1976-11-19

ROUTINE PROCEEDINGS


Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, I rise on a matter of most urgent and pressing necessity under the provisions of Standing Order 43. In view of the widely talked about proposal of the hon. member for Vaudreuil (Mr. Herbert) that the Liberal party seek a review of the leadership of the Prime Minister (Mr. Trudeau), and in light of the growing public concern, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That because of its historical significance, the Prime Minister's reply to the member's obviously sensible letter be tabled in this House.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. I feel sure that if I am not able to put my hand on the precedent there must be something in the Standing Orders to the effect that even motions pursuant to Standing Order 43 have to be within the competence of the administration of the government and not the Liberal party of Canada.


Some hon. Members:: Hear, hear!
[DOT] (mo)



ORAL QUESTION PERIOD


Mr. Walter Baker (Grenville-Carleton):: Mr. Speaker, I should like to direct a question to the Acting Prime Minister. Before doing so I want to congratulate him on the display of sartorial splendour he has offered us today.


Some hon. Members:: Oh!


Walter David Baker: In view of reports that the conference of finance ministers has been postponed, would the
Acting Prime Minister inform the House whether it is intended to postpone the first ministers conference scheduled to take place in mid-December and if so, to what date?


Hon. Allan J. MacEachen (Acting Prime Minister):: Mr. Speaker, in reply to the hon. member's question I would tell him that to my knowledge no request has come forward for a postponement of the first ministers conference. Presumably when the premier-elect forms his government he may wish to make such a request. Up to that time it will not be made. Accordingly, no action has yet been taken to postpone the first ministers conference.


Walter David Baker: Could the Acting Prime Minister inform us of the agenda for that meeting? Perhaps he would be prepared to table that agenda. Could he also tell us specifically whether one of the items on that agenda provides for a review of the anti-inflation program, particularly with respect to its termination?


Hon. Donald S. Macdonald (Minister of Finance):: Mr. Speaker, I would be glad to report to the House on the items for discussion. I think they are already generally known, but I am prepared to specify them further. The anti-inflation program will be a subject of discussion and, in particular, we shall be opening discussion with the provinces on the mechanics of decontrol and ultimate termination.


SASKATCHEWAN'S CLAIM OF JURISDICTION OVER PAY TELEVISION-POSSIBLE DISCUSSION OF SUBJECT AT CONFERENCE WITH PREMIERS
Mr. Ray Hnatyshyn (Saskatoon-Biggar):: Mr. Speaker, my supplementary question is in the area of federal-provincial relations and in the absence of the Minister of Communications may I direct my question to the Acting Prime Minister? Having regard to the announcements made by the premier of Saskatchewan in connection with legislation in that province to take control of pay television or closed circuit distribution systems, and in view of the reference by the Minister of Communications to the constitutional jurisdiction of the province and the position taken by the province as, to apparently quote her, "crap", would the Acting Prime Minister advise the House whether or not he considers Saskatchewan's claims to be negotiable within provincial jurisdiction?


Allan Joseph MacEachen: Obviously this is a matter of policy with which I would not wish to deal at the present time without first advising myself more fully about it.
80005-7%

November 19, 1976
Oral Questions


Ramon John Hnatyshyn: This matter has been before the cabinet and the country for some considerable length of time. I would have expected a policy decision with respect to it. In view of the forthcoming first ministers conference, would the Acting Prime Minister let the House know whether it is intended to give a high priority to this whole question of the confrontation which is apparently developing between Saskatchwean and other provinces and the federal government with respect to jurisdiction over pay television and cable television?


Allan Joseph MacEachen: With respect to the first ministers conference, I believe the Prime Minister mentioned recently that the agenda was still under consideration. Presumably, constitutional questions might be on the agenda although if a postponement of that aspect is required there would not be an immediate matter of discussion. There are also financial questions. Presumably, therefore, in direct answer to the hon. member, it would be open to the premiers, if they wished, to discuss such a matter under the constitution.


Ramon John Hnatyshyn: The Acting Prime Minister has indicated that the pay television question is a constitutional matter. Does this reflect the government's position that it is in fact a subject of judicial interpretation as opposed to a position the government takes that it has jurisdiction in pay television and in cable television?


Allan Joseph MacEachen: Mr. Speaker, I do not agree that any such conclusion should be drawn from my remarks. I was merely picking up the question of the hon. member as to whether jurisdictional questions might be dealt with at the first ministers conference. Of course, if constitutional questions are to be dealt with, jurisdiction is obviously of the essence.


ANTI-INFLATION PROGRAM POSSIBILITY ONTARIO WILL DISCONTINUE RENT CONTROL-GOVERNMENT ACTION
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I have a question for the Minister of Finance. Can the minister inform the House whether or not he has been informed of the Ontario government's decision to allow its rent control legislation to come to an end next year and, if so, what has been the response of the minister?


Donald Stovel Macdonald: Mr. Speaker, that has not yet come to my personal attention, but I would be glad to inquire into that report.


John Edward Broadbent: A supplementary question, Mr. Speaker. Since the Ontario government has announced its decision to do precisely that, and since the federal government has made it clear that it intends to maintain its wage and salary control policy at least until the end of 1978, would the Minister of Finance assure the House that if the Ontario government does proceed with its announced intention to terminate its rent

control legislation the federal government will step in to ensure that rents remain under control in the province of Ontario?


Donald Stovel Macdonald: Mr. Speaker, we would want to be assured that this very important element of costs in the country will not go out of control while other elements are under control.


John Edward Broadbent: A final supplementary question, Mr. Speaker. The minister did not give a precise answer to my question. Would he assure the House that he will take steps to control rents in the province of Ontario next year if the government of Ontario terminates its own program?


Donald Stovel Macdonald: That, Mr. Speaker, is of course a possible conclusion; but it seems to me that if, by market forces or otherwise, rents are effectively under control, it would be undesirable for the federal government to seek to do so directly.


FINANCE
Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, I would like to put a question to the Minister of Finance.
During a conference given at Sept-Iles, the minister stated that Quebec would receive from the federal government $3.25 billion in equalization payments and other benefits for this fiscal year.
In order to set up the net contribution from the federal government, could the minister tell the House what percentage Quebec corporations and taxpayers will contribute in federal revenues to allow for such a payment of $3 billion to Quebec?


Donald Stovel Macdonald: Mr. Speaker, we do not have such figures. I believe that in over the years corporate and personal contributions generally have not been calculated as described by the hon. member.


PROVINCES, OTHER THAN QUEBEC, WHICH RECEIVE EQUALIZATION PAYMENTS
Joseph Adrien Henri Lambert: Mr. Speaker, I would like to put a supplementary.
Is the minister prepared to tell the House which other provinces in Canada will receive federal funds within the framework of equalization payments and joint programs?


Donald Stovel Macdonald: Mr. Speaker, generally speaking I must say that the three richest provinces-Alberta, British Columbia and Ontario-contributed to the seven other provinces. I believe that Ontario taxpayers make up two thirds of all contributors to the national revenue.
November 19, 1976


SUGGESTION PROVINCES BE GIVEN GREATER FINANCIAL RESPONSIBILITIES
Joseph Adrien Henri Lambert: Mr. Speaker, on a last supplementary.
Will the equalization payment program be on the agenda of the upcoming finance ministers conference with a view to altering the current formula slightly and giving the provinces more responsibilities while affording them the means to shoulder resulting financial obligations?


Donald Stovel Macdonald: Mr. Speaker, I can say there will be no fundamental change in the equalization payment formula. No proposal has been made to that effect. In the case of other programs, well established programs such as post-secondary schools, we do have proposals whereby the provinces would assume more responsibilities with regard to the tax money to be used to finance them but we will ensure that at least the poorer provinces in Canada have minimum payments to make towards those programs that deal with hospitalization, medicare as well as post-secondary schools.


AIRPORTS
Mr. J. H. Horner (Crowfoot):: Mr. Speaker, I should like to direct a question to the Minister of Transport. In light of the fact that the Prime Minister is always asking us on this side of the House to assist him in any way, I should like to assist the minister by asking this question: Now that Hertz is suing the Department of Transport, Tilden is suing the Department of Transport and Holiday Car Rental is suing the Department of Transport, will the minister reconsider his acceptance of the tender process so that these costly losses can be averted? Would he even refer the whole question to the Standing Committee on Transport and Communications so that members on both sides of the House might be able to assist his department in getting out of this difficult position in which they find themselves?


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, 1 am not at all sure that the new actions raise any new issues but, rather, essentially the same ones. If there are any legal issues to be determined 1 think the court is the proper place for that.


REASON FOR ALLEGED DIFFERENTIATION IN BASES FOR ACCEPTING BIDS FOR CAR RENTAL CONCESSIONS AT VARIOUS LOCATIONS
John (Jack) Henry Horner: Mr. Speaker, a supplementary question which arises out of the minister's reply and out
Oral Questions
of his statement yesterday which indicated an attempt to bring about a greater participation by Canadian car rental companies. Will the minister explain why the Hertz bid for Fredericton was accepted on the basis that their guaranteed bid was higher than their percentage bid and yet at Charlottetown, although Holiday had a higher percentage bid than Avis, Avis was accepted? It is the inconsistencies that persist that are making people sue the government.


Otto Emil Lang: Mr. Speaker, certainly when different factors are weighed the matter is not a simple one in determining which bid is the most satisfactory. The right hon. gentleman is quite wrong in suggesting that any political consideration enters into it in any way. I will be very glad to give a further report to hon. members about the analysis of all bids, airport to airport, but obviously I do not have that analysis with me.


John (Jack) Henry Horner: A further supplementary, Mr. Speaker. Would the minister also explain why Budget was accepted in Timmins when they only fulfilled two parts of the tender? They did not provide a sales expectation, they just provided a bid and a minimum guarantee.


Otto Emil Lang: Mr. Speaker, in view of the interest of all hon. members and particularly the hon. member for Crowfoot, I will be glad in due course to give a statement and analysis of the nature of the bids and the bid process but just as obviously I will not try to do it in relation to every airport in Canada.


Mr. Steven E. Paproski (Edmonton Centre):: Mr. Speaker, I have a supplementary question for the Minister of Transport. When tenders were opened in Edmonton on October 15 at 3 p.m. MOT officials acknowledged when opening the Fort MacMurray airport bid that no rent tender had been received. As three other car rental operators had submitted tenders they concluded that only three counters would be given in Fort MacMurray. Yet, yesterday in Fort MacMurray, an MOT official stated to the three successful bidders that Hertz has been given the fourth counter. Were similar such questionable inconsistencies extended to the Hertz operator in London, Ontario, who has been thrown out of the airport for making a very minor calculation error in submitting a tender?


Otto Emil Lang: Mr. Speaker, I shall have to join these two matters to the list that I will look into. Naturally, the individual tenders are being administered airport by airport apart from the international group that was taken first.


Mr. Don Mazankowski (Vegreville):: Mr. Speaker, 1 also have a supplementary question for the Minister of Transport and perhaps he can add it to his list. Yesterday, the minister stated that sales forecasts were not relied upon in an important way, but, rather, contracts were awarded on the basis of an all encompassing confidence factor including the minimum guarantee. May 1 ask the minister why, in awarding the local counter at Calgary International Airport, Rent Rite Truck and Car Rentals Ltd. who submitted a minimum guarantee of $37,000 and who have a confidence in their sales forecast of

November 19, 1976
Oral Questions
only .21, was accepted over Compact Rent a Car who guaranteed a minimum of $94,000 and a confidence factor of .90?


Mr. Speaker:: Order, please. At the risk of interrupting a very interesting line of questioning, may I say I do not think any hon. member would want this process to go to the point that anybody who at this stage has a complaint about a tender at an airport can get up and put the case on the record. The details will have to go before the Committee on Transport in any case.


Donald Frank Mazankowski: If you will permit me, Mr. Speaker, this particular question flows directly from a question I asked yesterday.


Mr. Speaker:: Order, please.


Donald Frank Mazankowski: And I think it behooves the minister to answer it.


Mr. Speaker:: Order, please. 1 want to make clear that I am not stopping the minister from answering this question. I am simply indicating that it cannot go on much longer.


Otto Emil Lang: Mr. Speaker, may I just indicate that it would be useful, if hon. members really want information about these specific cases, rather than draw them to my attention publicly in this fashion if they would give me as much as a couple of hours notice that they want to ask the question and I would try to have the information.


Donald Frank Mazankowski: Mr. Speaker, for the hon. minister's information I wrote him a letter on this very important matter on November 8 which has not been acknowledged.


Some hon. Members:: Oh, oh!


Donald Frank Mazankowski: Mr. Speaker, he does not have the courtesy to stand up and answer. He tries to play tiddlywinks with the members of the opposition. He knows he is in a mess in respect of this whole business. This is nothing more than a sham. It is inconsistent.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. The hon. member for St. John's East.


SEARCH AND RESCUE
Mr. James A. McGrath (St. John's East):: Mr. Speaker, I should like to direct a question to the Minister of Transport. Today is the final day in the time frame within which he gave an undertaking to the House to make a statement on the recommendations of the task force set up to make recommendations on a new search and rescue policy for Canada. I ask the minister whether he intends to make an announcement and

if so, does he intend to make the announcement in the House will he give us some idea when it will be made. Otherwise, at the rate the minister is leaking information to the press it would be anti-climatic in any event.


Otto Emil Lang: Well, Mr. Speaker, I do not think I have been particularly leaking any information to the press. I am hoping that the announcement may be made still in the fairly near future.


James Aloysius McGrath: In view of the Canadian Press story this morning which has quite specific details concerning what will be contained in the minister's announcement and I will not ask the minister to confirm or deny it because he would not respond-I ask the minister if he can tell the House whether or not he will make a statement in the House and if not, why not?


Otto Emil Lang: No, Mr. Speaker; at this point I cannot predict exactly where the statement will be made or what it will be.


EXTERNAL AFFAIRS
Mr. Allan Lawrence (Northumberland-Durham):: Mr. Speaker, my question is for the Secretary of State for External Affairs. In view of the very strong language reported in the press over the last 24 hours from the president of Pakistan, who apparently utterly rejects the minister's policy of giving him a choice of going for a French reprocessing plant or having Canadian nuclear assistance cut off, I wonder in this horrifying game of bluffmanship if the minister is going to respond to this and did he really mean what he said a few weeks ago when he said he was giving them exactly that choice?


Hon. Donald C. Jamieson (Secretary of State for External Affairs):: Well, Mr. Speaker, I would hope the hon. member is not including either me or the Government of Canada when he refers to bluffmanship. Our position is quite clear and there are no qualifications to it. We have said without any kind of qualification whatever that if Pakistan goes ahead with a reprocessing unit then they cannot expect any assistance from Canada with regard to their nuclear generating program.


Allan Frederick Lawrence: Mr. Speaker, my question to the minister was, and still remains, since they are now obviously opting for a French reprocessing plant may I take it, may the public take it and may world opinion take it, that Canada is cutting off nuclear assistance to Pakistan?


Donald Campbell Jamieson: Mr. Speaker, obviously I am not sure from the press reports just precisely what the situation is. I have no doubt they are probably correct, but I think you would understand in this kind of matter, Mr. Speaker, that before making a categorical statement of that kind it would be appropriate to
November 19, 1976

have the official declaration rather than deal on the basis of press reports.


TRANSPORT
Miss Coline Campbell (South Western Nova):: Mr. Speaker, further to my question to the Minister of Transport on October 27, 1976 concerning the fact that the southern end of the province of Nova Scotia has had no heavy truck run between Yarmouth and Maine since the end of October when the Lyon Ferry Company stopped, and in light of the grave situation which now exists, can the minister tell me at this time if the situation will be rectified, and, if so, when?


Otto Emil Lang: Mr. Speaker, it appears that the necessary approval is likely to be received from Portland which, I think, is the last remaining formal step for the landing at Portland of the marine cruiser operated by the Canadian National Marine, and if this is forthcoming, as I expect it will be, we expect to see the marine cruiser in operation from about the twenty-eighth of this month between Yarmouth and Portland, with the crew from the Bluenose operating that vessel.
* V *


FAILURE OF PRODUCERS TO MEET PRODUCTION COSTS AS A RESULT OF PRICE REDUCTION-GOVERNMENT ACTION
Lorne Edmund Nystrom: Mr. Speaker, my question is for my frugal friend, the Minister of Transport.


Some hon. Members:: Frugal!


Lorne Edmund Nystrom: In view of the fact that the domestic price for milling grain was set at $3.25 some three years ago and the price of grain is falling while the production costs are going up, can the minister say whether or not he would be making any upward adjustment in that domestic price of grain to reflect the increased production costs to farmers in the country?


Otto Emil Lang: The level of the price of grain on the domestic market has not been entirely relevant until just now because, with the world price being much higher the Treasury was paying an additional portion to the Canadian Wheat Board. With the decline in price, it seemed to me to be appropriate to begin immediate consultations with the farm organizations about the proper approach to how the level might be examined in the current circumstances. Discussions with the Canadian Federation of Agriculture have begun, particularly with their western representatives, and I
Oral Questions
anticipate further discussions leading to certain conclusions on which action may be based.


Lorne Edmund Nystrom: I should like to thank the minister for his answer and ask him whether or not he is taking into consideration the immediate situation of farmers which has caused the minister to look at the increased cost of production which has gone up by 44 per cent in the last three years, and of using the cost of production as part of the formula for the new price.


Otto Emil Lang: We have a number of possibilities before us in our discussions with the Canadian Federation of Agriculture, and of course we are prepared to look at a variety of alternatives. I do not think this is the appropriate forum which would give us the possibility of discussing the logic of these alternatives adequately, but in the discussions with the federation we will be able to consider them.


PURPOSE OF PUBLISHING BROCHURES ON SEX EDUCATION-POSSIBILITY THAT OBJECTIVE IS TO CHANGE LAW ON ABORTION
Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, I should like to ask a question of the Minister of National Health and Welfare, but unfortunately he is not here, so perhaps I could direct it to the Acting Prime Minister or the parliamentary secretary. My question relates to a kit which has not yet been circulated but which has been published under the authorization, as it says here, of the Minister of National Health and Welfare, on the matter of sex education. It contains six beautiful volumes.


An hon. Member:: How did you get it, Eldon?


Eldon Mattison Woolliams: That is a secret. In light of the fact that education falls under the jurisdiction of the provinces, can the minister advise us why his department has published and printed these six beautiful volumes on the teaching of sexuality? May I just quote one of the preambles so that the minister will follow it?


Mr. Speaker:: I am sure the hon. member would agree that that is unnecessary.


Eldon Mattison Woolliams: I have a serious question, Mr. Speaker. I should like to ask the parliamentry secretary what is the purpose of this publication, how much did it cost, and why is it put out by the Department of National Health and Welfare when it is the provinces which have jurisdiction over education?


Mr. Fraser:: What is the failure rate?


Mr. Paul E. McRae (Parliamentary Secretary to Minister of National Health and Welfare):: Mr. Speaker, I have not had the opportunity to review the booklets-


Some hon. Members:: Oh, come on!

November 19, 1976
Oral Questions


Paul Edmund McRae: I will take the question as notice now and reply at a later date.


An hon. Member:: Not good enough.


Eldon Mattison Woolliams: Mr. Speaker, what is the purpose of the extensive brochures which contain pictures of males and females together as if they were posing for Penthouse or Playboy magazines? Is the purpose of volume four, entitled, "Birth Control and Abortion", to bring forth legislation under the Criminal Code to allow female Canadians to have abortion on demand? Is that the purpose of this literature?


Hon. Ron Basford (Minister of Justice):: If I might answer the latter part of that question which is related to the responsibilities of my department, the answer has been given many times in the House that in the month of December we intend to table the Badgley report of the committee examining the equitable operation of the Criminal Code in the area of abortion. The tabling of that report will provide the country with an opportunity of debating the whole issue on the basis of rational analysis of the situation.


Eldon Mattison Woolliams: In light of the fact that many thousands, maybe millions, of dollars have gone into the study of abortion and we are probably looking at another $100,000 or $200,000 spent on these brochures which are published on the most beautiful paper, why has this study been done by another department when the Department of Justice is studying this subject and recommending abortion on demand?


Stanley Ronald Basford: I have not read the brochures referred to by the hon. member. I know he is an eminent lawyer, but may I point out to him that sex is not mentioned in sections 91 or 92 of the constitution. I was not aware that it was a matter of exclusive provincial jurisdiction.


ABORTION
Mr. Paul Yewchuk (Athabasca):: Mr. Speaker, my question is also for the Minister of Justice. He indicated that when he tables the Badgley report he expects a national debate to take place: Does he mean that he will initiate a debate in the House of Commons on the report when it is tabled?


Stanley Ronald Basford: It has not been decided by my colleagues, through the President of the Privy Council, what to propose to the House.


INQUIRY OF THE MINISTRY
Mr. Leonard C. Jones (Moncton):: My question is directed to the Minister of Energy, Mines and Resources, but in his absence I will direct it to his parliamentary secretary or to the
[Mr. McRae.)
Acting Prime Minister. In view of the government's purported dedication to energy conservation, restraint and conservation generally, would the Minister of Energy, Mines and Resources or his department be kind enough to look into the massive waste being perpetrated on the Canadian public by junk mail such as the Progressive Conservative Party's more than frequent mailings to non-Progressive Conservative members and ex-communicated Progressive Conservative members of this House to solicit funds-


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please.


VETERANS AFFAIRS
Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, 1 have a question for the Minister of Veterans Affairs. In light of the minister's announcement of the decentralization of the operations of DVA and the recent statement by Mr. Bob Adams, director general of Veterans Affairs, that there is a firm idea to increase the number of district officers out in the area where the clients are located, and in particular to establish storefront types of operations, when will the minister be basing a field representative in Brandon, Manitoba to serve the Westman area?


Hon. Daniel J. MacDonald (Minister of Veterans Affairs):: Mr. Speaker, this subject is under review, as has been indicated by the hon. member. Unfortunately, it is quite impossible for me to give him an answer today, but it will be taken into consideration along with other areas.


Walter Gilbert Dinsdale: Mr. Speaker, until such time as the minister reaches some conclusions on this subject, will he give clearance to the DVA office in Winnipeg making it possible for them to make long distance telephone calls to veterans outside the greater Winnipeg Area, a service which was withdrawn some months ago and which is urgently needed?


Mr. Speaker:: Order, please. That is clearly a representation as opposed to a question.


CRIMINAL CODE
Hon. Robert Stanbury (York-Scarborough):: Mr. Speaker, I have a question for the Minister of Justice. In the light of yesterday's recommendations of a coroner's jury in Toronto and the continuing tragic consequences of the lack of adequate
November 19, 1976

gun controls, can the minister advise what progress has been made toward reintroduction and early passage of the bill which was known in the last session as Bill C-83, which was so thoroughly considered and amended in the justice committee?


Some hon. Members:: Hear, hear!


Stanley Ronald Basford: Mr. Speaker, I have not seen the actual coroner's jury recommendations, but I have seen press reports about them. They highlight the need for different gun laws than those which now prevail and with this I agree. With my colleagues and various members of the Standing Committee on Justice and Legal Affairs 1 have been considering what approach might be made to ease the passage of Bill C-83 through the House, and that kind of discussion is continuing.


John Allen Fraser: Why don't you bring in a new bill?


ENVIRONMENTAL AFFAIRS
Mr. Bill Jarvis (Perth-Wilmot):: Mr. Speaker, my question is to the Minister of Fisheries and the Environment. It relates to a question I asked a month ago today. The minister said at that time that he had set up a committee some time ago to report on the flurocarbon issue. Has that report been received, and if so, would the minister undertake to table it? If it has not been received, would the minister give us some indication of the deadline he has established for the report?


Hon. Romeo LeBlanc (Minister of Fisheries and the Environment):: Mr. Speaker, I had hoped the report would have been on my desk about ten days ago. I am told now that it is being revised in the light of some new information and that it should be available soon. As soon as it is available, I will be prepared to make it available to the hon. member.


William Herbert Jarvis: In light of the fact that the atmospheric environment services branch has been on the record publicly for two years asking for a ban, would the minister indicate whether the committee is charged with the responsibility of recommending the means of implementing a flurocarbon ban, or is the committee charged with the broader responsibility of indicating whether there should be any ban at all with respect to flurocarbons and aerosol sprays?


Roméo LeBlanc: I would have to check the exact terms of reference, but I understand this applies to the latter part of the hon. member's question.
Oral Questions FINANCE


POSSIBILITY OF REDUCTION OF INTEREST RATES
Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, my question is to the Minister of Finance. In view of continuing high interest rates in Canada and the burden they place on our people, will the minister indicate whether he expects a reduction of these rates in the near future, bearing in mind that there is now a four point differential between our prime rate of 10Vi per cent and that in the United States, where Morgan Guaranty Trust and certain other banks this morning lowered their rate to 6 'A per cent?


Donald Stovel Macdonald: Mr. Speaker, as the hon. gentleman knows, the determination of interest rates from time to time is made by the actions of the Bank of Canada, and I do not think it would be appropriate for me to comment on any possible future changes at the moment.


Sinclair McKnight Stevens: As the Bank of Canada is responsible to the minister and as our economic recovery has been faltering, would the minister indicate why the government has persisted in maintaining such a high interest rate structure, particularly in relation to our major trading partner, the United States, bearing in mind that our high interest rates, coupled with the controls program of the government, has been dampening our business activity, heightening unemployment and even causing certain business activity to shift out of Canada?


Donald Stovel Macdonald: The analysis of the hon. gentleman is totally miscast. He should know that one of the critical factors involved is the difference between Canada and the United States in the relative rates of inflation, and that the government has been addressing itself to bringing down the rate of inflation in Canada. Naturally, when the inflation performance of this country improves, we can expect lower interest rates.


STORAGE OF RADIOACTIVE SLAG NEAR OTTAWA RESIDENCES- POSSIBLE CONTAMINATION OF SAWMILL CREEK-GOVERNMENT ACTION
Mrs. Jean E. Pigott (Ottawa-Carleton):: Mr. Speaker-


Some hon. Members:: Hear, hear!


Jean Elizabeth Pigott: I am impressed by the decorum of my side of the House.


An hon. Member:: What about the other side?


Jean Elizabeth Pigott: I would like to address my question to the Minister of Energy, Mines and Resources, but in his absence I will direct it to the parliamentary secretary.
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November 19, 1976
Oral Questions
My question arises from reports that radioactive slag is being stored on NRC property 60 yards from homes on Queensdale Road in my constituency. In view of the widespread alarm this is causing, will the minister or the parliamentary secretary tell the House when it is intended to move the radioactive slag to some other more remote location?


Mr. Maurice Dupras (Parliamentary Secretary to Minister of Energy, Mines and Resources):: Mr. Speaker, I commend the hon. member for her concern about the safety of the people in her district, and I can assure her that we will look into this very serious situation.


Steve Eugene Paproski: Send it over to 24 Sussex.


Jean Elizabeth Pigott: Would the parliamentary secretary tell the House if any measures are being taken by the Atomic Energy Control Board to ensure that run-off from this slag is not contaminating Sawmill Creek, which runs near the dump?


Maurice Dupras: This is being considered, Mr. Speaker.


Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, I have a supplementary question. In this connection I wonder if the Minister of Fisheries and the Environment can comment on the reports circulating now about an atomic or nuclear bearing cloud which is drifting across the Pacific following nuclear explosions in China-


Mr. Speaker:: Order, please. That question is not to the same minister and is not in any way supplementary to the one asked.


Donald W. Munro: Is it nuclear fallout.


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

[ Translation]


CRIMINAL CODE
Mr. Eymard Corbin (Madawaska-Victoria):: Mr. Speaker, my question is directed to the Minister of Justice and is supplementary to others asked previously.
Since there are thousands of couples in Canada who want but cannot procreate children and since adoption agencies are unable to meet requests, does the Minister of Justice intend to introduce an early amendment to the Criminal Code to prohibit so-called legal abortions and, in cooperation with his cabinet colleagues and provincial authorities, draft a social policy which would promote upholding life and human dignity?


Stanley Ronald Basford: Mr. Speaker, my present intention goes no further than tabling and making public the report of the Badgley Committee.
[Mrs. Pigott.)


ENVIRONMENTAL AFFAIRS
John Allen Fraser: Mr. Speaker, my question is to the Minister of Fisheries and the Environment. Reports this morning indicate that nuclear fallout from a Chinese test is moving toward the northwest United States coast and the southwest Canadian coast. Can the minister advise the House what the situation is, and in view of the fact that apparently the degree of effect of this particular fallout cloud is much higher than usual, what are the conditions and what is the situation as far as the safety of our people is concerned?


Roméo LeBlanc: Mr. Speaker, this is the first that I have heard of this. Obviously, I will check on it immediately and report.


An hon. Member:: Where have you been?


PUBLIC SERVICE
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I direct my question to the President of the Treasury Board. My question relates to two issues which were unresolved when parliament considered and passed Bill C-52, during the last session, a bill which amended the many superannuation plans which come under the aegis of the federal government.
In view of the fact that it is unfair to many retired RCMP and armed forces personnel to have their pensions frozen until age 60, will the minister consider this issue? Also, in view of the fact that it is unfair to the widows of many public servants, RCMP, armed forces and other personnel not to receive pensions at all because their marriages took place after the date the deceased husband was put on pension, will the minister consider this issue, and indeed, does he plan to make a report to the House on both these issues as soon as possible?


Hon. Robert K. Andras (President of the Treasury Board):: Mr. Speaker, most certainly I can make the commitment that we will look at the matter. I have become aware of these and other anomalies in present pension plans. Indeed, as the hon. member and others no doubt know, there is a comprehensive review under way now of public service pension programs, in all fields and aspects. I tabled a report two or three weeks ago as the beginning of what I hope will be an informed discussion on significant aspects of the question. I shall certainly take specific areas of concern as expressed by the hon. member into consideration in the course of this review; however, as to
November 19, 1976

making a commitment for a final response, that is more difficult and I cannot give the hon. member a date yet.


EXTERNAL AFFAIRS
Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, my question is for the Secretary of State for External Affairs. As a manifesto was signed in France by leading Gaullists and socialists to the effect that the French people could not remain indifferent and must be watchful to make certain that no pressure, especially economic pressure, emerges to prevent the free play of democracy in Quebec, may I ask the minister if the government of France has officially expressed any concern along the lines of the manifesto and what would be the government's reaction if this should occur?


An hon. Member:: Tell them to go to hell.


Donald Campbell Jamieson: No, Mr. Speaker, and therefore the second part of the question is hypothetical.


PUBLIC WORKS
Mr. J. R. Ellis (Hastings):: Mr. Speaker, my question is addressed to the Minister of Public Works. Has the minister decided or does he intend to sell federally-owned land on which Pickering airport was intended to be built back to its original owners or to any other persons?


Hon. Judd Buchanan (Minister of Public Works):: Mr. Speaker, 1 am not aware of any such intention.


EXTERNAL AFFAIRS
Mr. Howard Johnston (Okanagan-Kootenay):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. In the light of disquieting reports of renewed warfare in Angola, has the minister made representations to Cuba urging an end to the use of that nation's troops in the continued and worsening oppression of the native peoples of Angola?


Donald Campbell Jamieson: Yes, Mr. Speaker. In an informal way recently I proposed the notion to representatives of Cuba that it was
Oral Questions
Canada's view that withdrawal of their forces from Angola would be a highly desirable move, and the sooner the better.


Howard Earl Johnston: A supplementary question, Mr. Speaker. Would the minister follow the example of his predecessor in office and send a special mission to Angola, which could ascertain at first hand the situation there and perhaps talk directly to that government as well?


Donald Campbell Jamieson: Mr. Speaker, I will consider it.


INDUSTRY
Mr. Allan B. McKinnon (Victoria):: Mr. Speaker, in the absence of the Minister of Industry, Trade and Commerce may I direct my question to the President of the Treasury Board? Recently, the Minister of Industry, Trade and Commerce told me in this House that no direct financial intervention by the government was required by Canadair's Learstar-600 jet project. But now in a semantic dodge the government is going to guarantee a loan to Canadair of $50 million. As the government already owns Canadair, could the minister explain what security the company can provide for the loan?


Robert Knight Andras: Mr. Speaker, I believe the Minister of Industry, Trade and Commerce has explained the reason for this guarantee. It is for the encouragement of a new venture with the Learstar-600 jet aircraft which seems to be attractive and will bring with it, upon success, considerable improvements in our balance of trade, and so on. The government decided to make this commitment to guarantee in order to stimulate what we think will be a beneficial venture for Canadair and Canada.


Allan Bruce McKinnon: A supplementary question, Mr. Speaker. It is difficult to determine what part of the arrangement does not constitute direct financial intervention. I ask if the minister has heard that Mr. Lear, the designer of the aircraft, has been quoted as claiming that design changes by Canadair have caused the aircraft to lose its fineness ratio and that he doubted it would meet the promised specifications. Can the minister indicate what assurances he has that the wider, heavier aircraft will perform to specification; and if it does not, will the sales contracts be valueless and the deposits returned?


Robert Knight Andras: Mr. Speaker, I really think that kind of detailed question would be much better addressed to the Minister of Industry, Trade and Commerce. My knowledge of the matter in my capacity as President of the Treasury Board is fairly extensive, but I have not heard of that comment attributed to Mr. Lear. I shall certainly look into the matter and draw it to my colleague's attention.
80005-8>/2

November 19, 1976
Oral Questions


ANTI-INFLATION PROGRAM ALLEGATION WAGE CONTROLS TO BE LIFTED FROM PRIVATE SECTOR BUT LEFT ON PUBLIC SECTOR-GOVERNMENT POSITION
Mr. D. M. Collenette (York East):: Mr. Speaker, my question is for the Minister of Finance. In view of the statement the minister is reported as having made yesterday in Toronto that public service employees at provincial and federal levels may have to live with some permanent form of wage controls, is the minister giving notice that the government has decided to phase out the anti-inflation program as it affects the private sector early in the new year while leaving the program intact as it affects the public sector? If not, will the minister recommend such a change in policy to his colleagues?


Donald Stovel Macdonald: Mr. Speaker, may I comment on the press report of my statement made last night. I indicated that in the long run there should be broad and flexible compensation guidelines for the public sector, but it would be misreporting that statement to say that I was proposing wage and compensation controls as such for the public sector. I will be glad to send a copy of my statement to the hon. gentleman. I also indicated that there are several options which have been discussed with regard to the removal of the controls programs, but the precise proposition which the hon. gentleman put forward is not in my speech.


ALLEGATION FORMER MINISTER OF FINANCE ADVOCATES REMOVAL OF CONTROLS
Hon. Robert L. Stanfield (Halifax):: Mr. Speaker, may I direct a supplementary question to the Minister of Finance? In view of reports in the TToronto press that his predecessor in office, the previous minister of finance, has advocated the immediate dropping of controls as essential, may I ask if his predecessor made that kind of representation directly to the minister?


Donald Stovel Macdonald: No, Sir.


Ramon John Hnatyshyn: And what would you say if he had?


TRANSPORT
Mr. Ron Huntington (Capilano):: Mr. Speaker, my question is for the Minister of Transport. In his answer yesterday to my question concerning the B.C. ferry subsidy the minister indicated his pleasure at saving $3 million by cancelling the Northland subsidy and stated that this saving will be "for better transportation in the area." Will the minister advise the House where and how this $3 million saving per year will be applied in order to improve coastal transportation in British Columbia?


Otto Emil Lang: Mr. Speaker, the statement I made was regarding the possibility of that kind of expenditure and I indicated some of the things which might be done, which are .badly needed in that area. Naturally, I am not prepared to outline in detail the consequences of that view at this point. Indeed, I would want to have discussions with the provincial government and people of the area before making a final decision.


Arthur Ronald Huntington: A supplementary question, Mr. Speaker. Is the Minister of Transport aware of the disruption his sudden and ill-timed removal of the Northland subsidy has caused the people and communities on the B.C. coast, and is he aware that 70 per cent of the new subsidy arrangement is being paid to the organization which said it could provide the Northland service without subsidy?


Otto Emil Lang: Mr. Speaker, I think the hon. member will appreciate that a change in service is bound to create certain difficulties, particularly as it works its way into the system. Of course many criticisms were aimed at the outgoing service before the subsidy discontinuance was proposed, at which time the complaints seemed to cease. It is true that there are some temporary subsidy arrangements, but they relate to the maintenance of passenger traffic and are not in relation to freight. These passenger arrangements in the main are worked out with the province of British Columbia on a temporary basis while we look together at what type of vessel should be acquired and put in service on a more regular basis. Probably it will be operated by a B.C.-operated or owned ferry.


PUBLIC WORKS
Mr. R. E. McKinley (Huron-Middlesex):: Mr. Speaker, my question is for the Minister of Public Works. This week the minister said that he favours the concept of charging for services and facilities provided by the Department of Public Works to other government departments instead of providing them free. I wonder if the minister has discussed this provision with the heads of other departments, that is, with his cabinet colleagues; if so, has he received their approval, or will he bring this matter before cabinet at an early date, either for approval or disapproval?


J. Judd Buchanan: No, Mr. Speaker, 1 have not dealt with the matter since it was raised in the Senate committee to which the hon. member referred yesterday, although I think it is valid to make certain that government departments show greater awareness in their own budgets of the actual cost of providing such space.


Robert Elgin McKinley: Mr. Speaker, this matter has been kicked around. There was the Glassco commission of 1963, a consult-
November 19, 1976

ing firm in 1965 and a task force on Public Works and Treasury Board regarding real property administration in 1970-71. If the minister has intentions in this regard, it would seem reasonable that he bring this before cabinet at an early date. I would ask the minister to do so.


Mr. Speaker:: Order, please.



ROUTINE PROCEEDINGS


Robert Knight Andras: Mr. Speaker, I wish to table, in both official languages, copies of the progress report on financial administration in the Public Service of Canada.


EXTERNAL AFFAIRS
Donald Campbell Jamieson: Mr. Speaker, I stated in the House on November 5,
1976,	that I would be reporting on my recent talks in Paris regarding Canada-France fisheries questions. I propose to do that today, but first I think it would be useful to review in a more general way developments relating to the implementation of our 200-mile fisheries zone.
The decision to extend our fisheries zones on the Atlantic and Pacific coasts was taken in light of the urgent need to halt the rapid depletion of our fish stocks and arrest the decline of our inshore fisheries industry, a situation which had reached crisis proportions. The urgent nature of this problem required us to take action before conclusion of the Law of the Sea Conference where fisheries questions are among the many matters being discussed. Nevertheless, the new, extended jurisdiction is in conformity with the consensus emerging at the Law of the Sea Conference. The principle is now firmly embodied in the Revised Single Negotiating Text that a coastal state has the sovereign right to manage the living resources of the sea in a 200-mile zone adjacent to its shoreline. The main features of the new Canadian regime are based on the relevant provisions of the Revised Single Negotiating Text.
A number of countries have enacted, or are soon to enact, 200-mile zones, including Mexico, Norway, Denmark, France, the U.K. and the U.S.A. Most recently, the foreign ministers of the Nine agreed that a European Economic Community 200-mile fisheries zone should be in place as of January 1,
1977.	Altogether, there are now some 50 states which have
Fisheries Zones
already, or will soon establish extended Fisheries zones beyond 12 miles, and in many cases as far as 200 miles. Thus, from the standpoint of both emerging treaty law and cumulative state practices there is a sound basis in international law for the action Canada has taken to protect the living resources in waters contiguous to its shoreline.
Canada has not only acted in accordance with emerging international law but has also made every effort to take into account the interests of those states directly affected by our extended jurisdiction. We have been conscious of the need to avoid disputes with other countries stemming from our new fisheries management regime. For this reason, Canada has taken a number of steps, internationally, aimed at achieving a smooth transition to our new 200-mile jurisdiction regime.
Our first priority was to obtain agreement within ICNAF on fishing quotas for the calendar year 1977 which would correspond to Canadian requirements within the 200-mile zone. At Canada's insistence, total allowable catches of stock have been set at levels low enough to ensure rebuilding of threatened species over a period of time. There will be a further meeting of ICNAF in December, in Spain, to deal with the quotas on a few remaining stocks. I should point out for those members who perhaps are not familiar with the shorthand title of ICNAF that it is the International Commission for North Atlantic Fisheries.
The commission, at our urging, is in the process of examining the role it might play in future. We have given formal notice of Canada's intention to withdraw from the convention, as has the U.S.A. I am hopeful, however, that ICNAF can make the necessary adjustment to Canada's exclusive jurisdiction, management and enforcement in the 200-mile zone, and that the new arrangements will preserve the long tradition of international co-operation, particularly in the field of scientific research, which has grown up within the commission. On this basis Canada could continue to play a full and active part in the work of the commission. After the December meeting we will be in a better position to assess what our attitude toward ICNAF should be for the coming year.
Our next priority was to negotiate bilateral agreements with those countries which together account for almost 90 per cent of the foreign fishing operations off our coasts. The government has now concluded an intensive round of bilateral negotiations, and fisheries agreements are now in place with Norway, the U.S.S.R., Poland, Spain and Portugal. These agreements set out the terms and conditions that Canada will apply in permitting foreign fishermen, under Canadian management and control, to harvest certain stocks surplus to our needs.
In addition, we have required the submission of fishing programs from all members of ICNAF who wish to fish off our coasts in 1977. This information is essential in order to ensure that these projected fishing operations are compatible with the quotas established by ICNAF with Canadian concurrence. The problems on the Pacific coast are no less important and we are taking the steps which we consider necessary to ensure that Canadian jurisdiction in our new Pacific zone is

November 19, 1976
Fisheries Zones
effective. Our recent bilateral agreements with the U.S.S.R. and Poland cover the Pacific coast and we are engaging in consultations with other countries that have previously fished there.
The government will also take early action to promulgate an extended fisheries zone in the Arctic. There is no foreign commercial fishing in waters off the Canadian Arctic coast, nor are there depleted stocks requiring urgent conservation measures. However, the government is fully alive to the need to safeguard the fishing interests of the Inuit and to provide for the future development of fisheries in the Arctic area. Consequently, the government has decided to bring into force a 200-mile fisheries zone in the Arctic by March 1, 1977.


Some hon. Members:: Hear, hear!


Donald Campbell Jamieson: I have outlined the steps we have taken to ensure a smooth transition to the 200-mile jurisdiction regime. The response has been encouraging. Nations fishing off our coasts have shown a willingness to adapt to the facts of the resource crisis and to the new legal regime which Canada is bringing in.
I now wish to draw the attention of the House to an important aspect of the notice of order in council tabled by my colleague, the Minister of Fisheries and the Environment (Mr. LeBlanc), on November 2, namely, the geographic co-ordinates defining the fishing zones in which Canada will be exercising jurisdiction. If members agree, 1 would be prepared to table maps prepared by the Canadian hydrographic service illustrating the new zones as prescribed by the co-ordinates in the order in council. That may have to wait until Monday because some of the preparatory work has not been completed. These co-ordinates raise maritime boundary implications with neighbouring countries. The order in council makes express reference to boundary delimitation talks with the U.S., France and Denmark, and affirms that the limits of the Canadian fishing zones as defined in the order are "without prejudice to any negotiations respecting the limits of maritime jurisdiction in such areas."
The United States government has responded to the publication of the order in council by issuing, in the form of a notice in their federal register of November 4, 1976, a list of co-ordinates defining the lateral limits of its prospective fisheries zone, as well as its continental shelf in the areas adjacent to Canada. In a number of areas these lines differ from the Canadian co-ordinates. We do not accept these lines and we are so informing the United States government through diplomatic channels.


Some hon. Members:: Hear, hear!


Donald Campbell Jamieson: 1 am pleased to note, however, that the U.S. government has mirrored the approach taken in the order in council by making it clear in the federal register notice that the co-ordinates listed therein are without prejudice to any negotiation with Canada or to any positions which may have been or may be adopted respecting the limits of maritime jurisdiction in the boundary areas adjacent to Canada.

During my visit to France I had occasion to discuss with the French foreign minister our plans for extension of jurisdiction by January 1 in the area off our east coast. At that time, precisely on November 3, the European Community officially announced the decision taken by all member countries to extend their jurisdiction over fisheries to 200 miles by January 1, 1977. While the new management regime will be decided by the community, the determination of the exact areas to be brought under extended jurisdiction, of course, continues to belong to the individual member countries, and the matter of delimitation of waters off St. Pierre and Miquelon remains a question for Canada and France to work out.
What I particularly wished to underline in Paris-and my French colleague was quick to respond favourably-relates to the urgent need for both our countries to put in place by the end of this year interim arrangements in waters close to the French islands. Such arrangements would avoid conflicting fisheries regulations on matters such as enforcement and licensing. I am confident that as a result of those discussions in Paris, both sides have a keener appreciation of the necessity of early agreement on these agreements.
Interim arrangements are especially necessary in the absence of agreed maritime boundaries off the coasts of the French islands of St. Pierre and Miquelon. While France has given itself enabling legislation to extend jurisdiction off any of its coasts, there has been no indication to date by France of its intentions regarding the area off St. Pierre and Miquelon. In the preamble to the order in council extending jurisdiction, we clearly indicated that the establishment of an extended fishing zone is not intended to prejudice ongoing consultations on the delimitation of waters with France, and this matter is also being pursued.
Another important factor in our fisheries relations with France is that the bilateral fisheries agreement concluded in 1972 grants certain rights to French vessels and in particular, to vessels registered in St. Pierre and Miquelon in the areas that are now under Canadian jurisdiction, that is, in our 12-mile territorial sea and in the Gulf. These rights, which are not modified by the creation of our new zones, were granted in exchange for the abandonment by France of important treaty rights in extensive areas dating back to the time of French settlement in the area. Similar rights were granted to Canadian vessels off the coast of St. Pierre and Miquelon. We have made very clear to the French that the rights granted to their vessels by this agreement are exclusive to France, and cannot in any way be claimed or exercised by other members of the European Community.
The 1972 bilateral agreement also refers to the possibility of extension by either country. In article 2, the agreement states that each country will, in the event of a modification of the areas under its jurisdiction, undertake on the basis of reciprocity to recognize the right of nationals of the other country to continue to fish in the modified areas, under rules and regulations to be applied by the country having jurisdiction,
November 19, 1976

including, in our view, regulations on quotas, licensing and enforcement.
In making this statement today, I should like, with your permission, sir, to extend a word of appreciation to my colleague, the Minister of Fisheries and the Environment for his very active participation in all these discussions over a prolonged period, and to compliment him on the successful negotiations of bilateral treaties with the countries 1 have mentioned.


Some hon. Members:: Hear, hear!


Donald Campbell Jamieson: I think it is entirely appropriate, also, to add a word of commendation to the officials in the Department of External Affairs and the Department of Fisheries and the Environment who, by unanimous agreement, are some of the best-informed and skilled people in this field anywhere in the world and who, I believe, have done a most creditable job for this country, as I am sure they will continue to do.


Some hon. Members:: Hear, hear!


Mr. Lloyd R. Crouse (South Shore):: Mr. Speaker, 1 listened with interest to the statement made by the Secretary of State for External Affairs (Mr. Jamieson) covering the extension of our fishing zones. I wish to thank him for making the statement available to the official opposition prior to its presentation in the House.
The statement makes it clear that the decision to extend our fisheries zones on the Atlantic and Pacific coasts was taken in light of the rapid depletion of our fish stocks, creating a situation of crisis proportions. However, the decline in our fisheries resources is not something which has occurred recently. Rather, it is a situation which has been brought about because of excessive overfishing by foreign nationals operating on our continental shelf over a long period of time. It was this overfishing which brought about the first Law of the Sea Conference in 1958 followed by subsequent conferences in 1960 and 1974 in Caracas, in 1975 in Geneva, and in New York in 1976. The crime of the century, as far as our fishing industry is concerned, is that the knowledge gained from all these conferences and all the contacts made with representatives of other governments has not yet led to a suitable agreement for the over-all management of our fish stocks.
The minister stated, "Our first priority was to obtain agreement within ICNAF on fishing quotas for the calendar year 1977 which would correspond to Canadian requirements within the 200-mile zone." The minister is surely aware that ICNAF, like the quotas it has established over the years, has been a dismal failure. This paternal organization and its associated scientists have carried out a tremendous amount of useful work. However, it now appears that the greed of nations which motivated the quotas, or "numbers game", worked the system to the disadvantage of everyone.
National quotas for fish have been juggled, and international deceit has created what our fishermen call "paper fish", resulting in a tremendous waste of effort in negotiations
Fisheries Zones
between nations for certain species of fish which they have virtually wiped out. Then at this late date, after all these negotiations, all the minister can tell us is that 1977 quotas for catches in our 200-mile zone are based on quotas established by ICNAF, an organization which is everywhere discredited because of its inefficiency and lack of control over incidental catches.
These are not my views alone. The Minister of Fisheries, in his proposed management plan for the Atlantic groundfish fishery in 1977, puts forward the view that next year the prospects facing the industry are even more dismal. This is due to those ICNAF quotas. He states that the Gulf redfish stock continues to deteriorate. He points out that on the Scotian shelf the greatest declines have occurred in stocks of cod and pollock, from 30,000 tons to 7,000 tons and from 55,000 tons to 30,000 tons respectively. In summary, the highest possible catch the Canadian fleet could take, according to the minister, is 85,730 tons, which is 3,000 tons less than last year on the Scotian shelf. These are the fruits of ICNAF as they apply to Atlantic Canada, and since we account for only 7 per cent of the total fishing tonnage off our coasts taken by ships in excess of 50 tons, it is obvious that Canadians play a very small part in overfishing any species.
The minister went on to tell us that bilateral agreements have been negotiated with those countries which together account for almost 90 per cent of foreign fishing operations off our coasts, and that agreements are now in place with Norway, the U.S.S.R., Poland, Spain and Portugal. What about Japan? What about Korea, East Germany, Cuba and other fishing nations? What tonnage will they take next year? It is these bilateral agreements which are today causing such concern to the Canadian fishing industry. I say to members opposite, through you, Mr. Speaker, "You have, in effect, given away the key to our fishing banks, and our fishing banks are just as important as our chartered banks".
The minister's generosity to foreign nations in 1977 will do nothing for Canada or for our fisheries resources. According to his own figures, there are no fish surplus to the needs of Canadians in 1977, but this fact was not recognized by his officials at ICNAF. Canadians have only been allocated 17.5 per cent of the cod catch, 6 per cent of the mackerel and 23 per cent of the redfish. In contrast, Mr. Speaker, Russia, which has consistently overfished our resources, is rewarded by ICNAF with 13 per cent of the cod catch, 33 per cent of the mackerel and 50.4 per cent of the redfish.


James Aloysius McGrath: What about the capelin?


Lloyd Roseville Crouse: My colleague asks, what about the capelin? The food fish and the codfish have been given away by this government to the Russians. The minister's bilateral agreements, which were supposed to be a breakthrough, represent, instead, the outright selling of Atlantic Canada's birthright. That is what he has done. We on this side cannot applaud a policy which continues to permit foreign overfishing while

November 19, 1976
Fisheries Zones
Canadians remain at home and Canadian fishermen are forced to draw unemployment insurance. Unfortunately, those who work in our fish plants are unable to draw unemployment insurance due to the sporadic nature of their employment. They may work on Monday, Wednesday and Friday, and because they are laid off for two or three days in the week those in the plants, due to government policies, are unfortunately unable to earn any money or draw unemployment insurance.
This is the situation that now applies to our fishermen in many of our ICNAF areas. We are told that next year's quotas will be even less than the quotas for 1976. This type of discrimination will not be tolerated by our people. The situation our fishermen face today is a far cry from the flowing picture painted by government supporters of the benefits which would accrue to Canadians from a 200-mile limit.
Finally, Mr. Speaker, the minister indicated that he would be prepared to table maps illustrating the new zones, even though agreement on these co-ordinates has not been reached with the United States, France and Denmark. It is a matter of some regret that this government, after attending numerous Law of the Sea Conferences, is at this late date unable to lay down boundary lines in agreement with out maritime neighbours. The best that the minister can promise is interim agreements with France and the United States on major problem areas of vital concern to Atlantic Canada, especially to our fishermen in Newfoundland and Nova Scotia.
Obviously, the government's efforts in the field of international diplomacy have been no more successful than their efforts in dealing with the economy, unemployment and inflation. They have all been a dismal failure. The high hopes of Canadian fishermen for a better future and bigger catches under a 200-mile limit must now be tempered with the sad fact that this government does not intend to permit Canadians freely to fish in their own waters, a ruling that cannot help put create massive social problems in our coastal areas.


Mr. Andrew Brewin (Greenwood):: Mr. Speaker, the minister's statement, if read very carefully, referred to the Canada-France fisheries question. I have read through that part of the statement dealing with this question and, to put it mildly, it is extremely vague, full of hopes and is lacking any particular substance. Nevertheless, I think both the minister and the Minister of Fisheries and the Environment (Mr. LeBlanc) deserve congratulations on the progress made in various fields toward protecting fishing stocks in Canadian waters, or what will be Canadian waters.
The preservation of our fisheries is, as we all know in this House, of vital importance to the people of Canada, especially on the east and west coasts. It is also important to all of us from an economic and human point of view. The minister referred to "crisis proportions" and the hon. member for South Shore (Mr. Crouse) used exactly the same expression. I am prepared to make it unanimous on behalf of this party and say we also recognize the crisis proportions which have been reached in regard to the protection of our fisheries.

Initially, Mr. Speaker, we would have been of the view that it would have been preferable to wait for the proposed extension of our fishing jurisdiction and its declaration until the Law of the Sea Conference had reached a general agreement, and presumably have the benefit of universality under the auspices of the United Nations. Nevertheless, we recognize that it was just not possible to wait that long and we welcome the fact that the government is moving ahead. I think it is on January 1, 1977, that our declaration of the expanded fishing zones becomes law and enforceable by Canada. Although we are nationalists, we do believe in a degree of international support, both in the revised single negotiating text and a series of bilateral agreements. We feel we are justified in moving out ahead of, instead of waiting for, the universal agreement that we hope will come.
We must recognize that there are extremely serious gaps in the minister's statement. First of all, I want to refer to what is essential to any policy, namely, an adequate means of enforcement. I suggest that this statement indicates, once again, the necessity for those responsible for defence in this country to look at what our priorities should be. I think that protection of our sovereign waters as extended should be one of the very highest priorities in defence matters. This would mean building more ships and increasing the number of patrols.
It is no good laying down laws, drawing lines on maps and calling them zones, and so on, unless you have every intention of enforcing those zones and are in a position to do so. This may require a change in priorities. For example, I think that we needed a long-range patrol aircraft to go all the way across the Atlantic to destroy mythical submarines like we needed a hole in the head. Here we have something relevant to our needs which has to be done, but I am afraid that by spending $1 billion on the wrong thing we may not be ready to spend enough on the right things in the field of defence which are essential to the welfare of our people.
There are, as the minister's statement made clear, other serious gaps. There is the question of defining the co-ordinates; I do not know whether I am translating that correctly when I call it fixing the boundaries of the fishing zones. We still have to reach agreement with the United States on that matter. We also have differences with France. All we have heard from the minister is that the French are understanding and are ready to discuss the matter.
I am pleased to see that in regard to some of the interim agreements they will perhaps be ready to deal with them before the end of the year. This is an item of unfinished business. It may be that negotiation can fill the gap and make it possible to apply these zones effectively without international dispute. It may be that we will have in some cases to go to arbitration or even to the International Court to settle a dispute.
Mr. Speaker, as has already been mentioned, there are serious gaps in regard to countries such as Japan which are immensely important in this field, particularly as it affects our
November 19, 1976

west coast offshore. My understanding is that the northern pacific treaty is due to expire before very long. When that happens, it is of the utmost importance that we have in place an adequate agreement on this matter with Japan.
To summarize what we would say in regard to this matter: The statement is vague, but some of the things it says are clearly moving in the right direction and we welcome them. There are serious gaps, however, particularly in regard to enforcing it. I suppose this is fair enough if it is a matter for the Department of National Defence, but it is clearly related to this whole program. We urge the government to proceed with all dispatch to close some of those gaps so that these immensely important resources of our fisheries may be preserved, not only for the benefit of our own people but for the benefit of others to whom this is a highly important source of nutrition.
[ Translation]


Joseph Adrien Henri Lambert: Mr. Speaker, I should like to comment briefly on the minister's statement which I received during this sitting. I understand that he is not responsible for that delay because it happens sometimes that messages are not immediately delivered. I would like to draw the attention of the Chair on the necessity of further supervising the immediate delivery of important communications such as this one during the proceedings of the House.
As a comment on the minister's statement, even if Canada could do more to protect our fisheries, the Minister of Fisheries (Mr. LeBlanc) deserves our congratulations for his considerable effort to protect that important Canadian industry. 1 am especially pleased with the decision to extend the territorial zone to 200 miles, even during an important conference on the law of the sea. I am convinced that if my colleague the member for Rimouski (Mr. Allard) were in the House, he could comment more knowledgeably on that statement since he is the member of our party who has been specifically asked to consider the matter.
However, I am glad that at long last Canada has acted as a sovereign country. This attitude may spur other countries to do so. According to the statement, there will be another conference in December and 1 hope that the good intentions mentioned in the statement will be maintained at the forthcoming conference and that once again Canada will assert itself, not to the prejudice of other countries, but to really protect our industry and allow our fishermen to earn their living honourably. We recall that several years ago fishermen had a hard time. Action taken by both federal and provincial governments made it possible to improve their lot. We must not quit now, we must go forward much faster if we really want to maintain and improve our fishing industry.
The statement refers to agreements which are under way, to talks with the French government about Saint-Pierre and Miquelon Islands. I suggest it is a good thing to mention these negotiations in the declaration. It demonstrates that, in the exercise of the rights of the country, the government of Canada also considers that Atlantic area does include islands
Fisheries Zones
which are under French government jurisdiction and that good neighbourhood relations must be maintained.
If we continue in this direction, we will have to do more even if we take into consideration the remarks of the spokesman for the official opposition who mentioned some interesting figures, which I do not have at hand. Therefore as a member of parliament I should like to encourage the minister and all his staff to continue in this direction; this increases the assurance and the pride of our country when we see that we are able to negotiate on an equal footing on the international level. I am really aware of this pride.


James Aloysius McGrath: Mr. Speaker, with your indulgence I should like to ask one or two questions of the minister. First of all, may I compliment him on the statement he has made. May I also compliment him on his elevation to this portfolio, knowing its importance to our province and the primary industry of our province, namely, the fishing industry. I should like to ask the minister if he can enlarge upon the declaration of the European Economic Community, bearing in mind that France has made its colonies, St. Pierre and Miquelon, an area of France.
I understand this is almost equivalent to provincial status and eliminates their special right with respect to taxation, and so on, as they are now part of France.
Will this eventually mean that the countries of the European Economic Community will demand rights, to which they are entitled under the agreement of Rome, to the fishing grounds of St. Pierre and Miquelon as well as any interim agreements that may have been concluded by the minister and his counterpart?


Donald Campbell Jamieson: Mr. Speaker, I will be very glad to answer the hon. member's question, and I thank him for his kind references. On November 3, the European Economic Community indicated that all nine countries would accept a so-called 200-mile territorial zone. It is up to each individual country, however, to decide which portions of its coastal waters, or all of them, it is going to include in that 200 miles. To the best of our information and knowledge at the moment, nothing has been said by the nine countries as yet about what they propose to do individually.
In theory, of course, the situation in St. Pierre and Miquelon is, as the hon. member said, that it is part of France. Therefore, setting aside altogether what the European Economic Community does, France unilaterally, obviously, has the right to define what it considers to be its 200 miles. However-and this is the point that I believe the hon. member is getting at- it then, other than in that sector, cannot have the European Economic Community agreement transcend its treaty with Canada. We have made it very clear to them that since 1972 there is a treaty between Canada and France. The French government cannot now say, in effect, to the EEC that because the nine have agreed on a 200-mile zone which the community will totally use, that agreement supersedes the agreement it has with Canada.

November 19, 1976
Fisheries Zones
The best legal advice we have is that it would not be possible, for instance, for non-fishing nations, in terms of ones that have never fished in the North Atlantic or any category of that kind, to come in under the umbrella of the EEC agreement. It is still basically a Canada-France agreement and we would have total negotiating control over it.


James Aloysius McGrath: A supplementary question, Mr. Speaker. The minister and I grew up with a background of this kind of history and the treaty of Utrecht which we were studying while our Canadian counterparts were studying the British North America Act. The treaty of Utrecht is still very much a binding instrument between Canada and France. I ask the minister what effect that treaty has on the interim agreement he has concluded with France, given the fact that the treaty of Utrecht gives France not only rights within the waters of St. Pierre and Miquelon but rights within the three-mile limit, as it then was, of the waters of Newfoundland. I say that to the minister because my understanding is that that treaty is still very much binding both on Canada and France.


Donald Campbell Jamieson: Mr. Speaker, I agree this is a matter which we both studied a long time ago, but I fear I am a little hazy on the treaty of Utrecht at the moment. I can say, however, that the way it has been put to me by the constitutional experts is that the 1972 Canada-France treaty superseded the previous treaties which had to do with fishing and other rights, and in terms of the 1972 treaty we had reciprocity, an equidistant line between Canada, that is, Newfoundland and St. Pierre for local fishermen, and certain fishing rights in the Gulf of St. Lawrence. In return for giving those to France, France forgave, or gave up any rights it had previously under old treaties.


Donald W. Munro: Mr. Speaker, the questions and comments so far have been devoted entirely to the east coast. I would just like to remind the chamber, and put on the record, that there is a west coast in which these new zones will be extended. There is another difficulty, Mr. Speaker, that I will run into and which I have already run into today, because there is more than one minister involved in this and I do not want to trespass or run into another ruling. However, the enforcement machinery that was mentioned by the hon. member for Greenwood causes us concern.
The minister may not be aware of the problems of the fisheries patrol vessels on the west coast and the fact that they are lying alongside because of lack of funds. Has there been discussion in cabinet about improving, enhancing or increasing the enforcement machinery that will be needed in respect of this fisheries' patrol zone? I do not necessarily follow the notion put forward that this should be the responsibility of the Department of National Defence. It is a fisheries zone we are talking about. It is not the writ of Canada extending out beyond the 12-mile limit but, rather, a fisheries zone and responsibility. Where are these vessels to be designed? Are they to be designed in Sweden, like the ferries that are to operate between Nova Scotia and Newfoundland, or will we design and make them in Canada?


Donald Campbell Jamieson: Mr. Speaker, I think my colleague, the Minister of Fisheries and the Environment, has indicated on a number of occasions that steps have already been taken to increase surveillance. These were announced six or seven months ago, I think in July, when we pretty well doubled the number of hours of patrols and activities of that nature. Also, as I am sure the Minister of Fisheries and the Environment will say on an appropritate occasion, we are now looking at additional means through which surveillance can be achieved in an effective way. Incidentally, I might agree with the hon. member, who I take it is not totally accepting the national defence concepts, because much of this surveillance is not the kind of thing that would be done by long-range patrol aircraft. It is a quite different kind of surveillance. Also, I think the hon. member will appreciate that when you recognize the fact that 90 per cent of the foreign catches are now subject to bilateral agreements, this is a substantially better position-


Donald W. Munro: In ICNAF.


Donald Campbell Jamieson: In ICNAF, yes; and outside of ICNAF, as well, my colleague informs me. It is 90 per cent of the total catch on both the east and west coasts which is covered by agreement within the 200 miles, but when you take into account the fact that there are agreements on this, it basically means that you are not doing a policing action in the form that you would be-


Donald W. Munro: Oh!


Donald Campbell Jamieson: I have not even finished the sentence, and the hon. member says "Oh!" I am not naive enough to assume that we will not have to do policing. I say it is significantly easier to do it when you have an agreement than it is if you have somebody who does not recognize your jurisdiction. Therefore, that is the distinction or qualification I would make.


Donald W. Munro: I am glad the minister recognizes that fishermen are fishermen and will poach if they get a chance.


Some hon. Members:: Oh, oh!


Donald W. Munro: It is not only the Poles, the East Germans, the Japanese and the Koreans who poach. These, however, are the ones that are of concern to me on the west coast. The Japanese are being brought in under patrol arrests on the west coast and charged. I would like clarification on this. Does the agreement with Poland that was referred to in the statement cover catches on the Pacific coast as well as in the ICNAF area, and will that be observed? Are there any things ongoing with respect to fishermen from Japan, Korea and East Germany, who are also great fishermen on the west coast, because this could involve us in very serious problems unless there is an agreement?


Donald Campbell Jamieson: Mr. Speaker, in terms of the first question with regard to Poland, I am advised it does in fact include their operations in the Pacific as well as in the Atlantic. In the
November 19, 1976

case of Japan there is, of course, a north Pacific organization roughly comparable to ICNAF, although perhaps not functioning in exactly the same way. Nevertheless, this is a mechanism through which the same kinds of things can be achieved on the west coast, we hope as elsewhere. Mr. Speaker, I realize that you do not wish to prolong this question, and I do not know what the Standing Orders provide in this connection, but I am sure my colleague, the Minister of Fisheries, would be prepared to clarify the answer.


Mr. Speaker:: Order, please. I might clarify the matter for the hon. member for Esquimalt-Saanich. He operates under two separate disabilities. During the question period his difficulty was not that he had put the question to a different minister, which is quite permissible, but that the question was in no way supplementary. In this particular period the Standing Orders permit questions only of the minister who made the statement.


Donald W. Munro: Thank you for that clarification, Mr. Speaker. I would like to ask a number of questions, but I will try to put two. One of them has to do with the possible extension beyond the fisheries notion of the extension into an economic zone on the east coast and the west coast. Is this being thought of, also, in terms of out to the edge of the continental shelf? My other question is whether the sectoral approach is being advocated by Canada, because to my way of thinking this is a new notion in the Artie, the extension beyond the present 100-mile territorial sea out for another 100 miles. Is that just fisheries, or will that eventually be an economic zone, and is the sectoral approach the boundary between Alaska and the Northwest Territories? Is there any possibility of getting an answer to that question?


Donald Campbell Jamieson: Mr. Speaker, I will do my best to answer it, but I am sure the hon. member, given his background, will understand if I am not as precise as he might wish. On the first question, of course, Canada has for some years now-and indeed it is internationally accepted by all countries-claimed its total continental shelf to its outer limits in terms of seabed resource, ownership and the like. If that was the thrust of the original question, that has been done. In so far as the 200 miles is concerned, it is described, as I recall it, in the single negotiating text as a 12-mile territorial sea and 188 miles of economic zone. I gather the question was whether we would go beyond 200 miles. There is no thought at the moment of going beyond 200 miles by any country, to the best of my knowledge.
The continuing importance of ICNAF which was mentioned relates to the fact that there are stocks beyond the 200 miles which will still have to be managed and which are migratory over the 200-mile line. On the sectoral approach, I would ask the hon. member to bear with me, because obviously we are in the midst of discussions on that subject and I think it would be advisable not to say anything publicly in that regard.
Order Paper Questions


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk).
Mr. Ross Milne (Parliamentary Secretary to Minister of Communications):: Mr. Speaker, the following questions will be answered today: Nos. 98, 104, 200, 201, 341, 364, 512, 623, 774, 815 and 980.


Mr. Cossitt: 1.	Did Mr. D. Cuddy retire from the Unemployment Insurance Commission and, if so (a) on what date (b) what was his position at that time?
2.	Have his services been retained by the UIC on a contract basis and, if so, what are the principle terms of the contract including his duties and money to be paid him?


Hon. Jack Cullen (Minister of Manpower and Immigration):: In so far as the Unemployment Insurance Commission is concerned: 1. Yes (a) December 28, 1974. (b) Director Field Liaison.
2.	Yes. To assist in the assessment and review of current UIC appeals, thereby enabling the Advisory Committee to plan changes to the UIC Appeal System. Amount paid on contract, $19,403.


Mr. Cossitt: 1.	Was a proposal made a few years ago to computerize Employer Registration of Wage Loss Insurance under the Central Index of the Unemployment Insurance Commission in place of the manual method and, if so, on what date?
2.	Was the proposal to computerize the section accepted and, if not, for what reason?
3.	What is the present total number of employees in this section of UIC and what was the estimated number that would have been required if computerization had taken place?


Jack Sydney George (Bud) Cullen: In so far as the Unemployment Insurance Commission is concerned: 1. Yes. Certain aspects of the administration of the Employer Registration Program, notably the sending out of the annual renewal notices, and of the advice to employers and to Revenue Canada of the premium rates applicable to each employer, were computerized in the autumn of 1975.
2.	Yes.
3.	At present, the Section has a complement of 50. Computerization was not undertaken to reduce the number of staff needed by the operation, but rather to cope with a rising workload which was being handled, in mid 1975, largely through overtime.


Mr. Marshall: 1.	How many World War I veterans were prisoners of War?

November 19, 1976
Order Paper Questions
2.	Of those still living (a) for how long was each interned and in what location (b) what percentage disability pension is each receiving?


Daniel Joseph MacDonald: 1.	There were 3,846 members of the Canadian Army who were prisoners of war during World War I. Of these, 386 died in the camps. There are no statistics available on navy personnel.
2.	Records of this type of information are not kept.


Mr. Marshall: 1.	With reference to the turnover of veterans' hospitals to outside control, how many domiciliary beds are available in departmental institutions, or in the institutions under contract to the department as of (a) January 1, 1963 (b) January 1, 1968 (c) January 1, 1973 (d) January 1, 1976?
2.	What are the projected figures for 1977 and 1978?


Daniel Joseph MacDonald: 1.	(a) and (b) Records are not available prior to 1969; (c) 2,818; (d) 2,927.
2.	The number of domiciliary beds is not expected to vary appreciably in 1977 and 1978.


Mr. Marshall: 1.	How many applications did the Pension Commission have on hand at the beginning of 1974?
2.	By month, how many came before the Commission in (a) 1974 (b) 1975 (c) 1976?
3.	How many were (a) processed (b) approved (c) turned down in (i) 1974 (ii) 1975 (iii) 1976?
4.	How many were on hand at September 30, 1976 and how many were (a) up to six months old (b) from six months to one year old (c) from one to two years old (d) two years old or more?


Daniel Joseph MacDonald: 1.	On January 1, 1974 the Commission had 7,846 applications on hand at first decision level.
2. Applications at the first decision level:
(a)	(b)	(c)January	656	547	412February	643	496	494March	592	767	546April	622	489	546May	700	461	496June	572	575	791July	833	697	663August	583	475	579September	490	751	593October	686	570	November	518	520	December	614	639	3.	(a) Claims processed at first decision level: (i) 9,460; (ii) 8,581; (iii) 3,996 (to September 30, 1976); (b) Claims granted: (i) 4,356; (ii) 3,753; (iii) 1,712 (to September 30, 1976); (c) Claims not granted: (i) 6,126; (ii) 5,290; (iii) 2,425 (to September 30, 1976).

4.	On September 30, 1976 there were 2,720 applications at first decision level on hand. Statistics are not maintained relating to the specific periods requested. The statistics maintained relate to periods of inclusive numbers of days. Of the claims on hand at the first decision level on September 30, 1976: (a) 1,914 were less than 149 days old (approximately five months old), (b) 738 were between 149 days and 365 days (five months to one year), (c) 68 were between one and two years old. (d) None were two years old.


Mr. Munro (Esquimalt-Saanich): 1.	For each constituency in British Columbia, what was the allotment of LIP grants in (a) 1972-73 (b) 1973-74 (c) 1974-75 (d) 1975-76 (e) 1976-77?
2.	For the same years, what were the unemployment figures, in percentage terms, in each constituency?
3.	What other criteria were used in deciding on allocations?


Jack Sydney George (Bud) Cullen: 1. (a) Under the 1972-73 Program, LIP funds were not allocated by constituency, (b) Refer to Sessional Paper No. 301-2-230. (c) Refer to Sessional Paper No. 301-3-4. (d) Refer to Sessional Paper No. 301-7-41. (e) This information will be tabled shortly.
2.	1972-73-As funds were not allocated on a constituency basis, these rates were not calculated by constituency. 197374: Refer to Sessional Paper No. 301-2-256. 1974-75: Refer to Sessional Paper No. 301-3-4. 1975-76: Refer to Sessional Paper No. 301-7-41. 1976-77: This information will be tabled shortly.
3.	The mathematical formula for allocating LIP funds to constituencies has always been based on unemployment statistics. For detailed descriptions of the formulae used see documentation referred to in l.(c), (d) or (e).


Mr. Herbert: 1.	Does the Unemployment Insurance Commission refuse benefits to an applicant whose employment is terminated and the reason given is excessive absenteeism and, if so, does the applicant have the right to appeal?
2.	Is a notarized statement of absenteeism from the employer accepted as adequate evidence in the event of an appeal?
3.	Must the employer appear at a hearing to present evidence?
4.	Have there been indications that employers are not willing to appear at hearings when so requested and, if so, for what reasons?


Jack Sydney George (Bud) Cullen: In so far as the Unemployment Insurance Commission is concerned: 1. A claimant who has lost his employment on account of excessive absenteeism without leave can be disqualified from the receipt of benefits for a period of up to six weeks and has a right to appeal the decision to a Board of Referees.
November 19, 1976

2.	The employer's statement regarding his former employee's absenteeism is part of the evidence submitted before the Board of Referees.
3.	Boards of Referees do not have the power to subpoena witnesses whether employers or employees to appear before them; however, section 91(4) of the Act gives them the authority to request a person to attend and thereby pay expenses.
4.	Except for labour dispute cases, employers do not ordinarily attend hearings. Whenever an employer fails to appear before a Board of Referees after invitation, the reason for non attendance are not recorded.


Mr. Herbert: 1.	What are the details of the agreement between the government and the Province of Quebec by which the Queen Mary Veterans Hospital in Montreal will be transferred to the provincial government?
2.	What is the effective date of transfer?
3.	What provision has been made, if any, to provide elsewhere, the services presently available to veterans at the hospital?


Daniel Joseph MacDonald: 1. At the present time there is an agreement in principle that Queen Mary Veterans Hospital in Montreal will be transferred. Negotiations on the details of an agreement for transfer have not yet been completed.
2.	An effective date of transfer has not yet been determined.
3.	Provision for continuing care of entitled veterans will be part of a transfer agreement once the terms have been negotiated.


Mr. Rodriguez: 1.	In 1976, by constituency, what is the (a) estimated rate of unemployment (b) dollar value of LIP grants?
2.	In 1975, by constituency, what was the (a) rate of unemployment (b) dollar value of LIP grants?


Jack Sydney George (Bud) Cullen: 1. (a) (b) This information is to be tabled shortly.
2. (a) (b) Refer to Sessional Paper No. 301-7-41.


Mr. McKinnon: Does the Department of Veterans Affairs have any plans to build additional accommodation for Section 29 veterans, to be domiciled near the Veterans' Hospital in Victoria?


Daniel Joseph MacDonald: The Department of Veterans Affairs has no plans to build additional accommodation for Section 29 veterans to be domiciled near the Victoria Veterans Hospital. By virtue of the transfer agreement respecting the Victoria Veterans Hospital,
Income Tax
Canada undertook to make a capital grant to the Province in the sum of $3,725,000 towards the costs of (a) construction for the purpose of renovating, improving and adding to the buildings and structures, and for new buildings; (b) replacing obsolescent equipment and furnishings; and (c) purchasing and installing additional equipment and furnishings. To date the Province has not provided any indication as to their plans concerning the construction of additional facilities in Victoria.


Mr. Beatty: What individual or bodies within the government currently has a responsibility to make recommendations to the government relating to privacy and, in each case (a) who is the individual or members of the body involved and for which department or agency does he or she work (b) to whom are reports made (c) on what date was the responsibility for privacy first given to that individual or body (d) on what date does the mandate of the individual or body expire (e) what reports or recommendations have been made to the government to date and, on what date (f) what action has been taken by the government as a result of these recommendations and, on what date?


Stanley Ronald Basford: (a) (b) (c) (d) (e)
(f): On December 7, 1972 when the Report of the Task Force on Privacy and Computers was released, the Ministers of Communications and Justice jointly announced the establishment of a special interdepartmental committee. It has been the responsibility of this committee to draft privacy-protective rules and develop mechanisms to enforce these rules in respect of data banks operated by the Federal Government. Various departments have been represented on the committee chaired by the Departments of Communications and Justice.


William Ross Milne: I ask, Mr. Speaker, that the remaining questions be allowed to stand.


Steve Eugene Paproski: Mr. Speaker, in view of the fact that it is close to one o'clock, may we call it one o'clock?


Mr. Speaker:: Order, please.



GOVERNMENT ORDERS


Donald Stovel Macdonald: that Bill C-22, to amend the statute law relating to income tax, be read the second time and referred to committee of the whole.
He said: Mr. Speaker, may I pursue the suggestion that we call it one o'clock?

November 19, 1976
Income Tax


Mr. Speaker:: It being one o'clock, I do now leave the chair until two o'clock this afternoon.
At 12.55 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
Donald Stovel Macdonald: Mr. Speaker, we have now before the House Bill C-22, to amend the Income Tax Act, arising out of the budget of May 25. The purpose of the bill, as hon. members know, is to implement a number of the important changes in taxation provisions affecting individuals which were introduced in that budget, as well as some changes in the corporation tax and, in particular, a change in the general tax regime dealing with charities under the Income Tax Act and a change in the definition and mode of operation of charities as dealt with in the Income Tax Act.
Naturally, at second reading I would want to discuss those specific amendments, but before doing so, in response to the undertaking I gave to the hon. member for Halifax (Mr. Stanfield) on Wednesday, I would like to comment on the economic and fiscal situation as we see it at the present time in light of changes which have occurred in the nearly six months which have intervened since the statement was made on the evening of May 25. It would be useful to recall the very grave dangers which faced the Canadian economy in the autumn of 1975, and the comprehensive program of action we announced on October 14, 1975. At that time we set the goal of achieving a gradual reduction in the rate of inflation which was threatening the very foundations of our social and economic progress. At the same time we looked toward a moderate pace of recovery in terms of growing output and employment.
The objective we set for slowing the rate of inflation was rather specific. It was to bring down the year over year rate of increase in the consumer price index from 10.6 per cent in October, 1975, to 8 per cent in October, 1976, and by a further 2 per cent per year thereafter. As the House knows, that target of reduction of the rate of inflation was not only achieved but was, indeed, overachieved in the time-frame. The consumer price index in October was only 6.2 per cent above its level a year earlier, and Canadian consumers have benefited from lower food prices. I think it is important to emphasize, as we look at the perspective of dealing with inflation in the coming 12-month period, that the beneficial effects, for example, of a drop in food prices which have been passed on by way of lower food costs for consumers cannot be expected to continue for the next 12-month period. If it is our wish that our farmers should continue to be able to keep on producing economically and producing to meet Canadian needs, we will have to expect that returns at the farm gate will improve somewhat over those of recent months.
Still looking at the persepective of the economy as a whole, there can be no doubt that there has been a marked slowing in the inflationary tide. The result of this has been a major gain

in the purchasing power of workers' takehome pay, even though the rate of increase in dollar wage settlements-that is to say, in nominal terms-is only half what it was a year ago. Nevertheless, we have a long way to go before we are out of a situation of danger with regard to inflation in Canada. Our costs in Canada are still rising faster than those in the United States, and while it is true that inflationary expectations may have been dampened in this country, I do not believe they have been sufficiently turned around to ensure the continuing health of the economy.
May I now turn from the question of inflation to estimates of growth. At the time of the budget I anticipated that real growth in 1976 would be at the level of about 5 per cent, and that unemployment would continue at the recent trend level, which at that time was just above 7 per cent, and that there would be a gradual decline as cyclical expansion both in Canada and in our trading partners took hold. It now looks as if there may be a small shortfall from that 5 per cent real growth which we had anticipated on May 25.
It is, of course, difficult at the best of times to predict what that rate is going to be with fine precision. It is all the more difficult to predict it this afternoon when we have not yet received figures concerning the performance of the Canadian economy in the third quarter of 1976; we have not received the most relevant, recent figures from which we can attempt to make some predictions in the several quarters ahead. Having said that, I confirm again that we expect a shortfall below that 5 per cent level which I had set out in the May 25 budget, but the shortfall, given the relatively satisfactory performance, particularly in the first quarter of 1976, should be not too far below the 5 per cent level.
The rate of unemployment is, and continues to be, a matter of general concern. The rate continues to be influenced by erratic month to month movements which reflect work stoppages. I am referring, for example, to collective bargaining situations and other factors which are relatively temporary. I remind hon. members that when we consider figures which became known last week with the publication of the October figures, we are looking at a situation in which the rate of unemployment has come down substantially in British Columbia from the rates which had been experienced several months previously. These figures reflect not inconsiderably the fact that extensive work stoppages which that province had been undergoing during the summer of 1976 had been brought to an end and there has been a substantial return of working people to employment, along with some cyclical growth brought on by the expansion of exports.
In the same way, when looking at figures for last month, we note in particular the impact on Ontario figures of the strike at the Ford Motor Company which had rippled effects throughout the Canadian economy or the part of the economy in that part of the country which had to do with the auto pact. There was, therefore, an impact on employment in the Ontario area and for that reason unemployment was up in that area.
November 19, 1976

It now seems clear that the rate of unemployment in the last quarter of 1976, that is to say, the present-day period, will average somewhat more than the trend level indicated in the May budget. As I recall-if I may refer to the May budget- we were at that time looking at a rate of 7.2 per cent; we are looking at a rate, in the month of October, of 7.6 per cent, or a variation upward of between 7 per cent and 8 per cent over figures anticipated for the fall of 1976. This continues to be a matter of concern.
What is of particular concern is that because of our commitment to restrain government expenditures in support of the anti-inflation program the flexibility previously available to the government for dealing with unemployment, for example by substantial expansion in government expenditures, is simply not present. Indeed, if one looks at expenditures in the economy over-all, one will notice not only the restraint of expenditures at the federal level but also the restraint of expenditures at other levels of government, this reflecting the fiscal stringency which all economic levels in this country face.
Therefore, the government sector has not been providing the stimulus to the economy which has been the experience in past years. This is the result, on the one hand, of our success in dealing with the levels of government expenditure in Canada, but the cost must be paid on the other side in terms of the lack of stimulating effect by the government on economic activity in the country. My colleagues and I continue to keep the unemployment situation under the closest attention. In particular, while we are concerned about unemployment rates in all parts of Canada and, if I may add parenthetically, particularly unemployment rates among those in the 17 to 24-year age group, we are particularly concerned about regional unemployment levels in the Atlantic provinces and Quebec which are higher than the Canadian average and have increased most rapidly in recent months.
As I have indicated, and as hon. members know, the tempo of expansion slowed in recent months not only in Canada but also in the United States and other industrialized countries- countries with whom we trade in a major way and whose performance is measured along with ours in the figures of the Organization for Economic Co-operation and Development. It now appears likely that the growth performance of the OECD group as a whole, which includes Canada, in the year 1976 will fall short of the 5.5 per cent forecast set out in the economic outlook paper of that organization which was published in July and formed the basis of the declaration of policy guidelines agreed upon at the summit meeting of major economic countries at Puerto Rico.
At that time, ministers and chief executives laid considerable emphasis on the impact of inflation on western economies as a whole and the necessity for restraint of inflation measures which would bring corresponding benefits in terms of lower rates of cost increases. Indeed, some in the private sector, writers on editorial pages and economic commentators, have wondered whether, in light of the sorry performance of the OECD as a whole, it is not incumbent on some of the major countries of the OECD group-that is to say, the United
Income Tax
States, Japan and major countries in the European Economic Community-to engage at this time in more stimulative measures than were contemplated when the prime ministers and ministers met in Puerto Rico.
Turning to our balance of trade and the prospect of slower growth in the countries which are our major trading partners, our balance has improved this year but we cannot but be unaffected by the slower growth which has occurred in our trading partners. This is a matter of concern. The sustained health of the Canadian economy depends on further reducing the large current account deficit, that is to say, the current account deficit on our balance of payments as opposed to the balance of trade, and it also depends on a substantial upturn in capital investment.
Perhaps I could refer hon. members back to the remarks I had occasion to make in the throne speech debate with regard to the capital investment climate in OECD countries as a whole. I suggested that economic commentators had drawn attention to the caution being exercised in all major countries, or at least to caution respecting declaration of investment intentions if not to the commencement of investment at this point in the economic cycle. The observation had been made that in these countries as a whole investment was not occurring as rapidly as had occurred in past cycles, reflecting perhaps the caution induced upon investors in all countries because of the traumatic shock they had been through, particularly because of the levels of recession in previous months.
I would like to comment briefly on the government's fiscal position. In some ways it is a corollary to the comments I made earlier about the impact of government spending on the economy as a whole. At this stage, from estimates of expenditure, I can report that our persistent efforts to restrain additional expenditure are bearing fruit. We are confident we can meet our target as set out at the time of the budget in total outlays this year of $42,150 million. Indeed, we feel we have won some room for flexibility in terms of our spending programs. We are in the process of considering a possible redirection of some of those fiscal resources into areas that would respond to the needs of the economy, particularly the concern I cited with regard to regional unemployment and unemployment among certain constituent groups in the work force.
My colleague, the Minister of Manpower and Immigration (Mr. Cullen), will be announcing to the House very shortly some redirection of spending in relation to employment programs, programs which have been selected on a number of criteria. First, of course, they should be targeted particularly for those groups where there have been high rates of unemployment; and, second, programs which can start producing an impact on unemployment right away this winter rather than measures similar to taxation measures which could have a longer term macroeconomic effect, but no effect this winter. Because my colleague will be making a statement within the next ten days or so, 1 will not go further into the details except to say that we anticipate being able to apply additional public

November 19, 1976
Income Tax
funds for the support of direct employment measures this winter.
Looking at the other side of the government balance sheet, that is to say, at the question of revenues, one of the corollaries of a slower rate of growth is that the rate of growth of revenues of the government of Canada has been slower than was anticipated at the time of the budget statement. Revenues, therefore, appear to be falling somewhat short of those projected at the time of the budget. The consequence is that I now expect our financial requirements, excluding foreign exchange transactions, may amount to a little over $5 billion in this current fiscal year, compared with the $4'/2 billion which 1 forecast on budget night in May.
I have made reference to some of the principal economic concerns: to inflation, the rate of growth in the economy, levels of employment, the government's efforts to restrain the growth of expenditure, our revenue projections and, finally, the impact of all these factors on the government's cash balance. I hope to be able to keep the House advised as time goes on of any discernible efforts we have made in this regard. In the short term we will be concentrating our efforts in the next several months on the problem of unemployment, particularly, as I have said, on the specific target groups. In summary, we are ahead of the track we set for ourselves with regard to inflation, but are somewhat behind where we had expected to be in terms of output and employment. In connection with employment, we are keeping a very close eye on the situation. 1 hardly need to empahsize the uncertainties there are at the present time, not only with regard to economic problems here in Canada but in the world at large.
Perhaps I can take occasion to repeat here in the House a point which I had occasion to lay some stress on outside the House. That is with regard to the potential impact on Canada and the rest of the industrial world, and indeed on the world economy generally, of the much discussed potential increase in price by OPEC countries for crude oil sold abroad. There could be little argument with the fact that at this point in the economic cycle of the industrial countries the recovery from recession has not been so robust that a substantial increase in an industrial cost, such as for energy, would not have a rather great impact upon the recovery. The wise counsel that we hope the OPEC ministers will take is that a substantial increase in the price of oil internationally at this time, or indeed any increase in price in oil at this time, could put in jeopardy the economic recovery which is so important not only to the prosperity of the industrial countries but the developing countries as well. Therefore, a restraint from a price increase on January 1, 1977, would be of widespread interest.
I will not confine myself to special pleading on the part of Canada or, indeed, all industrial countries in this regard. We and other representatives of OECD have shown a capacity to protect ourselves substantially from the impact of an oil price increase. The community which has suffered most, and indeed is not yet out of the difficulties created by past increases, is that group of non-oil producing developing countries. That is one of the principal concerns we have had in terms of our

development assistance program. For the industrial countries, this involves a slower economic growth and slower recovery from the recession. When an oil price increase is translated to the non-oil producing developing countries, it pushes them very close to the edge of survival in terms of the state of their economy and in terms of the health and safety of their population. Because of the shaky growth in the industrial world and the impact on non-oil producing developing countries, a restraint on oil price increases would be wise counsel for the OPEC countries at this time.
Coming back to Canada, I emphasize again that we would not hesitate to make whatever mid-course directions seem appropriate in terms of directing the Canadian economy. In doing so, we have to recognize at all times that we have set ourselves a very narrow framework in which to make the changes. Above all, we must try to avoid swinging violently between "stop" and "go". We must not forget that the one essential condition for restoring the health of the Canadian economy is continued success on the anti-inflation front.
I now wish to refer to the specific amendments to the tax law which are put forward in the bill. Members will have noted in reading the bill that a number of significant amendments of a relieving nature are being put forward affecting the income of individuals. For example, at a cost this year of $15 million in revenues I have introduced a measure which for 1976 and subsequent years effectively doubles the deductions permitted working women and single parent fathers in respect of their child-care expenses. The maximum amount will now be limited to the least of $4,000, $1,000 per child and two-thirds of the taxpayers' earned income for the year. Also, for 1976 and subsequent years, taxpayer parents of a disabled dependent child will be able to deduct any portion of their child's disability deduction which cannot be used in relation to deduction from the income of the child itself.
Moving to the other end of the life spectrum, to assist taxpayers in saving for their retirement the bill provides for substantial increases in the maximum annual contribution limits for registered retirement savings plans, registered pension plans and deferred profit sharing plans. For example, an individual who is not a member of a company pension plan may, for 1976 and later years, contribute up to $5,500 per year to his registered retirement savings plan. The previous maximum was $4,000. Commencing also in this taxation year, an employee and his employer may each contribute a yearly maximum of $3,500 to a registered pension plan on the employee's behalf. The previous limit was $2,500. Similarly, the employer contribution to a deferred profit sharing plan is increased to a permissible $3,500 annually from $2,500. Also, in respect of deferred income plans the rules governing registered home ownership savings plans will be amended to permit taxpayers to shift plans from one institution to another should they decide to do so. The increases in contribution limits for deferred income plans mean that taxpayers as a whole will be able to save an additional $60 million annually which would otherwise have gone to pay taxes.
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The present bill also includes provisions to establish a simplified mechanism for calculating the amount of deductions which may be transferred between spouses, including the age exemption, the investment income deduction, the pension deduction, the disability deduction and the student living allowance. Relieving provisions are introduced to ensure the deductibility of certain expenses incurred by taxpayers living abroad, to amend the principal residence rules relating to divorced or separated individuals and spouses of transferred employees, and to amend certain capital gains provisions relating to estates and trusts. A number of other provisions respecting individuals are included to simplify existing tax treatment, to cure anomalies and prevent unintended results.
Mr. Speaker, the bill also gives expression to a number of important measures announced in my May budget relating to corporate taxpayers. A measure of substantial benefit to incorporated small businesses which played such a prominent role in our economy involves a further major increase in small business deduction limits. Effective for 1976 and subsequent taxation years, the maximum annual amount of the active business income of Canadian-controlled private corporations subject to the 25 per cent low rate will be increased from $100,000 to $150,000 and the total accumulative limit will be increased from $500,000 to $750,000. Canadian small business will save an additional $30 million in taxes in the first full year as a result of this measure.
Deadlines have been extended and rules modified to provide relief when taxpayers elect to pay dividends out of various corporate surplus accounts. The taxpayer's ability to object and appeal various determinations made by the Minister of National Revenue has been broadened. In addition, certain modifications have been made with respect to the tax treatment of life insurance companies, foreign affiliates and nonresident corporations.
The culmination of one of the major efforts in the review of the tax system is recognized, as well. Members will recall that the budget referred to certain conclusions and proposed changes resulting from an intensive review of the capital cost allowance system. Our system was found to be basically sound and in line with the tax depreciation systems of other industrial countries while possessing relative advantages in terms of certainty and simplicity. Some changes in rates were indicated, however, and these were described in the budget papers. Since the budget I have received a number of representations by taxpayers affected by these proposed changes. Regulations making the necessary rate adjustments have resulted from this additional input and are due to be published shortly. Regulations providing for a basic change in capital cost allowance rules respecting leased and moveable property have already been published.
Also in this context of capital allowance I should like to take this opportunity to announce that I have decided to extend for a further year the two-year, fast write-off on equipment designed to control water and air pollution. This incentive rate would otherwise have expired at the end of the year.
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Mr. Speaker, let me turn briefly, now, to the subject of resource taxation. In recent years, federal and provincial governments have been obliged to make some hard decisions concerning fiscal arrangements for the petroleum and mining industry. Conscious of the need to maintain the stability of the tax system which has now evolved, I am not proposing any major changes in this area.
It is important, however, that Canadians be encouraged to invest funds in resource exploration. To encourage vital exploration activity, the bill proposes that all taxpayers, whether individuals or corporations, be allowed an immediate 100 per cent deduction with respect to Canadian expenses incurred after May 25, 1976, and before July 1, 1979. Deductions in respect of such expenses were previously limited to 30 per cent per annum for individuals and corporations whose principal business was outside the resource industries. The incentive period is to be limited to three years to allow the government the benefit of a trial period in which to assess the utility of this measure in terms of the stimulus to extra exploration.
Before leaving this subject, I should like to commend recent provincial initiatives aimed at encouraging taxpayers to seek out new reserves or maximize recoverability of existing reserves. In this regard, the bill contains an amendment making it clear that provincial government incentives such as the drilling incentive credits provided by Alberta and Saskatchewan will not reduce a taxpayer's potential deductions in respect of Canadian exploration or development expenses.
An equally important side of our over-all national resource policy is energy conservation. Members will recall that my May budget made reference to a number of incentives and deterrents designed to promote energy conservation. One important incentive involves the expansion of the present two-year, fast write-off to include certain types of equipment acquired after May 25, 1976, and before 1980 which contribute to the efficient use of energy resources. Regulations pertaining to this measure have already been published.
Finally, Mr. Speaker, I should like to say a few words concerning the taxation of charities. In the May budget I announced a set of proposals involving changes in the Income Tax Act having to do with the definition and operation of charities. These proposals stem from a discussion paper tabled along with the June, 1975, budget, from more than 200 briefs, from many oral representations prompted by the discussion paper and from an intensive study conducted by the government. The proposed changes in income tax are designed to promote public confidence in, and support for, charitable activities while at the same time ensuring that tax exempt moneys flowing to charities are used as intended for strictly charitable purposes and not for private gain. The new rules seek to do this in a number of ways: by rationalizing the classification of charities; by enforcing minimum annual levels of distributions for charitable purposes by charitable foundations enjoying tax advantages; by limiting excessive fund-raising costs, and by requiring a greater degree of public disclo-

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sure of the finances and charitable activities of all registered charities.
1 do not need to persuade members of the importance of charitable activities in Canada. The growth and development of charitable institutions and activities has been most significant in recent years and the changes proposed represent a comprehensive effort to modernize tax laws and further the public interest in this area.
I have outlined in general terms, Mr. Speaker, the more important tax proposals contained in the bill. Hon. members will be examining the detailed provisions effecting these measures as well as the other relatively minor changes of a technical nature which are included in the bill as we proceed, in committee of the whole, to examine the bill on a clause by clause basis. I will be happy to provide any further explanation and elaboration which members may require to enable them to support these measures when they are put to a final vote.


Sinclair McKnight Stevens: Mr. Speaker, before referring more specifically to some of the provisions of Bill C-22, I should like on behalf of my colleagues and other members of the House to say we are very pleased that the minister has given to a certain extent a state of confederation speech respecting various matters of an economic nature. I am particularly pleased the minister has done this in response to the request made by the members of my party, particularly by the hon. member for Halifax (Mr. Stanfield), who asked that such a statement be made.
Perhaps I will be allowed to make some comments concerning some of the observations made by the minister. Speaking very generally, although I think he was reasonably frank in his remarks I felt there was very little sense of urgency regarding the terrible plight of our business community at the present time. As I recall, Mr. Speaker, the minister dealt, for example, with inflation, indicating that he felt the initial target of an 8 per cent level had been more than met in that in October the rate, compared to the rate the year before, was about 6.2 per cent. The minister mentioned that food prices had been a very significant contributor to that relatively low level of 6.2 per cent. I certainly agree with the minister that in all likelihood food prices are going to start bumping back and that the favourable cost of living level so far as food prices are concerned will not continue.
I should like to emphasize that it is somewhat misleading when the minister takes credit at this juncture for inflation being at 6.2 per cent compared to a year ago and does not comment on the fact that in the last three months inflation actually seems to be on the rise again. In the last three months, on an annual basis, inflation is over 8 per cent, not 6.2 per cent, comparing month by month with a year ago.
In touching on the loss of purchasing power, the minister stated that purchasing power among employees was coming back, that it had risen. Mr. Speaker, I would hope it has. The fact is that the real earnings of employees in Canada declined

by something like $200 between the years 1972 and 1975. If the minister is indicating that his figures reveal that this purchasing power is now starting to come back, then it is about time the government gave the House this information.
Dealing with real growth, I was disappointed to hear the minister state that he felt the estimate he made in his may budget of a growth of about 5 per cent is not likely to be attained. Those who recall the budget debate will remember that we on this side of the House stated that the 5 per cent target which the minister had set was too low, that realistically it should have been a real growth target of 6 per cent. At that time we felt the minister had deliberately shot too low at 5 per cent in the earnest hope that he could exceed it and look well. Now to be told by the minister that the rather low target of 5 per cent growth is not going to be attained is most alarming.
I say it is most alarming because, when we suggested a 6 per cent real growth, we did so in the context of realizing that in 1975 and in 1974 there had been a drop in real growth in the aggregate of 7 per cent below potential. Frankly, Mr. Speaker, this is why we have over 200,000 extra Canadians out of work today. The fundamental lack of real growth of the kind the economy is capable of represents a failure on the part of the government.
I am rather fascinated by how the government's attitude shifts so quickly from telling us that their problems are of an international nature, then of a domestic nature, and then back again to an international nature. How many of us in this House recall that when we suggested the imposition of wage and price controls in the period 1973-74 and the imposition of a restrained fiscal posture and monetary posture, the government told us that this would not work because the problems we were having to live with were of an international nature.
We do not believe that this is true, Mr. Speaker. We believe that essentially the government failed to move at the time that they should have moved. We then found that when it suited their purpose, and in anticipation of bringing in the wage and price controls program, they said that, to and behold, international conditions were not the problem and they shifted back to the argument that the problems were domestic ones and that wage and price controls may have some effect. Today we find, the government's having not attained the relatively low goal in real growth of 5 per cent, that they tell us that it is not their fault, that again the problem is an international one, and the government quote figures from OECD and other convenient figures that they can find among foreign countries.
This is not being responsible, Mr. Speaker. The fact is that the government must accept responsibility for the sad performance of our economy. I am disappointed at the lack of leadership shown for so many years, not only by this minister but by his predecessor, leadership that is apparently not going to be provided if we can judge from the remarks of the minister today.
When the minister dealt with unemployment, he said he had hoped in his budget that unemployment would follow what he called the recent trend line, but that he now feels that it looks as if it is going to fall short of that. I was startled to hear him
November 19, 1976

say that unemployment will range between 7 and 8 per cent in the fall of 1976. If 8 per cent is actually the level, this will mean 800,000 Canadians are needlessly out of work because of a misfiring budget that was brought down in May of this year.
It is not only the sad fact that 800,000 people will be out of work, Mr. Speaker. We must also bear in mind that, according to the latest figures, 30 per cent of those out of work have been out of work for 14 weeks or longer. With figures getting that high, we are getting to chronic, hard-core unemployment. Mr. Speaker, I will deal with this question more fully when I deal with Bill C-22 more specifically, but I believe that hon. members should be reminded of the suggestions we made in May on the budgetary position with respect to what this economy needs. We said we felt there was room to slash about SI billion from the spending estimates that the minister has confirmed today were excessive. We suggested that the money should be used first of all to give Canadian taxpayers a substantial tax cut and, secondly, to reduce the deficit that the minister indicated today will be about half a billion dollars higher than the figure he suggested last May. I am pleased that some of my colleagues on my left are now suggesting tax cuts, Mr. Speaker. Even they have caught on to the fact that it might be wise to stimulate this economy, and that what the minister proposed last May was inadequate.
If I could return to what the minister said today, he just glanced-and I use the word advisedly-at this country's trade problem. He said that the balance of trade has improved. It is misleading to say that our balance of trade has improved without making two or three things clear. First, the current account deficit has not improved in this country. Second, the reason the balance of trade has improved is not so much that manufactured articles have been exported but that raw resources are being exported at an ever-growing rate. The hard fact is that there is almost a $10 billion deficit in manufactured goods as far as our trade position is concerned. For the minister to suggest that merchandise which includes all other articles-wheat, livestock, raw resources, etc.-is in surplus is not being candid without pointing out the dire circumstances that our manufactured export goods are in vis-a-vis the import of several manufactured goods.
The fact is, Mr. Speaker, that every trade account today, other than resources, is in deficit. Our tourist trade deficit is about $1 billion and the invisibles, such as interest, dividends and royalties, are greatly in deficit and will be every month, bearing in mind the amount of foreign money we are borrowing, literally, to pay for consumption in this country. This government is allowing the nation to act like a family that is paying for every day's food by credit card. But there will be a day of reckoning, and hopefully this party will be in power and will be able to do something about it.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: I was pleased that the minister spoke about fiscal matters and said that he anticipated the target he
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announced last May with regard to spending $42,150,000,000 would remain. He then stated that there is room for flexibility in spending. That is just a nice way of saying that they have excess revenue and are trying to figure out how to spend it. If they are sitting on excess revenue, why do they not give the Canadian taxpayer a tax cut? Everyone wants to get the economy rolling, and one of the most effective ways to do it is through tax cuts, especially to those in the lower income bracket. 1 hope the government will reverse its current trend and give the Canadian taxpayers a break.
I notice that the minister said revenue was slower than expected and as a result financial requirements would be up by about half a billion dollars. This is not the impression he left with the House a week ago when I asked if the deficit would be higher. At that time he said no, but apparently it will be, by half a billion dollars. I want to remind hon. members that the savings program we suggested in this House on May 27 would have eliminated that half billion dollar deficit.
The minister has stated that the government is behind on output and employment, but he has not offered any suggestions about getting ahead. He was very cocky when he introduced the budget in May, saying it would create 250,000 jobs. He did not tell us today how many will be created, however, because he does not know. All he knows is that the quarter million extra Canadians he contemplated would be employed when he spoke last May, will not be.
We have had the advantage of reviewing the statistics since the May budget was brought in. When I say it is an advantage, I must also say that unfortunately that advantage has not been given to us in recent months to the extent it could have been. I have reference to the minister's almost studied preoccupation with telling this House and the Canadian public as little as possible about the affairs of the nation.
I am pleased that the minister outlined certain statistics today, but I must add it is high time he tried to regain public confidence and the confidence of business, consumers and labour, that the government knows what direction the country should be taking. Speaking about the middle and longer term prospects, they should have some of the answers on how we can get back to a real growth of, say, 6 per cent per year and how we can get our workers back to work and away from this intolerable situation of 8 per cent unemployment.
Why the secrecy? Why is the minister so hesitant about communicating? For example, when we took an opposition day to discuss the important subject of tariff and the tariff negotiations in Geneva, why did the minister decline to enter that debate and spell out exactly what our negotiating position is? What about the new agreement that is to be signed there which inadvertently is going to lower tariffs or take some other step that will result in Canadian industry, in certain respects, being totally non-competitive and unable to continue? The Canadian public wants the facts. They want to know what the government had in mind, but they are not given the information. I can give another example, Mr. Speaker, in Bill C-5 to amend the Currency and Exchange Act. This is a very important bill which deals with the exchange fund and the interrela-

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tion of Canada and the International Monetary Fund. That act is being amended. To date the minister has not made a statement in respect of that act.


Donald Stovel Macdonald: I spoke on second reading. What are you talking about?


Sinclair McKnight Stevens: Mr. Speaker, the minister says he spoke on second reading. The parliamentary secretary introduced Bill C-5 and the only time the minister spoke was in an attempt to rebut what I said. He made no statement on the record concerning why that bill was being introduced. The harsh fact is that the minister declined to appear before the finance committee upon being requested to do so, in order to answer questions concerning that bill. I ask the minister today why he continues to decline to appear before the finance committee so that we can have a full review of the activities of the exchange fund in relation to Bill C-5. I hope he will change his mind, come to the committee, and give us the information to which we are entitled, I believe, concerning this matter, the functioning of this, and the present Canadian position in so far as foreign exchange is concerned.
There are many rumours in the business community today and I think it is high time the minister set the record straight.


Donald Stovel Macdonald: Rumours of what?


Sinclair McKnight Stevens: Mr. Speaker, the minister says, "Rumours of what?" May I suggest that if he had come to the committee meeting yesterday I could have put the stories to him and could have had him answer them.


Donald Stovel Macdonald: Put them now. Let us hear them.


Sinclair McKnight Stevens: As the minister knows, he is not in a position to reply to the various questions I would like to put to him at this time. It is important to consider Bill C-22 in its proper context. That context basically is in relation to the budget we referred to of last May. Bill C-22 is the most important piece of legislation that will arise from the budget. As a piece of legislation it will be one of the most important bills that will come before this House, certainly this year, and possibly for an even longer period. As we know it is a highly technical type of legislation. I believe most agree it can be dealt with best in committee of the whole.
I believe there are significant aspects of the legislation that deserve comment in an over-view sense, and in fact in the over-view sense that the minister has already entered into in his general remarks concerning the state of the economy. I suggest there were no fresh ideas in the May budget that was introduced. Then, as now, there was no new perspective, long-range or otherwise, that would give Canadians a renewed hope in their future, that would give them hope that our staggering levels of jobless will find employment, hope that our real growth will regain what we lost in the sad years of 1974 and 1975, and that we are losing even in real growth in the

current year. There is no hope that we will regain our position in per capita national wealth among the nations of the world, and there is no hope that our $5 billion current trade deficit will not be even higher than anticipated in May.
Even now as we have learned that an economic recovery has not materialized as the minister predicted in his budget, even now as our real growth stagnates, even now as an additional 50,000 jobless swell our unemployment rolls to a disgraceful three quarters of a million Canadians, even now as the minister repeatedly rejects requests from this House to address himself to our worsening economic position which has rendered his budget clearly out of date, which in many ways means that this bill should be amended, even now when the minister's message is clear-"economy heal thyself' he says- is it any wonder that the non-budget of last May is here represented by 105 pages of the most ho-hum income tax legislation this House will see for some time?
The combined effect of proposed tariff and taxation legislation as indicated by the minister in his budget speech is a net reduction in budgetary revenues of $75 million during our current fiscal year. The minister today made certain comments about the losses of revenue in respect of income tax cut-backs and I point out that he was speaking only in relatively small terms, tens of millions of dollars. We will again propose measures today, as we did last May, that will slash revenue from taxes by more than three times the amount suggested by the minister. One proposal alone, designed to provide an incentive to small businesses, would result in a savings equal to that of the tax and tariff measures combined which the minister announced last May. Our concept of a tax cut to stimulate growth in the sector where it is needed most, the private sector where jobs and national wealth are created, is a concept which has been gaining currency throughout the land since we introduced it six months ago.
The Institute for Policy Analysis in a release on November 2 entitled "Time for Tax Reduction" stated that sluggish economic growth and higher unemployment rates are in the cards unless the government acts soon to revive the flagging private domestic sector. The Institute proposes a fiscal package which includes a 5 per cent across-the-board tax cut in personal income taxes, and a 5 per cent investment tax credit. If such a program were implemented the result, the Institute claims, would be a halt in the rise of unemployment rates early next year at V/i per cent instead of the projected 8 per cent. Perhaps in anticipation of the minister's continuing insistence that inflation, and inflation alone, remains the primary target, the report argues that "the effects of the tax reduction program on the rate of price inflation appear negligible".
I am encouraged by that report. I believe the government, particularly the Minister of Finance, should read it and, instead of confirming that unemployment will go up to 8 per cent, why does he not seriously consider our suggestion of last May of a tax cut to stimulate the economy, and allow that unemployment level to be at least more moderate than he expects?


John Allen Fraser: The minister has just discovered that.
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Sinclair McKnight Stevens: Yes, and the New Democratic Party which is always slow on these things has discovered that tax cuts would be in order. The simple fact is that the government always seems to be about a year behind our advice. You will recall, Mr. Speaker, that we advised a restraint program, including an incomes policy, but it took them a little over a year to finally get around to the point of doing something. Unfortunately the circumstances had changed and they did it at a time when they should not have done what they did, namely, bring in a program that would have been more suitable about 12 or 15 months earlier. Now they appear to be doing exactly the same thing. They brought in a budget which we suggested should have contained more tax cuts. They declined to bring in those tax cuts. Now, six months later, they still decline to give those tax cuts. They may do so six months from now, but that may be too late to avoid the type of economic behaviour we are talking about today.
Wood Gundy Limited is also among those who favour stimulating the economy through tax cuts. In a forecast published in October of 1976 that firm examines two alternative scenarios for the Canadian economy through 1978. What are the results? The first scenario is that if we rely on a sluggish upturn in the U.S. economy-which I suggest is the essential feature of the May budget-our export volume will increase by only 3.9 per cent and 4.3 per cent in 1977 and 1978, instead of 7.5 per cent and 5.7 per cent. The Wood Gundy report states in addition that the trade deficit will actually climb to around $6 billion.
If I may, I should like to quote what Wood Gundy predicts, as follows:
The domestic economy would weaken rapidly, real consumer spending growth would slow to only 2 per cent in 1977 and we predict no real growth in business capital spending in 1977.
The real gross national product in this scenario will rise by less than 1.5 per cent in 1977. This is the urgency of what we are facing, and yet 1 sense a strange complacency on the part of the minister. Somehow he is bound and he cannot move, and yet more and more economists are saying that he must move, that he made a mistake, and that he should move for the benefit of those who deserve better than to be without work in this fine country of ours.
I would also point out that a tax cut in all likelihood would lower our trade deficit. The Wood Gundy figures anticipate an approximate tax cut of 3 per cent, while the proposal we put to the House last May recommended about this same amount so far as the personal income tax cut is concerned. Finally, the Wood Gundy report states:
We do not believe that the rate of inflation would be significantly worsened in 1977 or 1978 by such a tax cut policy.
In short, we can continue hopefully to improve our inflation performance, and I would even suggest that if we could make up our mind to disband the Anti-Inflation Board this would allow inflation to go down quicker than is the case at present. That is the silly thing about the present government stance.
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We have a relatively high level of inflation, certainly higher than in the United States, and at the same time our unemployment levels are totally unacceptable. Surely the answer is to regulate the economy in the form of business regulations, to allow those who wish to invest to get on with job creation in this country, to do their job, and to get the economy rolling.
Let us look at our proposal which we brought before the House six months ago when, incidentally, we predicted an increase of 50,000 jobless as a result of the budgetary measures brought in by the minister, and I would recommend that hon. members read Hansard. We ask hon. members to bear this proposal in mind when they consider the various aspects of Bill C-22.
The tax cut favoured by my party is based on possible savings of $1,025 million, and that was what we thought could and should have been saved. Today I emphasize again that the minister has indicated he will not go over the $42.1 billion level as he said in May, but now he admits they have some leaway, some possible expenditures which they can re-route and, as I said before, that is a nice way of saving when they have a little too much money and they are trying to figure out where to spend it. Let us give it back, as we suggested, in part to the Canadian taxpayer. For the sake of brevity I will not now repeat the figures for the savings, but I should like to refer hon. members to pages 13895 to 13900 of Hansard of May 27 for a detailed explanation of the program which we felt at that time could be brought in to save Canadian taxpayers some money.
Of the $1 billion we proposed to save we suggested that a tax break of $250 million should have been given to the Canadian taxpayer who is increasingly paying the shot for this administration's mismanagement. Hon. members should not forget that aggregate personal income taxes based on the May budget were anticipated to jump 26 per cent this year alone over last year. In 1968, the year the Prime Minister took office, personal income taxes represented 34 per cent of the total revenue received by Ottawa, while corporate taxation represented 15 per cent. Today personal income taxes supply an amazing 53 per cent of Ottawa's take, while the corporate sector still accounts for that 15 per cent. In short, it is not the fat-cat, the wealthy, or the vague corporate entity which pays; in the main it is the average hard working Canadian who shoulders this wasteful and ineffective administration's costs.
We suggest, as we did last May, a 10 per cent tax credit, which would be about $100 million for those earning $8,000 or less. The remaining $150 million of our tax approach would have been given in credits scaled down appropriately in relation to those earning between $8,000 and $16,000.
We believed, and we still believe it is time to give the taxpayers such a break for three very good reasons: first, the real gross national product per employee in Canada, as I have indicated, actually went down by $200 since 1972 compared to 1975. In 1975 the average employee earned $11,645 in real dollars compared with $11,848 in 1972. Surely it is wrong to deny a tax break to such employees who are being required to restrain their wage increases.

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Second, as we have pointed out, this administration will reap a bonanza in personal income tax aggregate increases which this year will total $3.3 billion. An 8 per cent reduction in this tremendous bonanza, as we suggested, would not appear to be out of line.
Third and most important, the government has confirmed to the minister today that it does not need the money which we budgeted for last May.
There are other measures as well which we believed in May would stimulate the economy and provide the jobs and growth that are lacking in the country. Once again I would refer hon. members to Hansard of May 27 for details on our $100 million incentive to the private sector to encourage it in the expansion of its research and development activities. We also suggested that there should be a $75 million plan to encourage export sales, especially in the case of small businesses. I emphasize that both would have been simply financed out of the $1 billion savings that we felt could have been made in the spending estimates which were put before us last May.
As I indicated earlier, the provisions of this bill are rather detailed and I would remind hon. members that my colleague, the hon. member for Edmonton West (Mr. Lambert), will be dealing with most of these provisions extensively. This is a fairly technical bill which contains 105 pages and 86 clauses of tax amendments, and surely most comments on these sections should be best left to the committee of the whole stage during which my colleagues and I will have much to say about individual provisions.
One thing which is perhaps overlooked is the question of the withholding tax on corporate and provincial bond issues. As I am sure hon. members are aware, the withholding tax on corporate bond issues was lifted on June 23, 1975, and the same tax had been lifted earlier, on April 15, 1966, as far as provincial bond issues were concerned. Unless there is a change in legislation, both taxes, as I understand it, are to be reinstated in 1979. As we have noted before in this House, the result of this action has been the rapid growth of foreign debt financing, from zero in the second quarter of 1975 to nearly $7 billion through September of this year. Not only has the holding tax been removed, but this government has also embarked on strange interest structuring, and as of today the prime lending rate in Canada is a full 4 per cent higher than in the United States.
Morgan Guaranty Trust in New York lowered its prime rate today to 6'A per cent. In this country we have had a 1014 per cent prime lending rate since March of last year. The Americans have been lowering their rate, which was already in the 6 per cent rage last March. They have been lowering their level, and yet we have had a constant 10 'A per cent rate, which is partly a result of no witholding tax and partly a result of the differential which has resulted from a tremendous inflow of debt capital-and I emphasize debt-to this country which has been used by the government mainly for consumption purposes.

It will require years for us to pay the interest load before we do anything as far as our trade balance is concerned. That is just nuts. It should not happen, yet that is exactly what is happening, and this government has allowed our current account trade deficit to get sharply out of line. Dealing with this I point out that in the second quarter it is anticipated that this will continue, and if I may I would like to refer to the chief economist of the Royal Bank of Canada, Dr. Ralph G. M. Sultan.
Dr. Sultan estimated that in the first quarter of 1976 Canada sustained a net inflow of almost $2.5 billion, or nearly $10 billion at an annual rate, of foreign borrowings. This borrowing in the first three months alone will cost Canadians a tidy sum, nearly, $175 million per year in interest payments, year after year into the foreseeable future. Put another way, this three months of financial cover will cost Canadians each year about two months of their total lumber exports, or about one month of their total wheat exports, or close to one month of their total mining and concentrates exports. Partly because of the suspension of this tax provision Canada accounted for an amazing 46 per cent of all foreign bonds and 22 per cent of all Eurobonds in the first quarter of this year. If we may, we will say more later on this subject.
I would like to touch on capital gains. This party has on repeated occasions called for indexing of the capital gains tax. We have always felt that to exclude this tax from the principle of inflation adjustment, a principle which is widely implemented in many other areas of taxation, is unfair and demonstrates how easily the "soak-the-rich" philosophy backfires, to the detriment of middle income groups.
From information now available from the Department of National Revenue for the first three years since the introduction of a capital gains tax, we now know that the overwhelming majority of taxpayers reporting taxable capital gains earned a total income, including these gains, of less than $25,000. In 1972 and 1973, 86 per cent of those taxed on capital gains were the non wealthy. In 1974 this percentage was 83 per cent. In all three years this middle income group paid between 30 per cent and 40 per cent of the total capital gains tax which was collected by federal authorities. We will be looking more closely at this tax, especially since it now seems possible that this tax may have contributed to the shrinking of the Canadian pool of risk capital so necessary to maintain a growth rate which could reduce unemployment. Moreover, it has already encouraged the export by Canadians of their badly needed investment capital.
Our constituents have also written to us, and undoubtedly to other hon. members of this House, concerning certain clauses dealing with the effects of the Income Tax Act on Ontario farmers, particularly clauses 70, 73 and 80. We will examine this as well at the appropriate time.
In conclusion, I again remind hon. members that as we look at this bill in the coming weeks we will view it for what it surely is: the residual graffiti of a budget which, six months after presentation, has been discredited by some of the most severe economic developments in 15 years. It is in this context
November 19, 1976

that we have offered the House and the country conservative and constructive alternatives.


Some hon. Members:: Hear, hear!


Mr. Max Saltsman (Waterloo-Cambridge):: Mr. Speaker, after listening very carefully and with great interest to the Minister of Finance (Mr. Macdonald) and the hon. member for York-Simcoe (Mr. Stevens), I feel that I simply have to respond to what the hon. member for York-Simcoe had to say about the choice which is being offered the country. It seems to me, now that capital punishment has been abolished, we have a choice between being drawn or quartered and, as far as I am concerned, that is not much of a choice.
Having listened to both hon. gentleman it seems to me that they both are oblivious to something we must take into account. Both of them are talking about solutions which are disappearing from this world. 1 hate to call upon the statement of the Prime Minister (Mr. Trudeau) for confirmation of what I am trying to say, but what the Prime Minister said in his speech around Christmas last had a great deal of truth to it. It is unfortunate that he has lost his nerve, or his party has lost its nerve and has not proceeded accordingly.
What I am going to attempt to show in my remarks this afternoon is that both the government and the official opposition are arguing in a vacuum. They are arguing like so many generals. They are fighting the last war rather than seeing that we have a completely new situation facing us in economics, and neither of them seems to be prepared to deal with it.
If we consider past recessions and recoveries, a number of things become evident. I think it is important to take that kind of historical look in order to place what I want to say in perspective. I will deal just with the recent past. I will begin with the ending of the second world war. Much of the prosperity then was based on a pent up consumer demand which had not been filled during the war. We were on a wartime footing, and there was no time to manufacture things like washing machines, tires, or even cars themselves, and for many years we were able to keep the economy going on the residue of savings which had been made during the second world war and the demand for consumer goods.
Following that there were a number of wars, and wars always seem to be good for prosperity, as dreadful as they may be in terms of the human condition. That is the one way the western world has maintained a semblance of prosperity. There was the Korean war and the war in Viet Nam. Then there was the great baby boom. There was growth which stimulated housing, the construction of schools and all kinds of other things, and in between there were great technological advances. There was the advent of television, both black and white, and colour, everything that went with that, and the whole electronic era with all the new gadgets and gimmicks. Cameras also came on to the market, and there was tremendous expansion.
But what is the situation today? I am not going to say that the end of the technological invasion is here; I am sure more advances will be made. A number of things have already
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happened. Our society has altered in a very fundamental way, but there are still many people who have not had their needs satisfied. There is still demand for consumer goods, but almost invariably that demand exists among people without money to buy things.
The government encourages those who are reasonably well off to save their money; consequently much money is saved and not spent on consumer goods. The post-war baby boom is largely over, the population growth has started to slow, and the government has reduced the rate of immigration. All these factors contributed in the past to economic growth. This country, the United States, the European Common Market and most other industrialized countries are in the midst of a recession. There can be no doubt about it. We have severe unemployment, and the minister this afternoon did not paint a happy picture of our economy. Our prospects are not cheerful. The question is, how are we to climb out of the recession? We shall need to do something fundamentally different from what has been done previously.
I was sorry to hear the Minister of Finance use strikes as a phony excuse for our high unemployment figures. He tried to say that well, yes, the unemployment figures are high, but some part of the figures, can be attributed to numerous strikes. We know that strikes contribute to unemployment Figures; but even if you took all strikers out of the unemployment figures, or reduced unemployment figures by 100,000 to compensate for people on strike, you would still be left with a horrendously large figure.
A Canadian Press report in one of this afternoon's newspapers shows that the number of job vacancies has dropped in the last three months from 59,700 to about 56,900. When you compare the number of job vacancies with about 679,000 people looking for work, you can see that the picture is dismal. I suppose there was a time one could argue, especially when the job vacancy rate was high, that some people did not want to work. Present day figures show that this is not so. People want to work. The current job vacancy rate takes into account little more than normal seasonal shifts and people changing jobs. What the unemployment figures do not show, and they would be considerably higher if they did, is the number of people who have dropped out of the labour market or are no longer registered as unemployed because they have given up hope of finding a job.
Conditions are changing; I do not know if the government and hon. members to my right are aware of the changes taking place and are prepared to act accordingly. I see no evidence to show that the Minister of Finance is concerned about what is happening and is prepared to make fundamental decisions necessary for correcting unemployment. He will need to act at some point; why he delays I do not know.
As the hon. member for York-Simcoe correctly said, when it suits the government's purposes it will say that a difficulty really is an international problem and we can do nothing about it. The truth is that these are not international difficulties; we

November 19, 1976
Income Tax
are considering a domestic problem and the government must intervene in the economy. Unemployment does not happen in the abstract. True, we are not the only country with unemployment difficulties; other countries experience them as well. When we suffer from inflation, other countries suffer from it as well. Yet surely the government can do certain things to improve conditions in this country. So far this government has done little in this regard.
Let me indicate some of the things which must be taken into account and which are not being considered. First, given unemployment of the dimensions I have outlined, the first priority of any government is to get people back to work. But in his remarks to the House the minister was still beating the anti-inflation drum, saying that inflation is the most serious difficulty we face. I am aware of the existence of inflation; but was not the anti-inflation program established to take care of inflation? Has not the government taken pleasure in pointing out that, in its judgment, inflation has been controlled? If that is the case what argument has it for not expanding the economy right now? Inevitably any system of controls such as brought in by the government will contain elements of unfairness. If there is any justification for such controls it is this: they are to be used as a tool, as an instrument for doing something worth while. That "something worth while" means getting people back to work.
The government must decide if it will encourage resource industries or encourage manufacturing industries. So far the government has always said, "We will encourage both. But you cannot do both. Bill C-22, instead of encouraging manufacturing as it should be doing is offering advantages for resource speculators and encouraging them to get back into the business. Mr. Speaker, we cannot provide jobs for our unemployed merely by encouraging resource industries. We should not encourage resource industries to produce more than we need for our domestic use and for meeting our commitments to foreign nations. Stimulating the resource industries is a losing battle, and by encouraging speculators to return to that field Bill C-22 is waging a losing battle. How many jobs will we create if we bring the speculators back? I suggest that the more resources we export, the higher will be the value of our dollar; this means that we shall bring in increasing quantities of imports in the form of manufactured goods and there will be still fewer jobs in Canada. That is a prescription for continued, chronic unemployment, yet the government persists in that kind of policy.
The government argues that it is encouraging manufacturing industries by giving tax breaks to small businessmen. My friends on my right seem to be of the mistaken view that the tax-break policies they advocate have been echoed by the NDP. Let me make it clear that when we talk about tax breaks we mean something entirely different from what the Conservative party means when it talks about tax breaks. Although the hon. member for York-Simcoe seemed to make his obeisance to fairness by suggesting that his party, if in power, would give tax breaks to people at the lower end of the income scale, he made it clear that most of the money he

would be prepared to forgo in taxes would go to encourage investment, that is, to encourage people in the private sector to speculate. I see the hon. member shaking his head. Surely the whole tenor of his remarks was that he would encourage the private sector to make additional investments in order to get the economy going. I cannot be wrong in that, surely.


Sinclair McKnight Stevens: The main impact of my remarks concerned the transfer tax credit.


Max Saltsman: Yes, but the hon. member's policy would mean substantial benefits in other areas as well. Both the government and hon. members to my right keep saying that we must stimulate investment, and in the last number of years the government has made substantial concessions in this respect by providing over-generous depreciation allowances to business for capital investment. It has lowered corporate taxes year after year in order to provide business with internal revenues for increasing investment. If one wanted to be cynical one could show that there is an inverse relationship between tax concessions and unemployment. As the government has lowered the business tax rate, unemployment has climbed. That is the only conclusion one can draw.
The point I make is this: There is not any direct relationship between a tax cut, a tax benefit given to business, and the amount of employment created. During the last number of years when the benefits given to business have been of the highest order, we have had the highest levels of unemployment. They just do not go hand in hand.
If you take that kind of argument to its conclusion, you are talking about an international trade war. If one country lowers its corporate tax rate, its competitors are tempted to do the same. In fact the justification for lowering our tax rate was that the Americans had introduced the DISC program and we had to follow suit. It is a losing game, especially when it does not result in employment.
According to existing evidence our problem is not that we are short of capital, capital goods, or that we can get prosperity by encouraging capital investment. The latest figures that I have seen on plant utilization in Canada show that we are limping along at something like 80 per cent of capacity. If there were consumer demand in our society, our present factories could put every single Canadian back to work without additional investment. That is because the rate of utilization at the present time is so low.
This week a friend of mine handed me a paper which I think is important. I argue that even using the standard concept of capital utilization, we are far from using what we now have. We could absorb the unemployed without any real incentives to additional capital formation. There might be some bottlenecks, some things that are not perfect. Some plants may now be operating at 100 per cent capacity while others might only be at 60 per cent. Obviously there are some problems of that kind. However, if the market is good, the demand is good, and taxes are reasonable-not give-away taxes, but reasonable
November 19, 1976

taxes-those industries can respond without the general sort of give-away programs the government has brought into play.
I wish to refer to the paper that was brought to my attention. I ask hon. members not to be frightened by the title, "The Theory of Capital Utilization and Idleness". It appeared in the Journal of Economic Literature, 1974. The author is Gordon C. Winston of Williams College. I read from page 1,301 which I think is the pertinent section. The point Dr. Winston is making is that even though it looks like there is full utilization of capital, most capital remains idle or is not used under the best of circumstances. I quote:
-and more important for the present discussion, the highest level of utilization reached (in 1954) was only a meagre 22.9 per cent of the time ... Put more bluntly, the United States manufacturing capital stock was idle over 75 per cent of the time, even in the best of years.
I realize that I am using a study that was carried out in the United States. However, it is not irrelevant to our discussion. If anything, the figures from a Canadian study would be more startling because, from the information we have, capital utilization in the United States is much better than in Canada. The point that is being made by a statement of that kind is that, when you are into a recession, the problem is not the absence of capital or the equipment, but how you couple demand to existing and potential capacity. That is where the failure has taken place.
Reverting to what I said earlier, the demand, if it is going to take place in the future, is of a different nature than that of the past. I do not see the same kinds of situations that gave relative prosperity in this and other countries following World War II continuing. I do not see that it is going to be coming from the private sector.
If we are going to be prosperous there will need to be greater government intervention, greater planning of our economy. If not, we will be doomed to the abnormal and unconscionable levels of unemployment we are now experiencing and which show every indication of becoming greater and greater as this year goes on. We will have to find a different tax system and a different method of income distribution if we are to succeed.
There was a medieval theory that was popular for many years. If the rich consumed richly, the poor would benefit. It was a very self-serving kind of theory that only the rich believed and only the rich could find evidence to support. In fact for centuries the theory simply was not true. It was simply a justification to support those who were well off against those who were not so well off.
It was not until we got political democracy and the ordinary person had a greater say in the management of the affairs of state that we were able to move toward the prosperity of the twentieth century. That was brought about by mass consumption by the little man, a lot of it because we were able to tax much of the benefits of the better off. That process must continue.
Unless we move to a more egalitarian kind of society and unless we are prepared for a greater redistribution of income, our society cannot be prosperous again. My party certainly
Income Tax
hope we can persuade the Canadian people that redistribution of income and equality of conditions is a good thing. To some extent we have been successful. Perhaps one reason why our argument has been accepted over the years is because it is not only a good thing from a moral point of view, but also from an economic point of view.
If it were not for the present level of redistribution of income through such programs as family allowances, old age pensions, and unemployment insurance, we would be in a much deeper recession. Rather than what we are in now, we would be in a bad depression like we had in the thirties.
If you compare the degree of suffering and hardship in one country against another, let us say the European Common Market and the countries in North America, you will find that the degree of hardship and frustration is almost in direct relationship to how much of a social welfare program those countries have instituted. It is small wonder that some of the greatest hardships being undergone at the present time, in terms of suffering by workers, are being experienced in the United States. Support programs which exist in Canada do not exist in the United States to the same extent. The least amount of suffering is taking place in the Scandinavian countries and Germany where there is an involvement in social democratic ideas.
I am suggesting that we need to find a new base for prosperity, a good base, in my view a moral base, and a much better base than having three quarters of a million people out of work. There are a number of things we could do. There might be tax cuts for people with low incomes-tax credits, rather, because tax cuts tend to help those who are better off rather than those who are worse off. If we really wished to improve the lot of the very poor we could introduce a system of tax credits.


An hon. Member:: Tell Broadbent.


Max Saltsman: I believe my leader has already made this point.
As a further step we should be thinking about providing for earlier retirement. We in this party did come close to persuading many in this House and in the country of the merits of lowering the retirement age for women to age 60. I believe that to some extent women's lib interfered with that, but aside from that I believe the government thought it could get off more cheaply by a formula under which, if one spouse was 65 and retired, and his income did not exceed a certain amount, and the other spouse had reached the age of 60, they would both be eligible. I am sure somebody figured out how grand this would sound to the public and how little it would cost the federal treasury. That is better than nothing at all, and on that basis I shall not denounce the arrangement. But relatively few people can profit from that program. I think there is a great deal to be said not only for lowering the age of retirement to 60 in the case of women but for lowering the retirement age generally to that figure.
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November 19, 1976
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Many people have asked me this question, and I am sure they have addressed it to every member of parliament. They say, "I have worked all my life, 1 have worked in the workshops for 35 or 40 years; why should I continue working while 750,000 people need jobs and have to be supported by unemployment insurance benefits; would it not be more decent, more humane for me to retire at an earlier age and give work to young people?" What is the answer to this point of view? It is a perfectly sensible approach. It might be argued that an early retirement program of this kind would cost money. Well, it costs a great deal of money at the present time to support unemployed people. The cost is horrendous. I believe, of course, that the state has an obligation to provide jobs; if the state does not provide jobs it is evidence of failure on the part of the state, because full employment is possible. If it fails to provide jobs, it has an obligation to set up support programs.
A serious characteristic of unemployment, if it persists too long and if support programs continue too long, is that many people become accustomed to being supported and not having to work. This is not good for them, and it is certainly not good for society. As members of a social democratic party we take the view that the state has an obligation to provide jobs in the same sense as people have an obligation to take those jobs. It is the greatest mismanagement of the economy to continue a situation where jobs are not available, and thus increasing numbers of people are inclined to regard living on support programs as a way of life. It is tragic from that point of view, but it is also tragic from the point of view that the money spent could have gone to help people who are poor, people who are old, people who are disadvantaged. While some of those who are supported through unemployment insurance benefits may be poor, and while some of them may be disadvantaged, they are not all in that category. Numbers of them have reasonably high incomes. It is a destruction of any ordinary moral concept that humanity should continue in this way.
There are other things we could do. For example, we need housing for senior citizens. Now is the time we should be building such accommodation. From what I have been able to see, the senior citizens' housing we have built so far has been of good quality and highly acceptable. We should be increasing the amounts paid to the disabled, to those who are no longer capable of forming part of the labour force. It would be much better for society to pay the money out in that direction. It would not be saved. That money would be spent on goods and services and it would provide employment for those who are now unemployed.
We should be increasing family allowances. If we look at the statistics on poverty we find that one of the great causes of poverty is that people have children when their incomes are not sufficient to look after those children. The market system does not care about the responsibilities of a father or mother in terms of the number of children they have to look after. The market system pays the same rate for a young single man as for a man or woman with family responsibilities. In an age in which standards of living are improving, it is only just that we

should redistribute income through family allowances. It is better to do it that way than through other programs.
If we lower the age of retirement, if we improve family allowances, if we start to construct the things we need, both now and in the future, we shall be able to put people back to work. We shall not be able to do it any other way. We do not want to start wars. I would prefer to live this way, or even worse, than see prosperity brought on through war.
To judge from the government's attitude to immigration we cannot expect in future to see a continuation of the waves of immigration which in the past provided much of the impetus for development, much of the demand for housing and consumer goods.
[ Translation]


The Acting Speaker (Mr. Ethier):: Order. It being four o'clock the House will now proceed to private members' business as listed on today's order paper, namely notices of motions, public and private bills.


PRIVATE MEMBERS' MOTIONS
The Acting Speaker (Mr. Ethier):: Notice of Motion No. 3. The hon. member for Levis (Mr. Guay).


Some hon. Members:: Stand.


The Acting Speaker (Mr. Ethier):: The motion stands at the request of the government.
Notice of Motion No. 4. The hon. member for Ottawa-Vanier (Mr. Gauthier). Shall the motion stand?


Some hon. Members:: Stand.


The Acting Speaker (Mr. Ethier):: The motion stands at the request of the government.
Motion No. 5. The hon. member for Brandon-Souris (Mr. Dinsdale).


An hon. Member:: Stand.


The Acting Speaker (Mr. Ethier):: The motion stands at the request of the government.
Notice of Motion No. 7. The hon. member for Humber-St. George's-St. Barbe (Mr. Marshall).


Some hon. Members:: Stand.


The Acting Speaker (Mr. Ethier):: The motion stands at the request of the government.
Notice of Motion No. 8. The hon. member for Selkirk (Mr. Whiteway).


An hon. Member:: Stand.
November 19, 1976


The Acting Speaker (Mr. Ethier):: Motion stands at the request of the government.
Notice of Motion No. 10. The hon. member for Egmont (Mr. MacDonald).


An hon. Member:: Stand.


The Acting Speaker (Mr. Ethier):: Motion stands at the request of the government.
Notice of Motion No. 11. The hon. member for Vegreville (Mr. Mazankowski).


An hon. Member:: Stand.


The Acting Speaker (Mr. Ethier):: Stands at the request of the government.
Notice of Motion No. 12. The hon. member for Dartmouth-Halifax East (Mr. Forrestall).


An hon. Member:: Stand.


The Acting Speaker (Mr. Ethier):: Stands at the request of the government.


WEST INDIES
Mr. Heath Macquarrie (Hillsborough) moved:: That, in the opinion of this House, a special Joint Committee of the Senate and the House of Commons be appointed to consider the advisability of taking an initiative in seeking to promote closer relations with the former British possessions in the West Indies, such as the Turks and Caicos Islands, which have not yet attained independence, and further that if the residents of any of these islands so desire it, economic and political union of these islands with the Dominion of Canada be negotiated at an early date at the proper constitutional levels.
He said: Mr. Speaker, this is not a new proposal for me. In fact the general area has been of great interest to me since I came to this House, as it was indeed of interest to me in the misty era before I arrived.
In the years following Confederation the Dominion of Canada was limited in its control of its foreign policy. Our international outlook never really got beyond the United Kingdom and the United States. But as we matured and moved beyond our total absorption with our relations with these powers, our first meaningful contacts were with the area then described as the British West Indies.
In 1885 Sir John A. Macdonald appointed Sir Francis Hincks, former governor of Barbados, as his adviser on West Indian affairs. In 1889-1890 Sir George Foster, Macdonald's finance minister, visited the area. A preliminary conference was held in Barbados in 1890. Later a royal commission was set up including two ministers of the Laurier government. In 1912 the first Canada-West Indies conference was held in Ottawa. In 1920 another conference convened in our capital,
West Indies
and another in 1925. From these flowed special trade and tariff arrangements. One might say that the last in the conference series was that of 1966 presided over by our late Prime Minister and leading internationalist, the Right Hon. L. B. Pearson.
Thus it is in our historic tradition that I advance a plea for special consideration for our southern commonwealth neighbours. It is not inappropriate that today's motion should come from a member representing a part of Atlantic Canada. Our people had close commercial ties and warm relations with the Caribbean community long before Confederation. If I may mingle my commodities if not mix my metaphors, this was in the golden age of wooden ships and iron men. I am glad that my seconder is also from Atlantic Canada because he knows the value of the ties which bound our two regions together, for we sold them codfish and brought back rum, and probably got the better part of the bargain, nutritionists' views to the contrary notwithstanding.
In those days our ocean-side position was a stimulus to commerce and not a barrier, as in these days of exorbitant freight rates, user pay policies, and other harassments of the geographic extremities of this country.
I gave some thought to rewording my motion since the Turks and Caicos matter is not now so timely as it was two or three years ago, but I refrained from deleting this portion lest I be seen to agree in any way with the cold, callous statement made by the government on April 10, 1974. I found this statement paternalistic in the extreme, suggesting that the residents of these little islands really didn't know their own best interests. 1 also found it somewhat difficult to accept the logic that anything which financially favoured small communities and not more populous neighbours would be wrong. Surely we do not, for instance, adopt in our Cl DA programming the notion that, unless we can universalize our efforts, we do nothing.
It may well be that there has been a great diminution of interest on the part of the people of the Turks and Caicos Islands in any kind of special association with Canada. But, apart from union, this country could have done much more to help those very small islands. In this connection I have made representations to former ministers and to the president of CIDA, but I regret to say without too much success.
There is a tendency today to leave human problems to vast world bodies. Too often one gets the feeling that if we can just construct the proper, elaborate international agency, the gap between the developed and developing world will disappear. Of course, we must improve our international concepts and programs, but there will still be a vital area for bilateral arrangements and we must never overlook the special responsibility which special opportunities provide.
I have always believed that with the Commonwealth Caribbean we have both. We also have special ties, and I hope a special interest. Those who cherish the British parliamentary tradition should note the progress and process of development of the small political communities in the Commonwealth Caribbean. Some have moved to full independence and have
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November 19, 1976
West Indies
taken their place in the Commonwealth, the U.N. and other world bodies. Often in the face of great disadvantages they have built viable economies. More important still is the development of their political institutions. With certain exceptional deviations, the parliamentary structure has developed and flourished. I have often been impressed by the manner in which veritable mini-states have been able to make the parliamentary system work. It is a credit to the people and, with a certain partiality, I would say to the system also.
The main purpose of my motion is to indicate to the people of the Commonwealth Caribbean that our parliament and our people still regard them as very special friends and that, without seeking to intrude upon their judgments on their own future development, we are ready to discuss with them helpfully and cordially any matters up to and including a closer association in the economic or political sphere.
In a debate in an earlier session on this motion I was accused of being an annexationist or imperialist. I was made to feel like Joseph Chamberlain, Bismarck, King Leopold I of the Belgians, or Genghis Khan. To avoid repetition and to assume that this time I may be criticized for other motives, I point out that the motion contains the expression "if the residents of any of these (non-independent) islands so desire it".
I am not a conquistador. I am not an imperialist. I say it again: I am a gentle parliamentarian of Canada trying to express the best intentions toward areas of real concern to this country. I am not interested in a colonial empire for Canada but I am interested in giving or renewing a high priority to an area of the world in which we are uniquely able to be helpful. The communique of the 1966 Canada-Commonwealth Caribbean Conference, Article 23 declared:
In keeping with the intention of the Heads of Government that the consultation instituted at this conference should be continued, it was agreed that a meeting of the governments represented should be held, at a date to be fixed and at an agreed venue in the West Indies for a general discussion of Commonwealth Caribbean-Canada relations and to review progress.
Ten years have passed and no such summit meeting has been heid. I think this is most regrettable. I realize that the Commonwealth Caribbean states have formed or joined other associations, but I am far from convinced that any diminution of the special relationship between our two areas will be advantageous to either.
I would like to see Canada take an initiative on this. Meanwhile a joint committee would serve to signal a rebirth of interest and a renewal of amity on our part.
I have suggested a joint committee because I have the highest regard for a study made six years ago by the foreign affairs committee of the other place. They prepared a valuable report after hearing academics, economists, political leaders, industrialists, businessmen and community leaders. Its recommendations were important, and I believe one of the most important ones was this:
The possibility of constitutional links between Canada and the countries of the Caribbean area should be re-appraised by the Canadian government. This prospect now seems remote, but the Canadian government should be prepared to discuss proposals for closer economic and political association between Canada and countries of the area.
Another, No. 5, is also important.
The excellent and highly competitive rums of the Commonwealth Caribbean should receive as much assistance as possible in the Canadian market. The 1966 agreement to implement labelling regulations went into effect on July 1st, 1969, but does not appear to have led to any dramatic increase in imports. The committee recommends that the Canadian government reassess the effectiveness of this measure and that the mutual advantages to Canada and the Caribbean countries concerned be discussed at the ministerial level with the respective Canadian provinces.
I do not see how anyone could read that statement of the Senate committee and suggest that the Senate is not a useful body. I think in the interests of trade and of the digestive system of Canadian citizens, the emphasis upon the fine quality West Indian rum is well placed. Rum is not the only commodity of importance. There are many products from the West Indies which could be purchased by Canadians. In all of the conferences I described at the beginning of my remarks one of the important issues raised was the question of how we could take advantage of the things they produce which we do not. Fifty years ago Robert Borden said that as we do not produce bananas and sugar we should buy them from the West Indies.
In my lifetime, Mr. Speaker, one of the great national blunders has been the decline of our merchant marine. It would be in our interest to get the shipyards open again and revivify the north-south commerce on the Atlantic seaboard.
These are but some practical considerations and some questions which could be weighed and discussed in an atmosphere of good will by parliamentarians and peoples of the Commonwealth Caribbean and of this Dominion. I offer this as a practical suggestion, Mr. Speaker.
Today a newsman asked me if I did not think it incongruous that we should be discussing the remote possibility of our country being enlarged at a time when people thought it might be diminished. I said that I do not think it will be diminished because I think the same processes of moderate judgment and good will will hold our country together. I would also subscribe to what Mr. Pearson said more than once however: if we have reached the stage in this country that we are completely absorbed in our own affairs and neglect our responsibility to the world, then indeed we might be in grave trouble.
I think good citizens of Canada and good parliamentarians of Canada must embrace the words of John Keats, long, long ago, and describe themselves as those to whom the miseries of the world are misery.
I am glad to submit this motion, Mr. Speaker. While I do not think hon. members opposite were listening, I hope the record will show that this House on this Friday afternoon spent some time directing its attention to a very important part of the world. I urge support of this motion as a gesture of good will to our very, very close and very, very important friends in what I might call the southern commonwealth neighbourhood of this hemisphere.

November 19, 1976


Mr. Fernand E. Leblanc (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, first I would like to congratulate the hon. member for Hillsborough (Mr. Macquarrie) for the interest he shows in international events as he once was a radio commentator on international affairs, member of the Canada-U.S. and International Political Sciences Association and of the Canadian Institute of International Affairs. He is also the author of several very interesting articles on international affairs. He has also been a member of the UN Canadian Association since his election in 1957. He is a Canadian delegate to the UN General Assembly. So one understands his interests for the international scene because he is a man dedicated to Canada's external affairs.
I do not think it would be necessary to read over motion No. 13. However I want to draw the attention of hon. members on the last sentence which I would like to quote:
-economic and political union of these islands with the Dominion of Canada be negotiated at an early date at the proper constitutional levels.
I am pleased to note that that resolution was tabled on October 20, 1976, that is before the results of the election of November 15 last in the province of Quebec were known. It is strange to see that certain Canadians would seem to want to separate from Canada and that non-Canadians would want to join the most beautiful country in the world, and one sees that non-Canadians from the Turks and Caicos Islands also want, through the hon. member for Hillsborough, to join our beautiful country that we all love and respect so much.
However I would not want my words to be construed as meaning that I am convinced that Quebecers want to separate from Canada. On the contrary, it is now recognized and admitted that the majority of Quebecers strongly want to remain within our confederation made up of a number of provinces and known as Canada. Furthermore, I think it is appropriate to point out the effort of the hon. member for Yukon (Mr. Nielsen), a Progressive Conservative, a member of the same party as the hon. member for Hillsborough, who would now want the Yukon and the Northwest Territories to become provinces of Canada.
As far as I am concerned, Mr. Speaker, I would certainly have a personal interest in Canada uniting with those islands as in bad times we might move Parliament to those islands and that might help me avoid flu like I have now, and I would be quite happy besides that. But, seriously speaking-

-as mentioned by the hon. member, this intriguing idea has been discussed in this House before, in May, 1975. The then secretary of state for external affairs had tabled a statement on a similar proposal in April, 1974. Earlier in that year a private member's bill had been introduced by the hon. member for Waterloo-Cambridge (Mr. Saltsman). This called attention to a proposed association between Canada and the Turks and Caicos Islands.
The question of a close political relationship between Canada and the Islands in the West Indies has also been raised
West Indies
periodically on earlier occasions. In the statement of the former secretary of state for external affairs just referred to, it was pointed out that the question was given particularly close attention by Sir Robert Borden toward the end of World War I, but since that time there is no record that any Canadian government contemplated such a proposal. Canada has not sought to extend its territory beyond its present borders.
This latest manifestation of a Canadian interest in the Commonwealth Caribbean, nonetheless, deserves careful analysis. It is perhaps understandable that this subject has risen again at this time of year when the annual flow of Canadian visitors southward is getting under way.
Canadian tourism in the Commonwealth Caribbean, which has grown steadily over the years, is one of the long-standing links we have with that area. A very recent official manifestation of Canadian interest was the visit of Mr. Manley, Prime Minister of Jamaica. As you know, he was here in late October and described his visit in glowing terms on return to his capital, Kingston. Hon. members who were present will doubtless remember vividly the very interesting dialogue Mr. Manley had with members of the Standing Committees on External Affairs and National Defence of both Houses and with the Commonwealth Parliamentary Association during an informal meeting on October 28.
Canada's links with Jamaica are important but not less so than with the other and varied members of the Commonwealth Caribbean. These links include important investment and two way trade. There has been a growing immigration program and our common interests are intensified by some shared traditions and parliamentary institutions. Many people in the Commonwealth Caribbean countries have received their education at some level or other in Canada. Some fought in the Canadian Armed Forces during the war. We have links in the field of transportation, particularly air transportation, which help to promote the flow of tourism. Last but by no means least, we have a significant program of development assistance with increasing concentration on the lower income territories.
In the field of trade and aid we have been seeking to replace the old 1925 Canada/West Indies Trade Agreement, as amended by the 1966 Protocol, by a new form of relationship more compatible with the current international economic realities of the Commonwealth Caribbean countries. Two rounds of consultations at the level of senior officials have taken place during the last year and it is hoped that in due course this new relationship can be established. One feature of the discussions to date has been the question of industrial co-operation between Canada and the members of CARICOM, which is the Caribbean Community and Common Market. CARICOM contains two types of members, the independent states of Guyana, Trinidad & Tobago, Jamaica, Barbados and Grenada and also the Associated States which are five territories in the Windward and Leeward Islands. They have complete internal self government but rely on the British for their defence and foreign relations.

November 19, 1976
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Although these five territories are small and not independent we have been very active in the aid field, and in general are very visible in the region. I think it is true to say we have contributed significantly to their economic progress and we shall continue to do so.
The importance of all these ties is worth emphasizing to show that Canada is playing a significant role in the area and is able to do so without any form of constitutional links with any of these territories. I believe that we can continue to play such a role and the links, for example, constitutional union or absorption, which could result from the motion before us, would in fact have a counter-productive effect on relations which are now of mutual benefit to Canada and the Commonwealth Caribbean.
Mr. Speaker, let us look clearly and frankly at the current circumstances of the Turks and Caicos Islands themselves. In spite of their small population, these islands suffer from the widespread Caribbean problem of too many people supported by too few natural resources. The form of government is that of State Council the majority of whose members are elected, and over which the Governor of the Islands exerts certain powers of control. Although there is some subsistence agriculture in the islands, most foodstuffs have to be imported, as do all manufactured goods.
One of the most important sources of income for the Turks and Caicos islanders is the money earned by the several thousand people of the country who are working elsewhere, particularly in the Bahamas. So far, tourism has developed to only a limited extent, but there remains a potential for considerable expansion. A few Canadians are living in the islands and a greater number have visited them as tourists. It is evident that the people of the Turks and Caicos Islands have a friendly interest in Canada and Canadians and that a number of them were attracted by the idea of constitutional association with Canada.
However, it is one thing to be attracted by a theory and a very different thing when one must consider in depth the practical consequences of such a development. To begin with, the islands are receiving very substantial direct subventions from the British government which work out to approximately $500 per capita per annum. This funding appears to be a basic necessity simply to enable government institutions to function. If the islands were to join in the Canadian Confederation, we would quite naturally seek to raise the basic level of services to the standard expected throughout this country. The primary problem resulting from such an increase in the standard of living in the Turks and Caicos might well be a growing dissatisfaction in other similarly placed territories in the Commonwealth Caribbean that they too could not share in this greater wealth, either inside or indeed while remaining outside Confederation. I suggest that we would find that Canada was being drawn into an intolerable situation whereby we would have at some point to make an artificial distinction and say what was fine for the Turks and Caicos Islands would be unacceptable for other, equally needy, territories. In fact there are several other territories in the Caribbean which could
legitimately claim to have had a longer and closer relationship with Canada than the Turks and Caicos Islands.
However welcome, well-meaning and well-conducted the involvement of an outside power may be in a non-contiguous region, it is nevertheless vulnerable to charges of colonial interference. For Canada to become involved constitutionally with a territory in the region could give rise to a range of difficulties. What, for instance, would be the Canadian government reaction should there be serious local disruptions and a deterioration in the security situation? However pure our motives, remedial action would look very much like colonial repression, and might well be interpreted in this light.
Such links would inevitably arouse suspicions of Canadian motives. In absorbing territory so far from Canada as part of our own country we would inevitably lay ourselves open to charges of unwarranted interference. The general balance of our even handed and carefully developed policies in the area would be upset by this act of constitutional absorption. By this act we would become a Caribbean country and might be drawn into conflicts and affairs of this rather distant region. This could well be embarrassing. In so doing we would endanger our status as a good friend and provider of disinterested development assistance.
We would also be swimming against the independence currents which have been accepted by both Britain and her various Caribbean dependencies. Canada has supported this evolution in various international forums, such as the United Nations General Assembly and at the Commonwealth heads of government meetings.
It would thus appear inconsistent if Canada were to be the nation to re-introduce a foreign element into the Caribbean which could, at its worst, be interpreted as neo-colonialism and, at best, as bringing into being a very unbalanced partnership of interests which could push local economies into disequilibrium.
Let us instead maintain our friendly and responsible approach to the Caribbean as a whole and not jeopardize our reputation by taking on new commitments, the import and extent of which it is impossible to foresee.
As you have noticed, Mr. Speaker, I am having some problems with my voice, so, to conclude, may I say that the reasons given are important enough not to accept the motion.


Stanley Howard Knowles: Mr. Speaker, in spite of one aspect of the resolution placed before us by hon. member for Hillsborough (Mr. Macquarrie), I should like to indicate our support of it. I might say that the hon. member for Waterioo-Cambridge (Mr. Saltsman) regrets that he is not able to be here at this time to speak on this motion. As the record will show, he was here until four o'clock, but there was a plane that he had to catch.
As has already been noted, my friend and colleague presented a bill dealing with one aspect of this matter a few sessions ago and, like the hon. member for Hillsborough, has been

November 19, 1976

quite interested in the whole question of closer relations with the Caribbean islands. I said that there was one aspect of the resolution that was a hurdle which I had to get over. Not only does the hon. member for Hillsborough know what it is, I have the suspicion that he thought I might be the one to speak for my party on this motion so he put it in there for my benefit. I refer to the suggestion that it is proposed that the matter go to a joint committee.


An hon. Member:: Amend it.


Stanley Howard Knowles: My friend suggests I amend it. I imagine that the motion itself will have trouble getting through before five o'clock, and amending it would only make it more difficult.
I notice that not only does my hon. friend want the matter to go to a joint committee consisting of members of the House of Commons and of the other place but also in referring to the study of the Caribbean area made by the other place he made particular reference to rum. All I can say is that I think that the Senate and rum are two things we could do without.


Walter David Baker: The hon. member could get a tan from either or both.


Some hon. Members:: Oh, oh!


An hon. Member:: How about Arrowroot?


Stanley Howard Knowles: The reason I am not trying to speak right away is that these interjections are so interesting that I wanted to give the Hansard reporter a chance to get them all. I enjoy the particular reference to Arrowroot biscuits. I have had mine with my tea. But at any rate let us get back to the proposition itself.


Walter David Baker: I rise on a point of order, Mr. Speaker. Would the hon. member permit a question?


Stanley Howard Knowles: Gladly.


Walter David Baker: Could the hon. member inform the House whether he got his high colour from Arrowroot biscuits?


Mr. Blaker:: In commenting on the point of order raised by the hon. member for Grenville-Carleton (Mr. Baker) I should like to remind him that not too long ago we had cause to ask the hon. member for Winnipeg North Centre (Mr. Knowles) to retire behind the curtains because at that time a discussion was going on with respect to the colour of the liquid he was drinking. I understand it was tea.


The Acting Speaker (Mr. Ethier):: Order, please. I think we should confine our remarks to the subject matter of the bill before us.


An hon. Member:: A little colour goes a long way.


Stanley Howard Knowles: This is Friday afternoon and I have had my tea and Arrowroot biscuits.
West Indies


Some hon. Members:: Hear, hear!


Stanley Howard Knowles: I did not know there was anything striking about my colour, but let us get back to the motion.
I listened to the opposition to it expressed by the Parliamentary Secretary to the Secretary of State for External Affairs (Mr. Leblanc). He went so far as to say that it would be counterproductive to pass this motion. I find that incredible. Actually the motion does not call for economic or constitutional union; it calls simply for the setting up of a committee to study the whole matter of closer relations between Canada and the Caribbean islands. The reference to the possibility of any kind of union is based on a desire in that regard being expressed by the residents of those islands. In other words, I see that my friend, the hon. member for Hillsborough, is trying to counter a certain referendum that might take place in one part of the country with a referendum in an area that is not yet part of the country. In any case that is what the motion asks for, namely, that a committee of parliament study the whole question of closer relations between this country and the Caribbean islands. In my opinion this is such a good idea and so sensible that I do not know why we do not pass the motion right away.


Mr. Robert McCleave (Halifax-East Hants):: Mr. Speaker, it is a pleasure to support the motion proposed by my friend, the hon. member for Hillsborough (Mr. Macquarrie). I understand that my hon. friend's constituency now is 20 centimetres deep in snow, that parts of it are without electricity, and that this miserable state of affairs will persist until tomorrow. Under such circumstances there is no doubt that one's thoughts turn to sunny climes, sandy white beaches, the gentle wash of warm water upon them and to the sounds of guitars strumming in the night, and of ice tinkling in glasses. In short, this is the time of year when one might hope that Canada would be a somewhat warmer place.
I think the motion of the hon. member for Hillsborough has been well supported by his speech, which I thought was truly excellent. He put it into an international perspective, and though the speech of the Parliamentary Secretary to the Secretary of State for External Affairs (Mr. Leblanc) had a pessimistic conclusion, I thought it was a very thoughtful look at the economic factors involved, and he should be complimented for contributing much to the debate. I do not share the hon. member's pessimism, and I hope I will be giving reasoned answers to his reasoned doubts in a few moments.
I represent an area which was formerly represented years ago by that great internationalist, Sir Robert Borden, and when the hon. member for Hillsborough noted that Sir Robert had talked about the two way trade, rum coming up and cod going down, it struck a very responsive note. As a matter of fact it is very likely that the rum cargoes arrived improved by ocean travel. It is not always certain that the cod went the other way increasing in quality as it went, but in any event

November 19, 1976
West Indies
there are two different countries, two different climates, and two different sets of products. They can provide us an opportunity to enjoy sunshine and a different set of living conditions in the winter, and if such a union were ever to come about, it would mean that they could look thousands of miles away knowing that they had friends and that they had opportunities to seek a way of life in the northern hemisphere.
I think my hon. friend has put the emphasis on the approach in the right way. It should be done by a joint committee of parliament, not by a group of bureaucrats. It should be done by people who are versed in the political process because, as the parliamentary secretary has so well noted, as well as the hon. member for Hillsborough, we have to be careful of any approach which is made. As the hon. member for Hillsborough said, we cannot go as conquistadors. I cannot imagine him going as a conquistador in any event. We cannot go there as spoilers or exploiters.
If we were ever asked there to assume some federal partnership with these people, we would have to be very careful to avoid the mistakes which have plagued other parts of the West Indies, the mistakes which give rise to racial tensions. For example, we should be very careful to ensure that a reasonable part of the ownership of resource facilities remains in local hands so that they would not feel that a group had descended upon them and, in the guise of friendship, taken over their wonderful part of the world and suddenly turned them into mere employees. We have to be very careful to avoid something like that, and that would probably involve a much greater share of government participation in any investment than perhaps ordinarily would be the case.
I think also that if there is to be any joint committee at work in this field, we should show our willingness to set up such a joint committee by adopting the motion of the hon. member for Hillsborough, but I would also like to see coming back to us before we venture anywhere further from that a council statement, as I gather the parliamentary secretary noted that their form of government is by council. There should be some statement by the people in the Turks, by the people in the Caicos and by the people on any other island in the British West Indies who would be interested in union with Canada so that we would know that there is an opinion from there before any Canadian ever goes near there or, for that matter, before they come anywhere near Canada.
In short, I think if we took steps such as that, we could go to them as friends showing interest, we could argue about all the good things Canada could do for them, and I am sure they would be able to argue about the good things they could do for us.
One obvious and very early step would be to build an international airport on any island which enters into a liaison or union with us, and in that development Canadian technology would surely have its role. In recent years some of us have been to Colombo, Sri Lanka-the former Ceylon-and seen a great international airport there. It makes the one a few miles away, the Ottawa International Airport, look very old fash-
[Mr. McCleave.J
ioned indeed. It was the gift of Canadian technology which made that great airport in Colombo possible.


Walter David Baker: Otto Lang could use his planes there.


Robert Jardine McCleave: If I can sound chauvinistic just for a moment in the Nova Scotia chauvinistic sense, any islands which do take advantage of this wedding proposal should naturally find that provincially they would become a part of Nova Scotia and educationally, probably, a part of the Halifax county school system, which indeed is a rather good school system.
In suggesting that his colleagues not support the motion, the parliamentary secretary suggested that there might be discrimination among those small islands. He presented his reasoning as well as he could, and he is a very forceful fellow when he gets going, but I do not think that is so. The motion presented by the hon. member for Hillsborough gives an opportunity to small places which otherwise would not likely be terribly interested in voting on this subject unless they knew that there would be some interest or sympathy at the other end of the line for their position. So, in short, I have to say to the hon. member for Laurier that we would not be thwarting independence by adopting the motion.
If we deny this motion, we forbid or prevent those people from a freedom of choice, that choice being whether to join us as Canadians or not. To me that seems to be a discrimination, even though it might seem like a discrimination in reverse. As small islands they probably would not feel particularly fitted for independence. I gather that to be so, and there would be thousands or tens of thousands living on an island who would find it very difficult to imagine such groups as nations, though I suppose several of them banded together might be able to give themselves the feeling of being a nation. But to imagine themselves as part of a much larger country, one of the greatest countries of the world, surely should not be beyond their comprehension, and perhaps it would be something they would want.
I have to stand corrected. It is not the riding of the hon. member for Hillsborough which is inundated with all that snow I mentioned earlier. His constituency has so far missed the storm, and I suppose by sending me the note he did, the hon. member just wants to prove that he represents his people well and will not allow them to suffer the affliction of a major snowstorm.
In any event, I thank the House for its attention. I thank the hon. member for giving me an opportunity to support his motion. I cannot see any harm coming out of it. I hope it starts off a vigorous debate both here and in the West Indies. After all, eventually it will be a matter on which all sides will have their say, and I am pleased to support what seems to be a constructive idea.

[ Translation]


Mr. Albert Bechard (Bonaventure-Iles-de-la-Madeleine):: Mr. Speaker, as surprising as it may seem, since the hon. member for Hillsborough (Mr. Macquarrie) has introduced the motion which we are debating today, and since the more or less convincing and persuading intervention of the hon. member for Waterloo-Cambridge (Mr. Saltsman), I have had the opportunity to conduct certain in-depth studies on the subject of this afternoon's debate and 1 have come to the conclusion that the motion we are considering contains a proposition which could, in spite of its superficial interest- that is warm sands and what not-cause serious damage to the relations between Canada and the West Indies if it were passed.
Indeed, the West Indies has had special ties with Canada for many years and these ties have been strengthened in a very human way by the fact that thousands of Canadian tourists visit that country every year.
The relationship is generally relaxed and pleasant and I feel that we must ensure that we do not introduce any new perturbing element. If, like my hon. friend from Hillsborough suggests, in his capacity as expert on foreign policy, we name a joint committee of the Senate and the House to study the question with a view to creating a political partnership, we could very well introduce such a perturbing element.
Mr. Speaker, there seems to be much support to your right this afternoon. I also feel that we should reevaluate in a very pragmatic way the probable repercussions of a union between Canada and one or maybe several smaller non independent countries of the West Indies.
Let us look first at the economic results-though the hon. member for Winnipeg-North Center said a while ago that they were out of the question-precisely to present arguments with a view to preventing that study which, to my mind, because of present circumstances, is absolutely useless and, to say the least, superfluous.
One must not forget that most of those territories are relatively underdeveloped economically; they would need massive injections of Canadian capital to reach the level of economic activity that should be expected of them. Those injections could bring greater results in the sector associated with the construction of facilities connected with tourism, because
West Indies
eventual investments would be encouraged by the prospect of Canadians travelling to that new part of Canada.


Mrs. Holt:: Mr. Speaker, would the hon. member permit a question? I was wondering if the hon. member-


Albert Béchard: I will be in a position to answer the question outside the House.
Even though on the face of it such investments in tourist facilities may seem attractive, the overall impact must be studied within the context on the total area, like everything else that involves the Commonwealth Caribbeans. Increased investments and tourist trade in a given area would most likely deprive other countries of the Commonwealth Caribbeans of their revenues from those sources. This would lead to increased unemployment levels and lower living standards in those other countries. Such is certainly not the aim pursued by the hon. member for Hillsborough (Mr. Macquarrie). As far as investments are concerned, massive imports of Canadian money could go to agriculture or even to low cost manufacturing industries in the proposed new Canadian island, considering the easier access to our market. This could dry up capital for other Caribbean countries, restraining their traditional share of the Canadian market. Therefore, Mr. Speaker, the will and ability of those countries to maintain their level of exports to Canada could be affected. In my view, this tends to show that from every economic, trade, commercial and investment aspect, any advantage would be more than offset by the disadvantages.
And since the time is going so fast, I would state in conclusion that although I am not against those who would join in a greater Canadian family, in the circumstances I referred to before, Canada must first attempt to keep what she has, and keep everything! I therefore ask the government, and especially Parliament to work toward that goal, giving fair treatment to every Canadian, and giving a chance to remain Canadian to those who, although a majority of them wish to remain so, unfortunately or otherwise voted last Monday to elect a separatist party.


The Acting Speaker (Mr. Ethier):: Order, please. The hour appointed for the consideration of private members' business having expired, I do now leave the chair until 2 p.m. Monday, pursuant to Standing Order 2(1).
At 5 p.m. the House adjourned, without question put, pursuant to Standing Order.



Monday, November 22, 1976