1976-12-02

ROUTINE PROCEEDINGS


Mr. Jack Marshall (Humber-St. George's-St. Barbe):: Mr. Speaker, I wish to move a motion under the provisions of Standing Order 43 on a matter of urgency. The case against one Brian Davies, who was charged with violations of the Fisheries Act during the seal fishery last year, was ruled by the Newfoundland court as outside their jurisdiction. The results of this decision prompts action by the federal government. I therefore move, seconded by the hon. member for St. John's East (Mr. McGrath):
That this House orders that the government investigate the circumstances and that they lay charges in the appropriate court regarding this deliberate attempt to cause destruction of the seal fishery of Newfoundland.


Mr. Speaker:: Such a motion pursuant to Standing Order 43 can be presented to the House only with its unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


SUGGESTED CANCELLATION OF SALE OF NUCLEAR REACTOR TO ARGENTINA IN VIEW OF ALLEGATIONS OF BRIBERY-MOTION UNDER S.O. 43
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. The government, through its Crown corporation Atomic Energy of Canada, has been engaged in sale of a nuclear reactor to the Argentine Atomic Energy Commission, not yet completed. It now appears that an Italian corporation, Italiampianti acting as some sort of partner of Atomic Energy of Canada Limited, has paid bribes to two former Argentine cabinet ministers using Canadian public funds. In as much as this transaction was unprofitable to the tune of $25 million and involves possible nuclear proliferation to a country of notorious political instability and as there is now every reason to doubt its legality, I therefore move, seconded by the
hon. member for Nanaimo-Cowichan and The Islands (Mr. Douglas):
That the Canadian government be instructed to investigate this matter fully and if the facts turn out as alleged to cancel the deal and cease from further negotiations of the sale of the reactor forthwith.


Mr. Speaker:: Such a motion pursuant to Standing Order 43 can be presented to the House only with its unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


HOUSING
Mr. Eudore Allard (Rimouski):: Mr. Speaker, under the provisions of Standing Order 43, I ask for the unanimous consent of the House to discuss a matter of pressing necessity.
In view of the fact that, according to Central Mortgage and Housing Corporation President William Teron, two thirds of the Canadians who require some housing cannot adequately do so; that, again according to Mr. Teron, the Canadian government is responsible for such a situation for having failed to develop housing construction; and that it is the duty of any government to improve as much as possible the standard of living of its people, I move, seconded by the hon. member for Champlain (Mr. Matte):
That the federal government, through the Department of Finance, take as soon as possible the necessary steps to allow the payment of mortgage interests paid by a taxpayer on its first house to be deductible from his personal income tax, thus making easier the purchase of a house, so that all Canadians may get suitable housing.


Mr. Speaker:: Order. Under the provisions of Standing Order 43, this motion requires the unanimous consent of the House. Is there such consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


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

December 2, 1976
Bill C-19


CANADIAN NATIONAL RAILWAYS
Mr. John Crosbie (St. John's West):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In view of the statement made today by Dr. R. A. Bandeen of the CNR in St. John's, Newfoundland, that the company's railway operations in that province are expected to operate on the same basis as the rest of the company's rail business, with capital investment being financed on a commercial basis; that he could see no part of the Newfoundland rail system as capable of being operated on a commercial basis if rate levels are kept on the same basis as those on the mainland, and that the only way the railway could be expected to continue to run in Newfoundland was on the basis of combined subsidies and revenue, I move, seconded by the hon. member for St. John's East (Mr. McGrath):
That the Government of Canada ensure continued operation and improvement of the CN's rail services in Newfoundland through subsidies as necessary and that a Royal Commission not be appointed to study all aspects of transportation in Newfoundland as suggested by Mr. Bandeen unless assurance is given by the Government of Canada that:
1.	there be no lay-offs in the interim.
2.	that there be no change in the rail services offered nor in the quality of such services.
3.	that the Government of Canada continue to act on matters such as financing of DREE roads and assistance for an improved Trans-Canada Highway and other transportation measures until such a Royal Commission reports.


Mr. Speaker:: Such a motion requires the unanimous consent of the House.


Some hon. Members:: No!


GOVERNMENT EXPENDITURES RESTRAINT ACT
Mr. Mike Landers (Parliamentary Secretary to Minister of Justice):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the terms of Standing Order 43. In view of the fact that the unit train concept is not in place, and in view of the fact that a filibuster is preventing my government from legislating expeditiously, I move, seconded by the hon. member for Gloucester (Mr. Breau):
That this House agree to reconsider section 15 of Bill C-19-


Some hon. Members:: Hear, hear!


Mike Landers: -until we can give birth to the unit train concept.


Mr. Speaker:: Order. The provisions of Standing Order 43 require unanimous consent for the presentation of such a motion. Is there unanimous consent?


Some hon. Members:: No.



ORAL QUESTION PERIOD


Mr. David MacDonald (Egmont):: Mr. Speaker, my question is for the Minister of Energy, Mines and Resources. It is part of a continuing saga with respect to those still undetermined agents acting on behalf of the AECL. In the light of the revelation yesterday that the $2.4 million paid out by AECL was deposited not in a Lichtenstein bank account but in a bank in Lugano, Switzerland, on behalf of the International General Trading Establishment of which there seems to be no record in that country. Has the minister determined whether or not such a company does exist, and if so, whether it has received this money, in which case has he ascertained whether this is the final agent acting on behalf of AECL in the Argentinian deal? Also, has he inquired with respect to the serious allegations which have been put forward in the Argentinian press concerning bribes to two former cabinet ministers?


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources):: I can assure the hon. member that I am just as anxious as he is, or as anyone else in the House, to get to the bottom of this thing. Atomic Energy of Canada Limited wrote to its partner on my instructions to find our the name of the agent and to clarify the details of the arrangement. That request for information was coveyed by them over the telephone and by letter. I am informed that the Italian partner is awaiting the letter before replying. I have no further information at the present time.


David Samuel Horne MacDonald: Can the minister tell the House why it is that he and AECL would not have readily available the name of the final agent acting for them in this important project, particularly when one considers the millions of dollars presently being lost to Canada in connection with this transaction?


Alastair William Gillespie: Those explanations have been given before, both in the Elouse and in the committee. They deal with the arrangements entered into between AECL, I am informed, and their Italian partner.


David Samuel Horne MacDonald: A final supplementary question, Mr. Speaker. In view of the fact that reports in the last few days from Buenos Aires indicate that two former cabinet ministers may in fact have received Canadian public funds in
December 2, 1976

connection with the expedition of this project, has the minister been in contact with Argentinian officials, either here through the embassy of Argentina or directly with the government of Argentina, considering the very serious nature of the accusations in the press?


Alastair William Gillespie: Mr. Speaker, I have had no dealings whatever with any Argentinian official on this matter.


GOVERNMENT ADMINISTRATION
Mr. Don Mazankowski (Vegreville):: Mr. Speaker, I should like to direct a question to the Minister of Industry, Trade and Commerce arising out of the Canaven transaction. In light of the minister's reply to the House yesterday, as reported at page 1555 of Hansard, to the effect that no agent had been appointed at this particular time, may I ask the minister whether he has been in touch with Mr. Robert L. Grassby, the former chief negotiator for this consortium, who has stated that he personally had hired such an agent before he left that position on September 30, 1976?


Hon. Jean Chretien (Minister of Industry, Trade and Commerce):: No, Mr. Speaker, I have not been in touch with this gentleman. The officials of my department tell me no contract has been signed with any agent, but, under the Venezuela's law, if we bid and get a contract, we must obtain the services of a local firm to operate in Venezuela; such is the law of the country.


Donald Frank Mazankowski: Mr. Speaker, I have a supplementary question. The minister also said yesterday that he would be informing the cabinet today as to the full terms and nature of the bid. I presume that by now the minister is fully briefed on the totality of the subject. Is there anything further that the minister can add to his statement of yesterday with respect to the appointment of the agent and with respect to meeting all the requirements of the Venezuelan government that have been put forth?


Joseph Jacques Jean Chrétien: Mr. Speaker, Canaven has not yet completed its bid; there are still a few points to clarify. What I can say to the House is that it will be impossible for the group to submit a bid likely to meet all the Venezuela government requirements, but I am told that other tenders will not be able to meet them either. In these circumstances, the risk that had to be taken at this time will not be taken because as a Canadian group we do not intend to assume responsibility for all public works which must be performed; but we are prepared to supply the equipment and technical services.
Oral Questions


ATOMIC ENERGY OF CANADA LIMITED
Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, I have a question for the Minister of Energy, Mines and Resources which arises out of a report in the Argentine newspaper La Razon alleging that Jose Ber Gelbard, former minister of economic affairs and Adolfo Mario Savino, former minister of defence, were involved in the $2.4 million paid by AECL into a bank account either in Lichtenstein or Switzerland in the name of Intercontinental Trading Development Establishment. I want to ask the minister whether he personally has been in touch with the president of the National Atomic Energy Commission ,of Argentina, Captain Carlos Castro Madero, who himself is carrying on an investigation into the possibility of Argentinian officials having been bribed in connection with the sale of a CANDU reactor to Argentina, and has he contacted the Canadian embassy in Buenos Aires to see whether or not discussions can be held with the government of Argentina so as to investigate this matter fully?


Alastair William Gillespie: Mr. Speaker, I have not been in touch with Captain Madero or the Argentinian embassy on this matter, but I believe there have been discussions, or at least communications, between Captain Madero and the chairman of AECL.


REASON FOR COMMUNICATING WITH ITALIMPIANTI BY LETTER-SUGGESTED DISCONTINUANCE OF PRACTICE OF PAYING FEES TO UNDISCLOSED AGENTS
Thomas Clement (Tommy) Douglas: supplementary question, Mr. Speaker. In answer to a question a few minutes ago the minister said they had written a letter, or that the chairman of AECL had written a letter, to Italim-pianti. I want to ask the minister why he himself has not been in touch with the Italian firm that was a partner in the sale of the reactor to Argentina. Would he tell me why he has not used the services of the Canadian embassy in Rome in order to find out who was the recipient of the $2.4 million, whether or not the Intercontinental General Trading establishment is a fictious organization, and in order to get other particulars? This matter has been going on for some time. It is weeks since the House was acquainted with the concern expressed by the Auditor General, and I would ask why we are waiting for a letter to arrive rather than having an immediate communication with the people who could give us the information, namely, Italimpianti?
Hon. Alastair Gillespie (Minister of Energy, Mines and
Resources): Mr. Speaker, I think this is for a very good reason, that the arrangement was entered into by Atomic Energy of Canada Limited with its Italian partner, and I believe the most effective way of dealing with this matter is to ask the senior officers of Atomic Energy of Canada Limited to

December 2, 1976
Oral Questions
contact the Italian partner and convey the concern of the Canadian government and the minister seeking the information as the minister responsible.


Thomas Clement (Tommy) Douglas: Mr. Speaker, it seems to be a long time to wait for information. In view of the statement by the minister's colleague yesterday, that is the Minister of Industry, Trade and Commerce, to the effect that Canada has no more right to impose its morals on overseas sales than it has to interfere in the bedrooms of the nation, I would ask the minister whether he shares that view and if he is prepared to say that AECL will discontinue the practice of paying sums of money to undisclosed agents without knowledge as to whom the money is going or for what purpose it is being paid?


Alastair William Gillespie: Mr. Speaker, I would agree with the hon. member when he says we are not in a position to impose our morality or moral values on other countries.


Some hon. Members:: Oh, oh!


An hon. Member:: What have you got to impose?


Alastair William Gillespie: Mr. Speaker, I should like to add that the Canadian government does not in any way condone bribery, if that is what the hon. member is alluding to. I think it also important-


An hon. Member:: To put the telescope to the blind eye.


Alastair William Gillespie: I think it is also important that the hon. member and the House understand that when international transactions are arranged they are usually arranged through agents. Indeed, the most normal way of arranging an international transaction is through the appointment of a foreign agent. Indeed, there are many countries with which it is impossible, in fact, to make or enter into a commercial transaction without the appointment of an agent resident and domiciled in that foreign country.


ALLEGATIONS OF BRIBERY IN CONNECTION WITH SALE OF NUCLEAR REACTOR TO ARGENTINA-REQUEST FOR INFORMATION
Mr. Allan Lawrence (Northumberland-Durham):: Mr. Speaker, the Minister of Energy, Mines and Resources has just informed the House that officials of AECL, for whom he has responsibility in this House, have been in contact with the head of the Argentinian power authority specifically respecting press reports about two ex-Argentinian cabinet ministers who have had their names mentioned in the press, one of whom I understand is now in Europe and the other of whom I understand is in Washington. Pending the possible invitation by the Public Accounts Committee to those two gentlemen to appear, could the minister now inform the House what information he has received from the head of AECL or its officials respecting that conversation?


Alastair William Gillespie: Mr. Speaker, the hon. member made an assumption in his preamble which is incorrect. He has assumed that the communication by a senior officer of AECL was in respect off the newspaper report which appeared in an Argentinian newspaper yesterday. The communication to my knowledge was not in respect of that particular newspaper report.

[ Translation]


FINANCE
Mr. Ren6 Matte (Champlain):: Mr. Speaker, my question is for the Minister of Finance.
Given the fact that we have already heard all kinds of reactions from high finance regarding the Quebec election of November 15, could the minister tell the House whether the financial situation of Canada since then has been affected by those events or, more precisely, to what extent can the Canadian dollar depreciation be attributed to that election? Finally, is the minister prepared to give a plain and clear explanation about that?


Hon. Donald S. Macdonald (Minister of Finance):: Mr. Speaker, I have already pointed out to the House that it was possible to relate to a certain extent the Canadian dollar depreciation to the results of the Quebec election, but that there are also other reasons for that; particularly, lower interest rates and the general reduction of Canadian borrowings abroad have also affected the value of Canadian dollar. If I may give a general opinion, some Canadian businessmen feel that we have to keep a wait and see attitude.


INQUIRY IF MINISTER AWARE CHARTERED BANKS CONTROL VALUE OF THE DOLLAR
Mr. Gilbert Rondeau (Shefford):: Mr. Speaker, I wish to ask a supplementary question of the Minister of Finance.
Does the minister know that Canadian chartered banks handle about $700 to $800 million in foreign currency every day and that those banks, which change Canadian dollars into foreign currency, also determine the daily value of the dollar and that, since the election of a PQ government in Quebec, those banks set at will the value of the Canadian dollar to the benefit of the exclusive and internal manipulators of the Canadian Bankers' Association of Toronto?


Donald Stovel Macdonald: Mr. Speaker, I take note of the hon. member's question and I will inquire.
December 2, 1976


MANPOWER
Mr. Lincoln M. Alexander (Hamilton West):: Mr. Speaker,
I should like to direct a question to the Minister of Manpower and Immigration. There is a very serious pattern of massive lay-offs in the experience of last week. We had massive lay-offs in the transport and related industries and then in the forest industry, because of the depressed markets, we find that in particular MacMillan Bloedel is laying off some 4,000 people and that Crown Zellerbach is laying off some 500 people. I wonder whether the minister has been in touch with these companies to see how the extreme financial hardship to which these employees will be exposed can be minimized? Has he been able to convince these companies that, in light of the fact that Christmas is coming they might be able to postpone these massive lay-offs. Has the minister been in touch with these companies?


Hon. Jack Cullen (Minister of Manpower and Immigration):: No, Mr. Speaker, not personally, but my department through the management consultative services and other arms of the department are there in the interest of helping the employees. Unhappily, as so often is the case, we come into the situation afterward to help them on the occasion of the lay-off. The representations the hon. member has made probably will be brought to the attention of the companies to see whether anything can be done to forestall the lay-offs.


LAY-OFFS IN FOREST INDUSTRY AS RESULT OF DEPRESSED MARKETS-GOVERNMENT ACTION TO STIMULATE
Lincoln MacCauley Alexander: Mr. Speaker, I have a supplementary for the Minister of Industry, Trade and Commerce who is busy with the Prime Minister and the Government House Leader. The minister probably did not hear my question regarding the massive lay-offs which are being experienced in the forest industry in British Columbia with some 4,000 being laid off by the MacMillan Bloedel Company as a result of depressed markets. Crown Zellerbach is also involved. I wonder if the minister has been involved with these companies in order to determine what steps he can take to bring about some buoyancy in these very important industries keeping in mind we are now faced with a very serious pattern of lay-offs which does not speak well for the future.


Joseph Jacques Jean Chrétien: Mr. Speaker, I have heard absolutely nothing from the companies mentioned by the hon. member, but I shall inquire about it. Should they get in touch with me, I shall be pleased to hear from them.
Oral Questions


SEARCH AND RESCUE
Mr. James A. McGrath (St. John's East):: Mr. Speaker, in the absence of the Minister of National Defence, I should like to address a question to the Minister of Transport who shares jurisdiction over search and rescue with his colleague, the Minister of National Defence. On October 18, following questions in the House, the minister gave an undertaking outside the House that he would be reporting within two weeks on the recommendations of the task force that had been set up. That was on October 18. Today, his colleague, the Minister of National Defence, en route to NATO meetings in Europe will be touching down in Gander where he will be holding a press conference to announce the new policy. Since parliament is being affronted by this move by the minister, will he now rise in his place and tell the House just exactly what the Minister of National Defence will be announcing in Gander tonight?


Hon. Otto E. Lang (Minister of Transport):: Obviously, this will be for the Minister of National Defence to announce, but I am surprised to hear the hon. member express indignation at the fact the minister will visit Newfoundland and make the statement there.


Some hon. Members:: Hear, hear!


James Aloysius McGrath: In view of the fact that members on this side of the House presented the House with petitions and raised the question on numerous occasions, thus demonstrating the obvious interest of the House in this matter, I would ask the minister, a distinguished parliamentarian and former minister of jusiice-


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


James Aloysius McGrath: -if he is prepared to rise in his place at three o'clock and make the statement in the House that his colleague will be making in Gander later this day.


INDUSTRY
Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, I have a question for the Prime Minister. Calling the Prime Minister-


Some hon. Members:: Oh, oh!


George Harris Hees: As the Prime Minister knows, exports are declining steadily and, as the Prime Minister quite rightly said in Tokyo recently,

December 2, 1976
Oral Questions
If we are going to get more export business, we must pull up our socks and increase our productivity
As this improvement will not just happen but must be induced by incentives, would the Prime Minister tell the House when we may expect the announcement of the introduction of productivity incentives to be paid in direct proportion to increases in productivity, as the Prime Minister has been telling me for more than two years now would be announced in the House soon, without any results taking place?


Right Hon. P. E. Trudeau (Prime Minister):: Possibly the hon. member has been absent, but from time to time the Minister of Finance and the Minister of Industry, Trade and Commerce have indicated various forms of productivity incentives being applied to the Canadian economy. If the hon. member would check he would probably find them in the income tax legislation and other forms of legislation.


George Harris Hees: I have checked all the statements made by these gentlemen and have found no incentives introduced to be paid in direct proportion to increases in productivity and no worthwhile incentives introduced at all. As the Prime Minister, obviously, has no intention of making good on his promise to me, I would ask him a question. Is he by any chance related to that Mr. Micawber of Dickensian fame who, like the Prime Minister, was always expecting something to turn up, but it never did?


Some hon. Members:: Oh, oh!


An hon. Member:: Give him the dickens.


Mr. Speaker:: Order, please.

[ Translation]


EXTERNAL AFFAIRS
Mr. Claude-Andre Lachance (Lafontaine-Rosemont):: Mr. Speaker, my question is for the Secretary of State for External Affairs.
Is there a government order instructing the Department of External Affairs to convey the official statements of the right hon. Prime Minister of Canada (Mr. Trudeau), especially those he makes on television, to Canadian missions, consulates and embassies abroad, in only one of the two official languages depending on whether the recipient is a Francophone or Anglophone country, the other version of which would follow normal diplomatic channels? As the purpose of such communications is to inform staff members posted abroad, and as there are French-speaking personnel not only in French-speaking countries and vice versa, if such instructions exist, would the minister consider sending such communications in the future simultaneously in both official languages of Canada as a courtesy to the staff?


Hon. Donald C. Jamieson (Secretary of State for External Affairs):: Mr. Speaker, we do in fact make available various statements, including those by the Prime Minister and others, in the way the hon. member has mentioned. However, as an economy measure, what is done is to send, in the normal language of the particular mission, the first text by wire and to follow it up with the text in the alternate language in the official mailbags which go every day. This is done because we would more than double the cost of doing it if we sent them both out by wire in all cases.


TRANSPORT
Mr. John A. Fraser (Vancouver South):: Mr. Speaker, I have a question for the Minister of Transport. In view of the fact that yesterday at Ocean Falls 300 irate citizens refused to allow the motor vessel Bella Bella to land, complaining about the inadequacy of the service in that area, and in view of the fact that the minister said yesterday:
I am expecting later this day a report from an official who has been surveying the entire scene of the current new operation.
Can the minister make an undertaking to the House that he will go to British Columbia immediately to see for himself the inadequacy of the service, and if the minister agrees, this party might even be prepared to let him take his own jet plane.


Some hon. Members:: No, no.


John Allen Fraser: Would the minister also make a statement to the House today as to what was the report he was waiting for yesterday, so that the people of British Columbia might be assured that this service will be revitalized?


Otto Emil Lang: Mr. Speaker, the people in Ocean Falls have long wanted the ferry service, particularly the one operated by the British Columbia government. One of the results of the new arrangement with the government was to provide that service to them. I am surprised at the reaction reported by the hon. member. I did have a chance to examine some of the questions which were put yesterday, including the one about specific extra charges on automobiles, and I find that the charge for an unaccompanied automobile is in fact exactly the same as it was before. What happened before was that a special bargain had been available in terms of automobile and passenger travelling together, and some adjustments of rates will be necessary in special circumstances because now the accompanying passenger arrangement will not normally work on the enlarged service.
December 2, 1976

Oral Questions


REASON FOR ENDING ARRANGEMENT BETWEEN RIVTOW AND COAST FERRIES-POSSIBILITY OF SUBSIDY FOR COAST FERRIES
John Allen Fraser: Can the minister tell the House why Coast Ferries have ended the arrangement with Rivtow? Can he also assure the House that those ports that were being served by Coast Ferries will continue to be served by them, and can the minister tell the House whether or not any subsidy is anticipated for the Coast Ferries section of the service?


Otto Emil Lang: Of course, these are two private companies and I will be taking an interest in the service which they have been providing along that coast. The greatest part of the Coast Ferries' service had been in areas where no subsidies were being paid, and therefore any implication that it had to do with recent action on our part is clearly misleading. But I will look further into these questions immediately.


BRITISH COLUMBIA COASTAL SHIPPING-POSSIBILITY OF SUBSIDY TO RIVTOW IF RATES NOT INCREASED
Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, my question is supplementary to the one asked of the Minister of Transport by the hon. member for Vancouver South. The minister indicated in one of his answers that in fact the tariff has not increased on automobiles but that it has increased because passengers had to take a separate service. I hope I understood his answer correctly. The facts are that that still means a total increase of something like 150 per cent in order to get from Prince Rupert to the Queen Charlotte Islands. When the minister announced the discontinuation of the Northland navigation subsidy, he indicated in his press release that there would not be an increase. In view of the fact that a subsidy is being paid on the coast to Rivtow, did the minister obtain in writing or any other way a commitment that the rates charged by Rivtow would be comparable with the rates charged by Northland for comparable service and, if he did not get such a commitment, would he explain to the House why he did not?


Otto Emil Lang: The freight service of Rivtow, of course, is not being subsidized, and I would like to have the hon. member understand that quite clearly. He understood the first part of my answer that the rate being now charged for carrying automobiles was the same as the rate charged before and the only comparison being made was with the reduced rate which Northland had on the combined automobile and passenger service. Rivtow is reviewing its rate structure in view of that competitive rate having come to its attention, but it is important to recognize that in the case of Rivtow this rate now being quoted in the press is not a changed rate from its automobile rate, and it had been competing with some success against Northland in the carrying of automobiles with that rate prior to the discontinuance of the Northland service.


MANPOWER
Stuart Malcolm Leggatt: Mr. Speaker, my supplementary question is directed to the Minister of Manpower and Immigration. It is supplementary to the questions dealing with the problem on the B.C. coast. Some 200 men at Northland Navigation have been laid off, and my information is that the minister had indicated, prior to that decision of the government to cut off the subsidy, that jobs had been identified for these 200 people. Can the minister tell me how many of those 200 have now obtained jobs? My information is that the number is zero. Would he also explain to the House what program he now has to provide work for those 200 people who have been laid off as a result of a decision of this government?


Jack Sydney George (Bud) Cullen: Mr. Speaker, I am not sure I agree with the premise of the hon. member's question, but we will certainly look into that particular case and see if there is any information available for the hon. member.


MINISTERS KNOWLEDGE OF ROAD CONDITIONS IN NORTHERN BRITISH COLUMBIA
Mr. Bob Brisco (Kootenay West):: Mr. Speaker, my supplementary question is to the Minister of Transport. In view of the fact that the minister has indicated that Stewart will be served by other means and that there is a readily accessible road to Stewart, I wonder if the minister has considered having his official drive his car or the minister's car from Hazelton, to Meziadin Junction, to Stewart at this time, or in fact at any other time of the year, and is he aware of the road conditions which prevail?


An hon. Member:: He only flies.


Otto Emil Lang: Mr. Speaker, I believe that the barge service will be offered for that point in any case. I would want to check that, but in addition, whether the road conditions in that area are quite poor or not, the fact remains that in some of those areas truck service regularly offers and carries freight into those places.


ALLEGED INCREASE IN RATES BY RIVTOW
Mr. Benno Friesen (Surrey-White Rock):: Mr. Speaker, my question is to the Minister of Transport. Is it not the case that when Rivtow took over the Northland operations, it assumed the Northland tariff plus its own, maintained the Northland rates by that tariff the first two weeks and then dropped them in favour of its own higher rates, which are up to 150 per cent higher!


Otto Emil Lang: Mr. Speaker, as I pointed out in the one example which was referred to

December 2, 1976
Oral Questions
yesterday, I understand that the automobile carrying rate which Rivtow had been quoting before was competitive with Northland's automobile carrying rate.


ATOMIC ENERGY OF CANADA LIMITED
Miss Flora MacDonald (Kingston and the Islands):: Mr. Speaker-


Some hon. Members:: Hear, hear!


Flora Isabel MacDonald: I feel that I am welcome back.
My question is to the Minister of Energy, Mines and Resources. In view of the recently approved licencing agreement between AECL and P.M. Nucleari Company of Italy, which for the first time gives to a foreign country the exclusive right to design, make, use, and sell CAN DU reactors in Italy and in five years time to other countries provided they comply with the Canadian safeguards policy, will the minister explain by what means Canada proposes to enforce these safeguards once the exclusivity of design has been relinquished to another country?


Alastair William Gillespie: Mr. Speaker, through safeguards reached either on a multilateral basis, that is to say, Canada with EURA-TOM, or on a bilateral basis, Canada with the government of Italy.


Flora Isabel MacDonald: This does not say what the government would do if Italy goes ahead with sales on its own without any reference to Canada. In view of the very questionable commercial arrangements which have come to light with regard to contracts entered into by AECL, can the minister say whether he has checked to see what if any connections exist between P. M. Nucleari of Italy and Italim-pianti Company, the contracting company in Argentina?


Alastair William Gillespie: Reverting back to the last part of the first question, quite clearly the licensing agreement is conditional upon these arrangements being put into place between the government of Canada-


Flora Isabel MacDonald: What if they do it afterwards?


Alastair William Gillespie: -and the other control authorities in Europe to whom I have referred.
On the second part of the question, yes, I have checked, and I am told there is no corporate relationship whatsoever between the two parties.


MANPOWER
Miss Aideen Nicholson (Trinity):: Mr. Speaker, my question is for the Minister of Manpower and Immigration. It concerns the Canadian Classification and Dictionary of Occupations which is prepared by the minister's department in consultation with Statistics Canada. Can the minister confirm that the sections in this work dealing with service occupations are being revised to eliminate absurdities such as including a foster mother and child care attendant in the same occupational group as a tattoo artist and cabana boy and rating a foster mother's skill requirements in dealing with people as lower than those of a dog trainer?


Jack Sydney George (Bud) Cullen: Mr. Speaker, I thank the hon. member for giving me notice of the question.


Some hon. Members:: Oh, oh!


George Harris Hees: Now read your answer as well as she read her question.


Jack Sydney George (Bud) Cullen: Mr. Speaker, this book was published in 1971, and it is in fact being revised. My department is considering the possibility of having a special unit group to cover the areas the hon. member has raised. If hon. members opposite would sometimes give notice when they are looking for information rather than-


Mr. Speaker:: Order, please. The hon. Leader of the Opposition.


GOVERNMENT ADMINISTRATION
Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, my question is to the Prime Minister. On questions of morality to ministers, one yesterday and one again today, they have given their view that Canada is not to judge the standards of other countries. In light of that I wonder whether the Prime Minister can tell the House whether it is the position of the government of Canada that agents or representatives of Canadian Crown corporations dealing abroad are free to encourage or to acquiesce in the violation or evasion of laws of other countries.


Pierre Elliott Trudeau: Mr. Speaker, the answer is no. Quite the contrary; in relations we have with agents in other countries it is the intention of the government, and it has been the specified intention in the past and it will be in the future, that those agents must not derogate from the laws, or accounting practices, for that matter, of their own countries.
December 2, 1976


Charles Joseph Clark: If that is the specified intention, and if it will be the specified intention in the future, I presume the Prime Minister has established and circulated guidelines or specifications, and on behalf of the House I ask him to table those guidelines which are now in practice. If up to this point there have been none, would the Prime Minister tell us whether he is going to establish such guidelines and whether he will do the House of Commons the courtesy of tabling them here.


Pierre Elliott Trudeau: Such guidelines do exist. Whether they are written in a form which can be tabled is something I will have to ascertain. I do know that they are contained in instructions and in draft model agreements which are circulated by certain ministers, those who have Crown corporations under their command.


INQUIRY WHETHER AGENTS OF CROWN CORPORATIONS FOLLOWING GUIDELINES
Charles Joseph Clark: The Prime Minister has indicated that he is now taking a personal interest in these matters. I wonder if he would tell the House whether he is personally undertaking an investigation into the degree to which whatever specifications exist in the government of Canada are being honoured in practice and whether he will give us a commitment now that he will personally report to the House on the degree to which they have been honoured, the adequacy of the guidelines and specifications which exist and the detail of any specifications or new guidelines which he will cause to be put into place.


Pierre Elliott Trudeau: It is not clear to me whether the question relates to whether these guidelines are honoured in other countries by agents chosen by us. As far as our people honouring these guidelines is concerned, that is, of course, the meaning of the guidelines themselves. When we sign a contract with an agent in another country we make it clear, in writing or otherwise, that money will be spent only for legal purposes. But in so far as the honouring of that contract, and knowledge of whether somebody in another country has broken the law in his country, of course we have no authority or ability to look into that matter.


CANADIAN NATIONAL RAILWAYS
Mr. J. H. Horner (Crowfoot):: Mr. Speaker, my question is for the Minister of Transport. Recently, the president of the CNR made a speech in Newfoundland stating that a commission had been set up to study the over-all transportation problems of that province and he suggested that the user-pay concept will place the CNR and the people of Newfoundland in a great deal of difficulty. Is the minister therefore prepared,
Oral Questions
(a) to go ahead with the commission which is to study transportation problems and (b) treat the rail problems of the CNR in Newfoundland in the same manner as he treats the CNR operation of the marine service?


Otto Emil Lang: Mr. Speaker, I am delighted the hon. member has noted that there are differences in relation to the way services are to be treated and that various principles of transportation and good business practices in transportation do not exclude special assistance for helping remote areas, areas of difficult access, where that is justified. That part of our policy is consistent with the over-all approach to transportation which requires transportation policies to be sensible and economic.
At this stage may I say that I have noted the suggestion of the president of the CNR in connection with a commission and will want to consider that carefully with my colleagues. It is, of course, a suggestion about a commission in which the government of the province of Newfoundland would be fully interested as well. I had some preliminary discussions with the minister of transport of the province earlier on the question of how best to approach the total transportation question in Newfoundland and whether, through a commission or otherwise, we can work together to produce the most effective transportation system for Newfoundland which money can buy.


John (Jack) Henry Horner: Mr. Speaker, may I ask a short supplementary question? The Minister of Transport proceeds to lecture everyone who asks him a question. My simple question was this: Is he prepared to treat the rail transport system in Newfoundland in the same manner as he treats the CNR marine services?


Otto Emil Lang: Mr. Speaker, that was not really and necessarily the total answer to the question and, whether the hon. member likes it or not, he cannot prescribe whether there shall be a yes or no answer to a question. I indicated to him that we would want to look at the transportation question in Newfoundland from the point of view of determining what kind of transport system can best be created for the good of Newfoundland. We would not want to waste a single dollar on transportation systems which do not benefit Newfoundland, because I am sure that we and Newfoundland together could find better uses for those dollars in Newfoundland than waste them on transportation which will bring no benefit.


John (Jack) Henry Horner: Oh, go back to Saskatchewan university.


REFERENCE TO PREVIOUS STUDY OF RAILWAY OPERATIONS IN NEWFOUNDLAND
Jack Marshall: Mr. Speaker, may I direct a supplementary question to the Minister of Transport? Would the minister remind Mr. Bandeen that a voluminous study commissioned by this government was undertaken last year of the transportation system of Newfoundland. Will the minister remind him to look at this study which has already elicited many facts which would help transportation in Newfoundland before he, the minister, camou-

December 2, 1976
Oral Questions
flages what action is necessary with the establishment of another royal commission?


Otto Emil Lang: Mr. Speaker, we would want to take the hon. member's suggestion fully into consideration. We will be looking at Dr. Bandeen's suggestion, discussing it with Newfoundland and looking at the extent to which studies have been undertaken. I think Dr. Bandeen had those in mind but wondered if we could not now consider them all together, that is to say, have a commission give a short, sharp look at the question, which would also allow the people of Newfoundland to have some input into some of the difficult questions involved.


John (Jack) Henry Horner: That's right; bury it in another royal commission.


Otto Emil Lang: I might say to the hon. member that if it were not possible to have a commission bring these matters into focus quickly and sharply, then I would hope we could find another solution.


TRANSPORT
Jack Marshall: supplementary question, Mr. Speaker. 1 wonder if the minister would reply to the submission of the four provinces in the Atlantic region with regard to the upgrading of the Trans-Canada highway. Can he say when a decision will be made for advancing the funds to build up that highway which is necessary to the over-all transportation needs of the region?


Otto Emil Lang: Mr. Speaker, no decision has been taken in that regard, although we have been working with the Atlantic provinces on the question of the priority of the various roads they listed with us. Of course, in Newfoundland and other areas in Atlantic Canada, the question of highway upgrading is tied closely to the future nature of rail services to be offered and also the kind of marine service which will be available.


POST OFFICE
Mr. John Rodriguez (Nickel Belt):: Mr. Speaker, my question is for the Postmaster General. Since the mediator between the Post Office and the Canadian Union of Postal Workers has given up his efforts, calling the dispute the toughest and most complicated he has encountered in industrial relations, and since the government is forcing another confrontation in the Post Office at the worst time of year by its refusal to honour

its contractual obligations, will the minister tell the House if he is prepared to halt further technological changes in the Post Office until present problems have been settled to the satisfaction of both parties to the contract?


Hon.   J.-J. Blais@Postmaster General: Mr. Speaker, first, the mediation has not been completed. There have been consultations between the parties since Dr. Hall indicated he was no longer ready to proceed. That is the first point. The second point is that we are doing all in our power in order to avoid that sort of confrontation of which the hon. member spoke. We are attempting to proceed, having recognized that the mediation of Dr. Hall has been advantageous. It has delineated some of the issues. There has been some action on the part of the Post Office in the way requested by the union. Undoubtedly, we look forward to continuing that particular process.
I hope the hon. member joins me in hoping that no threats now or in future will lead to stoppage of postal service. I understand that such threats have been made. We are not making any such threats. I hope everyone within Canada will continue to use the postal service, and will be assured that that postal service will continue past the Christmas period.


John R. Rodriguez: A supplementary question, Mr. Speaker. Since there is some dispute about what the minister said about negotiations going on and since the minister and officials of the Post Office are, in the public's view, making statements, will the minister promise that he will report to this House immediately with respect to the negotiations and what is happening in the Post Office regarding Article 29, so that this House and the nation can be informed about relationships within the Post Office?


Mr. Blais:: Mr. Speaker, we dealt with this matter without the glare of publicity. In my view it is more advantageous to have these particular matters dealt with behind closed doors, to avoid disquietude on the part of the Canadian population. It is our view that we have made progress in the past. We will continue to make progress and, hopefully, there is not going to be an interruption in postal service either now or in the future.


GOVERNMENT ADMINISTRATION
Mr. Walter Baker (Grenville-Carleton):: Mr. Speaker, may I direct a question to the Prime Minister relating to the question asked by the Leader of the Opposition. The Prime Minister indicated in his answer that guidelines with respect to the practice of Crown corporations now exist. I wonder if he can advise the House whether those guidelines condone the practice which has been admitted by the head of the government, the practice of issuing inflated invoices by Crown corporations and the authorization of transactions under which payments are made into secret bank accounts.


Mr. Paproski:: It's like skimming off the top.
December 2, 1976


Pierre Elliott Trudeau: Mr. Speaker, the hon. member has smuggled into his question an allegation that is false and erroneous.


George Harris Hees: It is not false. It was stated in the report of the Auditor General.


Steve Eugene Paproski: That is skimming off the top, Pierre.


Pierre Elliott Trudeau: Mr. Speaker, if the hon. member for Prince Edward-Hastings would listen-


George Harris Hees: I have been listening.


Pierre Elliott Trudeau: If he would listen to his own members he would learn that the hon. member in his question said that "I had admitted". The hon. member for Prince Edward-Hastings said that the Auditor General had said it in his report.


George Harris Hees: It has been stated and proven, and you know it.


Pierre Elliott Trudeau: Mr. Speaker, that is not the point, whether it has been stated by the Auditor General or not. The hon. member opposite says that I have admitted-


Charles Joseph Clark: Would you answer the question?


Steve Eugene Paproski: Yes, answer the question.


Pierre Elliott Trudeau: Mr. Speaker, I will answer the question if hon. gentleman opposite will shut up for a minute.


Charles Joseph Clark: Would you like us to leave?


Pierre Elliott Trudeau: Therefore, there was no admission by me or anyone in the government that there were any inflated invoices. The matter arose because the former Auditor General said in a letter to me that there were inflated invoices. This matter was investigated. We have read into the record statements by the auditor Peat, Marwick who, after considering the matter, made the statement that they had audited the books and there were no inflated invoices. Obviously, there was a disagreement between Mr. Henderson and Peat, Marwick. For that purpose among others, the government has taken the position that the Public Accounts committee should look into this matter to try to ascertain the facts. If there is a conflict of opinion between two Auditors General, the House will have to make up its mind. However, it would be helpful if in the meantime members opposite did not smuggle in lies and falsehoods.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Walter David Baker: Mr. Speaker, the Prime Minister ought to consider that statement over the evening. I hope he will do that and I hope he will retract it.


Some hon. Members:: Hear, hear!
Privilege-Mr. McGrath


Walter David Baker: It has not been my practice to lie to this House. If there is anything that has come out of this series of questions, it is a host of unanswered questions that have been put by members of the opposition.


Some hon. Members:: Hear, hear!


Walter David Baker: It would be much better, Mr. Speaker-


Some hon. Members:: Order.


Mr. Speaker:: Order, please. At the moment the hon. member has the floor for a supplementary question.


Walter David Baker: Rather than that kind of innuendo and stupid statement by the Prime Minister-


Some hon. Members:: Oh, oh!


Walter David Baker: -I think the Prime Minister ought to answer the question, no matter who said it. Do the guidelines which the Prime Minister said today exist condone the payment or the issuance of inflated invoices by Crown corporations? Is that the case, yes or no?


Pierre Elliott Trudeau: Mr. Speaker, the evidence we have is that there was no inflated invoice. If it is a hypothetical question about hypothetical inflated invoices, Mr. Speaker; the answer is no. I have said in this House, as other ministers have, that we want the accounting practices to be in accordance with normal practices. That was the whole issue in front of the Auditor General.


Walter David Baker: If that is the case, Mr. Speaker, having regard to the fact that the Prime Minister said that the guidelines existed although they are not in a form to be tabled, will the Prime Minister tomorrow or on Monday put those guidelines in a form to be tabled and table them in this House?


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: Mr. Speaker, it is the intention of the government to make a statement in the very near future about this whole matter.


Some hon. Members:: Oh, oh!


An hon. Member:: Christmas Eve.


Pierre Elliott Trudeau: I see the opposition is not very interested.


PRIVILEGE
James Aloysius McGrath: Mr. Speaker, I rise on a question of privilege. Today I directed a question to the Minister of Transport (Mr. Lang) regarding information
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December 2, 1976
Privilege-Mr. McGrath
which has come to my attention on the proposed plan of the Minister of National Defence (Mr. Danson) to issue a statement in Gander, Newfoundland, later this day announcing the new search and rescue policy for Canada. After I establish what I hope to be a question of privilege, I intend to move a substantive motion.
This information came to my attention by way of the press in Newfoundland who had been alerted to the fact that the Minister of National Defence would be going to Newfoundland today to make a statement on a new national defence policy. The minister gave me an assurance last Tuesday that no such statement would be made because he was on his way to attend a NATO meeting in Europe and there would not be time for such a statement this week. Ele gave me an undertaking that I would be notified. Today, while 1 was trying to get the substance of the minister's statement from his colleague, the Minister of Transport, who shares jurisdiction in this regard, the Minister of National Defence happened to be sitting in his office with a statement which is being denied to this House.
The statement which will be made in Gander, Newfoundland, at eight o'clock tonight is on a matter which has been before this House for the past 11 months. It has been before the House in the form of questions, adjournment debates, a petition with 40,000 names, and numerous questions during the oral question period. Indeed, it was so much an issue in the last part of the last session that the Minister of Transport, who has a great deal of responsibility in this regard, issued a statement on April 7 announcing the establishment of a task force to advise the government of a new search and rescue policy. That announcement came after three tragedies off the east coast in which six Canadian fishermen were lost.
Further action was prompted at the beginning of the present session by the foundering of the Dutch ship Gabrielle and the loss of 13 lives. Following that tragedy, I reminded the minister of an undertaking which he gave to the House last April that he would be reporting on the recommendations of the task force by midsummer. The minister, outside the House, following questions, on October 18 gave an undertaking that a statement would be made within two weeks. That was a month and a half ago.
I maintain that the Minister of National Defence is contemptuously denying to this parliament information which is being released to the press today. He is denying the members of this House the opportunity to question him on that statement. That would be all right if the minister had made that statement in the House under the provisions of Standing Order 15(3). The press assembled in Gander, Newfoundland, tonight will have the privilege of questioning the Minister of National Defence on that statement. We will be denied that privilege.
I maintain that this is contempt by the Minister of National Defence. It is equally contemptuous for the Minister of Transport, who has jurisdiction in this regard. He has assumed most of the responsibility in this House with regard to questions, motions and speeches: he rose in his place today in response to my question and denied this House information which is now

in his possession and is being prepared for release to the press later this day. The minister is not leaving Ottawa until four o'clock this afternoon. The press conference is not scheduled until eight o'clock this evening. However, we are being denied the right to have access to this statement and to cross-examine the minister on the contents of it. I say that is contemptuous.
This situation differs from the question of privilege raised a few days ago by the hon. member for Oshawa-Whitby (Mr. Broadbent) with respect to the statement made over television by the Prime Minister (Mr. Trudeau) on the Quebec election. It differs in this fundamental respect. The statement on a new air-sea rescue policy being made to the press in Newfoundland later this day is a matter which has seized the attention of this House almost daily for the past 11 months. For the minister and his colleague to deny the House at this time something which the minister undertook to provide to the House in statements both inside and outside the House is, I submit, a complete violation of the practices of this House. It shows a degree of contempt for this House which one would not expect from a minister of the Crown, particularly a former minister of justice.
My question of privilege is that the practices of this House have been substantially violated.
I contend that the Minister of National Defence and his colleague, the Minister of Transport are in contempt of the House. I would remind you, sir, that the Standing Committee on Procedure and Organization has no reference before it at this time. It has not been constituted since the session began. This is the second time this question has come before the Chair as a matter of privilege. In these circumstances, I move, seconded by the hon. member for Grenville-Carleton (Mr. Baker):
That the matter of ministerial statements made outside parliament while parliament is in session be referred to the Standing Committee on Procedure and Organization.


Otto Emil Lang: I shall make only a brief intervention, Mr. Speaker, since some of the statements the hon. gentleman has made are only within the knowledge of the Minister of National Defence (Mr. Danson). I must say, though, that the hon. member's motion is, as far as I can see, not a question of privilege at all but, rather, a matter affecting the rules and procedures of the House. As I indicated in my first response to the hon. member's question, I find it extremely surprising that he should say it was contemptuous to announce a program of great importance to Newfoundland, in Newfoundland.


Some hon. Members:: Hear, hear!


Otto Emil Lang: As I understand the rule, it is by no means absolute even on the question of policy statements. Certainly, not every statement as to ways of dealing with particular matters needs to be made in the House. In this case, our purpose in establishing effective search and rescue services is well known. It was well known, too, that we were working on
December 2, 1976

details of providing such facilities. Statements which particularly concern certain areas are often best made in those areas. For instance, I have frequently made announcements affecting the grain industry, in the prairie provinces. This, it seemed to me, was a course which was natural to take. This particular statement is one which it seems to me would naturally be made in the Atlantic or in the Pacific region. To deprive the press and the people in that area of the opportunity from time to time to deal with announcements first-hand, rather than in a delayed fashion, seems to me to be an extraordinary demand on the hon. member's part. In any event, Mr. Speaker, I believe that as the hon. member has framed his motion it is more in the nature of a rules and procedure question than one of privilege.


Walter David Baker: Mr. Speaker, there are some facts which ought to be underscored with respect to this matter. There might be occasions when ministers might choose to make statements in the way the hon. gentleman has chosen. But I think it is contempt of parliament to make statements in that way, outside the House, on issues of an important nature which have taken up a great deal of time during debates in this chamber and during the question period, particularly when the minister himself is here, when he has not yet boarded his aircraft.


James Aloysius McGrath: He is leaving at four o'clock.


Walter David Baker: The hon. member for St. John's East (Mr. McGrath) says the minister is leaving at four o'clock. Not too long ago the House undertook a revision of its rules. It did this for the purpose, not of limiting the rights of members with respect to the discussion of issues of public importance-as this one certainly is-but of extending those rights. We provided for the practice of making statements on motions at particular times, with questions to follow from those members who are interested.
I suggest to you, Mr. Speaker, that it does impinge upon the right of a member to express himself on a matter of public interest when the original statement to which he must respond is made outside the House of Commons. That is the case in this instance. With that in mind, I should like Your Honour to examine the motion which has been put forward by my hon. friend, from the point of view of privilege. If it is not possible for Your Honour to find that it is a question of privilege, I should like you to address yourself to the more general question which has been raised. Perhaps Your Honour, in the position you occupy, might be able to suggest a way out of this difficulty.
I take the view, however, that basically it does affect our rights. The rights of the hon. member for St. John's East, the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall), the hon. member for St. John's West (Mr. Crosbie), the hon. member for Dartmouth-Halifax East (Mr. Forrestall), and members from the maritimes generally, as well as those who come from the west coast and who are interested in air-sea rescue, are impinged upon, in particular their right to
Privilege-Mr. McGrath
direct questions to the minister, if the minister decides to make a statement outside the House.
I respectfully suggest that hon. members need guidance from the Chair, possibly in the form of a statement as to how we should proceed, what the rule means, whether ministers themselves can choose what course to take, depending on their estimation of the importance of a statement and the advantage of making it in a particular location. Perhaps the subject might be referred by Your Honour, as the first commoner, to the Standing Committee on Procedure and Organization or, if not, a strong suggestion might be forthcoming from the Chair to that effect.
The practice about which we complain is wrong in principle because it denies members who have repeatedly pressed an issue, as the hon. member for St. John's East has done in this case, day after day and week after week, an opportunity to comment at an appropriate time on what is being proposed. Suddenly, the only right they have is the limited right of asking questions during the oral question period, instead of the much more extended opportunity they would have enjoyed under Standing Order 15(3). This is an important question not just for the opposition but for parliament as a whole. I should like to see it dealt with as a question of privilege, but if Your Honour cannot see your way clear to do so, then in other ways such as I have indicated.


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I support very strongly the position taken by the hon. member for St. John's East (Mr. McGrath) in asserting that what has happened today is contempt of parliament. Before developing my argument, brief though it will be, I should like to say that for an attempt to avoid the issue the Minister of Transport (Mr. Lang) has taken the prize today. For him to stand and say it surprises him that a Newfoundlander should object to a statement being made in Newfoundland, when that same Newfoundlander, as a member of parliament, is asking that a statement be made here, is not facing up to the situation at all. As a matter of fact, he shot his own case full of holes when he admitted that search and rescue is of concern not only to Newfoundland but to other Atlantic areas, to the Pacific coast and, as far as the Department of National Defence is concerned, to all parts of Canada. So the issue is one of concern to the nation, and the place to deal with it is here in the House of Commons.
Mr. Speaker, I realize the difficulty the Chair always faces with regard to questions of privilege because the definitions of privilege are so narrow. But, surely, what has happened is contemptuous of parliament if, as the hon. member for St. John's East says, the Minister of National Defence (Mr. Danson) is, or at least was, in his office on Parliament Hill and simply refuses to make a statement here because he wants to make it in Newfoundland tonight. That is certainly treating the House of Commons with something a lot less than respect. There is a sentence in citation 108(1) of Beauchesne's Fourth Edition which provides that anything that may be considered contempt of court by a tribunal is a breach of privilege if
80005-33*4

December 2, 1976
Privilege-Mr. McGrath
perpetrated against parliament. You, sir, know a lot more about the courts than I do.


Otto Emil Lang: It is not very relevant.


Stanley Howard Knowles: There is my hon. friend, the jet flyer, saying it is not very relevant. I suggest that if a matter were being dealt with in a court and those involved went outside and made statements about it, the judge would not be very happy. If it is contempt of court if that sort of thing happens, it is contempt of this institution for the minister to take the action that he is taking tonight in Newfoundland.
As others have said, this matter has been raised repeatedly on the floor of the House of Commons. My hon. friend from St. John's East (Mr. McGrath), his colleagues on the Atlantic coast, his colleagues on the Pacific coast and my colleague, the hon. member for Nanaimo-Cowichan-The Islands (Mr. Douglas), have all been involved in this matter. It is an issue that concerns parliament. We represent the whole nation. For the Minister of National Defence (Mr. Danson) to treat us in this way is certainly a gross lack of courtesy. I can see situations in which conditions might make it necessary for a statement to be made this way, such as if parliament were not sitting or something happened over the weekend. But if the fact is that the minister is in his office here on Parliament Hill and he does not come into the chamber and make his statement to the House of Commons, that is disrespect, discourtesy, and to me it is awfully close to contempt.


Hon. Allan J. MacEachen (President of the Privy Council):: Mr. Speaker, I wish to make only one very brief argument. The hon. member for Winnipeg North Centre (Mr. Knowles) has talked about courtesy and about respect, which are at times tangible or intangible in their operation or manifestation. The hon. member for St. John's East (Mr. McGrath) has raised a question of privilege which alleges that the Minister of National Defence (Mr. Danson) has somehow breached the privilege of members of the House of Commons. Presumably, in making his argument he believes that there is an obligation on the part of the Minister of National Defence to make his statement in the House of Commons rather than in some other part of Canada.
I do not believe there is any such obligation. It is a matter of choice for ministers whether they will make a statement in the House or elsewhere in the country. In many cases I have recommended to ministers that it would be preferable for them to make statements of policy in the House of Commons rather than elsewhere, but I believe if ministers were obligated to make every statement of interest or importance in the House of Commons, to be followed by comments from hon. members opposite, it would add a very great, additional time factor to the work of the House. If there is any question about it-


Stanley Howard Knowles: But it takes up time to deal with questions of privilege.


Allan Joseph MacEachen: -may I refer to Standing Order 15(3), where the procedure is outlined under which ministers may make a statement on motions or a statement in the House of Commons. Standing Order 15(3) provides:
On statements by ministers... a minister of the Crown may make a short factual announcement or statement of government policy.
I think the operative word there is "may". The minister has a choice and is free to exercise that choice, taking into account a multitude of factors including respect for the House, the impact of the statement, and so on. In this particular case, in light of the clear wording of the Standing Order, I do not believe there is an obligation on the part of the minister to make such a statement in the House, and therefore I do not believe there is a valid question of privilege.


Mr. Speaker:: Order, please. I see four other hon. members to my left wanting to contribute to the discussion. Naturally, I am not going to refuse anyone the right to participate in a discussion on a question of privilege or on any matter before the House, but I do want to caution hon. members that the question at issue is whether or not the privileges of the House have been breached. Whether or not it is desirable or contemptuous-depending on which side of the question you wish to argue-for a minister to comment in a certain way is not really relevant to the question of privilege. The question I have to consider is whether or not the privileges of the House have been breached by the failure of the minister to make a statement in the House.
If any other hon. member has something to contribute on that particular point, as opposed to criticism or otherwise of the minister's action, I would be pleased to hear them.


Mr. Erik Nielsen (Yukon):: Mr. Speaker, I have two brief points. The first is that of the three regions-or four regions, really-in the country concerned with search and rescue, the north is one and those services are vital to its people. So it is not really a Newfoundland problem with which this announcement is concerned.
With respect to the privilege itself, the government House leader rested his entire argument on his assertion that because Standing Order 15(3) places no legal obligation on the part of the minister to make a statement in the House, no privilege is being breached. With that I strongly disagree. There are some here who have sat through a good many parliaments, and I am one of them. It used to be common practice in the House of Commons for statements to be made on motions by ministers on matters affecting government policy of major importance. This opportunity was taken almost on a daily basis in past parliaments and it was indeed so often taken advantage of that it became a practice of the House. Certainly since I came to the House in 1957 it was the continuation of a previously existing practice that had become so deeply embedded as a practice of the House that it had the same force and effect as if it were a provision in our Standing Orders. I make the submission to you, sir, that there are privileges in this chamber that may be breached even though they may not be enshrined in our Standing Orders, and one of them is this long-standing
December 2, 1976

practice of ministers making statements on major changes in government policy.
That practice changed, Mr. Speaker, and we have a hint of why it changed in the government House leader's remarks on this point. The change came about with the change of government in 1968. The reason the government House leader puts forward for it-and it is perfectly accurate-is that if a minister makes a statement on motions, then the right arises for the Leader of the Official Opposition and the leaders of the other parties in the House to reply. However, Mr. Speaker, this became burdensome in terms of time, in the view of the government, and therefore the government says, "If we are going to save this time, we will simply deny the opposition parties the opportunity of reply by not making statements".
The government House leader knows this was a long-standing practice hitherto which had become deeply embedded in our procedures, hon. members opposite who were members in the past know that this was the practice that was followed. As I say, it was discontinued because, (a) they did not want the opposition fire in reply to government statements, and (b) they wanted, in their view, to save time, and in our view to deny us the time to make replies. The privilege here is based on long-standing practice, and it is this which is being breached.
The statement is of as much interest to me as a member of parliament as it is to the member who raised this question. We are being denied the right to reply to a statement regarding a major change in government policy. That is, in my view, the privilege which is being breached, and that privilege is founded on long-standing practice, even though there is no mandatory obligation in our rules requiring the minister to make statements in the House. I agree with the government House leader on that point.
Finally, Mr. Speaker, my submission is that, notwithstanding the absence in our rules of a mandatory obligation to make such statements in the House, it has been such a long-standing practice that it has become the right of members of this House to have ministers make statements of this nature in the House. Therein lies the breach of privilege in this case.


Jack Marshall: In
order to save time, Mr. Speaker, I will make just a few short comments. I was closely involved in this matter with the hon. member for St. John's East (Mr. McGrath), and I am beginning to wonder what we are doing here. We have been asking questions for 11 months, to which we have been receiving the answer that there is an important task force review which is to be tabled. This has been promised time and time again. We have been told it is going to be tabled soon, but instead we have the minister making announcements piecemeal about what the task force is recommending.


An hon. Member:: Outside the House.


Jack Marshall: I happened to look at the Halifax Chronicle-Herald the other day and saw a headline which stated that the
Privilege-Mr. McGrath
House leader was a man of vision and ability. Apparently he had a piece of the action as well, because in the task force review it suggests that one of the areas which will receive immediate attention is that dealing with a proposed voluntary coastguard auxiliary, with the indication that implementation guidelines are expected early this summer. The House leader made an announcement in Sydney that there is going to be a coastguard facility there, so obviously he is getting a piece of the action.
I sometimes wonder what we as members are doing here, because anybody in Canada can write to a minister and get the same kind of answer that we get. If we cannot act on behalf of our constituents in a knowledgeable manner by having access to material the minister has promised to table, then I wonder what we are doing here as members. This report should be tabled and debated in the House.


Mr. J. M. Forrestall (Halifax-Dartmouth East):: Mr. Speaker, I should like to address my remarks to the question of privilege now before the House and I will confine them to the point raised by the hon. member for Yukon (Mr. Nielsen). There are certain parliamentary traditions which are adhered to and honoured and which through usage over a period of time have in fact become rights. As a layman, I suggest that is certainly a clear principle in common law and it is certainly a principle in natural law.
There is some desire on the part of the government to use the time of the House efficiently, and for that reason ministers often make statements outside the House on matters of local concern. This is understandable and acceptable. However, notwithstanding that desire on the part of the government, the degree to which ministers are making statements regarding various parts of the country, not in this House but outside it, for whatever reason, is becoming quite alarming.
These statements very often involve major changes to government policy. For example, I understand the minister intends to make an announcement this evening. I do not know what the minister will say, but I expect members of the press already have a copy of that announcement. Such a procedure affects my rights as a member and, therefore, the privileges I have as a member in my place in this House.
I am unable at this point to determine what the implications of the minister's statement might be. I am unable to do that on behalf of the people of Nova Scotia, particularly in the Halifax-Dartmouth area, on the south shore, the north shore and the east shore. I would like to know how many additional boats we are going to have, whether we are going to have new helicopters or air-cushion vehicles, as well as the number of additional personnel involved. I should like to know just what the situation will be. I wonder how long it will be before the people of Nova Scotia fully understand the implications of the change in policy to be announced this evening by the minister. Any statement in respect of a substantive policy change should be made on the floor of the House of Commons. In this way the representatives of the people affected would have the opportunity of determining the implications.

December 2, 1976
Privilege-Mr. McGrath
As the hon. member for Yukon and the hon. member for Winnipeg North Centre (Mr. Knowles) have pointed out, search and rescue affects all of Canada. If the statement were made here in the House, the people affected would know much sooner the implications and the details of the policy change. To reiterate the point made by the hon. member for Yukon, the making of statements of this kind outside the House denies members the opportunity to fulfil our obligations as representatives of the people. When a minister of the government chooses-and I suggest in the present case it is deliberate-to make a statement of this nature outside the House, then it does in fact affect my privileges as a member as well as my ability to function as a representative of my constituents.


John Carnell Crosbie: Mr. Speaker, I rise in support of the statement made by the hon. member for St. John's East (Mr. McGrath) on this question of privilege. Although I have only been a member of this House since November 1, as I conceive the situation I have the same rights and privileges as any other hon. member.
It is off the coast of St. John's West where the incidents occurred in the last 11 months to cause the government to change its policy regarding search and rescue in eastern Canada. At least, I believe the government is going to change its policy. It should be on the record of this House that at least the Minister of National Defence (Mr. Danson) has indicated he will send the hon. member for St. John's East a copy of the statement he is to make at eight o'clock tonight in Gander.
I should like to remind hon. members of the San Juan and Gabrielle disasters, as well as a number of other events that occurred this year off the coast of Newfoundland. The people are very upset about the situation, yet the government has not even had the courtesy to tell this hon. member that the minister intends to make a statement in Gander tonight at 8 p.m., or to make available a copy of the statement.
I know, Mr. Speaker, that you have to consider and decide on the technical matter of whether there is a breach of members' privileges. Many observers of the parliamentary scene over the last 20 years are suggesting that parliament is becoming more and more irrelevant. I submit to hon. members that it is becoming more and more irrelevant as a result of ministers-who are really only members of the House, although they also have cabinet positions-treating the House and its members with contempt. The Minister of Transport (Mr. Lang) who spoke on this question of privilege a few minutes ago has now left the House before the question of privilege has even been decided upon.


James Aloysius McGrath: How is that for contempt?


John Carnell Crosbie: How is that for arrogance and contempt? The Minister of National Defence is going to drop into Gander this evening to make a statement on the government's policy in respect of a new search and rescue operation in Newfoundland, yet he has not indicated to members from Newfoundland what the statement contains. I suggest this does affect members of the House. I know that privilege is a technical matter,

Mr. Speaker, but surely the House, its members and the people of Canada have to be taken more seriously by members of the government.
Whether or not you make a technical ruling in favour of this matter, Mr. Speaker, this proposed statement involves one of the most important questions affecting eastern Canada and Newfoundland, and it was the subject matter of a lot of debate and a major issue during the by-election in St. John's West. The minister says an announcement is to be made in Gander, and the excuse is that the government wants to give the Newfoundland press a chance to cover the matter. The press gallery here in Ottawa is jam-packed with press people who send their material back to Newfoundland, to eastern Canada in general and throughout the country.
The minister is skulking and sneaking down there like a thief in the night. He is on his way to Cyprus, but he is going to drop down into Newfoundland and make this announcement in Gander. That shows you how important it is: he is going to break his trip to Cyprus. I don't know whether he is going to Cyprus to pick up a Cypriot nanny, or why he is going there, Mr. Speaker, but this is a terrible situation-


Some hon. Members:: Order.


Mr. Speaker:: Order, please. The hon. member for St. John's West (Mr. Crosbie) was really doing very well on the question of privilege up to that point. I do not want to interrupt him, but I do think he should get back to the subject.


John Carnell Crosbie: I retract that statement, Mr. Speaker. In finishing, let me say that I am only a new member-


An hon. Member:: With a lot to learn.


John Carnell Crosbie: I have a lot to learn, as well as hon. gentlemen opposite. They will learn an awful lesson when the next election comes. Let me end with this statement as a new member, Mr. Speaker. I know the Speaker may have to break some new ground in deciding that this matter should go to the committee, but surely he can make a ruling which would enlarge a bit the privileges of the House of Commons so that we might bring to the attention of ministers the fact that they are members, too, and are not gods, and that the rest of us deserve some consideration.


Mr. Speaker:: Order, please. I do not propose to entertain any further discussion on the matter. Hon. members will know, since reference has been made to them in this matter, that the precedents are very clear. The reason of course, for the difficulty in attempting to move in the direction that has been suggested by all those who participated in this question of privilege, that is to say, some requirement that the minister make a statement in the House rather than make it anywhere else, is that the basis for that is obviously thin. There is the difficulty not only of defining what kind of statements would be required to be made in the House, but in addition to that
December 2, 1976

there is the difficulty of interpreting the definition if such a definition were attempted.
That is some justification, I presume, for the rationale behind the very clear precedent to which reference was made by the Chair during the debate on the question referred to by the hon. member for St. John's East (Mr. McGrath) of the Prime Minister's appearance on television last week. That precedent was cited by the Chair. It is renewed, as a result of that discussion, at page 1285 of Hansard for Tuesday, November 23, and is crystal-clear.
I want to take a few seconds, however, to stress an aspect of the argument that appeals to me. Certainly, it is always dangerous for the Chair to get into gratuitous observations that are outside the ambit of the argument put forward. But in light of the intervention by the hon. member for St. John's West (Mr. Crosbie) I think I have to say that the question of relevance to which he referred is one that does, I am sure, cause all members some concern. No member of this House can be unaware of the dangers that are at least described, whether they are artificial or real, or the fear held by the Canadian people concerning their parliament. I am sure their fears are common in respect of the governments of all the countries of the western world today, that is, that democratic governments as we know them have a tendency to become irrelevant in the opinion of the public.
There is one thing that can be absolutely certain. When a minister makes a statement in this House and is questioned by hon. members, it is always on a matter of topical importance and is always, therefore, extremely relevant to the day to day events. Often it happens that parliament has to deal, particularly in respect of legislation, with events that are pretty much after the fact. That is the nature of legislation. It needs time to be considered and, therefore, the rules often put is somewhat behind the events that give rise to the spirit behind the particular bill. But when a minister makes a statement in the House of Commons, he is always speaking on a topical subject and the questions are very current and very topical. Therefore, it is an opportunity, as the hon. member for St. John's West has described, for this House to emphasize its relevance to current matters.
It is, I am sure, no surprise that members who, if they cannot establish technically a question of privilege, certainly express their deep disappointment when the opportunity to make such a statement in the House is missed. I do not wish to say whether that is the case today or not, but the fact is that it certainly is no surprise that that disappointment and that chagrin is expressed in the terms that were expressed this week, which were expressed last week, and indeed in examining all the precedents on this subject the same sentiments are expressed at all times when such an argument is put forward.
If the sentiments themselves are valid it is clear, as well, however, that the question of privilege is not. The precedent is crystal-clear, and for me now to find that a question of privilege exists, in the circumstances, would be to fly directly in the face of the precedent and to do an injustice to the long-standing practice of being guided by clear precedents.
Privilege-Mr. McCleave
There are times when precedents may give room for some ambiguity and some flexibility in that regard. The language of Mr. Speaker Lamoureux, one of the most distinguished, if not the most distinguished Speaker in the history of the House of Commons, in this respect is crystal-clear. It cannot be doubted; it cannot be in any way ambiguous; it is very clear and direct. It has been cited, as I previously indicated. For me to attempt to say otherwise, in the face of the following language which I quote now, would be improper;
The question has often been raised whether parliamentary privilege imposes on ministers an obligation to deliver ministerial statements and to make announcements and communications to the public through the House of Commons or to make these announcements or statements in the House rather than outside the chamber. The question has been asked whether hon. members are entitled, as part of their parliamentary privilege, to receive such information ahead of the general public. I can find no precedent to justify this suggestion.
That language could not be more applicable to the present situation. Accordingly, I have to find that no question of privilege exists.


MR. McCLEAVE-LANGUAGE USED BY PRIME MINISTER
Mr. Robert McCleave (Halifax-East Hants):: Mr. Speaker, I have a question of privilege. I raise this question at the first available opportunity. I tried to raise it at three o'clock, at the end of the question period, when the right is given to us to raise questions of privilege. Therefore, I consider that I had raised the matter, now having been recognized by Your Honour at the first available opportunity.
My question of privilege arises out of the words used by the Prime Minister of this country at about five minutes to three this afternoon in response to a question that was directed to him from this side of the House. As I heard the right hon. gentleman, he used the phrase "smuggled in lies". This is my understanding. If I should be wrong on that I, of course, will make the best apology I can for having misunderstood what I thought had been said. But my understanding is that he did use the words "smuggled in lies" with reference to the words of members on this side of the House.
The argument I therefore make now, sir, is that this in fact constitutes a prima facie breach of privilege and is a matter to be scouted in a committee of the House of Commons. I will give you, sir, the motion I would intend to move, and then, if I may be permitted, I would back it with the best argument I can put forward. My motion would be-


Mr. Speaker:: Order, please. I do not want to interrupt the hon. member, and will certainly permit him to go on. I think he will realize that the Chair and other hon. members will be at a disadvantage in not being able to examine, ultimately in order to judge the merit of the motion, exactly the language that was used and, indeed, the context in which it was used. It seems to me it would be prudent for all those who may wish to participate in the discussion to take the hon. member's action today as notice of his intention to raise the question when it is possible to use, as part of the argument, the actual language used.

December 2, 1976
Privilege-Mr. McCleave
I do not know whether it is preferable to do that later in the afternoon or whether it is preferable to do it when Hansard is in our hands tomorrow. But if the argument is put forward today, I will have to leave the matter in such a state that I would have an opportunity to examine the language, and 1 am sure that those who would want to participate on both sides of the question would want the same assistance.


Walter David Baker: Mr. Speaker-


Robert Jardine McCleave: Mr. Speaker, neither the House Leader nor anyone else is going to stand up in front of me. I have asked for the blues to be brought down. I will continue to raise the question this afternoon. Since it is now 55 minutes since the language I complained of was used, I hope the page boy will be able to get to the Hansard office and bring me down the record. Sir, I intend to persist in this. The words "smuggled in lies" either were used in this House this afternoon, or were not. If I am incorrect in this, then I will have to make the biggest apology I have ever made in my life in this place. That, at least, is not a phrase of such gigantic proportions that even a simpleton like myself would not be able to put it down and think that it was a serious affront to myself and to other people in the House of Commons. The motion that I am going to raise at the end of my speech is:
That this House regards the use of the phrase "smuggled in lies" applied to members of parliament by the Prime Minister at approximately five minutes to three this afternoon as a breach of its privileges and directs that this matter be referred to the Committee on Privileges and Elections for its deliberations and recommendations.
In support of my motion I refer hon. members to Beau-chesne's Parliamentary Rules and Forms, fourth edition, page 98, paragraph 108(1), which reads as follows:
Anything which may be considered a contempt of court by a tribunal, is a breach of privilege if perpetrated against parliament, such as wilful disobedience to, or open disrespect of, the valid rules, orders or process, or the dignity and authority of the House, whether by disorderly, contemptuous, or insolent language, or behaviour, or other disturbing conduct, or by a mere failure to obey its orders.
I make the point that if the country learns tonight on television, by radio or by reading the newspaper that one of the leading people in the House of Commons, namely, the Prime Minister (Mr. Trudeau), thinks that it is an acceptable way of life in this chamber to direct lies across the floor, then none of us should have the right to be in this chamber. If that is the way we carry on, then let us forget that there is a parliamentary process; let us forget even that there is a government; let us all clear out of here and let a new crowd take over, because that is how I regard the seriousness of the statement.
We are accused of telling lies, always, from this side to the other side, or perhaps lies come here. I suppose one could reverse that. But this is the language used by the Prime Minister of this country in this chamber. Who does the Prime Minister say has been telling lies? Is it the Leader of the Opposition (Mr. Clark)? Is it the opposition House leader? I see a number of hon. members who are here now, but I will not name them. Who is telling the lies here? The hon. member for

Humber-St. George's-St. Barbe (Mr. Marshall) says he never tells lies, and 1 am sure he does not; but who is telling the lies in this chamber? The Prime Minister shrugs his shoulders and speaks of lies in the House of Commons. If we cannot deal with such a situation and find out who is telling lies or what this is all about, then I say we do not deserve to be parliamentarians or to belong to a parliamentary system.


Allan Joseph MacEachen: Mr. Speaker, I rise on a point of order, without dealing with the question of privilege. The words to which the hon. member for Halifax-East Hants (Mr. McCleave) has referred occurred during a question and answer exchange with the hon. member for Grenville-Carleton (Mr. Baker). These words were audible to the hon. member. In fact, as I recollect, he dismissed them and decided to pursue his question. Then we went on to a question of privilege which had to do with whether or not a minister should have made a statement in the House of Commons.
My point of order is whether, when the incident arose in the hearing of all of us, especially in the hearing of the hon. member for Grenville-Carleton, it is appropriate to raise a question of privilege an hour later, because it is my understanding that if a question of privilege is to be validly raised, it must be raised instantly when the event takes place in the House. Perhaps I am mistaken on that, but I must question whether, especially when the hon. member who was engaged in an exchange with the Prime Minister (Mr. Trudeau) passed over the point and kept on with his question, it is appropriate now to raise a question of privilege.
I think it is an important ruling. Of course, if Your Honour rules that a question of privilege can be raised at this point, then I would argue on the substance as to whether privilege is involved, because I believe the generality of the statement is such that it cannot be ascribed to any individual, and if I could recount the number of times I have heard such expressions thrown back and forth across the House we would be rising frequently on questions of privilege.
However, I will not argue the substance. I really want to argue whether, with this lapse of time, it is appropriate to raise a question of privilege. I submit that the hon. member lost his opportunity, having permitted the proceedings to continue.


Mr. Speaker:: It may be valid to clear up the point of order first. However, I do have to concede that the hon. member for Grenville-Carleton (Mr. Baker) was the last questioner today and that immediately upon the conclusion of his questions two members rose to raise questions of privilege, one being the hon. member for St. John's East (Mr. McGrath) and the other being the hon. member for Halifax-East Hants (Mr. McCleave). The Chair recognized the hon. member for St. John's East first. Had the hon. member for St. John's East not been seeking the floor, I presume the hon. member for Halifax-East Hants would have tried to raise his question of privilege immediately upon the conclusion of the questions put by the hon. member for Grenville-Carleton.
There is the other question as to whether or not, the exchange having taken place between the hon. member for
December 2, 1976

Grenville-Carleton and the Prime Minister (Mr. Trudeau), it was open to any other hon. member to have raised the question of privilege rather than the hon. member involved. But if privilege exists, in order to be valid it must affect the privileges of all hon. members, not just those hon. members involved in the exchange. My inclination would be to not disqualify the hon. member for Halifax-East Hants, on that ground in view of the fact that had he been given the floor at the time it was given to the hon. member for St. John's East, his question of privilege might not have followed forthwith the allegedly offensive words but it would certainly have followed as the next order of business after the hon. member for Grenville-Carleton finished his questioning.
Therefore, I propose to hear the President of the Privy Council (Mr. MacEachen) on the merits of the argument, either now or at a later moment.


Allan Joseph MacEachen: Mr. Speaker, we do not have the official record of the proceedings.


Mr. Speaker:: Order, please. Before hearing the President of the Privy Council on the merits of the question, I should like to point out that we are faced with a difficulty in this matter to which I referred originally, namely, the difficulty about the use of the "blues" that has been suggested by the hon. member for Halifax-East Hants; namely, that they are not available.
We have never gone into arguments in the House on the basis of quotations from the rough notes of the Hansard reporters taken earlier in the same day. Once the words are enshrined in Hansard, they become the official record, but until that time they remain only Hansard reporters' notes. I do not think the House has ever engaged in an argument on the basis of those notes. I am prepared to hear arguments on that point, but to my knowledge this has never been done and I would not propose that we begin now to discuss a very important question on the basis of rough notes. Therefore, I think we must come down to the point eventually that the actual words used and the surrounding words which may have set the context will have to be interpreted at one point by examining the official record of the House.
Hon. members who wish to participate in the discussion may do so either now or when Hansard is available.


Allan Joseph MacEachen: Mr. Speaker, I will not speak on the point of order which you appear to have dealt with but, rather, on a fresh point of order. I believe one can only determine the validity of my argument, namely, as to whether the hon. member rose at that very instant to enunciate a question of privilege, by an examination of the official record, because I believe that proceedings took place from the moment the words were uttered which disqualified the raising of a question of privilege. But in my view that can only be determined by an examination of the record.


An hon. Member:: Too facile.


Walter David Baker: I have listened to the statements made as if they were etched in stone by the
Privilege-Mr. McCleave
government House leader. I want to call Your Honour's attention to his first utterances. He admitted the words had been used in the House. That was his first utterance. He said he heard them, and other hon. members heard them. Obviously, the hon. member for Halifax-East Hants (Mr. McCleave) heard them. The questions Your Honour will have to decide are whether those words are parliamentary, and if they are not parliamentary, what Your Honour is going to do about it. No matter what the context is, no member can be called a liar or can have a lie imputed to him directly or indirectly on the floor of the House of Commons by the Prime Minister or anybody else.


Allan Joseph MacEachen: That has not been stated by the Prime Minister (Mr. Trudeau). The word "liar" or "person" has not been used, and that is precisely the kind of innuendo the Prime Minister was attacking.


Steve Eugene Paproski: Oh, come on.


Some hon. Members:: Hear, hear!


Walter David Baker: You had your turn.


Some hon. Members:: Oh, oh!


Walter David Baker: The context in which the words were used is precisely the issue. If the words were used in a context which would indicate that they had breached a rule of the House-and we do not know that at the moment; obviously there is confusion with respect to what happened, at least in the mind of the President of the Privy Council (Mr. MacEachen)-they are unparliamentary and they ought not to be allowed to stand. If they were not used that way, then the question of privilege raised by my hon. friend has no foundation.
I think whatever rights I have as a member of parliament have been preserved by the question of privilege which has been raised by the hon. member. I recall saying words to the effect that I thought the Prime Minister (Mr. Trudeau) had better retract his words and I thought he should consider them overnight. I think it is the worst possible, cheap parliamentary tactic for the President of the Privy Council to stand up on a trifling point of order and try to deny to a member of this House the right at least to have the record examined to find out where the cards fall.
As a member who tries, like other hon. members, to carry out my work and responsibilities with at least as much effort as any other hon. member in this House, I want to wait to see the official record. I do not want to rely on the blues. I want to reserve the right to raise, if it is necessary after the question of privilege of my hon. colleague has been dealt with, a question of privilege myself arising out of the exchange between the Prime Minister and myself during the course of the question period. That is all I ask.


Mr. Speaker:: This is the proposition I put to the House initially, and I do not see how there is any other possibility of
1602

December 2, 1976
Privilege-Mr. McCleave
dealing with the matter intelligently. I do not know if hon. members need the official record in front of them to participate in the discussion, but I do know I am certainly going to require it. It would require it, first, to determine the validity of any point of order, if it exists in terms of the raising of the question; second, to determine accurately what was said; and third, to determine if what was said in fact was unparliamentary or was at the time and in the context unparliamentary in terms of our practices and precedents and then, thereafter, requiring further action if the first three points are established.
I do not want to be repetitive, but the discussion, obviously, will have to be raised tomorrow if, in the opinion of those who have given the Chair notice today, it ought to be raised tommorow, and I think that is where the matter should be left.


Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, on this point I think you find yourself and the House finds itself in a somewhat narrow dilemma. I have had to deal with this problem in the past, and in view of the fact that the working copies, or what we call the "blues", go to the press gallery and are used as the basis for press stories, I suggest it is not the right argument to say that those copies are irrelevant.
There have been times when I had some things to say, when the record was examined, about what appeared in Hansard and what appeared in what we call the "blues". There were times when people were being very improper when making catcalls, but they were sitting in, shall we say, the privileged circle, within the hearing of the reporters who develop an ear for a particular voice and are able to take down remarks which may not be heard in the far reaches of the chamber; so these remarks appear in Hansard. They are not known to the speaker, nor has the Chair had a chance to hear them.
While we can say that the blues are not the final proof, I can say that Hansard tomorrow will not necessarily reflect what was actually said. I have seen amended "blues" where whole phrases and paragraphs have been blue-pencilled. They have been blue-pencilled either by the individual who made the remarks or by someone on his staff. There have been many instances of that.
In addition, if it is valid for this House to consider that one of the working copies, a green copy, shall be forwarded to the press as its working document-and no one objects to that- how can we in our, shall we say, sanctity ignore those copies when it might happen that tomorrow the official record of what was said will not disclose that the phrase was used at all, notwithstanding the fact that the government House leader says he heard it? The opposition House leader says he heard it, and the hon. member for Halifax-East Hants (Mr. McCleave), who raised the question of privilege, says he heard it; yet it is conceivable that it will not appear in the official record. The hon. member for Scarborough East (Mr. O'Connell) may shake his head, but it is a fact. Therefore, I suggest that the hon. member for Halifax-East Hants was correct in saying that reference would have to be made to the working copies and not just to Hansard.


Stanley Howard Knowles: Mr. Speaker, there is one point which I hope is clear, and that is that the hon. member for Halifax-East Hants (Mr. McCleave) is not to be disqualified from raising this point of order because it was an hour or so after the words were uttered when he did so. I was going to rise some minutes ago and make this point, but I thought Your Honour made it quite clear from the chair. However, my friend the government House leader disagreed with you. I hope it is clear that the hon. member did raise it at the first opportunity which was presented to him.


Allan Joseph MacEachen: That is not right.


Mr. Speaker:: Order, please. The situation on that is precisely this: as I attempted to indicate to the hon. member for Halifax-East Hants (Mr. McCleave), we shall have to have some official record in order to argue this point intelligently and to come to some decision on it. The President of the Privy Council (Mr. MacEachen) indicated that the official record will support his argument that the matter was not raised at the first available opportunity. I have already given my preliminary sentiments on that. It would take a very persuasive argument indeed to convince me otherwise. However, I think the matter is entirely open on all counts until we see the official record and hear whatever arguments might arise.
I cannot prejudge any arguments which might be made on the basis of and supported by whatever the official transcript may show. I do not want to try to deal with part of the problem without the transcript and the rest of it with the transcript. I have indicated my preliminary feeling and recognized the difficulty the hon. member was in; so the matter stays open until we see the official transcript.


Stanley Howard Knowles: Mr. Speaker, that satisfies me, namely, that your preliminary opinion is that he raised it at the earliest possible opportunity, and I doubt if my friend across the way could produce arguments to set aside that opinion. Therefore, because I also agree that all of us ought to see the record before we proceed further, I hope that is what we will do. However, the matter could be resolved very easily by the Prime Minister (Mr. Trudeau) withdrawing the words he used.


Mr. Speaker:: The matter, therefore, will stand over until tomorrow immediately after the question period.
December 2, 1976



ROUTINE PROCEEDINGS


[Stage Direction]
Second report of Standing Committee on External Affairs and National Defence-Mr. Prud'homme.
[Editor's Note: For text of above report, see today's Votes and Proceedings]

Walter David Baker: Mr. Speaker, I rise on a point of order. This happens to be Thursday, although it feels like Friday in Ottawa. I wonder whether the government House leader, in anticipation of the House leaders' meeting, wishes to make a statement concerning the business of the House, or would he rather leave the statement until tomorrow after the House leaders' meeting?


Allan Joseph MacEachen: Mr. Speaker, I propose to call on Monday the bill which has been before the House for some time unless, as a result of discussions, we can make alternative arrangements. That means that today we shall continue debating the Income Tax Act, tomorrow is to be an allotted day, and on Monday, in the absence of other arrangements we shall resume debate on Bill C-19.


Stanley Howard Knowles: Mr. Speaker, with respect to the business of the House, may I put a question to the government House leader? The Minister of Veterans Affairs has said on a number of occasions that he and his department are working on the problem of prorata pensions for veterans' widows where the veteran's pension was less than 48 per cent. Can the minister say if sufficient progress has been made on that matter to lead us to expect that legislation correcting the situation will be introduced during the present session?


Allan Joseph MacEachen: Mr. Speaker, I cannot give that undertaking at present. I am not saying it will not happen, but I cannot undertake to make it happen.


Stanley Howard Knowles: The minister might as well go back to External Affairs.
Order Paper Questions


GOVERNMENT ORGANIZATION (SCIENTIFIC ACTIVITIES) ACT. 1976 MEASURE RESPECTING ORGANIZATION OF CERTAIN SCIENTIFIC ACTIVITIES OF GOVERNMENT
Allan Joseph MacEachen: for leave to introduce Bill C-26, respecting the organization of certain scientific activities of the Government of Canada.


[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. Ralph E. Goodale (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, the following questions will be answered today: 314, 315, 316, 515, 516, 517, 518, 603, 653, 655, 667, 668, 675, 818, 835, 855, 857, 867 and 884.


Mr. Orlikow: 1.	(a) Who is the Co-ordinating Director, Special Industry Teams, of the Anti-Inflation Board (b) what is the (i) classification (ii) salary or salary range of the position?
2.	(a) What previous position in the Public Service did he or she hold (b) what was the (i) classification (ii) salary or salary range of the position?


Mr. Bob Kaplan (Parliamentary Secretary to Minister of Finance):: For reasons of workload this responsibility is shared as follows: 1. (a) J. VanEssen, (b)(i) SX2; (ii) $31,500-541,500. (a) H. Stevenson (b)(i) SX2; (ii) $31,500-$41,500.
2.	J. VanEssen: (a) SX1 SAPP Not against any classified position. (b)(i) SX1; (ii) $27,500-536,500. H. Stevenson: He was not in the Public Service.


Mr. Orlikow: 1.	(a) Who is the Director, Food and Agricultural Division, of the Anti-Inflation Board (b) what is the (i) classification (ii) salary or salary range of the position?
2.	(a) What previous position in the Public Service did he or she hold (b) what was the (i) classification (ii) salary or salary range of the position?


Robert Phillip Kaplan: 1. (a) Mr. W. W. Lasby. (b)(i) SX1; (ii) $27,500-536,500.
2. He was not in the Public Service.
80005-34%

December 2, 1976
Order Paper Questions


Mr. Orlikow: 1.	(a) Who is the Director, Policy and Interpretation Division, of the AntiInflation Board (b) what is the (i) classification (ii) salary or salary range of the position?
2.	(a) What previous position in the Public Service did he or she hold (b) what was the (i) classification (ii) salary or salary range of the position?


Robert Phillip Kaplan: 1. (a) B. Levitt; (b)(i) SX2; (ii) $31,500-$41,500.
2. He was not in the Public Service.


Mr. Reynolds: 1.	(a) What is the name of the present warden and acting warden at Bowden
(b)	how long have they held the positions (c) what positions did they hold previously (d) what are their salary levels?
2.	Was their formal education (a) less than grade 10 (b) grade 10 to grade 12
(c)	some university (d) a first university degree?


Hon. Francis Fox (Solicitor General):: Note: For the purposes of this question Warden is construed to mean Director and Acting Warden to mean Deputy Director. 1. Director: (a) Mr. R. L. Benner, (b) Since April 1, 1974. (c) Warden, Bowden Institute, Solicitor General's Department, Province of Alberta, (d) $24,700-528,000. Deputy Director: (a) Mr. R. A. Ferguson, (b) Since April 1, 1974. (c) Deputy Warden, Bowden Institute, Solicitor General's Department, Province of Alberta, (d) $21,000-523,900.
2. Director: (a) No. (b) Yes. (c) No. (d) No. Deputy Director: (a) No. (b) No. (c) No. (d) Yes.


Mr. Reynolds: 1.	(a) What is the name of the present warden and acting warden at Drumheller (b) how long have they held the positions (c) what positions did they hold previously (d) what are their salary levels?
2.	Was their formal education (a) less than grade 10 (b) grade 10 to grade 12 (c) some university (d) a first university degree?


Francis Fox: Note: For the purposes of this question, Warden is construed to mean Director and Acting Warden to mean Deputy Director. 1. Director: (a) Mr. E. E. Noel, (b) Since December 14, 1973. (c) Director, Collins Bay Institution, Kingston, Ontario, (d) $26,400-533,000. Deputy Director: (a) Mr. A. Porter, (b) Since November 6, 1961. (c) Assistant Director, Technical Services, (d) $19,500-$22,100.
2. Director: (a) No. (b) No. (c) No. (d) Yes. Deputy Director: (a) No. (b) Yes. (c) No. (d) No.


Mr. Reynolds: 1.	(a) What is the name of the present warden and acting warden at British Columbia Penitentiary (b) how long have they held the positions (c) what positions did they hold previously (d) what are their salary levels?
2.	Was their formal education (a) less than grade 10 (b) grade 10 to grade 12 (c) some university (d) a first university degree?


Francis Fox: Note: For the purposes of this question, Warden is construed to mean Director and Acting Warden to mean Deputy Director. 1. Director: Acting Director (a) W. R. Swan, (b) Since October 15, 1974, (c) Assistant Director, Security Matsqui Institution, (d) $26,400-533,000. Deputy Director: (a) K. P. Peterson, (b) Since August 12, 1974, (c) Supervisor, Adult Education Research Centre, University of British Columbia, (d) $21,535-$23,822.
2. Director: Acting Director (a) No. (b) Yes. (c) No. (d) No. Deputy Director: (a) No. (b) No. (c) No. (d) Yes.


Mr. Reynolds: 1.	For the years 1970 to 1975, what was the number of guards, excluding living unit-officers, at Ferndale?
2.	Was their education (a) less than grade 10 (b) grade 10 to grade 12 (c) some university (d) a first university degree?
3.	For the same years, how many guards were at each level on the salary scale?


Francis Fox: This Institution is a Living Unit Organization. There are no guards on establishment.


Mr. Munro (Esquimalt-Saanich): 1.	(a) How many regional offices are maintained by the Department of Labour (b) where is each located (c) for what area is each responsible?
2.	On what date was each established and with how many personnel?
3.	What is the present personnel strength of each office?
4.	In addition to regional offices, are district or other sub-offices maintained and, if so (a) in what locations (b) how many?
5.	Are the duties performed by those manning the regional and/or district offices line functions, in the chain of command from Ottawa to the operator in the field, or do they have other functions to perform and, if so, what are such functions?


Hon. John C. Munro (Minister of Labour):: 1. (a) five, (b) Mountain Region, Vancouver, B.C., 750 Cambie St., 7th floor, V6B 2P2. Central Region, Winnipeg, Manitoba, 400-303 Main St., Grain Commission Bldg., R3C 3G7. Great Lakes Region, Toronto, Ontario, 74 Victoria St., 5th Floor, Arcade Bldg., M5C 2A5. St. Lawrence Region, Montreal, Quebec, 3rd Wing, 2nd Floor Port of Montreal Bldg., Cite du Havre No. 1, H3C 3R5 Atlantic Region, Moncton, New Brunswick, P.O. Box 1267, E3B 5C8. (c) Mountain Region, British Columbia, Alberta, Yukon, Northwest Territories. Central Region, Saskatchewan, Manitoba, Northwest Ontario, (Arm-
December 2, 1976

strong and Nipigon). Great Lakes Region, remainder of Ontario. St. Lawrence Region, Quebec. Atlantic Region, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland.
2.	The Mountain Region was established on October 14,1975 with 34 employees. The Central Region was established on October 14, 1975 with 21 employees. The Great Lakes Region was established on October 14, 1975 with 46 employees. The St. Lawrence Region was established on October 14, 1975 with 30 employees. The Atlantic Region was established on October 14, 1975 with 37 employees.
3.	Mountain Region, present strength is 31 employees. Central Region, present strength is 19 employees. Great Lakes Region, present strength is 46 employees. St. Lawrence Region, present strength is 27 employees. Atlantic Region, present strength is 39 employees.
4.	Yes. (a) Mountain Region, Alberta. Central Region, Saskatchewan. Great Lakes Region, Ontario Atlantic Region, Newfoundland, New Brunswick, Nova Scotia, (b) One, Edmonton. Two Regina, Saskatoon. Three, London, North Bay, Ottawa. Four, St. John's, Fredericton, Halifax, Sydney.
5.	Yes, they are line functions in the sense of program delivery functions. However, the Regional Directors of the five Regions are expected to have a strong influence on the design of this department's programs and the formulation of this department's policies.


Mr. Lachance: Between the date of the presentation of the last budget May 25, 1976 and October 12, 1976, did the Department of National Health and Welfare, Advisory Council on the Status of Women and Medical Research Council hire, dismiss or transfer employees to other departments and, if so, how many?


Hon. Marc Lalonde (Minister of National Health and Welfare):: Between May 25, 1976 and October 12, 1976:
Number of employees
(includes term employees)
	Hired	Dismissed	Transferred
National Health			
and Welfare Medical Research	714	140	66Council	3	-	-Status of Women	3	1	4


Mr. Lachance: Between the date of the presentation of the last budget May 25, 1976 and October 12, 1976, did the Office of the President of the Privy Council and Public Service Staff Relations Board hire, dismiss or transfer employees to other departments and, if so, how many?
Order Paper Questions


Ralph Goodale: In so far as the Office of the President of the Privy Council is concerned: Two employees left the public service for personal reasons. Five employees were hired.
In so far as the Public Service Staff Relations Board is concerned: 20 employees were hired. One employee was dismissed. Two employees were transferred to other departments.


Mr. Lachance: Between the date of the presentation of the last budget May 25, 1976 and October 12, 1976, did the Department of Consumer and Corporate Affairs, Copyright Appeal Board and Canadian Consumer Council hire, dismiss or transfer employees to other departments and, if so, how many?
Hon. A. C. Abbott (Minister of Consumer and Corporate
Affairs): (a) Copyright Appeal Board, Nil; (b) Canadian Consumer Council, Nil; (c) Department: (includes Term employees). Hired, 289; Dismissed, 264; Transferred, 49.


Mr. Lachance: Between the date of the presentation of the last budget May 25, 1976 and October 12, 1976, did the Treasury Board Secretariat hire, dismiss or transfer employees to other departments and, if so, how many?


Hon. Robert K. Andras (President of the Treasury Board):: In so far as the Treasury Board Secretariat is concerned: Hired, 68; Dismissed, Nil; Transferred, 85.


DEPARTMENT OF EXTERNAL AFFAIRS PERSONNEL
Mr. Lachance: Between the date of the presentation of the last budget May 25, 1976 and October 12, 1976, did the Department of External Affairs hire, dismiss or transfer employees to other departments and, if so, how many?


Mr. Fernand E. Leblanc (Parliamentary Secretary to Secretary of State for External Affairs):: Hired, 182; Dismissed (includes Term employees), 70; Transferred, 37.


LIST OF ETHNIC ASSOCIATIONS IN CANADA
Mr. Epp: Does the government keep a list of ethnic associations in Canada and, if so, what are the (a) addresses (b) names of the leaders of the associations?


Hon. John Roberts (Secretary of State):: The Department of the Secretary of State does not keep an official list of ethnic associations in Canada. The compilation of information to produce such a list would be a very long and time-consuming effort.

December 2, 1976
Order Paper Questions


GOVERNMENT FUNDING FOR MEDICAL RESEARCH
Mr. Herbert: Has the government considered increasing the funding next year for research, particularly medical research by 5% over and above inflation?
unlikely that incremental resources as high as 5% over and above inflation will be made available for research grants in the immediate future.


Robert Knight Andras: The Government is presently reviewing budgetary allocations for next year and these will be tabled in February for consideration by the House. In preparing the 1977-78 Estimates we are endeavouring to recognize both general price increases and those peculiar to research so that the real value of our research budgets will not be diminished. However, in view of our overriding concern to restrain government expenditures, it is


VETERANS AFFAIRS-PERSONNEL
Mr. Herbert: How many public servants were employed by the Canadian Pension Commission, the Pension Review Board, the War Veterans Allowance Board and the Bureau of Pension Advocates as well as veterans services, treatment services and administration services of the Department of Veterans Affairs as at March 31 for each of the past ten years?


Hon. Daniel J. MacDonald (Minister of Veterans Affairs):: 1967	1968	1969	1970	1971	1972	1973	1974	1975	1976Canadian Pension Commission	332	329	310	297	299	314	359	373	358	450Pension Review Board	-	-	-	-	-	9	10	14	14	17War Veterans Allowance Board	30	31	31	28	27	26	28	30	34	44Bureau of Pensions Advocates	168	165	126	115	105	82	94	105	106	112Veterans Services	987	1,005	961	838	816	842	845	843	842	901Treatment Services	8,766	8,716	8,121	7.980	7,890	7,959	7,546	7,410	5,822	5,907Administrative Services	428	444	513	592	729	499	479	429	386	284Total	10,711	10,690	10,062	9,850	9,866	9,731	9,361	9,204	7,562	7,715


DEPARTMENT OF VETERANS AFFAIRS-PERSONNEL
Mr. Herbert: For each of the past ten years, how many public servants in the Department of Veterans Affairs (a) were transferee! from other departments (b) are new entrants into the Public Service?


Daniel Joseph MacDonald: This information is not readily available from Departmental Personnel Records. To acquire such information would require a manual review of approximately 8,000 employees' Personnel History Cards which are located in the various field offices of the Department.


Robert Phillip Kaplan: No loans have been made to foreign countries by the Department of Finance in the past five years.


Ralph Goodale: I ask, Mr. Speaker, that the remaining questions be allowed to stand.


Mr. Speaker:: Is that agreed?


Some hon. Members:: Agreed.


VETERANS AFFAIRS-NUMBER OF FORMER VETERAN EMPLOYEES
Mr. Herbert: In the Canadian Pension Commission, the Pension Review Board, the War Veterans Allowance Board and the Bureau of Pension Advocates as well as veterans services, treatment services and administration services of the Department of Veterans Affairs, how many of the personnel are veterans?


Daniel Joseph MacDonald: This information is not readily available from Departmental Personnel Records. To acquire such information would require a manual review of approximately 8,000 employees' files which are located in the various field offices of the Department.


LOANS TO FOREIGN COUNTRIES
Mr. Lambert (Bellechasse): In the past five years, did the government make any loans to foreign countries and, if so (a) in what amounts (b) to which countries (c) at what interest rates
(d)	what were the terms of repayment?
[Mr. Roberts.J



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Friday, November 19, consideration of the motion of Mr. Macdonald (Rosedale) that Bill C-22, to amend the statute law relating to income tax, be read the second time and referred to committee of the whole.
Marcel Joseph Aimé Lambert: Mr. Speaker, the opening part of this debate centred on a review of the economy. Certainly, the minister spent half his time, when introducing the bill, on such review, and my colleague from York-Simcoe (Mr. Stevens) devoted almost his entire speech to replying to the minister. We are now considering Bill C-22, the
December 2, 1976

copy of Bill C-97 which was introduced following the June presentation of the budget.
When discussing income tax one must remember that unless one is discussing the sort of tax proposals brought forward in 1970 for the so-called reform of income tax, the interest of most members of the House in the subject, considering the number of committees they must attend, is at a rather low level. So far as the public is concerned, the proposals we are discussing today and will discuss later in committee of the whole are old hat because although their applicability may have been deferred they actually came into force at the time of the budget.
General satisfaction was expressed in the budget debate with regard to the indexation of income tax, because the minister intended to introduce provisions which were to correct some anomalies, and certain allowances were to be expande d in order to take into account inflation. One sees, if one reads the ways and means motion on which this bill is based, that we are embarked in part on a process of tightening up.
I want, first, to talk about the general effect on income tax of the tax indexing in 1977, because on that point the taxpayer will be most interested since it will affect his personal income.
I think the point bears repeating because less than a month ago the minister announced the effect of this year's tax indexing on forthcoming tax levels. After all, as I recall, that provision in the 1972 election campaign was derided by the minister's predecessor as hair-brained and as likely to bankrupt the country. The formula adopted by the government is different, admittedly, but the end result and principles are entirely the same. It now appears that the Minister of Finance (Mr. Macdonald) suffers from strained shoulders from patting himself on the back and saying what a good move this was.
Let us see what the bill will do. Bill C-22 proposes that for 1976 and subsequent taxation years the amount of personal exemptions and deductions will be rounded to the nearest $10. That is not too significant. We know that because of the increase in the CIP, personal exemptions in tax brackets will increase by 8.6 per cent for the 1977 taxation year. This means that the basic personal exemption will increase to $2,270 from its rounded level of $2,090, the amount which applies to the 1976 income year. Similarly, the married exemption will increase to $1,990 from $1,830, and the deduction for the aged and disabled will increase to $1,420 from $1,310. Elsewhere in the bill there is provision for an increase in child-care allowances and child expenses. We see, as well, that the maximum exemption for children under the age of 16 will rise to $430 from $390. For children aged 16 and over, the corresponding increase is to $780 from $720. This is all good news to the taxpayer. Even though there has been somewhat of a decline in the rate of increase in the cost of living, the cost itself has continued to rise. We know that the taxpayers of Canada have been very hard pressed on one side by a severe progressive income tax scheme, and on the other by the ravages of inflation. As a matter of explanation, the 8.6 per cent indexing adjustment is based on the increase in the average consumer price index for the 12-month period ending September, 1976,
Income Tax
over the corresponding average for the preceding 12-month period.
I have gone to the point of putting a lot of what might appear pedantic knowledge on the record for the benefit of those who read Hansard-and it is surprising how many do- to get this precise information. After all, bulletins, press releases and communiques from the Minister of Finance are not available to that many people. The news appears in a newspaper, possibly on page 39, and is missed by a lot of the population. Therefore, I make no apology for giving information that was given by the Minister of Finance to indicate clearly that with regard to personal income tax the 1977 taxation year will reflect such changes.
There are a lot of things in this bill of which it will be quite simple for us to say we fully approve. It may be a little more difficult when we get into the technical language of the clauses, but that is for me and others to raise at that time. In the notice of ways and means motion proposed by the minister there is a change with regard to the registered retirement savings plans reflecting increases because of highly increased incomes. If these plans are to maintain their value as a savings vehicle, the ceilings must, of course, be raised. I will put on record in a short while a proposal from an old friend of mine who is well versed in insurance affairs. It indicates that the increase proposed by the minister prefers one class of taxpayers against another.
The whole matter of RRSPs will have to be examined more carefully in committee of the whole. As we know, some individuals either in television programs or newspaper articles have taken a rather one-sided view of RRSPs. They have raised a lot of fear in the minds of those who watch the television program. They get only a garbled version of what the program is trying to say. The program itself may be garbled. The net result is that members of parliament, including ministers, receive a flood of mail from people who say that the provisions, which have been there for a long time and which have been working very well, are a total rip-off. This, I just cannot see. As I said, we will want to look closer at our RRSPs and establish once and for all what may be the limitations and the great advantages.
I am pleased that the minister has increased the ceiling for section 125 of the act, increasing the totality of small business to $150,000 and increasing the total business limit for a taxation year to $750,000. The next one, No. 4, is, as far as I am concerned, a final admission by tax officials that for 25 years or more they were in total error. This has to do with principal occupation. If it had not been for a most pernicious rule in income tax law in this country, I suggest that Canadians would own anywhere from 25 to 35 per cent more of the petroleum and natural gas industry of this country.
I recall when I first came to parliament years ago asking the then minister of finance to give Canadians equal opportunity with regard to investing in the search of and drilling for oil and natural gas in Alberta and Saskatchewan. After all, in the

December 2, 1976
Income Tax
early years, the 1950s, it only required $75,000 to drill a D-2 well. It was easy for a syndicate of a couple of farmers, a garage owner, a farm machine distributor, a doctor, and anyone else you wish-say, seven or eight people-to put up $75,000 to risk on the drilling of a well. There were a lot of small independent drillers at that time. However, this was available only to Americans. If such a venture resulted in a dry hole, the $75,000 put up by Canadians would go down the drain. There was no means of deducting it from ordinary income as our American friends could do. It was a case of their going to chase another $75,000 or $150,000.
When one considers that the average might be one in three or one in four of producing wells, particularly when working in marginal fields, the money was never recovered. However, our American friends could charge off all lost drilling expenses against their ordinary income over a relatively short period of time. Therefore, that venture capital was readily forthcoming from the United States. Canadians, however, could not step across the sill of a door.
Despite representations every year, successive ministers of finance and their officials rejected the proposal to get rid of the principal occupation rule. Bit by bit it has come along. First it was about 20 per cent. It may have gone as high as 50 per cent. The numbers matter little. Finally, it has gone; the principal occupation rule no longer applies. However, Mr. Speaker, there are no more oil fields where independents can operate. As I said, in the era of the 1950s, a D-2 well would cost approximately $75,000 to drill. Today it would cost between $400,000 and $500,000. The costs of the search for and production of oil and natural gas have gone up just as much if not more than many other sectors.
Thus, I find it ludicrous to see leading articles in newspapers and to hear commentators on radio and television, in addition to certain political representatives of the New Democratic Party in this House, crying to high heaven because on a dollar basis the revenues of the oil companies have increased. Day after day we hear the government saying that the industry must go out and find a lot more oil and gas. But consider how costs have increased. Instead of $75,000 or $100,000 for a well, the price is now a minimum of $500,000, and in the case of the Arctic wells it is anything from $5 million to $6 million.
How is this revenue to be generated? There is no magical money tree. Of course, if the socialists had their way, a Crown corporation would be set up to feed in public money. That would be the money tree. But we do not yet have to rely on a nationalized oil and gas industry.
The same thing applies in mining; it applies throughout the manufacturing sector in the replacing of equipment, and so on. It makes my blood boil to hear people prate about profits increasing by such and such per cent. They do not tell you whether they are comparing $100 with $10 or $1 million with $100,000. The percentages are still the same, though the sums are vastly different. Looking at the picture from a dollar point of view, I am amazed people should be gullible enough to be

taken in by this type of criticism. I might say a lot more about the intelligence of those who advance this type of criticism. Either they are carelessly ignorant or they are deliberately hoping to mislead.
I hope the minister will be able to explain precisely what he intends to do about tightening up the rules concerning charities and charitable foundations. There seems to be some public concern about the ability of certain of our traditional charities to survive, because they would not be spending certain minimum percentages of the income generated in any one year. This may present a problem. I hope the minister will be able to tell us whether he has received any representations with regard to this point. One can only say, dealing with individuals, that the new definitions and adjustments with regard to the principal residence of taxpayers, and so forth, will remove some of the anomalies in the Income Tax Act.
I want to talk, now, about some of the effects of what appears to be a series of newspaper stories or editorials which have appeared following some sort of declaration by the National Welfare Council. The council is critical of what it calls a "hidden welfare system" operating through the income tax laws. I shall cite two editorials which appeared in the Ottawa Journal of November 10 and November 11. Seemingly, because figures are tossed around-so many percentage points of earnings paid out in tax by one group of people, while a much larger number of people earned lower incomes and therefore did not pay as much tax-the conclusion was reached that the whole system is wrong. But I think the Welfare Council was totally wrong in its assessment of the effect of tax deductions in a graduated tax system.
In giving more than moral support to the proposals of the National Welfare Council, I think the Ottawa Journal rendered its readers a disservice. They bought a bad case. Here, for instance, is a sentence from the editorial of November 11:
The National Council of Welfare doesn't much like the federal government's child care deduction, among others, under the personal income tax system. It has good reason. A woman earning $6,000 a year would receive $123 less in tax savings from a $1,000 deduction than would a woman earning $20,000 a year. It is impossible to justify the difference.
Of course there is justification. One had a higher income, and an income of $20,000 may justifiably be earned. We are not an egalitarian society in which it is said that every woman taxpayer earning $20,000 should be cut down to the level of a woman earning $6,000. Since when has it been decided that we shall all earn the same amount? I quote again from this editorial:
The council is also critical of the exemption for dependent children which works in the same way to benefit the rich more than the poor.
I suppose one might say that the rich are all those who earn more money than we do. Exemptions for dependants are treated as being in the same category as are a number of other allowance provisions. I think that the National Council of Welfare, though it does some admirable things, does write mischievous things sometimes. With regard to that press release by the National Council of Welfare, I would much prefer to take the view given by a well known resident of Winnipeg, a man well known to government supporters
December 2, 1976

because he is a former leader of the Liberal party in Manitoba. I refer to Mr. I. H. Asper. Regardless of how bad his politics may be, or may have been, he is a very erudite and capable tax authority. There is a headline which appeared in the Ottawa Journal on Friday, November 19-and this is not a free advertisement for them-"No Welfare for Wealthy with Troubled Tax System." This article of Mr. Asper really takes to task the National Welfare Council. I suppose the Ottawa Journal can say that it wrote some editorials and printed an article on the subject, but admittedly on a back page which completely demolished the grounds for the editorials as well as the article that was put out by the National Welfare Council. Here is what Mr. Asper wrote in the Ottawa Journal for November 19:
Canada is truly a country adrift; one with no discernible foreign policy, with which the public can identify; one which rations its massive and untapped energy resources by the strange means of overcharging, through taxation, the people for what should be a plentiful resource; one which cries out, on the one hand, for new business entrepreneurship, but bludgeons efforts toward it, on the other hand, with legislative and tax disincentives, to mention but a few facts of our national schizophrenia.
That is what our income tax system is, Mr. Speaker, a national schizophrenia. Mr. Asper continues:
Most of it is our own fault-the people, who don't understand what makes the country tick, the educators who won't or can't teach them, the political leaders who are afraid to tell the public the truth, and to lead them, and the knowledgeable minority which knows, but is too docile, too passive, or too enriched to stand up and speak out loudly, or support those who will.
Examine taxation, as a case in point. A few weeks ago the National Welfare Council captured headlines plus a lot of free television time on public affairs broadcasting by publishing a "study" which "discovered" that the Canadian tax law is a welfare system for the rich.
Then he adds a phrase that I have used before, that "rich" is anyone who makes more than you. His article continues:
At about the same time this nonsense was given public attention, another responsible citizen, the President of one of Canada's largest and most successful life insurance companies, Great-West Life Assurance's president, James Burns, also published a study, the truth of which is unassailable, which demonstrates that Canada is taxing its most productive citizens higher than most and to the point that they are looking elsewhere to express their efforts and activity. That truth attracted no television attention, and only the back pages of the newspapers.
When he says that Canada is taxing its most productive citizens higher than most and to the point that they are looking elsewhere to express their effort and activity, ask anyone who is active in the real estate development field today where they invest. They invest in the United States because there they are not taxed so high. The return to the investor is higher. Continuing:
Mr. Burns was addressing himself to the difficulty the business community faces in keeping high income earning executives in Canada, or, indeed, attracting them from the lower taxed provinces to those where their after-tax situation is worse.
He produced a schedule of comparative after-tax situations of executives in various income categories in most Canadian provinces, and then contrasted that position to just one of the United States. The study was prepared and certified corrected by a respected international firm of chartered accountants. It is indeed correct, and, if anything, understates the degree of differential.
At the $25,000 income level-
Income Tax
In industry and in three levels of government today, Mr. Speaker, many thousands earn an income of $25,000 a year.
-the after-tax differences are noticeable but not too dramatic. After taking into account federal, provincial, sales, gasoline, medicare, CPP, and unemployment insurance taxes, and adding back family allowance receipts, the difference between Manitoba and Alberta is almost $1,200 per year-$17,800 compared with $19,017, with Colorado coming between them at $18,850 after tax.
At the $35,000 income level, the differences become more distinct, and by the time you get to the $50,000 level Colorado and Alberta are away out in front, with the taxpayer netting $35,000 in Colorado, $31,741 in Alberta, $29,719 in British Columbia and Ontario, $28,000 in Quebec and $27,864 in Manitoba, Canada's highest tax province.
If the average doctor earns $50,000, the $7,000 per year, after-tax take-home pay difference between Manitoba and Colorado might well account for the well-publicized exodus of doctors out of Manitoba. Over a 40-year work life, it would come to $280,000-enought to retire upon with a lifetime income of well over $30,000 per year.
The crunch in differentials really becomes dramatic at the senior executive level of $75,000 salary. The after-tax difference between Manitoba and Colorado is $13,000 per year in favour of Colorado. Colorado's executive nets $48,518, whereas Manitoba's nets $35,528-less than half of his pre-tax income.
Alberta is competitive at $42,478, with Ontario next at $39,383, followed by British Columbia at $39,310 and Quebec at $36,614.
Those figures don't tell the whole story, which, in fact, is far more dramatic. The U.S. executive can claim a tax deduction for all interest expenses including the mortgage on his home. As well, he can split his income with his wife and thus cut the marginal tax rates even further.
Strangely enough, Mr. Speaker, we then hear about all the provinces of Canada, particularly those that are not as economically developed as others, which must get out and attract industry. Who runs industry? The $7,500 a year clerk? No, it takes well trained, energetic, resourceful and imaginative executives. In Manitoba, says Mr. Asper, a province that must attract industry, the $75,000 a year executive gets to keep only 47 per cent of his income. On anything above $75,000 he must pay 74 per cent federal and provincial income tax; and out of what is left he still has to pay his real property and school tax. Mr. Asper continues:
Now, it would be interesting to learn what reasoning could lead anyone to describe the Canadian income tax system as a welfare scheme for the rich.
Those are the facts. Any student of history should be able to draw the obvious conclusions that flow from them.
I know there will be the reply that there should not be any salaries of $75,000 a year; that this is too much income; that everyone should be down at the level of the so-called poor people. But it just does not work that way, Mr. Speaker. I have another article on this point. I do not think I will put all of it on the record, but it has to do with another gimmick that was put into the Income Tax Act in 1970 or 1971, the federal capital gains tax. What has been the result of that tax, Mr. Speaker?
In 1971 we saw a so-called tax haven eliminated. I remember the then minister of finance and his parliamentary secretary extolling the high virtue of this move on the part of the government. It was wrong that there should be this principle of deferred depreciation or deferred tax on the construction of multi-storeyed or large buildings. I remember that at the public hearings, tenants' associations in Vancouver and else-

December 2, 1976
Income Tax
where objected strenuously to this proposal because they quite rightly judged this would eliminate a great source of rental housing development. It did; they were absolutely right. As soon as the act came into force we no longer saw any cranes up in the air to construct high-rise apartment buildings or office buildings. But back in 1974 the provision was re-introduced on a one-year basis. It did not produce any results, because investors will not participate in a one year venture. Subsequently this was extended to 1977, and I suggest that we are still observing the socially negative results of that move.
The tax is ultimately collected through the recapture of depreciation when a building is sold, and the developers inevitably sell these buildings because they will not stay in business with just one building. This has resulted in the opening of a market in Canada to foreign investors. We have mistreated our Canadian investors. We have heard a great deal of complaint about the amount of foreign capital that has come into Canada since 1970 to purchase major residential properties. This was inevitable because these properties were put up at fire-sale prices. They represented good buys at depressed prices. Any foreign investor is ultimately governed by tax rates applicable in his home country. In addition, in the last couple of years particularly we have noted Canadian investors investing in the United States.
[ Translation]


The Acting Speaker (Mr. Ethier):: Order. I regret to interupt the hon. member, but the time allocated to him has elapsed. He may continue with the unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Ethier):: The hon. member for Edmonton West (Mr. Lambert) has the floor.


Marcel Joseph Aimé Lambert: Thank you, Mr. Speaker. I had reached the final point I wanted to make. I should like to make reference to a suggestion I have received regarding registered retirement savings plans. The proposed change will allow an individual exemption of $5,500. No mention is made of a change in the allowable taxable income. Therefore, it is 20 per cent at the present time with a ceiling of $5,500. The only people who will fully benefit from this increase are those with taxable incomes of $27,500 or more. A maximum was achieved in relation to 20 per cent of a taxable income of $20,000 or $4,000.
If the purpose of the tax deferral, or the registered retirement savings plan, is to provide for a future retirement and encourage more saving, why not take another look at the percentage allowance? There are many people in this country in their middle years with moderately low incomes of $10,000 to $15,000 who are concerned about saving, having now finished raising their families. They have some surplus money that could be put aside for retirement purposes. They do not have many years left before retirement, and they should be given an incentive to save more in that relatively short time.

Let me put the following formula to the minister for his serious consideration. Where a person is not a member of a company pension plan and he or she is 50 years of age or over as of July 1 in any calendar year, the exemption should be $5,500 without a percentage of salary requirement. In other categories the percentage should be raised from 20 per cent to 30 per cent of taxable income with a ceiling of $5,500. I put this to the minister for his consideration, and terminate my remarks.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Ethier):: It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised at the time of adjournment are as follows: The hon. member for Winnipeg South Centre (Mr. McKenzie)-Cana-dair-Request for tabling of documents authorizing loan guarantee and specifying orders; the hon. member for Saskatoon-Biggar (Mr. Hnatyshyn)-Atomic Energy of Canada Limited-Services to be received for payments to agent; the hon. member for Mackenzie (Mr. Korchinski)-Farm Credit Corporation-Alleged denial of loans to farmers getting less than 50 per cent of income from farming.
It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, notice of motions, papers. Motion No. 1, in the name of the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall).


Jack Marshall: Stand.


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


PRIVATE MEMBERS' MOTIONS FOR PAPERS
Jack Marshall: That an humble address be presented to is Excellency praying that he will cause to be laid before this House copies of all correspondence, minutes of meetings, telegrams, contracts and/or agreements between the government and the province of Ontario having to do with the transfer of Westminster Hospital in London.
December 2, 1976

He said: Mr. Speaker, I welcome the opportunity to debate one of my motions for the production of papers No. 8, not merely because of the particular issue which is related to the concern over the effect on veterans involved but, more importantly, to emphasize the ridiculous situation that results when I am told that the material requested, referring to correspondence, minutes of meetings, telegrams, contracts and/or agreements between the federal government and the province of Ontario having to do with the transfer of Westminster hospital in London cannot be released because of ongoing discussions between the two governments.
The reason I request these papers is to try to prevent a recurrence of the failure of the Department of Veterans Affairs to project and plan for the needs of entitled veterans which is becoming more and more obvious as a result of the concern expressed by veterans and veterans groups after hospitals have already been transferred. I can only ask why I am being denied my right on behalf of veterans who have submitted their appeal to myself, my party and the minister, to have this information. The commitment by the minister or his predecessors has not been completely fulfilled. This commitment was made under cabinet decision on December 5, 1963, entitled "Medical treatment for veterans". It relates as follows:
A)	That the Department of Veterans Affairs be authorized to withdraw gradually from the operations of departmental hospitals, as opportunities arose to do so under conditions acceptable, and to turn these hospitals over to the operation of non-federal agencies for the benefit of the total community.
B)	The conditions acceptable to the department in making such a transfer of operational control would generally require:
1)	A guarantee of unconditional priority use of beds, either in the hospitals which were transferred or, in other suitable hospitals, for the treatment of service-incurred disabilities.
2)	Assurance of the existence in the community of adequate hospital resources to absorb the workload created by war veterans allowance recipients, and
3)	The requirement of satisfactory arrangements for the protection of the employment and pension status of civil servants now employed in veterans hospitals.
According to my records, there are 11 veterans' hospitals in Canada. Of these, five have been already transferred. I can only presume that the others are in the process of negotiation. But certainly it is obvious, through information I can receive from everyone else but the department involved, that Westminster is presently under negotiation for transfer. This brings me to the point of my motion: why am I refused the documents in my attempts to ensure by doing so that the mistakes in the past, as evidenced by the complaints being received over transfers, can be corrected by debate in this House? Why, indeed, am I refused freedom of information which is supposed to be of so much concern in this House of Commons? Why, indeed, is there so much secrecy involved if indeed, the minister feels that he is fulfilling his obligation to the Canadian veteran? I think he should look at some of the facts concerning those veterans who are involved.
The priority requirement at present is to provide adequate chronic and domiciliary beds for veterans. In almost all cases
Westminster Hospital
since the transfers this commitment has not been fulfilled to its fullest extent. Visits to a few of the hospitals by myself and some of my colleagues have borne this out. We have brought the matter to the attention of the minister. Let me make clear that we do not object to the policy of transfer. We recognize the reasons for the transfer. It is becoming increasingly difficult to maintain qualified personnel because as veterans grow older their need for care has shifted from acute to the extended care. But despite the best intentions of the minister, who I must admit is trying to correct the inadequate projections by his predecessors, it is becoming more and more obvious that the department has not been able to make practical arrangements for the required bed space for veterans' needs where hospitals have been turned over to the civilian authority.
The situation will become worse as World War II veterans reach the 70 and 80-year bracket over the next 20 years. This emphasizes the projected need for domiciliary care beds. I will deal with other hospital transfers at a later date. Referring to the Westminister Hospital alone, it is very obvious that the authorities of the hospital brought to the attention of the minister back in 1975 their concerns, because they are closer to hand and are more aware of what is going on in respect of their endeavours to care for the veterans in that hospital in London, Ontario. Let me read from a brief that was submitted in February 1975. It states:
For the past two years negotiations have been continuing between the Department of Veterans Affairs, the provincial government of Ontario and the London health planning board, for the transfer of Westminister Hospital to provincial control. The Federation of British Canadian Veterans are very concerned when policy of the federal government in any way affects the health and welfare of our aged ...
Various ministers of veterans affairs have stated time and again, that it is essential that the veterans' hospitals be turned over to local authorities, in order to maintain the high standard of treatment they have become accustomed to. The federation would be inclined to agree with this, in so far as active treatment is concerned, but not at the expense of the chronic, psychiatric and domiciliary care patients...
At this time-
That was in 1975, a year and a half ago.
-the Federation of British Canadian Veterans are more concerned with the future of the chronic, psychiatric and domiciliary care patients now in Westminister than with the proposed turnover.
Copies of this brief were presented to the veterans affairs committee at that time. The brief continues:
We have stated previously that our concern at this time was not the actual turnover of the hospital to municipal authorities but the future welfare of the chronic, psychiatric and domiciliary care patients. In order that we may further clarify the points in our resolution, we must first be assured that the members of the committee are aware of the lay-out of Westminister Hospital.
Since negotiations began between the Department of Veterans Affairs, the provincial government and the local health planning board, many reports have been publicized in the local press, the majority of which revealed little or nothing of the plans of either body, yet there was one very disturbing report, this calling for the transfer of the chronic, psychiatric and domiciliary care patients to the confines of Victoria Hospital. We, the Federation of British Canadian Veterans of Canada must take a definite stand against any such proposals ...
The Federation of British Canadian Veterans of Canada, after 30 years of dedication to serving our veterans, sincerely believe that here is a great opportunity for the federal government to set aside this little corner of this great land of ours as a memorial to all those courageous citizens, who during the many years of conflict gave their lives that we might live in freedom and peace.

December 2, 1976
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It is very strange that although this beautiful land will be transferred to a provincial government or a municipality at no cost, the federal government will have to provide the services from its capital fund which is needed so much to care for other veterans and their needs. The federation states:
1.	That we the Federation of British Canadian Veterans of Canada, request the federal government retain that part of Westminster Hospital, south of Commissioners Road and east of Wellington Road and it be so dedicated as a memorial to all those Canadians who have given their lives in the defence of our country.
2.	A new building be erected on the site, or the present psychiatric building be renovated to house the chronic, psychiatric and domiciliary care patients.
3.	A liaison be arranged with the local authorities so that patients needing active treatment may be transferred to the main hospital.
4.	The Department of Veterans Affairs retain supervision and control of all phases of treatment and care.
I indicated earlier in my remarks that I do not think past ministers or those who decided back in 1963 to transfer hospitals projected what would be needed at this time as conditions change. I did a little research. First may I refer to a letter I received from the minister dated September 17, 1976. This letter is vague. I asked the number of domiciliary care beds available in departmental institutions as of 1963. The letter indicates that between 1969 and 1976 there was not even an increase of 100 beds. As I said, with the number of Second World War veterans now at age 60 whose needs will increase over the next 10 or 20 years, this amazes me a bit. The minister says:
The number of section 29 VTR beds is not expected to vary appreciably in 1977 or 1978, except in the event that some hospitals are transferred.
I presume this letter was prepared for the minister by officials from the treatment services. The minister goes on to say in his letter:
It is expected that a sufficient number of beds will be reserved for domiciliary care patients as part of the agreement and will likely favour the veteran.
Do the minister and his staff not know how many beds will be needed? After extolling the virtues of doing all the things he says he will do, why does he say that the veterans will likely be favoured? We can show the minister lists of veterans across the country waiting for domiciliary and extended care. Commitments have been made to veterans, yet the minister only says that the veterans will likely be favoured. I have here some figures showing what the needs will be in the next 10 or 20 years. I have here the number of veterans receiving disability pensions. They now number 82,516. Over 12,000 of them are World War I veterans between the age of 75 and 80. There are 91,392 war veterans allowance recipients, and a great majority of the 173,908 veterans will be needing domiciliary care. I broke those figures down to the numbers receiving disability pensions of between 50 per cent and 100 per cent to point out that veterans in that category will likely need care. There are still 4,513 single World War I veterans between the ages of 75 and 80, most of them probably alone. The married World War I veterans number 7,869. It is obvious when the minister said that the department's projection for 1976 was for only 2,927 beds that somebody in his department must look again at those

projected figures, because we should be able to plan for the care of veterans.
The main object of this motion for the production of papers is to point out that I am being denied my right to provide help and assistance to veterans which I have done since I have been associated with veterans affairs in my party. We must never deny to the veteran the care which he deserves and to which prime ministers in the past 60 or 70 years have committed themselves.
I should like to quote from an article written by my colleague, the hon. member for Peace River (Mr. Baldwin) which appeared in Reader's Digest. The caption reads: "It's all too easy for Ottawa to withhold the facts and data on which government decisions are made. But in a democracy, the public has as much right to know as the policymakers". It is obvious that the Westminster hospital is likely to be transferred very soon. The parliamentary secretary knows that all I want to do is to ensure, with the continued co-operation of the Standing Committee on Veterans Affairs, that these veterans are looked after in accordance with the commitments made. The hon. member for Peace River referred in his article to another motion of mine when I sought documents about a meeting of senior officials to set a new deadline for loan applications under the Veterans Land Act. At that time the request was denied because the papers were confidential.
I put my case forward with all the sincerity and kindness which I feel toward veterans, and I know I will receive the co-operation of all hon. members regardless of party affiliation. I know that some of my colleagues will want to participate in the debate, and I apologize for taking up so much time.


Mr. Victor S. Railton (Parliamentary Secretary to Minister of Veterans Affairs):: Mr. Speaker, I regret that the minister was unable to attend at this time. I am sure he would have been very pleased to speak on the motion put forward by the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall). The minister cannot accede to the request of the hon. member for the tabling of all correspondence, minutes of meetings, telegrams, contracts and agreements between the povernment and the province of Ontario having to do with the transfer of Westminster hospital. The reason is that our officials have had meetings with the provincial authorities and have been unable to reach agreement to date. The situation at present is that the position is being re-examined, as the hon. member stated. The agreement is still under negotiation, and I hope we will be meeting soon with provincial officials.
The government feels strongly that it would be in the best interests of both veterans and the community to integrate Westminster into a planned complex of facilities at the present site. There may be some misconceptions even in the minds of people who are anxious to do their very best for veterans. I do not think we should have two classes of hospitals. Hospitals should provide the very best care for veterans whether it is geriatic care or acute hospital care. The hon. member must remember that the government's record with regard to the care of veterans in hospitals is very good indeed. Also, the government has been very anxious in all the negotiations also
December 2, 1976

to ensure proper care of the staff in these hospitals. So the possibility of keeping an area for domiciliary care at Westminster hospital may be very good indeed. For all I know, it may be under negotiation.
However, I think that the figures which the hon. member gave of the possible number of recipients of domiciliary care is somewhat larger than I think will be the case, because it is quite obvious that we can no longer look after all veterans in the veterans' hospitals. I think that a high level of care continues to be a prime requisite. In the case of Sunnybrook hospital, the level of care was declining until it was taken over. Now we have a 450-bed veterans' wing of which we can be proud and which veterans regard very highly. This wing provides chronic care, geriatric care or maybe extended care.
I think the hon. member will appreciate that this is the state of affairs in our discussions with the province. It would be quite irregular for the federal government unilaterally to hand out documents concerning the negotiations to date. That is pretty obvious. Nevertheless, this is a great opportunity to reiterate our position on the transfer of DVA hospitals. This was stated in a cabinet report of December 5, 1963. The report provides the terms of reference for all the negotiations concerning the transfer of hospitals.
Right after the last world war there were not enough hospitals in Canada to care for the wounded who were returning from overseas. Many of them came off hospital ships. Many were on stretchers and they had to go right to hospital. We had to have special hospitals built, and at one time we had 40 institutions. These were acute care cases requiring every conceivable kind of specialized care. They stayed in hospital for varying lengths of time. Some never got out of hospital. Many were discharged but had to return for treatment periodically. As the wounded veterans returned to health, the institutions were gradually closed down, but there were First World War and Second World War veterans who still required care of one kind or another so certain hospitals were kept open all across Canada. As the number of patients being treated for war wounds decreased, we began to allow the use of the beds for veterans such as war veterans allowance recipients.
These hospitals were never intended for this kind of use, and I think veterans should realize that. The beds were there, so we used them, and eventually we ended up with most of them being occupied by patients in need of care for chronic conditions frequently of a geriatric nature. It became harder and harder to attract young professional staff, both doctors and nurses, to work in the hospitals. They told us, with some justification, that the work was too limited. The young specialists wanted to work where they could experience the widest possible range of medical practice.
What happened when one of the veteran patients in what has become essentially a geriatric hospital suddenly needed acute care? The hospital did not have the staff to treat him. He had to be transferred. We could see this situation looming on the medical horizon so we got contracts with provincial
Westminster Hospital
authorities to transfer the hospitals to provincial jurisdiction. They have been integrated with local hospitals, but with certain guarantees for veterans. These guarantees included a specific number of beds reserved for veterans with pensionable disabilities. We were assured that there would be adequate care for war veterans allowance recipients, and the protection of the employment of hospital staff. I mentioned this just a while ago. The hon. member can appreciate that I am only giving a broad outline of the policy and I have not gone into the cost factors or the effect of hospital insurance on the transfer of responsibility. How many graduating doctors or nurses would choose a workplace which would limit their future? Hon. members can understand the difficulty in attracting competent staff, although this work would be good experience for every young man proceeding to specialty training.
I will ask the hon. member another question. If his father or brother suffered a heart attack, where would he take them-to a veterans hospital or to a modern local hospital? It has been proved time and again that modern local hospitals are better fitted to deal with acute illnesses and major surgery.
Our concern has been to provide the best possible care for veterans. That is why we continue to support and promote the hospital transfer policy. We are not avoiding our responsibilities to our veterans. We are doing everything in our power to give our veterans the kind of care and treatment they deserve. If the hon. member would look into this question, he would find it sometimes becomes a question of misconception. I have used the minister's notes to show how sincere we are in wanting to give veterans the very best care.
Now that this debate has been initiated by the hon. member for Humber-St. George's-St. Barbe, I think there will be better understanding in Canada, especially by veterans, of the role of the federal government and the Department of Veterans Affairs in looking after our sick veterans.


Mr. J. R. Holmes (Lambton-Kent):: Mr. Speaker, at the outset I wish to indicate how pleased I am to second the motion of the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall) for the laying of these important documents before the House. I was somewhat concerned about some of the observations made by the Parliamentary Secretary to the Minister of Veterans Affairs (Mr. Railton) in giving his reasons for not producing these documents. He implied that there has not been agreement between the various parties in negotiating the transfer of jurisdiction of Westminster Hospital to some other prime complex in that particular area, although he did not define that specifically.
He talked about some of the misconceptions which have arisen because of these activities. That is the very reason the hon. member for Humber-St. George's-St. Barbe asked for the production of these papers. There is a need for this information. It might allay the fears and apprehensions of the veterans in that area, and there is also a necessity to have an input from those veterans. I have some personal background with respect to that. Some of my training was done at Westminster Hospital. I have looked after patients over a number of years who

December 2, 1976
Westminster Hospital
have utilized the splendid facilities at that hospital. A number of veterans from that area have expressed to me a number of concerns and it is only fair that I should share some of those concerns with the House because to me they form the crux of the problem. That is why I believe the production of these papers might allay some of those apprehensions and fears.
The major concern of the veterans in the area is the quality of medical care. They recognize that in years gone by they received excellent medical care at Westminster Hospital. They feel very comfortable in the surroundings there. They know the personnel; many individuals and veterans have been patients on a recurring basis for a number of years. The crux of the problem for them is the need to be reassured about the quality of the medical care they will have in the future.
There is some concern because of the government's initiative in introducing Bill C-68. They are well aware that the federal government has indicated it is prepared to reduce its fiscal responsibility with respect to health services in the provinces. They are concerned about whether that quality of care will be maintained in subsequent years. Very clearly there is uncertainty about the quality of medical care and whether it will be provided in some other area in the future.
Another concern expressed to me on numerous occasions is the question of where these veterans will be transferred to. Some of them honestly believe that they might be transferred to such distant areas as Toronto. It is quite obvious that these individuals want to be as close to their home as they can, whether that be Wallaceburg, Bothwell, Oil Springs, Blenheim, Ridgetown or many of the small communities which are at a distance close enough for their families to visit them.
The parliamentary secretary referred to a misconception, and this has not been defined, but there has been the suggestion that some of these veterans might be returned to local hospitals. No one is objecting to that concept in principle, but there is concern that some of these local hospitals might not have the facilities required for the special type of treatment veterans need, whether it be in the area of rehabilitation or whatever. It is important to have these papers so that we know the background and can allay the fears and apprehensions of veterans, especially veterans in that area.
I must also compliment the hon. member for Humber-St. George's-St. Barbe for raising the specific issue of chronic care and domiciliary-type cases, an issue which, without doubt, is of great concern to veterans in my area as well as to veterans all across Canada. We have seen no documented evidence to show that the government has a plan for meeting this particular need, which will grow in years to come. I again say to the parliamentary secretary that we urgently need to have this information tabled in the House of Commons so that we may know precisely what the government has in mind for chronic care and domiciliary-type cases.
Around the middle of September at a meeting held near Sarnia the possible closing down of Westminster Hospital or the transfer of patients, and the full implication of such closing

or transfer, were discussed. Unfortunately I must report to the House that the proceedings at that meeting did not allay the apprehension and fears of veterans in my area. After that meeting I received representations from veterans and it was evident that their fears had not been allayed, but were greater than ever.
May I refer again to the special services provided at Westminster Hospital? There is no indication-and this is why the pertinent documents ought to be tabled in the House-that special services for veterans, for example such as occupational therapy and rehabilitation, will be provided elsewhere. Therefore we need far greater assurance that veterans will continue to receive the particular kind of care to which they have been accustomed in the past.
Allow me to cite some more examples of special needs, Mr. Speaker. I received a letter from a legionnaire in my home town, Wallaceburg, who is most concerned because he, suffering from a dermatological ailment, had been told by his dermatologist that not enough beds were allocated in the one major hospital in London for the treatment of that particular ailment. He implied that at the moment there are only four beds available for such treatment in London, whereas between 15 and 25 beds were required at Westminster Hospital for treating that chronic ailment. That is a matter of concern-


The Acting Speaker (Mr. Turner):: Order, please. I interrupt the hon. member to draw to his attention that he is not speaking to the motion. I suggest that he bring his remarks back to the terms of the motion.


John Robert Holmes: Mr. Speaker, may I summarize quickly. I have tried to point out that fear has been expressed, and that the documents in question ought to be tabled so that we can act on the basis of adequate information. I have mentioned our concern with respect to Westminster Hospital in London and the necessity for the veterans of the area to be assured in the future of care of high quality.
I wish to make one final point which has been overlooked by many. I know from experience that veterans under treatment have enjoyed feelings of comradeship, in that veterans and legions of the area have provided them with personal service, gifts, and entertainment. We want to make sure that the personal touch is not omitted; some of us are concerned that this will be the result if there is to be a transfer at some later date.
I conclude by saying that it is relevant and important that these documents should be tabled at this time so that we may have a better understanding of the situation in order to allay the fears and apprehensions of veterans of the area concerned.


Stanley Howard Knowles: Question.


Mr. Gus MacFarlane (Hamilton Mountain):: Mr. Speaker, I appreciate this opportunity to talk on the motion proposed by the hon. member for Humber-St.George's-St. Barbe (Mr. Marshall) and I take this opportunity to congratulate him on
December 2, 1976

being made honorary president of the British-Canadian Veterans Association, which is an honour indeed.


Some hon. Members:: Hear, hear!


Angus (Gus) MacFarlane: I also agree completely with the views expressed by the parliamentary secretary on why it would be impractical for the government to table documents relating to negotiations to date with the province of Ontario with respect to the transfer of Westminster Elospital.


Stanley Howard Knowles: What about freedom of information?


Angus (Gus) MacFarlane: Not only would it be impractical; it would be discourteous and possibly unethical.
Let me say while I am on my feet that I am not unfamiliar with veterans' hospitals and extended care for veterans. I say with pride that after my father returned from Vimy Ridge where he had been seriously wounded he spent many days in veterans' hospitals. He had suffered from brain damage and had seriously injured his arm, which led to the loss of use of his hand and the loss of fingers. He became a totally disabled veteran. In those days the kind of care which is prevalent today was not available; not a great deal could be done for veterans in our hospitals. Finally, on his own initiative, my father took the leather braces which had been supplied to him and, in front of me-I was then a young boy eight or nine years old- threw off those braces. Although he was in terrible pain he took them off. I remember what happened.
Actually I think the Department of Veterans Affairs should analyse the experiences of veterans' children because possibly such an analysis would reveal much pertinent information about veterans.
If I may return to my father-he put himself to work and rehabilitated himself; and although classed as a totally disabled veteran he proved to himself that he could do many useful things. Mr. Speaker, I saw my beloved father going through the stage of almost howling, of crying with pain in the hallways in hospital, of screaming like a child in pain. That is why I sympathize with veterans. I remember as a boy going to St. Anne's to see my father. I used to crawl under the beds and I remember seeing the veterans who were then in baths of oil. Because of my experiences I still visit hospitals and, because of my father's experiences, I am able to sympathize with veterans in hospitals. For that reason I do not think that I look at these matters in a bureaucratic or technical way.
Having considered this general situation I have drawn the ultimate conclusion concerning the extended care a patient requires. In the interest of good treatment, a patient's extended care should be within a health care system geared to look after all his needs, no matter what direction his health may take. In other words he needs to be in a system which at any moment of day or night can call on the full range of professional medical care facilities. That cannot be organized in an extended care hospital which is not tightly integrated into a total community health care system.
Westminster Hospital
When you ask people making decisions in the area of health to produce papers, you are asking for details of a most confidential nature concerning those under treatment. Surely we will not treat our veterans in that manner. Our veterans, having given almost all but their lives for their country, would object to being treated as second-class citizens. Hon. members know that there have been objections concerning which hospital door veterans were to use. Now that improved health care facilities are available, particularly for extended care in hospitals, it may be necessary to make certain transfers, and I say that one should not make available documents which could be interpreted publicly to the possible disadvantage of those involved.
I wish to summarize in point form, if I may. First we must recognize that DVA hospitals were created to deal with the influx of returning war wounded. That was the idea. They were there to receive those lame souls when they returned.
As the wounded were brought back to health, beds became surplus and most of the institutions were closed. This has been a continuing process. As the number of pensioners in our remaining hospitals diminished, WVA recipients were admitted because beds were available and, to the extent that beds were available, this was a way to reduce the financial pressure on recipients in the days before hospital insurance.
The number of beds available for WVA recipients, however, has diminished as we ceased operating hospitals-from a high of 40 institutions down to the present six hospitals. In the intervening years, however, hospital insurance was introduced so all citizens are entitled to hospital care, including WVA recipients, and DVA retains financial responsibility only for the treatment of disability pensioners and for their pensioned disability.
Finally, DVA hospitals have become, essentially, institutions where 90 per cent of care is extended care and fewer than 10 per cent of patients are entitled pensioners. The operation of such hospitals is becoming increasingly more difficult in terms of quality of care. The vast majority of the patients now in our hospitals are a provincial responsibility, in the sense that they are covered by hospital insurance.
Because of the conditions I have described, the government decided in 1963 that active steps should be taken to transfer the remaining DVA hospitals, with the expectation that they would be integrated into community health systems.
I do not think any member would want to raise a bogeyman about the lack of our concern for veterans. I believe there is room for opinion. Others may have had a different experience than I. They may have a different reason for feeling that this is a removal of some kind of right or emotional feeling we should have toward the veteran. For the record, my own feeling is this. I believe that in the early days this kind of care was required. However, the veteran felt that in the stream of the world he would care for and rehabilitate himself. We have to realize that what is happening now is a transfer of hospitals. In some cases the people who are thinking about the matter are

December 2, 1976
Westminster Hospital
indeed doing that. It will be for the betterment of the majority of veterans and the community. There will be better hospital service for all concerned.
I want to reaffirm that when a member requests documents there is always the feeling that something which would change the facts is being concealed. It is hard to imagine the purpose of the transfer being of disadvantage to the injured party, the veterans. It is hard to believe that something is being concealed that would change that transfer. The whole objective of the Minister of Veterans Affairs (Mr. MacDonald), his parliamentary secretary, members of the Veterans Affairs committee, members of parliament and, in particular, members of the Department of Veterans Affairs is the welfare of the veteran. That is what the transfer of hospitals is all about.


Mr. Prosper Boulanger (Mercier):: Mr. Speaker, may I congratulate the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall).

I congratulate the hon. member. However, I hope it will not be as we say in French-
[ Translation]
-a conflict of interest.

I know his sincerity. He has been a member of the Standing Committee on Veterans Affairs for a long time. He always works for the good of the veteran. He is a very straightforward member who does not act in a partisan way in committee.
I was, however, a little disappointed today. If ever we have had a minister we can trust, it is the present minister. He is probably the best minister of Veterans Affairs we have ever had. That should answer one of the hon. member's first questions with regard to these documents. If the hon. member thinks that the minister is trying to hide something or would do something to hurt someone, he is wrong. I have more confidence in that minister than any previous minister. I am glad to say once again, as we say in French-

-it is not always easy to have confidence in the party in power when we sit in the opposition. I fully agree on that. But in French we always say-and this is a new expression which has been used for a few weeks only-"la chance au coureur". That is the system which was initiated, the transfer of veterans' hospitals to the association of hospitals existing in the provinces.

From what we have heard so far, I do not think there is anything less than a satisfactory result. The hon. member has travelled abroad as have many of us. I am sure he has learned that we have the best system of hospitalization and medicare in the world.


Jack Marshall: I do not deny that.


Prosper Boulanger: I am glad to hear the hon. member say that. He probably forgot to mention that in his speech.
With regard to the hon. member's argument for the right to read these documents, he knows that it is the minister's privilege to say no. If the present minister says no, I believe that it is for the good of everyone that the documents not be made public. As previously mentioned, it could be misinterpreted or used for politicking.


Jack Marshall: Mr. Speaker, I rise on a point of order. I want to inform my worthy colleague that two years ago I presented my same motion for the production of papers. I was given all the papers at that time. I want to know what has transpired in the meantime. I do not deny we have good hospitalization. I just want to ensure that the projections made by previous ministers for domiciliary care for the next 20 years are being fulfilled.


Samuel Victor Railton: Mr. Speaker, I rise on the same point of order. I can answer the hon. member's question fairly briefly. It is the imminence of the completion of the negotiations that is important. At the time he asked this question, one or two years ago, it was a negotiation with quite real overtones. It is rather like asking for all confidential information about strike negotiations when arbitration is taking place behind closed doors.


The Acting Speaker (Mr. Turner):: Order. I suggest we are getting into a matter of debate. The hon. member for Mercier (Mr. Boulanger) has the floor.


Prosper Boulanger: Thank you. The question was asked and I had an answer. The best answer to the hon. member for Humber-St. George's-St. Barbe would be the one I had a few weeks ago when we were attending the Armistice ceremony. I too met many of our friends, veterans, and I am surprised because what they said does not quite click with what he was saying about the confidence the veteran has right now, confidence not only in the government but especially in our minister and our committee. The hon. member's name was mentioned. The hon. member for Winnipeg North Centre (Mr. Knowles) was also mentioned. Every veteran I talked with over a couple of glasses of beer was satisfied and happy with all members of the Veterans Affairs Committee.
When we talk about medical and hospital services I do not think the veterans worry as much as hon. members seem to worry. If there is someone who knows, it is someone who has experienced the care you get at Westminster. He knows he is getting the best care possible. It is fair to say that today veterans feel much more at ease and more sure about what is going on in veterans affairs than ever before. We must remember this, and that is my message to the hon. member who has put down motion No. 8.
In 1963, as someone mentioned, it was clear that the need of veterans in the years to come would no longer be for acute care. If we found ourselves in the position that our only patients were older people, we would not be able to practice or
December 2, 1976
maintain the high quality of staff or patient care we are committed to provide.
I have visited veterans who were hospitalized from time to time and receiving treatment in our hospital in Montreal, the one known as Queen Mary's. I am telling you right now that upon their discharge these people received good service and attention at home. 1 do not think any of them have a serious complaint to make.
If you speak to someone who has experience of the exchange of services, transfer hospitals, he does not think for a minute that he is in danger of getting lesser service or quality. I am confident from what I hear that they do not think of that. They are not afraid of that. They do not seem to worry about it. The English word is "fear". In French, "fear" is a strong word. The hon. member who spoke before me talked about fear. I think he is exaggerating unless once in a while, because of his sickness, the morale of a veteran is down, and sometimes he might complain. But in general I doubt very much that patients are as worried as the hon. member would suggest.
I agree with the minister's actions, and because of his right to say yes or no on documents I do not think the hon. member for Humber-St. George's-St. Barbe need think that any veteran is in danger of having a lower quality of service. For that reason, members of the committee on this side agree that the minister was right in doing what he did.


Mr. Joe Flynn (Kitchener):: Mr. Speaker, I should like to compliment the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall) for his continued interest in the veterans of Canada, an interest which he has especially shown through his membership on the Veterans Affairs Committee. I would mention also our regard for our present Minister of Veterans Affairs (Mr. MacDonald). He has done more than his share.
I am happy to speak on this motion today, having been a patient at the Westminster Hospital for some while. I know the lay-out. I know the staff, and I know the value of the work done by this hospital. I should like to correct an impression which I believe the hon. member for Lambton-Kent (Mr. Holmes) has given with regard to the Victoria Hospital in London, to the effect that facilities would be somewhat inadequate in meeting the needs of patients. 1 gathered that this was what he was saying, though I may not have interpreted him correctly. Perhaps 1 was wrong; I know the high regard he has for the Victoria General Hospital-


The Acting Speaker (Mr. Turner):: Order. The hour appointed for the consideration of private members' business having expired, I do now leave the chair until 8 p.m.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS The House resumed at 8 p.m.

______________________________________1617
Income Tax


[Stage Direction]
The House resumed consideration of the motion of Mr. Macdonald (Rosedale) that Bill C-22, to amend the statute law relating to income tax, be read the second time and referred to committee of the whole.
Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, I welcome the opportunity to participate in the debate on Bill C-22, being part of the legislation arising from the ways and means budget motions which allows for wide ranging debate. Hopefully we will hear from the minister what he feels is in store for the country. Certainly there is widespread unease about the economic status of Canada today, which has been manifested by the fall in the value of the dollar. Quite apart from the coming to power a couple of Mondays ago of Mr. Rene Levesque whose avowed intention is to break up the country into component parts. The financial situation of Canada is more serious than it has been for a long time.
Before embarking upon a general discussion of the bill I should like to make a couple of observations about it. It is mainly a housekeeping bill and is of no great significance. Secondly, representations have been made to me by knowledgeable accountants and heavy equipment operators that the change in the depreciation allowances for heavy equipment is of concern to them. No doubt this provision was used as a tax haven by some people. A person could buy a bulldozer for $80,000, rent it out at $1,000 a month and write off a $30,000 loss. However, there are many contractors who made genuine use of the provision.
The contracting industry is a rather risky one. I can remember some years ago a contractor built his house right beside mine and mentioned he was going to put it in his wife's name. When I asked why, he said he had been sold out by the bailiff twice already on Christmas Eve and he was not going to allow it to happen again. There is no doubt contracting is a risky business. High depreciation has been a useful tool that has enabled some independent contractors to continue in business, and although there has been abuse by certain high income people I think it behooves the minister to allow contractors to continue to make genuine use of the provision and to retain the same approximate level of depreciation that has existed in the past.
I should also like to say a few words about registered retirement savings plans. I am not enamoured of the idea that tax free registered retirement plans are necessarily a good thing for this country in the long run. Raising the ceiling to the proposed levels is in line with the inflation rate, and outwardly it appears as though it is going to aid the economy by aiding savings. But this form of savings has certain drawbacks. First of all, it is a saving of tax which means that a good part of the saving really belongs to the government. If the tax system were functioning correctly, these tax free savings would not be



December 2, 1976
Income Tax
necessary. It would not be necessary to bribe our people into saving money, a good portion of which really belongs to the government.
What happens to this money, Mr. Speaker? It is collected into huge holdings which are managed by just a few managers. Naturally they must manage these funds to the best of their ability since they represent the savings and pensions of their clients, so they tend to invest only in blue chip companies or government bonds. This dries up the normal financial flow that might go into venture capital and into more risky businesses.
I think the pension retirement plan study that was conducted in the United States was very interesting. It showed that over the last 25 years most of the major pension companies were owned by pension funds. When we heard about corporate bums a few years ago, in many instances this really would have meant corporate pension plans which, as I say, were owned by registered retirement funds. I do not think this is necessarily a good thing. It is something we will have to consider in the future in order to prevent large blocks of capital being in the hands of a few managers and contained as they must be by government regulations.
I should like to turn now to our own political and economic situation. Even before the Quebec election economic problems seemed to descend on us severely. For almost two years in a row we have had a foreign trade deficit of upwards of $7 billion. One has only to place this in perspective to realize that in a similar situation in the United States this would have meant a deficit of something in the order of $70 billion. Only a few years ago there was great alarm in United States financial circles at a deficit of $15 billion or $20 billion, which would have respresented only $2 billion for us, so we can see what serious trouble this poses for us. We have been able to contain this because of a huge inflow of debt borrowed by the giant corporations. We should not blame the private corporations as much as institutions such as Quebec Hydro, Manitoba Hydro, and the Potash Corporation of Saskatchewan which are involved in the major cost of borrowing through the provincial governments in the political field.
I am well aware that this large foreign trade deficit really is the result of economic forces at work within our country. I do think this vast borrowing abroad has been instituted by political decisions of provincial governments and provincial utilities to undertake projects on a grandiose scale in many instances far beyond the potential of this country to cope with at least over a shorter term.
What is the point of the Saskatchewan government buying potash companies at, as I understand, a good price, and raising the money in New York, to be taken by the American owned potash company which is drilling for potash in the continental United States across the border which, if successful, will diminish the market for the Saskatchewan product? It would seem that it would have made more sense had Saskatchewan developed another potash mine.

We have heard much in the past about foreign investment. A few years ago the nationalists said that foreign investment should be in the form of debt equity and not ownership. While we seem to have effectively cured that problem, more investment money is leaving the country than is coming in and we find that whether it is debt equity or actual ownership with dividend payments, the cost is the same. When the economy of the country is low, foreign dividend payments reflect this but interest payments must be made regardless of the state of the economy. As anyone who has been involved in business understands, it is far better to have a partner with an investment when business is poor than to have a mortgage held by a hard taskmaster.
Government spending clearly is out of hand. Canadians have been spending far too much. They have been merely mortgaging the future to spend for today. The programs set in motion in the 1960's in respect of health, welfare, and education are now realizing their full cost. We now realize that what the country can afford is not what people like. With our social programs we have been living on champagne tastes with a beer economy. In recent months we have been struck by a comparison of United States and Canadian costs. To highlight the difference I might point out there was an item in the Winnipeg newspapers to the effect that high prices had sent American tourists home screeching in horror. This, as usual, was attributed by a government official to excess charging by the hotel industry in Winnipeg. But the hotel industry came back and pointed out the very much lower level of taxation and wage structure the American industry enjoys.
I think there is a fairly reasonable explanation for the large difference in wage structure between the two industries with somewhat comparable productivity. In fact Americans pay far more for their social services out of their own pockets while in Canada such costs are collected whenever a transaction occurs. Ideally perhaps for the individual the Canadian welfare structure is good, but with the U.S. economic structure he then would have the best of both worlds.
I do not think we can talk about the economy without facing up to what happened in Quebec recently. A few things are said on this subject in an editorial in today's Toronto Sun. It states:
People who worry about such things have long known that the Canadian dollar is overpriced. And now that it is declining at an alarming rate, some wiseacres (who, historically, are more often wrong than right), predict it may continue to decline to 92.5 cents American.
Our gut-feeling is that the dollar could sink into the 80-cent range. Maybe not right now, but soon. That would cause near panic in Canada.
Although the decline of our dollar more or less coincided with the election of Rene Levesque in Quebec, one can't in fairness blame separatism. All levels of government must share responsibility, and especially federal.
Massive Canadian borrowing abroad, which was possible through the collateral of our irreplaceable natural resources and docile citizens who allow themselves to be taxed to the hilt by various levels of government, has enabled this richest of countries to become the world's biggest borrower.
It is estimated that Canada owes some $100 billion around the world.
The article further suggests that while in 1962 the devalued dollar at 92*^ cents was a boon to our export trade, this time our industrial wage base is higher than in the United States and our productivity is lower. This is the reverse of what was
December 2, 1976

the situation. It further points out that Australia and New Zealand have recently devalued their currency and "we are all potential Britains."
In speaking of Quebec it would seem from comments in this House and from the action of the Prime Minister (Mr. Trudeau) that this has nothing to do with the state of the economy in this country. I suggest, however, that it has a great deal to do with our economy. This comes at a time when the Canadian Imperial Bank of Commerce reports that its leading commercial indicator, the bank's quarterly index, in monitoring the economic performance shows that a pause in the U.S. recovery and uncertainties for the federal anti-inflation program have clearly jeopardized our recovery. They point to a significant decline in non residential building permits. It is further suggested that if the indicators turn down further in this last quarter, this would certainly have to be interpreted as a sign that recovery is in danger. Again it is indicated that there is sufficient evidence to predict that the economy will lapse into recession by late 1977 or early 1978.
How can there be anything but great doubt about the role of the new government in Quebec when one peruses its suggested aims? The platform of that party is to alter the economic rules. We have been given written plans which certainly indicate an unusually detailed political and economic situation. The P.Q. platform promises extensive reworking of personal income taxes and sales taxation. The Parti Quebecois would sharply curtail conditions in respect of foreign ownership or control. If there had been a feeling that the government should stay out of the economy, the P.Q. would seem to consider it its duty as a government to control all conditions and elements in its economy. The Parti Quebecois envisages a central planning office for economic development in Quebec, which would have a broad influence.
The argument of the P.Q. is that large private firms in Quebec which are largely foreign controlled are financed by borrowings within Quebec. These firms would feel the full weight of government. It would certainly seem, in a perusal of what the P.Q. proposes, that it would radically change the citizens of Quebec so that they would be substantially different to other citizens in Canada. It proposes that capital gains, gifts, successions and grants should all be treated as current income and that there would be an unspecified form of guaranteed minimum income. Excise taxes are to be raised on luxury goods, while retail sales taxes are to be increased.
With regard to corporate taxes it appears that the Parti Quebecois' program would seek to increase them markedly. In economic structures the emphasis in many instances is to be on co-operative ownership, and in others on government ownership. There is to be recognition of private ownership in certain segments of economic production.
Surely all this indicates that the party's programs envisage a wholly different set of rules from those which were followed in the past, and that the role of private enterprise will be considerably reduced. Hydro Quebec will retain its monopoly posi-
Income Tax
tion, and SOQUIP, the provincial oil company, will have its role substantially enlarged.
What is the attitude of the new provincial government with regard to investments? I think this is very important in the light of its possible recognition of Canada as a foreign country. Investment is to be sharply limited in both extent and form. The participation of foreign investment would be totally excluded from these industries where it is thought to be important to modify the structure of existing enterprises for public benefit. Communications is an example of what is considered to be a vital sector.
In financial institutions the maximum minority participation allowed would be 25 per cent, while in manufacturing industries some minority participation would be allowed but only under severe restrictions, particularly in view of the fact that the Parti Quebecois considers Quebec's economy to be poorly balanced and divorced from the society in which it operates, and therefore in great need of responsible planning.
It seems obvious that the Parti Quebecois intends to establish an entirely new set of rules, and the rest of the country cannot expect to continue dealing with this province as it has in the past. What about the various industries which are now located in the province of Quebec? What about Air Canada, which is regarded by many as a Quebec airline but which draws most of its passengers and revenue from outside that province? Will the rest of the country want to continue to support this airline? What about the Canadian National Railways with its base in Montreal, when in fact western Canada provides the railway with over half its business, and when the operation in the west is rendered weak and inefficient because the Montreal headquarters are too far removed? Why is the CNR management located in Montreal? Is it merely there for the good of Montreal's economy, as is Air Canada?
Little by little we are seeing the province of Quebec moving apart from the rest of the country. Perhaps we should cease to call it a province. The editor of Le Devoir, Mr. Claude Ryan, himself a federalist, said:
Federal elections are no longer relevant to us, only provincial elections have any meaning.
What relationship does the federal party now in power have with the province of Quebec if Quebecers can consider it to be no longer essential to them even though its leader, the Prime Minister is one of their own? How else does one explain the defeat of a former Liberal minister, Jean Marchand, who was a local hero in Quebec, than by the fact that he has been away too long? What about the election of Bryce Mackasey, the result of whose entry into the provincial election has been to isolate English Quebecers from the new Parti Quebecois more than they had been previously from the provincial Liberal government? Obviously the province of Quebec has decided to go its own way.
The province of Quebec is irretrievably turning away from the rest of Canada, on the way perhaps not to complete independence but at least to self-dependence. The same experts who said that the Parti Quebecois could never come to power are now saying that the referendum which will call for

December 2, 1976
Income Tax
separation will be lost but Quebec's relationship with the rest of Canada can never be the same. A special status for Quebec must inevitably be considered so as to give that province broad powers in the areas of culture, communications, and immigration, but on the other hand a more relaxed federalism could well be the governing factor for the rest of Canada, as it has been in the past 70 years, in allowing English Canada to become self-reliant and autonomous on the northern half of this continent. We should not fear that we will be swallowed up by the United States. The future is bright if we grasp it. Confederation can be preserved but will have to be altered from a pact between two races in a single nation to a partnership between two nations and a business arrangement.
This legislation which arises out of the last budget is being debated here in a changed atmosphere from the one which prevailed in the country at the time when the ways and means motion was introduced. This is a time of concern and of a realization that the economic forces which work in the world are allowed to bear down on us. As President-Elect Carter has suggested, and as was reported in today's newspapers, the state of the economy in the United States is much worse than it has been. I suggest that the state of the economy in Canada is much worse than we have been willing to admit up to the present time.


Mr. David Orlikow (Winnipeg North):: Mr. Speaker, we are debating a bill making some changes to the Income Tax Act. I suggest that this country is undoubtedly facing greater problems than any we have faced in the history of Canada, except during the two world wars. We are facing the problem of inflation which is hitting people on lower incomes in an extremely pernicious way, and we are facing the problem of unemployment, with which I will deal at some length in a little while, the kind of unemployment which just a few years ago we in all parties agreed would never take place again. We thought we had learnt from the experience of the last 30 years that mass unemployment was no longer necessary.
We thought just a few years ago-and the thought was accepted by all parties-that we could have full employment, and that full employment was in the neighbourhood of 4 per cent unemployment. Now the economists, particularly those around the Economic Council of Canada, have begun to rationalize full employment as being considerably more than 4 per cent unemployment, and they give all kinds of reasons why full employment is reached when there is unemployment in the neighbourhood of 6 per cent. They say that now, because we have over 7 per cent unemployment, and I suppose that if unemployment gets higher, as it undoubtedly will given the present government's policies, next year they will be saying that full employment is when unemployment is in the neighbourhood of 7 per cent.
Then, of course, we are facing the threat to the unity of this country through the election of a government in Quebec committed to the separation of that province from the Canada which we have known for over 100 years. We have to ask ourselves how we arrived at this situation, and if we look at these questions seriously we will see that we have arrived at

this situation because of the mistaken social and economic policies of the government, and because of the stubborn tunnel vision of this government, headed by the Prime Minister (Mr. Trudeau), on the whole question of federalism. This is not the time to discuss the problems of federalism and the relationship between the federal government and the provinces, although I do not think it is an accident that eight years ago when the Prime Minister took office there was not a single separatist member of parliament and not a single separatist member in the Quebec national assembly. If in eight years the province of Quebec moves from that position to a position where the separatist party has a substantial majority of seats in the national assembly in Quebec, I say that the Prime Minister and his government will have to accept a large part of the responsibility.


Some hon. Members:: False.


David Orlikow: Hon. members opposite are saying, completely false. I invite them to get up after I finish speaking and refute what I said.
At the present time we have 7.6 per cent unemployment in Canada. A large part of the reason for that is the government's policy on restraint. The determined decision on Thanksgiving Day of 1975 was that we had to have an anti-inflation program, that we had to put limits on the incomes people earned, and that we had to cut back or hold back on government progress. In almost every month of the last 20 months we have had unemployment of over 7 per cent. According to Statistics Canada, in October of 1976 there were 679,000 people unemployed. On a seasonally adjusted basis that is 7.6 per cent. The rate is up in every province, I think, but British Columbia.
Hon. members say that I am being mischievous and that I am not being truthful when I say this government has some responsibility for what happened in Quebec. I come from Manitoba. We are fortunate because our unemployment rate is still pretty low. If I were a member from Quebec, even a member of the government party, I would be calling privately and publicly on the government to do something, because there is no bigger incentive for the people of Quebec to reject federalism than the present situation with regard to unemployment in Quebec.
What is the situation in Quebec? October of 1975 was not a good month, according to Statistics Canada, in the province of Quebec. I am not making these figures up. I am just putting the facts on the record. In October, 1975, there were 191,000 people unemployed in the province of Quebec. In October, 1976, that number had risen to 234,000. For the country as a whole we have an unemployment rate of 7.6 per cent, but in Quebec the rate rose to 10.1 per cent.


Marc Lalonde: What about New Brunswick, Nova Scotia, and Newfoundland?
December 2, 1976


David Orlikow: Of course it is worse in Newfoundland and in New Brunswick, but unfortunately they cannot see any way out of it.


Marc Lalonde: They don't want separatism.


David Orlikow: They do not vote separatism for that. All I can say is thank God for small mercies. For men aged 15 to 24 the jobless rate rose in Canada as a whole by 2 percentage points to 13.3 per cent. In Quebec the unemployment rate for young people is probably over 13 per cent, and since the rate of unemployment has been rising consistently-


An hon. Member:: Oh, oh!


David Orlikow: The hon. member who is interjecting usually sits in his own seat when he interjects. I would be happy if he would get into his own seat and then get up and tell me if the figures I am quoting from Statistics Canada are incorrect. I know it is alleged that there is a great deal wrong in Statistics Canada, but I did not know it was guilty of cooking the figures to make the unemployment situation look worse than it is and to make this government look worse than it is. That would be a difficult job even for Statistics Canada.
We expect that in January, February and March of 1977 unemployment in the province of Quebec, particularly among young people, will be in the neighbourhood of 14 per cent to 15 per cent. Why should hon. members be surprised that those are precisely the people whom all the polls showed moved decisively to support the Parti Quebecois and its position for independence? I am not surprised. In fact if I was to be surprised about anything it would be about how long it took them to move to that position.
The hon. member for Mercier (Mr. Boulanger), who has been interjecting, said something which probably was not recorded by the Hansard reporter. He said that I was talking about socialism. Well, Don McGillivray who writes for the Financial Times and the Southam Press, who is not a real radical socialist, said a couple of weeks ago in the Montreal Gazette under the headline "Unemployment Tattering Macdonald's Economic Policies":
Mr. Macdonald's economic policy, as set forth in his budget speech only five months ago, is in tatters.
Rising unemployment is not the only chilly breeze blowing through the holes in his costume.
He forecast in May that 250,000 new jobs would be created in Canada this year. He is going to fall a little short. In the first ten months of the year, 114,000 new jobs have appeared.
In other words, the minister was a little out, by about 50 per cent. Then Mr. McGillivray said:
Mr. Macdonald was relying on business investment to "sustain the expansion" next year. But the latest investment survey by the Department of Industry, Trade and Commerce shows a pattern of postponed investments with a failure of "market demand" as the most frequently cited reason.
Those are the facts with regard to unemployment. However, unemployment is not the only reason people are dissatisfied. This country of ours is certainly one of the wealthiest countries in the world in terms of natural resources.
Income Tax


Prosper Boulanger: Now you are telling the truth for a change.


David Orlikow: We will see what the truth really is. I hope the hon. member for Mercier will listen for a while and not interject with his inane remarks. This country has a relatively small population, and what do we find after 25 years of governments supposedly trying to create a more equitable society, 25 years in which for about 20 years the governments have been Liberal and for five they were Conservative? If we look at the income distribution in this country it has virtually not changed at all, but what change there has been has been for the worse.
In 1951 the poorest 20 per cent of Canadians earned 4.4 per cent of the national income while the top 20 per cent earned about 42.5 per cent. Almost 25 years later, in the late 1970's, the poorest 20 per cent of the Canadian population earns just 4 per cent. In other words, their share of the national income dropped, while the top 20 per cent still earned over 42 per cent.


Prosper Boulanger: Come on now.


David Orlikow: The hon. member says come on now. I invite the hon. member for Mercier to call the Statistics Canada office which deals with income distribution, and he will get the same figures I have quoted.


Prosper Boulanger: Mr. Speaker, will the hon. member permit a question? Talking in the straight Canadian language, or the popular language, as some like to call it, 20 years ago a floorsweeper earned $40 a week. Is he not earning about $150 or $160 a week today?


David Orlikow: Mr. Speaker, I think the hon. member for Mercier exaggerates.


An hon. Member:: Who exaggerates?


David Orlikow: I think the hon. member for Mercier exaggerated somewhat because I do not think 25 years ago the floor sweeper earned $40 a week. I think he made $25.


Prosper Boulanger: I said 20 years ago, and that is the big difference.


David Orlikow: Well, the hon. member spoke of 20 years ago. I do not think the floor sweeper today makes $160 a week.


Prosper Boulanger: Sure he does.


David Orlikow: There is no question that he makes substantially more now than he made 20 years ago, but that has nothing to do with my illustration. We are all living better than we lived 20 years ago.


Some hon. Members:: Hear, hear!


Prosper Boulanger: For the first time tonight you have been right.

December 2, 1976
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Mr. O'Connell:: Mr. Speaker, would the hon. member permit a question?


The Acting Speaker (Mr. Turner):: Order, please. Will the hon. member permit a question from the hon. member for Scarborough East (Mr. O'Connell)?


David Orlikow: Certainly.


Martin Patrick O'Connell: Mr. Speaker, the hon. member mentioned earned income. He may be correct that relative incomes are about the same as they were 25 years ago, although at present they are at higher levels. Would he be willing to consider income figures which include transfers to persons on low income? That is to say, would he be willing to consider their real incomes, not merely their earned incomes, and therefore admit that this government has done something with respect to redistribution of income? Is he not prepared to consider the impact of certain social programs which are accessible to all, such as medicare, education grants, family allowances and that sort of thing and, when making comparisons between conditions of 25 years ago and today, give credit to what this parliament has done, led by this government?


Some hon. Members:: Hear, hear!


David Orlikow: Mr. Speaker, I notice that the Minister of National Health and Welfare (Mr. Lalonde) is in his seat, applauding the hon. member for Scarborough East for asking that question. I am sure the minister knows that the figures I used relate not to earned income, but to income adjusted to take care of all the programs which the hon. member for Scarborough East mentioned. I am using figures which come from the same source the minister used in his speech of one and a half years ago-and I hope the hon. member for Merrier is listening. The minister used precisely the same figures, because he was trying to make the same case I am trying to make, but of course he was saying that the government had done a good deal for people.


Prosper Boulanger: That is true, it has.


David Orlikow: The hon. member for Mercier is correct when he says that today we are all living better, but I say that the poor still occupy the same position in relation to the wealthy as they occupied 25 years ago.


Angus (Gus) MacFarlane: That cannot be right. I was poor then.


David Orlikow: Because I expected hon. members opposite to make the kind of interjections they have made this evening, I brought with me some figures produced by an OECD study which examined the percentage of the population which lives below the poverty line in certain countries listed. In the study poverty was defined; I hope the minister is listening, because that study made Canada look bad.
For example, in Sweden 3.5 per cent of the people live below the poverty line; in Norway, 5 per cent; in Germany, 3 per cent; in Australia, 11 per cent; in the United Kingdom, the country which according to our newspapers will go bankrupt

tomorrow or in the near future, 7.5 per cent of the population lives in poverty; and in Canada, this wealthy country in which, according to the interjections of hon. members opposite everything is fine, 11 per cent of the people live in poverty. Mr. Speaker, the figures I referred to were not mine; they are OECD figures, and I hope the minister was listening. The figure for Canada is 11 per cent; and in only two countries is the percentage of the poor greater, in the United States, where it is 13 per cent, and in France where it is 16 per cent.


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


David Orlikow: I think I mentioned most of the countries on this list.
At present we are considering income tax, one of the basic tools of government for meeting government expenses and financing government programs. I suggest that we should not merely amend the Income Tax Act in a minor, technical way. We need a basic revision of our entire tax system. But we can only do this if we have a government which shows it means business, that it can govern, can be fair and can be businesslike. Certainly such a government will be different from the present government.
The government expects to spend more than $40 billion next year. It is asking the people of Canada to pay out in income tax and other taxes a substantial proportion of their incomes. They will pay a great deal particularly in income tax. However, if one message has become clear in the last few months, it is that the government has lost control of the mechanisms for running the country.


Mr. Guay (St. Boniface):: Mr. Speaker, I rise on a point of order. The hon. member spoke about income tax being a heavy imposition on Canadian citizens. He should mention at the same time that the provincial government in Manitoba takes in income tax 42.5 per cent of the taxable income of citizens of Manitoba, the highest proportion of any province in this country.


David Orlikow: Mr. Speaker, I hesitate in my remarks, because I realize that I shall for the first time have the opportunity publicly to congratulate the hon. member for St. Boniface (Mr. Guay), my friend, on his elevation to the cabinet, and I do so now. Let me say that he is right when he says that the province of Manitoba has the highest rate of income tax of any province in Canada. I do not have to apologize for that; that is precisely the point of my speech. I hope the minister from Manitoba has been listening to me and will continue to listen.
My precise point is that the federal government and the governments of the provinces need money for running government programs and services, and they ought to get that money from those best able to pay it. So, because I am fortunate enough to be a member of parliament and in the top 1 per cent or 2 per cent of this country's income earners, I pay a substantial proportion of my income in income tax, and I am happy to pay it in the province of Manitoba. I wish that every province would require the people who earn most to pay most.
December 2, 1976

My criticism of this government is that it does not follow the principle of the ability to pay. It does not require those who earn the most to pay the most.


Joseph-Phillippe Guay: Mr. Speaker, it goes without saying that we should make the point very clear that 42.5 per cent of a taxable income hits the poor, the low income group, not only the rich.


David Orlikow: The Minister without Portfolio knows that one of the major reasons for that 42.5 per cent income tax rate is that the province of Manitoba eliminated the monthly fees that are paid in provinces such as Ontario and Quebec by their citizens for hospital and medical insurance. In those two provinces, the amount now runs something in the neighbourhood of $300 a family.


Angus (Gus) MacFarlane: Mr. Speaker, I rise on a point of order. I cannot speak for the University of Manitoba. I have hardly any experience there. I do have experience in the Atlantic provinces, la Belle Province, Quebec, Ontario and Saskatchewan. However, 42.5 per cent of something-


The Acting Speaker (Mr. Turner):: Order, please. I suggest the hon. member is now getting into a point of debate. The hon. member for Winnipeg North (Mr. Orlikow) has the floor. I suggest we listen.


Angus (Gus) MacFarlane: On the point of order, Mr. Speaker-


The Acting Speaker (Mr. Turner):: Order, please. 1 have ruled the hon. member out of order.


David Orlikow: Mr. Speaker, I wish the hon. member who interjected would make his own speech on his own time. With regard to the 42.5 per cent income tax which is paid by the people in the province of Manitoba, I do not have the latest figures but I can get them for the hon. member tomorrow. All citizens of Manitoba who earn $11,000 or less, and that is a substantial majority of the people of Manitoba, who pay the rate we are talking about do not pay any hospital or medical premiums. The citizens of Manitoba are better off than those in Ontario which has a much lower rate.


Angus (Gus) MacFarlane: I think I have a point of order now, Mr. Speaker.


The Acting Speaker (Mr. Turner):: I suggest the hon. member make it a point of order.


Angus (Gus) MacFarlane: Thank you, Mr. Speaker, for the instructions. I believe the hon. member is stating that if you pay outside the percentage or inside the income tax, there is a difference. I merely say that the people are paying it. Whether he thinks it is less to pay it by a fee rather than a percentage is really not important. The people in his province pay 42.5 per cent. If you earn $7,000, it is rather important. If you earn above $11,000, I guess it is important too.
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David Orlikow: Mr. Speaker, I do not mind questions, but I hope that, when you are computing the time I have taken, you will deduct the time for these spurious points of order which do not have anything to do with my speech.
Incidentally, in both Quebec and Ontario the premiums for hospital and medical insurance were increased last year by 50 per cent. Therefore the taxpayer in Manitoba is more than compensated for the higher rate of income tax which he pays.
The federal government has no right to ask people to pay income tax when it is so careless about the money it collects from the people of Canada. I want to put something on record for myself. I am not going to say anything that other members have not said. However, I want to put this on record because it is a disgrace.
Some things which this government has done look like disasters for the Canadian people. I refer to the contracts for the sale of nuclear reactors to Argentina and South Korea. Because of poor negotiating we are going to lose $25 million in the Argentine deal. I do not know why we enter into a deal that will lose money.
It is obvious that secret payments were made by a Crown corporation, Atomic Energy of Canada Limited, into numbered accounts in Switzerland, Lichtenstein or wherever they were made. What was the purpose of the payments? We were told it was part of the sale, normal business. I suggest that if millions of dollars were paid into numbered accounts, there are two possibilities. First, there was a payoff to individuals who used their influence to obtain the business for Canada. Morally, that is not permissible. Second, there were rebates to companies which probably breached the tax laws of their own country.
A sale was made in Europe by Polysar. Speaking from memory, I think it was $2.4 million that was paid into a numbered account. For what purpose? We were told it is part of a system generally used for volume discounts. Most members of parliament know enough about business to know that discounts for sales in large quantities are normal practice in this and other countries. If that is what was done, we have no objection. However, why make payments into a numbered account? There can only be two possible explanations. The First is that the money does not show up in the books of the company to which the sale was made. Therefore that company does not have to pay taxes in the country in which it operates. I am certain that is a violation of the tax laws of that country. Certainly no government of Canada and no Crown corporation should countenance that. The second is even worse, that it went into the pockets of individuals in those companies who were able to give the business to Polysar of Canada rather than some other company. That too is not permissible either legally or morally. However, we have a continuous defence of the indefensible.
We continue to have horrors recounted to us by the Auditor General. We can no longer be told either publicly or privately that we can ignore these reports because it is a Conservative Auditor General, as was the last one, writing about a Liberal government. The present Auditor General was appointed by

December 2, 1976
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this government, but lo and behold, the horror stories are as bad as ever.
Millions of dollars have been spent for office space which is not being used and which will not be needed until some time next year. We have the saga of the travelling Minister of Transport (Mr. Lang) who in three years spent $750,000 travelling on government planes. In those three years he spent $750,000 travelling in government planes on trips most of which could have been carried out at a fraction of the cost had he flown by one of the commercial air lines.
We have seen a phenomenal growth in the senior echelons of the Civil Service. In the seven years from 1968 to 1975, according to figures supplied to us in answer to questions on this subject, the number of public servants employed by the federal government in its departments and agencies grew by 22.5 per cent from 379,000 to 464,000. But if we look at the executive employees we see an amazing thing: the number of SX employees was 381 in 1968. By October of 1975 it had grown to 1,260, an increase in seven years of 230 per cent. Remember, we are talking about people to whom the lowest salary paid is $27,000. I suggest that if the government expects the people to co-operate in its programs it has to set an example, it has to begin to be serious about running the country seriously.
I have talked about the fact that we have allowed expenditures to get away. We have encouraged the growth of unemployment such as we have not seen since World War Two. Moreover, we are doing this at a time when we are asking people to pay very heavily for the running of government.
People are upset. People complain justifiably. I am sure there is no member of parliament who has not been approached by one of his constituents, and rightly so, and told a horror story about the people who are ripping off the system, people who are drawing unemployment insurance benefits to which they are not entitled, people who are getting welfare payments when they could, or should be working, or indeed when they are actually working. What we are not told by the government or by its paid and unpaid public relations experts is that while this goes on the rich are being subsidized much more heavily.
I have spoken before about the fact that, according to a senior official in Revenue Canada, we are losing hundreds of millions of dollars, because of the system, to people and companies which avoid taxes. Many of the companies concerned are multi-national corporations which use their international status to channel their profits out of reach of the tax man. This is not an idle charge. This was the message from Mr. James Gourley, director-general of audit for Revenue Canada in a speech in Ottawa in October, 1975. He said he had no idea how much Revenue Canada is losing through tax avoidance by multi-national corporations. He estimated that missing revenue from all sources, including the multi-nationals, might amount to as much as 10 per cent of total revenue.

If one takes into consideration the fact that estimated revenue for the current fiscal year is $27.75 billion, it becomes apparent that we are talking in terms of $3 billion. But aside from that vast sum which we are losing by failure to monitor the corporations we are losing even more because of deliberate decisions by the government to write loopholes into the Income Tax Act, legitimate ways in which people can avoid paying income tax.
Earlier in the debate the hon. member for Edmonton West (Mr. Lambert) was quoting the opinions of the former leader of the Liberal party in Manitoba on this question. Of course Mr. Asper was giving the facts as he saw them. He sees them from his point of view, which is that of a tax lawyer who has specialized in telling business and professional people how to avoid legally paying income taxes.
The National Council of Welfare recently put out a study entitled "Hidden Welfare System" in which they say that Canada's hidden welfare system allows the federal government to transfer billions of dollars to wealthy taxpayers through inequitable income tax deductions and exemptions. The report included a chart based on information supplied by the Department of National Revenue, which showed that the average benefit per taxpayer from 17 subsidies in 1974 was about $244 for those with incomes of less than $5,000. But persons earning more than $50,000 realized a tax saving of about $4,000. The report went on to say that these tax reductions represented a loss to the government of $6.4 billion which had been allowed to remain in the hands of taxpayers through tax inequities in 1974. This would have paid for the most recent income support and supplementation program 19 times over, the Council stated.
The report questions whether the billions of dollars the government fails to collect from taxpayers who can afford to pay more could not be better spent. It asserts the amount is enough to eliminate poverty in this country many times over. The study goes into considerable detail. I do not have time to deal with it thoroughly because of the many interruptions and questions raised earlier in the course of my remarks, but attention is drawn to the nature of some of these tax loopholes. There is the individual thousand dollars of tax-free income from investments. There is the Registered Home Owners Savings Plan, there is the Registered Retirement Savings Plan and so on. Seventeen of these concessions are listed.
I say to the minister in closing that if he expects people to accept the programs which government says are necessary, and if he wants co-operation-


The Acting Speaker (Mr. Turner):: I regret to inform the hon. member that the time allotted to him has expired. I took the interruptions into consideration and have allowed him three extra minutes.


David Orlikow: Can I not finish my sentence? I would take only a few moments.


The Acting Speaker (Mr. Turner):: I have allowed the hon. member three extra minutes.
December 2, 1976


Stanley Howard Knowles: Let him finish his sentence.


Some hon. Members:: By consent!


Robert Phillip Kaplan: On a point of order, Mr. Speaker, if you were to canvass the House I think you might find there was unanimous consent to allowing the hon. member to conclude his remarks.


The Acting Speaker (Mr. Turner):: Is there unanimous consent for the hon. member for Winnipeg North to continue his speech?


Some hon. Members:: Agreed.


David Orlikow: Mr. Speaker, I want to conclude by urging the minister to take his own time, as well as the time of the government, seriously to rethink the system of taxation that we have permitted to exist in this country, and to come into the House in the very near future with a proposal for a system of taxation which will be much more equitable and will give the people of Canada some feeling, whether they be rich or poor, that they are paying their fair share of what is required to meet the needs of this country, a feeling which I do not think people can possibly have, given the kind of system we have at the present time.


Mr. Gordon Towers (Red Deer):: Mr. Speaker, I should like to take this opportunity in this debate on Canada's taxation policy, particularly since the minister is now in the House, to bring to the minister's attention a very pertinent matter of concern to the agricultural industry at the present time.
Inflation has placed a false value on farmland today. Quite often when a small farmer retires he sells his farm property to some individual at today's inflated price, and has to pay a capital gains tax. We discussed this issue with the previous Minister of Finance and he did agree to take a look at it. Therefore I hope the present minister will give it due consideration.
This is a problem with which those who intend to retire in the not too distant future will have to contend. Not only do they have to pay a capital gains tax on the inflated value of their farm property, but in turn they then have to put this money into the purchase of a house at a similarly inflated value usually in an urban centre.
These retired farmers rely on the sale of their farm property to provide them with the means by which they can live the rest of their lives. I think there is a misapprehension about what farmers are worth at the present time. While a great many people feel they are fairly well off-and it is true that on paper they are-all their assets are tied up in property. The minute they turn their property into cash they are called upon to pay tax on the inflated value of their farms, which creates a particular hardship for them.
I hope that at some time the minister will give due consideration to this problem, perhaps in his next budget, and will pay
Income Tax
due regard to the differential that exists between the value of their property on valuation day, which is December 31, 1971, and the value of the property on the date it is sold.
The unfortunate part of it all is that the Department of National Revenue is about two to three years behind in its assessments. In a great many cases farmers put the anticipated value of their property on their income tax return, which figure is accepted by the Department of National Revenue, but the department has, I believe, up to seven years in which to reassess and readjust those figures. This causes a great deal of concern to western farmers who are caught in this dilemma. Fortunately, the Department of National Revenue is giving this important aspect of taxation due consideration, and rightly so.
If the Minister of Finance would compare land values he would find that as of December 31, 1971, land values were at their very lowest point for some time compared with both before and after that particular period. Between 1969 and 1970 land values were up, and then in 1972 and 1973 we find land values escalating again. The minister nods his head in recognition of this, and I appreciate the fact that he acknowledges these people are caught in a very serious dilemma.
Perhaps certain regulations to cover the situation of these people will be required, but surely some way can be found to help those who have tied up their lifetime earnings in property which they have to sell at time of retirement at an inflated price, the proceeds of which they then use to buy a house at inflated cost in their retirement years.
I do not propose at this time to delay passage of the bill in any way, but I hope the minister will take my remarks and use them to the best advantage of the farmers about whom I have been speaking.


Mr. Deputy Speaker:: Before I recognize the hon. minister I wish to inform the House that if he speaks at this time he will be closing the debate.


Some hon. Members:: Agreed.


Donald Stovel Macdonald: Mr. Speaker, this debate has been very extensive in subject matter, and indeed it is so because of the statement I made on opening second reading in giving a general perspective of the economy as we see it at this particular time. Therefore in closing the debate I propose to confine myself to a number of points of a more technical and specialized nature raised by hon. members in the debate, and we will have an opportunity of talking in more refined detail during the future course of consideration of the bill.
I can tell the hon. member for Red Deer (Mr. Towers) that I do appreciate his observations. He puts his finger, of course, on a problem that has recurred again and again throughout the community with respect to the capital gains tax. I think there was an escalation in monetary value of many kinds of assets that people held for a number of years, but I really cannot give him any kind of assurance or satisfaction this evening except to say that I will undertake to consider the
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December 2, 1976
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situation, along with a number of parallel representations that 1 have received, particularly in relation to business properties and to businesses where there is some disposal at arm's length, so as to see whether we can, with equity to others in the tax system, make an adjustment in this particular case. 1 noted particularly, as the hon. member observed, the impact on farmers of a relatively low valuation for land in the year which was the valuation year, and the suggestion that we might see whether or not there may be a distortion in that case.
I should like to say a few words about some of the remarks made this afternoon by the hon. member for Edmonton West (Mr. Lambert), particularly with regard to registered retirement savings programs. The first thing I would say is that the government has now under way at the official level an assessment of not just the narrow question of pensions but the broader question of retirement incomes to assess the current provisions of the law and the current policies we are now following, particularly in light of the impact on retirement incomes of the rate of inflation we have known in recent years. I therefore say to him that the area of retirement savings programs is being and will be reviewed in this context, and that there may be changes brought forth in future budgets to take account of the review which is taking place.
One of the issues which 1 suspect hon. members in all parties have been hearing about from their constituents is this question of the future of the retirement savings program which requires at age 70 that an annuity be purchased with the proceeds of the retirement fund. Indeed the consumers association of Canada has been particularly active in this regard. As an interim response I think I would have to remind those interested in this question that the registered retirement savings plan provisions of the Income Tax Act were put in the act in an effort to give those who are self-employed, or who are not entitled to the benefits of a registered pension plan, the same opportunity as participants in a pension plan to deduct from their taxable income from year to year amounts they would set aside for retirement.
The underlying policy is that it is in the interest not only of the employers and employees, but also the community in a broader sense, that individuals should make provision in a systematic way for their retirement years. Before the registered retirement plan provisions in respect of income tax were brought into being there was not that opportunity for people who were not participants in a company plan. Therefore the present provisions of the Income Tax Act are intended to try to place the self-employed-and that of course includes more people than the self-employed, but that is a form of shorthand if I might refer to them in that way-in the same position as pension plan participants so that they would be able to take periodic deductions and be in the same position as most pension plan recipients of having the right to a periodic payment of income rather than a lump sum payment upon their retirement from active employment. It is for this reason the provisions of the law were created requiring that the proceeds be put into an annuity pension which would be paid

out to the individual as time goes on. In a sense, unless one did that, the self-employed would then have a tax benefit which those in company pension plans would not enjoy.
The argument has been made-and there has been extensive debate on both sides of the question-either that the annuity requirement is a bonanza for the life companies, or conversely that on the part of the life companies in representative cases the individual stands to gain over the longer run by putting his funds into an annuity in this particular way. At this point I come down on neither one side nor the other of the argument, except to say this will be assessed within the context of the retirement income study and that we would give attention at that time to meeting the concern expressed, but bearing in mind at the same time the importance of equity as between people on company pension plans and those who have this provision for savings for their own retirement.
The hon. member for Edmonton West also drew attention to the specific problem with regard to the increase that is involved in the R.R.S.P. deductions, that is to say, the increase in the contribution limit to $5,500 will benefit only those having between $20,000 and $27,500 a year of earned income. As I understand the hon. gentleman's proposal, it was with respect to those 55 years or more who had not been contributing to a retirement pension plan and that there would be no percentage limit but just the $5,500, and that others would be entitled to a higher percentage.
I would have to say there is no magic in the figure of 20 per cent. It is one that has seemed to be reasonable. A practical consideration of course is that there are few people earning $10,000, $12,000 or even $15,000 a year who can use the full 20 per cent limit. It is difficult for them to save that much. It can be argued that an increase in the percentage would incline to favour those with an investment income who could live off their investment income and shelter more of their earned income in this way. That is the argument in respect of this particular group. As the hon. member knows, one of the great difficulties in creating any monetary crossover point is that naturally there are feelings of inequity on both sides of the frontier created. I am prepared to consider that, but at the moment I am inclined to think the provision we have left in the law is a reasonable restraint.
The hon. member made some comments with regard to the payout requirements under the charities provisions, in particular some of the requirements of the charities provisions with regard to capital payout. I know that the 5 percent capital payout is still regarded as being rather tough by some private foundations, but we feel that with the transitional rule that is provided the requirement can be fair. I do not know whether I should really deal with that in extenso at this point, or deal with it perhaps when we get to the amendments in respect of the charities. I think it might be better to defer any exhaustive comment until that point.
I should like to thank members for their contributions. We will now be moving to the clause by clause consideration. I might indicate that we have on hand a number of amendments to the bill which we will bring forward to deal with particular
December 2, 1976

comments that have been received on certain aspects of the bill. I will ask one of my colleagues to bring these forward when we come to those particular points.


[Stage Direction]
Motion agreed to, bill read the second time, and the House went into committee thereon, Mr. Laniel in the Chair.
Shall clause 1 carry?
[Stage Direction]
On Clause 1.
Donald Stovel Macdonald: Mr. Chairman, 1 should like to explain that this clause would increase the deductible limits under registered pension plans as opposed to registered savings plans from $2,500 to $3,500 for the maximum reduction which an employee would be allowed in respect of such contributions. These changes, both with regard to pension plans and registered retirement pension plans, will mean that Canadian taxpayers will be able to put aside an estimated additional $60 million for their retirement which would otherwise be taxed.


Marcel Joseph Aimé Lambert: Mr. Chairman, I found the last statement of the minister to be the most amazing of the lot. I do not think the minister necessarily meant to say that the $60 million would go into a tax that was payable by the taxpayers, but rather that an additional $60 million would go into a form of deferred income on which tax would be payable. I will not accept exactly what the minister says. As the hon. member for Scarborough East says, it may give an opportunity, but I do not think that it is to that extent a sequestration of income to the extent that there should be a diminution in the tax yield of $60 million simply by raising these limits by $1,000. It is just not in the cards. But there is one further point that I would like to make.
While it may not be strictly apposite to this particular section, it still has to deal with a problem that was raised with me by employees of CNR and a number of other organizations that the contributions to the pension plan under the labour agreement shall be paid entirely by the employer and that ipso facto the payment by the employer into the registered retirement plan bars the employee from making any payment into the registered retirement savings plan on his own, even though as I recall the argument, the payment by the employer into the registered retirement plan does not reach the limit. In other words, if the employer, as the result of a collective agreement, pays the entire shot into the registered retirement plan, the employee is precluded from paying any portion into a registered retirement savings plan. Frankly, I do not think this is right. The employee in a big union, such as in the CNR, running or operating trains, has no say so in this matter. It is a condition of employment, and this applies not only to the CNR but to many other collective agreements in organizations with many employees. The employee is bound under a variety of formulas. He either goes along with the crowd or he quits his employment. The contribution is paid into the registered pension plan solely by the employer, and the employee is barred
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by the rules of the Income Tax Act from making any contribution to the registered retirement savings plan.
I should like to hear the minister confirm whether or not 1 am correct in my interpretation and, if so, what would be the rationale in maintaining this disability, because I maintain that the rationale of the registered pension plan and the R.R.S.P. is the encouragement of a great cross section of workers to provide something for their retirement. There are incentives by way of deferred tax on both these plans so that the individual does not prescribe to a socialist philosophy of earning all he can, spending all he can, and at the age of 65 holding out the pockets of his trousers and saying, "I have spent everything, now the state will look after me".
I think the philosophy which is recognized in the Income Tax Act under R.R.S.P.'s and under registered pension plans is that however low an individual's income may be, as a result of the contributions paid by the employer and by him there is provision for some savings for his retirement. To me this is the greatest of the social objectives that we can have in so far as the state is concerned, rather than the state trying to induce the individual to spend everything and then come to the gate at the age of 65-or whatever may be the variation in so far as spouses are concerned-and saying, "Here I am, I am devoid of everything but the clothes in which I stand. Now support me in the style to which I would aspire". That philosophy is prevalent among far too many people today in Canada.
I will ask the minister to say whether I am right or wrong in my technical application of the Income Tax Act and, if 1 am right, could he give his views as to why he insists that the act shall continue as it is presently designed?


Donald Stovel Macdonald: I would accept the correction of the hon. gentleman. My final phrase, of course, is that the $60 million would be taken out of taxable income rather than out of the taxes themselves.
If I could hypothesize the situation, under a registered pension plan in which the employer contributes $3,500, and the question is whether the employee could contribute on his own an additional $2,000 to a registered retirement savings plan which would then be deductible to the extent of $2,000, I would confirm that he cannot do that in that particular situation. He could do so in a case where there is a joint contribution, but not in the case of a sole contribution by the employer.


Marcel Joseph Aimé Lambert: I cannot see any rationale for the distinction because, as I pointed out, an employee in a large union or a large working group has no individual say. The contract is negotiated over his head, and it is a condition of the working agreement that the employer shall make the sole contribution.
As the minister has rightly pointed out, it might be limited to $3,500 a year. Certainly there are many categories of workers-not just in the railways but also in others-where the pay is quite sufficient for them to put aside up to an extra
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December 2, 1976
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$2,000 a year in a registered retirement savings plan, and frankly I just cannot understand this negative restriction. Under most other circumstances the individual has the right to go to $5,500, particularly where there is a joint contribution, and why, if there is a sole contribution on the part of the employer, is the employee penalized?


Donald Stovel Macdonald: Mr. Chairman, I must acknowledge that the hon. member has made a serious objection which I would be glad to consider.


William Gordon Ritchie: Mr. Chairman, I would like to ask the minister a question. What was the total amount of savings under this section last year, approximately, and how much of that would have been collected in taxes had this particular registered retirement plan not been in effect? Can the minister give me some approximate idea?


Donald Stovel Macdonald: I am sorry, but I do not have that information this evening. Elowever, I can certainly inquire to see if it can be put together.


William Gordon Ritchie: Do I understand the minister to say that this clause would mean another $60 million approximately which would go into the plans and which would be taxable with these new amendments?


Donald Stovel Macdonald: It means that there would be $60 million of taxable income which would have been subject to taxation but which will not now be.


William Gordon Ritchie: Of that $60 million is there any calculation of what the government might have collected?


Donald Stovel Macdonald: I think it would be very difficult to apply a general factor. I could see if anyone has put together that kind of calculation.


David Orlikow: I wonder if the minister can tell me how many people participated in this plan last year and how much money which would have been paid in the form of income tax went into this type of plan.


Donald Stovel Macdonald: The second part of the question is the question I already answered which was asked by the hon. member for Dauphin. I do not think I can give an-estimate as to what the tax would have been if the provision had not been in existence. I might say that one of the aspects of the study I referred to at second reading is the difficulty of getting firm information in this regard, and therefore I cannot give the hon. member even a round figure on that this evening.


David Orlikow: Is the minister saying that he does not have any estimates as to the number of people who have taken advantage of this tax provision and the amount of money involved? I wonder also if studies are being done, and if the question of what taxable income people availing themselves of the plan are making has been considered.


Donald Stovel Macdonald: I am saying we do not have the information with us this evening. I can certainly make inquiries.


Thomas Gordon Towers: Mr. Chairman, I am not sure that this is the clause under which I should raise my point. I think it is, but if I am wrong the minister of the Chair could correct me.
I am very pleased whenever there is a government program which encourages the Canadian people to undertake some kind of registered retirement savings because of the fact that it has a teaching factor which has stood this country in good stead through the years, that is, to conserve those things which have been of benefit to us, and one of those things is money.
Any plan to inspire people to save for years when they will no longer be working is beneficial, and so I welcome programs to encourage people to save. Many in the House will remember that during the last war there was a program under which people could put money away, and that money was used for the benefit of the country. It was not necessarily used for the benefit of the citizen individually, but it was of benefit to the country because Canadians became involved in financing their country. I think we should use every means available to us to get people to do this because there seems to be a very widespread feeling today that we might as well spend what we have, eat, drink and be merry, and let tomorrow take care of itself. This is a very dangerous philosophy, therefore I encourage the minister to look further into registered retirement savings.
The point I want to bring to the attention of the House is that at the present time many people are concerned that when they become 71 they will either have to take the money out of their registered retirement savings plans and pay tax on it as of that date, or turn it into an annuity with an insurance company. There are people who feel that this is a windfall profit for insurance companies, and I think the government should take a look at this aspect and not put this discouraging problem in front of people who would ordinarily like to become involved in a registered retirement savings plan.
Perhaps between the ages of 65 and 71 people do not wish or require the money they have put away in registered retirement savings plans, but when they reach the age of 71, all of a sudden they have to do something with that money. It seems to me-and I hope the minister will reply to this-that for the people involved it would not be all that much of a hardship and probably would not have that much effect on the over-all taxation policy of the government if those people were allowed at any time during their life to take that money out at whatever age they would like to do so. I would like the minister to respond and tell us why the age of 71 is the magic age and why the choice cannot be left to the individual.


Donald Stovel Macdonald: I noticed that the hon. member stepped behind the curtain when I made the point previously, but I would be glad to repeat it. The short explanation is that it would be unfair to people who are in registered pension plans as opposed to registered retirement savings plans to enable those in the second category to take it in a lump sum
December 2, 1976

when the first category, by the nature of the plan, can only take it in periodic amounts. The provision was made in the tax law to bring the people I described as self-employed into the same relative position as those employees under a registered pension plan. As I said in my statement earlier in reply, this is under consideration as part of the study into retirement income. The short answer is that the tax law attempted to treat the two groups equally, and that is the reason for it.
There has been a further quick examination of the Income Tax Act and I should like to revise the opinion I gave the hon. member for Edmonton West previously. May 1 hypothesize another example? If, for example, an employer has put into a registered pension plan $7,000 but the employee has put nothing in, I am advised that the employee can put up to $3,500 or 20 per cent of his earned income into a registered retirement savings plan. In other words, 1 must revise the earlier opinion.


Marcel Joseph Aimé Lambert: Mr. Chairman, I am glad to have heard the minister's answer. I may say that it is at variance with the opinion I received from the Minister of National Revenue about one year or 18 months ago. At the last consideration of the Income Tax Act it was not possible to consider the point because there was no relevant amendment to the act before the House. I was foreclosed from any opportunity of discussing the question in detail. 1 hope as a result of this evening's discussion, notwithstanding the minister's revised opinion which was far more favourable than the one he had given me earlier, that, as my colleague for Red Deer said any discouragement to incentive to saving will be removed.
These savings plans are an incentive to save; they are not a way of evading tax. They represent a deferment of tax. On the other hand, at the crucial time, when people are 65 or 70 years old, such plans will lessen the pressure on government, inasmuch as thousands of people who participate in such plans will not be clamouring for additional help from the government. In addition, such people pay their shot, as it were, when they earn money. In the interval, when these people have been earning they will have provided funds for investment in Canadian business, and God only knows we are short of such funds.


David Orlikow: Mr. Chairman, it is unfortunate that the minister has not seen fit to answer the questions which I and the hon. member for Dauphin asked with regard to the numbers of people who have availed themselves of benefits obtainable under the plans the committee has been considering, and the income bracket to which people who availed themselves of such plans belong.


Marcel Joseph Aimé Lambert: They include railway workers.


David Orlikow: It is obvious that the vast majority of people who avail themselves of these plans are in the relatively upper income brackets.
Income Tax


Marcel Joseph Aimé Lambert: Not at all.


David Orlikow: The hon. member for Edmonton West is quite right; railway workers have availed themselves of the plan as have steelworkers and others in those categories. Yet I am certain that studies will show that most participants are business and professional people who earn incomes which permit them, after they have contributed to regular pension plans, to put extra money into these types of registered plans. They are helping or benefiting themselves and, to that extent, the people as a whole pay for their benefits, because the government does not collect tax which such people would ordinarily pay.
Is the government considering studying the sorts of pension plans now in place in Sweden and West Germany, to mention two countries about which I know something? In those countries employees and the self-employed pay a much higher proportion toward the state pension than we pay toward our Canada Pension Plan, and the benefits in those countries are substantially higher. In other words, and I speak from memory but I do not think I am wrong, in those countries people retire at age 65 on a pension which equals close to two thirds of their average earnings in the best five years before age 65. That pension is indexed either to the cost of living or to the increase of the average industrial wage.
Such a pension in this country would do away with the justifiable fear of many people, namely, that if they retire this year and inflation rages at between 6 per cent and 10 per cent, as has been the case for the last half dozen years, by the time they reach age 70 their pension will not be large enough to maintain them in dignity. Can the minister say if the government is considering an expansion of the government pension plan in order to encourage mobility and to provide a better pension than we now have?


Donald Stovel Macdonald: Mr. Chairman, I shall be glad to check with the Department of National Revenue on the first question, to see if they have analysed tax returns in determining if there is any profile of those who are taking advantage of the registered retirement pension plan provisions. On the second point, one of the fundamental questions to be studied in connection with income is whether the private pension plan system provides the best assurance for retirement, whether it can deal with the problem of inflation, and whether a public system of the kind described, for example an expansion of provisions under the Canada Pension Plan, would be desirable.


Marcel Joseph Aimé Lambert: Mr. Chairman, may I draw to the attention of the hon. member for Winnipeg North and the minister table 15 of 1975 taxation statistics, which relates to the 1973 taxation year? The table deals with registered pension plan contributions on the basis of numbers of contributors in various categories of taxpayers and amounts they have contributed, and with registered retirement savings plans and the amounts various income taxpayers have contributed. May I say with regard to registered pension plans that the big bump in the curve does not largely support the contention of the hon. member to my left. Contributors range from those in the $5,000 to $5,500 taxable income class, to

December 2, 1976
Adjournment Debate
those in the $15,000 class. The bump, or the spread, shall we say, is somewhat larger with regard to retirement saving plan premiums. If the hon. member examines this document which is readily available from the Department of National Revenue I think he will find it answers everything he wants to know. Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker, when one takes into consideration that the Government of Canada has guaranteed a loan of $50 million of the Canadian taxpayers' money to Canadair, I for one find it very questionable that the government refuses to supply parliament with pertinent information with regard to Canadair.
In particular, Mr. Speaker, I am referring to my question of November 2 to the Minister of Industry, Trade and Commerce (Mr. Chretien) in which I requested that the minister table the document whereby the government authorizes the loan guarantee. That was not done, and as Canadair is now owned by the taxpayers of Canada, and as the board of directors has a majority of senior civil servants presumably representing the taxpayers' interests, I feel the government owes parliament some answers on Canadair.
With $50 million of public funds invested in Canadair, the government has an obligation to come clean and state just what its plans and expectations are for Canadair. There are several matters with regard to the LearStar that must be raised.
Fundamental to the entire matter is the basic decision of the government to purchase Canadair. Having made this questionable decision, and since it has not divested itself of this establishment, the government faces the inevitable problem of having a major plant facility in a depressed industry. Out of this rises the question, if the government's investment in Canadair is a "make work" program for the Montreal area then why doesn't the government designate it as such, and different criteria should be applied? The Liberal government has squandered far too much of the taxpayers' dollars on schemes in the past and should be accountable.
Mr. Lear in his public statement on the Canadair program said that the market could reach 2,500 aircraft over a ten year

period. I have consulted with aircraft experts, and they find that very questionable. There has not been a civilian jet aircraft that has sold anywhere near this number, and the most successful jet aircraft ever produced, the Boeing 727, has approximately 1,200 in existence. Fred Kearns, president of Canadair, was obviously conscious of this fact when he stated that 1,000 might be a more reasonable number. Even that figure is similarly optimistic and I note that the minister has referred to between 250 and 300 aircraft over a five to seven year period.
You know, Mr. Speaker, the sale of 300 aircraft in the $3 million price range would be a successful program, but there would have to be a highly successful marketing program. If you look at the record of the Gulfstream Two, which is the obvious competitor for the LearStar, this aircraft has established a strong position in the market but sales are well below the 200 level.
As far as the commuter service area is concerned, based on the information I have, I do not believe that there is a market not presently being serviced by either turbo-prop aircraft or existing twin jets such as the VFW-614. It would seem that the government is in a sense competing with itself because the major thrust of the De Havilland Dash 7 was directed toward the commuter short haul market and with the type of stage lengths being considered there is no particular advantage to jet speeds. In fact the turbo-prop aircraft is less costly to operate at these stage lengths than the jet aircraft, particularly in the area of fuel consumption.
The major market for this aircraft must rest in the executive aircraft field and I would think that if the probable maximum market is between 200 and 300 aircraft over a ten year period then one has to question the economic basis for the investment. In an article that appeared in Le Soleil dated September 14, 1976, it would appear that the requirements for the program could total $150 million. At that level Canadair would have to sell 500 aircraft just to recover the investment let alone cost of money over the intervening period.
The government is being naive in suggesting that the only funds that it will provide are a guarantee of $50 million. We all know that if additional funds are necessary they will be provided since the government would otherwise be faced with having to close down the facilities or meet the guarantees that it has undertaken.
In light of the conflicting figures on projected LearStar sales, as well as other questions in relation to Canadair, the time has come for the government to quit hiding behind the cloak of secrecy and refer this matter before parliament. Secrecy under these circumstances should in no way be tolerated because tax dollars are involved. 1 contend that the proper course of action is either to refer this matter to the Standing Committee on Industry, Trade and Commerce or to establish a special committee to delve into the Canadair program. In the meantime it is absolutely imperative that the Minister of Industry, Trade and Commerce table all the pertinent documents related to Canadair.
December 2, 1976

With $50 million committed to Canadair there certainly are a lot of unanswered questions. Certainly in transactions between firms in the private sector no profit motivated company would enter into such a large transaction without reasonable assurances that it was a wise venture. The Canadian taxpayers expect the same from the government and would like to know what kind of a venture Canadair is.
In the final analysis the only real hope that the taxpayer has is that the government will divest itself of Canadair as soon as possible. If Canadair is really a potentially profitable operation then one would anticipate increased interest by the private sector in purchasing Canadair. In the meantime the government should start revealing the true information with regard to Canadair.


Mr. Hugh Poulin (Parliamentary Secretary to Minister of Industry, Trade and Commerce):: Mr. Speaker, the hon. member referred to the question he asked, and I would draw his attention to the words of the minister in reply. He said:
Last Friday in Montreal 1 held a press conference on this matter during which I gave all the information. We guaranteed a loan of $50 million, the government of Quebec a loan of $20 million and the balance of the program to be financed through two Canadian banks.
I should like to explain the matter further for the benefit of the hon. member. Canadair estimate that it will require to borrow up to a maximum of $128 million in 1979 for the LearStar 600 program. The funds will be used in both the development and production phases of the program to finance the work in process and inventory build-up prior to delivery of the first aircraft. Present arrangements are for the $128 million to be provided by a consortium of two Canadian chartered banks. The federal government will guarantee $50 million of the loan and the province of Quebec will guarantee a further $20 million. The balance of the financing, $58 million, will be secured by a pledge of Canadair's assets.
The LearStar program is recognized by the federal government to be a relatively high risk venture. However, the potential benefits to Canada in terms of exports, employment, technology gains and return on investment are considered to be sufficiently high to warrant supporting the program.
In terms of anticipated benefits, a market for 250 aircraft, with an export value of $950,000,000, is forecast. The program should create 1,500 jobs at Canadair and a further 1,500 at other facilities in Canada. Canadair will gain access to the advanced technology in airframes and engines and will earn a very satisfactory return on investment if the program goes according to plan. Independent consultants retained by the department have evaluated the market and the estimated program costs and have indicated that Canadair's estimates are, in their opinion, soundly based.
Firm orders with deposits have now been received for 58 aircraft from major corporations, and additional orders are expected before the end of the year. The present order backlog for LearStar aircraft is about $300 million.
Adjournment Debate
ATOMIC ENERGY OF CANADA LIMITED^SERVICES TO BE RECEIVED FOR PAYMENTS TO AGENT


Mr. Ray Hnatyshyn (Saskatoon-Biggar):: Mr. Speaker, the report of the Auditor General, in the normal course of events documents the infinite capacity of the government for misal-locating the taxpayers' money, has reached beyond a comedy of errors to reveal a drama played on an international stage which is at times shadowy, at times sinister. The actors I want to deal with in this drama are two powerful Crown corporations, Atomic Energy of Canada Limited and Polysar Corporation.
The AECL connection concerned a $15.3 million commission payment made to a company called United Development Inc. which had acted as the corporation's sales agent in negotiating the recent nuclear sale to South Korea. Of this payment, $5.1 million was commission on the sale and $8 million was billed as expenses for which the accounting was, in the restrained prose of the Auditor General's report, inadequate. In addition to these nebulous expenses, which included $2.5 million to consultants, there was also included a $2 million advance payment on a post services contract which calls for minimum payments of $175,000 by AECL every three months for what could well be the next eight years.
I raised the question of the payments for the services being rendered with respect to this so-called commission paid to Mr. Sol Eisenberg, who apparently is a principal of this particular company, hoping that I would get some information from the minister. The reason I bring it up tonight is that unfortunately from my point of view, and I think from the point of view of shedding light on this particular topic, the minister again persisted in evading the question by sloughing it off on the basis that it is being answered in another place at another time.
Unfortunately I have to point out to the House that the minister was not absolutely correct in his assertion that the question has been answered. We are still in the dark with respect to the services being rendered for these particular payments. In fact during the course of the committee deliberations it was suggested that the Auditor General travel to Tel Aviv to investigate the books and discuss the nature of the services rendered with Mr. Eisenberg. But Mr. Macdonell refused to accept this suggestion because limitations were placed upon the terms upon which he could investigate the books of Mr. Eisenberg. He said that he was prepared to go to Tel Aviv only if there was an assurance that he could learn the nature of the services and expenses that have been billed for. He also wanted to know the nature of the post services contract for which AECL agreed to pay up to $5 million, $2 million of which has already been paid.
I think the government does Atomic Energy of Canada Limited a great disservice by continuing to avoid answering questions and by not taking the initiative and getting to the bottom of it, coming clean with the Canadian people, and particularly with the House of Commons, as to what precisely

December 2, 1976
Adjournment Debate
is going on. I hope that the parliamentary secretary will be able to enlighten us as to what services are being provided for this massive amount of money that is in the nature of a commission.
The Auditor General is a respected servant of parliament; he has expressed concern, and I think we owe a duty to him and to the people of Canada to have the situation explained by the government, hopefully by the parliamentary secretary tonight. As long as the question remains unanswered there will be continued speculation as to the nature of these payments and, whether the government likes it or not, there will be the suggestion that there is something very unusual happening, leading to the further speculation that there is something improper.
It is not members of the opposition who are causing this speculation to be made. I think when people are not given the full facts, as very often they are not by this government, it is only human nature to tend to suspect there is something wrong. If I may be permitted to give advice to the government, I would ask it please to let us know precisely what services were involved in this particular transaction; and also I ask the parliamentary secretary to explain tonight whether or not under this particular arrangement with Mr. Eisenberg we in Canada will be faced with a total expenditure, not of $15.3 million but something in excess of $20 million, for services that have not been verified as yet.
If we are in fact paying these quarterly payments of $175,000 until at least 1980, in my estimation this means that the total amount that will be expended in respect of the commission to Mr. Eisenberg and his company in connection with this transaction will exceed $20 million. I hope the parliamentary secretary will be in a position to explain why the minister seemed to indicate that would not be the case. If there is an explanation I would like to hear it tonight.


Mr. Maurice Dupras (Parliamentary Secretary to Minister of Energy, Mines and Resources):: Mr. Speaker, on reading questions the hon. member addressed to the Minister of Energy, Mines and Resources (Mr. Gillespie) in this House last Friday, November 26, it is evident to me that the member was under some misapprehension. I refer in particular to the question which indicated it was the member's impression that under the renegotiated contract AECL might ultimately pay its agent in the Republic of Korea in excess of $20 million, or more than was provided for in the original contract.
The minister answered the question by stating that it had been made quite clear before the Standing Committee on National Resources and Public Works that the renegotiated contract was for a lesser amount than the original contract. In case the member himself is still not quite clear on the matter I should like to elaborate.
The original contract provided for the payment of $20 million. Under the renegotiated agreement, the amount cannot
exceed $18.4 million. The latter includes a provision for postcontract services, payments to be made quarterly for expenses incurred, to a total not to exceed a fixed amount, namely, $5,142,392 over the entire performance and warranty period.


Steve Eugene Paproski: Cash or chargex?


Maurice Dupras: You have a choice. There is a provision in this contract whereby, should AECL question any invoice, AECL shall nevertheless pay in respect of such quarter $175,000. In other words, this is not, as the member seemed to think, an open-ended contract.
The hon. member also wanted to know what would constitute the post-contract services AECL would receive from the agent. As this House is well aware, the Minister of Energy, Mines and Resources has asked, and the chairman and members have agreed, that the Public Accounts Committee examine at an early date AECL's employment of agents for the purpose of effecting power reactor sales in the Republic of Korea and Argentina. So far three committee meetings have taken place. Because of the great number of questions put to the Auditor General we have not yet had an opportunity to examine either the minister or the officials of AECL. Nevertheless, I do not think it would be redundant to answer the question now, and in fact it might help to dispel some of the uncertainty that now exists.
Throughout the performance and warranty period of the contract between AECL and the Korea Electric Company- approximately seven years-the agent will provide services which will include first, assistance in getting AECL's office and personnel established in Korea; second, assistance with the entry and handling of all goods imported for the job, the value amounting to well over $100 million over the construction period; third, assistance, as necessary with local subcontracts for labour, material and services; fourth, advice on Korean laws and regulations affecting the execution of the main contract; fifth, commercial assistance to AECL in respect of dealing with the customer concerning changes in the scope of work and the provision of spare parts; sixth, provide experienced staff in Korea and elsewhere as necessary to perform these functions.
These are services that are now foreseen at a very early stage of the project. They are more in the form of a framework than a detailed description. Undoubtedly there will be others which AECL will require and the agent will provide, under the terms of the agreement.
The hon. member has asked why the services to be provided by the agent could not be supplied by the purchaser. I believe the outline I have given helps to answer that question. In any event, these services are of a kind that are either the responsibility of the supplier or are in the suppliers' interest. If they were not provided by an agent, they would have to be obtained from other organizations. This is the only way to do it. Thank you, Mr. Speaker.
Motion agreed to and the House adjourned at 10.21 p.m.

Friday, December 3, 1976