provinces or the Department of Transport. I think that is what not only the western provinces but the others as well have been requesting for a very long time.
We want to know. That would be done on a confidential basis for a very simple reason: I think that from the moment you accept competition between railway transport, shipping, trucking, and air transport there is a need to know exactly what the cost is to be able to compare and make sure that Canadians really get a fair deal with all those with whom they must deal.
So, Mr. Speaker, the purpose of the bill before us is very limited. There will be another later on, a general one, dealing with not only the whole cost but all forms of transportation. For the time being we want to know what it costs. The western provinces want to know what it costs to move commodities from one place to another and, presumably, the other provinces also want the same information. That is the purpose of Bill C-48 now before the House.


Mr. Jack Murta (Lisgar):: Mr. Speaker, I certainly hope that I will not take up too much time of the House this evening because I understand that there are three more speakers. It would be tempting, after listening to the Minister of Transport (Mr. Marchand) speak, to get into all the areas of past inequities in eastern or western Canada pertaining to the whole aspect of freight rates, etc. I will not do that tonight because hopefully we will have

February 18, 1975
Railway Act
time to scrutinize this particular piece of legislation at committee stage, and again on third reading.
The western provinces, in fact all the provinces, have waited for some action from the government for a very long time. The minister mentioned the Western Economic Opportunities Conference held two years ago. When you view this particular piece of legislation I think it is apparent that it is a very small band-aid in the government's total approach to transportation, and because it is a small band-aid approach it is apparent that the transportation policy of the government is clearly in a mess. I think that that really goes without saying.
In speaking to Bill C-48, the primary intent of the amendments is to provide the Minister of Transport with the power to obtain costing data from the railways at the request of the provinces. This legislation is apparently one step toward the implementation of a more comprehensive transportation information act as was mentioned in the Speech from the Throne on September 30, 1974.
To give a little bit of background, which the minister really did not delve into, the request for railway cost disclosures originated from a transportation paper presented by the four prairie provinces at the Western Economic Opportunities Conference in July, 1973, nearly two years ago, yet the minister comes into the House tonight and says he is still planning to do something in the area of transportation.
In response to this request, at the time the minister stated:
We agree fully with the provincial position that this is desirable, and if it cannot be achieved under the existing act, which we believe it can, we are prepared to amend the act.
This is one of the very few times I have been able to ascertain in the minister's political career that he was correct in a statement. There is little doubt in my mind, on looking into the various aspects of the National Transportation Act, that the power to obtain information from the railways re costing data exists under both the Railway Act and the National Transportation Act if the government wants to use that power.
Dealing with the Railway Act, I intend to refer to specific sections because I think they are important, and I hope hon. members will bear with me. It is important that we look at the National Transportation Act in its total context, especially those sections which pertain to the bill we are discussing now and will be debating in the committee.
In looking at sections 325, 326, 327, 328, 329, and 330 of the Railway Act we find they clearly outline the specifics of information to be submitted to the commission by the railways on an annual basis. Furthermore, if we look at section 328 we find it gives to the commission the power to dictate to the railways the accounting procedures and classifications which must be used uniformly by all railways under the legislative authority of parliament.
If we look at section 331 we find it states that the commission, once in receipt of this costing information, may at its own discretion, dependant on the public interest, publish that information.

Furthermore, if we look at section 335 we see that it indicates that the commission may require returns from the railways at any given time, and specifies the type of information it may request. If we look at section 335(3) we find it states that this information shall not be made public, but section 335(4) requires that the information may be communicated to the Governor in Council, in other words, the cabinet.
Furthermore, section 335(5) states that the commission may make public the information when there are "good and sufficient" reasons for doing so, but it cannot publish the information unless the company is notified and its objection is heard.
The purpose of outlining these sections of already existing legislation is primarily to illustrate that this piece of legislation before us is not needed at the present time if the government wants to use the existing legislation at its disposal. Bill C-48 will be, if anything, more restrictive than the present statutes.
Under the Railway Act the Canadian Transport Commission and the Governor in Council are given a very broad range of powers concerning railway costing data. The Canadian Transport Commission has the right to publish this information in the public interest, consequently the provinces do have the right to examine the costing data under existing legislation.
The provisions of Bill C-48 specify that the minister, upon the request of a provincial government may-and there is the use of the word may again-in writing request the railway companies to furnish him with information relating to costs "in such manner and to such extent as he may specify".
Furthermore, upon receiving the information the minister may-note once again-release the information to the provincial government if that government has undertaken to treat the information as confidential. This amendment, as far as we are concerned, serves to restrict the dispersion of the material solely to the provincial governments which must, in turn, agree to treat the information as confidential. Consequently the restrictive nature of these provisions in Bill C-48 is clearly illustrated.
We think that this entire piece of legislation is what could politely be called a political farce. The powers accorded the minister under Bill C-48 are powers which already exist at the request of the Canadian Transport Commission and the Governor in Council, if they wish to use them. This fact is openly admitted in section 331.4(2) where it states that if the railway refuses to comply with the request of the minister he can then revert to section 82 of the National Transportation Act as a contingency measure.
We also believe that the bill appears to erode from the Canadian Transport Commission some of its duly appointed powers, and proceeds to place these powers in the hands of the Minister of Transport whose past performance, as far as the assertion of power is concerned, leaves much to be desired, and is at times shameful.
We feel what can be termed the wresting of power from the Canadian Transport Commission is indicative of the persistent authoritative struggles between the ministry and the commission over the past few years. In some cases
February 18, 1975

the commission, being the legally established regulatory transportation body, should necessarily have control over railway costing data, simply because it has the authority to control the rate of every mode of transportation in this country. It would appear that the minister has now deemed it politically expedient, and I would say that is the only reason this legislation is before us, to assume this control, especially where western Canada is concerned.
The operational validity of the entire ministry of transport must, at the present time, be subject to the most severe criticism and skepticism. The minister has publicly admitted that the system is in a mess. He said this as early as March, 1974, nearly a year ago. We have a situation where an 18 month freight rate freeze, which was a gesture, to use the minister's own words, and which was initiated to allow for the creation of a time frame within which a more equitable policy could be formulated, now ends without a policy or any indication of one in the near future.
I do not think anyone in this country believes the Minister of Transport when he says there will be a transportation policy in the near future. We have the Minister of Justice (Mr. Lang) intervening in a legal and lawful decision taken by the Canadian Transport Commission in the public interest, and negating the effects of that decision. We also have the Minister of Justice making statements contradictory to those made by the Minister of Transport over the Crowsnest Pass freight rates.
We have seen situations where the president of the Canadian Transport Commission and the minister have persistently passed the buck over who has authority over what. We have witnessed the creation of numerous pilotage authorities which are allowed to operate completely autonomously from the minister, or from any control the minister has over them. We apparently have a situation, according to the minister himself, where the railways, and I am quoting the minister:
... when these companies consider they are making no money by investing in cars they do not build any.
The minister said that on March 21, 1974, as recorded at page 737 of Hansard. The railways are thus hindering our grain transportation efficiency as well as Canada's international reputation as a grain supplier. The Canadian railway system is plagued with inefficiencies which the minister claims are beyond his control. For example, a situation exists where the number of derailments escalates every year, and still nothing is done, no leadership is given, and no positive action is taken. There is a persistent boxcar shortage, and under the Canadian Transport Commission Railway maintenance is negligible, to say the least.
The minister claims once again that these matters are beyond his control, yet the president of the Canadian Transport Commission contends that the minister does have the legal authority to order the railways to improve their services.
Section 100(1) of the Railway Act provides that whenever the minister is aware that a railway company, which has received construction subsidies out of public funds, cannot be safely and efficiently operated, he may apply to
Railway Act
the commission for an order that the railway and its equipment, or both, shall be put in a safe and efficient condition. The commission is authorized to make such an order, and the order may direct what repairs, improvements or additions shall be made to the railway, equipment, or both, and stipulate time limits for commencement and completion.
The use of the word may in the subsection indicates that the minister has the discretion as to whether he makes an application. The minister repeatedly says that he does not have that discretion, so one can only draw from that the conclusion that he is still passing the buck, and that he is still either not interested or does not understand the significance of transportation in Canada.
However, as a minister of the crown representing the public interest-as opposed to private interests-and as a trustee of the subsidy interest of the public in the railway, his discretion must be exercised in the public interest. The application of the minister, when made, must be in a mandatory form, that is, that the railway must be put in a safe and efficient condition, if the minister truly wants that to happen. This power vested in the minister under the Railway Act is confirmed by section 48 of the National Transportation Act.
Again, Mr. Speaker, section 50 of the National Transportation Act authorizes the Governor in Council-presumably on the recommendation of the minister-to refer to the Canadian Transport Commission for action anything required to be done under the Railway Act, and the commission shall, without delay, comply with the requirements of such reference. Yet the minister has made no move towards utilizing the authority accorded him, and if one looked at the various sections of the act, which I have quoted, the sections provide the government with the power to go ahead and move toward solving many of the problems we have in transportation. This is especially true of the small piece of legislation that is before us, which is a political farce.


Some hon. Members:: Hear, hear!


Jack Burnett Murta: If this is the case, the implication of the provisions of this bill and the persistent use of the word may, which implies that the minister has a discretion, are such that they will render the legislation ineffective and useless. For this reason we intend to amend the legislation to ensure that its enforcement will reflect the public interest.
It has been nearly a full year, give or take a month, since the minister first admitted that the system is a mess, yet absolutely nothing has been done. His speech tonight indicates that probably nothing will be done. The election promises the government made in the 1974 election were just promises. Commitments made at the Western Economic Opportunities Conference have disappeared in the midst of struggles within the department and politically motivated statements from the Minister of Transport from time to time, not to mention the kind of performance we have seen by the minister of transport here in the House of Commons.
At this point in time one can only reflect that the government based its mandate in the last federal election on the aspect of leadership, and on May 17, 1974, the Prime

February 18, 1975
Railway Act
Minister (Mr. Trudeau) opened his campaign in Toronto by stating, and I quote him "The issue is not this or that or the next problem. The issue is what group of men and what party can give the leadership to the country to solve its problems." At the present time that quotation must have a very hollow ring even for the government backbenchers. There has not been leadership in the transportation area, to be specific, nor has there even been a passing interest in transportation from the Minister of Transport himself.
I would like to close by saying that it can only be hoped that part of our transportation problem will be solved by the replacement of the Minister of Transport at the earliest possible time.


Leslie Gordon Benjamin: Madam Speaker, many people in many parts of the country have been waiting many years for something to happen to our freight rate structure, in fact for as long as 40 or 50 years for parliament to act in this regard. I was hoping that the government would have deemed this important enough that we could have dealt with it a little earlier tonight, but there was agreement to do so at this time and I must abide by that.
I want to say that legislation has been promised by the government and by the Minister of Transport (Mr. Mar-chand) for almost two years. The bill proposes a new section of the Railway Act empowering the minister to require the railways to furnish specified cost information, either at his request or at the request of the provinces, and to release such information to those provinces. As the hon. member for Lisgar (Mr. Murta) said, such information will be kept confidential. The first question I want to raise with the minister and with hon. members is why the necessity for confidentiality. There is no need for it, particularly where there is no competition. There is very little need for it even wherever there is some small semblance of competition in transportation. The minister himself has said that competition in transportation in Canada does not work.
I agree with the hon. member for Lisgar, and I hope that the minister will do this himself without our having to try to amend the bill so that it will read that the minister shall, not the minister may. I am sure the minister would want to amend his legislation to that effect.
I have a lot of quotations from speeches of the minister and the Prime Minister (Mr. Trudeau) but I will be lenient on hon. members tonight, Madam Speaker, and not quote them all. I want to quote some of them, however, to illustrate what I believe to be the case, that the Minister of Transport does not have the support of his colleagues in caucus and in cabinet for what he would like to do for transportation in Canada. One only has to notice the minister in charge of the Canadian Wheat Board run from one end of the country to the other, making announcements about Crowsnest pass rates, freight rate freezes, branch line abandonments and other areas of transportation that are the prerogative of the Minister of Transport, to see how he is being undermined by his colleagues.

This bill is only a small beginning regarding the disclosure of costs. The minister promised a new transportation information act prior to the election, and the Prime Minister promised it during the election. If, and when, we get it we will want an extension of the disclosure provision to cover all federally regulated modes of transportation. We will press for a full disclosure, not only to provincial governments but to the public, where massive public subsidies are involved. Every mode of transportation in this country gets massive subsidies. The railway subsidies show up clearly, but the greater subsidies to highways, trucks and airlines do not show up as readily. There is no real competition in most areas of transportation in Canada, and so there is not the excuse of confidentiality. The public has a right to know, and this parliament has a right to know.
It is not sufficient for the railroads just to disclose their costs. I, for one, do not believe their figures, and the minister, the provinces and this parliament need to be satisfied that their costs are not padded. If the minister does not have the authority to investigate the railways' claim of their costs of freight rates and branch lines, etcetera, then I hope that he will ask for that authority by amending this legislation.
The hon. member for Lisgar said that he thought this bill was a farce because the government already had the power it sought. Certainly in certain circumstances it does, but I think it is significant that the provinces still want this disclosure legislation. That indicates to me that they do not believe the figures that are being given. I have only to quote the Premier of Alberta on this. The premiers of other western provinces agreed with him, and I am sure the premiers of the Atlantic provinces would agree as well. In March, 1973, Premier Lougheed said:
We call here and now for the federal government to order both national railways to provide every aspect of their costs to interested provincial governments.
The fact that the provincial governments want this legislation indicates to me their lack of trust in the railroads' figures. The four western premiers pressed their demand further in July, 1973, and secured a commitment from the federal government to get information on railway costs. In November, 1973, in this House the minister said:
We made a commitment in the west to the effect that the provinces would be informed as to all details of the railway rate structures.
Since he himself has said "we"-meaning the government-made a commitment, I ask why they have the word may in the legislation instead of shall. Later in November, 1973, the minister said:
... the commitment we made was to have the CTC and the railway companies give the information-on costs-at the request of the provinces. The provinces have made a number of specific requests and information with respect to them will be furnished ...
Perhaps the minister will tell us when we get to committee whether these requests have been complied with fully. I should also like to know what information the provinces asked for that they still have not received. The fact of the matter is that the provinces want all the information there is, not only on freight rates but on the cost of operating branch lines and so on. That commitment, made by the minister and the Prime Minister, applies to everything.
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This has been a thorn in the side of the Atlantic provinces and the western provinces ever since the CPR was built. The anomalies of freight rates-or what I call the absurdities of freight rates-have been a thorn in the side of the western provinces for decades. This is somewhat of an occasion this evening. We are finally dealing with this matter-we finally have an opportunity to request our transportation industry to be honest and open with the parliament of Canada, the Minister of Transport, the provinces, and the people of Canada.
Any attempt to rationalize a freight rate structure and remove inequities cannot succeed without full and complete cost data. The lack of progress to date in the federal-provincial committee has been primarily because of the refusal of the railways to supply the information requested. Let me give an example.
An independent study done in Ontario by R. L. Banks and Associates, Inc. was commissioned by the Ontario government, and the report was released in November, 1973. It estimated that the cost of moving coal by rail from Alberta to Ontario was between $5.49 and $6.08 per ton. But the CNR and the CPR were requesting a rate of $9.50 per ton.
In view of the importance of exploring relative economic efficiencies of alternative energy sources, the provincial governments of both Alberta and Ontario demanded information on the railways' cost structure and the rationale for what was obviously an excessive rate-something over $3 per ton in excess of what was a reasonable cost. In my book cost includes a reasonable return on investment.
Let us consider subsidies. Each year the two national railways receive hundreds of millions of dollars in government subsidies to cover operating losses on branch lines, or for what they claim are operating losses based on their figures and costs. Allegedly, these subsidies cover uneconomic passenger service. Even the CTC, which you can hardly call the friend of the Canadian public, has disallowed something like 20 per cent of the alleged costs claimed by the railroads for their transcontinental passenger services.
The 1974-75 estimates include payments to the railways of $140 million. Of this sum, the subsidy for rail passenger service was $100 million, and for branch line service, $40 million. Without full and complete costing information the public and the government have no means of knowing whether and to what extent subsidy payments are justified. The parliament of Canada has no alternative except to accept the word of the railways as being given in good faith.
From my experience with railroads, both when I was with them and agin' them, I know that I cannot accept their figures in good faith. We have known too many years of bitter experience with our transportation companies, and I will not accept their costing figures as being given in good faith. Yet the government will part with $140 million, without knowing actual costs. That is what I call parting easily with public money.
Let me say for the benefit of the Postmaster General (Mr. Mackasey), who I am sure agrees with me, that if our transportation system were treated, owned and operated
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as a public utility, if we eliminated nineteenth century concepts of competition and profitability and provided transportation service to meet the needs of Canada, all these figures, all these costs, would always be known to the government, parliament and the people of the country.
To use the words of the Minister of Transport, our transportation system is in a mess. The freight rate freeze was imposed for 18 months and the railways have received or will receive compensation of around $180 million for what they claim to be the losses they incurred as a result of the 18 months' freeze. Madam Speaker, lacking full access to railway costing data, the government must accept, again, company figures at face value.
What will happen when the freight rate freeze is lifted? Our people complain about freight rate inequities-anomalies is the polite word, but absurdities is better. The government will part with $180 million to compensate the railways for alleged losses incurred while their freight rates were frozen; in addition, the lifting of the freeze will mean that these same inequities, anomalies and absurdities will be compounded by 25 per cent as of March 1. I know, Madam Speaker, that you are interested, even if the Postmaster General is busy. The Minister of Labour (Mr. Munro) may be interested.
When you consider existing rates it is small wonder that provinces want costing information, and small wonder that we want it to be made public. Consider the rate for the shipment of iron and steel articles, not punched or drilled or bored. I am not sure if that applies to Liberal members of the House. To ship these articles from Hamilton, Ontario, to Vancouver costs $2.43 per hundred weight. To ship the same articles from Hamilton to Regina, costs $2.63 a hundred weight, or 20 cents more per hundred weight.


Lincoln MacCauley Alexander: Watch it!


Leslie Gordon Benjamin: Regina happens to be 1,200 miles closer to Hamilton than Vancouver is. We could even ship members of parliament from Hamilton out at cheaper rates.


Stanley Howard Knowles: Not the hon. member for Hamilton West (Mr. Alexander)!


Lincoln MacCauley Alexander: I am not disagreeing with your figures, but just watch it when you talk about Hamilton.


Leslie Gordon Benjamin: The rate to Saskatoon is $2.84. What have the railways against Saskatoon? The distance from Hamilton to Saskatoon is not much greater than the distance to Regina.
Let us talk about agreed charges, the rates arrived at between the railways and various corporations. The Minister of Transport has said that there is not much the government or the CTC can do about agreed charges because they result from contracts between the railways and corporations. Let us see what some of these agreed charges do to western Canada.
The rate for 75,000 pound carload lots of calcium chloride from Niagara Falls and Shawinigan, Quebec, to Vancouver, is $2.63 per hundredweight; the rate to Regina is $3.12 per hundredweight. That is an agreed charge, a charge which the minister cannot touch because it is

February 18, 1975
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provided for under a contract. Now you can see why we support a railway costing bill.
I should like the CPR to tell parliament and the Minister of Transport how come they can collect 49 cents per hundredweight more for calcium chloride shipped to Regina, when Vancouver is 1,200 miles farther down the line. Furthermore, the railways need not go up and down all those mountains when shipping to Regina. Yet it costs 49 cents per hundredweight less to ship to Vancouver than to Regina.
Let us look at phosphates and sulphates. There is a fertilizer industry in western Canada. The rate for shipping 100,000 pound carload lots of phosphates and sulphates from Buckingham, Quebec, and Clarkson and Port Maitlan, Ontario, to Vancouver is $2.51 per hundredweight. The rate to Regina is $3.12, and to Saskatoon, $3.29. What have the railways against Saskatoon? What have they against Regina?
Let us see how these agreed charges affect consumers. The rate for 80,000 pound carload lots of corn oil, corn starch, corn sugar and corn syrup from Toronto to Vancouver is $2.20; to Regina, $2.17, which is three cents less than the rate to Vancouver, although Regina is 1,200 miles closer to Toronto, and to Saskatoon, $2.42. The distance from Toronto to Regina is about the same as the distance from Toronto to Saskatoon, give or take 20 or 40 miles of rail line.
Let me continue speaking about agreed charges. No wonder the people of western Canada and of the Atlantic provinces are upset after 90 years of discrimination, and betrayal of confederation by the national railroads; yet these birds opposite fight elections every time on the issue of national unity while they perpetuate discrimination in freight rates which make national unity a myth.
The agreed charge for 100,000 pound carload lots of canned foodstuffs from southern Ontario to Vancouver is $2.57 per hundredweight; to Saskatoon it is $2.75 per hundredweight. Madam Speaker, the Canadian National main line runs through the south side of Saskatoon, yet the rate is 18 cents per hundredweight higher to Saskatoon than it is to Vancouver. Let us look at the rate for packaged foodstuffs, including baking powder, macaroni, spaghetti, margarine, milk or cream substitutes, oils, rice, and other necessities. The rate for 80,000 pound carload lots from southern Ontario to Vancouver is $2.43 per hundredweight; to Regina, it is $2.71 per hundredweight, and Regina is 1,200 miles closer to southern Ontario. To Saskatoon the rate is $2.93 per hundredweight, and Saskatoon is as far from southern Ontario as Regina is. I am enjoying this.


Jack Burnett Murta: I'm not.


Leslie Gordon Benjamin: I hope the Minister of Transport is angry about these rates, because then we can do something about them.
Let us look at the open tariffs on which the minister allowed the freeze to be lifted. The minister stated this only affected 22 per cent of the railway rates. That is true.

However, it affected more than 22 per cent of the commodities the railways haul.
I now wish to deal with the inequities in different regions of Canada. Let us look, for example, at live cattle and dressed beef. There were announcements in Alberta and Saskatchewan of cutbacks and closures of meat packing and meat processing plants. These announcements were made last year as well as from January 1 this year. There is a perfectly good reason.
If I were the owner or operator of a meat packing or processing plant in western Canada, I would close it and build a new plant in Ontario or Montreal. It was bad enough during the freight rate freeze. It cost 91 cents a hundred more to ship a whole dressed beef hanging by its hocks from Saskatoon to Montreal, Ottawa or Toronto than to ship a live cow or steer.
The minister allowed the freeze to be lifted. The railways fought the CTC order in the courts, supported by the Minister of Justice (Mr. Lang). With a friend like that, the Minister of Transport (Mr. Marchand) does not need any enemies.
The rate increase was allowed. Instead of the differential being 91 cents a hundred between shipping live cattle and dressed beef from Saskatoon to Montreal, on March 1 the difference will be $1.17 per 100 pounds. I do not believe the railways can prove higher costs to ship dressed beef as compared to live cattle.
If the minister puts the requests properly and in sufficient detail, this railway costing bill will reveal that in the livestock, and meat packing and processing industry in western Canada, the railways have been robbing the people of that area.
For decades these rates have discriminated against the manufacturing industry and meat industry in western Canada without any justification other than "all that the traffic will bear". There is no significant competition. The shibboleth the Liberals and Tories abide by is competition and profitability. They got together and did us in some more.
The Edmonton Journal and the Western Producer of February 3 illustrate that it costs more to move 100 pounds of meat from Edmonton to Toronto than 100 pounds of live animal. After the 30 per cent increase, the differential will be $1.51 per 100 pounds.
The minister has made many statements about inequities and discrimination. We all agreed with them. How can he now sit back and refuse to extend that freeze? These inequities have been compounded. Surely the minister could have said to the railways that even if the freeze only affects 22 per cent of the rates, it will remain in effect until the legislation goes through parliament and the railways' costs have been examined to see whether they are justified. If the minister had done that, he would have done a favour to the packing industry in western Canada.
Burns and Company have been forced to cut their operations in half in Prince Albert because of freight rates. They make no bones about the fact that they would rather be operating with two plants in western Canada instead of five. Why? Because of freight rates.

The Minister of Transport has stated what he thinks our transportation should be in this country, yet he has allowed the minister in charge of the Canadian Wheat Board to make statements about transportation, If I were in the position of the Minister of Transport and one of my colleagues did that to me, I would punch him in the mouth.
The minister in charge of the wheat board stated the Crowsnest Pass rates should be reviewed. He made a number of speeches on the Crowsnest Pass agreement. However, in answer to the hon. member for Lisgar, the Minister of Transport assured him he need not worry, that that item is not being reviewed. I would like to know who is correct on this, the Minister of Transport or the minister in charge of the wheat board. Who is calling the shots on this?
I said at the beginning of my remarks that I do not think the Minister of Transport has the support and co-operation of his colleagues in cabinet and caucus. He is almost alone trying to win the battle of transportation, a battle Canadians have been trying to win for the past 90 years. One of the minister's colleagues is trying to cut not only his throat but the throats of all Canadians.
In the throne speech of last September a long section was devoted to transportation. It stated:
Transportation must be an instrument of national purpose, designed to achieve broad social and economic objectives.
That is a beautiful quote. I could not have written it better myself. It continued:
The government does not believe the principles underlying the present transportation system or its methods of management and operation are adequate to meet current and future national aspirations.
Not even the NDP could have put a better line in the throne speech than that. What has happened since? We got a small beginning. I hope the minister will introduce some minor amendments to this bill. Commitments and promises were made by the Prime Minister, the minister, and their predecessors, including the right hon. member for Prince Albert (Mr. Diefenbaker) when he was Prime Minister. Most of this is not new. We have had it ad nauseam year in and year out.
I still believe the Minister of Transport is genuinely sincere about this. I am sorry he was not able to bring in this bill sooner. It is very short. There is not much to it. We have been waiting for this bill for 20 months. I can only assume it was not brought in sooner because the minister's colleagues in cabinet and caucus objected. The minister had a great deal of difficulty persuading them to bring this forward, if for no other reason than to honour a commitment made before and since WEOC.
I say to the Minister of Transport that I will support him when it comes to the Crowsnest Pass rates. As far as I am concerned, the minister in charge of the wheat board would have a better chance trying to amend the Ten Commandments than changing the Crowsnest Pass rates.
I have never believed the railroads' claim with regard to their losses in hauling grain. They have never put a figure on those losses. We have never been given the cost to move a bushel of grain from point A to point B, yet we are expected to believe them. I believe that in this field the unit cost of moving grain has been cut in half in the last ten to 15 years. We need this bill to prove that the railways
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are not losing the kind of money they claim they are losing on the Crowsnest Pass rates. That is why the provinces of western Canada are asking for this information, whether the CTC already has it or not.
I should like to say a word here about rapeseed and rapeseed products. I am not sure what disclosure may do to encourage the government to reach a decision on these items. When one considers the freight rates charged on rapeseed and rapeseed oil one cannot help wonder why it is taking so long to determine this matter.
When the Minister of Transport was asked why the cabinet had not made up its mind on the rapeseed question he said, "That is Otto Lang's baby." Well, it seems to have been an abortion. The minister in charge of the Wheat Board says he is not sure whether anything will be done this year, even though the matter has already been under consideration for a year. According to the Minister of Transport, it is the Minister of Justices' baby, and he cannot get off the hook lightly. I know he has assumed prerogatives which belong to the Minister of Transport, sounding off with policy announcements and making statements he has no right to make. I can only assume he is doing this without the knowledge of the Minister of Transport; I would hate to think the minister agrees with his suggestions.
One rapeseed mill has already been sold because of the delay in reaching a decision. The minister in charge of the Wheat Board says he is not sure whether he can get this matter settled in cabinet before the end of the year. If the Minister of Transport feels the bill before us would help him by giving him more authority, I am all for it. I hope that once he is armed with these powers he will not be in a hurry to review the Crowsnest Pass rates. I urge, too, that there should be no delay in reaching a decision with regard to rapeseed rates. We want information as to the cost not only of moving people and commodities but the cost with regard to the operational portions of the branch lines and particular sections of the main lines, because I do not believe the figures already offered.
I believe the minister should invite experts from outside, from the provinces, to help him in reviewing these costs. I should like him to invite experts from other countries to take a careful look at what the railroads here claim to be their costs. It is my belief that some of those costs are based on trackage which was written off 50 years ago. There are still rails in use which were put down in 1910. I should like to know all these costs. So would the provinces. So would the Minister of Transport. I hope the minister will move a couple of amendments in committee.
We shall deal with the matter quickly because the provinces are ready to make their requests, but in the meantime I trust the government will hold the line with regard to freight rate increases which would further magnify the inequities in the structure. We shall support the legislation, but much more is needed and we hope the government will not be slow in taking action accordingly.


Joseph Adrien Henri Lambert: Madam Speaker, further to the agreement reached today on Bill C-48 by the
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February 18, 1975
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leaders of the various parties represented in the House, I should like first of all to assure Your Honour and my colleagues that we will respect this agreement and that I shall limit my remarks to the strict minimum.
With regard to the comments of the Minister of Transport (Mr. Marchand) broadcast last night with regard to the present disturbing economic situation in Canada, and more particularly in the province of Quebec, which situation will continue to worsen through 1975, we better understand the purpose the government wishes to achieve through Bill C-48.
Still, it is time authority should manifest itself in Canada that the people might be reassured and that order might reign in our country, that the monetary capital might serve the human capital and that those two forms of capital might work together towards the economic development of our country.
Madam Speaker, I often regretted that in our country we have governments that are strong in front of the weak, governments that do not hesitate to smother the weak with taxes of all kinds, that force the little people to respect law and order. On the other hand, we have seen weak governments in front of the strong, governments that in turn are defeated by the big and powerful.
It is high time that taxpayers be in a position to know what it costs in such and such a sector to ensure essential services to the public and that without waste.
I also understood that Bill C-48 is an instrument, a very valuable tool, providing we are willing to use it, put into the hands of a minister, a cabinet, so that the large companies, in this context, the railway companies, respect our country's laws and give accounts.
Year after year, Parliament votes credits to subsidize this transportation system which often operates at a loss without submitting a detailed account of its administration to Parliament. Are the taxpayers' dollars used to the best advantage of all? That is what I have asked myself. Are Canadians receiving reasonable transportation services for their tax dollar?
Now, the purpose of Bill C-48 was to disclose the profits and expenditures of the CNR for the whole country, and not only for one part, be it Eastern or Western Canada. Formerly, Madam Chairman, expenditures and revenues were not disclosed to the public. This bill will make the rendering of accounts and the disclosure of expenses and revenues to the public in general mandatory, so that they may have a clear view of this situation and that they might receive proportional return for their contribution to the maintenance of these public services.
The provinces rightly requested information from the Minister of Transport (Mr. Marchand) and the federal cabinet, through the Canadian Transport Commission. The CTC, with all respect due the commissioners, has not always clearly met the taxpayers' demands. We have here another high-minded commission flying way above the people's representatives and ministers, not giving a heck about anybody, making decisions as they see fit without answering to Parliament for their administration. I hope under this bill we will at least have reports and see

exactly what goes on in the field of transportation. As the Minister of Transport aptly said, clause 331.1 only requires companies to give what the right hon. Prime Minister (Mr. Trudeau) already mentioned at a western provinces' conference. If through an act of Parliament the wish expressed by the Prime Minister of our country is translated into action, we will be in a position to say one conference at least gave results and the Canadian taxpayers can be proud of it.
Public information on railway costs has long been overdue, whether from CN or CP. We are entitled to know exactly what we pay for. Whether the cost is too high or too low is for the taxpayer to tell, when the figures are published.
Clause 331.2 provides the minister may require and publish cost information. I support this. For once we perceive the government has the strength and courage to require public information from these big corporations. For this reason, I wholeheartedly support Bill C-48 introduced by the government, and feel convinced my colleagues will surely follow suit when they have had an opportunity to get more detailed knowledge of it.
In section 331.3, according to what the minister said a while ago, we are advised that it will not be possible to publish cost information until it is released to all the Ministers of Transport, both federal and provincial. But it is quite normal that the companies operating under national or provincial legislations should report to the government, to the minister responsible for their respective operations, before having their reports made public, so that the minister may check the information, and get to the bottom of things, as the President of France, the great General de Gaulle, used to say. He has given the world a piece of advice we should never forget. We, as members of Parliament, should be inspired by it: to get to the bottom of things. We should closely check on whatever happens in any given area without acting silly. When we are asked to give information, we should be able to give it out.
I think that, under section 331, the minister will at least have the satisfaction of being able to get the required information and then to pass it on to the public. I think this is the way it should be. I know this is not the second reading debate and that it should not be a clause by clause discussion of the bill, but in this I take example after the Minister of Transport who just explained the fundamentals of this bill. He said its purpose was to make sure the demands of the minister would be obeyed by the railways; through this bill the minister will have the power to make investigations, call witnesses to clear up the issue. Madam Speaker, if there is a minister with enough courage to present such a bill and insist that all this transport issue be fully aired, then I will gladly and vigourously endorse such a bill, if for no other reason than to shed light on the subject.
Finally, whenever provinces request it, the minister wants to have information on the transportation costs in both western and eastern Canada, in order to compare railway costs to those for water, air, or land transportation.
God knows, Madam Speaker, how many discussions have taken place over the last few years over the issue of feed grain transportation from Western to Eastern
February 18, 1975

Canada. The Eastern farmers were asked to believe that if to get the same grade of feed grains they had to pay higher prices than the Western farmers, it was because of transportation costs from the West to the East, even though Parliament had passed legislation providing for a grant to compensate for this price differential. Of course, that grant did not always provide a fair compensation, but at least it was available and its aim was to establish a reasonable balance between production costs for Western feed grains and Eastern grains.
Unfortunately, Madam Speaker, as representatives in this Parliament, I and several of my colleagues did not always get the necessary information to be able to ascertain whether the subsidy did reflect the difference in prices, with the effect of giving eastern and western farmers equal chances.
If this bill is a means of obtaining information, as the Minister of Transport (Mr. Marchand) said earlier, while another act is still to come later, then we shall be in a position to use Bill C-48 to clear up a lot of questions which might be of some concern not only to Members of Parliament but also to taxpayers and those in the production business, whether in the furniture industry or in the production of pork, eggs, poultry or dairy products which have to travel throughout the country. If this bill can enable us to force transportation companies to provide Parliament with real information on the cost of transportation, on the revenues accrued, and we eventually manage to determine whether there really are profits or losses, I think it will have been worth waiting a little bit later tonight to pass this bill and let it become a reality as soon as possible so as to enable the Minister of Transport to give us more information.
I trust that the Minister of Transport will be honest and another bill will be introduced in the House. Hon. members will then be able to inquire deeper into the activities of railway companies and the effective cost to taxpayers of this public service which is essential for the development of our country.
Madam Speaker, I have always considered that railway transportation services are a must for our country as a whole and that Canadian people are willing to assume the costs of that transportation provided it benefits the development of our industries throughout Canada and they do not have to pay twice as much for a service that can be obtained at a lower cost.
I therefore commend Bill C-48 with all my heart.
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Leonard C. Jones: Madam Speaker, I suppose at this hour of the night I should give the benediction, the blessing, and go home; but that is not quite all. Certainly Bill C-48, on reading it, is self-explanatory. After all I have heard tonight, in the interests of fairness, time and expediency, I do not intend at this time to pass judgment on the Minister of Transport (Mr. Marchand) or his department.
Certainly the matter of disclosure by the railway companies is a serious business. They are public utilities and their costs of operations should be public knowledge. Certainly the bill should go further and I trust that the committee will cause amendments to be made to make it more forceful and meaningful, and report it back to this House forthwith.
This question of transportation is of the utmost importance in the minds of all Canadians, including those in this House. The government must get on the right track, and get off cloud nine. I come from a railroad town and I know some of the problems in transportation at first hand. The transportation problems in our country must be given priority of solution. This is a most essential prerequisite of our confederation, and the survival of our economy and our people depends in large part on straightening out the transportation system, once and for all, so we can then proceed to achieve greater heights in confederation, in unifying our country, and in eliminating regional disparities.
We must have a policy and a plan, and we must be prepared to follow that policy and that plan. Transportation must be treated as a service to the public, not as a business. Until we realize that philosophy as the basis of policies to be drafted in respect of transportation, we will never really correct the difficulties. I am sure that we, in this House of Commons at this session, can straighten out most of those problems.


The Acting Speaker (Mrs. Morin):: Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the Standing Committee on Transport and Communications.
The Acting Speaker (Mrs. Morin):: Pursuant to an order made earlier today, this House stands adjourned until tomorrow at two o'clock.
At 11 p.m. the House adjourned, without question put, pursuant to Special Order.

Wednesday, February 19, 1975