1976-06-03

ROUTINE PROCEEDINGS


Mr. Claude Wagner (Saint-Hyacinthe):: Mr. Speaker, pursuant to the provisions of Standing Order 43, I request the unanimous consent of the House to present a motion dealing with an important matter of national urgency.
Given the fact that under the new dairy policy Quebec industrial milk producers stand to lose over $100 million in income; that, by the Minister of Agriculture's own admission, producers have generally respected their quotas and are in no way responsible for the present surpluses, and that, consequently, those producers should not be penalized for an over-production to which they did not contribute, I move, seconded by the hon. member for Joliette (Mr. La Salle):
That the government accept the principle of a compensatory subsidy to those Quebec milk producers who, in the last dairy year, have respected their quotas, or that it exempt them from the pertinent provisions of its dairy policy; that, in addition, the government defer application of its new policy on the feed grains transport subsidy until such time as the producers concerned have been consulted and the new substitute programs promised by the government have been announced.


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


Some hon. Members:: Yes.


Some hon. Members:: No.


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


EXTERNAL AFFAIRS
Mr. Paul Yewchuk (Athabasca):: Mr. Speaker, I rise under the provisions of Standing Order 43 to move a motion of urgent and pressing necessity. There have been consultations with all parties and I believe there is a
disposition to have this motion passed. I am informed that a decision concerning the mental health of Ukrainian historian, Valentyn Moroz, by officials at the Serbsky Institute of Forensic Psychiatry in Moscow is to be made on June 10, following which Mr. Moroz may be transferred to a psychiatric prison hospital. I move, seconded by the hon. member for Hamilton West (Mr. Alexander):
That this House express the hope that cases such as that of Valentyn Moroz will be dealt with in accordance with the principles covering human rights and fundamental freedoms and other relevant principles in the Helsinki final act.


Mr. Speaker:: Such a motion pursuant to the provisions of Standing Order 43 can be presented to the House only if there is unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Mr. Speaker:: The House has heard the terms of the motion. Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.
Some hon. Members:: Hear, hear!



ORAL QUESTION PERIOD


Mr. Joe Clark (Leader of the Opposition):: Sir, my question is to the Minister of Supply and Services. I should like to ask the minister a question with regard to precisely when he personally became aware of the shortfall in financing of the proposed contract with Lockheed. His parliamentary secretary is on record as stating that the minister did not learn of this problem until January. The minister himself said it was in mid or late December. Having now had full opportunity to check the record, can the minister confirm that he was not informed of the funding shortfall until after the telex of December 2 to Lockheed?


Hon. Jean-Pierre Goyer (Minister of Supply and Services):: Mr. Speaker, I would like to make an essential distinction regarding the hon. member's question. Of course, I knew there was a cash flow problem at the Department of National Defence before December 2, but on

June 3, 1976
Oral Questions
December 2 they assured me that problem could be solved and the financing was assured; that is what prompted me to send the telex. However, it was not until the middle or the end of December that I learned that Lockheed was unable to supply the financing. If my parliamentary secretary said in his reply that it was in January, I apologize for it.


LOCKHEED CONTRACT-KNOWLEDGE OF MINISTER OF CONTENTS OF MEMORANDUM FROM DEPUTY MINISTER
Charles Joseph Clark: I wonder whether the Minister of Supply and Services has any further corrections he would like to make to the record he has given to the House in answer to questions with regard to the date of his knowledge and the extent of his knowledge of any shortfalls which were involved in the arrangements with Lockheed. Can he tell us, in particular, whether he was told in an aide-memoire from his deputy minister, Mr. Desroches, dated December 1, before the telex was sent to Lockheed, that there was a financial risk having regard to the company's overall situation, that the approved budget of the Department of National Defence was not sufficient to meet the cash flow requirement of the early years of the contract and that there would be some $100 million in interest costs which had not been budgeted for?


Jean-Pierre Goyer: Mr. Speaker, I am a little surprised to find that an aide-memoire addressed to me by my deputy minister is in the hands of the opposition. It is a lack of basic ethics. At any rate it is not the first document to fall by chance into the hands of the opposition, and I think it is unfortunate.


Some hon. Members:: Just answer the question.


Some hon. Members:: Who are you?


Jean-Pierre Goyer: I see that members opposite are very touchy when they are told a few home truths.


Some hon. Members:: Oh, oh!


Jean-Pierre Goyer: At all events, Mr. Speaker,.. .


Mr. Fairweather:: Truth is a five-letter word.


Jean-Pierre Goyer: Did the hon. member say that I am lying to the House now? Was that his remark? Stand up and say it!


Mr. Paproski:: Just answer the question, that is all.


Jean-Pierre Goyer: Mr. Speaker, I repeat to the House that on December 2 I sent a telex with the agreement of the Department of National Defence. The latter was to see about financing the contract according to conditions stipulated in the contract draft, conditions that every party involved was aware of.


Charles Joseph Clark: A supplementary question, Mr. Speaker. Did the minister know at the time of the sending of the memorandum that the approved budget of the Department of National Defence was not sufficient to meet the cash flow requirements of the early years of the contract? Did he know that there would be some $100 million in interest costs which were not budgeted for? Did he know that there was a final financial risk because of the company's over-all situation? Did he know those three things?


Jean-Pierre Goyer: Mr. Speaker, with regard to the financial risk involved in dealing with Lockheed, the government felt that the risks were not so great at that time, therefore we could deal with the company. Such was the government's opinion.
Further, on December 2 I did not know yet that the Department of National Defence would need $100 million for interest charges. I said a moment ago that I knew there was a problem of cash flow within the Department of National Defence, but that it would provide for the budgetary deficiencies.


MINISTER'S ACCUSATIONS AGAINST DEPARTMENTAL OFFICIAL-POSSIBILITY OF CHANGE
Charles Joseph Clark: A final supplementary question, Mr. Speaker. Is the minister prepared to change in any way the accusations that he made against officials of his department in the statement he made the other day, in light of this new information which he has now presented to the House?


Jean-Pierre Goyer: Mr. Speaker, the hon. member neither read nor listened to my statement.


Some hon. Members:: He was not here.


Jean-Pierre Goyer: Or else he was ill informed. Then his information system is inadequate at the official level, if it is not as regards detectives. I will say to the hon. member, Mr. Speaker, that the civil servant who was replaced on the project management committee by my deputy minister had changed a text he had read to me personally in the presence of the deputy minister. That is unacceptable. I took my responsibilities and if I had to do it again, I would, because I will not stand for being fed false information and then pass it on to the House and the public. That is essential.


LOCKHEED CONTRACT-REASON FOR NOT ASKING FOR WRITTEN COMMITMENT FROM COMPANY IN VIEW OF INFORMATION IN DEPUTY MINISTER'S MEMORANDUM
Mr. Peter C. Bawden (Calgary South):: Mr. Speaker, I have a question for the Minister of Supply and Services. In answer to my question yesterday the minister said that if he had had the information on Lockheed's shortfall he would not have signed a formal contract and sent the telex

June 3, 1976

to Lockheed on December 2. In view of the memorandum to the minister of December 1 in which the financing requirements of Lockheed and the shortfall were made very clear, would the minister say why he did not make the contract with Lockheed conditional upon Lockheed firming up their commitment in writing?


Jean-Pierre Goyer: Mr. Speaker, the draft contract containing all the main items which had been negotiated and agreed upon by both parties had been prepared by the LRPA project management group, therefore with the knowledge of all the departments involved. That document was of course the basis of the contract which was proposed between Lockheed and the Crown.


Peter Colwell Bawden: Mr. Speaker, in spite of the statements by the minister, it is clear now beyond the shadow of a doubt that the minister and a number of his senior officials were fully aware-


Some hon. Members:: Question, question.


Mr. Speaker:: Order, please.


LOCKHEED CONTRACT-INFORMATION ON FUNDING SHORTFALL AT CABINET MEETING OF NOVEMBER 27-DATE OF APPROVAL OF INTEREST PAYMENT
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, would the Prime Minister inform the House whether he and other members of the Cabinet knew of the existence of the shortfall on or during the Cabinet meeting of November 27, which was prior to sending the telex on December 2, and, when the government approved the payment of some $100 million in interest charges to the Lockheed Corporation, did this approval take place before or after December 2?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, I will want to give this answer to the House, but I must confess that I do not have the exact schedule of events and the calendar of them in my mind.


An hon. Member:: Is it too complicated?


Pierre Elliott Trudeau: Maybe it is to you, but I do not see anything complicated about it. The hon. member has asked a legitimate question and I understand the interest of the House in having these dates. I am confessing to parliament now that I do not have those exact dates. I can give an explanation to the House of what went on in my mind. It is that we knew the Department of National Defence did not have the cash to finance an outright purchase; we knew that there would have to be some borrowing; and we knew, therefore, we would have some interest to pay for that borrowing; we were hoping that the LRPA bridge financing would be provided by Lockheed, but I cannot at this stage give the exact dates on which those facts came to my knowledge. I will undertake to look at the cabinet minutes and answer the hon. member's legitimate question.
Oral Questions


John Edward Broadbent: Mr. Speaker, to refresh the right hon. gentleman's memory, it is my clear understanding that the decision to pay the $100 million was made by the Treasury Board subsequent to December 2. If that is the case, I would ask the Prime Minister why the telegram or the telex was sent off, clearly implicating the government of Canada in a legal commitment to the Lockheed Corporation that did not exist before, when presumably the government was not fully aware of the additional $100 million that would have to be supplied by the people of Canada?


Pierre Elliott Trudeau: Mr. Speaker, I thank the hon. member for having consulted the minutes for me, but I prefer to do it myself and perhaps give him an answer. I think the House will want to remember that the Minister of National Defence indicated yesterday that the beginning of December was a deadline for us, and if we went beyond that deadline we would certainly not be able to purchase the LRPA from Lockheed under the conditions which it had submitted. It was important at that point to keep the contract alive if we wanted to fulfil our commitment to the defence forces of Canada, our commitment to the NATO force and our commitment to our allies. That is the reason we did not want a hiatus between the expiration date and government action. Even with hindsight, I think we did the right thing.
I want to remind the House that we did decide very shortly before to be very strict in our fiscal guidelines and our expenditure decisions, and we knew we would not be able to buy these outright. Therefore, it was clear to us for several months that we had to find more financing. The misunderstanding was explained to the House several months ago by the Minister of National Defence. It was between the Lockheed Company and one of his officials. It was a verbal agreement on which I think the minister said perhaps we acted imprudently, but we did so in good faith based on this verbal agreement.


NATIONAL DEFENCE
John Edward Broadbent: Mr. Speaker, the Prime Minister took a long time not to answer the question. I should like then to ask the Minister of National Defence if he would confirm to the House that the person from whom he or his officials received the oral commitment from Lockheed was in fact a person who worked in the marketing section of the Lockheed Corporation and not in the finance department of Lockheed and therefore was not likely to be in a position to know the details about the financial capacities of the Lockheed Corporation and certainly was not in a position of authority to give any kind of commitment to the government.


Hon. James Richardson (Minister of National Defence):: Mr. Speaker, it is correct that the conversation which General Allan had was in the first instance with Mr. Dale Daniels who is in the marketing side of the Lockheed Company but General Allan asked Mr. Daniels to confirm with whatever officials he wished to in the finance depart-

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Oral Questions
ment of Lockheed and it was a day or two later after those consultations with the proper authorities in Lockheed that Mr. Daniels called back-


John Edward Broadbent: What date was that?


James Armstrong Richardson: -and reported the Lockheed position. It was not just the opinion of one man in the marketing department.


AGRICULTURE
Mr. Leonel Beaudoin (Richmond):: Mr. Speaker, I should like to put a question to the right hon. Prime Minister. Is the Prime Minister aware that there are today on Parliament Hill from 8,000 to 10,000 industrial milk producers, and that many have come from 700 or 800 miles away, that is beyond Rimouski or Temiscouata? Would he then advise the House whether the Minister of Agriculture will meet with those producers this afternoon and whether negotiations are under way between the Canadian Dairy Commission and the management committees concerning the settlement of the industrial milk issue?


Pierre Elliott Trudeau: Mr. Speaker, this matter was discussed a while ago at the cabinet meeting and we have delegated the Minister of Agriculture, the Minister of Regional Economic Expansion, the Minister of National Health and Welfare, the President of the Treasury Board and the Minister of Communications to meet with them. The meeting took place, but unfortunately I have not yet been informed of its outcome.


Léonel Beaudoin: I have a supplementary, Mr. Speaker.
Would the right hon. Prime Minister tell whether he thinks it will be possible to have or to complete these negotiations this afternoon and whether farmers will be able to get an answer before heading back home?


Pierre Elliott Trudeau: Mr. Speaker, I have just indicated that that meeting has been held and that I have received no report. I know the farmers' case has been heard with an open mind. In addition to the ministers I have named some twenty Liberal hon. members were in fact at that meeting. I am expecting a report on the meeting.


Mr. Andre Fortin (Lotbiniere):: Mr. Speaker, with your leave, I direct my question to the President of the Treasury Board, having just heard from the Prime Minister that he attended the meeting.
Considering that the President of the Treasury Board was at that meeting, is he in a position to inform the House of the decisions which were taken, if any?


Pierre Elliott Trudeau: Mr. Speaker, the Parliamentary Secretary to the Minister of Agriculture, the hon. member for Sherbrooke, informs me that the meeting is going on now, that of course some ministers are in the House to answer the
questions of the opposition but that the meeting is not completed. Therefore we have not received the final report.


TRANSPORT
Claude Wagner: Mr. Speaker, my supplementary about this same matter is for the Minister of Transport.
I would like to ask him whether he has examined the protests raised by Quebec Agriculture Minister Kevin Drummond, and those raised by concerned groups against the removal of the feed grain freight subsidy and whether he intends to confer immediately with Mr. Drummond or the representatives of Quebec agricultural organizations with a view to finding a solution to hardships caused to Quebec producers by the government decision?


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, meetings of that type have been held and certainly will continue. The Minister of Agriculture and I met with Mr. Drummond some time during the course of the winter to discuss the matter. On Monday, prior to the announcement, officials were here discussing it and the implications for the future of the programs that will be available for grain deficient areas.


NATIONAL DEFENCE
Mr. Allan B. McKinnon (Victoria):: Mr. Speaker, my question is for the Minister of National Defence. Yesterday we witnessed the unedifying sight of two ministers quarrelling over who was responsible for the $16 million waste-


Some hon. Members:: Hear, hear!


Allan Bruce McKinnon: Could the Minister of National Defence advise the House if it was at the meeting on November 27 of the cabinet that the cabinet was informed of the requirement for funds to pay the interest on borrowing needed because of the DND shortfall?


James Armstrong Richardson: Mr. Speaker, I would like to say first of all that my statements yesterday and those of my colleague indicated very clearly that we were working together on this project.


Some hon. Members:: Hear, hear!


James Armstrong Richardson: It was at the cabinet meeting of November 27 that the cabinet document containing the reference to the need for financing and the provision of

June 3, 1976

approximately $100 million for that purpose was considered. I, like the Prime Minister, would have to check the records to see whether there was a cabinet decision on that subject or whether it was subsequently at Treasury Board but it certainly was very clearly before cabinet for consideration on November 27.


Allan Bruce McKinnon: Mr. Speaker, I would appreciate it if the minister would check the minutes of that meeting. At the Standing Committee on External Affairs and National Defence on May 27 the minister supported General Allan when he said that the agreement with Lockheed was put to the cabinet on November 14, considered on November 27 and the minister said: ".. . the fact that cabinet approved interest payments and which as I said are in the blue book, indicate that cabinet knew there was a shortfall." The Minister of Supply and Services denied knowledge of the shortfall. He said that in reply to a question from the hon. member for Winnipeg South Centre. Does the minister wish to withdraw the statement which he made to the committee or are we to understand that one of the two ministers has misled the House and is continuing to do so?


James Armstrong Richardson: Mr. Speaker, the estimates from the Department of National Defence that are before the House in the blue book show $1,061,000,000 for this program of which $953 million is for the main project and the remainder, which is about $107 million, is the interest. It is in the blue book and it is before the House.


TRANSPORT
Mr. Roch La Salle (Joliette):: Mr. Speaker, my question is for the Minister of Transport.
Could the minister explain why, contrary to what he suggested, a significant part of the population of the province of Quebec was deprived of the subsidy provided for the transportation of feed grain before announcing the alternative programs or compensatory measures which he mentioned? When does the minister intend to announce those programs which could make up for the great loss which Quebec producers will suffer?


Otto Emil Lang: Mr. Speaker, that last statement is not true at all. The program for the increased production of grain is a broad one and certainly always tended to favour in many ways, as indicated, those areas which are grain deficient but have potential. It is therefore a positive program on the side of making an area more self-sufficient. There is no detriment through the removal of the feed freight assistance. In many circumstances the grain is being purchased in the area of Ontario and Quebec because the adjustment will take place on an equivalent basis to the offering prices by the Canadian Wheat Board. It is only if grain is priced at very low levels the real freight will make a difference and at that point obviously by definition the grain will be at an economic rate.
Oral Questions


Roch La Salle: Mr. Speaker, I wish to put a supplementary to the right hon. Prime Minister.
Considering that with the recent measures included in the dairy policy, the Quebec milk producers will lose $100 million in gross revenue, that many milk producers are now in Ottawa, and that there is a meeting with some ministers and government officials, would the right hon. Prime Minister be prepared to recommend a direct subsidy to make up for those direct losses suffered by each milk producer?


Pierre Elliott Trudeau: Mr. Speaker, if the hon. member wants me to consider his proposal, I must point out first that this year we increased the subsidy to about $86 million. The hon. member wants us to be more generous, but I know he will not take the money out of his pocket. He should indicate what other government program he wants us to cut if we are to find the $100 million.


INQUIRY OF THE MINISTRY
Mr. Leonard C. Jones (Moncton):: Mr. Speaker, my question is directed to the right hon. Prime Minister. In view of the series of recent events which have created serious unemployment and severe economic conditions in the Moncton area, would the Prime Minister be good enough to advise the House of the following: What is the status regarding the rumoured closure of Canadian Forces Base Moncton; is the Department of Supply and Services establishing operations and facilities in Moncton; are there plans for the erection of a public service training school in Moncton; what other government facilities are likely to be decentralized to Moncton-


Mr. Speaker:: Order, please. With all due respect to the hon. member I am sure that information ought to be sought by way of a question on the order paper.


AIR TRANSPORT
Mr. Serge Joyal (Maisonneuve-Rosemont):: Mr. Speaker, my question is intended for the Minister of Transport.
In view on the fact that following a meeting with representatives of the Department of Transport on Monday May 31, the representatives of the 1'Association des gens de l'air du Quebec asked the Minister of Transport in a letter to appoint another member to the inquiry commission headed by Mr. John Keenan, and that the terms of reference of the Keenan Commission provide for the hiring of experts and consultants, could the Minister of Transport inform the House whether he intends to comply with the request made by the association for the appointment of Mr. Benoit Sainte-Marie to the Keenan inquiry commission, and to

June 3, 1976
Oral Questions
hire the experts and consultants required by the commission to carry out the terms of reference given to it by the cabinet?
[ English]


Otto Emil Lang: Mr. Speaker, the matter is too complex to respond to at this point without some further reflection and indeed I propose to attempt to explain my view of the situation at a meeting I hope to have at a later date with representatives of the l'Association des gens de l'air. I indicated the last day my reasoning behind the appointment of Mr. Keenan and hon. members will know much of the background that concerns it. It is expected of course that Mr. Keenan will be selecting people to advise him, and I understand he may be making some indication of that in the very near future.


COMMUNICATIONS
Mr. Cyril Symes (Sault Ste. Marie):: Mr. Speaker, I have a question for the Minister of Communications. In view of the fact that pay television would further reduce audiences for many Canadian television stations and hence would reduce revenues for production of over air broadcasts, thus subverting the intent of the Canadian Broadcasting Act, and in view of the fact that the CRTC in a policy paper of December 16, 1975 concluded it was premature to have pay television in Canada at this time, why is the government rushing to have pay television in place at the end of the year when it will have such a disruptive and negative effect on over air broadcasts?


Hon. Jeanne Sauve (Minister of Communications):: Mr. Speaker, I think the hon. member would agree that pay television is inevitable. The fact that it is inevitable does not necessarily mean it should be disruptive to the system as we have built it presently; therefore we are not rushing into the introduction of pay television but, on the contrary, we are trying to envision how pay television can be introduced in this country in an orderly fashion. We are also trying to envision how it can be integrated into the present system, and most of all, how it can be used to generate more revenues in the broadcasting industry, thus enhancing our position in producing better quality Canadian programs.


Reginald Cyril Symes: In view of the admission by the CRTC that at least in its initial period pay TV will depend on foreign produced material for its financial success, what guarantee can the minister give that the majority of pay TV revenues will not go to acquire foreign programs, to the detriment of Canadian program production?


Jeanne Sauvé: If the hon. member had read the speech I made yesterday, he would realize that I said that in order to avoid that the revenues derived from the distribution of foreign programs for Canadian viewing, some kind of structure should be set up. I gave a few suggestions as to what these structures could be. I suggested some kind of

structure which would ensure that those who purchased the programs would put the revenues derived from the viewing of those programs into the system of pay television to produce more Canadian programs which then could be fed back into the pay television system.


ENVIRONMENTAL AFFAIRS
Mr. Bill Jarvis (Perth-Wilmot):: Mr. Speaker, in the absence of the Minister of the Environment I will direct . my question either to the acting minister, the parliamentary secretary or possibly the Minister of National Health and Welfare. In light of the federal government's task force background report regarding the presence of the toxic chemical PCB in great lakes fish-in fact, that report is now available, and I presume it will be tabled today- and in view of the fact that a press conference is scheduled for 3.30 this afternoon, I ask the minister or parliamentary secretary to tell the House, so that we might have the benefit of that knowledge at the same time as the press, some of the highlights. In particular, will the minister or the parliamentary secretary confirm that the report discloses levels of PCB which are eight times higher than acceptable levels, according to health authorities? If such is the case, what action will be taken-or will any action be taken-under the Environmental Contaminants Act, and if so, when?


Mr. George Baker (Parliamentary Secretary to Minister of the Environment):: Mr. Speaker, the hon. member is correct. The report will be tabled this afternoon. There are some findings in the report. It really depends upon what part of Canada the hon. member is talking about and what he means by health standards.
As the hon. member knows, we inspect all fish from the great lakes which is sold. The great lakes area is the most contaminated area, particularly the Lake Ontario portion. However, none of this fish is passed on to the consumer because we have the fish inspection branch, and our standards are very strict. In fact, they are some of the strictest standards in the world for PCB's in fish, so I suggest to the hon. gentleman that he read the report, and then the matter can be discussed openly.


Some hon. Members:: Hear, hear!


AIR TRANSPORT
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, my question is directed to the Minister of Transport. I hope the minister is aware that a great deal of uncertainty has been created amongst air traffic controllers across the country by an ambiguous statement in the Globe and Mail this morning indicating that officials of his department have said to representatives of Gens de l'air du
June 3, 1976

Quebec that a planned inquiry into air traffic control is no more than a marketing operation to sell bilingualism. Is the minister in a position today to comment on that statement, and particularly on that marketing notion, or would he be prepared to do so tomorrow? It is very disquieting.


Otto Emil Lang: Mr. Speaker, I followed up on the matter as soon as the report came to my attention, and what I suspected was confirmed: that any such reference was taken quite out of context. It is true that my officials had made the very obvious point that even after the report of the commission there would be a very important public relations matter to be dealt with in order to assure the public of Canada that safety is indeed protected in the procedures we have developed. It was in that context that the statement was made.
Of course, it has been our aim all along to reassure that safety is a foremost consideration. Consistent with that we believe that bilingual air traffic control can be developed in the province of Quebec with the appropriate procedures, and that, of course-to ensure that that is the case-was a purpose of the appointment of the Keenan Commission.


POSITION OF PRIME MINISTER ON BILINGUALISM FOR FLIGHT CREWS OF AIRCRAFT
Mr. Erik Nielsen (Yukon):: Mr. Speaker, I have a supplementary question for the Prime Minister, but he is not in his seat now.


An hon. Member:: Don't rush him.


Erik Nielsen: The Prime Minister probably did not hear the question from a member on this side and the answer by the Minister of Transport. The question had to do with the inquiry into the air traffic control requests with respect to bilingualism in air traffic control in the province of Quebec. In the interests of safety, and because the matter is of some concern as the Prime Minister discovered in his most recent visit to Vancouver, and in order to reassure the travelling Canadian public, would the Prime Minister adopt and enunciate as government policy just as quickly as possible the suggestion that the government has no business in the cockpit of the nation's airlines?


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: Mr. Speaker, the hon. member knows about the government's official languages policy because his own party supported that policy, and it applies to all federal institutions. It would be useful if he would remind himself of that.
Since I am reminding the hon. member of something, let me remind him that the last time we had an exchange in the House he promised to look at a certain press clipping which indicated he did not believe what I said. He was either going to correct that or confirm it in some way. Let me just remind him that he has not found time to do that.


Some hon. Members:: Hear, hear!


Erik Nielsen: I will do that immediately, but in the meantime, let me remind the Prime Minister that the cockpits of the nation's airlines are not exactly government institutions.
Oral Questions


Some hon. Members:: Hear, hear!


Erik Nielsen: I read the press clipping, which the Prime Minister's staff very kindly supplied to me, from, I believe, the Montreal Gazette at the moment of my departure on the day we had that exchange, and I found that in that article nowhere am I quoted as having said the word he says the article attributes to me. I found also that there were several errors in the article, including the statement that I am a former member of the RCMP. So, if the Prime Minister does have the kind of quotations in articles to which he was referring, I would be very pleased to consider them, and if any apologies are necessary, they will be forthcoming.


Steve Eugene Paproski: And I hope it is vice versa.


SUPPLY AND SERVICES
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, yesterday I endeavoured to secure from the Prime Minister his undertaking to place on the table of the House the minutes of the cabinet dealing with the mysterious matter which was referred to earlier by the Leader of the Opposition, and the Prime Minister's attitude did not indicate that passionate love he advocated internationally at the Habitat Conference.
However, I now presume to ask the Minister of Supply and Services whether he will table the aide-memoire referred to by the Leader of the Opposition dated December 1. After all, it should be very easy to produce that, unless there is some reason to hide it, too.


Jean-Pierre Goyer: Mr. Speaker, it is evident that there is a lack of communications between the previous Progressive Conservative Party leader and the present one, since the hon. member's query at the very beginning of the question period had to do precisely with an internal document. Then, the hon. member only had to ask his dear colleague!


John George Diefenbaker: Mr. Speaker, I simply ask whether the aide-memoires will be produced. If it is not, I remind the hon. gentleman of Cromwell's words in the Long Parliament, paraphrased: "In the name of God, go." We say, "Go Goyer. Go Goyer, now!"


PUBLIC SERVICE
Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, my question is for the President of the Treasury Board. In

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Oral Questions
view of the continuing high unemployment rate in Canada and the further deterioration in postal service brought about by Treasury Board's decision to cut 305 man years from the postal service, would the minister now reconsider this decision?


Hon. Jean Chretien (President of the Treasury Board):: Mr. Speaker, the answer is no.


Walter Gilbert Dinsdale: A supplementary question, Mr. Speaker. Am I to take it from the President of the Treasury Board's answer, Mr. Speaker, that he favours expenditures for unemployment insurance and welfare rather than for payment of wages for urgently needed work?


Joseph Jacques Jean Chrétien: Mr. Speaker, we are now under a budgetary restraint period, which is indeed supported by most members of the opposition, if not by the hon. member himself.


MANPOWER
Mr. David MacDonald (Egmont):: Mr. Speaker, my question is for the Minister of Manpower and Immigration. It has to do with his comments yesterday concerning the creation later this year of a new, year-round multi-faceted direct job creation program.


An hon. Member:: What a phrase!


David Samuel Horne MacDonald: As the minister referred to this program as being related to areas of high unemployment affected by seasonal or cyclical factors, can he indicate what consultation has taken place with the various provinces which obviously have a direct stake in it and whether, because of the extended time needed to make the program effective, there will be an announcement about the program before the summer recess?


Hon. Robert K. Andras (Minister of Manpower and Immigration):: Mr. Speaker, there will be no further announcement about the program before the summer recess apart from my comments yesterday, in which I clearly indicated-


Steve Eugene Paproski: What summer recess?


Robert Knight Andras: -that we intend to design the program for presentation to parliament in the fall.


Steve Eugene Paproski: What summer recess?


Robert Knight Andras: If there is a summer recess. There will be, of course, discussions with my colleagues in the provincial governments. Ongoing discussions are naturally in order. As I said yesterday, we have a conference of federal and provincial manpower ministers scheduled for the fall.


ALLEGED CANCELLATION OF COMMUNITY EMPLOYMENT
David Samuel Horne MacDonald: A supplementary question, Mr. Speaker. As some provincial premiers seem to be upset by the obvious lack of consultation in this area, and the cancellation last December of a program known as the community employment strategy, may I ask what information the minister conveyed, either to the premiers or the ministers responsible in the provinces, as to why these programs were terminated a few months ago?


Robert Knight Andras: Mr. Speaker, the hon. member is incorrectly informed. The community employment strategy program has not been cancelled. It was reconfirmed by cabinet decision last fall and is an ongoing developmental program in which I have a great deal of faith and commitment. There have been discussions with provincial ministers. I have met provincial ministers bilaterally on many occasions. I met with them regularly, in concert, and as recently as two weeks ago we definitely agreed that we have in place now a consultative mechanism which satisfies both the federal and provincial governments. Indeed, I think they were enthusiastic about my reaction on that occasion.


SUPPLY AND SERVICES
Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, my question is directed to the Minister of Supply and Services. In answer to a question asked by the hon. member for Oshawa-Whitby, the Minister of National Defence indicated that not only had he received assurances from the director of marketing of Lockheed, but had received confirmation two days later of the capacity of Lockheed to provide front end financing. The letter which the minister tabled recently, in which he extended the option for one month, provided for a full release of liability with regard to the Lockheed corporation. Since those assurances were given by Lockheed, why was it necessary to have a full legal release from Lockheed in the document? Clearly, when the minister sent the telex on December 2, there was no legal liability because of the assurances Lockheed had given.


Jean-Pierre Goyer: Mr. Speaker, the hon. member is asking me for a legal opinion, and I am obviously not a legal adviser to the government. However, I will simply say that the document of March 30, to which the hon. member refers, had nothing to do with the verbal offer made by Lockheed to finance part of the contract.


Stuart Malcolm Leggatt: A supplementary question, Mr. Speaker. Since the information which the Minister of National Defence gave this House concerning those assurances of Lockheed was information which Mr. Stopforth had, it means that if the Minister of National Defence and his
June 3, 1976

officials were misled, surely the Minister of Supply and Services and his officials were misled. My question is this. Since there was this misrepresentation from Lockheed, why is Mr. Stopforth's head on the block? Clearly, he is as innocent as anyone else. Why is he carrying the can for this?


Jean-Pierre Goyer: Mr. Speaker, it is quite simple and I already gave this explanation in the House. A first version was given me in the presence of my deputy minister, who is the administrative head of the department regarding civil servants. I thus received a version from Mr. Stopforth to the effect that he was not aware of such a verbal offer. Later on, Mr. Stopforth decided to change his version. In my opinion, this is fundamental: he misinformed me and under the circumstances I had no choice.


Mr. Baker (Grenville-Carleton):: The minister's attitude is tantamount to conviction before trial. I do not like your way of going about this.
Environmental Contaminants


AIRPORTS
Mr. Eudore Allard (Rimouski):: Mr. Speaker, I should like to put a question to the Minister of Transport.
Could the minister assure the House that the amendments soon to be brought to the Canadian airport construction policy will promote Canadian initiative and that no airport financed with Canadian public funds will be monopolized as at present by foreign firms as Budget controlled by Transport America Corporation or Hertz owned by RCA?


Otto Emil Lang: Mr. Speaker, perhaps I can review the hon. member's question with him, to ascertain the particular policy to which he is referring.


TRANSPORT
Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, may I direct a brief question to the Minister of Transport? Is the minister in a position to indicate to the House by way of report or otherwise the findings of the task force which was established for the purpose of reviewing Bill C-87? May I ask him, as a supplementary question, whether he will be prepared at the appropriate time to table the documentation accompanying that report, documentation particularly which relates to the integral train concept which is to replace the subsidy?


Otto Emil Lang: Mr. Speaker, any reference to a task force should be specifically in relation to the question of unit trains for grain going directly to the Atlantic ports. I have received an informal, preliminary report, but the final report is not available. When it is I anticipate being able to let the hon. member know about the results.


J. Michael Forrestall: A supplementary question, Mr. Speaker. Could the minister give some indication of the time frame about which he is talking? As he knows, there is no money in the estimates to meet the requirements of that particular section of the Railway Act.


Otto Emil Lang: Mr. Speaker, we will worry about the problem of money when the time comes. I cannot give a precise time. One of the elements involved is a satisfactory agreement about rail rates. One may begin by taking a certain position with the railways and, hopefully, end with another position. That is one of the difficulties. The process could take some time.



ROUTINE PROCEEDINGS


Walter David Baker: Mr. Speaker, I rise on a point of order. On Monday, the government House leader indicated what the business of the House would be down the line, so to speak. Has he anything to add to what he said then?


Mr. Sharp:: Mr. Speaker, basically, the government's program remains the same. I thought I might indicate our intention to call what I hope will be considered as two or three non-contentious matters. Today we will continue with the budget debate.
Tomorrow is Friday, the day that we traditionally try to clear the order paper of non-controversial items. I, therefore, intend to call first, tomorrow, items Nos. 33 and 34 appearing under government business on the order paper which refer certain documents to standing committees, followed by third reading of Bill C-81. We will then revert to Bill C-84 and will continue that business on Monday, followed by the budget debate for the rest of the week.


THE ENVIRONMENT
George Baker: Mr. Speaker, on behalf of the Minister of the Environment (Mr. Marchand), and under the provisions of Standing

June 3, 1976
Order Paper Questions
Order 41(2), I wish to table two copies of the task force report on PCB's to the joint Department of the Environment and Department of National Health and Welfare Environmental Contaminants Committee.


MEASURE RESPECTING DOMESTIC AND INDUSTRIAL USE OF SOLAR ENERGY
Mr.   Chas. L. Caccia@Davenport: for leave to introduce Bill C-440, respecting the domestic and industrial use of solar energy.


Some hon. Members:: Explain.


Mr. Caccia:: Briefly, Mr. Speaker, the reasons for introducing this bill are the following. Time is running out before non-renewable resources will have been depleted. Future generations of Canadians, and their energy requirements, depend upon decisions made in this decade. The potential offered by renewable resources, such as the sun, needs to be pursued vigorously now. Solar power heating offers an opportunity for the development of a new Canadian industry. Considerable strides are being made in other industrial nations, particularly the United States. We must develop the solar heating technology suited to the Canadian climate.
The purpose of the bill is to establish an institute of solar energy applications. The institute would undertake intensive research leading to the development of a technology that will permit the use of solar energy.


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

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr.   J.-J. Blais@Parliamentary Secretary to President of the Privy Council: Mr. Speaker, the following questions will be answered today: 4,583, 4,591, 4,954, 5,168 and 5,440.


Mr. MacDonald (Egmont): Were any discussions held between the federal and provincial governments respecting quotas for the showing of Canadian made feature films and, if so (a) between whom and on what dates (b) what were the results of such discussions (c) what objections or reservations, if any, were expressed by the representatives of provincial governments to the proposed voluntary quota agreement (d) which provinces specifically indicated an interest in implementing quotas for feature films made within their own province?


Miss Coline Campbell (Parliamentary Secretary to Secretary of State):: I am informed by the Canadian Film

Development Corporation as follows: Yes, discussions were held: (a) Between Mr. Michael Spencer, Executive Director, Canadian Film Development Corporation; and Mr. Peter M. Roberts, Assistant Under-Secretary of State for Cultural Affairs; and on February 27, 1975 in St. John, Newfoundland: Mr. John Perlin, Director of Cultural Affairs, Government of Newfoundland. On February 28, 1975, in Halifax, Nova Scotia: Mr. Hugh Conrod, Deputy Minister of Recreation; Mr. A. J. Hickey, Deputy Provincial Secretary, Government of Nova Scotia, and officials, on March 7, 1975 in Edmonton, Alberta: Mr. Walter Kaasa, Assistant Deputy Minister, Department of Culture, Youth and Recreation, Government of Alberta, and officials, on March 10, 1975 in Victoria, British Columbia: Mr. A. L. Pearson, Associate Deputy Attorney-General; Mr. L. J. Wallace, Deputy Provincial Secretary, Government of British Columbia, and officials. On March 13, 1975 in Regina, Saskatchewan: Mr. Frank Bogdasavich, Deputy Minister of Culture and Youth, Government of Saskatchewan and officials. On March 14, 1975 in Winnipeg, Manitoba: Mr. Allan Early, Department of Industry and Commerce, Government of Manitoba, and officials. On April 10, 1975 in Ottawa: Mr. Douglas B. Boylan, Clerk of the Executive Council and Secretary of the Cabinet, Government of Prince-Ed ward-island. On April 17, 1975 in Fredericton, New Brunswick: Mr. Harry Cochrane, Deputy Provincial Secretary, Government of New Brunswick, and officials. On April 18, 1975 in Toronto, Ontario: Mr. Malcolm Rowan, Deputy Minister; Mr. Douglas McCullough, Assistant Deputy Minister, Ministry of Culture and Recreation, Government of Ontario, and officials. On May 9, 1975, in Quebec City: Mr. Andre Gourd, Special Advisor to the Minister of Cultural Affairs, Government of Quebec; (b) The discussions indicated that there was no unanimity among the provinces as to the need for a quota, although some of them were prepared to give consideration to this form of support for the Canadian film industry. On the other hand there was little interest in the proposal that box-office levies should be imposed by the provinces; (c) The proposed voluntary quota agreement was not discussed with the representatives of the provincial governments; (d) While some provinces indicated that they were prepared to consider implementation of quotas for feature films, it is not possible to identify specific provinces due to the confidential nature of discussions.


Mr. MacDonald (Egmont): 1.	What Canadian participation will there be in deciding on the allocation of the $1.7 million set aside under voluntary agreement with Odeon and Famous Players for investment in Canadian made films?
2.	For each of the seven major feature films produced in Canada since the voluntary agreement came into effect, what percentage of the financing came from (a) CFDC (b) the $1.7 million voluntary agreement with Odeon and Famous Players (c) other sources?
3.	What new measures is the government considering to encourage investment from (a) public (b) private Canadian sources in the Canadian feature film industry?
4.	Does the Secretary of State consider one of the effects of the $1.7 million agreement to be a centralization of decision-making with respect to which feature films in Canada receive production funding, and (a) if so, for what reason (b) if not, for what reason?
June 3, 1976

5.	Does the Secretary of State consider decentralization of the Canadian film industry, away from its current concentration in a few major centres, to be a desirable goal and, if so, does he consider the current state of the industry appropriate to pursuing such a goal within the next decade?


Coline M. Campbell: I am informed by the Canadian Film Development Corporation as follows: 1, The decision regarding the allocation of these funds is being made by the executives of these companies which are registered as Canadian companies and are doing business in Canada.
2.	Nine major motion pictures were produced in Canada since the voluntary agreement came into effect on August 1st, 1975: (a) 63.64 per cent; 621/2 per cent; 63 per cent; 47 per cent; 50 per cent; 25 per cent; 30 per cent; 0 per cent; 0 per cent; (b) 14.14 per cent; 12'A per cent; 21 per cent; 35 per cent; 30 per cent; 10 per cent; 7l/z per cent; 20 per cent; 14 per cent; (c) 22.22 per cent; 25 per cent; 16 per cent; 18 per cent; 20 per cent; 65 per cent; 62*/2 per cent; 80 per cent; 86 per cent.
3.	(a) The government is considering changes in the CFDC Act in order to make it more flexible; (b) Private Canadian sources will only be interested in the Canadian feature film industry as an investment if producers manage to create a significant track record of financial returns, but a decision to provide more flexibility in the CFDC Act will create a better climate for private investment.
4.	To be answered elsewhere.
5.	To be answered elsewhere.
In so far as the Department of the Secretary of State is concerned: 1. To be answered elsewhere.
2.	To be answered elsewhere.
3.	To be answered elsewhere.
4.	Decisions with respect to which feature films will receive production funding in Canada have been made in Montreal, Toronto and, to some extent, Vancouver and a change in this situation is not anticipated in the near future.
5.	Decentralisation of the Canadian film industry away from its current concentration in a few major centers is only a desirable goal in so far companies established in the regions can operate successfully on an industrial basis. In the long run, such a goal appears to be feasible.


Mr. MacKay: 1.	What aircraft was used by the Prime Minister's wife to return from Venezuela?
2.	Who was the (a) captain (b) first officer during the flight?
3.	Did the Prime Minister's wife occupy the pilot's seat at any time during the flight and, if so (a) for how long (b) over what territorial area?
4.	Did the Prime Minister's wife operate the controls of the aircraft at any time and, if so (a) for how long (b) did she control the aircraft in a climb in controlled air space (c) over what territorial area was she at the controls?
5.	Was the captain of the aircraft in a position to allow an unqualified individual to occupy his seat during cruise and climb manoeuvres and, if so, on what basis?
Order Paper Questions
6.	Did the captain allow the Prime Minister's wife to control the aircraft in cruise and climb manoeuvres through manipulation of the controls and, if so, for what purpose?
7.	Was airways traffic control clearance received for the climb during which the Prime Minister's wife was at the controls?
8.	Has a violation been filed against the pilots by the Department of Transport and/or the Federal Aviation Authority?
9.	Have any instructions been issued to the Air Force VIP squadron to ensure that no such incident occurs again?
10.	Has the Minister of Transport received any reaction to this violation of International aviation rules from the (a) Airline Pilots of America (b) Federation of Airline Pilots Association (c) Canadian Airline Pilots Association (d) International Civil Aviation Organization?


Mitchell William Sharp: I am informed by the Departments of National Defence and Transport Canada as follows: 1. Mrs. Trudeau returned from Venezuela on board the Canadian Armed Forces Boeing 707 aircraft that had been assigned to the Prime Minister and his party for this official visit.
2.	(a) and (b) See Question No. 69 answered on February 3, 1976.
3.	Yes. One of the two pilots seats; (a) Five minutes; (b) Over the Atlantic Ocean approximately 200 miles south east of New York City.
4.	(a) and (b) Mrs. Trudeau was not in control of the aircraft at any time. Throughout the time that she was invited to sit in the left hand seat, the Captain was in control of the aircraft from the right hand seat; (c) The area as described in 3 (b) above.
5.	The Captain was in the righthand flight deck seat and he retained full control of the aircraft at all times. Canadians Forces regulations stipulate that both pilot seats need only be occupied by qualified pilots during arrivals and departures when the aircraft is below 10,000 ft. and at all times below 1,500 ft.
6.	No. The Captain was in full control at all times.
7.	Clearance was received for a climb from 35,000 to
39,000	ft. during the period when Mrs. Trudeau was present in the flight deck.
8.	No. DOT and the FAA have no jurisdiction over military aircraft.
9.	No. Additional instructions have not been issued, because safety was not compromised and no regulations were broken.
10.	No.


Mr. Caouette (Temiscamingue): 1.	What is the role of the CBC Council?
2.	What (a) is the number (b) are the names and addresses (c) are the functions (d) are the salaries (e) is the distribution by province or territory of the senior public servants on the Council?
3.	How many are (a) English speaking (b) French speaking (c) bilingual?


Coline M. Campbell: I am informed by the Canadian Broadcasting Corporation as follows: 1. Under the Broadcasting Act, 1968, the Board of Directors constitutes the Canadian Broadcasting Corporation. As such, the Corporation
14116

June 3, 1976
Order Paper Questions
(Board) is established for the purpose of providing the national broadcasting service contemplated by Section 3 of the Broadcasting Act. The Act provides a mandate of broad objectives for the Corporation and the Board establishes Corporate policies to be followed by Corporation Management in achieving programming and coverage objectives as laid down in the Act. These achievements are assessed regularly by the Board. The Board also reviews all Corporate budget estimates and approves final budgets.
2.	(a) Fifteen. One vacancy exists at present, (b) A. W. Johnson, Ottawa, Ont.; Dr. Stanley Bah, Windsor, Ont.; Brian Flemming, Halifax, N.S.; Mrs. Georgette Guay, Quebec, Quebec; Frank N. Hansen, Inuvik, Northwest Territories; Mrs. Mary Konantz, Winnipeg, Manitoba; Andre Lamy, Montreal, Quebec; Fernand D. Lavergne, St-Boni-face, Manitoba; Michael Lypka, Hamilton, Ont.; Yves J. Menard, Montreal, Quebec; James S. Palmer, Calgary, Alberta; Judge Dorothy Petrie, Willowdale, Ont.; Paul S. Plant, Vancouver, British Columbia; Bernard F. Trotter, Kingston, Ont. One vacancy; (c) See 1 above; (d) With the exception of the President, Directors receive an honorarium of $150. per day while attending a meeting of the Corporation or a Committee thereof; (e) See (b) above.
3.	(a) Ten; (b) Four; (c) Six.


Mr. Herbert: Was a contract awarded by the government to GENAC, a joint venture of Air Canada and General Aviation, for aircraft de-icing at Mirabel Airport and, if so (a) what are the details of this contract (b) was a tender received from GENAC and was the content of any such tender made public (c) are any costs of this contract recoverable from airlines and, if so (i) what is the method of recovery (ii) what percentage of costs is the objective of such recovery charges?


Mr. Ralph E. Goodale (Parliamentary Secretary to Minister of Transport):: No contract was awarded to GENAC; (a) Not applicable; (b) No tenders were received; (c) The facility was under construction during the winter of 1975/1976. The facility was declared fully operational on March 20. No weather occurred since March 20 requiring aircraft to be de-iced at this airport and thus no charges could be assessed; (i) Recovery of costs will be pro-rated to each airline on amount of usage to recapture operating, maintenance and material costs; (ii) The decision to construct a common de-icing facility at the new Montreal International Airport (Mirabel) was based primarily on ecological factors, to ensure that effluents (glycol) were not discharged into streams. This facility is an experimental facility from which design standards must be assessed, confirmed or modified as necessary for future installations as required elsewhere at Canadian airports. Until the results of a research project to be conducted during the forthcoming two winters can be evaluated, the parameters of cost recovery of capital costs will not be fully determined.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Wednesday, June 2, consideration of the motion of Mr. Macdonald (Rosedale) that this House approves in general the budgetary policy of the government, and the amendment thereto of Mr. Stevens (page 13901).
Claude Wagner: Mr. Speaker, my feeling indeed is that the best speech in this debate is now being made outside this House, a few steps from here on Parliament Hill, because some 10,000 farmers are now expressing to the government their dissatisfaction and anger with the inequities now being caused against the farming industry in Quebec, Ontario and elsewhere.
I hope their vibrant speech will be heard by the Minister of Finance (Mr. Macdonald), the Minister of Transport (Mr. Lang) and the government as a whole.
Before starting these comments, I had an opportunity to state, in a motion under Standing Order 43, that Quebec's industrial milk producers will face a loss of revenue totalling more than $100 million. I also indicated that by the Minister of Agriculture's (Mr. Whelan) own admission, those producers respected their quotas and are in no way responsible for the current overproduction. Therefore, they should not be penalized for something they did not contribute to. Mr. Speaker, I would extend to the Minister of Finance the usual congratulations for his tour de force in presenting us with a non-budget, for the know-how with which attempted to have us accept his wait and see approach as an action-oriented approach. Of course I share the views of the hon. member for York-Simcoe (Mr. Stevens). I was pleased to second the non-confidence motion that he put forward as regards a budget speech of which he underlined the mistakes and deficiencies.
* (1510)
Even though our party has no majority in the House, it is obvious from what we hear from every region of this country that it reflects the view of the majority of Canadian taxpayers in this debate. The very fact that Liberal members have publicly indicated their reservations about the government policy is a very strong indication that it does not have the support of the public at large.
How times have changed, Mr. Speaker! Two years ago, we were in the midst of an electoral campaign and the Prime Minister was still refusing to recognize the impending danger of inflation. He was openly laughing at the program that the Progressive Conservative Party was suggesting. Fifteen months later, on October 13, 1975, the government leader appeared on the national radio and television network to recognize publicly that one year earlier he had cheated the people. He was introducing it as his party's initiative, but scamping it in such a way and with such clumsiness that today, everybody has to admit that his administration is a complete failure.
In his non-confidence motion, our party is asking most hon. members to support it because nothing justifies us to
June 3, 1976

believe that the incapacity the government has shown since 1968, and which is aggravating every week, has suddenly turned into expertise. Nothing allows us to think that the congenital weakness of cabinet members has suddenly turned into energy. We are always faced with the same inert and inefficient cabinet and getting rid of them as soon as possible would do this country great service.
The mockery of a budget which the Minister of Finance (Mr. Macdonald) introduced on May 25 is a further indication of this inefficiency. In this regard, some people have mentioned a status quo. Reality is even worse: We have here a policy of ultra-conservatism. The Minister of Finance was satisfied with making minor adjustments in the hope that others, the United States in particular, will come to his rescue. Being unable to conceive dynamic initiatives that would meet our actual requirements, the minister is merely following the lead of foreign economies.
When tax incentives were needed to stimulate the shaky recovery that was emerging, the minister only granted very small benefits to small businesses, but he further whittled down corporate profits. He has increased a little bit the deductions for child care and retirement savings plans, but, as a whole, he has not submitted to us any program that would really contribute to improve the difficult economic conditions this country is facing.

I deeply regret that the government did not see its way clear to provide this country with a limited quantity of something which is all too rare these days-a little bit of hope. No one wanted extravagant promises. Our leader and our party have pushed for realistic spending and for realistic spending restraint on the part of the federal government. But this does not mean the exclusion of hope-hope for the working people who wonder when controls will begin to operate in favour of the average man; hope for the small businessmen who wonder when exports and real economic activity will allow for expansion; hope for students who want nothing more greedy or self-centred than a chance to work their way through college or university; hope for the young people in the maritimes, Quebec and elsewhere who would like to find work, purchase a home and build a future.
I share with the Minister of Finance (Mr. Macdonald) belief in the need for a responsible and balanced budget. But that does not necessarily mean a budget which is dull and unimaginative. Budgets are more than a prognosis of a government's spending activity; they are more than indicators of what the country can expect in terms of taxes and assistance. They are assessments of economic health and of the capacity of the nation to produce the wealth needed to sustain and improve the quality of life for its citizens. Where are the programs to produce more jobs? Where are the programs to assist the poor, the needy, the disunited?


An hon. Member:: Read it.


Claude Wagner: Where is the humanity, where is the compassion? I believe the budget is one drawn up by men who revel in the status quo; indeed, they are prisoners of the status quo. It is a budget devoid of humanity, compassion, hope and optimism. If history is to say anything about the difference between our party and the party opposite on budgetary matters in the year 1976, I hope it might say that
The Budget-Mr. Wagner
we in the Progressive Conservative party believed in the economic capacity of this nation, when the government did not; that we believed in the average man and woman in this country, when the government did not; that we believed in the future of this country, when the government did not.

Mr. Speaker, there is no need to be an expert on economic matters to be concerned about a deficit of the order of $5 billion. Nobody can accept either expenditures which amount to $42 billion. As far as its spending is concerned, the government has not made any worthwhile cutbacks. And what about the adverse trade balance which amount to an astronomical figure.
Everyone is concerned about the government decision to maintain the interest rates at an artificially high level. It is true that after its long-standing slackness, the government simply had to check the growth of the money supply, but this belated policy can only hinder every more a shaky economic recovery. Without tax incentives, without tax cuts, especially for low income groups, this economic recovery will not be enough to absorb a significant number of the 761,000 unemployed registered last month.
This government is resigned to maintaining the unemployment rate to its present level. I say resigned but it is patently obvious that this government depends on unemployment to reduce inflationary pressures. It comes back to the old classical method: create unemployment to fight inflation, let thousands of workers idle so that demand will not be increased, all this in the hope that the inflation rate will get down to 8 per cent this year, a level which is not even reassuring.
So the minister resorts to the unemployment-inflation trade off. What a philosophy! What contempt for distributive justice, what irresponsibility in front of the dangers that all those Canadians maintained in unwarranted poverty represent for social peace. We have a good example this afternoon on Parliament Hill, we can see how angry citizens can get when they are provoqued to such extent by an irresponsible, insensitive, intransigent and unfair government.
If this is the new society promised by the Prime Minister, it deserves to abort like the just society about which, incidentally, we no longer hear anything. In its fight against inflation, this government maintains a false feeling of security in the public. It knows very well, for instance, that the recent and modest dip of the consumer price index will not last very long. The expected increase in oil prices will be felt this fall and next year in a wide range of products and services, particularly in essential sectors like food, housing and transportation.
Furthermore, in his predictions the Minister of Finance (Mr. Macdonald) did not take into account a new element which in recent months has influenced the cost of living- the almost general increase in provincial taxes and especially municipal rates. Without adequate revenues, the municipalities will continue to demand more from the homeowner. And how could it be otherwise? In 1975, local governments' revenues went up by only 13.5 per cent while their expenditures increased by 15.8 per cent. The small
95S68-S9'/2

June 3, 1976
The Budget-Mr. Wagner
owner has also become one of the greatest victims of this government's policy.
Mr. Speaker, a moment ago, I spoke of unemployment. The budget offers no hope to the 11,000 textile workers who have been laid off in the last 18 months. I am sorry the minister did not concern himself with the critical crisis the textile industry is now going through, an industry that is very important to the provinces of Ontario and Quebec and, in particular, allow me to point it out, to my riding of Saint-Hyacinthe.
It is urgent that the government should hear at last the cries of alarm Quebec and Ontario authorities have just put out. It is high time it take into consideration the admonitions of the Senate Committee on Banking, Trade and Commerce and that it answer the dramatic appeal of the Congress of Democratic Unions.
Despite some initial success, after the 1970 reform, the textile sector fell back into stagnation. Still, thanks to increased productivity, it proved it could get back on its feet. What it lacks now for a decisive impulse, is very simply a sensible policy on the part of the government. Under the pretext of international commitments and aid to the underdeveloped countries, the government authorizes the import of textile products to a far greater extent than do other countries which have also signed the same agreements.
Studies have shown that the main problem facing our textile industry is not a lack of markets, but massive imports. Imports now account for 54 per cent of our domestic market, compared with 12 per cent for the United States, 10 per cent for Japan and 20 per cent for the European Common Market. It is therefore not surprising under theses circumstances that the textile industry has been constantly on the decrease in Canada. From 1973 to 1974, in a single year, the number of workers went down from 102,000 to 86,000. From 1969 to 1976, 33 plants closed down and 6,000 workers became chronically unemployed.
I know that the government talks about the need to help developing countries. However, at the present time, the textiles which constitute the worst threat for our industries come mostly from highly industrialized countries. I accept the fact that we must help developing countries by accepting their textile products, but instead of opening our boundaries indiscriminately, would it not be more logical to accept foreign textiles in a ratio inversely proportional to the standard of living of the country we want to help? In this way, the most needy would receive our help and we would be protected against competition from the wealthiest countries.
One thing is certain, the present voluntary quota system must be completely reviewed. The government should be more realistic and abandon a policy which is now leading our textile industry to a slow death. The Senate Comittee on Banking, Trade and Commerce and the CSD have shown the way: to sign, like the United States, bilateral agreements concerning the level and nature of textiles that we shall accept; to establish long-term objectives in relation to the potential of the textile industry, both as concerns production and employment. We could thus eliminate the uncertainty which is drying up investments and discouraging the workers. As Mr Yvan Guay wrote in the

newspaper La Presse of May, 19, Canada must finally stop playing boy scout because, and I quote:
For Canada to assume alone the responsibility for a world free-trade policy would be ridiculous and the more so since clothing, like food, is a basic product. No country can ever rely excessively on foreign nations for its food and its clothing ... That is why the textile and clothing industry, like agriculture, must be more or less subsidized if we do not want its workers to become under-proletarians.
And while I am talking about unemployment, Mr. Speaker, there is reason to be concerned about the general economic situation in the metropolitan area of Montreal once the works for the Olympic Games are finished. Economists, business and labour spokesmen have brought to the attention of authorities the need to avoid massive unemployment in the building sector. Layoffs have already begun and more will soon follow.
The situation appears all the more serious because the government of Quebec has just ordered that the work on the subway extension be suspended and the government in Ottawa comes in with postponements on the completion of Place Guy Favreau and the new postal terminal and cuts back on its budget for public or harbour works in the metropolis. It is imperative that federal, provincial and municipal authorities get together on an urgent basis to set up a works program capable of absorbing the greater part of the manpower made available. Construction workers in greater Montreal must be protected from massive unemployment. It would be unfair to let them bear the load of budget restraint. If expenditures must be cut back, let it not be by denying those workers their livelihood.
Just a word about Loto Canada for which the government is asking for $5 million in interim supply. I accept that in principle but on very specific conditions. The government must not permanently interfere with an area that is better left with the provinces and in which they have indeed taken the initiative. We are pleased to see that Loto Canada will contribute to make up the deficit of the Olympic Games in Montreal and will also bring a substantial contribution to those to be held in Edmonton. However, I regret that the government neglected to consult the provinces and failed to secure beforehand the agreement of those provinces which already operate loteries. And that is why I suggest that Loto Canada should stop existing after 1979 and that Ottawa should afterwards return that jurisdiction to the provinces.
So in this area the federal government recognizes belatedly, one must admit, the national nature of the Olympic Games and agrees now with the official opposition which has always called for the active participation of Ottawa in the carrying out of an undertaking it had morally backed up with the International Committee as was the case when Montreal requested the Games. But Loto Canada must not be-a new source of division between Ottawa and the provinces nor between the citizens of the various regions of this country.
Incidentally, Mr. Speaker, in view of certain recently reported abuses by unconsciencious distributors one may wonder whether public authorities would not be well inspired to put the organization for the distribution and sale of tickets in the hands of some voluntary associations, and I am thinking of the veterans, the blind and the handicapped. The profits derived therefrom could be used to further the purposes of those associations even if they
June 3, 1976

should give the sellers a commission. Those additional funds would help those organizations to alleviate the financial burden imposed upon them through the assistance they provide to the more needy of their members.
Finally, and this is how I want to conclude my remarks, Mr. Speaker, the budget speech on May 25 will-have air impact abroad where, as is the case at home, the competence of this government is unreliable. Already suspected of being halfhearted with the Atlantic Alliance this government must now after the ridiculous Orion adventure restore its credibility with our allies. Let us also hope that we will not see another equally aberrant comedy when it comes to obtaining Leopard tanks.
The minister did not talk much about the major issues that remain undetermined between Canada and the United States, namely with respect to the Auto Pact and the irritants about which U.S. authorities are complaining. We are not much more informed about the nature of the discussion we have had with the Common Market and the importance of the barriers which up to now delayed the establishment of a contractual link between Canada and the European Economic Community.
Mr. Speaker, the same kind of silence persists about the negotiations entered into in the Tokyo Round and in which, however, the interests of our exporting industries are deeply involved. We are also completely in the dark about the specific projects of the government as regards the important problem which the conscience of the western world has to solve: that of the economic and food assistance to the underdeveloped countries whose inhabitants suffer from hunger. The news we had from Nairobi are far from being satisfactory. I hope we will soon know the position of the cabinet on all the questions which have been studied but which are far from being solved.
Either by bilateral or multilateral agreements, our country which, in spite of its present difficulties, is one of the most privileged in the world, must significantly increase its help to the millions of people who are without bread and who lack the minimal material comfort. Our generosity must be consistent with the hopes which the underdeveloped and underfed people have in us. If it is necessary, we must take ourselves the initiative of launching a new collective effort of the industrialized countries to this aim. Mr. Speaker, this is the price of international peace.


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources):: Mr. Speaker, I welcome the opportunity to enter this debate today. I welcome it particularly as it provides me with an opportunity to speak on a number of important questions. I should like to touch on some of those mentioned by the previous speaker, the hon. member for Saint-Hyacinthe (Mr. Wagner), a man who has a reputation as a polished gentleman, an urbane man and an effective politician in his province.


Some hon. Members:: Hear, hear!


Alastair William Gillespie: I listened with a great deal of interest to what he had to say. I thought the first part of his speech was long on rhetoric. I thought the middle part of his
The Budget-Mr. Gillespie
speech dealt with some important questions, like the textile industry. But I am afraid he did not persuade me, and perhaps others, that he had any particular solutions. Of course, I listened very intensly to the end of his speech, because it was there that I thought I might see the dimen- sion he is well known for-that dimension of a man with wide perspectives, that critic of external affairs.
The hon. member did touch on a number of broad questions. He dealt with NATO, but he really did not say much about it. He alluded to the auto pact, and he sort of established his credentials in the new economic era. I had the feeling, Mr. Speaker, that all of those comments were just sort of pushed into the record so he could say, "Well, you know, I do have some knowledge and understanding of these questions." I thought they were rather short, and lacked depth.


Some hon. Members:: Oh, oh!


Alastair William Gillespie: I thought that if the hon. member really wanted to establish his position as a man with a strategic sense of things, he would have said something about energy.


Some hon. Members:: Hear, hear!


Alastair William Gillespie: There was not a word about energy in his remarks, that I can recall.


Some hon. Members:: Oh, oh!


An hon. Member:: He is full of energy.


Alastair William Gillespie: I suppose there is always a problem with the Tories, though. He referred to the fact that his party has a commitment to the future. I have a feeling that his party has a commitment to the future through a rear-view mirror.


Some hon. Members:: Hear, hear!


Alastair William Gillespie: That is the only way they know for steering toward the future.


An hon. Member:: If anybody knows, you should.


Alastair William Gillespie: He made the comment that he hoped this budget debate would record-for posterity, presumably- the fact that his party, the Tories, and I want to use his words, "believe in the future and the government does not".


An hon. Member:: Right on.


Alastair William Gillespie: I have already referred to the fact that one of the most strategic matters as far as the future of Canada is concerned is energy, and there was not a word about that.


An hon. Member:: You sure don't know anything about long-range planning.


Some hon. Members:: Oh, oh!


Alastair William Gillespie: I suspect that this may not be all his fault. He has a new leader now. I remember very well, and I am sure the hon. member followed a part of the debate him-

June 3, 1976
The Budget-Mr. Gillespie
self, his new leader telling the people of Canada and those who were supporting him at the Tory convention, that the Tory party must stop criticizing in a destructive way and start telling the Canadian people what they stand for and not what they stand against.


An hon. Member:: We will, in 1978.


Alastair William Gillespie: I have been listening very carefully to him and some of his colleagues, and I have not found out what they stand for yet. It may well be that his new leader has not yet confided in him, so I do not blame him altogether.


An hon. Member:: That's another cheap shot.


Some hon. Members:: Hear, hear!


An hon. Member:: No wonder the budget is in such a mess.


Alastair William Gillespie: As I said, I welcome the opportunity of participating in this budget debate. There are some very important energy provisions in this budget, and I want to talk about them. It has been just a little over a month since I tabled an energy strategy for Canada in the House- self-reliance.


Some hon. Members:: Hear, hear!


Alastair William Gillespie: This is one of the most important and comprehensive statements on energy that has ever been made. I recommend it to my colleagues opposite because, quite clearly, very few of them have taken the opportunity to read it.


An hon. Member:: Including yourself.


Alastair William Gillespie: I guess you do not want to be troubled with the facts. I recommend it to you, because you might learn something about the situation and some of the options and, indeed, some of the problems and opportunities for Canada. It might help you to have some kind of commitment and sense of direction toward the future.


Some hon. Members:: Hear, hear!


Alastair William Gillespie: Mr. Speaker, as I say, since that occasion when we tabled the strategy, a number of very important measures have been taken to support the main thrust, the priority areas enunciated and outlined in that strategy paper. First, we have announced a new set of oil and natural gas prices for Canada fully consistent with the strategy. Second, my colleague the Minister of Indian Affairs and Northern Development (Mr. Buchanan), and I tabled a policy statement that clarifies the terms and conditions under which the petroleum industry will operate on Canada lands-terms and conditions that will increase the exploration effort, increase our resource information and increase Canadian content and participation in the development of Canada's energy resources.
Last week, my colleague, the Minister of Finance (Mr. Macdonald), in his budget, announced a series of further initiatives that this government is taking to further our objectives of energy self-reliance. These are very important measures which fully support and reinforce those to 
which I have already alluded. There are three particular aspects of those energy measures in the budget which I should like to identify for hon. members of this House and particularly, perhaps, the opposition. The first is the further stimulus to exploration. The second is the economic incentives for the substitution of alternative energy sources for oil. The third is provision to further enhance the energy conservation proposals I have already announced, particularly in so far as they affect the use of motor gasoline.
For the exploration of alternate sources of oil and conservation there is a series of measures in each one of these policy priority areas. I believe these budget measures reinforce the basic thrust of the government's resource policy. They will enhance our ability to meet the specific energy targets and objectives in respect of energy self-reliance. In assessing the energy related budget measures, it is necessary to consider them in the context of both the government's energy policies as they are continuing to evolve, and the current and prospective economic situation. As the budget speech makes clear, we are embarked on an economic recovery in Canada, but the policy course we must steer is a very sensitive one if we are to move the Canadian economy back to its potential growth rate in a sure and steady way. Inappropriate action at this stage would inevitably lead to problems farther down the road. The greatest of these problems is the possibility that inflationary expectations could lead to a renewed outbreak of cost and price pressures that would abort the economic recovery in Canada and that would lead ultimately to declines in real purchasing power, curtailments in production and increased unemployment.
At the same time as our short-term economic situation demands careful monitoring and prudent management, it is obvious that a number of structural changes in our economic system are necessary if we are to be able to realize our potential over the longer term. Nowhere is this more apparent than with regard to our energy situation. We need to move domestic prices to a level that adequately reflects the higher costs of finding and producing new energy supplies in Canada. We need to encourage and stimulate more efficient methods of producing, distributing and using energy. We need to facilitate the reallocation of manpower, equipment and financial capital that will be required to augment our domestic energy supplies and enhance our self-reliance. We need, as well, to move deliberately and in an orderly way.
The necessary adjustments that producers and consumers of energy must make will have to be phased in an appropriate manner. Attempts to move too rapidly to develop crash programs that do not take account of the realities of the Canadian situation will waste scarce resources and lead to distortions and bottlenecks that will endanger our anti-inflation objectives and our prospects for real economic growth and employment.
The pricing decisions I announced for crude oil and natural gas reflect the manner in which these considerations must be balanced. Crude oil and natural gas were specifically exempted-I emphasize this-from the antiinflation program because it was recognized that upward relative price adjustments for these energy sources are essential. That is a point which not all members opposite
June 3, 1976

seem to realize, or perhaps some members opposite have short memories in this regard. At the same time, in determining the actual increases that should be permitted, the government would be acting irresponsibly if it did not consider the state of the economy at the time.
The first portion of the increase I announced for crude oil prices will lead to increases of about 3 cents per gallon in the price of motor gasoline and other petroleum products, including home heating oil. These price increases will take effect 60 days after July 1 of this year. In addition, the price of natural gas in residential use can be expected to increase by about 7.2 per cent, although the timing and exact magnitude of this increase will be determined by provincial regulatory agencies. Through the balance of 1976, these higher prices will increase the CPI by less than one percentage point. They will not unduly impair the success of the government's anti-inflation program, nor will they threaten the recovery that we foresee for the Canadian economy.
Further increases will occur in the spring of 1977, amounting to about 2 cents per gallon in the price of motor gasoline and other petroleum products, and 4.3 per cent for natural gas for residential consumers. These increases will have further inflationary impacts, but we are confident that by that time the anti-inflation program will have reduced inflationary expectations enough, and the economy will be sufficiently resilient, to allow these further increases to be absorbed in a smooth and orderly way.
Let me reiterate, again, that while the steps we take are tempered by current economic considerations, there should be no doubt as to the directions in which we are going. Those Canadians making investment decisions now, both consumers and producers, would be well advised to make those decisions on the basis of more expensive energy in the future. With these remarks as background, Mr. Speaker, let me turn specifically to the budget measures as they affect exploration activities and energy conservation initiatives. There are a number of changes in the budget that will further increase the incentives to explore and develop that currently exist in the federal tax structure. All payments made to acquire Canadian resource properties after May 6, 1974, will be included as part of development expenses; provincial incentives for exploration and development drilling will not be included in income; to the degree that provincial governments reimburse industry for federal taxes collected in respect of provincial royalties, these reimbursements will not themselves be subject to federal tax; and the depreciation allowance for offshore drilling platforms has been doubled, from 15 per cent to 30 per cent.
These measures will increase the cash flow to the petroleum industry in Canada and will further enhance the already considerable incentives to exploration that exist in the federal tax system. In addition, the suspension of the principal business test for a three-year period will allow those individuals and corporations who choose to invest in exploration, even though this is not their principal business, to expense their investments immediately. This will increase the ability of the petroleum industry to attract the capital and Canadian equity that is required for the exploration that must be undertaken if we are to assess
The Budget-Mr. Gillespie
adequately the options that are available to meet our future energy requirements.


O (1550)
[Stage Direction]
Mr. Speaker, I believe there has been very limited attention so far in the press, and very little appreciation so far as the potential of that particular measure-the measure of removing the principal business tax. I believe it could have, potentially, a very important impact on new exploration activities in Canada, particularly from the point of view of the Canadian investor who has not always had an opportunity to invest. As a result of the new regulations I have referred to, the Canadian investor will have more opportunity and it will put him on a more equal basis with foreign investors who have been investing in our resources.
Hon. members will recall that the federal government's share of total production profits accruing to the petroleum industry in Canada is in the order of 17 per cent. As well as taxing at a relatively low rate, the federal system is highly sensitive to reinvestment. If, for example, producers reinvest about half of the $1.05 increase in the price of petroleum that will occur on July 1, the federal share of the incremental revenues will decrease from 27 per cent to 3 per cent. What this means, in very simple terms, is that about 50 per cent of new exploration investments can be financed with money that would otherwise have gone to the federal government in the form of taxes.
Let there be no mistake about this, Mr. Speaker. I am getting a little tired of reading the comments of critics within the industry, and outside, who claim that the federal government is taking a major share of the increase in price. Quite clearly, as I have already indicated this afternoon, the federal government will back off to a very small percentage if the additional price increase is reinvested in exploration. Indeed, if 57 cents of that dollar is reinvested in exploration in Canada, there will be no federal tax on that incremental increase.
Mr. Gillies:: Three cents.


Alastair William Gillespie: Nothing for the federal government at all. In other words, the federal government backs right off to provide this degree of incentive. Some critics of the energy strategy we have adopted have suggested that our emphasis on exploration amounts to "putting all our eggs in one basket". It has been suggested that we are relying on frontier resources that, in the event, may not be there. This simply is not true. As I have pointed out on many occasions, there are a number of energy options available to us. But in order to know what we should do, we have first to know what we can do. And it is this need to know that makes accelerated exploration activity critical over the next three to four years. As I indicated previously, the federal government-through the existing fiscal system and the modifications announced in the budget-is contributing indirectly, but substantially, to exploration activity. We are also making a major, direct contribution through Petro-Canada. Hon. members will recall, I am sure, that the exploration budget for Petro-Canada this year will be $100 million, which will place it out in the forefront of companies exploring on Canadian lands. It is

June 3, 1976
The Budget-Mr. Gillespie
perhaps number one. Yet we still hear from the Tories opposite that they are against Petro-Canada.


James McPhail Gillies: What has it done for us yet? It has not done a thing. It is $700 million down the drain.


Alastair William Gillespie: I would hope that the producing provinces, who currently receive over 40 per cent of the production profits accruing to the petroleum industry, will assess the degree to which their incentive programs are appropriate in the context of our national objective of energy self-reliance.
The budget also introduces a number of measures that are supportive of our efforts to encourage the substitution of domestic energy sources for imported oil and to facilitate the introduction of renewable energy technologies. The extension of the two-year write-off of new capital equipment to equipment that can be used to produce energy from industrial and municipal wastes is an important measure in this regard. Many European countries, such as Germany and Sweden, generate a substantial proportion of their electrical energy from waste material, such as wood wastes produced in the lumber industry, or waste steam produced in a manufacturing industry. In Germany, this production is as high as 28 per cent of the total electrical capacity of the country. Preliminary estimates suggest that we might ultimately be able to supply 20 per cent of our electrical energy requirements from these sources. Thus, the budget measures should encourage the industrial sector to use energy resources more efficiently and encourage a diversity of electricity supply which will enhance the security of our national electrical supplies. Similarly, the removal of federal sales tax from items such as heat pumps, solar furnaces and heating panels, and wind-powered generating equipment will increase the commercial practicability of these alternative energy sources.
The final item in the budget which I want to address is the revisions to the excise taxes on heavy automobiles. While there are some variations, studies indicate that on average there is a close correlation between automobile weight and fuel consumption. Therefore, the increased excise taxes will reinforce the mileage standards I announced in February and are to be phased in over the same period as the mileage targets. Quite frankly, Mr. Speaker, I find myself puzzled by the reaction of the Canadian automobile industry to these tax increases. Some of the comments I have heard suggest that the taxes will not make any difference in consumer purchasing decisions. It is alleged that people will continue to demand heavy cars and will pay the higher price. At the same time, and sometimes from the same sources, it is suggested that the tax will lead to disruption in the automobile industry and to increased unemployment. Clearly, the industry's early reaction is a confusing one-it is not a well thought-out or consistent one.
I think it has been further confused by allegations that the government has arbitrarily forced the automobile companies to increase the weight of automobiles by 650 pounds for pollution and safety devices. On examining this, I find that roughly 50 additional pounds have been added for catalytic converters, and close to 600 pounds for safety reasons. I think it is fair to suggest to automobile manufac-
(Mr. Gillespie.]
turers that if 600 pounds are needed for safety reasons, there has to be something wrong with the kind of cars offered to the Canadian public in the past. The second point is that I believe it is fully within the capacity of the automobile industry to reduce the weight of the modern automobile through the substitution of materials without in any way effecting its safety. I have every reason to believe that some quite substantial reductions can, and will, be made by them in the near future.
We believe that Canadians will respond to the excise tax by demanding lighter, more energy-efficient cars. We also believe that the automobile industry in Canada is imaginative and responsive enough that those demands can, and will, be satisfied. There will undoubtedly be a period of adjustment in the industry, and it is precisely to make that adjustment as easy as possible that the tax provisions are being phased in over a four-year period.
In conclusion, Mr. Speaker, I want to reiterate the theme with which I began. Adjusting to the realities of our energy situation will take time, and the adjustments must be made in a manner and at a pace that safeguards our economic objectives over the shorter term.
It is imperative, in this process, that consumers and producers know what the energy objectives of the government are so that they can plan accordingly. The publication of "An Energy Strategy for Canada", supported by the recent announcements with regard to domestic pricing and land and lease regulations, and further reinforced by the measures announced in the budget, make the directions of our energy policy clear and, more than that, the commitment of the federal government to these targets and priorities.


Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, we have just listened to the Minister of Energy, Mines and Resources (Mr. Gillespie), who usually gives a fairly constructive, straightforward speech; but today he was a great disappointment because he started off on a negative pitch and continued on a negative pitch all the way through. For some reason, he found it necessary to criticize the very excellent and constructive speech given by the hon. member for Sainte-Hyacinthe (Mr. Wagner). He said it was a disappointment, and then went on to castigate the hon. member for not talking about energy.
Then the minister proceeded for the next 20 or 25 minutes to bore the House to death with a rehash of what we have already heard in the budget, and told us absolutely nothing new. He spoke in glowing terms of a paper he had produced a short while ago called, as he put it, "An Energy Strategy for Canada," which is a very imposing title for something which could have been far better entitled, "Much Ado about Nothing"-because that policy paper really was a bust. It told us nothing about energy conservation which we did not already know, and announced no new plans, or workable plans, on the part of the government for conserving energy.
Then the minister talked about the energy price increases of a short time ago and how these are going to induce much greater exploration for oil and gas. But, as pointed out to the minister a couple of weeks ago in a
June 3, 1976

question at the beginning of the day, there is nothing in these price increases which have been granted to the oil companies which requires them to use this money for exploration. As I pointed out to the minister, these increases can be used in any one of three ways. They can be used to increase exploration, which is what is desired; but they can also be put into the company's reserves, or they can be paid out in additional dividends to shareholders. There is nothing to require the companies to do what the Canadian people and the government want them to do, and that is to increase their exploration activity. So we see the energy consumers of Canada subjected to a very real possibility that a great deal of the increase they are going to pay at the gas pump or in their bills for heating oil during the year is going to pay out fatter dividend cheques to shareholders in oil and gas companies.
There is nothing the government can do about it whatsoever, because there is no requirement of the oil companies that the money they get-the many millions of dollars they will get-in increased oil and gas prices should go into exploration. That is just another typical policy of this government which is badly thought-out and put through in a slipshod fashion.
I can just see the oil and gas company presidents gathering around the minister's office and telling the minister that he can count on them because they are his friends; that he can give them those prices and they will surely explore more. Then they will go out slapping their thighs and laughing themselves to death, saying that the minister is a poor old sucker and that he went for it again, the way John Turner did when he effected great increases by reductions in taxes about three years ago to increase productivity and industrial activity. The manufacturers and producers of this country told John Turner he could count on them and that they would increase productivity and plant and equipment, and they laughed all the way to the bank and did whatever they darned well pleased with the money the government gave to them by reducing their taxes.
The minister and the House know very well that that has not brought about anything like the results the then minister of finance assured the House those reductions would bring about. Unemployment was supposed to be lowered as a result of those gifts, but it has gone up steadily ever since, and those same producers and manufacturers, like the oil companies, are still laughing all the way to the bank. That is the kind of thing which is going on in this government, and unfortunately there is nothing we can do about it for the next two years. However, I can tell the government that in two years we are going to do a great deal about it, because we will move from this side of the aisle over to the other side and give this country the kind of government it deserves.


Alastair William Gillespie: Tell us what you are for, George.


George Harris Hees: I want, now, to say a few words in a quiet and modest way about the government's anti-inflation program and to put forward some concrete suggestions on my own behalf as to what I think the government should do to improve greatly the situation. Now that the anti-inflation program is approaching the end of its first year of operation, people are naturally asking two questions: What
The Budget-Mr. Hees
results have been achieved; and how long will it be necessary to keep it in operation? In answer to the first question, the inflation figures speak for themselves. During 1975, the consumer price index rose by 10.5 per cent. During the most recent 12-month period, the index went up by 9 per cent. Such results should be described, I think, as slow progress.
Regarding the second question: How long must controls remain in force?-the answer is a great deal more difficult to find. I do not think anybody really likes controls, and most people would like to get rid of them as soon as possible. But to answer the question: When can they be abandoned?, we will first have to look at the two reasons it was necessary to apply controls in the first place. The first reason was that the rapid and accelerating yearly increase in the consumer price index, commonly referred to as the cost of living, had driven prices to such a level that the average Canadian simply could not make his or her earnings keep up with the bills he or she had to pay.
As I have said, the cost of living went up by more than 10 per cent in 1975. This was not much of a problem for those whose yearly incomes were kept abreast of the cost of living by means of management or union contracts which increased as the cost of living increased. But the great majority of Canadians do not have such contracts, and they were suffering badly. This majority demanded that the government do something to control the cost of living and bring it back to a yearly increase which they could keep up with; and so controls were announced on October 13.
To find out what is a reasonable yearly increase in the consumer price index, we should look back over the yearly records of this indicator during the past 70 years, since it first began being recorded. During those 70 years, the average yearly increase was just under 3 per cent a year. Such an increase we found we could live with, and having found that we were able to keep our average yearly increases in expenditures-our inflation-to that level, people generally believed that we must make every possible effort to reduce our present inflation rate to that level once again, and keep it there.
The second reason for applying controls was that rapidly accelerating inflation was making our products less and less competitive in both the Canadian and the export market, and production and employment were adversely affected. In this regard, we are particularly vulnerable to price levels in the United States, the country which is by far our most important trading partner and with whom we do 70 per cent of our export and import trade. Neither Americans nor Canadians are willing to pay more for a Canadian product if they can buy a similar American product at a lower price. For many months now, the rate of inflation in the United States has been considerably lower than ours, and that is one of the reasons their economic recovery has been moving forward at a steadily accelerating pace and ours has not. Today, their rate of inflation is 6 per cent a year, while ours is 9 per cent. Moreover, in April the American secretary of the treasury, Mr. Simon, said that he is confident the United States will reach an inflation rate of 2 per cent within two years, which is April, 1978. Our government is aiming at 4 per cent by the end of 1978.
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June 3, 1976
The Budget-Mr. Hees
I think it is obvious that if we are to compete successfully with American products in the Canadian and United States markets and in the world market as well, we must achieve a rate of inflation roughly equal to theirs. To do so, we must accelerate our efforts very considerably. To achieve this, certain improvements must be brought about in the government's approach to reducing inflation. First of all, the government must reduce the rate of increase of the money supply-the total of bank deposits and cash in circulation-to a range far below the more than 10 per cent yearly rate at which the Bank of Canada is increasing the money supply today. The United States government has reduced its yearly rate of increase of MI to a range of between 4.5 per cent and 7 per cent, and that is the basic reason why they have been able to deal with inflation so much more successfully than we have. I believe that the Canadian government must strive to reach a comparable range within the next 12 months, a pace far quicker than they are moving today.
Second, I believe that the government must keep the increase in government spending each year to the increase targets which it has set for itself and for all Canadians. As you know, that target for the present year is 13 per cent, made up of 8 per cent, the estimated inflation for the present year, plus 5 per cent, the estimated growth in real domestic product for the year, for a total of 13 per cent. The government's present increase of 16 per cent above last year must be reduced to this figure as soon as possible. Finally, we must greatly increase our industrial productivity because of its very great effect on costs and selling prices.
Industrial productivity, expressed in terms of volume of production per man-hour, has been measured and recorded on a national basis in this country for the past 30 years. During that period, the average yearly increase has been 3.2 per cent, due to improved methods of production and new and improved plant and machinery. With yearly increases in productivity of around 3 per cent a year, we were able to keep our costs of production to a level where our selling prices were competitive with those of our principal industrial competitors in both the Canadian and export market, and unemployment and inflation remained at reasonable levels.
Then, four years ago, our yearly increase in industrial productivity began to decline. Whereas in 1971 we had shown an increase of 3 per cent over the previous year, in 1972 the increase over 1971 was only 2.6 per cent; in 1973, the increase over 1972 was only 1.5 per cent; in 1974, we showed an actual decrease of .5 per cent from 1973 and, in 1975, a decrease of 2.4 per cent from 1974.
These accelerating decreases in industrial productivity have caused costs and selling prices to rise sharply, contributing heavily to inflation. They have also brought about higher unemployment, because people in this country and abroad will not pay more for a Canadian product if they can buy a similar product made in some other country for less money, and Canadian production has suffered as a result of this falling demand.
What has contributed greatly to our difficulties in finding customers who will pay the prices we are asking is the fact that United States industrial productivity has been
rising as rapidly as ours has been falling. The result has been that we have been losing sales to United States producers at a steadily accelerating rate. It is obvious that we must introduce measures to increase industrial productivity, so that we can bring inflation back to a yearly increase roughly comparable to that of the United States and thereby make our selling prices competitive with those of our principal competitor. To do so, we must offer incentives which will persuade producers they will be able to pay for the new plant, machinery and production systems they will have to buy in a reasonably short space of time and, in this way, make it as easy as possible for them to make the usually high expenditures involved in the kinds of purchases I outlined.
The kinds of incentives I have in mind would be the following: First, all capital expenditures would be written off in two years. Second, a plant would be rewarded in the form of a generous cash bonus at the end of the year, in proportion to its increase in productivity during the year, compared to the base year-the last full year before the plan goes into operation. This form of incentive has been very effective in increasing productivity in such countries as Japan and West Germany, where spectacular results have been achieved since the end of the Second World War. There is no reason why such an incentive would be less successful in this country today.
So I think that the answer to our original question, when can controls be ended, is that the people of Canada will not agree to their removal until inflation is lowered to a level where they have found in the past that it can be tolerated, at around 3 per cent a year. Also, I do not believe that we can relax our efforts until we bring inflation to a level where we can once again compete successfully with our principal economic competitor, the United States, for the Canadian, the United States and the world market. That level will also be no more than 1 per cent above the United States target of 2 per cent a year, or no more than 3 per cent. In other words the answer to the question, when can controls be ended, is not a matter of time but of performance and results. The task before the government and the Canadian people is a formidable one, but one which must be tackled without delay. Reluctance to tackle the task vigorously will be very serious for the welfare of this country.
Now let us take a look at which direction the economy should take after controls have been discontinued. Once the target of 3 per cent inflation has been reached, I think it is obvious that it must be kept within that range for the good of the economy and for the good of the Canadian people. If there is a significant move by those elements of society whose pressures caused inflation to rise rapidly during the past few years to start it on another upward spiral, then controls will, of course, have to be reimposed. If we are to avoid having to reimpose controls, it must be made crystal clear that that will be done if those elements of our economy which have it within their power to create excessive inflation are unwilling to control their actions for the general good of the country.
In conclusion, Mr. Speaker, I believe that if it is made very clear and definite that this country has no intention of going through another round of spiralling inflation, once the present inflation has been brought within reasonable
(Mr. Hees.
June 3, 1976

bounds, we will have a very good chance of proceeding with a prosperous economy, free of the kinds of controls which were imposed last October.


Mr. David Orlikow (Winnipeg North):: Mr. Speaker, the first budget presented by the present Minister of Finance (Mr. Macdonald) was characterized by the Financial Post writer, George Radwanski, who is certainly not a flaming radical, as a-
-continuation of a trend toward a nasty, gutless kind of conservatism-
Anyone who studies the budget will agree with Mr. Radwanski. The budget of this minister of finance shows the truth of the old adage-the more things change, the more they remain the same. Former ministers of finance, Mr. Benson and Mr. Turner, are gone. They are relatively silent. The former deputy minister of finance, Mr. Reis-man, is gone but is still vocal. However, the effect of this budget will be the effect of budgets which they presented in recent years.
Those budgets produced hardships on the ordinary citizen of this country. This budget will do the same. They produced more unemployment. I predict that a year from now there will be an additional 100,000 on top of the present 760,000 unemployed at the present time. That is based on the best economic advice we have been able to get from economists who have been much more accurate in their predictions in recent years than economists of the Department of Finance.
The minister spoke glowingly and proudly about the way that inflation has slowed down in the past three or four months. I suggest that he dampen his enthusiasm. It is obvious to almost every business analyst and economist, other than the trained seals who work for the government, that the slowdown has been, and will be, very temporary. The slowdown in the rate of inflation was almost exclusively as a result of a reduction in food prices. Mrs. Plump-tre of the late and unlamented Food Prices Review Board, now of the Anti-Inflation Board, agrees that food prices are going up.
There have been sharp increases in provincial and municipal taxes. They increased as a result of cutbacks forced on the provinces by the federal government. For the two largest provinces in particular, Ontario and Quebec, this has been a mean and regressive increase and has resulted in a doubling of hospital and medical insurance premiums. The increased cost to every family will be between $50 and $100 per year.
The federal government has agreed to increases in the price of oil and gas. Oil will increase $1.05 a barrel on July 1, and another 70 cents a barrel on January 1, 1977. That represents an increase of 5 cents a gallon in the wholesale price. Retailers will probably add on their increases. Therefore, every person who buys gas for his car or oil to heat his house will be affected. The price of natural gas has also been increased. For those families using natural gas, their costs will increase next winter between $40 and $50 for the heating season.
Last year, the increase in the cost of living was 10V2 per cent. Although for the past three or four months it has
The Budget-Mr. Orlikow
been going up at a slower rate, it will go up more quickly beginning in July. From July to the end of the year there will be an increase of about 1 per cent per month. By the end of 1976, the increase in the cost of living will be 9 per cent as compared with the 10V2 per cent increase in 1975. As if that were not bad enough, there will be a substantial increase in the rate of unemployment. In his budget speech, the minister stated that government estimates are that there will be an increase in the number of jobs in Canada of 250,000. However, the number of people who will be looking for work will increase by about 350,000.
Unemployment has been rising steadily. Last month, calculated on the seasonally adjusted basis, it was 7.4 per cent. That was the highest rate of unemployment in Canada since 1961. On the basis of any estimates one wants to make, it is obvious that this winter the unemployment rate, on a seasonally adjusted basis, will not be 7 per cent but 8 per cent. That is a tragedy for this country as a whole. However, it is sheer disaster for the slow growth areas.
Last month, the national rate of unemployment was 7.4 per cent. However, in Newfoundland there was 16.3 per cent unemployment. On the northeast coast of Labrador the unemployment rate was 19.8 per cent. In New Brunswick the rate was 13.2 per cent, and in the northeast part of that province, 26.3 per cent. Under those circumstances, is it any wonder that the members of this party object so strenuously to the proposal in the budget, and elaborated on yesterday by the Minister of Manpower and Immigration (Mr. Andras), that the period which people must work before qualifying for unemployment insurance will be increased from 8 to 12 weeks?
When the Minister of Finance made his budget address some days ago there were cries of protest, not just from members of this party but from Liberal members from Newfoundland and Conservative members from New Brunswick and Newfoundland. Yesterday, our amendment objecting to the increased qualifying period was voted on. It was an amazing sight. All the protesters, led by the minister who introduced the unemployment insurance legislation in 1971, the present Minister of Consumer and Corporate Affairs (Mr. Mackasey), were absent from the House and did not have to vote against the amendment. That was true of Liberal and Conservative members from the slow-growth areas.
The minister and some members of the House may think that we are being partisan for protesting that infamous proposal of the government. Let us see what the provincial governments whose people will be most adversely affected have to say. I quote from the Toronto Star of Friday, May 28:
Finance Minister A. E. Stairs of New Brunswick said the extension of the period of eligibility and the changes in the length of benefit "clearly indicate a substantial shift in the burden of social assistance to the province from the federal government."
He said, also:
It is most unfortunate that this kind of program change should be made without extensive prior analysis of the impact on regions such as ours.
95568-60^

June 3, 1976
The Budget-Mr. Orlikow
Then the Nova Scotia minister of labour, a Liberal, Mr. Walter Fitzgerald, said he was discouraged by the proposals. A recent provincial study estimated that 14,800 people would lose their benefits of more than $9 million, he said. In pockets where unemployment was highest, such as Sydney, the net loss of direct income was predicted to be $3.3 million. That is what the ministers from the provinces with the highest unemployment are saying. For the Minister of Manpower and Immigration to say, as he did yesterday, that there would not be much hardship, that most of the people concerned could extend their period of work from 8 weeks to 12 weeks, and thus qualify, is to cast a slur on the bulk of the people who are unemployed and drawing benefits. The minister is implying that people work for eight weeks and then quit voluntarily so that they can draw unemployment benefits. Except when the minister has to make excuses, as was the case yesterday, he knows better.
When we talk about a rate of 7.4 per cent unemployment nationally, we are excluding native people almost entirely because native people who live on reserves are not counted when compiling the national rate. The minister should know this as well as I do, because there are a large number of native people in his constituency. He knows it, the Minister of Finance knows it, and I know it-but it is very likely that people in general do not. As I say, we have knowingly, and in a calculated manner, excluded the native people. The fact is, as the minister is aware, that between 60 per cent and 80 per cent of the native people who live on reserves are unemployed for all or part of the year. They are not even counted by those who compile the unemployment figures.
The minister implied yesterday that the government still believes in full employment. Here is what he said, and members can find his words at page 14085 of yesterday's Hansard:
Our goal is not necessarily a 5 Vi per cent or even a 5 per cent unemployment rate. Our goal is the lowest employment rate possible having regard to inflationary pressures and the economic situation.
What the minister did not say was that his goal is somewhere between a rate of 7 per cent and 8 per cent. Liberal cabinet ministers always pay lip service to the idea of full employment. When the Minister of Consumer and Corporate Affairs was introducing amendments to the Unemployment Insurance Act in 1971, he said:
I imagine somebody is going to suggest that the government has determined 4 per cent to be an acceptable rate of unemployment in Canada. Well, it is not my criterion. Like everybody else, I believe the acceptable rate is the lowest possible rate.
He was saying that 4 per cent is too high. Now the Minister of Manpower and the Minister of Finance, are regarding a rate of more than 7 per cent as being acceptable to them. In the course of a CBC broadcast on January 9, 1972, the Prime Minister (Mr. Trudeau) said:
We have already entered into better times. I think the prodding will be less perhaps in the economic sphere; you won't be worried; you know you'll have 96 per cent of the work force employed .. . your concerns will be oriented more and more to the 96 per cent or 95 per cent of the population which is working and secure.
So, in 1972 the Prime Minister was accepting 4 per cent as being adequate. Now we are close to 7.5 per cent, with the rate likely to go up, and the government is not concerned at all. We are sometimes told by both Liberals and
Conservatives that whether the rate of 7.4 per cent or 4 per cent, as it was a few years ago, the figures are misleading because there are lots of people who could find work at any time if they chose to do so.
Some members say that anyone who wants a job can get one. Mr. Speaker, the facts prove the contrary. At a time when there are more than 750,000 unemployed, the number of job vacancies is down substantially as compared with last year, especially in areas of high unemployment like Newfoundland. Job vacancies in the first quarter of 1975 amounted to 61,000 in all of Canada; in the first quarter of 1976 there were 48,100. In Newfoundland there were just 500 job vacancies, and in that province, as I have stated, 13 per cent of the work force is unemployed. So there is no way in which unemployed people in Newfoundland can get jobs at the present time. There were 15,400 job vacancies in Ontario, and I believe there were six times that number of unemployed in the province. So we face a situation of large-scale unemployment created by government policies. And who will bear the brunt? The unemployed and the people who work. The unemployed, because they will be cut off from benefit if they have not worked 12 weeks, and the employed who will have to pay higher premiums to make up for the deficit in the unemployment insurance fund.
We are seeing a two-step retreat from the financial commitment of the Liberal party in 1971 to create jobs for the unemployed. The 1971 act provided that the federal government would pay the cost of all extended benefits and the total cost of all benefits payable when unemployment rose above 8 per cent. According to the minister at that time, this provided an incentive for the government to keep unemployment down and thus restrict the size of the pay-out. In December, 1975, Bill C-69 amended the scheme so as to change the federal government's commitment from one based on the straight 4 per cent level to one based on an eight-year moving average. In effect, federal contributions kick in much later, as a result-in 1976 at 5.6 per cent, to be precise.
Amendments are now being proposed in the budget to reduce the financial obligation of the federal government still further by lowering the contributions payable when unemployment exceeds 4 per cent. We can understand why the Liberal minister of social services in Nova Scotia said at the opening of the meetings where the premiers rejected the welfare proposals of the Minister of National Health and Welfare (Mr. Lalonde):
If the federal government keeps escalating the price of oil and tightening unemployment insurance, we're going to have the whole province on social assistance.
This is the sort of thing that has happened with a government led by a "mod" Prime Minister, a modern guy who has the media all agog. He knows what the people are interested in and can anticipate their wants. He can move to meet their needs. What he has done in fact, as I have indicated, is not only to give us the highest unemployment we have had in 15 years, but he has tried to convince the people of Canada that they should accept this as normal and as the right way to do things.
Let me compare for a moment this "mod" Prime Minister, who is really "with it", as our young people say, with

June 3, 1976

an old-fashioned, liberal political leader in the United States, a man who has been in politics for a long time, who is presently a senator and was once vice-president and a presidential candidate, failing to get elected by less than one per cent of the vote, Hubert Humphrey. We Canadians read American newspapers and magazines a great deal and we picture Hubert Humphrey as somehow old-fashioned, that he really is not "clued in" to the 1970s. I want to put on the record a few paragraphs from the Congressional Record printed in Washington for January 15, 1975. Senator Humphrey had introduced a bill, the equal opportunity and full employment act for 1975, and I would like hon. members to compare what Senator Humphrey proposed with the record of this "mod", up-to-date government which has permitted, indeed welcomed, 7.4 per cent unemployment. He said:
In December, 6.5 million Americans, 7.1 per cent of of the labour force, were "officially" counted as unemployed. Of course, for members of minority groups conditions were much worse.
In the last 12 months "official" unemployment among blacks rose 50 per cent, from 888,000 to 1.3 million people.
I pause there for a moment to suggest that if we compare our record for employing native people with the United States' record for employing black people, we Canadians would have to hang our heads in shame. Senator Humphrey went on to say this:
In 1948, the "right to work" was clearly established in the Universal Declaration of Human Rights adopted by the United Nations ...
Despite the official declarations and the generally well-intentioned policy pronouncements, we have failed dismally to provide "jobs for all". Large segments of our population, especially women, the young, the old, the poorly educated, and ethnic minorities, have had their "right to work" ignored and, in many cases, the fact of their unemployment swept under the rug and conveniently out of sight by "official" statistics.
... it is time to fulfil this promise of "jobs for all," a promise that far too long has gone unmet. We must guarantee an equal opportunity to work at fair wages to every person in our nation who is able and willing to work.
He then went on to outline how he proposed that this be done. He called for the establishment of local reservoirs of public service and private employment projects developed by local planning councils in co-operation with community job boards. He called for the creation of a job guarantee office able to fund public and private work projects developed through the local reservoirs. Senator Humphrey was not talking about some band-aid, cosmetic measures, like a few LIP or OFY projects; he was talking about jobs for everybody, about unemployment of probably of 2.5 to 3 per cent. That is not too far removed from the 4 per cent unemployment level which over the years the Economic Council has calculated would be full employment in this country.
We have argued that dealing with unemployment is the number one priority in this country. We have argued that to meet the threat of unemployment what we need is a budgetary deficit that is substantially greater than that proposed by the minister, so as to give the economy the stimulation it needs to get people back to work. Our calculations indicate that a deficit in the order of $4.5 billion would be necessary in order to inject any significant stimulus into the economy this year. This would mean a tax cut, preferably for those in the lower income brackets, of about $1.2 billion.
The Budget-Mr. Orlikow
In addition, we have argued that we should end the indexing of income tax and the assortment of middle-class tax gimmicks that the government has introduced in recent years. This would free another $1.5 billion that could be included in a redistributive tax cut. Such an amount, roughly $3 billion, would be enough to provide a sizeable tax cut, which we have calculated to be in the neighbourhood of $250 for each person who files a tax return that shows an income of $15,000 and under. It is our belief that these are people who essentially do not save money; they would spend this tax cut of $250 and the injection of this money would lead to the purchase of goods and services, which in turn would immediately bring about a sharp reduction in the number of people unemployed.
With 7.4 per cent unemployment, Mr. Speaker, the economy needs a stimulus in the order of the roughly $3 billion tax cut that I have mentioned. This is a doubly advantageous time to provide such a tax cut because the income redistributive effects of ending the middle-class tax gimmicks would provide more equity to the system at the same time as it was delivering increased income to the bottom end of the income scale, where it would tend to be spent rather than saved, as I have already said.
The only objection that we have heard to a tax cut at this time, an objection raised by the Minister of Finance, is that the stimulation of demand on the kind of scale I have suggested would rekindle inflation. We reject that opinion. We insist that that is not a valid argument, for the simple reason that all these statistics that have been released by Statistics Canada, the Department of Finance and the Department of Industry, Trade and Commerce show very clearly that the industrial sector of our economy at the present time is operating at only about 80 per cent of capacity.
Although some of this has caused a slump in exports, a great deal of this excess capacity could be geared to domestic markets. We believe such a stimulation of the domestic market would not be inflationary but would lead to an economic recovery. It would use up our unused capacity, put people back to work, and in the long run have a positive effect on the rate of inflation. If you make housing more available and reduce the high cost of purchasing homes, the shortage and the high cost factor would tend to disappear. It seems to us, again-


Mr. Deputy Speaker:: Order, please. I regret to inform the hon. member that his allotted time has now expired.


David Orlikow: I will just be one minute.


Mr. Knowles (Winnipeg North Centre):: One minute.


Mr. Deputy Speaker:: Is there unanimous consent to allow the hon. member to complete his remarks?


Steve Eugene Paproski: One minute.


Some hon. Members:: Agreed.


David Orlikow: Thank you, Mr. Speaker and hon. members. I simply want to say that I believe this budget tends to cool down the economy and restrict its growth, and will, therefore, increase unemployment when it should be doing

June 3, 1976
The Budget-Mr. Flynn
exactly the opposite. The budget should be geared to put people back to work in order to meet those unfilled needs of the hundreds of thousands of people in this country who are still living in poverty.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: Order, please. Before recognizing the hon. member for Kitchener (Mr. Flynn), may I be permitted at this time, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: The hon. member for Halifax-East Hants (Mr. McCleave)-Agriculture- Request for report on study of effect of removal of freigb . subsidy on wheat and flour for export: the hon. member for Palliser (Mr. Schumacher)-The Queen-Date of statement on plans to celebrate Her Majesty's silver jubilee; the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall)-Energy-Dispute between Newfoundland and Quebec over Churchill Falls power-Action of minister.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Macdonald (Rosedale) that this House approves in general the budgetary policy of the government, and the amendment thereto of Mr. Stevens (p. 13901).
Mr. Joe Flynn (Kitchener):: Mr. Speaker, I would especially like to thank you today for allowing me to join some of the elite of the political parties to present my first comments on the budget. I should also like to commend the Minister of Finance (Mr. Macdonald) for presenting a most realistic budget. In these inflationary times this is the kind of budget that is needed. It is the kind of budget that is going to be instrumental in combating the economic difficulties we are facing.


An hon. Member:: You can do better that that, Joe.


Patrick Joseph Flynn: If you will listen, it becomes even more succulent. It is the kind of budget that is going to be instrumental in combating this kind of difficulty. It is a realistic budget that does not suggest quick or facile methods. Nor does it entail draconian methods. Certain government critics may condemn the Minister of Finance for proceeding far too cautiously. I would think they should be reassured to know that their country's economic future is

being handled cautiously. This is not a time for magnificent extravaganzas; this is a time for restraint, for economic recovery and for reality.


An hon. Member:: Who wrote that-you Don?


Patrick Joseph Flynn: If hon. members will pay close attention they will realize this is a wallner research report and, therefore, is very special. I do not claim to be an economist, but I certainly do know that Canada's material prosperity is at stake. As was to be expected, the May 25 budget is inextricably linked to the anti-inflation program. Of the 1,500 largest Canadian companies that fall under the direct control of the Anti-Inflation Board, 35 have head offices in Kitchener, Waterloo, Cambridge, Guelph and Stratford. More than 40 others have head offices elsewhere but are major employers in this area, including such a local giant as Uniroyal Limited.
There are also many companies with local branch offices, distribution centres, franchise outlets or stores in the area. Among them are all the major banks, most of the major retail store chains, car dealerships, mortgage and insurance companies and service industries, such as those involving computers, office copying machines, etc. Naturally, the business community of the Kitchener area watched with interest the proceedings of Tuesday last.
The Minister of Finance reported in his budget speech that the controls program has begun to take effect. When the anti-inflation measures were introduced last October, the consumer price index was at 10.6 per cent and rising. By December it had dropped to below 10 per cent, and it dropped to 9.1 per cent in Feburary, the best record in well over two years. There has been excellent public support for the anti-inflation program. A public opinion poll showed that fully 61 per cent were in favour, while only 22 per cent were opposed. The May, 1976, budget is another measure which increases the whole effectiveness of the anti-inflation program. It is meant to enhance the steps taken in other areas, especially in respect of reductions in government spending and cutbacks in the growth of the public service.
A Kitchener chamber of commerce publication describes my constituency as being noted for its sausages, Schneider's sausages, its spareribs, its pigtails, its sauerkraut and its good food in general. But, it is also known for its television sets, its fine furniture, its electronic components, its shirts, its sweaters, its shoes, the stability of its labour, the high productivity of its workers, its hospitality and its reputation as a desirable community. The budget just presented will support and encourage this good life in Kitchener, Mr. Speaker.


Mr. Heath Macquarrie (Hillsborough):: Mr. Speaker, may I commend the hon. member who has just resumed his seat for the brevity which characterized his remarks. I have never pretended that I have been popular in all the years I have been here, but at least one claim I am able to make is that no Speaker has ever had to rise to tell me that the hon. member's time had expired. Perhaps that is because I have good eyesight and have seen the Speaker starting to rise, but I have always avoided that error.
Normally, it is a very ebullient pleasure for me to take part in the general debate on the throne speech and the
June 3, 1976

budget debate, especially when on occasions such as this afternoon I see around me a cro'wded, hushed and expectant House.


Some hon. Members:: Oh, oh!


Heath Nelson Macquarrie: This year and in this session, sir, I have lost some of that high excitement which usually characterizes my learned and deliberated utterances. I find this is not one of the parliamentary sessions which brings a great deal of uplift to me. I note, in beginning, in a very mundane way, that we have now reached over 14,000 pages- not words, but pages of Hansard. If anybody thinks that is not too long for a group of parliamentarians to be together talking about the same sorts of things, I disagree with that person. It is a time, also, when there is certainly unease about the management of our national affairs. We have a cabinet divided; we have resignations; we have near-resignations; we have a government seeking to put into effect an aborted form of policy or proposal the opposition to which brought it into office.
We have a society which is seriously divided. A major segment thereof, namely, labour, is strongly and seriously committed against a major aspect of the government's program. We have scandals; we have near-scandals; we have suggestions; we have anxiety. I may say that never in my now, fairly long time in public life and my much longer period of study of Canadian political institutions have I seen anything more reprehensible than the behaviour of the Minister of Supply and Services (Mr. Goyer) in the manner in which he tried publicly and in this place to thrust responsibility and blame upon a public servant. That, I thought, was a new low. We are becoming accustomed to in-fighting among ministers, to the absence of ministers and to the passing of blame from one minister to another; but I think most heinous and reprehensible is the attempt in public and in parliament to throw the arrow of responsibility and culpability on a senior public servant who has no chance to appear before us and state his case.
I also think, since this long session began, about what great changes have occurred. This does not mean I have a magnificent memory; however, I can remember when that most handsome man, that brilliant athlete, that gem in the French and English-speaking world, John Turner, was here. Where is he now? Where has he gone? In this long procession of history we began with Prince Charming. Then he was "Mr. Clean", "The man from Glad", "The architect of our economy". Where is he now? Why has he gone? Did the Prime Minister of Canada (Mr. Trudeau) think that the hon. member for Rosedale (Mr. Macdonald) was potentially a better minister of finance? Did he think he was a better architect of our nation's future in economic, monetary and fiscal terms?
I am quite capable of criticizing the Prime Minister, although I am not a partisan man. But I have never accused him of really believing that. That, I would not charge him with. So we are left with the greatest failure as House leader that any parliament has ever seen, and he is moving on in his great, lumbering gait to become the most disastrous minister of finance this country has ever seen.
The Budget-Mr. Macquarrie
In this budget debate it is not our task or my job to reflect upon the difficulties of the Prime Minister, although if I were totally relaxed I could enjoy some of these reflections. We must think about the state of the national economy. It is our job to analyse and assess the pertinent and pressing facts of our national economic life. What, sir, is happening to this country? What are the portents, and where is our present leadership leading us?


An hon. Member:: Onwards and ever upwards.


Heath Nelson Macquarrie: He says, "Onwards and ever upwards," but my dear friend did not go upwards as he should have. If I were a cabinet-maker, I would have put him up. I am old enough in this parliamentary stage to remember when budget night was a great experience; the galleries were packed and the House was packed. We came here; we waited and we listened for portents, for forecasts, for policies and for analyses which were going to be important. We waited expectantly for those changes which would alter the life of the nation and affect the lives of all the people in the nation. Canadians waited expectantly for something which would have a bearing upon their day-today economic existence.
But what of May 25? After the great speech had been delivered, what was the result? In our highly-computerized and technological society, could even the most sensitive computer measure the degree of uplift among any sector of Canadian society? The most common, and perhaps the most frequent, description of the minister's effort was that euphemistic expression "stand-patism". Indeed, I wondered then, and I wonder still, why it was thought necessary to present a budget at all. Many thousands of seasonally employed Canadians will suffer; but apart from this group, what benefits will flow to the Canadian population; what will be the strengthening effect upon the sagging Canadian economy?
The question is almost a rhetorical one. The impressive, serious and compelling economic indices are all negative- indeed, profoundly disturbing. Before I came to this House, I spent many years studying what was called the dismal science, the study of economics. It was dismal then, and it is dreary now! But one thing we were taught by our professors was that inflation and unemployment were cyclical developments, one following the other and that if the economy was well managed, you would not have either.
It is the great achievement of this government-which has been in power for 13 years-that it has broken that law. The government has stood that law on its head or on its posterior-whichever it is-and we have inflation and unemployment together: not only together but, additionally, seemingly forever! Both inflation and unemployment are together and in the average month we see from Statistics Canada the same distressing statistics no matter how devious may be the effort to alter the formula.
Expressions like, "seasonally adjusted" are now ancient. About five years ago, someone asked me what it meant, and I said that I was not sure. However, I did say that I thought it meant that it is not as bad as it could be. I think I am right in that. In this twentieth century, with the very best efforts and with the greatest deficits, we have 7.4 per cent of our work force out of work. No matter how one describes it, that is far too many unemployed Canadians.

June 3, 1976
The Budget-Mr. Macquarrie
Not only is that continuing this month, but it has been continuing month after month since we converted into the "just" society.
We have a great army of functionaries. We have all sorts of people on the Anti-Inflation Board. If the Prime Minister could not wrestle inflation to the ground, who is to say that the callous Jean-Luc Pepin, or the more callous Mrs. Plumptre are doing the job. Of course we will not bring inflation to the ground. Any housewife or house spouse in Canada knows that. While it might seem economically sound to talk about stand-pattism on budget night, and while we may watch all the postures and expostulations of ministers and their apologists, we know that when that is all over there is not a single hopeful or positive sign to which they may point. Of course, they may hope that somehow in the United States things may get better and that we may benefit from the economic recovery in that country. I imagine when that day comes we will not receive any telegraphed messages from the Secretary of the Treasury of the United States. The ministers of this government will be taking credit, and not admitting it is just a spin-off from the American development.
My colleagues have discussed many aspects earlier in their fine discussions and argumentations and I know that further examinations of our national situation will follow. I want to pay tribute to my colleague, the hon. member for York-Simcoe (Mr. Stevens), who has made an excellent analysis of our economy. I have the mildest, most subtle suggestion for the minister-he will not be there for more than 24 months at the most-in his disagreement with complete secrecy in the budget. If he wants to go out of office with some degree of credibility, I suggest he listen to our spokesman and others who have thought about these things very carefully and have put the national interest ahead of party advantage.


Some hon. Members:: Hear, hear!


Heath Nelson Macquarrie: Mr. Speaker, as the first member from the Atlantic region who has spoken on this side, I want to focus my thoughts for a short while on the vital question of regional disparity. Coming from Atlantic Canada, I think that I have the right to draw upon my experience in this field. '
In the construction of a federal state, it is the very ethos of such a developing organization that the advantages and disadvantages of the component regions be recognized and shared. If the Atlantic area has suffered because of national policies, it is surely quite clearly and rightly and properly the responsibility of the national authorities to make redress, to make adjustment and to make equalization for that situation. The basic question in the discussions in Charlettown in 1864-a city which I have the honour to represent in this parliament-concerned the great economic questions affecting the various regions. As John A. Macdonald said more than once, 90 per cent of all the agreements were made at the Charlottetown meeting in September, 1864.
Since this is general debate, Mr. Speaker, I might say that in the present mild flurry of discussion about our constitution I hear the Prime Minister talk about the

patriation of our constitution. I should like to take the opportunity of saying to him that if it is necessary to use that non-word, at least he should recognize Canadian history and recall that the British North America Act, although entirely and technically an emanation of the British parliament, was in fact the product of Canadian discussions, of Canadian statemanship, and in every way was "made in Canada". So if we must use the Latin construction "patria", which is so dated, when we talk about patriotism-the word is not "patriation", but "repatriation"-we are bringing back to Canada that which was made in Canada by great and distinguished Canadian statesmen, the chief of whom was Sir John A. Macdonald.
To move from terminology to economics, Mr. Speaker, I must say that I am profoundly disturbed about what is happening in the Atlantic region. I have often said in this House that just because we have grown accustomed to national policies working to our disadvantage there is no reason why we should be asked to like those policies. Overexposure does not in this case mean overaffection and the purpose of this government-especially in relation to the Department of Regional Economic Expansion and most recently in the budget of May 25-brings little cheer to Atlantic Canada and the long-suffering people from that area where this nation began.
We still have month after month, year after year, the highest unemployment rate in the whole country. Our cost of living is still high; our wages are low! Month after month the grim statistics tell their tale. In those indices of prosperity which should be high, we are generally, universally and apparently eternally, low. In those areas where a low figure indicates economic well-being, we have these figures high. One has only to examine these statistics of unemployment. One has only to refer to the report on the cost of living, which gives the annual income of our people year after year after year, to check the veracity of the assertion I am making. Time after time I have tried to convince successive ministers of public works that it is a cruel injustice to pay people working for the government of Canada in the Atlantic region a lower per-hour rate than those doing the same work in the rest of Canada. The prevailing wage rate program is one of the greatest economic deterrents to maritime prosperity that I can think of.
I have said that the Department of Regional Economic Expansion is of immense importance to the sea-girt provinces of the east. It is the department which has special responsibilities for programs designed to redress some of the grave imbalances in our national economy. That is a good thing, and it is an important department. It is of the essence that regional economies be strong. No nation can be really prosperous or economically strong if any of its constituent parts are suffering from chronic economic depression. That is why 100 years ago Sir John A. Macdonald, after serious discussions with Joseph Howe, admitted quickly that changes in the basic document, the British North America Act, must be made to bring about a degree of justice to Nova Scotia and the Atlantic region. All these foolish announcements about special status for certain provinces being wrong is not historically true; all our provinces have special problems. Those whose economy has been damaged by national policies have all the more right to a special regard from the national government. I
June 3, 1976

believe all of us in this House from Atlantic Canada and all our people want DREE and the minister to be successful, to really accomplish something and to diminish the gulf of inequity which retards a healthy economy.
I congratulate the new minister. I have high regard for him and wish him well in all his endeavours. But I regret that we see indications of serious communication problems between his department and its provincial counterpart in Prince Edward Island. At least this is the view of the Hon. Gilbert Clements who appeared before the Standing Committee on Regional Development on May 23 and who had some sharp criticism of the federal department. He told the committee:
But I have no hesitation in saying that the communications with DREE and the action that we get from DREE is very poor . . .
The attempt to decentralize, as far as I am concerned personally as one minister, is not worth it. We have a bureaucratic bog that is very difficult to cut through, and I think this is where the whole problem is. You ask a simple question and it gets lost in the wheel. You just do not see it again. It is very difficult for my people in my department to be continually trying to get answers to very simple, basic questions while we have a lot of work to be done.
Later at the same meeting, Mr. Clements declared:
I can just answer this way. We are not the only province that is having problems with DREE, as I indicated, by the four ministers. Their frustrations are equally as great as mine. So there is nothing special about the plans in the other Atlantic provinces so it would look as though the problem is the same.
I do not object to dealing with all kinds of people in Moncton and Charlottetown at all, as long as the pipeline to whoever makes the answer is open. But when you get the pipeline clogged then you are in real trouble and, of course, if you are dealing direct with Ottawa and you get a plugged pipeline then you are no better off.
He went on to say:
But it seemed that under the first part of the plan when I was not really involved with it, the line to Ottawa was more direct, the answers were direct, and progress was made. Now it is difficult to even sit down and have a meeting with people. I was just indicating to your chairman here, a top level*person in our province requested a meeting with DREE a month and a half ago that has not taken place.
I suppose that it is not surprising that there should be problems between Mr. Clements and the Minister of Regional Economic Expansion in Prince Edward Island. The present government has been notable in the development of a climate of misunderstanding between the federal and provincial levels of jurisdiction. One recalls the recent and repeated pleas of Premier Regan on the energy problems of the province of Nova Scotia, and I recall the chastising lecture which was given by the Minister of Energy, Mines and Resources (Mr. Gillespie) which was recently replaced by a more reasonable attitude. The Premier of Prince Edward Island must feel eternally the odd man out, because his representations on transportation, national parks and other vital questions seem, if not unnoted, at least to be unheeded.
But much more serious than the lack of communication between the federal DREE minister and his provincial counterparts is the perpetual situation where it appears that no other minister in the federal cabinet communicates with the DREE minister. That department was set up, and rightly so, to look upon the inequalities between regions of Canada and to do all in the power of the national government to diminish the gulf between those economically
The Budget-Mr. Macquarrie
disadvantaged regions and the national average. That is a laudable and proper role for the national government, and it is one which only the national government can perform.
Former Premier Smith of Nova Scotia was constitutionally right and proper when he had that inserted on the agenda for the dominion-provincial conference-if I may use that proper and correct word "dominion"-but if none of the colleagues of the minister pay the slightest attention to this concept, we are not going to get very far. What is the use of having the Minister of Regional Economic Expansion assert and try to carry out the notion that there are special needs in certain areas of this country requiring special action by the national government, if his colleagues, one after another, say that they must apply a uniform standard?
Did the Minister of Transport (Mr. Lang) listen to his colleague, the Minister of Regional Economic Expansion, with reference to the ferry situation? Our great problem is to transport the products of the sea and the soil, to other parts, as well as tourists, and our Minister of Transport allowed a 100 per cent increase in one ferry rate and a 60 per cent increase in another. He enunciates the brilliant theory: let the user pay the fare. I will not begin to tell how many people in the Atlantic provinces pay for the St. Lawrence Seaway.
Did the Minister of Indian Affairs and Northern Development (Mr. Buchanan) consult his colleague when he forced the people of Prince Edward Island to go to the beaches of the North Shore by entering the Prince Edward Island national park? In other words, until there is recognition by all the members of the cabinet that there are special factors affecting the disadvantaged regions, then the Minister of Regional Economic Expansion will never be able to make a success of his very important portfolio, and I am wondering if there is even yet a glimmer of recognition by the present government of the great problems facing the Atlantic region.
The only innovative idea I saw in the statement of the Minister of Finance of May 25-and I commend him for this-was the suggestion that something should be done for those who are moving to alternate power sources. I congratulate him for that. I cannot see anything else. I have not seen, for one moment, in the mind of the Minister of Energy, Mines and Resources the slightest recognition of the energy situation affecting the maritime provinces. It is easy for him to give little lectures to the provinces about cutting down their highway speed and turning off their lights-but he can watch, and if he is at all interested he can study the situation with reference to the Fundy tides. We all believe, or we say we do, that we are heading toward a future in which energy resources will be very seriously drained. There are few energy sources which are renewable; but in Atlantic Canada today we have a magnificent source of energy which, as long as the earth, the sun and the moon endure, will be there. That is longer than most of us will be here.
The Fundy tidal study has been analysed and researched in depth; studies have been made of the studies. We know it can be done. We all know that the time will come when it must be done; but did we see the slightest scintilla of suggestion in the budget the other night about this magnificent source of energy? I fear that if the present

June 3, 1976
The Budget-Mr. Kaplan
administrators of our realm are in possession of the keys of the kingdom for 24 more months, nothing will be done and there will be a delay until we reach the stage where it has to be done-and the cost will be many times greater than it would be now. I believe it was the great French philosopher, Montesquieu, who said: "To govern is to foresee". Heaven help us! We have tried and tried to help the present government foresee the energy needs of the whole country and the energy opportunities in the Atlantic provinces.
I listened carefully to the Minister of Manpower and Immigration (Mr. Andras) when he had the placatory job of picking up the broken pieces from the crumbling of the unemployment insurance measure. He told us what was going to happen and what was going to replace the curtailment of the benefit eligibility period; but he took fine care that he gave us no details. He had no program, and there is nothing I can tell the young people of Atlantic Canada, especially as to what will replace this change.
It is easy to talk about jobs and new creations. Are we going to have LIP ad lib? In some way, are we going to pick up the young people's program? What are we going to do? Some day this session will adjourn. Summer is coming. We might end this portion of it. I would like to know from the Minister of Manpower and Immigration what to tell the people down there and what is coming in place of this. I invite the minister or some of his cabinet colleagues to tell us, before this debate is over, so that we can tell our people what is coming from this disastrous budget.


Some hon. Members:: Hear, hear!


Mr. Bob Kaplan (Parliamentary Secretary to Minister of National Health and Welfare):: Mr. Speaker, there is a rumour around that the Liberal caucus opposes the tightening-up of unemployment insurance which is taking place in the current budget. I have no intention of representing the views of the Liberal caucus, but in view of the rumour I want to speak for myself and indicate that as a Liberal I very much welcome this part of the budget. In fact, I think we would have had a better unemployment insurance program if even more changes had taken place, and I want to suggest some to the government.
Anyone who criticizes the extent of payments which the government makes to the unemployed needs to be attacked for being a yahoo. After all, what can be wrong with giving payments to people who are out of work? When the program was first proposed I remember the tremendous pressure from the business community which expressed concern about the potential cost of the program and its possible effect on the work ethic. There was an answer. It was said that this kind of criticism was being made by people who were against unemployment insurance. Some people said, "What does the business community know about the work ethic?" Besides, the plan was to be an insurance type plan supported not by taxes but by employer-employee contributions.
During the 1972 election campaign I remember my opponent arguing that in its first year of operation the unemployment insurance program had exceeded its estimated cost of operation by $1 billion. I went through the entire
[Mr. Macquarrie.J
election campaign without contradicting him. He was wrong. The excess was slightly over $600 million. I remember asking myself, after I was defeated, if the government would have introduced the program in the first place if it had known that it would cost in the first year $600 million more than was estimated.
Putting aside the enormous contributions made to the fund by employers and employees, the federal government's contribution to the unemployment insurance fund, or our tax contribution, rose in 1971 from $103 million to an estimated amount for the fiscal year ending in 1976 of $890 million. I understand that the estimated contribution for 1976-77 is $1.7 billion. And that does not include the contribution made by the employer and employee.


Mr. Stevens:: So you agree that there was a mistake?


Robert Phillip Kaplan: That represents quite an escalation.


Sinclair McKnight Stevens: There was a mistake, was there not?


Robert Phillip Kaplan: Unemployment insurance can be looked on as a great liberal advance. I agree with it. I think unemployment insurance is a program which Canadians are willing to accept; it represents a recognition of liberalism in society. It represents the recognition that while opportunities should be provided for the individual to make the most of himself, to fulfil his life, the grave risks of losing one's livelihood should be shared.
The unemployment insurance program has always been difficult to administer because of its many facets. We consider the job search, and the quality of that search. During the initial period the government encountered understandable difficulties in controlling and administering the new program. Yet with the benefit of hindsight I find it hard to be critical of the way the program was administered. So far as I can see, and I followed the program closely, there are now few difficulties connected with abuse of unemployment insurance. I think the program is well administered and adequately controlled. As I see it, the budget we are considering is not concerned about abuses so much as about initial design problems, if I may put it that way.


Sinclair McKnight Stevens: And who is responsible for those problems?


Robert Phillip Kaplan: We are concerned about some aspects of coverage which do not involve abuse but which involve the lawfully recognized conditions under which an individual is entitled to come forward and claim unemployment insurance.


Sinclair McKnight Stevens: And who put those provisions in the plan?


Robert Phillip Kaplan: And who will improve them?


Steve Eugene Paproski: We will, when we take over in 1978.


Robert Phillip Kaplan: Oh yes?


Steve Eugene Paproski: Don't worry, Bob. We shall take over.


Robert Phillip Kaplan: Mr. Speaker, I notice a strange ambivalence on the part of hon. members opposite with regard to unemployment insurance.
June 3, 1976

This plan has always enjoyed, in large measure, the support of members on all sides of the House. It puts into practice the principle that we are our brother's keeper. It gives members of our society while unemployed, and seeking an opportunity to return to the work force, the support they deserve.
As I said in the beginning the business community voiced its concern. Now as of 1976 the difficulties connected with the program are widely recognized far beyond the business community and the present budget is designed to correct those very difficulties which are of concern to members of the community at large. No matter which neighbourhood of my constituency I visit, I hear people grumbling about individuals who are on unemployment insurance and who, in the opinion of neighbours, ought to be working or would be working if a genuine incentive existed to find a job. I occasionally hear parents say this sort of thing about young people.
Let me tell the House something that happened to me not long ago. Last Friday afternoon I received six students from my riding. They attend York University. One of them came up here to work in a government department; the job, starting this summer, is to be permanent. The other five were on unemployment insurance. Well, they had been students for the year and, as it turned out, had all worked last summer. Therefore having worked for eight, nine or 12 weeks last summer, they were qualified for and entitled to unemployment insurance if they could not find a job.
I told them that I had seen help wanted ads in shop windows in the shopping centre where my constituency office is located. There were signs saying, "Cashier Wanted," and "Help Wanted," and so on. I asked these young people if they knew about such opportunities, and had tried to take advantage of them. They said to me, "Well, no. This is how we looked for our jobs-we sent out nearly 100 letters to all sorts of businesses, asking for jobs." They said that none of these letters produced an offer of employment; they felt that, having spent nearly $10 on postage in conducting their job search, they were entitled to claim unemployment insurance. I can imagine how parents who work all their lives feel when confronted with a situation like that. But they tried for a job, continued to write letters, and to claim unemployment insurance.
Let me refer to some statistics which the Minister of Manpower and Immigration (Mr. Andras) brought to the fore when he spoke the other day. He said that in a majority of cases those who claimed unemployment insurance for the maximum period after eight to 11 weeks of work were able, when their qualifying period ran out, to find employment. A large percentage found work within six weeks. I think that many of them are like the students who came to my office from my part of the city of Toronto. They may not be aware of where to find work. Or, if they were given a greater incentive to find work, many would be able to do so, I am sure.
I think the changes in the plan will benefit regions like mine. The changes proposed by the government are changes in the right direction. They will increase employment, not increase the number of people on welfare. Not only will they lead to increased employment; they will lead to increased productivity in our economy. There are labour shortages in every sector.
The Budget-Mr. Kaplan
I turn now to the problems we encounter in some depressed regions of the country. There the situation is quite different. I understand that there you cannot go into a shopping centre, as you can in Toronto, and find jobs advertised in store windows. It is hard to find work in those areas. The question we must ask ourselves-and the hon. member for Hillsborough (Mr. Macquarrie) asked it but without looking at the answers-is this: is unemployment insurance the kind of constructive program which will produce employment in depressed areas of this country, or must we do something else? Instead of institutionalizing employment can we increase productivity in Canada? Shall we continue features which create a sense of entitlement to a pension? In other words, if we do not change the unemployment insurance program will we make Canadians, especially those in the depressed areas, into a nation of pensioners?
By themselves I think unemployment insurance payments are a false solution, a false source of prosperity and stability for the depressed regions of the country. There is a better way. If the hon. member for Hillsborough had listened to the minister, or read his speech, he would know that the government is making solid proposals for job creation, proposals which will bring development to our depressed regions, and programs which ought to be in place in depressed areas in order to create employment. I believe that most Canadians want to work. It is particularly frustrating for the unemployed in the depressed regions of this country because the jobs are not there.
You cannot have a program that is escalating in cost the way this program is and try at the same time to add something new and substantial to the job creation element. When government expenditures just cannot be permitted to grow at their recent historic rate, you have to cut back some programs in order to expand others. In my view nothing can be more rational than to cut back a program like unemployment insurance where the thrust of it is directed toward providing a kind of false alternative to employment, and to try to develop programs that create employment. I very much welcome that. I think you can be a Liberal and welcome that alternative. I very much approve of what the government has done.
Recently I wrote to the minister. I made a number of proposals for amendments to the Unemployment Insurance Act which are not anti-liberal, anti-the unemployed, anti-the depressed regions. They are designed to give the government the resources to really do something about the depressed regions and to create a base of employment in those regions.
I recommended lengthening the qualification period. This has been done. It has been lengthened to 12 weeks. When the minister appears before the committee it will be interesting to know how much resources would have been freed if that 12 weeks had been 16 or 20 weeks, as are the qualification periods in use in the other liberal societies of western Europe and the industrialized world.
Second, I suggested adjusting the benefit period, which has been done, so that a shorter benefit period will apply for a shorter labour force attachment period.

June 3, 1976
The Budget-Mr. Kaplan
Third, I suggested that family income should be taken into consideration. This was not done in the budget. I hope it will still be considered. The individual who has no dependants, who is alone, would receive a smaller unemployment payment than the individual who is the sole earner and has a family to look after. For the individual who is a second earner in a family and whose income is not as essential, the payment could be lower.
One would like to see larger payments go to all individuals who are unemployed and who are genuinely searching for work, but we are talking about limited resources. If resources are limited, is it not better to give them to those who need them more, and use the savings to try to create employment, instead of just creating a government pension base for a local economy?
Fourth, I suggested that the government take a look at the situation of part-time and seasonal workers. I do not think the theory of the unemployment insurance system was that a part-time worker and a seasonal worker were to participate in benefits on the same basis as a person who found a full-time job, intended to be a full-time worker, lost that job and is looking for another full-time job. Special rules should apply for people in the work force on a special, temporary, part-time or seasonal basis.
Fifth, I drew the attention of the minister to a special type of unemployment, the layoff. A fair percentage of people who are unemployed and on unemployment insurance do not consider themselves to be unemployed. They consider themselves to be waiting for a recall from the employer who laid then off. Their situation is special. The employer who lays off a person because there is not enough work in the plant, or whatever it is, for the time being, has a responsibility to those employees he hopes to get back when business improves. His responsibility is greater than that of the employer who has had to lay off or fire people or close his business without the intention of recalling them. In a case like that, the laid-off employee should not be treated in the same way as the ordinary hardship case that led us to opt for a very generous unemployment insurance program in the first place.
Finally, I stated to the minister that there was a change which many were advocating that I do not support and do not want to see take place. Say a person earning $10,000, $11,000 or $14,000 a year loses his job. It is suggested that while such persons are looking for a similar job they ought to be forced by the administration to take any job that comes along.
As an example, a person may have worked as a manager in a business that has gone bankrupt. He wants to find another job as a manager. The case is put forward that this person ought to be prepared to take any job rather than go on unemployment insurance. I reject that argument. The unemployment insurance program ought to permit an individual who had a job that required high qualifications to have the opportunity to find a similar kind of job.
If a manager who has been laid off must accept a job as a waiter or something similar, it would be very difficult for him to make a proper job search for the kind of job he is capable of doing and which is more productive in terms of what it does for the economy as well as being more remunerative for him. That individual should not be forced to take any job just to get off unemployment insurance. He

should be given a fair chance to find the kind of job he had before. I was very glad the minister did not go that far in making changes.
I look forward to seeing the bill introduced by the Minister of Manpower and Immigration implementing these two extremely progressive changes. They will free funds which ought to be clearly committed to areas of need and to create employment in areas where we have been providing as an alternative an unemployment insurance base. That is really a dead end or false alternative.
I congratulate the minister, and indicate to him that I very much support what he has done. I consider it to be the kind of liberal approach to improving this plan that has been needed for some time.


Mr. G. H. Whittaker (Okanagan Boundary):: Mr. Speaker, this is a very dull, ho-hum type of budget. It has done very little, if anything, to excite the Canadian people or to help the economy of the country.
The government is relying on the anti-inflation regulations brought in last October in the hope that they will do something to control inflation in Canada. Even though it campaigned vigorously against any form of controls, last October it saw fit to bring in controls. However, that has not done very much to control inflation in Canada. It has not done anything to get people moving in the proper direction to control inflation in Canada.
The government brought in the budget because it was embarrassed about the length of time that had elapsed since the previous budget. Therefore it felt it should bring one in. It certainly was not very much of a budget.
We see that the main thrust of the budget is directed toward unemployment insurance. We don't really need budgets to debate unemployment insurance. It would have been easy for the Minister of Manpower and Immigration (Mr. Andras) to have brought in the necessary proposals to present to parliament in an effort to do something about unemployment insurance. But because the Minister of Finance (Mr. Macdonald) could find very little to put in the budget, or because he did not want to find very much, he concentrated on the unemployment insurance aspect. Thus we find ourselves today debating unemployment insurance and the absence of proper administration instead of the economic situation. What we are really discussing is the attempt to fix up the unemployment insurance arrangements which were brought in some years ago by the government, and which are not working.
From time to time the opposition has drawn attention in no uncertain terms to the fact that the unemployment insurance scheme is not working properly. We know the government is concerned about the high cost of the scheme and we realize, too, that there are many people in Canada who are concerned about this aspect. These include, in particular, men and women who keep paying into the fund-for them it is a form of taxation-but who never benefit from unemployment insurance and in fact never use it. They are asking whether it is truly an unemployment insurance program or whether it is really a welfare program in disguise.
June 3, 1976

We also have before us the latest report of the Economic Council of Canada concerning people and jobs. The main thrust of this report is getting people back to work. There is a lot to be said about the psychological aspect when it comes to getting people to work. The minister in his speech yesterday referred to "frictional and structural causes" as part of the reason for the large number of people in receipt of unemployment insurance benefits. Seasonal unemployment, he said, accounted for only a very small percentage of the total and other factors accounted for a much higher percentage. As far as I can determine, "frictional" implies a clash of will, temperament or opinion. This is one of the aspects dealt with in the report of the Economic Council.
What we are really talking about here is the work ethic. There is a clash of wills and opinions. I do not believe the Prime Minister (Mr. Trudeau) has done anything to help in the last few years by telling the people of Canada, "You really should be doing your own thing." In many instances, and I think this is notable about a lot of young people in Canada, doing their own thing does not mean working.
I like to look at what is happening in British Columbia today. I think one of the bright spots in the new provincial government there is the minister of labour who has come on very strong and told the people on welfare they should pick up a shovel. It did not go over too well to start with, but the result has been that the attitudes of people working today are considerably different. He designated areas where you could not get welfare. In other words, he told the people they had to go to areas where there was work. Whether it was there or not, they had to be there if they wanted to get welfare. It has made a considerable difference in my riding, especially in a lot of those places where we were having trouble with young people getting together in communes. I talked to the people last week about what is happening in those areas now and they said the communes have disappeared, they are just not there. I talked to business people, to processors and people in packing plants, and they say there is an entirely different feeling today on the part of young people about getting to work because they know they have to work, and they are working. The type of thing the Prime Minister has been saying about doing your own thing has done really nothing to foster the work ethic in Canada. May I call it six o'clock?
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
George H. Whittaker: Mr. Speaker, at six o'clock I was talking about unemployment insurance and the fact that the government has seen clear to announce amendments to the Unemployment Insurance Act in the budget. I was saying that the Economic Council of Canada report concerning people and jobs had reported that a lot of people were on unemployment insurance for frictional and structural reasons. After what the Prime Minister (Mr. Trudeau) and the government have said, that you do your own thing in Canada and you really don't have to work, it is understandable that the Economic Council should find that there are frictional reasons for people being on unemploy-
The Budget-Mr. Whittaker
ment insurance. "Frictional" really means, as far as I can determine, a clash of will, temperaments and opinions. I think if this government wants to convince people that they should work, it should not be speaking in this manner but rather should be telling them that it is a good thing to work, that there are many businesses in Canada that need workers. There are many workers who are willing to go to work but are not working under the shadow of the type of ethic that the Prime Minister advocates, that of do your own thing.
On November 5 we were debating unemployment insurance and I was lucky enough to speak that day. I was talking about the large amount of money that is being spent on unemployment insurance today, almost $4 billion, and about some of the reasons why there was such high unemployment. The member for New Westminster (Mr. Leggatt) in speaking after me twisted, I think, quite a lot of what I said, and argued that I had said that the reason there was a high unemployment insurance cost in Canada was because of abuses. He said "I defy the hon. member to cost the abuses and to tell me what percentage of the deficit is a direct result thereof".
I was very pleased to read in the review of the Economic Council "People and Jobs" that 0.7 per cent of the unemployed are on unemployment insurance today because of the laxity of the program. There are 70,000 people estimated to be on unemployment insurance because of this, and if you cost it into the total cost of the unemployment insurance it would amount to some $350 million. I think that should be proof enough for the hon. member for New Westminster, if he wants to take the time to read that portion and understand really what were talking about at that time.
I do not think that what the government is trying to do in its budget is going to do very much about that portion of the people and the laxity of the program. I think much more will have to be done if it is going to service that area. It has attacked the length of time, requiring a longer length of time for people to qualify for unemployment insurance. I am not sure that is the correct way. The government says it will save $330 million in this manner. If a person is legitimately off work he is suffering, and this is not the area where the attack should take place.
I am certainly pleased to hear that the government is now getting around to wanting to put Manpower and unemployment insurance together again. This is a real necessity, and the emphasis must be placed on Manpower, getting these 70,000 people back in the work force and gainfully employed. Some people may ask where they are going to work. There are lots of jobs if you have people with the right attitude. Much of the work being done in Canada today is not being done on time, is taking longer than it should. This is because people in business will not stand for harassment, and will not allow those people with the wrong attitude to work for them. I think there is quite an area in this regard for people who want to work.
We also know that many mines, not just in the remote areas, but in areas such as my riding, do not have enough people working because people will not go there. Of course they will not go when somebody else tells them they

June 3, 1976
The Budget-Mr. Whittaker
should be doing their own thing, and when there is a tremendous unemployment insurance and welfare scheme on which they can fall back. All these jobs must be filled, and I think with the right attitude it would not be too hard to fill them.
The minister announced that he is going to have another $100 million for LIP this year. This is good, providing it is spent properly. I hope he has read the review of the Economic Council of Canada, "People and Jobs", in which it is said that the government should enlist provincial governments, local governments, municipalities, and business organizations in order to carry out these programs. Rather than having a program under which the government asks the people what they want, it should co-operate with these various levels of government and business because they know what is needed in the various areas. I entirely agree with this suggestion, and this is what we must do if we are to spend the money and get the job done properly.
We should also spend this money on programs that last a year and longer, rather than just on projects or programs that last a few months, with people going back on unemployment insurance at their conclusion. People in these local areas are aware of the local needs and they will accept the responsibility of seeing that the job is done well.
Nothing at all was said in the budget about agriculture. Probably most hon. members will not remember what was said in the throne speech, because that was delivered in November, 1974, going on two years ago. At one time we had two sessions a year; now we have two years a session. I suggest this is not good because the government tends to forget what it proposed at the beginning.
In that throne speech of November, 1974, the government stressed that there should be incentives for farmers, with stabilization of income and markets. We all know of the demonstration which took place here today. The government should go back and read what it said in 1974. Had it meant what it said then we would not be experiencing the type of demonstration we saw today.
Every farm commodity grown in Canada that I know of has a more distressed price today than in November, 1974, perhaps with the exception of grains, and I am given to understand they are becoming more distressed.


An hon. Member:: That's not true.


George H. Whittaker: Somebody suggests that is not true. I wish he would get up and tell me of an area where it is not true. I would be very glad to hear about it, but I do not think the hon. member can tell me.
The cattle producer is in an even more distressed position than the producers of fruits and vegetables. The fruit and vegetable canning industry is certainly in a distressed position today, particularly in British Columbia. I suggest the reason is that cheap imports are coming into Canada as a result of the cheap food policy of the government. Obviously the government did not mean what it said in the throne speech of November, 1974. It is carrying on with the same type of cheap food policy it had years ago.
If there is someone else in the world who can produce cheaper than in Canada the government suggests we should bring in their products virtually free of any encum-

brance. The farmers in my area used to say, and I think this is also accurate today, that Canada is a saint in a world of sinners when it comes to the import-export trade. We put no encumbrances, or very few, on imported farm produce. Other countries in the world put total embargoes on our products when they see fit. They always seem able to find some kind of gimmick or means of putting an embargo on Canadian produce. Canada does not do this.
In this budget we find that the government intends to remove the tariff or reduce it in respect of pork. Every time a farm commodity reaches a position where our farmers are able to make a little bit of money the government reduces the tariff, allowing imports to come in, knocking the heck out of our farmers. The government has done this before and is doing it again. Pork is a product on which the producers are able to make a few dollars today. Now the government is taking the tariff off.
Let us just take the example of canned products being imported. There is a flood of cheap canned products coming into western Canada today. As a result the producers there still have last year's stocks on hand. The farmers want to produce, and the government suggests that production should be up in Canada. But the farmers cannot produce because there are no cans to be filled, and those that were filled last year are still sitting on the shelves. This is a result of the importation of cheap canned products. The farmers are wondering why they are not getting contracts from the producers. They are not getting them because the warehouses are filled with last year's products.


Some hon. Members:: Oh, oh!


George H. Whittaker: If the Parliamentary Secretary to the Minister of Agriculture (Mr. Pelletier) does not believe me, let me read him a letter I received from a cannery yesterday.


Mr. Guay (St. Boniface):: Read it; you can't even read.


George H. Whittaker: This letter is from Mrs. D. L. Milne Cannery Ltd.


An hon. Member:: Don't judge everybody by yourself, Joe.


Some hon. Members:: Oh, oh!


The Acting Speaker (Mr. Turner):: Order, please. The hon. member for Okanagan Boundary (Mr. Whittaker) has the floor.


George H. Whittaker: I do not like to be continually complaining about the government whip, but every time I get up to speak it seems he talks about me reading. I notice he is never here to see his own members reading their speeches, so he does not know when they get up and read.


Joseph-Phillippe Guay: On a point of order, Mr. Speaker, may I say that, if the hon. member would like to know, I have never missed a day since the opening of the House last fall. I could bring the record I have to show how many days he has missed. I have the record which shows how many days he has and has not been in this House.
June 3, 1976


The Acting Speaker (Mr. Turner):: Order, please. That is not a point of order; it is a point of debate.


George H. Whittaker: Mr. Speaker, I am sorry we had that digression because it has shown that even though the hon. member makes a lot of noise he really has a thin skin.


The Acting Speaker (Mr. Turner):: Order. I suggest that we all settle down.


George H. Whittaker: This letter is from Mrs. D. L. Milne Cannery Limited. It states:
As the government has stock piles of various foods for Acts of God (i.e. powdered milk), could the idea be engendered to use pears, packed in No. 10 cans, 100 oz. of fruit and liquid sugar.
The 1976 pear crop is going to be large and the canners pack will be small due to foreign dumping. I am suggesting that each canner be allotted a quota of this surplus product and the government show originality in having such a useful and nutritional product with long keeping quality, available for distribution (the rats cannot eat this).
This year the pear producers will be very hard pressed because they still have on hand their stocks of the canning crop from last year.
We hear about the tariff being removed from pork. This is taking place at a time when pork producers are making a little more money. We also note that the tariff is being removed from bananas. Bananas are in direct competition with the fruits and vegetables grown in Canada. Bananas are grown in a country where there is cheap labour. They flood the Canadian market, and now we note that those who ship them into Canada are to have an advantage. Many manufacturers in Canada are in exactly the same position. As soon as they establish a good business in which they can show a profit the government reduces the tariff, and consequently imports into Canada do much to inhibit their business. Therefore these manufacturers lose the incentive to increase their business. There are many such examples in Canada of businesses which are having difficulty in competing with imports. The government is doing absolutely nothing to help these businesses.
Then there is the matter of transportation. Transportation costs are much higher here than in the United States, and we have difficulty competing in this area. I do not see anything in the budget to relieve this situation. I do not see the Minister of Transport (Mr. Lang) doing anything about this. It is very difficult for farmers and manufacturers in Canada to compete with the competition from outside Canada.
Although we have been told there is to be a cut in government spending we find that government spending is higher. Many people believe that a large part of the inflation in Canada is caused by government spending. In the Globe and Mail of March 11, 1976, there is a story about how the President of the Treasury Board (Mr. Chretien) got the ministers of various departments to cut their budgets. He said he did it by gimmicks and tactics. He added that if the ministers did not subscribe to what he was asking, he would take the matter to cabinet. I think that is a good story. However, when we look at the situation we find that budgets have not been cut. We find that we are spending more in Canada. I think the minister should have gone to cabinet if he wants to cut the budgets of the various departments, because people are saying that the spending
The Budget-Hon. J. C. Munro
of the government is the cause of much of the inflation in Canada today.
The Employers' Council of British Columbia in its review of the budget said it is too bad that the government has not developed a more realistic level for the Canadian dollar, and new job creation through the encouragement of investment. The Canadian dollar is high in relation to what it really should be, especially if the government would cut back on its spending. A high Canadian dollar favours imports into Canada rather than exports from Canada. This is really an exporting nation. The government should be doing everything it can to make sure that we are able to export.


The Acting Speaker (Mr. Turner):: Order, please. I regret to interrupt the hon. member but his allotted time has expired. He may continue with the unanimous consent of the House. Does the hon. member have unanimous consent?


Some hon. Members:: Agreed.


George H. Whittaker: Thank you very much. I shall try to be as brief as I can. Our trade deficit is very high. We should be taking action to ensure that the Canadian dollar favours exports rather than imports into Canada. In the budget our deficit is reported to be $3.3 billion, but really when all the needs of the governments and its borrowings are tallied up one can see that it is really $4.5 billion. Because of this interest rates are high, and the dollar is at a high level. This dampens the export trade.
We hear much talk about energy. A high tax has been placed on large cars and air conditioners. This is very good. A manufacturer in my area who manufactures wood-burning stoves made a submission to the Minister of Finance that the excise tax be removed from wood-burning stoves. There is no excise tax on oil burners or gas burners of any kind, but there is a tax on wood-burning stoves. Wood in Canada is a renewable resource. I would have thought this tax would have been removed, especially since the minister wrote me a letter in which he said:
In the event that the sales tax relief you seek can only be provided through an amendment to the Excise Tax Act regulations, please be assured that your representation will be reviewed when amendments to these regulations are next under consideration.
I was very disappointed that there was nothing to this effect in the budget. Mr. Speaker, I could go on and on but I am very grateful that I was granted extended time.


The Acting Speaker (Mr. Turner):: The hon. Minister of Labour (Mr. Munro).


Steve Eugene Paproski: We have the heavies tonight.


Hon. John C. Munro (Minister of Labour):: That, coming from another one, Mr. Speaker!
I am glad to have the opportunity to bring out a few facts in this debate in support of the budget presented by my colleague, the Minister of Finance (Mr. Macdonald). I think there are a few aspects of this budget, when seen in context of our wage and price control program and other elements of economic policy which show that these policies

June 3, 1976
The Budget-Hon. J. C. Munro
have worked very much to the benefit of organized and unorganized workers.
I think it is well to keep in mind that some people have alleged that the organized and unorganized worker has not been receiving-certainly in the last months-an adequate share of the gross national product. Statistics show that this is a fallacy; in fact labour's share under this government has not only been maintained in terms of its percentage share of the Gross National Product but also in terms of national income. Since the inception of the controls it has actually gone up in current dollars without the inflationary factor taken out, and incomes have gone up in real terms once the inflationary factor has been taken out. If this is true, then some of the statements that are being made throughout the country to the effect that it is the policy of the government, or it is the end result of a wage and price control system and of this budget, to cut down the organized workers' percentage share of the gross national product in relation to incomes, are fallacious.
All hon. members should be aware of the statistics that back up this argument. I do not believe it is in the interests of any hon. member, irrespective of his or her political persuasion, to perpetrate what are erroneous impressions and, although perhaps not intentionally, to deceive the Canadian public about the situation. Before I go into some of these statistics, Mr. Speaker, I think it would be wise to take into account some of the background factors that I am sure were in the mind of the Minister of Finance, and indeed in all our minds when we brought in this budget.
We recognized one central thing, that the crucial national need was to gear down the rate of inflation without impeding economic recovery. This was the way to ensure job security and, in the long run, to combat unemployment. In an uncontrolled inflationary situation there can be no assurance of job security or that any policies will work to cut down an unacceptably high rate of unemployment.
Let me enumerate some of these factors, Mr. Speaker. First, there is no doubt that what we faced as a government, and what all of us faced as parliamentarians, was the unease last October when this program was introduced. The trade union movement and the union leadership felt their position was untenable. The leadership was vulnerable because it had led the membership into long term agreements-some for two or three years. The membership were coming out of those agreements to find that they had fallen behind the rate of inflation. They had endeavoured to anticipate it when they entered into agreements but it turned out to be higher than anticipated, and so the leadership was exposed for having led membership into agreements through which they had fallen behind.
I think it would be a natural thing for the union leadership-and if I were a union leader I would have done the same thing-to predict for 1976 and 1977 the very worst rate of inflation, and then endeavour to build in protection against it in the collective agreements. Of course that can be a self-fulfilling prophecy. If you have to predict the worst and protect against it, inevitably the worst will occur.
The stability of the union leadership, to say nothing about the real earnings of the workers, was very fragile, and this had to be corrected. Our economic policies, includ-

ing the budget and restraint program, were designed to restore the needed stability to workers and their leaders.
The second factor is also apparent,and I think the budget takes it into account as does the wage and price controls program, and that is the plight of the unorganized worker. Organized workers have their spokesmen, and some very effective ones at that, but unorganized workers are often on fixed incomes, or on incomes that do not keep up with the rate of inflation because they do not have spokesmen. They were some of the prime victims of a destructive inflationary process.
I think the third factor in the back of our minds when we not only brought in the restraint program but brought in a neutral budget in terms of the economic stabilizer, was that we recognized that the budget is just one element-it is complementary to the wage and price control scheme and reflects on the other elements that go into an antiinflationary program. I do not have to repeat what the other elements are; the Minister of Finance has dealt with them. They include fiscal and monetary policies, governmental expenditure policies, and structural policies.
The fourth factor that formed part of the background when we decided upon our economic policies was the fact that we must protect the real earnings of the workers, both organized and unorganized. That is what I referred to in a preliminary way in my opening remarks. I think it would be well to note that when we brought in the restraint program, labour's share of the gross national product was at its peak. There has been some suggestion that this scheme was anti-labour in the sense that it was designed to cut down labour's share, or that it was brought in at the low point in the cycle and thus they were cut down while other elements were allowed to expand. That led to some of the mythology that this program was primarily visited upon the backs of the workers.
The facts from Statistics Canada with respect to the workers' share of the Gross National Product-this is a distribution of national income in the context of percentage of Gross National Product-show that in 1975 when we brought in the control program the workers' share in terms of incomes was 56 per cent of the Gross National Product. In 1974 it was 53.9 per cent. In 1973 it was 53.9 per cent. In 1972 it was 55.1 per cent-still lower than the 56 per cent in 1975 when we brought in the program. In 1970 it was 54.5 per cent. If you trace labour's share of the Gross National Product from 1962 to 1975 you will see that we brought in the program when labour's share was at its peak in terms of a percentage of the Gross National Product. This means that the program was not brought in at a low point, in terms of the statistics, of labour's share, but at the high point, and if that share is going up it stands to reason that somebody else is de-escalating.
Indeed, if one wants to look at the profit statistics during that year, 1975, when we brought in the program, profits were 11.5 per cent of the Gross National Product. In 1974 they were 13 per cent. What this points out is that the program was brought in when labour was receiving a high share and profits were declining.
If we start from there, I think it is useful to note just what happened since that time under the controls program.
June 3, 1976

I think it can be pointed out that instead of workers being cut back in terms of real earnings after taking the inflationary factor out, their share has been going up quite substantially. In other words, the inflationary process has no longer been eroding their purchasing power. Under the restraint program they are getting tangible gains in terms of real disposable income. However, before getting into that, I would like to indicate again the fact that labour was at its highest plateau when we brought in this program.
If one wants to look at a history of what has happened when we talk about labour's share of national income from 1975 to 1976, we brought this program in when labour's share of the national income was 73 per cent. In 1974 it was 71.6 per cent. In 1973 it was 71.7 per cent, so in the last three years it was at some of its highest levels. I might just point out that in 1960 it was hovering around 69 per cent. In 1964 it was 69 per cent. Back in 1946 it was 62 per cent. We brought in this program in 1975 when labour's share was 73 per cent.


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


John Carr Munro: That gives some indication of the fallacy of what some people would lead us to believe.
I think some other statistics are interesting. Again I am referring to measures of real earnings on a quarterly basis to indicate just how well the workers have done in terms of the effectiveness of some of the economic policies of the government. Let us look at 1975. In the first quarter workers' real earnings had gone up 2.5 per cent. In the second quarter they went up 3.8 per cent. In the third quarter they went up 2.5 per cent, and then in the quarter in which the program began in terms of real earnings the workers' share had gone up 3.2 per cent. This is average real earnings with the inflationary factor taken out.
I think I mentioned the first quarter of 1976. That is the quarter after the anti-inflationary program came into effect, and the workers' real earnings were up 3.6 per cent. Recent statistics I looked at as late as this afternoon indicated that in the month of March over the previous month, which was 3.6 per cent, the rise was 4.1 per cent in real terms after the inflation factor was taken out. Surely this spells out something, and if we take this in the context of the settlements which are now being arrived at since the program came in, the workers have never been in a better position, from an economic point of view, that they are at present under the economic policies of the government.


Some hon. Members:: Hear, hear!


John Carr Munro: The average settlements being approved by the Anti-Inflation Board are in the area of approximately 1 per cent against the arithmetic guidelines, and this is because of the historical relationship factors and the special consideration factors which were taken into account, certainly during the early months of the program, and still are. So let us say we are running roughly around 13 per cent, with a majority of the collective agreements being entered into by the parties falling below that. However, in percentage terms, let us say 13 per cent. Yet the inflationary rate this last April as compared with the previous April is now down to 8.9 per cent.
The Budget-Hon. J. C. Munro
If the inflationary rate is down to 8.9 per cent, and the workers and salary and wage earners of this country are currently receiving roughly 13 per cent, is it any wonder that in terms of real disposable income after the inflation factor is taken out they now have a purchasing power 4.1 per cent higher than they had before? That is one of the most marked increases at any time since 1971 on a quarterly basis.
When some of my friends-and they are my friends-in the labour movement argue that the budget, in terms of it being a stabilizer with its primary aim to cut down the inflationary process, and that the controls program are somehow designed to limit labour's share or cut it back, statistics at the time we brought in the program and the statistics currently coming out would indicate exactly the contrary.


Mr. Peters:: They don't believe that.


John Carr Munro: I believe that this is the real basis. I have the statistics. My hon. friend says they do not believe this. These are statistics the CLC uses, and I am using them to inform my colleagues in the House. Labour has its economists, too. If they wish to argue with them, I would welcome that. I would welcome a detailed examination of this on their part because I think they would then have the intellectual honesty to perpetuate no longer what is fundamentally a falsehood in terms of what this program is doing for real incomes for the organized and unorganized workers of this country.


Some hon. Members:: Hear, hear!


John Carr Munro: I think that this is the basis upon which some of us on this side of the House would claim that a majority of the workers of this country are prepared to go along with this program. They saw what happened to the purchasing power of their dollar under the inflationary process prior to the introduction of wage and price controls, and they saw what would happen in the inflationary process if our budgetary measures-not as introduced by my colleague, the Minister of Finance- fueled the flame of inflation. That would cut down drastically their purchasing power in real terms, which for many of them had been their very unhappy experience in the first few years of the 1970's. Now the workers are receiving one of the most marked increases in real earnings since the program was brought in.


Some hon. Members:: Hear, hear!


John Carr Munro: I think this is one of the bases upon which we can legitimately count for a majority of workers getting behind this program, or at least going along with it. This is not to suggest for one minute that if the organized labour leadership in this country, which is highly regarded, for some reasons wishes to ignore the statistics and tries to arouse its members into some type of general strike for a day as a political weapon, the organized workers are going to humiliate their leaders by leaving them exposed and not backing them to a certain degree. I think there is a sufficient feeling of solidarity in the labour movement so that perhaps for a day this could happen, or partially happen. I do not think even they would expect 100 per cent adherence. The labour move-

June 3, 1976
The Budget-Mr. Horner
ment of this country is not more monolithic than any other organization; and in view of statistics showing real gains for the workers of this country I believe they will have some difficulty.
I also believe that it would not be in the interests of the labour movement, its leadership, membership, or in the interest of the country to embark on that process of confrontation which would alienate various elements of the Canadian community from the labour movement, that movement which has contributed so much to the economic well-being of this country.


William Arnold Peters: Yes, but you are only controlling labour's wages. Who else is being controlled?


An hon. Member:: You can make your speech later on.


John Carr Munro: In conclusion, if the Canadian labour movement meet with us around the middle of June, and I have indicated they are willing to do this, we can assure them that it is not the government's policy to decrease or cut back on labour's share either of the Gross National Product or national income. If they can be so convinced on the basis of the statistics I have put before the House, and we can show them that under this program, in real terms, workers' wages and salaries have gone up, perhaps they can be convinced that it is indeed the government's policy to protect in real terms the wages of all workers in this country.
If we could so lay a solid basis for co-operation we could set up the sort of mechanisms to which my colleague, the Minister of Finance, referred in the budget-structural mechanisms for consultation. This idea was the highlight of the Quebec manifesto of the CLC. It suggested how labour could participate with the government in the economic and social policy formation which will evolve during the post-control period. It seems to me that that was a most significant position for the Canadian labour movement to adopt. Mr. Speaker, they want to be involved; they want to be consulted; they want assurance that the government will respond, and that there will be an ongoing basis for such consultation. This may mean that in future we shall see less of the element of confrontation, less of the adversary approach in relations between labour and the government of the day.
Considering this program's record of protecting the organized and unorganized workers, I think it can lay the solid base for ensuring that in future labour's share of our income in real terms does not decrease but continues to increase, and that labour will get its share of the rewards of productivity as this country prospers.


Mr. J. H. Horner (Crowfoot):: Mr. Speaker, when I listened to the budget speech I tried to ascertain the real purpose of the budget. Did the minister try to plot a course for this country to follow? Was he trying to plot a course for the Liberal party? What was the purpose of the budget? As I sat here, listening to the minister make his speech on budget night, I could not help thinking that he was talking to himself. He read a long speech very quickly, mainly to himself. The minister was a changed man, not the man we used to know. When he was Minister of Energy, Mines and
(Mr. Munro (Hamilton East).]
Resources, he stuck out his chin, gave the facts, and told Canadians what he thought was good for them and the country. On budget night he was a changed man, talking only to himself, as if conscious that in his first budget address he had little to say to the country, and still less to give it. All this was clear to me on budget night, and is evident if one studies the budget.
A budget has a purpose, Mr. Speaker. It should provide direction to those things the government thinks important. And what does the government think is important? To what does it wish to direct the people's attention?
As I look at the world and consider Canada's role in the world, two things strike me. First, the world is greatly concerned about energy supplies and energy costs. As well, the world is greatly concerned about food supplies. We must ask are we capable of providing food for the underdeveloped people of the world? In addition Canada and the United States are greatly concerned about balance of payments difficulties. The budget address dealt not at all with the question of food supplies, dealt not at all with our agricultural industry and our capability of providing food for ourselves and other peoples of the world not as fortunate as we are, and dealt inadequately with the question of energy. We were told about the 100 per cent write-off provision designed to encourage companies to explore for minerals, oil, and gas. Really, that is a small measure for dealing with the over-all energy picture.
Most Canadians ask themselves this question: will lack of reasonably priced energy supplies limit our growth potential in the years ahead? The minister did not deal with that. He spoke of the high cost of energy, but did not go beyond that. He did not put forward solutions to our problem. He may have hinted at the existence of the problem but did not say how it should be solved. Most Canadians who are prepared to look down the road wonder if the high cost of energy will in future prevent our enjoying our present high standard of living. The minister did not deal with that question, and did not answer it. As I say, he hinted at the existence of the problem, suggested we are concerned about the rate at which we consume energy, suggested somewhat simplified solutions, but did not deal in detail with the problem.
He suggested that our productivity is slightly lower than that of the United States, that we were capable of catching up, that the American economy was doing very well and would bail us out. To met it was a shallow budget. Many newspapers have described it as a dead, a dull budget. The May 29 edition of the Financial Post said that this is an inadequate budget:
... especially since the federal government is expecting a huge 26 per cent increase in its personal income tax take during the current fiscal year? After all, there is nothing in the budget which would give unemployment a whisker of a chance of coming down.


Mr. Trudel:: What is the hon. member quoting?


John (Jack) Henry Horner: I quoted an article in the Financial Post, to enlighten hon. members opposite and the hon. member who just interrupted, and to substantiate what I said about the budget. I feel that it will do absolutely nothing to decrease unemployment in Canada, already running at the rate of 7.4 per cent.
June 3, 1976

In his column, which appears in many papers, Douglas Fisher castigated the Minister of Finance (Mr. Macdonald) for his budget. He said that Ottawa awaits with rising hope the American recovery becoming a boom. He further stated that the minister did not attempt to deal with the economic problems in Canada. I agree.
The minister suggested lengthening the qualifying period before a worker can collect unemployment insurance from eight to 12 weeks. The government has the habit of doing one thing, causing a great deal of concern, then patching it up by undoing what it should not have done in the first place. That is certainly true in this instance.
As one writer stated, one will go off Ottawa's pogey and on to the local dole. That may well be the case in many of the high unemployment areas. The minister certainly did not attempt to deal with the fiscal disparity that exists within various regions of Canada.
In the past year the government has added to a high cost economy. One need only look at the legislation dealt with in this House during this lengthy session which has lasted almost two years. Nearly every piece of legislation has contributed to growth in the civil service.
When looking at the figures I was astonished to see that the staff in the Post Office has grown by 15,000 in the past few years. I used to think that part of the problem creating the unrest in that department was the fact that automation would cost a lot of workers their jobs. That certainly has not been the case. Automation must have been completely stopped in the Post Office. It certainly has not contributed to any greater efficiency; many Canadians will attest to that. We do not have a situation where the government has been hiring less people.
The minister suggested the concept of again bringing together unemployment insurance and the employment department. There is an article in the Globe and Mail about this. The government separated these two departments a few years ago. Now that it is bringing them together again, we are expected to hail it as the great saviour. The Unemployment Insurance Commission will be grouped with the employment department. The word "unemployment" will be dropped completely. However, the government is only uniting what it divided.
What happened after the division? There was a tremendous growth in the civil service. In one department there were 10,000 civil servants, and 11,000 in the other. By again bringing them together there will be a duplication of services. According to an article in the Globe and Mail and reprinted in the Calgary Albertan, the Minister of Manpower and Immigration (Mr. Andras) said that there will be a duplication of much of the work. Can we expect a reduction in the number of civil servants as a result of grouping these departments? One official says that we can only look for a no-growth situation.
If we analyse the problem of inflation we see that the cause is excessive government spending. At the time of the last budget the government budgeted for a $1.5 billion deficit. It had a $5 billion deficit. It is now budgeting for a $4.5 billion deficit, saying that is less than we had in the last year. However, this is greatly above what it budgeted in its last budget. If its current prediction is as far out, we
The Budget-Mr. Horner
are apt to have a $10 billion deficit. How do I reach that quick conclusion? For one thing there is no mention in the budget of the social changes which the Minister of National Health and Welfare (Mr. Lalonde) talked about with his provincial counterparts this past week. There is no mention of that $375 million expenditure.
There are many omissions with regard to expenditures that the government fully intends to make within the next year. The budget is only a guide for government expenditures. The Minister of Finance deliberately omitted many known expenditures that the government will incur during the next year. The social program under the Minister of National Health and Welfare is just one example that comes to mind. Expenditures in the field of transportation are another. There are many more that will crop up and, therefore, the budgetary deficit suggested will be completely erroneous.
The minister stated that we must attempt to become energy self-sufficient. The Minister of Energy, Mines and Resources (Mr. Gillespie) spoke of that this afternoon. The budget dealt with three matters with regard to energy. It eased the clamp on dividends, allowing dividends to be paid as high as 8 per cent. At the same time it limited profits to 85 per cent of the base period. Therefore there will not be many companies able to pay dividends of more than 8 per cent. The limit on dividends should not have been set in the first place. This is an old habit of government ministers-creating a problem, solving it, and then expecting the Canadian public to hail them as great saviours. All they do is save themselves from their past actions.
The minister stated Canadians can look forward to a period in the future when interest rates will come down. He alluded to this several places in the budget. However, he did not state how or why they could come down other than to say that the American economy was picking up and we can take heart from that.
In the budget address the minister also stated that if you use your spare money to drill your own gas or oil well, or dig your own mine, you can write off 100 per cent of the exploration costs. That is supposed to be a bonus or gift to the oil companies and those provinces that have energy resources. It might also be a boon to those provinces which have potential in the mining industry. The minister mentioned exploration costs, but not development costs. Speaking for the oil and gas industry, that action is about 25 years too late. Had it been done 25 years ago many Canadians would have gotten into the oil industry to a much greater degree.
Another feature in the budget worthy of comment is the clause allowing Petro-Canada to pick up 25 per cent of the land in northern Canada in an attempt to Canadianize the oil industry. Why did the government not make that concession available to all Canadian oil companies, not only to the national oil company but to groups of Canadians willing to form a company and take part in exploration and development? To my mind the big question in the minds of Canadians who are concerned about this subject is: how extensive are the reserves in the north? The minister made reference to the need for more accurate reporting. The government is to demand more accurate information

June 3, 1976
The Budget-Mr. Horner
from the oil companies. The suggestion, I suppose, is that exaggerated claims have been made with respect to reserves or that there are reserves which have been found but not reported.
I listened to the Minister of Energy, Mines and Resources this afternoon and noted that he failed to deal in any way with the issue of the Mackenzie gas pipeline. Does the government want this pipeline? Two years ago the present Minister of Finance said it did-that it wanted the pipeline but was anxious to go about it in the right way. Now the dilemma is compounded by the necessity of considering a number of alternatives. There is the Polar gas route; the Arctic gas consortium wants to build a pipeline and we find a consortium which proposes to build through the Yukon and then branch into oil lines already existing in Alberta. I see that Foothills Gas is applying for a licence also. But nowhere in the budget did the government attempt to provide any degree of security for these operations, or any certainty as to the manner in which it proposed to go about settling native land claims in the region so that work might proceed and much needed resources might be brought on stream perhaps by the year 1982.
It is all well and good to talk about the energy crisis with which Canada might well be confronted in the years to come, but it is evident that the government is prepared to do very little about it other than attempt to bring greater Canadian content into the oil industry. I wish to deal with that aspect, too.
If we are faced in this country with a severe balance of payments problem and if we, in effect, import money from abroad to maintain our growth rate and the value of our dollar, we are virtually selling off a little bit of Canada each year. That is exactly what happened last year. The balance of payments went against us by some $5 billion. Foreign capital was enticed into Canada by high interest rates and it bought a little more of Canada in the process.
The government has got to set its house in order. It must reduce its expenditures. In his budget speech the minister sought to reassure us that he would try to keep federal expenditure in line with the growth in the Gross National Product. As far as I am concerned his assurances are not good enough. I saw little in the budget to convince me he was deeply concerned about the energy question. He told the House that in order to take the economy in hand he would give the Anti-Inflation Board more power by allowing the use of a different accounting system based on actual profits, something which would make it much easier for the Board to control the economy. To my mind, when I look at the economies of the six major countries in the OECD and compare what is happening there with what is happening in Canada, it becomes evident that we did not need an Anti-Inflation Board in any case.
The problem was caused mainly by the government's inept handling of the economy, and in particular by its too rapid acceleration of the money supply. It attempted to blame the unions and union demands for higher wages, but prior to last October the biggest culprits in the area of wage settlements were the public service unions, not the private sector. The public servants gained from the government larger settlements before October, 1975, than did the private sector. They were ahead by several percentage points. The government across the way created this prob-

lem and then brought in the Anti-inflation Board in an attempt to solve it. We, in turn, are supposed to hail them as some kind of saviour. Well, there is an interesting quotation in the current issue of Business Week dealing with inflation prospects:
After a period of high inflation the inevitable resultTs an abortive effort to impose price controls and an eventual collapse into a managed economy.
I suggest this is what we are getting into now. We are passing through a period of control following the government's careless handling of the economy. We are passing through that stage and moving into a wholly managed economy. How much better off shall we be as Canadians? I suggest we shall all be worse off because the government consistently fails to recognize the basic needs of our society.
It is all very well for the Minister of Energy to say, as he did this afternoon, that he is putting forward an energy strategy, and outlining the use of energy in Canada and in the Western world over the past number of years. In the 70 years before the war the demand for energy in all forms grew at a rate of 3.2 per cent a year. Since the war our energy demand has grown at the rate of about 5 per cent. The minister of energy says we have to get this down to 2 per cent. How does he suggest we do so?
The Minister of Finance in his budget thought we should all get wind chargers and rely on the wind. Well, Mr. Speaker, prairie farmers know all about wind chargers. Many a prairie farmer has climbed them often and found great difficulty in storing energy in the batteries provided. Whether the government sponsors the building of huge wind chargers or not, I question whether any significant saving of energy would be realized; I suppose the minister was putting forward that idea with half a smile on his face. Storage of solar energy presents a similar problem.
The minister did not indicate how many millions of dollars the government was prepared to put into research in the area of wind energy or solar energy. He did say, though, that a tax of $100 would be placed on air conditioners because air conditioners in automobiles used up more gas. He thought the tax would discourage the use of such air conditioners. Mr. Speaker, it will not discourage the use of one air conditioner in one automobile. It is nothing but an added tax on those who feel that they need, or can afford, an air conditioner.
The same applies to the tax on heavier automobiles. It will not discourage to any noticeable extent the use of heavier automobiles, particularly in the part of the country from which I come. Before the minister gets that statement wrong, let me make it abundantly clear that on many of our rural roads in Canada heavier automobiles are sought by many people, since with a higher clearance they stand up to the bumps and rough gravel much better than some of the smaller cars. The minister is really placing a tax on the people who want to drive heavier automobiles. This is a tax that will reap his department an additional $35 million; it is really an added tax. This tax will fall mostly upon the members of the agricultural industry, who use rural roads and I suppose feel they need a heavier car.
June 3, 1976

Getting back to the subject of energy, at no place in his budget is there any encouragement for the use of coal to a greater extent. The minister of energy this afternoon also made no mention of this. Nova Scotia, for example, derives all its electricity from oil-driven generators. I do not blame Nova Scotia for this because at one time oil was a pretty cheap commodity; in fact it was so for about 40 years. Did the minister outline in his budget some of the dangers of this state of affairs continuing? Did he mention how much coal Canada has? Did he allow for a bonus if the maritimes switched to coal-driven generators? No, Mr. Speaker, the budget makes no mention of that.
It is interesting to note how much coal was used in days gone by. Up until 1940 70 per cent of the world's energy was generated by the use of coal. Today the world uses twice as much energy derived from oil and gas. I think in the long term the situation must be reversed; more and more must we make greater use of coal.
How does Canada stack up against the rest of the world in economic matters? I see Your Honour is about ready to rise, so let me conclude my remarks briefly by saying that four of the six major countries that are members of the OECD are doing better than Canada, namely, the United States, Germany, Japan, and France. All of this is being accomplished without any use being made of an anti-inflation board or the kind of rigid controls that the government has imposed upon Canadians as a result of its own carelessness in the last two years.


Mr. Irenee Pelletier (Parliamentary Secretary to Minister of Agriculture):: Mr. Speaker, during the budget debate last spring, my remarks dealt almost exclusively with the textile problems in Canada and on looking them over, I find great progress has been made since then.
I had then suggested three methods likely, it seemed to me, to improve the textile situation. Firstly, that the Textile and Clothing Board's recommendations, following an investigation in a textile sector where it is proven beyond any doubt that the Canadian textile industry has been injured, should be accepted as such by the Canadian government. Secondly, that the Textile and Clothing Board become a permanent board. Thirdly, that we decide once and for all the share of the Canadian market for the Canadian textile producers.
In conclusion, Mr. Speaker, I had hoped that if we were to realize those three means of action I had detailed, there could be a tripartite meeting with government, management and labour to examine in depth the issue of the textile and clothing industry in Canada, with a view to developing a common objective and in the shortest possible time a real national textile policy in Canada.
Perhaps it is not necessarily because of this speech that, twelve months later, it was considered important to proceed with that suggestion. Nevertheless more than a month ago the Canadian government decided, to establish a committee to examine the textile situation in Canada and submit recommendations before the end of this month to the Minister of Industry, Trade and Commerce prior to the development of a Canadian textile policy.
The Budget-Mr. Pelletier
I want to congratulate the minister for having taken that initiative and having, somehow answered the wishes expressed repeateadly by the textile workers, that is, specifically, that the government should adopt a truly Canadian policy in that area to spare the textile workers the continuous uncertainties that have existed for so many years.
The problems brought up in last year's discussions are exactly the same this year. And the solutions proposed at that time still seem to be applicable, as far as I can see. Since the textile policy was announced in 1970, we have been under the impression that the recommendations of the then minister were not implemented and that no real progress has been made.
How is it, Mr. Speaker, that every now and then we have to come back to Parliament to remind people that all is not well in that area, that the Textile and Clothing Board has produced still another report, adding to the scores of reports already published and that, in the final analysis, most of these studies and recommendations, whether they are implemented or not, have done little to remedy the situation in this industry?
When I am told that steps are being taken to cope with some of the difficulties, when in fact every year the number of jobs is decreasing and competition is stiff from abroad, and not only from under-developed countries but from the United States, I wonder whether those people who handle textiles in the Department of Industry, Trade and Commerce really and truly want to help that industry progress.
I appreciate the announcement made by the minister a few weeks ago, specifically, that a special committee was being set up to look into the situation in the Canadian textile industry. A quick survey of the last six years reveal that good intentions were very ably expressed on several occasions but that, actually, the industry perhaps does not even fare as well as it did a few years ago. We are justified to reserve our judgment on the final brief which should be tabled within thirty days or so. It certainly is the responsibility of the Minister of Industry, Trade and Commerce (Mr. Jamieson) to determine what kind of textile policy we should have in Canada, and this must be done in cooperation with Canadian manufacturers, textile workers, importers, exporters and the government.
Without the participation of all these people, it is very possible that the new Canadian textile policy will not reflect the real situation of that manufacturing sector. In the last year, in several parts of Canada and particularly of Quebec, many unions have studied the domestic situation very seriously. I have had the opportunity many times to meet textile workers during seminars and study sessions in the constituency I have the honour to represent in this House. Each time, I met workers who are aware of the problem caused very often by imports on the domestic market.
Very recently, the Centrale des syndicats democratiques produced an in-depth study on the textile industry in Canada, which affects more than 200,000 workers, more than half of them being in Quebec. The area of the Eastern Townships is dominated to a very large extent by the

June 3, 1976
The Budget-Mr. Pelletier
textile industry and the economic health of this area still depends on the vitality of the textile industry. Now, it is very easy to have a fairly precise idea of the economy in the Eastern Townships when we see that the textile industry has been affected for several years by a very ill-defined policy in relation with the importation of foreign textiles on the domestic market.
On several occasions, over the years, I had the privilege of meeting the textile workers and each time, they told me about the enormous difficulties they have in this industry, and they have always tried to make us aware of the problems they face, not only myself but all those who have a responsibility to act at any level, whether at the public level, at the level of civil servants or at the level of legislators.
The excellent paper recently prepared by the CSD on the difficulties in the Canadian textile industry, in which they make a final attempt, was brought to the attention of legislators and the general public. A large effort was made, Mr. Speaker, to make the government concerned about the real causes of the difficulties and problems facing the textile industry in Quebec, mostly in the Eastern Townships.
The government would do better considering in a positive way the findings of the paper made public a few weeks ago already by the Centrale des syndicats demo-cratiques which deals rather thoroughly with all aspects of the problem we are faced with in this extremely important domestic industry. Several short term solutions are proposed in this paper, but long term alternatives are also taken into consideration. It is interesting to note that the suggestions made last year in the House reappear in one form or another in the recommendations which followed certain studies made across the country, especially in Quebec, on the way to improve the conditions of workers in the Canadian textile industry.
Obviously we must find a long term global strategy for this industry, I mean a development strategy which would enable the Canadian textile industry to become really competition-oriented. This industry has never been given the opportunity to become competitive and stand up to foreign goods.
As I have said previously, the Eastern Townships are dominated by the textile industry. In fact over 20 per cent of all industrial jobs in Quebec depend directly or indirectly upon it. In the Eastern Townships, this ratio is even higher in some cases and reach over 50 per cent. We should be concerned about the future of these areas where this sector employs such a large proportion of workers if we consider that the textile industry in general has not during the last few years grown according to the expectations of the early 70's.
One must add, in the same breath, that in 1970 the textile industry was given a certain direction which was a few years later sort of put aside by an importation policy obviously contrary to the bills passed by Parliament. Some time ago, we tried to change the textile industry into a consistent and dynamic industry so that it could eventually compete, but when one realizes the present conditions of this industry, and the lack of encouragement from government policies, one feels that it would be catastrophic at this time to allow exchange liberalization in this industry.
If we do not protect the textile industry against foreign competition, we might well find, within a few years, an industry almost dead or so weak that it would not be able to outlive any effect of competition. For now, we must absolutely forget about exchange liberalization because this industry itself has no defence. On equal terms, it would be fair if the textile industry could compete on the international level, but as it is in an unfavourable position to begin with, it is cruel and unfair not to give the appropriate tools to an industry which we want prosperous and dynamic.
Some officials are reported to have been entrusted a few months ago by a cabinet committee with a complete review of the Canadian textile policy. Over a month ago, a Senate committee was conducting a study on the textile situation in Canada. More recently, about a month ago, a committee was set up to look into the whole Canadian textile industry and to report before June 30. The terms of reference of the special advisory committee appointed by the Minister of Industry, Trade and Commerce, whose report is to be submitted by June 30, was instructed to look into the present conditions, the outlook and the trade position of the textile and clothing industry, to review the policy with regard to competitive imports, and also to consider the opportunity, under the present legislation and instruments, of implementing a policy with regards to paragraphs 3 and 4 of the 19th GATT agreement, and to report its conclusions and recommendations to the Minister of Industry, Trade and Commerce by June 30, 1976.
I hope, Mr. Speaker, that all the reports of those committees, commissions and task forces which will be submitted very shortly, will not remain a dead letter. We should not once again give glimmers of hope to textile workers and union members. People do not always live on glimmers of hope, and for so many years, that is what has been happening in this area. It is also time that someone answered some stupid comments made recently by two Canadian high officials who admitted in rather clear terms that the textile industry should eventually disappear or be considerably reduced in Canada.
Mr. Raynauld, president of the Economic Council of Canada and Mr. Joe Morris, president of the largest labour congress in Canada made those comments without really knowing the problem. The day when we no longer have a textile industry in this country, we will no longer have a viable industry in Canada. We will then have to pay a lot more for our clothing than we do at present.
The Canadian textile industry has a tremendous potential if it is allowed to develop as it can. Salaries have increased and even though they do not compare with those paid in other sectors, they are nevertheless interesting. There is also another matter I would like to raise briefly, and it has to do with the labelling and the enormous frauds that the Department of Trade, Industry and Commerce apparently fails to see. In certain cases, it was pointed out that "Made in Taiwan" labels and "Made in Korea" labels were exhanged and simply replaced with "Made in Canada" labels: Goods not made in this country were labelled as such and displayed in Canadian stores; that is what is known as outright fraud.
The department of Manpower is involved in the textile industry and so is the Department of National Revenue,

June 3, 1976

through customs and excise, the Department of Industry, Trade and Commerce, the Department of Labour and many others. But when you get down to the bottom of it, you really wonder whether one of those departments can, through its own policy, allow the textile industry to make progress. As has been pointed out in last year's intervention, the problem may be easier than it is believed. What the textile industry and the workers in that sector are asking for is the assurance of an increasing part of the market to eventually reach 75 or 80 per cent of the Canadian market.
Now, Canadian manufacturers have 46 per cent of our market. The government, through the Department of Industry, Trade and Commerce, indicates that close to 75 per cent of the market is controlled by Canadian manufacturers. Which of the two are we to believe? We do not even know, statistically speaking, whether those 46 per cent of the Canadian market the textile workers say they hold or the 75 per cent the government says belongs to the Canadian manufacturers are true figures. It is startling to note a difference of 30 per cent between the figures quoted by one and those quoted by the other.
We must therefore after all be happy that a detailed study is now being conducted on the future prospects of the textile industry and that if it truly has a future, the government will review its business policy and its global policy in this area, provided of course it really wants this sector, which is so important for Quebec and all of Canada, to survive. It is essential that the government stop allowing the countries who are much better placed to do so to compete against domestic industries.
A little over a year ago, the President of the Treasury Board (Mr. Chretien) told textile union members who had come to Ottawa that the government had no intention of letting the textile industry die out. However, when we see that imports have increased, that the Canadian share of the market is not even 50 per cent, if we believe this figure, we must ask ourselves if all the necessary action is being taken to allow this industry to live or to survive.
In the textile area, there has been a higher productivity rate than in any other industrial sector since 1953. And in 20 years, this sector has had lower prices than any other sector. In my humble opinion, there are certainly solutions to the problems that I have just described. There are answers to all the complaints that have been made these last few years, but to this day, the answers have not been satisfying for the simple reason that the government does not follow up on what it says.
A great part of our imports now come from the United States. Yet we are well aware that the Americans can compete very strongly on the Canadian market. We must give our manufacturers the means to defend themselves. If we want true competition, let us give Canadian producers a useful instrument to allow them to compete efficiently and equally, and I am convinced that the Canadian producers will fare well.
At the present time, one of the great problems of the textile industry is the lack of information and discussion among the various levels. We are told that the Department of Industry, Trade and Commerce has some 25 employees dealing day after day with the textile industry. Those 25 employees must make sure that the 200,000 workers in that
The Budget-Mr. Dick
sector earn a decent living. I sincerely believe that if those 25 individuals really want to look conscientiously and dynamically after that sector, they will have done much for the textile industry.
From now on, we will have to check whether the persons dealing with the textile industry, at any level whatever, especially at the federal level, make the necessary suggestions to the pertinent department for the development of that sector. On several occasions in recent years the government has indicated its intention of helping Canadian industry. Is it necessary to point out that the textile industry is 90 per cent Canadian. The fine intentions and kind words stated during those last years must now be translated into action.


Mr. Paul Dick (Lanark-Renfrew-Carleton):: Mr. Speaker, the Minister of Finance (Mr. Macdonald) stated that one of the best ways to increase industrial productivity is to encourage the development of high technology and innovative new processes. He then went on to say that this is a high risk business and a difficult one into which to attract venture capital. However, the result of this statement by the minister was only a promise to have his officials study this matter on a priority basis, whatever and whenever that might be.
In comparison to this lukewarm decision to make a study into something which he says is important, may I read into the record the official position of the Progressive Conservative party:
The Progressive Conservative Party believes expenditures on research and development are capital expenditures-investments in the future. We believe that, like all investments, if wisely made they will yield tremendous dividends. Our party has faith in Canada and the skills of Canadians and would make large-scale productive investments in science and technology.
We have a commitment and a belief. Let us compare it to the statement in a press release from the Department of Industry, Trade and Commerce on May 10, 1976, to the effect that after providing more than $220 million in research and development funds to do something for Canadian companies during the last nine years, the Industrial Research and Development Incentives Act will end this year.
The budget also referred to some deductions for small business. The minister indicated that these measures would significantly benefit all small- and medium-sized corporations. I should like to suggest to you, Mr. Speaker, and to members of this House that these promises of measures which will be of some small assistance to small business do not go to the core of the problem and of course will do nothing to help research and development which is so desperately needed if we are to expand the industrial base in this country. Canada needs a good research and development policy. Canada needs an industrial strategy unless we are to settle for a role as a second or third class industrial and scientific community.
On June 9, 1975, a member on the government side, the hon. member for Halton (Mr. Philbrook), stated that a national science policy for Canada of grand design has been seriously considered for many years by all interested

June 3, 1976
The Budget-Mr. Dick
parties, especially since science and technology began to dominate our lives after World War II as the spearhead for all society and our whole way of life. He said there has also been criticism in Canada of such a policy, mainly in that we have not been able to formulate one and therefore we have tended to fall behind other nations in scientific, political economic clout.
In September of 1975 the part-time minister, or as was explained earlier this session in a debate on science, the minister who spends four hours per week on science and technology, announced the publication of a report entitled "The Availability of Risk Capital for Technological Innovation and Invention in Canada". This report indicated what he says is a severe shortage in Canada of high risk investment which should be available to support technological ventures because we do not have the incentives for people to invest in high risk investments.
What do we have? We have some foreign controlled groups, mostly American, coming in and buying out our technology and our companies. There are not the incentives for Canadians to do this. A few years ago the government indicated that it would slow down the process, and of course it introduced FIRA. What has happened is that under the Foreign Investment Review Act about 85 per cent of all applications by foreign-controlled consortiums to buy Canadian companies have been approved by the government. So really the government has not done very much. There has been a lot of talk and much hot air but not much of substance has been provided. In the area in which it has proudly proclaimed it spent $220 million in research and development funds since 1967 to some 3,000 Canadian companies, it has now decided to wipe that out.
The Industrial Research and Development Incentives Act made its debut in 1967 to provide for the payment of outright cash grants, based on expenditures in Canada for scientific research and development by a taxable corporation in its fiscal year. The Industrial Research and Development Incentives Act also provided grants to universities, colleges, research institutions, and non-profit Canadian corporations. Those grants were exempt from income tax in order to emphasize that they were an additional incentive offered to Canadian industry and were designed to supplement the normal deductions of all research and development expenditures allowed under the Income Tax Act. Now, as part of these draconian cuts in government spending that we have heard so much about, IRDIA has been dropped. In order to try to gain some measure of restraint today, the government has cut out possible growth in the future arising from a scientific and technologically superior industrial base.
The IRDIA program was the only government assistance program that I am aware of that gave support to new business, except perhaps in the special DREE areas, and it is one of the very few programs that gave capital equipment assistance at any time. This was particularly helpful to small businesses as a new venture incentive where capital was necessary because of the technology involved.
The response to the program over the years has been warm. Many Canadian companies have applied for grants. The response to the repeal of this act was overwhelming.
[Mr. Dick.)
The Chairman of the Science Council of Canada has countered that technology based industries in Canada must be accorded a National priority. The Chairman of the Department of Geology at the University of Toronto has stated that, just as earth sciences became most exciting, funds for Canadian research were cut. The Chairman of the Science Policy Committee of the Canadian Association of Physicists has stated that Canadian physics is in a depression. The Chairman of the Department of Medical Genetics at the University of Toronto has said:
The government's policy in this respect could produce serious repercussions by undermining the quality of the universities, restricting opportunities for young people and limiting our ability to meet the challenges of our technological society and that Canada is indeed on the way to becoming a second or even a third-rate scientific community.
The Chairman of the Department of Medical Genetics at the University of Toronto was perhaps speaking in the area in which he has most knowledge, but he stated something that applied to all young people in Canada when he said that this action of the government will have "serious repercussions by undermining the quality of universities". But most important, Mr. Speaker, is the following phrase, "restricting opportunities for young people". We cannot employ the young people in our country today. There are people with Ph.Ds who cannot get jobs; there are engineers who cannot find employment; there are people with B.As who cannot work in any of fields for which they have been trained, and this is because we are expanding our industrial base rather than our scientific and research base.
Not so very long ago the Senate Special Committee on Science Policy under the chairmanship of Senator Maurice Lamontagne made an exhaustive study of Canada's research and development efforts with respect to this country's economic needs, and issued a three volume report entitled "A Science Policy for Canada". The third volume recommended that Canada should steadily increase its support of research and development and achieve by 1980 a figure of 2.5 per cent of our gross national product. A corresponding increase should have been made for support of basic research.
A recent Statistics Canada survey of "leading performers" showed that the in-house research and development expenditures as a percentage of the gross national product have declined in terms of current dollars to about .37 per cent in 1973 from .44 per cent in 1967. Mr. Speaker, .37 per cent is a long way from the 2.5 per cent which was predicted as needed if we were going to be a first class technology based industrial nation.
For some reason we have not been able to formulate a national science policy. The government has not put forth a science policy, and we have tended to fall behind all other nations in scientific-political-economic clout. We live in a more and more technical society and must make judgments on areas such as food supply, pollution, population control, energy resources, and nuclear disarmament. The decisions made by Canada are limited by our appreciation of what science can and cannot achieve.
With regard to industrial technology we have a minister who is urging Canadian businessmen to go outside Canada to form joint ventures with the Third World and export back to Canada something which is just taking jobs away from Canadians, as has happened under Bill C-179 in the twenty-ninth parliament. I know of a certain factory in my
June 3, 1976

constituency of Lanark-Renfrew-Carleton which went out of business because of it. Some 400 people were formerly employed there.
What we should be doing is staying in our own country, developing what we have. We are not doing much to encourage development of manufactured products in this country. If we are to maintain a strong industrial base then we can assist others, but if we weaken our home base surely we are going to be in grave danger.
The OECD has indicated that of the 12 countries spending various percentages of their Gross National Product on research and development, Canada stands tenth, behind the United States, France, United Kingdom, Sweden, Germany, The Netherlands, Belgium, Japan, and Norway. Mr. Speaker, perhaps I may call it ten o'clock and continue at the next calling of this debate.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Robert McCleave (Halifax-East Hants):: Mr. Speaker, I think this is the fifth, sixth, or perhaps even the seventh time that on the late show of this parliament I have raised the question of the proposal under Bill C-87 to do away with the subsidies on the transportation of flour and ground cereals through Atlantic and eastern Canadian ports under the Railway Act.
One of the advantages of being so persistent-along with other members who have done the same thing-is that it seems on the late show we have tended to find out where the issues really are. After talking and arguing with the Minister of Transport (Mr. Lang), the President of the Treasury Board (Mr. Chretien), the Minister of Agriculture (Mr. Whelan), the Minister of Industry, Trade and Commerce (Mr. Jamieson), and all of the hon. gentlemen I brought into the picture on the late show, I gather it really boils down to the fact that the Minister of Agriculture and the Minister of Industry, Trade and Commerce are very much in my corner, and the President of the Treasury Board is willing to pat me on the head and say he is in my corner because it is a substantial issue, but he knows that he has to carry out the financial mandate of the government. The Minister of Transport is squarely against me.
On the other hand the Minister of Transport has made this much of a concession, that since the debate started- not before the debate started-we have had smuggled into this issue the question of the unit train concept, that is, that there would be a train which would leave some Sas-
Adjournment Debate
katchewan or Manitoba grain point every so often and make its way to Halifax, or to Saint John, for that matter, and there unload its cargo for delivery overseas. So this much at least we have got of the Minister of Transport.
Now, mind you, we have no guarantee that this is going to happen, and it is because we have no guarantee that I continue to put my skeptical six foot four inch self up in the House of Commons from time to time to try to argue this issue. I think it is important to the port of Halifax, but also the port of Saint John, to the port of Montreal, to any number of communities in Ontario where there are flour mills, and to the wheat producers of western Canada.
Lest somebody should ever dare to tell me that I am arguing a very special interest to the port of Halifax, this has been discussed in an article which is part of a series of articles written by Ian Thompson, who is the transportation reporter for the Halifax Chronicle-Herald and for the Mail-Star, and who I think has done a pretty fair job of trying to analyse the situation. These articles can be found in those two newspapers for the week of approximately May 20 to May 26. In any event, quoting from the last part:
In 1975 the St. Lawrence Seaway handled about 450 million bushels of wheat from Canadian and American fields, more than 20 times that which went through the Port of Halifax.
Even if Halifax were operated to capacity and the additional business was taken from the Seaway, river ports would still be left with over 400 million bushels, more than six times that of a busy Halifax.
So I hope by putting that fact as succinctly as I could on record it is evident that I am not trying to argue that Halifax should have any enormous advantage over Montreal or any other place like that. I am not, but I am arguing, I will continue to argue, and perhaps I will be arguing into August because that is how strongly I feel about clause 15 of Bill C-87. Halifax at least should be permitted its legal place in the Canadian sun. It need not be permitted a great, great place, but at least nothing which is less than other places enjoy.
I asked the Minister of Agriculture my question the other day, and it is his minion who will be replying tonight. The question I asked was: what about the studies which are being carried out in the Department of Agriculture? Obviously the Minister of Agriculture looked at me with a friendly eye. As a matter of fact, both of them were friendly the other day when he answered my question. I do not know what kind of response I will receive tonight from the person who reports for him, but the fact is that there have been studies carried out there, and very properly.
There should have been studies carried out within the Department of Agriculture on the effect of the proposed cutting out of that particular subsidy under section 272 of the Railway Act. The minister is obviously in my corner, but he also obviously is not here tonight. However, I am just hoping that he and the Minister of Industry, Trade and Commerce will start to exert a greater amount of influence within the cabinet on this matter. We face Bill C-87. I put it this way-I do not mind at all having unit trains to Halifax. I can understand that; it will be a noble experiment. But let the train be in situ, as it were, in operation, before something which means so much to the waterfront of a great Canadian port is cut out.
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June 3, 1976
Adjournment Debate


Irénée Pelletier: Mr. Speaker, on looking over the official report. I found that this matter has been discussed at least six times during the adjournment debate since April. Answers to this question have been given by the Parliamentary Secretary to the Minister of National Health and Welfare on March 22, 1976, by the Minister of Transport himself on April 5, 1976, by the Parliamentary Secretary to the Minister of Industry, Trade and Commerce on April 13, by the Parliamentary Secretary to the President of the Treasury Board on April 29, 1976 and by myself on March 29 and 30. Therefore, there are very few new developments of which I can inform the House at this stage.
As regards the question that the hon. member put to the Minister of Agriculture on May 27, I can inform the House that studies are presently being carried out within the department. These studies are pursued in co-operation with the Canadian Grains Commission, the Canadian Wheat Board and other federal departments.
The Canadian Grains Commission has assured the minister on several occasions that the storage requirements in Atlantic ports will be fully safeguarded. The Canadian Wheat Board believes that Canadian grain exports will not be affected by the removal of this subsidy. Discussions have also taken place in the House about the use of unit trains for the movement of grain from the Prairies to the Atlantic ports.
Nevertheless, Mr. Speaker, I wish to inform the House that this matter is still under review and that our department, the Department of Agriculture, is giving it close attention, and that discussions are under way in order to ensure that such action will have no adverse effect. The minister has already made these undertakings to the Canadian National Millers' Association.


THE QUEEN-DATE OF STATEMENT ON PLANS TO CELEBRATE HER MAJESTY'S SILVER JUBILEE
Mr. Stan Schumacher (Palliser):: Mr. Speaker, I rise this evening to draw the attention of the House to the fact that 1977 will mark the Silver Jubilee of our Queen's reign.


Some hon. Members:: Hear, hear!


Stanley Stanford Schumacher: What an occasion for celebration, the celebration of Thanksgiving for the 25 years of Her Majesty's service and dedication to her peoples, service given in love, without any reward save that of knowing that she has accomplished thoroughly and well that which, as the young princess, she promised to do on her twenty-first birthday: that all her life, long or short, would be dedicated to our service. Has ever a vow been more conscientiously or faithfully maintained?
The Secretary of State (Mr. Faulkner) told the House that a committee is working on plans to celebrate this event in Canada and that he may be in a position to make a statement to the House some time this month as to plans for celebrating this great event. Seeing that the plans for the celebrations in the United Kingdom were announced

last December, it is evident that Her Majesty's Canadian ministers are already well behind the times.
I venture to make some suggestions to the committee on behalf of the average Canadian who loves his sovereign lady and who, perhaps more important, has a profound respect for the role played by the institution of the Crown-


Some hon. Members:: Hear, hear!


Stanley Stanford Schumacher: -that democratic system we cherish, embodied in the constitutional monarchy. That average Canadian, Mr. Speaker, would like to see celebrations both of substantial importance and of symbolic significance.
To deal with the first, I suggest that the government take upon itself, maybe with the helpful advice of loyal societies such as the IODE, the Monarchist League, the United Empire Loyalist Association, and the Royal Canadian Legion, the task of disseminating widely across Canada information about the role played by the Crown in our lives. By the end of 1977 every child should have gained a new perspective on our system of government, and doubtless many of their elders will have learned a few things too.
This widespread distribution of information should naturally be complimented by a host of symbolic events up and down the breadth of this dominion-national services of Thanksgiving in churches and synagogues across the country; a national bonfire coast to coast on the evening of the accession; fireworks displays on Victoria Day; dedication or re-dedication of federal parks, buildings and other sites in honour of our Queen; the enshrining by statute of "God Save the Queen" as the Royal Anthem and "O Canada" as the National Anthem; the issuance of a special stamp and coin series and the appropriate replacement of the present abstract design which appears in lieu of Her Majesty's portrait on pre-stamped envelopes; a symbolic meeting of the Queen's Privy Council for Canada after all, we are the only commonwealth country to have its own privy council-and, finally, a full royal tour. Let us not confine our Queen to Ottawa, but remember that as Queen of all Canada she should be allowed to visit, however briefly, all parts of her realm, for it is all sections of this dominion which desire to do her homage.
When Her Majesty comes to Ottawa, I trust that her government will see to it that an opportunity is given for the Queen of Canada to perform in public the important constitutional duties of our sovereign; to open or to prorogue a parliament, and to give Royal Assent to bills. In this way our constitutional abstraction is made a living reality.


Steve Eugene Paproski: How about making Stanley a Privy Councillor?


Stanley Stanford Schumacher: That would be all right.


Stanley Howard Knowles: Which Stanley?


Steve Eugene Paproski: Stanley Knowles.


Some hon. Members:: Hear, hear!
June 3, 1976


Stanley Stanford Schumacher: In all of this, Mr. Speaker, it must be evident that the government has to give the lead, if not itself actually organize these events to which I have referred. 1977 offers Canada a real chance to show to ourselves and to our commonwealth colleagues that we take second place to no one in the affection and in the pride we bear our beloved Queen. Long may she reign!


Some hon. Members:: Hear, hear!


Coline M. Campbell: Mr. Speaker, on the subject matter raised by the hon. member for Palliser (Mr. Schumacher), that of Her Royal Majesty's silver jubilee and how Canada intends to celebrate our sovereign's anniversary, I can assure this House that the question is presently under active study by officials of the Secretary of State's Department. It will be appreciated that, in such matters as royal visits, a great deal of consultation is necessary. I am also informed that a number of recommendations will be presented to cabinet during the course of this summer.


ENERGY-DISPUTE BETWEEN NEWFOUNDLAND AND QUEBEC OVER CHURCHILL FALLS POWER-ACTION OF MINISTER
Mr. Jack Marshall (Humber-St. George's-St. Barbe):: Mr. Speaker, on March 31 I questioned the Minister of Energy, Mines and Resources (Mr. Gillespie) about the dispute between the provinces of Newfoundland and Quebec with regard to the request by Newfoundland to recall some 800 megawatts of electric power from the Churchill Falls power station, a portion of the 5,225 total production which was negotiated for sale to Quebec by the previous government of Newfoundland.
The power is urgently required to develop the Lower Churchill-Gull Island site, particularly for the construction of transmission lines in the tunnel, in order to transmit same for the needs of the province in its future development, the creation of jobs and, indeed, to help Canada in its vital energy requirements.
Under a 65 year contract signed with Hydro Quebec in 1969, Newfoundland is entitled to recall 300 megawatts, but the province needs 800 megawatts. It is obvious that the federal government recognizes the justification of the lower Churchill development as it offered to provide some $343 million, out of a total $1 billion, in loans to the province.
I feel that in the interest of Canada, in the words of the premier of Newfoundland, it is particularly galling that Quebec is making enormous profits from the power sold to them at a ridiculous cost. More galling to me is their refusal to act as good partners in Confederation or to contribute toward solving the national problem, particularly when this could be done without hardship to the Quebec economy. It is total blackmail when the responsible Quebec minister states that a condition for acceding to Newfoundland's request would be the sale to Quebec of land comprising the watersheds of the five rivers which rise in Labrador and which flow through Quebec into the Gulf of St. Lawrence.
Under the agreement of 1969 the province of Quebec pays 3.5 mills per kilowatt hour and sell it for prices which range from 24 mills to 42 mills. While I realize that from an
Adjournment Debate
economic point of view Quebec cannot be blamed for taking advantage of a good thing, and that one cannot blame the previous administration in Newfoundland which might be criticized for entering into a bad deal, particularly when we recall that in 1969 predictions made by experts indicated that Canada had an abundance of energy available for use into the distant future, what I am concerned about, Mr. Speaker, is that the minister seemed to be reluctant to enter into these negotiations or to make any effort to impress on the Quebec government the need for a change in its attitude toward Premier Moore's request made in the national interest.
I emphasize that the premier has been more than cooperative. In the message he sent to the premier of Quebec he said, first, that he hoped an equitable and amicable arrangement could be concluded and that he was ready to undertake negotiations with respect to right of access to Churchill Falls power with a fairer apportionment of the benefits to both provinces. In the second place, he expressed willingness to agree to the joint development of the rivers which are common to Newfoundland and Quebec as part of the fuller use of Labrador hydro resources.
Needless to say, while the government of Newfoundland has expressed every willingness to co-operate, it is adamant in taking the position that, if the dog in the manger attitude of the Quebec government persists, there are other courses of action which can be taken. Under clause 2 (E) of the agreement giving the lessee the right to transmit throughout the province and to export such power, there is a provision that, upon the request of the Newfoundland government, its consumers of electricity shall be given priority where it is feasible and economic to do so. Unless agreement is reached the government of Newfoundland has no alternative but to institute steps to seek clarification of its legal rights, and once right of access is established the province could conceivably take the entire output of Churchill Falls.
My purpose in speaking tonight is to impress on the minister and upon the government that they should address themselves to this issue immediately rather than continue the passive interest which they have shown up to now. I say this Because of the need, as a priority, to develop alternative sourcek of power which are available through the Lower Churchill Gull Island project so as to relieve the pressures of the energy shortage for the benefit of our nation. I ask the minister to recognize the contribution which Newfoundland could make to this end, a contribution which is being hindered by one of the Canadian partners in Confederation.
I can only hope the minister or the parliamentary secretary will express, on behalf of the government, a willingness to direct meaningful attention to this problem in the interest of Canada and of national unity.


Mr. Maurice Foster (Parliamentary Secretary to Minister of Energy, Mines and Resources):: Mr. Speaker, I certainly appreciate the concern the hon. member has expressed about the difficulty Newfoundland has experienced in securing additional power supplies for Labrador and for Newfoundland itself. It is one which is shared by the Minister of Energy, Mines and Resources (Mr. Gillespie) and by the federal government as a whole. That is why a little over a year ago we offered to pay, I
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Adjournment Debate
believe, all of the financing costs of the hydro interconnection between the proposed Gull Island hydro installation and Newfoundland. So there is concern that adequate power will be available.
The dispute that has developed between Newfoundland and the province of Quebec is a matter for the two provinces, both of which have constitutional responsibilities in this area. I think the minister indicated, when he responded to the hon. member earlier this week, that he was
willing to play any meaningful role that he could in resolving this dispute, and I understand that he will be attending the Atlantic premiers' meeting this week end. At the same time I think we must recognize that if he is invited by the two provinces concerned to mediate or negotiate a settlement of the dispute, his position will be much stronger than if he tries to impose in the circumstances. I cannot offer the hon. member any further information on the situation other than that the minister stands willing to give his assistance when and if he is asked to provide it.
Motion agreed to and the House adjourned at 10.24 p.m.

**Hi

Friday, June 4, 1976