1976-05-27

ROUTINE PROCEEDINGS


Mr. Douglas Roche (Edmonton-Strathcona):: Mr. Speaker, on this first anniversary of the presentation to Parliament of a petition signed by more than one million Canadians urging legislation providing for the child conceived but not yet born the same protection as is provided for any other person, and noting, with urgency, that the 48,136 abortions in 1974 were 14 per cent of live births, I move, seconded by the hon. member for York South (Mrs. Appolloni):
That this House commend the organizers of the petition for their continuing efforts to seek legislation to protect the unborn and thus foster a life-sustaining society.


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.


UNEMPLOYMENT INSURANCE
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I rise on a matter of urgent and pressing necessity. Considering that those parts of the country most seriously affected by the proposed change in the minimum attachment period requirement from eight weeks to 12 weeks for unemployment insurance benefits are precisely those parts of the country most seriously affected by persistent high levels of unemployment, I therefore move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That the government be instructed to cancel its proposed intention to make this change in the Unemployment Insurance Act.


Mr. Speaker:: Order, please. Such a motion can be presented only with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


REQUEST FOR MORE FUNDS FOR MEDICAL RESEARCH COUNCIL-MOTION UNDER S.O. 43
Mr. Eudore Allard (Rimouski):: Mr. Speaker, pursuant to Standing Order 43, I request the unanimous consent of the House to present a motion dealing with a matter of urgent and pressing necessity.
Considering that according to a study published by the Science Council of Canada, the National Research Council of Canada should normally have a budget of some $19.9 million to be able to bring their financing at the same level as in 1969, whereas for the current year, namely 1975-76, the budget of the council has been frozen at $10.9 million; considering that the Canadian Cerebral Palsy Association protest violently against the reduction of funds alloted to medical research and that they go as far as saying that these reductions are deplorable, and considering that in the budget of May 25, the Canadian government does not give priority to medical research, I move, seconded by the hon. member for Roberval (Mr. Gauthier):
That this House order the federal government to take immediately all concrete measures required to enable the Medical Research Council to proceed with their works safely, and to face present and future health problems.


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


Some hon. Members:: Yes.


Some hon. Members:: No.


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



TRANSPORT


Mr. David MacDonald (Egmont):: Mr. Speaker, I rise on a matter of urgent and pressing necessity which threatens the very basis of Confederation in this country. The dis-

May 27, 1976
Air Canada
parity between the regions of Canada is well known, but the disparity between government rhetoric as opposed to concrete action in resolving these problems has now reached scandalous proportions. Nowhere is this more obvious than in transport policy, as evidenced by a statement this week, the one contained in the communique issued yesterday following the meeting of the Council of Maritime Premiers, which said that:
The announced allocation of transportation expenditures reductions was deemed to be inconsistent with programs designed to correct regional disparity.
The other by the Hon. Gilbert Clements, Minister of Tourism in P.E.I., who felt the situation was serious enough to request an appearance before our Standing Committee on Regional Development, where he stated on Tuesday that-


Mr. Speaker:: Order, please. Surely the spirit of Standing Order 43 is clear. It enables hon. members to expose briefly the urgency of the motion that is put before the House, not to debate it.


David Samuel Horne MacDonald: Perhaps I can put the
motion, Mr. Speaker. Because of the concern expressed by a number of members and ministers, I move, seconded by the hon. member for St. John's East (Mr. McGrath):
That the Minister of Transport meet immediately with the Atlantic premiers, as requested by them, and that he make a statement on motions in the House at the earliest possible date to justify his department's insensitivity to the needs of our poorer regions.


Mr. Speaker:: The motion can be presented to the House only with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.



AIR CANADA


Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Yesterday the president of Air Canada announced that Air Canada will be seeking increased air fares in the near future. These proposed increases come within months of the previous increases of April 18. In light of the fact that fare increases are usually directly related to higher operational costs, and in light of the financial fiasco in the finance branch of Air Canada in Winnipeg, I would like to move, seconded by the hon. member for Selkirk (Mr. Whiteway):
That this House direct the Canadian Transport Commission to not consider any air fare increases for Air Canada until the Auditor General, under direction from this House, has had the opportunity to do a complete investigation of Air Canada's financial operations to determine that proposed air fare increases are justified, and furthermore that upon receipt of the Auditor General's report the CTC be informed as to whether or not such fare increases are justified.
Furthermore in light of the fact that Air Canada has not been before the Standing Committee on Transport and Communications since 1973,

that the president of Air Canada, Mr. Claude Taylor, be directed to appear before the Standing Committe on Transport and Communications immediately.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


David Samuel Horne MacDonald: Mr. Speaker, my question is for the Minister of Transport. It relates to the very strong statement issued yesterday afternoon by the Council of Maritime Premiers, in effect a denunciation of federal transport policy and raising specific questions about the co-ordination of such a policy with the government's program and the announced commitment to regional economic development. In view of the specific request by the Atlantic premiers made in February concerning the revised intra-regional freight assistance program and the fact that there has yet been no official response from the Minister of Transport, can he explain the shocking disregard of this request and what in fact is the basic commitment of the federal government in respect of the rationalization of the transport policy with other programs of economic development in the region?


Hon. Otto E. Lang (Minister of Transport):: Rather than a shocking disregard there was indeed careful consideration of the position, including a possible position which had been generally agreed upon between the Atlantic transportation ministers and ourselves with regard to certain freight subsidies, and on that further consideration we decided to have rather longer term discussions before making any move. Indeed, for the present time, therefore, there has not been any further action taken on the $5 million cut in the inter subsidy which had been proposed earlier. The discussions indeed will proceed, but any such action will only be taken when we are satisfied that what we are doing with the available money for transportation is in the best interests of the Atlantic provinces.


David Samuel Horne MacDonald: I wonder whether the minister can indicate why no information was conveyed or no official response was given to the governments of the Atlantic provinces. In addition, can he indicate what steps have been taken with regard to the announced increase by CN and CP concerning freight rates as of July 1 for that region, and has the minister arranged any meeting with the provincial premiers in order to alleviate the obvious concern and anxiety they have with respect to federal transport policy?

May 27, 1976


Otto Emil Lang: There are possible contacts at different levels, and the ones that I had foreseen were preliminary discussions between our officials and the officials from the Atlantic region. Indeed, I will be very surprised if those discussions have not already been under way. It may be that the premiers were simply not aware of what may be done. I obviously would be prepared to meet the premiers. I have a regular system of meeting with the Atlantic transport ministers, and I had thought that would be the ordinary way of going about dealing with transportation issues, but it does seem that each time the premiers meet they raise the subject in a significant way. I will certainly be delighted to join them at some meeting if that is their wish.


David Samuel Horne MacDonald: In view of the fact that the council of premiers did issue this very strong statement, and considering their particular anxiety with respect, perhaps, to a decline in the federal commitment with respect to a co-ordination of transport policy in terms of the commitment to alleviate regional economic disparities, I wonder if the minister will indicate whether he stands by the same commitments made by his predecessor, now the Minister of the Environment, with respect to the fact that transportation policy had to take into account the special needs which exist in the various regions of this country, and if so, perhaps he would be prepared to make a statement shortly on motions with a view to alleviating the anxieties which presently exist in the region.


Otto Emil Lang: There is certainly no need for the anxiety, and let that be the statement. In fact, the ongoing position is very much to take regional problems into consideration, and it is our intention-and I convyed this to the Atlantic ministers at our last meeting-to include that as a statement of principle in legislation which will be before this House in the next session, which is also known to them as being in our schedule.
Therefore, there has been every assurance. We have a regular and ongoing system of meetings with the federal and Atlantic provincial transportation ministers which can take all these matters into consideration. Indeed, we have ongoing and regular meetings of officials, and I think the system is working very well. I am somewhat surprised that there might be a breakdown in communication between the transportation ministers and the premiers of the Atlantic provinces.


POSITION OF ATLANTIC PREMIERS ON BUDGET REDUCTION AND DELETION OF SUBSIDY ON EXPORTED WHEAT AND FLOUR-CONSULTATION WITH PROVINCES
Hon. Robert L. Stanfield (Halifax):: Mr. Speaker, the minister says that nothing is being done without consultation, and indeed, approval of the provincial leaders in the Atlantic provinces. Is he suggesting that the premiers or the appropriate ministers in the Atlantic provinces approve of the fact that of the $41.2 million removed from the transport budget as of December, 1975, some $22 million touched on the Atlantic region, and that the leaders in those provinces approved the provision in the bill before the House to delete the subsidy on the export of wheat and flour?
Oral Questions


Otto Emil Lang: Mr. Speaker, I would like to make it quite clear that I did not say that in every case before action is taken there will indeed be approval of the region. That may be a bit too much to ask, in terms of the obvious desire on the part of any particular region not to pay additional amounts and to have increased and never decreased subsidies. Region by region that is understandable, but not very consistent with the over-all problem of spending in this country.
Furthermore, I would say that the figure is quite wrong in terms of the proportion of savings, and we discussed this fully with the Atlantic transportation ministers some months ago. Furthermore, wrong as it is, it includes, for instance, the very $5 million which, as I just indicated to the hon. member for Egmont, has not been gone ahead with even though the particular slicing of that $5 million was an agreed matter in terms of better re-arrangement of subsidies. Obviously, in regard to increases in ferry charges, those who have to pay them prefer not to pay them, but on occasion we have to face the fact that as costs increase, some charges have to increase too.


Robert Lorne Stanfield: I take it that the minister approves of selective consultation. I would like to ask him whether he has had adequate consultation to work out an integrated approach to transportation problems in the Atlantic provinces with a view to fostering the development of those provinces rather than what seems to be a hit and miss effort on the part of his department to cut back on subsidies here and there.


Otto Emil Lang: Mr. Speaker, the hon. member for Halifax suggests that I have been talking about a selective approach but I have not. I have been talking about an all-embracing approach to consultation. If he thinks that what I mean by consultation is to give the final decision and an ultimate veto to a region, that is wrong. There is a need for the federal government to take some decisions and to take the responsibility for them. There cannot be a simple veto and control by any region in this country. I can assure the hon. member that there is the fullest consultation and consideration of the Atlantic need and the very organization of the committee of Atlantic transportation ministers with myself and with our officials working on an on-going basis is designed exactly for that purpose and will be doing a good job of it.


UNEMPLOYMENT INSURANCE
John Edward Broadbent: Mr. Speaker, continuing on the question of consultation I have a question for the Minister of Finance. Could the minister inform the House whether provincial governments, particularly in the Atlantic provinces and Quebec, were consulted before he announced in his budget two nights ago, the proposed regressive changes in the Unemployment Insurance Act which would change the minimum attachment period for

May 27, 1976
Oral Questions
eligibility from eight weeks to twelve weeks? Were the provinces consulted and if so, what were their views?


Hon. Robert K. Andras (Minister of Manpower and Immigration):: Mr. Speaker, perhaps I might be permitted to reply to the hon. member. The answer is that we have had a series of bilateral consultations with the provinces, which I think included every one of them, on a range of options which we are looking at, including the one to which reference was made. As recently as about three weeks ago, I indicated at a meeting I attended with the ministers responsible, or at that time designated, for manpower matters, some of the ideas that we had and indeed they have had some presentation on some of the reasoning behind them.


John Edward Broadbent: A supplementary question, Mr. Speaker, and perhaps the minister would try to answer it precisely. Could he tell us particularly whether the governments of the Atlantic provinces and the province of Quebec approved the specific change of the minimum attachment period that is required for unemployment insurance benefits to be changed from eight weeks to twelve weeks?


Robert Knight Andras: Briefly, Mr. Speaker, they did not give us any precise answer. They knew that these were options being considered for a very great length of time. Their responses, both verbally and in writing, were not precise. I will check on my correspondence to see if I can enlighten the hon. member more precisely, but that is it as I recall it.


POSSIBILITY OF LEGISLATION CONCERNING MINIMUM ATTACHMENT PERIOD
John Edward Broadbent: A final supplementary question, Mr. Speaker. Considering that those parts of Canada most adversely affected by the proposed changes will be precisely those with the most persistent high levels of unemployment, I would doubt that the provinces in question would have agreed to such changes. Having given consideration over the past couple of days to the impact of these changes on the parts of Canada I have mentioned, could the minister tell the House if the government will now announce its intention not to bring that amendment before the House?


Robert Knight Andras: Very specifically, Mr. Speaker, the answer is no. I will be glad at the proper time and when time permits to elaborate on some of the measures and some of the reasoning for it. I want to indicate, as I did yesterday, that the government cost-savings that might result from that plus other measures alluded to by the Minister of Finance and myself in this House, are designed precisely to be directed to and compensate on a selective basis the impact where it needs to be compensated for in those provinces or any other areas of high unemployment.


ENVIRONMENTAL AFFAIRS
Mr. Armand Caouette (Villeneuve):: Mr. Speaker, my question is directed to the Minister of the Environment.
Could the minister tell the House whether he had any contact with the committee responsible for studying the mercury pollution problem in affected areas and, if so, what he plans to do or what is done in this area to settle this serious problem?


Hon. Jean Marchand (Minister of the Environment):: Mr. Speaker, recently we drafted new regulations on the emission of mercury into the environment. The hon. member knows that in 1970, about 12 tons of mercury found their way into the environment, which was decreased to about 2 tons. I think it will be even less than that with the new regulations which will probably be enforced within a few weeks, because we are in consultation with the industry and the provinces.


UNEMPLOYMENT INSURANCE
Mr. James A. McGrath (St. John's East):: Mr. Speaker, my question is supplementary to that asked by the hon. member for Oshawa-Whitby and is directed to the Minister of Manpower and Immigration. As stated in its most recent report, dealing with the extension of the qualifying period for unemployment insurance, the Economic Council of Canada said:
-such recommendations could prove harmful to persons most exposed to periodic and genuinely involuntary unemployment.
I ask the minister if he has taken into account the fact that this move to increase the qualifying period from eight to 12 weeks will have a serious effect on the delicate employment potential in the Atlantic provinces, given the seasonal nature in many of the region's employment opportunities at present, and will result-


John Edward Broadbent: Ask Lincoln Alexander.


James Aloysius McGrath: -and will result in substantial numbers of people in the region being placed on the already overburdened social welfare rolls?


John Edward Broadbent: Why don't you ask Lincoln Alexander?


Robert Knight Andras: Mr. Speaker, I am wondering if the hon. member for Hamilton West should not be delegated to answer the question posed by the hon. member from Newfoundland. Seriously, we are fully aware of these implications. Our intention is to attempt in a better and more constructive way to provide alternatives which I think will be more beneficial both to the recipients of unemployment insurance in that category and, indeed, to the economy of that region as a whole.
May 27, 1976

Oral Questions


FRESHWATER FISH MARKETING CORPORATION
An hon. Member:: Next time we might as well ask Bryce Mackasey.


NATIONAL DEFENCE
A. Daniel McKenzie: Mr. Speaker, my question is for the Minister of National Defence. On Tuesday the minister confirmed that negotiations are proceeding with the West German government for the purchase of Leopard I tanks but said he could not talk about or describe the details concerning the price of those tanks. Since officials accompanying the Secretary of State for External Affairs have been briefing reporters in Europe on details of this tank acquisition program and since what the press calls government officials have been briefing reporters in this country, could the minister tell us whether he himself, or his department, is directly involved in the negotiations for this purchase?


Hon. James Richardson (Minister of National Defence):: Mr. Speaker, the Department of National Defence of course is directly involved in the negotiations. When they have been completed, details will be released.


A. Daniel McKenzie: A supplementary question, Mr. Speaker. I ask the minister, how is this purchase being negotiated? Is there an interdepartmental project office? If so, under whose direction is it; and, what steps are being taken to ensure that this time officials of the Department of Supply and Services and the Minister of Supply and Services are kept fully informed on all developments?


James Armstrong Richardson: Mr. Speaker, there is no interdepartmental project office. Of course, the Department of Supply and Services will be responsible for the contract and its signing.


SUPPLY AND SERVICES
A. Daniel McKenzie: Mr. Speaker, may I direct my final supplementary question to the Minister of Supply and Services? Bearing in mind the minister's experience, or lack of it, with the LRPA negotiations, can the minister tell the House what steps he is taking to ensure that this time both he and his officials will be kept fully informed of all developments with respect to the acquisition of these tanks, including the amount of money available for the purchase in the Department of National Defence budget?


Hon. Jean-Pierre Goyer (Minister of Supply and Services):: Mr. Speaker, there are full consultations.


PROPOSAL TO GRANT EXPORT LICENCE TO SELL FISH OUTSIDE CORPORATION-REQUEST FOR ANALYSIS OF PROCESSING COSTS
Mr. Dean Whiteway (Selkirk):: Mr. Speaker, may I direct my question to the Minister of State responsible for fisheries? It has to do, Sir, with the matter I raised several weeks ago concerning the Freshwater Fish Marketing Act, in particular the provisions of Part III, section 23(2). I gave the minister notice of my question and wonder if he can now say whether the corporation intends to obey the law and allow fishermen an export licence with which to sell their fish outside the jurisdiction of the corporation, according to the Act?


Hon. Romeo LeBlanc (Minister of State (Fisheries)):: Mr. Speaker, I thank the hon. member for giving me notice. In reply to his question I say that I remain convinced that the Freshwater Fish Marketing Corporation is the best vehicle for serving the over-all needs of fishermen through its single marketing desk approach. I am not able to agree with the hon. member's request, because I feel it would lead to erosion of the corporation and loss in the strength of the single selling desk approach, as created by the Act.


Dean Waldon Whiteway: A supplementary question, Mr. Speaker. As prices quoted at Motley, Minnesota, are 50 per cent higher than prices offered by the corporation and as the original concept of the corporation, that of a single desk marketing agency, is now saddled with an astronomically high capital cost, will the minister reassess his position and direct the corporation to open its books and analyse, per pound per species, the cost of the processing done by the corporation?


Roméo LeBlanc: Mr. Speaker, the hon. member will recognize that it is not my function to direct a corporation of this type on a day to day basis. There is a board on which all provinces are represented. Included are a good number of fishermen. There is also a very wide advisory board where fishermen are represented in very large numbers. They are involved in the setting of initial prices which, recognizing the high costs of processing, are set as high as possible with the final price set at the end of the season. The corporation has in fact been rather successful in this operation. Because of a passing difference in prices, which might be very temporary, I am not sure whether the hon. member would like to erode the role of corporation.


INDUSTRY
Mr. Gilbert Parent (St. Catharines):: Mr. Speaker, my question is for the Minister of Industry, Trade and Commerce. In view of the fact that the Minister of Finance stated in his budget address that there will be a four-year escalation of the special taxes on gas-guzzling cars in order

May 27, 1976
Oral Questions
to encourage a switch to lighter, more efficient cars, what will be the anticipated effect on the auto industry in Canada and what effect, if any, will it have on the auto pact with the United States?


Hon. Donald C. Jamieson (Minister of Industry, Trade and Commerce):: As far as I have been able to determine, Mr. Speaker, and there has been considerable consultation, it should not have any particular effect on auto sales in Canada. Indeed, I am happy to report, and hon. members may have noted, the first quarter of this year was substantially better than last year. On the second point, I do not think it will have any effect on the auto pact, other than two studies under way at the present time, one in each country, with a view to determining where the auto industry in headed in light of new developments on conservation and related questions.


EXTERNAL AFFAIRS
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, my question is to the Parliamentary Secretary to the Secretary of State for External Affairs. In view of the fact that this is the last week of the U.N. Conference, UNCTAD IV, in Nairobi, and in view of the fact that the developing countries regard a positive commitment in principle, with a dollar figure attached, to the common fund as an indication of the sincerity of the commitment of Canada and other developed countries to the new economic order and to a genuine effort to meet the claim of the developing world for a fairer trade system, will the parliamentary secretary or some other member of the government assure the House that Canada is prepared to make such a commitment with the dollar figure attached to the common fund before the conference closes?


Hon. Mitchell Sharp (Acting Secretary of State for External Affairs):: As the Acting Secretary of State for External Affairs, may I be permitted to answer this question. As had been announced in the House, the government has made a dollar contribution to the tin stabilization fund which is one of the commodities that is under discussion in connection with the whole of the common fund. Today in cabinet it was decided that there would be a contribution by Canada to a common fund, providing that certain very logical and I think reasonable precautions are taken.


Francis Andrew Brewin: Will the minister advise whether that commitment that he has given, and which I very much welcome, has or will have a definite dollar figure attached to it, as other nations are making pledges which actually state the amount they are prepared to contribute.


Mitchell William Sharp: Mr. Speaker, one of the problems is that one cannot be very sure yet what the dimensions of the need will be. I can assure the hon. member that Canada is prepared to play its full part in any such common fund.


SUGGESTED REALLOCATION OF PRIORITIES WITHIN CIDA TO PERMIT CONTRIBUTION TO UNCTAD COMMON FUND
Douglas Roche: Mr. Speaker, I have a supplementary question for the Acting Secretary of State for External Affairs. Given the fact that Canada has agreed in principle to a common fund at UNCTAD IV, is the government willing to pay its share, which has been estimated at around $25 million, and to find that money by reallocating the priorities within CIDA so that there is no additional money being spent, but merely a reordering of existing priorities?


Mitchell William Sharp: Mr. Speaker, I have not heard that particular suggestion. I will take note of it. I want to assure the House that Canada understands its responsibility in connection with the underdeveloped world. Indeed, we have been one of the leaders and we intend to remain so.


INFORMATION
Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I have a question for the President of the Privy Council of which I gave him notice several days ago. In light of the hopefully impending end of this session and for the purpose of permitting the Joint Committee on Statutory Instruments to organize its work with regard to freedom of information, will the minister advise whether it is the intention of the government to introduce legislation which, with due regard for the interest of the state and adequate protection of personal privacy, will provide statutory rules as to freedom of information?


Mitchell William Sharp: Mr. Speaker, preparation of legislation along these lines is underway within the government service. I cannot give an undertaking that a bill will emerge at any particular time, except to say that we are giving some priority to it. The hon. member, who has put forward his own version, understands the inherent difficulties and has pointed to some of the problems that would arise.


Gerald William Baldwin: Will the hon. gentleman discuss with the chairmen of the joint committee the possibility of appearing once more before that committee on behalf of the government to consider the usefulness of an omnibus bill dealing with freedom of information, automatic data processing and safeguarding of personal privacy in that regard all of which are matters in which the committee is seized of jurisdiction. The alternative is bringing in an omnibus bill or more than one bill to deal with these very complex and difficult subjects.


Mitchell William Sharp: Mr. Speaker, I have had the opportunity of speaking privately to the joint chairmen and have indicated my interest in their work. As to whether I will appear again before the committee, I hesitate to say. However, I hope that the committee will continue its studies of these

subjects because the government will be looking forward with interest to its recommendations.


STATISTICS CANADA
Mr. A. D. Alkenbrack (Frontenac-Lennox and Addington):: Mr. Speaker, my question, concerning job creation in Canada, is for the Minister of Industry, Trade and Commerce. Did the minister or his department make any contact with or seek the advice of the Manpower Department or make any effort to give employment to competent unemployed people registered with Manpower in their apparent partisan selection of census commissioners for this year's census taking, beginning June 1?


Donald Campbell Jamieson: Mr. Speaker, I am informed that some of those who were appointed census commissioners were in fact recruited through the Manpower Centres to which the hon. member has referred.


MANPOWER
Almonte Douglas Alkenbrack: Mr. Speaker, I will direct my supplementary question to the Minister of Manpower and Immigration. Were the persons chosen as census commissioners registered as unemployed with Manpower?


Robert Knight Andras: My apologies, Mr. Speaker, I did not hear the question. Will the hon. member repeat it?


Almonte Douglas Alkenbrack: Were the persons chosen as census commissioners registered as unemployed with Manpower?


Robert Knight Andras: Mr. Speaker, I'm damned if I know.


Some hon. Members:: Hear, hear!


PERFORMING ARTS
Mr. J. P. Nowlan (Annapolis Valley):: Mr. Speaker, in view of that very frank and honest answer, I know I will get an answer to my question. In the absence of the Minister of Communications, who I guess is tracking satellites or the Secretary of State who is not in the House but is perhaps out searching for stars, I will direct my question to the Prime Minister. I should like to ask the Prime Minister a question involving the budget of the other night because of the Prime Minister's interest in third options
Oral Questions
and contractual links. Would he tell the House whether the provision in the budget to reduce the capital cost allowance for the production of Canadian films and video productions is in the best interest of Canadian broadcasting and this whole business of the Canadianization of our own broadcasting waves?


Right Hon. P. E. Trudeau (Prime Minister):: I am flattered to think the hon. member is asking me for an opinion and I am pleased to tell him that everything in the budget is for the good of Canadians.


John Patrick (Pat) Nowlan: I knew, Mr. Speaker, that we would not get the frankness from the Prime Minister as from the Minister of Manpower and Immigration. But can the right hon. gentleman, as the leader of the land and as the leader of a cabinet which includes the Minister of State who made a very interesting speech on Canadian content and what we should do to make Canadians more aware of what we have done in Canada, explain to the House how a capital cost disallowance from 100 per cent to 30 per cent in the case of films and 60 per cent to 30 per cent in the case of video productions in Canada will help Canadian broadcasters fight the problem of conveying Canadian scenes to Canadians and the importation of foreign signals?


Hon. Donald S. Macdonald (Minister of Finance):: Perhaps I might advise the hon. member that the reduction in allowances are with respect to films from foreign sources. Canadian films or video tape will continue to enjoy favourable capital cost allowance rates.


LABOUR CONDITIONS
Mr. John Fraser (Vancouver South):: Mr. Speaker, my question is directed to the Minister of Labour. Last week I asked him about the situation in the City of Thompson, Manitoba. Subsequently the Anti-Inflation Board agreed to review its roll-back decision. The situation at the present time is that the people concerned in Thompson have received no reply from the Anti-Inflation Board and that a strike vote is about to take place. Can the minister tell the House what is going on? Is there any hope there will be an answer from the Board in time to avoid this strike?


Hon. John C. Munro (Minister of Labour):: The AntiInflation Board is endeavouring to deal with the matters before it with all possible despatch and I hope it will come to a decision in this case very soon.


John Allen Fraser: Might I remind the minister, through you Mr. Speaker, that the Board said it would have an answer ready by May 20. I would ask the hon. gentleman, through Your Honour, to use his good offices to hurry that answer because in its absence there is going to be a strike-one which does not need to take place at all since both management and the union are in agreement.

May 27, 1976
Oral Questions


John Carr Munro: Officials of the United Steel Workers of America have been in touch with me and people in my department to facilitate procedural matters with the AIB, and we have endeavoured to co-operate with them.


REASON FOR DELAY IN ANTI-INFLATION BOARD DECISION ON CASE AT THOMPSON, MANITOBA
Mr. Cecil Smith (Churchill):: My question, too, is directed to the Minister of Labour. I should like to ask him why the decision on the roll-back at Elliot Lake was made within two weeks yet it has taken one month now for the AIB to make the decision on Thompson and they are still without definite information?


John Carr Munro: This question relates to the period within which the decisions of the Board are made, and it is within the domain of the AIB. I feel they are doing the very best job they can in the circumstances.


Cecil Morris Smith: Is the minister saying that the Anti-Inflation Board is as incapable of making a decision as is the government?


AGRICULTURE
Mr. Arnold Malone (Battle River):: Mr. Speaker, my question is for the Minister of Agriculture. Does the minister approve of the fact that technicians who are doing blood testing |n suspected cases of Bangs diseases are paid a higher salary than veterinarians who are doctors of animal medicine and who are supposed to be in charge of the local health of animals technicians they are supervising?


Hon. E. F. Whelan (Minister of Agriculture):: I understand that the technicians are under contract while the veterinarians are paid a straight salary. But I would have to check into this matter, and if the hon. member has any real facts to bring out I will be happy to look into them.


HEALTH STANDARDS AND REGULATION FOR ATHLETES AND VISITORS TO OLYMPIC GAMES
Mr. P. B. Rynard (Simcoe North):: Mr. Speaker, I should like to ask the Minister of National Health and Welfare a question arising from widespread concern that adequate protection and safeguards against diseases which may be brought in by visitors to the Olympic Games have not been carried out. Bearing in mind the view expressed by Professor Berkowitz of Toronto, who specializes in health economics, when he stated it is incredible that plans are not more highly developed six weeks before the Games, would

the minister advise the House just what the health status requirements are and whether they have been met?


Hon. Marc Lalonde (Minister of National Health and Welfare):: Mr. Speaker, I am pleased to inform the hon. member that the standards required at the Olympics for the admission of foreign athletes and visitors will be the same as those which generally prevail in Canada, and that the standards will not be lowered for the games.
Besides, to alleviate the danger of serious contagious diseases developing, we have taken special interim measures to provide isolation facilities to prospective patients. In particular, we have ordered from the Vickers Company in England three isolation units, one of which has already arrived in Canada and the other two are expected to be delivered shortly. Those beds will be made available at the National Defence Hospital here in Ottawa to meet any emergency which might arise during the Olympics.


Philip Bernard Rynard: Will all the athletes coming have a health innoculation card showing that necessary innoculations have been carried out.


Marc Lalonde: Mr. Speaker, all athletes entering Canada will have to meet the usual standards which have been set up according to present regulations. No exception will be made for athletes who will have to face the same requirements as other visitors now coming to Canada.


NORTHERN AFFAIRS
Mr. Doug Neil (Moose Jaw):: Mr. Speaker, my question is for the Prime Minister. In view of a report from Whitehorse to the effect that the executive committee of the Yukon is proposing the creation of four ridings within which only Indian and Metis people will have the right to vote, can the right hon. gentleman advise us whether or not the Minister of Indian Affairs and Northern Development or officials of his department or, indeed, any officials of the government have had discussion with the executive committee on the subject, and whether this proposal constitutes federal government policy?


Pierre Elliott Trudeau: I will inquire, Mr. Speaker.


POSSIBLE INVOLVEMENT OF TERRITORIAL COUNCIL IN LAND CLAIMS OF NATIVES
Douglas Charles Neil: Is it the intention of the government to involve the administration and the Territorial Council in negotiations with the Indian people in the Northwest Territories and the Yukon in connection with their land claims?
May 27, 1976


Pierre Elliott Trudeau: The
negotiations are with the native people but certain consequences of those negotiations, on municipal structures, for instance, are of importance to the whole of the Yukon and as far as these matters are concerned the Territorial Government and the municipal structures have to be informed.


INDUSTRY
Mr. Gus MacFarlane (Hamilton Mountain):: Mr. Speaker, my question is addressed to the Minister of Industry, Trade and Commerce. Is the department considering an immediate inventory of manufacturing capabilities within existing aerospace companies. I ask this question having in mind recent newspaper articles alluding to the intention to establish a new government super corporation to control Canadian airframe companies.


Donald Campbell Jamieson: Yes, Mr. Speaker, something along the lines of what the hon. member has mentioned is under way. We know pretty thoroughly what Canadair and de Havilland have by way of inventory, in confidence, but a more thorough assessment is being undertaken to determine just what the aerospace capabilities are in the country in total. This is part of an ongoing study of strategy for the aerospace industry.


FINANCE
Mr. Leonard C. Jones (Moncton):: Mr. Speaker, may I ask the Minister of Finance whether he intends to propose to the House an increase in the tariff on foreign automobiles not covered by the Canada-U.S. auto pact, to protect the Canadian auto market?


Donald Stovel Macdonald: Mr. Speaker, subject to a detailed examination of the ways and means resolution with regard to tariff changes, I think the answer would be no.


TRANSPORT
Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, my question is directed to the Minister of Transport. Considerable concern has been expressed in the lower mainland concerning the loss of passenger tourist traffic as a result of the operation of Bill C-61 which would remove
Oral Questions
foreign passenger coasting vessels. While I respect the intention of the minister's bill, can he give any assurance to the residents of the lower mainland that the approximate $29 million in tourist revenue flowing into Vancouver as a result of that traffic will not be impeded by the passage of this bill, and does the minister have any specific changes to propose to the bill or specific recommendations to see that this traffic does not dry up?


Otto Emil Lang: Mr. Speaker, I can give an assurance and, in fact, it is important to note that the question is somewhat misleading in that at the present time foreign vessels can engage in the coasting trade only with a very long process of exemptions through national revenue. What is really proposed is a simplification of the procedures and essential sets of regulations which will allow for the appropriate engagement of nonCanadian vessels whenever that presence is seen as desirable. It is also my intention to reassure everyone, as I have been doing, that the fullest kind of consultation will take place in connection with regulations which may be proposed, and until there is a high degree of satisfaction with those regulations it would not be my intention to proclaim sections 8 to 14 of the bill.


AGRICULTURE
Mr. Robert McCleave (Halifax-East Hants):: Mr. Speaker, my question is for the Minister of Agriculture and is a follow-up to a question asked earlier by the hon. member for Halifax. The Minister of Agriculture advised that studies were being carried out in respect of the proposed removal of the flour and grain subsidies provided by section 272 of the Railway Act. Is the minister now able to advise as to the gist of those studies and, more particularly, whether the Minister of Transport is either wise or shrewd in doing away with a program before coming up with a definite replacement such as a unit train grain movement between the prairies and Halifax or Saint John?


Eugene Whelan: Mr. Speaker, in answer to the first part of the question, I am not aware whether the study or the discussions have been completed. I believe they have been, but I would have to check. I am sure the Minister of Transport is not blind.


TRANSPORT
Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, I should like to direct a question to the Minister of Transport which is supplementary to the question just asked and one asked earlier today. Earlier the minister attempted to reassure the House that the application of the "user pay" principle was being carried out equitably in all

May 27, 1976
Oral Questions
regions of Canada. In light of that general thrust to the minister's response, would he indicate what is equitable about the application of a further 7 per cent increase in freight rates in respect of the ports of Saint John, New Brunswick and Halifax, Nova Scotia, and in general to eastern traffic rates, and not to the areas east of Diamond Point affecting the movement of traffic in the upper river at Montreal, Toronto and the ports of New York and Baltimore?


Otto Emil Lang: Mr. Speaker, I do not think I should undertake to analyse the rates, especially since many of them are only distantly under my jurisdiction. Certainly, it would take a statement on motions or a speech to do the job.


J. Michael Forrestall: You don't deny it then, in other words?


NATIONAL DEFENCE
Mr. Bob Brisco (Kootenay West):: Mr. Speaker, has the Minister of National Defence received any communication from the Minister of Regional Economic Expansion, or have there been any discussions with reference to the proposal that DREE be substituted as a means of resolving financial stress in communities where the Department of National Defence may withdraw its base facilities?


James Armstrong Richardson: Mr. Speaker, of course there is departmental consultation on these matters and DREE is always involved in any discussion involving base closure or adjustment.


REGIONAL ECONOMIC EXPANSION
Robert Hylton Brisco: Mr. Speaker, my supplementary question is directed to the minister responsible for DREE. Can he give the House any indication as to what phase these discussions have reached, whether there has been a specific proposal to utilize DREE programs in cases where DND withdraws and closes a base in the maritimes or on the west coast; has there been any specific proposal made by either minister?


Hon. Marcel Lessard (Minister of Regional Economic Expansion):: Mr. Speaker, as my colleague has already announced, we work in close consultation in respect of any program, any project or any base closure or adjustment. We are not in a position now to decide, or we have not come to any conclusion or any decision regarding any project that will follow any base closure, if a base is closed.


NATIONAL DEFENCE
Mr. Louis Duclos (Montmorency):: Mr. Speaker, I wish to ask a question of the Minister of National Defence.
Could the minister confirm to the House that his department will pay all the costs resulting from the presence of the Canadian Armed Forces in Montreal during the Olympic Games, including the out-of-pocket costs estimated at $24 million and whose financing, according to a statement he made in the House on January 29, had to be negotiated with the Quebec government or else with COJO?


James Armstrong Richardson: No, Mr. Speaker. Our estimate is that National Defence will contribute approximately $30 million. That is our best estimate now of the cost of supporting the Olympic Games.


IMMIGRATION
Mr. Jake Epp (Provencher):: Mr. Speaker, I should like to direct my question to the Minister of Manpower and Immigration. In view of the fact the International Olympic Committee has now given permission to allow Stephen Badger to swim for Canada in the 1976 Olympics-


Some hon. Members:: Hear, hear!


Arthur Jacob (Jake) Epp: In light of this development, I should like to ask the minister whether he will give an undertaking that the officials of his department will expedite a new application for landed immigrant status by Stephen Badger, particularly in view of the fact he has now received permanent job offers from various swimming organizations, thereby eliminating the possibility of any incident which might arise if he won a medal for Canada, with the flag being raised and the national anthem being sung, yet he being a person the immigration department does not want to have enter Canada as a landed immigrant?


Robert Knight Andras: Mr. Speaker, the hon. member is fully aware that these are quite separate issues. The Olympic Committee has its own rules and regulations. If it has now found a way of making what it calls a commonwealth switch, that has nothing whatever to do with landed immigrant status as far as we are concerned. If that is the solution the committee has found, that is fine, but it is none of my business or the business of the department or the government. In so far as the application by Mr. Badger for landed immigrant status is concerned, if he fulfils and meets the regulations and immigration criteria, which the hon. member is suggesting is now the case by virtue of a bona fide job offer that a Canadian is not available for, then of course we will review it.

May 27, 1976


TRANSPORT
Mr. Perrin Beatty (Wellington-Grey-Dufferin-Water-loo):: Mr. Speaker, in light of the fact it is four years now, I guess, since the Standing Committee on Transport and Communications unanimously recommended that railway service be restored in those areas where it was discontinued in southwestern Ontario, and in view of the fact that in the space of that time the only action taken by the government has been a succession of promises, recommendations and broken promises, will the Minister of Transport indicate when he will be in a position to announce action on the part of the federal government that will result in a rationalization and improvement of public transportation services in that area?


Otto Emil Lang: Mr. Speaker, the whole area of passenger service from Montreal through to Vancouver is now under active examination by the Canadian Transport Commission. As a result of that consideration I expect a fairly early report on the lines in service that ought to be maintained for rail passengers, and thereafter we should very quickly have a final decision about the way in which that service can be maintained and improved, so far as it is to be maintained.


AIRPORTS
Mr. John Reynolds (Burnaby-Richmond-Delta):: Mr. Speaker, I have a question for the Minister of Transport following up a question I have asked in the past three weeks about security at airports. In view of the fact that the Minister of Manpower and Immigration has confirmed there were some arrests at the Toronto airport last summer of illegal immigrants working at the airport with clearance for security areas, can the minister assure this House that with the Olympics coming up he is taking steps to make sure that people working at airports who have keys to secured areas do have security clearance, and can he reassure this House also that there are no illegal immigrants working at airports with keys to secured areas?


Otto Emil Lang: Well, Mr. Speaker, obviously any such blanket assurance is very difficult to give, but I can indicate to the hon. member that the general procedure is that those who have access to security situations are indeed processed for security clearance, whether they are government employees or people working under contract for the government. This practice is the ordinary one followed. This does not mean, of course, that every employee, particularly those under contract or working for people under contract, with the government is security cleared or checked from that point of view. That is done only if it seems that a security question may arise.
Oral Questions


Mr. Speaker:: Order, please. The Minister of State for Fisheries on a point of order.


Roméo LeBlanc: Mr. Speaker, I rise on a point of order. The House will recall that yesterday I had occasion to question remarks of the hon. member for St. John's East. He had characterized a recently concluded arrangement with the U.S.S.R. which will enable ground-fish plants in his riding and elsewhere to keep operating longer than anticipated, and which entails no trade-off from Canadian quotas as the "biggest sell-out ever". I took exception to this. Later I reminded the House that when we temporarily closed Atlantic coast ports to Soviet fishing vessels, the hon. member for St. John's East opposed this measure. The hon. member rose on a question of privilege denying this, and in response I agreed to check the matter out and report back to the House. I am now prepared to do so.
In Hansard of June 9, 1975, as recorded on page 6548, the hon. member made reference to the possibility of port closure as a "veiled threat which will have little or no effect on ICNAF nations", and also referred to the fact that "some of our ports .. .would be very seriously hit if they were closed". Although he never said directly "I oppose the closure", he spoke in a negative way about the possibility. I must add, however, that later, in fact on the day I announced the closure as reported on July 23, 1975, at page 7854 of Hansard, the hon. member, in referring to this announcement, indicated that "we have all had to revise our thinking". This is as far as the hon. member went in indicating a change of attitude. However, given the ambiguity in the hon. member's comments on the two dates involved, and accepting that he shared my concern for the fisheries, I shall gladly give him the benefit of the doubt and apologize for stating that he opposed the decision to close the ports.


James Aloysius McGrath: Mr. Speaker, I accept the apology of the minister, albeit it was made somewhat less graciously than I would have expected from the minister whom I have come to respect. The fact is that in the incident referred to I had moved a motion, which was accepted unanimously by the House, supporting the minister in his initiatives at the ICNAF meeting which was based on the closing of the ports to the Soviets as a move designed to force ICNAF to agree to a reduction in ICNAF quotas and an increase in Canadian quotas. That is clear and unambiguous. Also, Mr. Speaker, the Toronto Sun of Thursday, July 24-


Some hon. Members:: Oh, oh!


James Aloysius McGrath: -in a Canadian Press dispatch states:
Tory MP James McGrath welcomed the move because it shows the government is finally taking the fishing situation seriously.
There is nothing ambiguous about that, Mr. Speaker. However, there is a great deal of ambiguity and uncertainty about what the minister is trying to do in the bilateral agreements with the Soviet Union and with Poland which, in the case of the Soviets, will have the effect of increasing their quota of capelin which they fished illegally up to a few years ago in exchange for sharing the red fish quotas.


Mr. Speaker:: Order, please. The only reason I recognized both members on a point of order today is that yesterday,

Business of the House
when the question arose, the minister indicated that if he was mistaken or not clear in the inference he made, he would clarify it today. He has done so. I thought it was appropriate that the hon. member involved from St. John's East should be given the opportunity at least to put his comments on the record at the same time. However, it certainly is not appropriate under our proceedings to go beyond that and develop any discussion on the merits of the question at issue, only the clarification of the remarks the minister made.


James Aloysius McGrath: May I close the matter, Mr. Speaker, by saying that I thank the minister for his apology.


Mr. Speaker:: The hon. member for Saskatoon-Biggar on a point of order.


Mr. Hnatyshyn:: It is a question of privilege, Mr. Speaker.


Mr. Speaker:: The hon. member for Surrey-White Rock on a question of privilege.


Mr. Friesen:: Mr. Speaker, on a question of privilege, I should like to point out to the government House leader that the Secretary of State, among all the habits he has learned in the last while, has at least one bad one. He comes to the House for the first part of the question period and then chooses to leave after a few minutes and no one is in a position to question him. If the minister himself does not have a sense of responsibility for his work, I wonder if the government House leader could encourage him to develop that kind of sense of responsibility. If he needs help, he could get the government whip, and if he needs three people he could get the deputy whip for the government to help him get the minister here on time and have him stay here for the whole question period.


Mitchell William Sharp: Mr. Speaker, there is a very considerable problem facing ministers who have responsibilities in places other than this House. The attendance of the Secretary of State on the whole has been admirable, at least as good as that of some of the members on the other side of the House.


BUSINESS OF THE HOUSE
Ramon John Hnatyshyn: Mr. Speaker, this being a Thursday, I should like to direct the usual inquiry to the government House leader and ask if he could inform us concerning the intention of the government in respect of the business during the course of the next week or so.


Mitchell William Sharp: Mr. Speaker, I am a little at a loss because I had hoped to have some further discussion with the House leader of the official opposition on the business. I have been having some discussions with him about the possibility of extending the hours of sitting to be devoted to the consideration of Bill C-84, and only for that purpose. There has been very great participation by members. I think it had been the hope of all members of the House that there should be an opportunity for as many members as possible

to participate in the debate. Therefore, in order to be able to complete our work by June 30, it seemed to us that the House should agree to sit some extra hours during the week.
I made some proposals which have been accepted by some parties but not yet by the official opposition. I hope that party will accept the proposals I have put forward. I have put them forward in a completely non-partisan way. They are perfectly reasonable proposals. We are discussing a bill which is not a government bill in the sense that there is any confidence attached to it. It is a bill in respect of which many members of the House wish to say something. There have been 65 members who have spoken already. I understand there are many more from the official opposition. I should like to see them have an opportunity, and I should like to see all of us get out of this House on June 30 with our business completed.
Another problem that has arisen is that I have had some preliminary discussion with the House leader of the official opposition about the possibility of dealing very quickly tomorrow with two bills from the Senate. I leave that open as a possibility. Other than that, we will continue with Bill C-84 on government days. There of course will be an opposition day on June 1, and the budget debate will be resumed on Wednesday. That will fill the rest of the week.


Mr. Knowles (Winnipeg North Centre):: Mr. Speaker, in view of the reference made to the point by the President of the Privy Council, I should like to confirm that we would be willing to agree to some extra hours during the next week or so to be given completely to Bill C-84. We hope that members of all parties in the House will agree to this so that we can plan a recess beginning by the end of June.


Mr. Beaudoin:: Mr. Speaker, about the comments of the President of the Privy Council (Mr. Sharp), we were to have a meeting at five o'clock and I would like to know whether the President of the Privy Council still wants us to meet at five o'clock or does he want to cancel it?


Ramon John Hnatyshyn: Mr. Speaker, I rise on the same point of order. I want to say to the House leader that so far as our party is concerned, the matter is still under consideration. I hope he has not left the impression in the House that we are not giving serious consideration to any proposal he puts forward, but possibly, unlike the government side, we always refer these matters to our caucus.


Some hon. Members:: Hear, hear!


Mr. Paproski:: We are a little more democratic on this side.


Mitchell William Sharp: Mr. Speaker, I should like to say to the House leader of the Social Credit party, through you, sir, that it is my intention to continue with the meeting. I do not know whether the House leader of the official opposition will be here for the meeting, but I welcome his alternate. I just want to say to the Acting House leader of the official opposition that I put forward proposals for the extension of hours some ten days ago. There have since been two
May 27, 1976

caucus meetings. We have discussed it at ours, and I hope it has been discussed in the others.


FLOWERS PRESENTED BY COMMITTEE OF ONE MILLION
Mrs. Ursula Appolloni (York South):: Mr. Speaker, I should like to draw the attention of the House to the fact that due to an unfortunate delay in delivery, few hon. members have been able to wear the yellow flower provided today by the Committee of One Million to mark the first anniversary of the presentation to parliament of their great petition to protect the lives of unborn children.


Some hon. Members:: Hear, hear!


Ursula Appolloni: I would not want these people, many of whom have come to Ottawa again today, to misunderstand the support they have in the House. I want to assure them that had it not been for this delay, many members from both sides of the House would have been proud to wear this flower as their gesture in recognition of their deep respect for human life.


Some hon. Members:: Hear, hear!


Dean Waldon Whiteway: Mr. Speaker, I rise on a point of order which has to do with the question put to the Minister of State for Fisheries. In his answer he inadvertently misled the House. I realize that he has been away for several days, but I intended at all times to keep him informed through his parliamentary secretary. In his answer he suggested that the price of fish offered to fishermen by the corporation FFMC has been at all times equal, except for sometimes when prices offered on the open market have been outside the corporation's jurisdiction. In fact, that is not the case.


Mr. Speaker:: Order, please. Surely the hon. member raises a question of interpretation, disagreement, debate or discussion about the minister's answer and indeed about the whole subject under discussion. Unless there is some indication that there is a question of privilege because of a deliberate misleading of the House, this is not a point of order.



ROUTINE PROCEEDINGS


[Stage Direction]
Twelfth report of Standing Committee on Miscellaneous Estimates-Mr. Flynn.
Numismatic Hobby Protection Act

[Stage Direction]
Seventh report of Standing Committee on Fisheries and Forestry, in the two official languages-Mr. Bechard.

[Stage Direction]
Sixth report of Standing Committee on Indian Affairs and Northern Development-Mr. Marchand (Kamloops-Cariboo).

[Stage Direction]
Seventh report of Standing Committee on Regional Development-Mr. Lumley.
[Editor's Note: For text of above reports, see today's Votes and Proceedings.]

Miss Coline Campbell (Parliamentary Secretary to Secretary of State):: Mr. Speaker, I would like to table, under Standing Order 41(2), letters from the Secretary of State addressed on May 12, 1976, to the ten provincial ministers of education respecting the financing of postsecondary education under the Fiscal Arrangements Act.


NUMISMATIC HOBBY PROTECTION ACT
John Douglas Reynolds: for leave to introduce Bill C-439, to amend the Criminal Code (counterfeit of numismatic items).
He said: Mr. Speaker, counterfeits of old and valuable coins are appearing in larger and larger numbers on the numismatic market and defrauding collectors of large sums of money. This bill would extend the protection of the currency counterfeit laws to items of numismatic value by requiring that such coins or tokens be marked with the date of manufacture and the word "Copy".


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.
[Stage Direction]
May 27, 1976
Order Paper Question ANTI-INFLATION BOARD

Donald Stovel Macdonald: Mr. Speaker, I would like to advise the House that His Excellency the Governor General in council has today, pursuant to subsection 12(2) of the Anti-Inflation Act, directed the Anti-Inflation Board to conduct an inquiry and advise as to whether it is appropriate to make the Anti-Inflation Act and guidelines applicable to the four pilotage authorities in Canada and private sector suppliers of pilotage services and I give notice of intent, pursuant to subsection 3(3.2) of the act, that should an order in council be subsequently made pursuant to subparagraph 3(2)(a)(v), it will be applicable as of today.
* *
*


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr.   J.-J. Blais@Parliamentary Secretary to President of the Privy Council: Mr. Speaker, the following questions will be answered today: 3,812, 4,605, 5,244, 5,291, 5,337, 5,344, 5,348, 5,357, 5,433, 5,434 and 5,450.


Mr. Crouse: 1.	How many employees have retired from the Department of the Environment, Fisheries and Marine Services Branch in the past two years?
2.	(a) What are their names (b) were they eligible for superannuation (c) what was the length of their employment?


Jean Marchand: 1. During the calendar years 1974 and 1975, a total of 652 employees ceased employment with the Fisheries and Marine Service of the Department of the Environment. Of that total, 133 employees were eligible for either an immediate annuity or an annual allowance.
2. (a) See following, (b) Yes. (c) See following.
Employee Name	Years of Service
MacDonald, H. C. Clarke, F. N. Bennett, F. Hammond, R. Warr, A. S.
Bragg, W.
White, T. P. Hillier, B. R. Brown, B. J. Girardin, E. F. Kieley, M. J.
15
12
7
7
8 22 30
Strickland, W. Hicks, H.
Zink, E. C. Hawkins, R. F. Mullin, T. I. Webber, G. T. Peverill, R. G. MacDuff, J. A. MacKay, E. M. Laventure, H. A. Jordan, E. E. Wood, H. C. Arsenault, L. N. Duffy, J. A. Meagher, J. M. Forgeron, H. G. McLeod, R. M. R. Montague, H. B. Murphy, M. F. Gilks, J. A. Rushton, H. K. Linton, R. F. Daigle, A. J. Crowell, A. C. Rogers, J. E. Hughson, B. A. Lloyd, R. S. Leblanc, G. W. Guilderson, W. Conrad, L. E. M. Theriault, M. J. Fontaine, A. Biggar, J. E. Gallichon, E. Kay, M. A. Delancey, A. L. Fleming, R. W. Semchuck, J. W. Mclndoe, G. T. Armstrong, E. W. Verbenkov, B. M. McLellan, R. D. Service, A. G. Gustason, F. E. Watts, R. W. J. Ellis, J. H. Thacker, L. J. Henderson, B. L, Ballantyne, J. Davis, W. H. Henry, W. B. Antosik, S. A. Whetter, E.
Cross, C. M. Jones, T. L. Clouston, G. W. McLean, A. G. Robinson, B. W. Kenney, T. C. Gilmour, J. G. Boutilier, J. F. Lavoie, J. L. Kenney, A. D.
23 8 28 25 25 35 25 28 21 25 9 25 28 30 28 9 19
19 32
13 18 21 12
25 22 25 25
14 17 25 14 9 16
17 25
18 25 9 9
25
27 11 17
20 6 16
24
6
17
11
8 5 17 12 27 24

May 27, 1976

Employee Name
Higgins, N. S. Boudreau, J. F. Richard, A. W.
Employee Name
Hiscock, A.
Duggan, W. J. N. Furey, G.
Howell, S. C. Howell, F. M.
Slade, G. R. MacDonald, R. E. H. Weeler, E. C. Boucher, J. I.
Kent, G. C.
Black, T. C.
Hirtle, D. M. Winters, F. A.
Ward, A. J.
Crosse, H. S. Allison, B. D. Clattenburg, H. M. Sinclair, P.
King, E. L. Houghton, M. P. Morgan, G. R. Baker, J. B. Robertson, E. S. Rigg. J Magee, K. G.
Moore, G. E. Gordon, M. E. Hammond, H. M. Thomas, R. Johnston, F. G. Davis, R. T.
Russel, M.
Holland, J. D. C. Kitson, E. J.
Covey, W. J.
Mack, A. L.
Veitch, N. S.
Swain, R. F.
Elliott, E. I.
Baker, A. K.
Watson, H. H. Wigmore, R. H. Weisbord, M. E. Huestis, C. E. Mcintosh, C. G. Gaskin, A. J.
Bath, J. F.
McIntyre, C. M. Gantzer, K. A.
King, L. C. Leadman, C. M. Brick, P. M.
Allan, C. S.
Gorman, H. L.
Lord, S. W.
Richard, C. W.
Years of Service
10
1974
Years of Service
27 39 6
8
7
23 25 16 10 10 9
24 15
19 27 29 12 27 23 7
14 22
34 9 7 9 7
20
35 35 45
15 9
13 22 9
14 7
15 21 7 9
25 11 12 20 29 11
Order Paper Question OLYMPICS '76 IN INNSBRUCK


Mr. Jones: 1.	Were athletes sponsored by Canada to participate in Olympics '76 held in Innsbruck?
2.	Was financial assistance provided to the athletes by (a) the government (b) the provincial governments (c) any other source?
3.	How many (a) trainers (b) referees (c) support staff accompanied the athletes and, in each case (i) who paid their salaries (ii) who paid their expenses (iii) were any sent at CBC expense?
4.	Do figures exist for a country with a population comparable to Canada and, if so, what are they?


Mitchell William Sharp: am informed by the Department of National Health and Welfare and the Canadian Broadcasting Corporation as follows: 1. The Canadian Olympic Association is responsible for Canada's Participation in all Olympic Games. The Fitness and Amateur Sport Branch of National Health and Welfare makes contributions to the C.O.A., in the same manner as to National Sport Governing Bodies, for certain projects undertaken. A contribution of $50,000 was made by the Branch toward the (1) transportation of athletes, officials and equipment, (2) meals and accommodation, and (3) minor administrative costs in relation to the 1976 Olympic Winter Games in Innsbruck.
2.	(a) The Fitness and Amateur Sport Branch makes grants-in-aid to eligible carded athletes in both Olympic and non-Olympic sports who are enrolled in an educational programme. (University level-$1,800; community college-$1,200; High School-$600). In addition, it provides an annual allowance of $600 to student-athletes who are married or living away from home. The following list indicates those members of Canada's Winter Olympic Team which received grants-in-aid and supplements during 1975-76. It is anticipated that several of the other athletes will enroll in summer school programmes and will be eligible for this assistance at that time. The remainder are not enrolled in educational programs, (b) and (c) The Department of Health and Welfare Canada can not respond on behalf of provincial governments or other sources.
3.	The Department of Health and Welfare Canada contribution to the Canadian Olympic Association was intended to assist with the transportation, food and lodging costs related to thirteen individuals other than athletes. Canadian Broadcasting Corporation: No.
4.	The Department of Health and Welfare Canada is not in possession of financial data for other countries.
Canada's Winter Games Team Totals
Alpine Skiing
Name	G.I.A. Supp.	TotalCloutier, Karen	600 -	600Podborski, Steve	600 -	600Figure Skating	Jones, Candy	900 -	900Bohonek, Stan	1800 -	1800Nightingale, Lynn	300 -	300Alleston, Kin	600 -	600Ski-Jumping	Graves, Richard	900 -	900Speed Skating	Appleby, Liz	600 -	600Gordon, Gayle	900 -	900
13892

May 27, 1976
Order Paper Question
Speed Skating
Vogt, Kathy	600	600Boucher, Gaetan	600	600Priestner, Cathy	600	600Nordic Combined	Sjolund, Kurt	1800 600	2400Total	10800 600	11400


Mr. Saltsman: 1.	How many companies as of March 31, 1975, were in arrears of corporate taxes for (a) 1975 (b) 1974 (c) 1973 (d) prior to 1973 owed (i) less than $5,000 (ii) between $5,000 and $10,000 (iii) between $10,001 and $20,000 (iv) over $20,000?
2.	In each ease (a) how many owed taxes for more than one tax year (b) what types of business were they engaged in (c) what penalties are applicable?
3.	For each month since March 1975, how much of the arrears for (a) 1975 (b) 1974 (c) 1973 (d) prior to 1973 have been repaid and, in each case (i) how many companies do the figures represent (ii) what penalties were assessed?
4.	How many persons as of March 31, 1975, were in arrears of income tax for (a) 1975 (b) 1974 (c) 1973 (d) prior to 1973 owed (i) less than $100 (ii) between $100 and $500 (iii) between $501 and $1,000 (iv) between $1,001 and $2,000 (v) over $2,000?
5.	In each case (a) how many owed taxes for more than one tax year (b) what penalties are applicable?
6.	For each month since March 1975, how much of the arrears for (a) 1975 (b) 1974 (c) 1973 (d) prior to 1973 have been repaid and, in each case (i) how many persons do the figures represent (ii) what penalties were assessed?
7.	As of the last day of each month since March 31, 1975, what was the total outstanding in Treasury bills and what was the average rate of interest owing on such bills?


Mitchell William Sharp: am informed by the Departments of National Revenue and Finance as follows: 1. (a) 12,881 Corporations were in arrears of taxes in respect of assessments issued in 1975 as of March 31, 1975. (b) 9,269 Corporations were in arrears of taxes in respect of assessments issued in 1974 as of March 31, 1975. (c) 2,470 Corporations were in arrears of taxes in respect of assessments issued in 1973 and prior years as of March 31, 1975. Total 24,620. (d) A further breakdown is not available as to the number of corporations in arrears of taxes in respect of assessments issued in 1973 and those in respect of assessments issued in years prior to 1973. (i) 20,837 Corporations in arrears of taxes as of March 31, 1975, owed amounts of less than $5,000. (ii) 1,900 Corporations in arrears of taxes as of March 31, 1975, owed amounts between $5,000 and $10,000. (iii) 1,833 Corporations in arrears of taxes as of March 31, 1975, owed amounts in excess of $10,000. Total 24,620. (iv) Information is not available as to the number of corporations owing amounts between
$10,000 and $20,000 and the number owing amounts in excess of $20,000.
2, 3, 5 and 6. Departmental records are not maintained in such a manner as to enable Revenue Canada to provide the information requested.
4. (a) 139,776 individuals were in arrears of taxes in respect of assessments issued in 1975 as of March 31, 1975. (b) 245,426 individuals were in arrears of taxes in respect of assessments issued in 1974 as of March 31, 1975. (c) 116,622 individuals were in arrears of taxes in respect of assessments issued in 1973 and prior years as of March 31, '1975. Total 501,824. (d) A further breakdown is not available as to the number of individuals in arrears of taxes in respect of assessments issued in 1973 and those in respect of assessments issued in years prior to 1973. (i) 263,108 individuals in arrears of taxes as of March 31, 1975, owed amounts between $100. (ii) 155,987 individuals in arrears of taxes as of March 31, 1975, owed amounts between $100 and $500. (iii) 34,289 individuals in arrears of taxes as of March 31, 1975, owed amounts between $500 and $1,000. (iv) 22,258 individuals in arrears of taxes as of March 31, 1975, owed amounts between $1,000 and $2,000. (v) 26,182 individuals in arrears of taxes as of March 31, 1975, owed amounts in excess of $2,000. Total 501,824.
7. Please see Bank of Canada Monthly Review, Section 20 and Section 23.


Mr. Cossitt: 1.	Was any money owing to the Treasury for unused advances for travel on the part of Mr. L.D. Hudon, Deputy Minister of Agriculture, as of December 31, 1975 and, if so (a) what was the total amount (b) what various amounts made up this total and, in each case, how long had they been outstanding (c) on what date was all the money owing finally paid back (d) what are the reasons the situation was permitted to exist (e) what steps were taken to clear the matter up and who took such steps (f) what was the maximum amount owing at any one time and what was the date this maximum existed?
2.	Is ten days the normal time permitted for repayment to the government of unused travel advances in cases of this kind and, if not, what is the time?
3.	What is a complete history of Mr. Hudon's employment in the Public Service including positions held, dates and salaries in each case?


Eugene Whelan: 1. Yes. (a) $851.37; (b) $470.95 from October 4, 1975 $380.42 from November 30, 1975; (c) February 19th, 1976; (d) Settlement was held up pending receipt of travel claims; (e) The outstanding advances were refunded on February 19, 1976; (f) $851.37 as at November 30, 1975.
2.	No, 15 days.
3.	See following.
Department	Position	ClassificationDept, of Finance	Administrative Branch	Administrative Assistant**	Economic Policy Division	Finance Officer Gr. 1Financial Secretary to the Canadian Permanent Delegation to NATO	Finance Officer Gr. 2"	International	"Salary Range	Effective Dates2,400	May 23, 1947 to September 13, 19472,700-3,600	July 2, 1948 to September 30, 19482,880-3,780	October 1, 1948 to November 30, 19503,312-4,044	December 1, 1950 to November 30, 19513,580-4,180	December 1, 1951 to May 31, 1953"	June 1, 1953 to November 30, 19533,780-4,500	December 1, 1953 to December 31, 19534,560-5,280	January 1, 1954 to October 1954"	November 1954 to March 31, 1956
[Mr. Sharp.)
May 27, 1976


Mr. Forrestall: What are the terms of reference for the feasibility study presently being conducted by the Department of Transport and the Government of the Province of Quebec respecting the further development of a deep water port at Gros Cacouna?


Mr. Ralph E. Goodale (Parliamentary Secretary to Minister of Transport):: The terms of reference of the federal provincial study on Gros Cacouna are as summarized below: 1. To analyze the potential dry bulk traffic to be transshipped at Gros Cacouna based on market trends.
2. To assess the impact of the development of a dry bulk port at Gros Cacouna on other St. Lawrence and East Canadian ports.
3.	To evaluate the costs involved in developing Gros Cacouna (including auxiliary costs such as rail infrastructure).	*
95568 -45 V2

May 27, 1976
Order Paper Question


Mr. Reynolds: 1.	Have any air traffic controllers been transferred out of Montreal in the past two years and, if so (a) how many (b) to what locations were they transferred (c) for what reason?
2.	What was the displacement allowance for each individual?
3.	How many were (a) English speaking (b) French speaking (c) bilingual?
4.	Did the government pay a housing differential move on any of the transfers?


Ralph Goodale: 1. (a) 10; (b) Ottawa 3; Toronto 2; Thunder Bay 1; Winnipeg 2; Vancouver 2; (c) 7 lateral transfers at the request of the employee 3 transfers relating to promotions.
2.	None of the employees have received a displacement allowance but all have received removal expenses as provided for by the Treasury Board Relocation Directive. The five controllers transferred since December 13th, 1975, may be eligible for special relocation provisions now under consideration by Transport Canada and Treasury Board.
3.	(a) mother tongue English 8; (b) mother tongue French 2; (c) bilingual 4.
4.	No although the five controllers transferred since December 13th, 1975 may be eligible for special relocation provisions now under consideration by Transport Canada and Treasury Board.


Mr. Dick: 1.	How many copies of the Department of the Solicitor General's monthly magazine Liaison, Volume 2, No. 2, March 1976 were printed?
2.	What was the (a) cost of printing (b) price of each copy?
3.	How many copies were sold?
4.	Are copies distributed free of charge and, if so, to whom?
5.	Does the government intend to publish the next issue containing views contrary to the government's own political views relating to Peace and Security as set out in Bills C-83 and C-84?


Hon. Warren Allmand (Solicitor General):: 1. 9,300.
2.	(a) $2,852.42; (b) 30.
3.	Nil.
4.	Yes. "Liaison" is distributed free of charge to interested parties, working mainly in the area of criminal justice in Canada, and outside Canada. The mailing list is approximately 9,000.
5.	No.


Mr. Forrestall: Has any action been taken to upgrade RCMP protection along the
eastern shore of Nova Scotia from Sheet Harbour to Halifax-Dartmouth in the last twelve months and, if so, what was such action?


Mr. Hugh Poulin (Parliamentary Secretary to Solicitor General):: Royal Canadian Mounted Police datachments have increased their patrols along the eastern shore of Nova Scotia.


Mr. Forrestall: 1.	Has the executive committee of the Montreal Port Authority been established and, if so, on what date?
2.	Is it the government's intention to establish an executive committee for the Halifax Port Authority and (a) if so, on what date (b) if not, what factors prevent its immediate establishment in Halifax, if any?


Ralph Goodale: The National Harbours Board advises as follows; 1. Yes, on January 29, 1975.
2. Yes. (a) Date not yet determined, (b) Completion of appropriate documents clearly indentifying limits of responsibilities and authority which are acceptable to ports concerned and within the powers of the National Harbours Board Act.


M. Forrestall: In 1975, what was the total revenue from leases paid to the National Harbours Board from the terminals operated in the Port of Montreal by Task Terminals Limited and Furness Withy Limited (Manchester Liners)?


Ralph Goodale: The National Harbours Board advises as follows: The total revenue in 1975 from the lease to Task Terminals was $675,353. The total revenue in 1975 from the lease to Manchester Liners was $560,560.


Mr. Elzinga: 1.	How much was loaned to farmers by the Farm Credit Corporation in 1972, 1973, 1974 and 1975?
2.	How much was disbursed in each province?
3.	What are the names of the individuals who received loans in 1972, 1973, 1974 and 1975?


Eugene Whelan: The Farm Credit Corporation advises; 1. Loan Approvals ($000), 1972-73-186,276; 1973-74-400,658, 1974-75-398,814; 197576-640,947.
2. Loan Disbursement ($000)

May 27, 1976

Province	1972-73	1973-74	1974-75	1975-76British Columbia	8,537	15,463	16,670	14,081Alberta	26,462	59,324	80,497	84,585Saskatchewan	48,344	99,970	88,240	98,275Manitoba	12,071	25,744	28,085	31,188Ontario	38,337	92,411	122,785	141,589Quebec	18,558	34,198	82,462	91,148New Brunswick	1,706	2,122	2,977	4,819Nova Scotia	772	1,266	644	894Prince Edward Island	966	2,177	3,022	3,413Newfoundland	263	538	882	2,005
3. The Corporation considers that individual farmers have the right to negotiate loans from it in confidence and that to indicate if specific farmers have obtained loans from the Corporation would breach that confidence.


Mr.   J.-J. Blais@Parliamentary Secretary to President of the Privy Council: Mr. Speaker, I ask that the remaining questions be allowed to stand.


Mr.   J.-J. Blais@Parliamentary Secretary to President of the Privy Council: Mr. Speaker, I ask that the question No. 4,600 be made an order for return, and also ask the consent of the House to table immediately the information which has already been submitted. Such additional information will be tabled at the time it is made available to me.


Mr. Yewchuk: 1.	What was the cost of information services for each department in (a) 1975 (b) 1974?
2.	What was the cost of (a) news releases (b) Ministerial speeches (c) Prime Minister's speeches (d) Members' speeches circulated to Canadian weekly newspapers?
Return tabled.


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



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Macdonald (Rosedale):
That this House approves in general the budgetary policy of the government.
Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, there are no fresh ideas in this budget. There is no new perspective, long range or otherwise, that would give Canadians renewed hope in our future, that would give them hope that our jobless will find employment, hope that our real
The Budget-Mr. Stevens
growth will regain what we lost in those sad years of 1974 and 1975, hope that we will regain our position in per capita national wealth among the nations of the world, hope that our $5 billion trade deficit will be lessened or eliminated. Confidence has been lost in Canada. The Minister of Finance (Mr. Macdonald) did not help restore it in his presentation on Tuesday night. As one commentor has said, the message seemed to be: Economy, heal thyself.
Judging from responses to questions yesterday, the minister appears to seek his answers in the United States. He hopes their upturn will spill over into Canada without himself having to lift even a finger. The American motto is, as we know, "In God we trust". This administration's motto seems to be, "In the United States we trust". Meanwhile, this administration continues its spending spree. On Tuesday evening I pointed out that they has caused federal spending to quadruple since they took power in April of 1968. Expressed another way, in the nine years since gaining control of Canada, they will have spent twice as much as all previous administrations combined, that is, over the previous 100 years of confederation. On Tuesday we referred to the staggering deficits of this administration which will now total, in the aggregate, by the end of this year, $11 billion-an amount four times the size of all the deficits incurred, in aggregate, by the Pearson administration, the Diefenbaker administration and the St. Laurent administration.
Coupled with this high spending we must note that it is the average taxpayer in Canada who increasingly has been paying the shot. This year alone, aggregate personal income taxes will jump 26 per cent over last year. In 1968, the year this man Trudeau took power-


Some hon. Members:: Order.


Sinclair McKnight Stevens: -personal income taxes represented 34 per cent of the total revenue received by Ottawa, while corporate taxation represented 15 per cent. Today, personal income taxes supply an amazing 53 per cent of Ottawa's take, while the corporate sector still accounts for that 15 per cent. In short, it is not the so-called fat-cat, it is not the wealthy, it is not that vague corporate entity which pays- in the main, it is the average, hard working Canadian who increasingly pays for the spending programs of this administration. In fact, taxation has gone so wild in this country that we now find the government is reverting to shell games in order to raise revenues still further.
Consider the approach of the administration to lotteries which it has aided and abetted with a view to increasing revenue and their take from Canadian citizens. Lotteries went out of fashion in the seventeenth century, and yet here we have a government in this century cultivating and developing that concept of raising money from the public.


An hon. Member:: Like Wintario.


Sinclair McKnight Stevens: Let us consider what this administration did with regard to the $100 Canadian gold coin. Yes, the administration is proposing to issue a $100 gold coin for $105, containing $32-worth of gold. That is what I mean by the shell game this government has become party to in order to continue raising money.

May 27, 1976
The Budget-Mr. Stevens
Let there be no mistake about it, in my remarks today I would like to indicate where at least $1 billion can be cut from federal government spending plans and where $500 million of that amount can be given back to the Canadian public, where it belongs, and something in excess of $500 million can be used to lower the $4.5 billion cash deficit proposed to be incurred by this administration in the current year. But let me first deal with the administration's wage and price controls. It now appears that this program was introduced at the wrong time, in the wrong way, for the wrong purpose and for the wrong length of time.


John Edward Broadbent: And with your support.


Sinclair McKnight Stevens: The controls program would have made sense 18 months earlier, but not during the current period when inflation is on the decline around the world, when we hover on the brink of recession, with 750,000 people out of work and when we have a need for more productivity in this country. Any controls program should commence with an absolute freeze for, say, 90 days, with a tempering of controls to suit the circumstances for another 15 to 18 months at the outside.
Hon. members will recall that this administration started with a consensus dialogue. That dialogue alarmed everyone. Then the government went into gentle controls, which were understood by few; and now, partly as reflected in the budget of last Tuesday, the government seems to be moving into extensive controls which will be policed by an ever-growing bureaucracy. Throughout the piece there has been a lack of meaningful dialogue with labour, with business, with the provinces and with the consumer in Canada.
When we clear away the sophistry surrounding this administration, it is more and more apparent that its interest in controls is threefold. First, this government believes it is popular, politically, to appear to be doing something to counter inflation. Second, controls give the government an opportunity to continue its spending habits in the mistaken belief that the wage and price control program will keep the lid on inflation which will ensue from its big spending and high deficits. Cut the minister's figures whatever way you like; the truth is that this government has allowed spending to increase by over 26 per cent per year for the last four years. With such a ravenous appetite for spending, no controls program will ever work.
Third, the Prime Minister (Mr. Trudeau) believes there should be greater intervention by government in our economy on a permanent basis. The recently announced northern land regulations perhaps highlight this type of thinking. The administration's refusal to outline options which will be open to Canadians in the post-control period confirms the belief that our control period is here for a long time, and chairman Pepin of the Anti-Inflation Board certainly leaves no doubt that he sees controls for an indefinite period in Canada. To suggest that the program should continue until December 31, 1978, or even longer, is alarming and particularly unfortunate. This administration should give a firm commitment today that these controls will not continue beyond another year. Twice the Liberal caucus, dominated by this government, defeated
[Mr. Stevens.)
our amending motions to terminate controls legislation by next April or May.


John Edward Broadbent: Why wait for a year, if it is wrong now?


Sinclair McKnight Stevens: The members of the Liberal caucus are forgetting that the main reason Canadians have supported controls to date is that they believe they are temporary, and that is one reason we voted against this measure twice in this House, on the basis of it running longer than for an 18-month period.
History demonstrates the administration is wrong in its approach. Robert Schuettinger, lecturer in economics at Yale University, in an interesting survey of wage and price controls for 50 centuries, states, "For the past 46 centuries at least, governments all over the world have periodically tried to fix wages and prices. When their efforts failed, as they usually did, governments then put the blame on the wickedness of their subjects."
Already this administration cites the businessman, the labouring man, or the individual as the villain in our inflationary condition. It chooses to ignore that our inflation is due primarily to excess federal spending and, until recently, undue growth in our money supply.
Surely we can learn from history. Great Britain, over the past 30 years, followed a path surprisingly similar to this administration's economic approach. Now, as we see that country crushed economically and humiliated in the eyes of the world, can we not accept that serious mistakes were made? Why repeat the mistakes? The British approach to wage and price controls developed from attitudes that arose during the Second World War. In an article on wage and price controls entitled "The Lessons from Britain", Michael Parkin from the University of Western Ontario concludes, "The existence of controls has certainly contributed to Britain's last 25 years of slide into economic and social chaos." The message is clear. Let's heed it.
In the March-April edition of the Canadian Tax Journal, Professor J. B. Jump and Professor T. A. Wilson of the University of Toronto reviewed Canada's fiscal policy and ended with a damning indictment of the administration controls program. In their article they state:
With negative effects on investment spending and spending for research and development, the controls program will hamper productivity growth thereby reducing Canada's potential rate of growth and contributing to higher unit labour costs in the longer run.
We therefore cannot escape the conclusion that the present program should be either modified substantially or abandoned completely. To continue our present course will reduce the rate of growth of the Canadian economy in the near term by reducing real aggregate demand and in the longer term by reducing productivity growth.
What more need be said, Mr. Speaker, especially when we bear in mind that Messr. Jump and Wilson are advisers to the Department of Finance.
Now let me deal with agriculture. No other field or industry in Canada was so ignored in this budget as was the farming community. Despite the fact that it was the farmer who, through the sale of his goods, helped, lessen our trade deficit, the same farmer was virtually ignored in the minister's presentation. In our view, the farm community in Canada could, with proper federal direction and
May 27, 1976

incentives, be one of the most effective forces in increasing our export trade and thus reducing our trade deficits. Surely the Minister of Finance, who complains that world markets for our products are not available-we heard him say that here yesterday; that was the statement he kept making in this House, that world markets are not available for our products-would have to admit there is a market for food around the world. That market could be tapped more effectively, with better direction from the federal government. It is too bad the Minister of Agriculture (Mr. Whelan) does not have the clout in cabinet to sell this concept.
Our farmers could increase production if they were given the opportunity. What finer way to reduce our trade deficit than to help feed more of the world's population? Let us take wheat as an example. We are a great wheat-producing nation, but I would suggest that we could be greater. How many people realize that France produces just about as much wheat as we do in Canada, or that India produces about one-third more than we do? How many realize that our production of wheat, expressed in tonnage terms, has been relatively static for ten years, while American production has jumped a dramatic 66 per cent? Incidentally, the Americans have sold much of that increase to foreign markets-the very markets the Minister of Finance says do not exist.


An hon. Member:: At a loss!


Sinclair McKnight Stevens: I believe if the present administration would go to our farming community and say, "Start producing more, and we will start selling more of your goods in foreign markets," the product would be forthcoming and sales could be made. On agricultural products alone, the Americans turned from a trade deficit of approximately $5 billion to a substantial surplus within two years. They are still in surplus, while we nurse our $5 billion deficit. Mr. Speaker, I say to the minister: Let us start selling in markets that are there. In supplying those markets, let us make sure that the family farm is preserved. There is no reason why easier roll-over provisions for farms held within families cannot be facilitated, as several farm groups have requested. The family farm is an efficient unit of production and it should be encouraged to continue.
I should like now to touch briefly on the question of energy. At this point I would suggest that the energy price increases which have been announced are vital to federal finances. Without such increases, federal cash requirements would have mounted sharply and would probably have precipitated substantial changes in existing revenue and expenditure plans. I would hope that this new source of revenue would not be retained by the federal administration long after its initial purpose has been fulfilled. That initial purpose was to even out energy price costs in this country.
I think we must remember that the ten-cent tax on each gallon of gasoline which was imposed by this administration equals $3.50 per barrel for the oil itself. That is regressive, and I would point out that when the administration speaks about a $1.05 increase at the present time, with a further increase next January of 70 cents, it should be made clear that with their ten-cent levy alone they are extracting twice the per barrel amount from the Canadian
The Budget-Mr. Stevens
public that that increase is going to entail when it is fully felt by the public.
In fact, let the administration make it clear that it is not only a ten-cent excise tax they are taking; they are also taking a 3.9-cent sales tax from the Canadian public, or a total of 13.9 cents per gallon of gasoline. Put in perspective, the dealer who pumps the gasoline into the car gets 7.9 cents, on average, while the government gets 13.9 cents on the same gallon. That is why we say it is important that in future this ravenous government should not attempt to retain that source of revenue long after the need for it has gone.
I should like now to touch on the question of capital formation to look after future productivity needs and development in this country. There is nothing in this budget that will ensure there will be sufficient capital formation in Canada to fill our investment needs in the coming decade. It has been estimated that the gap between domestic investment needs and our domestic savings forecast could be as much as 10 per cent. Over the next decade, the cumulative shortfall could be as much as $75 billion.
We have three alternatives, Mr. Speaker. We could let our capital investment lag, which would mean less real wealth for Canadians and fewer jobs, or we could import savings from abroad, with the necessity of paying interest on those foreign funds in subsequent years, which in turn would heighten our trade deficit. Last year alone, for example, we borrowed $4.7 billion in this category- encouraged, incidentally, by the June 23 budget. This year we will start paying $400 million on that debt alone, and in subsequent years like amounts will have to be covered. Our third alternative is to encourage more capital formation in the country. How many people realize that, historically, four-tenths of our capital formation is in the corporate sector in Canada, yet that is the sector this administration chooses to kick around, to overregulate and overcontrol, with the net result that it is hampered in producing the necessary capital that we need for future development.
Does the Minister of Finance believe that his new AntiInflation Board formula to control profits will encourage capital formation in Canada? Not only will it not encourage capital but it will lead to further inefficiencies and lack of productivity in our industries. That is exactly what we do not need if we hope to regain our competitive position in the world.
Let me now touch on the Unemployment Insurance Commission. The members of my party commend the Minister of Finance for moving in some of the directions we have long advocated regarding changes in the Unemployment Insurance Commission program. In particular, we think it makes very good sense to recombine Canada Manpower and the Unemployment Insurance Commission into one unit. Indeed, it is hard for many on my side of the House to imagine the kind of convoluted logic which led to their separation in the first place. The changes in eligibility requirements and length of time for benefit payments represent a small step in returning the fund to an insurance concept whereby premiums paid in might be balanced by benefits paid out. We support the principle that the

The Budget-Mr. Stevens
government should provide an income to those who need it in our society, but have a fundamental objection to labelling the program as an insurance program when in fact it is not an insurance program. We are intrigued by the minister's concerns about regional disparity. We share those concerns and look forward to the chance of studying what the minister has in mind.
Having said all that, I am still amazed that this administration has failed to grasp that when a few people have to work to support the many who do not work, significant strains are placed on people of our society. Anyone with vision should be able to see that it is in our long-term interest to move as quickly as possible toward higher levels of employment. Why does this administration continue to highlight unemployment insurance and say so little about stimulating the economy and providing more jobs in the private sector for more people? How can the government tolerate the vague idea that if the United States recovery continues, and we get all the lucky breaks, we shall then create 250,000 more jobs when, at the same time, last year there were 350,000 new entrants to the labour force and there are likely to be as many entrants this year? How can you gloss over the fact that the most optimistic forecasts still indicate to this House that the government is following a budgetary policy which may well add 50,000 more people to the unemployment rolls which are already at the highest level of the last 15 years? We need a change in employment policy much more than we need further tinkering with our unemployment policy. I suggest it is time this government got its priorities straight.
Let us now touch on government expenditures. In the Minister of Finance and the President of the Treasury Board (Mr. Chretien)-I am sorry he is not present-we have two of the finest diddlers in the land. Take a look at the Post Office, for example. In the estimates now before the House we are told that the department needs $1,122 billion for the current year. That does not sound too bad when you look at the expenditures estimated in the blue book for the fiscal year 1976.
Last year the department is reported to have spent $981 million, which means it is asking for an increase of $141,312,000, or 14 per cent. But then you find this crafty pair, the Minister of Finance and the President of the Treasury Board, start to fiddle. When you look at page 11 of budget papers "B" you are surprised to find that Post Office expenditures for the fiscal year 1976 are only $901 million, or $80 million less than we were told when the blue book estimates were tabled. Based on these figures, we find the Post Office estimates in reality have gone up $221 million, or 25 per cent in one year. Surely the people of Canada are entitled to an explanation. Why have the books been apparently cooked to show an additional $80 million as being expended in the fiscal year 1976, which of course makes the current estimates look more acceptable?
It is our suggestion that as far as the Post Office is concerned, until they can show otherwise their 1976 spending of $901 million should be taken as a base, to be increased by 14 per cent, the percentage they asked for, which would give a total increase of $126 million instead of the contemplated $221 million. Removing this diddle in the accounts would effect a saving for the people of Canada of

$95 million. In total, a review of the blue book estimates compared to the budget papers "B", page 11, reveals that there has been a misrepresentation of departmental expenditures in 1976 totalling $218 million. If that money was not needed in 1976, there was absolutely no reason for its being used as padding to justify a new estimate in 1977 which includes that amount plus an increase of 14 per cent or 15 per cent. The bulk of that money should be eliminated from present spending plans and returned to the people of Canada through a tax credit, or the cash deficit should be lowered. We reckon that including the Post Office's $95 million there is $225 million which could be eliminated from the 1977 spending plans of this administration, if they were prepared to be honest about their accounts. The fact is there. Let us cut it out. The average Canadian taxpayer needs that money more than do the ledgers and computers of the Treasury Board. If it is to be retained, then let us have a proper explanation as to why it is needed.
Lest you think that the $225 million misrepresentation, or error, in the accounts is but a single example, let me tell you of two other cases where the present administration appears to have altered the figures to its own advantage. The Minister of Finance notes that expenditures in the 1975-76 fiscal period are going to be somewhat higher- about 2 per cent higher. For this second piece of skullduggery let me take you back to the President of the Treasury Board's publication in February, entitled "How your tax dollar is spent." At pages 7 and 8 of that publication you will note that the President of the Treasury Board states that in the fiscal year 1976 total expenditures were $36.5 billion, and that in 1977 they would go up to $42.15 billion-as he said, a mere 16 per cent increase. The minister, on page 8, points out that this 16 per cent increase is the same increase as the previous year's. Included in the $42.15 billion are loans, investments and advances of a nonbudgetary nature totalling $2.75 billion.
Then on Tuesday night in walks the Minister of Finance, with his apparently innocent statement that he and the President of the Treasury Board have been surprised to find that the fiscal year 1976 figures have actually gone over the Treasury Board's final figure-I emphasize, final figure-by $725 million, almost three-quarters of a billion dollars. This conveniently put the minister in the position of being able to say that instead of growth in 1976 being at 16 per cent and in fiscal 1977 at 16 per cent, the actual growth figure was 18 per cent in 1976 and a mere 14 per cent in fiscal 1977. What sophistry! What diddling! Remember, we had been told less than one month before that the anticipated growth rate in this country was to be 13 per cent. Now we are told that real growth is to be 14 per cent or 15 per cent. The government had diddled its percentage figures and said that growth will be at 14 per cent to keep apparent spending in line with growth in the economy.
A review of the accounts reveals how this was cooked up. Certain Crown corporations and related entities- some, incidentally, under the direct control of the Minister of Finance-took down, in the aggregate, $725 million in fiscal 1976 rather than in 1977. By having these amounts reflected before March 31, the 1976 accounts were made to look higher so that the 1977 figure would look lower, percentage-wise. Here is the rub. Despite the fact that this extra $725 million was reflected in the 1976 figures, there is no credit for it now in the 1977 figures. The 1977 figures
May 27, 1976

show no reduction at all from the $42.1 billion figure to which I referred. To be consistent, 1977 spending should have been reduced by the same amount that 1976 spending was inflated, or by $725 million. But that is not the way these twins think. They now have $725 million to play with in the 1976 figures, and another $725 million in the current year.
These greedy, ravenous administrators who have control of this country have chosen to clutch on to this money because they know it gives them a slush fund of almost three-quarters of a billion dollars which they can squander as they see fit without meaningful recourse to the parliament of this country or the Canadian people. However, that is only part of the story of how they are handling your finances and mine and everyone's tax dollars in Canada.
In another section of the minister's speech he mentioned that $300 million will not be included for federal nonbudgetary expenses as they have asked Canadian National Railways and the Export Development Corporation to go out and raise the money directly. Remember, it was W. A. C. Bennett of British Columbia who first carried out that scheme. He cleared the British Columbia debt by having provincial Crown corporations take it over and then proclaimed the provincial government debt-free.
We are now told by this administration that they are saving $300 million. The fact is the money still has to be borrowed, and the covenant and guarantee they are giving is the covenant and guarantee indirectly of the people of Canada. Properly reflected, this $300 million should be added to what we understood was the ultimate figure to be spent in 1977, that is, to the $42.1 billion I referred to, the figure which the President of the Treasury Board told us only last month was the sky, the uppermost figure for 1977. For these reasons, we are asking the two ministers to give us an explanation as to why they cannot save for the people of Canada $225 million, as I touched on earlier, but why at least another $410 million cannot be eliminated from the non-budgetary side of federal spending for 1977. The Minister of Finance (Mr. Macdonald) claims he is innocent of the charge of excessive spending, but he appears to have blackened the figures to make himself white.
In addition to the savings I have indicated, we believe the administration should tell us why $250 million cannot be slashed from the consulting and related contracts reflected in current estimates. These are only part of the contracts this administration has grown accustomed to awarding to their friends. Based mainly on the Auditor General's recommendations, we believe the administration should tell us why administrative savings cannot be realized and the civil service stabilized with a cost saving totalling at least $90 million. In addition, a systematic amalgamation of departments or the phasing out of departmental operations which overlap with other federal departments or provincial counterparts can realize minimum savings of $50 million.
Do we really need 29 ministries in Canada, when the Americans can operate a country ten times our size with half that number? Does it really make sense to have ten departments operating in each of our provinces when in
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many cases their activities overlap directly with counterpart departments in Ottawa? I understand that on occasion these departments become counterproductive-one arguing with the other as to what should be done, with the result that nothing is done. To this end, it might be wise for the government to commission a Glassco-type commission to review the spending habits of this administration with a view to suggesting where savings may be made. After all, when the Glassco commission study was done in 1962, total federal spending was $6.5 billion. Today it is, on the same basis used at the time of the Glassco commission study, over $34.9 billion, a figure five times that of 1962.
In total, I have outlined possible savings of $1,025 million this administration could consider. Now, here is how we would like to see those savings used. First, we would like to give a tax break of $250 million to the Canadians who have been paying the shot. Of this amount we would like to see a 10 per cent tax credit-that would be about $100 million-go to those earning $8,000 or less. The remaining $150 million should be given in credits scaled down appropriately for those earning between $8,000 and $16,000. We believe it is time to give the taxpayer such a break, for three very good reasons. The April Economic Review reveals, at page 56, that the real gross national product per employee in Canada has actually gone down by $200 since 1972. In 1975, the average employee, in real dollars, earned $11,645 compared to $11,848 in 1972. Surely it is wrong to deny a tax break to such employees who are being required ti restrain their wage increases. Second, we would point out to the administration that they have reaping a bonanza in personal income tax aggregate increases which this year alone are jumping 26 per cent, or $3.3 billion. An 8 per cent reduction of this increase would not be out of line. Third, and most importantly, as we have already indicated, the administration just does not need the money. By being more restrained and by being more frugal there is no doubt they could save this amount and turn it back to the people we and they are supposed to be serving.
We would like to earmark another $100 million of our spending cuts to give further incentives to the private sector to encourage it to increase its activities in the research and development field. In this connection, we should have a further explanation as to why the administration chose to end assistance to small business under the Industrial Research Development Incentives Act. Our incentive scheme would be adjusted regionally to provide the greatest incentive in areas of disparity. For instance, locations in the maritimes would earn a 70 per cent credit, but locations in, say, Toronto, would earn 25 per cent. This administration only gives lip service to productivity and improving our trade balance which is really an $8 billion deficit. I am pleased to see the Minister of Industry, Trade and Commerce (Mr. Jamieson) here. We should never forget that before we sold our non-renewable assets last year, the total trade deficit in this country was $8 billion. We covered that deficit by selling $2.9 billion of our nonrenewable resources. That left a deficit of $5.1 billion, and even the administration admits that $5.1 billion deficit. We covered by borrowing, in foreign lands, $4.7 billion and allowing our cash reserves to go down by another $400 million.
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But let us not forget the point. We had an $8 billion deficit before we started to sell our non-renewable resources, and I would say it is wrong to continue to pay for current extravagances in the form of trade deficits by selling off non-renewable resources that we shall run out of some day. Surely, from an accounting standpoint, we should show our accounts on the basis of the situation before we sold these resources and after we sold them, and the administration should attempt to ensure a continuing benefit to Canadians with respect to the moneys received fron the sale of those resources. I have in mind something like the heritage fund in Alberta in connection with the sale by that province of its non-renewable resources.
The minister spent the greater part of yesterday's question period claiming that we cannot sell goods in foreign markets if the markets are not there. I say to him, "The markets are there, if you have the goods to sell; but you cannot get goods to sell if you keep shortchanging research and development in the private sector." Look at the facts. For the past ten years the private sector has spent .3 per cent of our gross national product on research and development. There has been little encouragement from the administration to increase this figure. On the other hand, the Americans spend 1 per cent of their GNP on research and development, and Japan and Germany spend 1.4 per cent of theirs. With our competitors spending such amounts on technology and the development of new products, is it any wonder that private industry here finds it difficult to compete in world markets? The minister is simply out of touch when he says the markets are not there. The markets are there. The difficulty arises through the failure of the present administration to give leadership and guidance to Canadian industry and to help them capitalize on those markets. By increasing our exports in this field we would lower our trade deficit in the most meaningful way-by selling merchandize, not non-renewable resources.
Tightly linked with this approach we would like to see another $75 million of the savings to which we have referred spent in giving export sales support and incentives to industry, especially to small businessmen who would increase their share of international markets. Surely, if the government is willing to give billions of dollars by way of assistance to large corporations, mainly foreign-owned, in the form of export credits it could give some assistance to our smaller concerns who could compete in these world markets if offered the opportunity.
Another $25 million of the money we suggest the administration could save should go into medical research in the hope that, through research, cures and preventive procedures could be found for many diseases which afflict citizens in this country. It is totally inconsistent to spend billions of dollars in the field of health and welfare while at the same time shortchanging medical research. Is it not sensible to find cures or, better still, to prevent diseases, rather than spend hundreds of millions of dollars treating people who become afflicted?
Mr. Speaker, all businessmen, and small businessmen in particular, are being swamped with increasing requirements to file government forms. This trend must be reversed. We believe the administration should be willing

to pay small businessmen for filling in federal forms, possibly by providing them with a suitable tax allowance. Hopefully, action along these lines would drive home to the federal administration the degree to which they are leaning on business to supply them with information which, very often, is never used. If they had to pay in order to get these forms completed, they might decide they did not need the information after all; they might even drop some of these forms. What a pleasant relief that would be for more than one million small businessmen who find the filling out of forms for the federal government one of the most onerous tasks they have to live with, when they would much prefer to be out selling their products or engaged in increasing their production?
In addition, we would like to see an incentive given to small businessmen to encourage them to increase their sales. As their sales increased over a certain level they would become entitled to a tax credit or rebate on a formula basis. In total, this form of assistance to small business and the form fees would take up $50 million of the unnecessary federal spending to which we have called attention. All in all, we believe $500 million of the $1,025 million we have identified could be given back to the Canadian people in the form I have outlined. The balance should be used to reduce the cash needs of the administration from $4.5 billion to $3,975 million. Such a cash deficit reduction would help renew public confidence in the economic future of the country. It would demonstrate to the Canadian public that, rather than continue to live with deficits, an attempt was being made to reduce those deficits. Capital markets would respond positively to such a move, and this in turn would encourage lower interest rates.
One of the most disturbing aspects of the budget is its lack of perspective. There is no long-range theme, no indication of where the administration sees the country going beyond 1977. We believe there should be a two-year review undertaken in every budget presentation, and a five-year perspective offered. In the United States, to which the Minister of Finance looks for relief, two-year budgets are required by law and a five-year perspective is given in addition. In that country they are much more frank with their people than the present administration is with Canadians. They spell out where they believe the country is going, then let their citizens judge the success or failure of successive administrations in reaching the goals set. In Canada we are told our real growth will be about 5 per cent this year, but this is not even a guess as to the situation in succeeding years. In the United States the long-term projections show a 6 per cent average rate of real growth from 1975 through 1981. Furthermore, this rapid advance in output is accompanied by a slowing of the inflation rate from 6.5 per cent in 1975 to 4 per cent, and possibly even 2 per cent. They show unemployment as deciding dramatically, well below the projection the Minister of Finance is holding out for Canada.
Mr. Speaker, the measures announced last Tuesday are not worthy of a budget presentation. Most of the items could have been covered in other ways. We are faced with an inflation rate of 9.4 per cent this year. This ought to be significantly lower. We are faced with current unemployment of 7.4 per cent and the situation is expected to be worse toward the end of this year: the figures will prob-
May 27, 1976

ably be even higher next year. That rate must be made lower. The real rate of growth in the economy last year was only .2 per cent, and the prospect this year is 5 per cent. It should be at least 6 per cent in this current year. We have an admitted deficit in trade of $5 billion, which is really the $8 billion deficit to which I have referred. We have interest rates 3 per cent higher than those in the United States, a country with which we are attempting to compete. It is with that background, Mr. Speaker, that I move, seconded by the hon. member for Saint-Hyacinthe (Mr. Wagner):
To delete all the words following "That this House", and insert: "regrets the lack of any government commitment to the long-term growth and job potential of the Canadian economy, its failure to realize that sound economic growth and job creation are essential to effective control of inflation, and its refusal to impose any real and honest restraint on its own spending to ease the tax burden on Canadians."


Mr. Max Saltsman (Waterloo-Cambridge):: Mr. Speaker, may I first deal with a point of order before commencing my remarks. I intend to move a subamendment before concluding, and I understand because of that I will have 40 minutes in which to make my remarks.


The Acting Speaker (Mr. Turner):: It is my understanding that the hon. member for Waterloo-Cambridge (Mr. Saltsman) will have 40 minutes in view of the fact he is moving a subamendment.


Max Saltsman: Thank you, Mr. Speaker. I would have required two days if I had intended to reply to the previous speaker, but I am going to forgo that particular luxury. Let me say something about the statement of the Minister of Finance (Mr. Macdonald) on budget night, in respect of which he has been suggested as saying he would rather be unimaginative than foolhardy. The minister managed the impossible task of being both unimaginative and foolhardy; foolhardy in the sense that he neglected in the most shameful way to do anything about that great forgotten problem of the Liberal government, namely, unemployment.
In many ways this is a political budget, not that all budgets are not political to some extent in that they all contain some element of politics. I would be naive to assume that they were not; but I have never, in my years in the House, seen a budget that was so totally political and totally responsive to an effort to correct the damage the Minister of Finance thinks his Prime Minister (Mr. Trudeau) did by his speech on New Year's. The budget is totally oriented to assuaging the business community to the belief that the new society the Prime Minister was talking about is unreal. He was trying to say to the business community, "Don't worry about it. This is still 'Canada Incorporated', with business as usual, and I am introducing a budget which will demonstrate that to you."
If you want some evidence of that, Mr. Speaker, let us look at the concluding remarks of the Minister of Finance when introducing the budget. His last paragraph is couched in the best of Bay Street terminology. The paragraph which appears at page 34 of the budget speech is as follows:
The Budget-Mr. Saltsman
We see ourselves as partners and not as sole proprietors in this enterprise. It is well to remember that in our economy there is not only a recognized role for governments and their enterprises but also and a massive and crucial role for private firms, labour unions great diversity of other private institutions and associations. If government alone is held responsible for the performance of the economic system, then government will be driven increasingly into the regulation of the private sector, at the cost both of efficiency and of economic freedom. In general we all look to the private sector to deliver the right goods and services to the right place at the right time and the right price. Productivity growth results primarily from the actions of the private sector, not the policies of government. The private sector can expect government to provide a framework of law and economic policy in which it can best function. But government can expect the private sector to operate efficiently, competitively and with due regard to the interest of society within that framework.
Never, in all the budget speeches I have listened to, have I heard such a denial on the part of the government of its own responsibilities. The budget reflects that, in that it says-almost in its entirety-that the government is not going to do anything. In some ways one gets the picture from the budget of the Minister of Finance, in an old jalopy going down a steep hill, with his foot on the brakes and his hands off the steering wheel, hoping to heck that a street called "Main Street, U.S.A." has been cleared for him. That is about the extent of the management he is putting into this economy with this budget.
The Minister of Finance is, in effect, saying, "Don't pay any attention to the Prime Minister's musings. Private industry is going to run this country as it always has, and not the government of Canada." He says, "To demonstrate that to you, we have given you a non-budget that in fact is not going to interfere with the marketplace in any way or try to manage the economy in any significant way". In other words, from the minister's point of view, the government that is best is the government that governs least.
The budget is a confused and impotent document that seems to have been put together by a committee, not of economists but of theologians. It seems to be an act of faith rather than anything based on economic doctrine and thought; sort of an Episcopalian belief, with faith that the great United States will save us. That country is going to be the cavalry which comes over the hill to the rescue of the Canadian economy. There are a number of problems with that kind of concept. First of all, we do not need the United States to save us. The minister, in his speech, seemed to be saying that unless the United States society recovers there is not much point in the Canadian government doing anything at all. That is the most shameful statement made by any minister of finance of this country.
Let us examine that statement for a moment. Granted, there is always some truth to the suggestion that our economies are interlocked. Let us look, for instance, at the manufacturing sector where the bulk of employment in Canada exists in terms of initial employment which feeds the service industry and other sectors above it. We find that the output of the manufacturing industry is consumed by the Canadian economy to the extent of 75 per cent, rather than by any foreign economy. We do not export manufactured goods, we export raw materials, and that is not a job-creating industry.
An article appeared in this morning's Globe and Mail which is very revealing. I wish I had the kind of confidence the hon. member for York-Simcoe (Mr. Stevens) seems to have that the United States economy is going to
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do better than ours. That hon. member holds up the United States as the guiding light for Canada. Things are bad enough in this country without that kind of guiding light. The heading of the article in the Globe and Mail is "Consumer confidence down sharply in U. S." Surveys being conducted in the United States indicate that the present recovery is mild, and a pretty shaky one. In addition to that, there is concern that before that recovery gets under way, inflation will start again. Monetary managers in the United States are starting to tighten up their monetary policies and increase interest rates there. If we are waiting for a United States recovery-and I hope that country recovers, as I hope every country in the world recovers we may be waiting for a long time in vain.
In other words, even if the American economy does recover, what guarantee is there that we will follow suit? The Minister of Finance (Mr. Macdonald) has taken considerable pride in pointing out that our economies have not been going in lock-step, that while the Americans suffered a high level of unemployment and inflation, in Canada we were doing somewhat better on the whole than the Americans. He is now reversing his position and saying that we are in lock-step because we have to wait for them to improve. The evidence is that by pursuing different kinds of policies we can do things the United States cannot do.
What really saved us in this country from the severest kind of depression was the unemployment insurance legislation we had, the old age pension legislation and the family allowances legislation. This provided a cushion and a stimulus to consumer purchasing power. That was absent to the same extent in the United States, and therefore the severity of the depression did not hit us as much as it hit them. However, if we look at the problem in the United States and assume that there will be an automatic recovery in Canada as the American economy recovers, we find no basis for that assumption. First of all, the slack in the United States is very great. Even if they recover to some higher lever of activity, what will they buy from Canada? They will buy the same things.
For a long time they have been buying our raw materials, which does not provide the same range of employment opportunity. If they step up their purchase of raw materials, we will have the same situation except that it will be exaggerated because the effect of selling raw materials to the United States will be that the value of the Canadian dollar will increase and we will be sucking in the manufactured goods, which is happening now and creating further unemployment in Canada.
What I am saying is that prosperity in the United States does not necessarily mean prosperity in Canada. Prosperity in the United States may very well be followed by a depression in Canada. Yet the Minister of Finance pins his entire policy in this budget on the hope that the American economy will recover and that we will get dragged along with that kind of recovery. That is fine management of the economy; that is great government we are getting! We might as well be paying our taxes to congress as paying them in this country, if that is the kind of management that is taking place. A budget is supposed to be an instrument for managing the economy, and not an instrument of

prayer. The cabinet does not look like a church, nor should it.
Let me take another example of the kind of situation the minister hopes for which may not materialize. In Canada there has been a fair demand for automobiles. Despite that, because of the lack of demand in the United States, our production in Canada has been declining and the imbalance of trade between ourselves and the United States has been increasing. The total imbalance in automobile trade is now close to $2 billion. In other words, we are importing $2 billion more, in terms of automobiles and parts, than we are selling to the United States. The Canada-U.S. auto agreement, with its main safeguards, still does not provide adequate protection for guaranteed production in Canada. The decisions that are made in respect of that agreement are made at the head offices of the motor companies of the United States, and the decisions are not always economic decisions based on where are the best costs or opportunities. Often they are political decisions.
If the American recovery should take place, it is not necessarily the case that we will receive an increased share of that recovery unless the American recovery takes place at such a pace that it is overheated and there is a surplus which must be purchased from other countries. In other words, before we can really count on the United States helping us, the improvement would have to be of vast proportions-and there is no evidence that that will take place. That is what the Minister of Finance is waiting for.
Other countries have managed their own prosperity. It is not as though this is a universal thing. Countries like Sweden, through proper planning, have in fact avoided some of the worst effects of the recession. Other countries have accomplished the same thing. Germany has accomplished very worth-while objectives by having better management of its own economy. Therefore, it is important that this country not be complacent, that it not sit back, and that it not wait for a foreign recovery in order to get the 7.4 per cent unemployment rate down in Canada.
It is for that reason we have advocated there be tax cuts in the economy at the lower end of the scale. The budget in fact does contain some tax cuts, but they are at the upper end of the scale in terms of registered retirement savings plans. There should be tax cuts at the lower end of the scale, because this would do two things. It would encourage consumers in Canada to purchase goods, and it would also restore some element of fairness to a tax system which badly needs that fairness restored.
The government and the minister may argue that this would be inflationary. Yet there is evidence that it need not be inflationary. The Conference Board of Canada pointed out that government deficits are not the cause of inflation. Other people in the business community also pointed out this situation. Therefore, it is important that purchasing power be restored in the economy. Very often, tax cuts and planned deficits result in surpluses, because if you can get the economy going again and can notch up some of the unemployment that is taking place and stimulate the economy in that way, there are very substantial savings from not having to pay out as much in unemployment insurance and welfare payments as well as having tax collections from those who are working.
May 27, 1976

A tax cut would encourage investment as well. My friends to the right seem to argue there has to be direct encouragement to investment. The experience has been that investment takes place when there is purchasing power in society. If there are customers whose needs need to be satisfied, industry will invest. At any rate, there does not seem to be any great need for additional investment to get the economy going, since the manufacturing industry is operating at only 80 per cent capacity and we must vastly increase the output of our society if in fact there is purchasing power in our society.
There are many things we could do aside from increasing purchasing power. There could be more direct government expenditure in things like improvement of the railbeds in Canada, which would have a significantly important job-creation effect. This would provide work for people directly on the railroads. It would provide work indirectly in places like the Sydney steel mills where the rails could be made. The Canadian government is talking about reviving passenger service in Canada. If there are expenditures needed for that, what are they waiting for?
Surely now is the time to proceed with these matters, when we need the employment and stimulus in this country. Yet there does not seem to be any response from the government in that area. If I were the prime minister, I think I would be suing the Minister of Finance for alienation of affection.
I mentioned earlier about consenting adults. This is not adult, and this is not consent. I pointed out earlier in my remarks the great rhetoric in the Prime Minister's New Year's address, the talk of a new society and the forwardlooking adherence and devotion to the Galbraithian ideas. These have been shot down in this budget by the Minister of Finance. I do not see how the Prime Minister can ever again call himself a Galbraithian. In fact, he has betrayed the central ideas of Galbraith. It seems that that great vision has now gone out the window and that the Prime Minister is in bed with the Minister of Finance and his unimaginative ideas.
The whole point of the Galbraithian thesis-and I think it is important to deal with this-this was the idea that brought in the wage and price controls program of the present government-is that you bring in that kind of system in order to enable you to do good and intelligent things. The government brought in the control system with all that is wrong with a control system but without any compensating merits which would enable them to use the control system for good things.
If you look at what Galbraith had to say about what he would do once a control system was in, you find that the government is doing none of these things. Galbraith said that the first thing you do is to improve the progressiveness of the income tax system; you lower taxes for people at the lower end of the scale, and you increase them for people at the higher end of the scale. That is what a control system is supposed to help you do. The idea of the control system is to keep a lid on inflation in order to enable you to stimulate the economy and to achieve more fairness in the incomes of people. So you would want a progressive tax system. We do not have a progressive tax system, nor is
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there any indication that the Minister of Finance intends to have it. Rather than do that, he has improved the amount of money that can be set aside for the registered retirement savings plan. He lifted the amount that can be set aside to $5,500. In other words, you can save up to $5,500 of your income, put it in a registered plan, and pay no taxes on it at all. Who has $5,500 to save? Certainly not the ordinary people of this country. If we look at the experience of the registered retirement savings plan and at the experience of some of the other programs that the government has set up, we find that even though it does not look like a tax break for the upper income people, the effect of all these new programs has been to enrich those who already have money, to the disadvantage of those who do not.
Let us take a look at the indexing which the government has brought in. The effect of indexing on tax reduction is startling. By the government's own figures, a married taxpayer with two children who makes about $10,000 can expect to have his taxes reduced by about $150. In 1976, through indexing, a similar taxpayer in the $30,000 bracket will save about $470, while a similar taxpayer in the $50,000 range will save about $680. The 38.4 per cent of tax filers who reported under $5,000 income received the grand total of .2 per cent of the tax savings from the deductions listed; that is, 38.4 per cent of tax filers had an income under $5,000, yet out of every $10 that was saved in taxes because of these programs, this group got just 2 cents out of the $10. The 2.4 per cent of tax filers who reported incomes of over $25,000 managed to snag just over 35 per cent of the total tax savings to be had from these programs. Out of every 1,000 tax filers, it were in the $25,000-plus category, yet out of every $1,000 saved because of these gimmicks, this small group saved $350 million of it.
The benefits of half taxation on capital gains are also enormous and concentrated in this top group. The top 2.4 per cent had 52 per cent of the taxable capital gains in 1974. This amounts to tax savings of about $31 million in 1974, a gift from the government to the richest citizens of the country. At the other end of the scale, the effect of half taxation of capital gains was the tax savings of some $171,000 spread over some 4,400,000 tax filters. The top 2.4 per cent saved over $88 million in taxes in 1974 through the registered retirement savings plan and just under $150 million from the total of exemptions as I have listed them.
The bottom 89 per cent, everyone with $15,000 income or less, saved just under $40 million through the RRSP and about $138 million from the total of exemptions. So we have 2.4 per cent who saved $88 million through this plan, and 89 per cent who saved $138 million from this plan- hardly an equitable system and hardly the kind of thing that the Prime Minister's love affair with Galbraith would indicate would be the correct thing to do.
There is an interesting editorial in the Ottawa Journal of March 30 in which reference is made to some of the loopholes which exist in the registered retirement savings plan. It is headed "Loopholes to stroll through", like walking through the tulips. It reads:
Let nobody deny that Canada is a land'of opportunity. Just consider a few of the opportunities created for Canadians by the federal government:
They can borrow from the bank at 13 per cent, invest the money at 10 per cent and make $200 or so in profit every year at the expense of other

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taxpayers. They can set up a registered home ownership savings plan in order to buy back a share of the house they cleverly transferred to the wife or husband the year before. Or they can collect the same $5,000 or more in tax savings by buying furniture for the house they already owned.
They can get the government to subsidize a foreign vacation by establishing a few years' worth of tax-sheltered registered retirement savings plans, then taking a year off in order to cash in funds at a large tax saving-several thousand dollars' worth for those who can wait a few years for the holiday. They can accomplish a similar tax saving without quitting work or taking a holiday by setting up a few years' worth of retirement plans for a wife or husband and then having the funds cashed in during the year in which the spouse's other income would be low.
Few, if any, countries in the world can match these and other opportunities for taxpayers to get something for almost nothing without even needing an accountant to figure it out. Just reading the financial advice columns in the newspapers would provide all the basic guides to the loopholes.
There is another excellent opportunity that is provided in this new society. If you invest in Canadian corporations and you get an income of $15,000 from the investment, it is all tax-free. Compare that to the situation of the man who works in a shop and earns $15,000 a year, if he is lucky enough to earn that. He would pay a substantial amount of tax. But you can invest in corporations and get some tax-free income. The story in the Globe and Mail of Thursday, May 30, headed "Investing in Canadian corporations could mean tax-free income" tells you how to do it. That is part of what our complaint is. I will not read that story. The techniques for doing it are there, and there are many people who take advantage of them.
Galbraith, in case the Minister of Finance has forgotten, or in case the Prime Minister has not reminded him, wanted a more egalitarian income distribution. Where is that in the budget? This budget, in fact, takes some of the advantages which I have outlined which already exist for upper income people in the home ownership plans and the registered retirement plans and gives them additional benefits, and the same kind of income distribution will take place. Those who have a great deal of money will get the tax-free benefits, and those at the bottom who can barely make it will get nothing at all. They do not have $5,500 per year in clear savings to put into these registered plans, and therefore they do not get the benefit. Is that the more egalitarian income distribution the Prime Minister has seemed to be so taken with?
Galbraith pointed out that there is a need for more government spending when the economy is flat. He did not suggest to the Prime Minister or to those here in Canada who read his interviews that we should wait for the American economy to correct itself. He said that if the private sector is not producing and providing jobs, then it is a government responsibility to see that jobs are created to stimulate the economy. However, above everything else the central part of what he was saying was that there must be full employment in society and that no government has any excuse for not moving and bringing in policies which create full employment. Instead of the government moving to full employment-and it obviously has no intention of bringing in policies to bring about full employment but is only praying that something will happen south of the border-it is going to do something else.

If the government cannot bring about full employment, how about knocking all kinds of people off the unemployment insurance rolls? Therefore, the government is suggesting a series of moves which would ask the poor in many of the areas of Canada where there is not any employment to pay for their failures and giving them the kind of aura which has been suggested by my friends on the right that they should have. The government is trying to out-conservative the Conservatives in terms of the approach it is taking with regard to the Unemployment Insurance Act. I have been critical of the Unemployment Insurance Act, as have many people. We know there are abuses in the act, and all of us are interested in correcting the abuses; but why does the government not work on those abuses, rather than throwing people out of work off the rolls? The greatest abuser of the Unemployment Insurance Act is the government itself by tolerating this level of unemployment.


Some hon. Members:: Hear, hear!


Max Saltsman: Any government which cannot produce employment is not worthy of that name, and because it has failed to provide the kinds of policies which will produce employment, and it is not prepared to intervene in the economy to see that there are jobs for people, it has no right to say to those who are collecting now that they are off the rolls. In many ways, the decision of the government to increase the qualifying period from eight weeks to twelve weeks is probably not going to have the results the government thinks it will. It will not really save the government the amount of money it expects. If it does, it will not be a total saving. It will be at the expense of the provincial and municipal governments which will have to pay out money to cover up what the federal government is not paying. In fact, it is going to be a forced transfer payment from the provincial and municipal governments to the federal government.


John Edward Broadbent: Welfare!


Max Saltsman: People will be thrown onto welfare. The other day, when I raised this question with the minister during question period, he became highly indignant and suddenly started to spout figures which a little while ago he claimed he did not have. He had no idea, and I do not think he knows now what the consequences will be. At the present time, even with the eight-week qualifying period there is a serious problem. Somebody who is between jobs, waiting to go back to work and is offered a job and takes it-a job lasting a week, two weeks or three weeks-will lose his unemployment insurance as a consequence. If that waiting period is increased from eight weeks to twelve weeks, how much less incentive will there be for people to take temporary jobs to get off unemployment insurance, to the extent it is possible, until they can get a full time job?
The minister and the government have no right to throw the burden on the unemployed in this country. This problem cannot be dealt with when there are no jobs available. When there are almost 800,000 people looking for jobs, and less than 60,000 jobs listed, how can we put those people to work? We cannot. How do we know who really wants to work, and who is abusing the system? There is no way of telling. Until the government moves to full employment
May 27, 1976

and has some kind of industrial strategy for grading employment, and until it stops waiting for the United States and comes up with some regional policies which make sense, it should not throw people onto welfare by removing them from the very thing which has saved us from a very serious recession.
Because of that, I want to move an amendment to the amendment. I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That the amendment be amended by changing the period at the end thereof to a semi-colon, and by adding immediately thereafter the following words: "this House regrets in particular that at a time when more than 760,000 Canadians are unemployed the government has announced its intention to change the minimum qualifying period for unemployment insurance benefits from eight to twelve weeks".



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Winnipeg North (Mr. Orlikow)- Manpower-Government action to find employment for students; the hon. member for Winnipeg South Centre (Mr. McKenzie)-Air Canada-Request for investigation of finance branch at Winnipeg by Auditor General; the hon. member for Hillsborough (Mr. Macquarrie)-External Affairs-Considerations entering into sale of military equipment.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of motion of Mr. Macdonald (Rosedale):
That this House approves in general the budgetary policy of the government.
Mr. Gilbert Rondeau (Shefford):: Mr. Speaker, it is always with a certain amount of anxiety that members and constituents alike look forward to the budget speech, because in any society and organization, finance and budget matters are always of paramount importance.
Before I get on with my remarks, I would quote some excirpts from an article that appeared in La Presse of May 26, 1976, that is a report on the currant ACDA conference in Vancouver, under the headings:
Six hundred million more units needed within the next 30 years.
The Budget-Mr. Rondeau
I find stated in that article:
Our cities and towns ... lack jobs, are chocked with pollution, overpopulated, crammed with slums, devoid of adequate transportation facilities and faced with a rising crime rate.
And further in the same paragraph:
There are not enough jobs and housing.
How is it that a foward-lacking society such as ours should run shot of jobs and housing?
The next paragraph quotes the following words by the Right Honourable Prime Minister (Mr. Trudeau), which were probably referred to at that conference. He said:
In the search for human dignity, housing is a vital need, along with food and health. However, no country in the world not even those with the most advanced technologies, not even those with the most temperate climates can boast of providing adequate shelter to all its citizens.
I agree with that statement. But Canada, a country with the most advanced technologies, could have acted just the same with the best financial technologies, if the will had been there to considered a leader. If we have housing technology and lack the financial technologies needed to meet the current and genuine needs of the people, our present problems will remain.
Mr. Speaker, this budget is no surprise for newspapermen nor members. In my view, it brings forth nothing new, nothing exciting. It is more or less the same old thing I have been hearing under six different Ministers of Finance.
It shows again the same financial thinking, it reveals another aspect of a new tax which Canadians will have to support. Mr. Speaker, unfortunately our economy is running too fast and yet the government economists do not seem to have other solutions to put forward to help the government, because I know very well that it is not the Minister of Finance (Mr. Macdonald) who develops the financial policy of Canada, I am not that credulous, yet it is the government economists who control the Minister of Finance and are responsible for what we see now.
I would like to say that in Weekend Magazine of April 24, 1976, page 5, a journalist rightjfully makes fun of economists. The headline of the article reads:


GEE, ECONOMISTS SURE ARE FUNNY
[Stage Direction]
And if we examine the present financial policy of the government and the results it has given in Canada, we can say that this series of six different cartoons show, if I may say so, the outstanding features of our Canadian economists and where they are leading us. They are represented by four individuals-let us say, the Minister of Finance and three economists-on a boat, at sea.
In the first cartoon, we see those economists discussing economic problems among themselves while they are slowly sinking: the boat is taking water, there is a hole in it, and it is sinking gradually, just like our Canadian economy. All the while, our economists continue making grand plans, voicing grandiose theories. This is what one of them says:
... Depressions and recessions were part of the normal cycle of ...
[Stage Direction]
May 27, 1976
The Budget-Mr. Rondeau
Depressions and recessions are part of normal cycle, indeed! The other one says:
... Solution to the problem is ...
But he does not say.
The boat continues sinking ever so slowly. In the second cartoon, one end of the boat has already sunk quite a way into the water. One economist declares:
... The nature and role of the free market system ...
And so they continue enunciating theories while sinking.
The other says this:
... That consists in defining scientific excellence as ...
He is already half submerged and he keeps on making theories.
In the third cartoon, the economist gives a new theory:
... By stimulating demand and production by manipulating the money supply ...
This is what they do indeed. We in the Social Credit Party know this very well.
There, we see the boat completely submerged and we see the heads of the four economists out of the water. Another economist says:
... Building economic model of .. .
The caption on the fourth cartoon reads:
... Once we abandon present theory of ...
The other economist says:
... Short-term analyses which guard against...
And there you see the head of one economist disappear in the water and the three others have only their heads showing. In the fifth cartoon, the economist says:
... Neo-classicism is a "microeconomic" theory that...
Then, under he goes. The last one says:
. .. Whatever the market will bear .. .
And the boat diseappears completely. The last cartoon in Weekend Magazine of April 24, 1976, page 5, shows only the sea. The boat has disappeared and so have the economists.
Tuesday night, on television, the Minister of Finance seemed to be already in water up to his waist, because he let himself be guided in the boat of finance by economists who have never brought anything else to Canada but deficits to maintain the financial system we have been denouncing for more than 30 years.
Mr. Speaker, it is absolutely ridiculous and unthinkable to see to what extent, from the mathematical and financial point of view, this country is going adrift and to find out again that the Minister of Finance (Mr. Macdonald) is having fun in the same boat with the same economists who give him the headaches which we know he has. Now, what struck me first and other hon. members who attended the reading of the budget around six o'clock, before the Minister of Finance made his speech in the House, was that inflation is good for the federal government because, without even touching the tax scale, it takes just under $4 billion more from personal income.

Last year, personal income gave the federal government a total revenue of $12,703 billion without taxes being increased. Because of inflation and as a result of the government financial policy creating inflation, $16,040 billion will be paid by Canadians in 1976, without taxes being raised. This means that inflation now allows the federal government to pocket almost $3.5 billion, without higher taxes while corporate taxes will bring $120 million more in the coffers of the Minister of Finance, which represents a 2 per cent increase for companies.
Mr. Speaker, the last six ministers of finance have always sung the same tune, come up with the same refrains. They do not change their tune and keep telling the Canadian people: Tighten your belts, live within your means.
The budget before us shows a $5 billion deficit, which clearly indicates the federal government is living above its means. How can the people be expected to live within their means, just because they cannot involve everybody into debts to finance their expenses, and trust a government which preaches restraint while incurring a $5 billion deficit?
Mr. Speaker, during the financial year 1976-77, the federal government will spend some 28 per cent of the gross national product. And I have in my hand figures which show that when the Prime Minister (Mr. Trudeau) was elected in 1968, the total yearly expenditures of the federal government amounted to $13.9 billion. Today, they reach $40 billion, that is a 300 per cent increase over six years. In 1963, those expenses represented $737 for each Canadian whereas today they amount to $2,600 for each Canadian or $7,860 a year for the average Canadian family. On page 21 of the French Maclean of February 1976, an accountant from Quebec City, Mr. Marcel Belanger, who has been for 15 years member of five inquiry commissions-two federal, three provincial, including one on taxation-and who is now president of the Canadian Institute of Chartered Accountants-as far as I know, he is not an idiot nor a social crediter-says the following:
Twenty five years ago, all governments ...
All governments, not only the federal government, but all governments-
... were spending about one quarter of personal and corporate income...
Today the federal government alone is spending 28 per cent-
That is it, 25 per cent of what we call the national product. Today, the figure is 40 per cent. In the United States, it is about 32 per cent.
Further down in the same article, he says:
. .. Taxation sooner or later generates inflation?
The government is trying to find the causes of inflation and Mr. Marcel Belanger, president of the Accountants Association of the Province of Quebec, who has chaired five royal commissions of inquiry, two of which under federal juridiction, says himself that taxation-and if anyone knows about taxation, an accountant does, since that is his job-generates inflation.
... And when taxation starts to generate inflation, you have a very strong indication that your relative limit has been reached.
... Therefore, the limit is not theoretical.
May 27, 1976
[Stage Direction]
That is not theory, that is facts.
It becomes perceptible.
That is why I said: Stop! Call a moratorium on fiscal changes, on new programs, and try to cut back government expenditures. Or at least slow down their increase . ..
Mr. Speaker, these people also agree with the position we have always taken in this House that inflation results from financial pressures exerted on the provinces, on their taxation system by the federal budget. Quebec municipalities are faced with the following situation. Some of them are now increasing their property assesment for 1976 and 1977 by 1900 per cent compared to 1975.
Since the provincial government is forced to change its property assesment in the province of Quebec due to the financial pressures exerted by the fiscal and monetary policy of the federal government, a 15-acre piece of land in the suburbs of Quebec City assessed at $11,670 in 1975 was assessed at $224,700 in 1976. The owner will have to pay in property only, let alone school taxes, $3,292 compared to $435 in 1975. Another taxpayer in Sainte-Foy who paid $40 in 1963 on an assessment of $4,400, will pay $588 in 1975 on an assessment of $33,450.
Mr. Speaker, when we go back to 1940 and look at the federal budgets, we note that in 1975 corporations paid 75 per cent of all taxes and in 1976-77, the national budget will be kept afloat by companies and corporations at a rate of 17 per cent; in other words, while personal income tax has increased, the corporate tax has decreased. As compared with 75 per cent in 1940, today, 17 per cent of the federal budget is being paid by corporations.
Mr. Speaker, I will not waste any time dealing with unemployment insurance. However, personal income tax has increased and the taxpayers will still be paying in 1977 almost $3,500 billion more in personal income tax, although income tax rates have not increased. Unemployment benefits will be reduced by approximately one half; in the words, theoritically speaking, instead of receving unemployment insurance benefits for 52 weeks, because of the new rates which have just been tabled, the same unemployment people will receive benefits during 26 weeks.
Mr. Speaker, one has to change the resources in the system being advocated. When we realize that a federal government, through its financial and monetary policies, can change the resource situation of a province or of an individual, then we must do something. The federal government has not always listened to the advice given him by economists. They listen to the economists who are in their employ, but pay no attention to those outside the House. In Le Devoir of May 31, 1971, it was reported that an economist employed by the Royal Bank of Canada, Mr. Reuber, has stated the following:
Ottawa should reduce personal income tax and sales taxes.
Ottawa does exactly the contrary in its present budget.
The government should reduce personal income tax and sales taxes to encourage productivity and decrease wage inflation, said the economist Grant L. Reuber, Director of the Department of Economics at Western University in London.
According to Mr. Reuber, the Bank of Canada worsened the economic problems of Canada by going from one extreme to the other and alternating credit restrictions and capital inflow in the banking system.
The Budget-Mr. Rondeau
This economist is stating that it is not by reducing the money supply of a country that we lower interest rates. When we restrict the money supply of a country, we automatically boost interest rates and automatically fuel inflation in an economy. When will the federal government stop listening to the economists of the Department of Finance and believe the economists of other spheres of the Canadian economy who have other concepts than the endless deficits, increases, taxes and levies. This economist went on to say:
.. . Canadian taxes are traditionally high and compared to United States tax reductions, they could be the basis of radical changes in the tax system.
And I was referring to a speech. It was certainly not delivered by an idiot as the speaker was the Hon. G. V. Clyne, Chairman of the Board, Chief Executive Officer, McMillan & Bloedel Limited. He made that speech on April 29, 1969 and he predicted what is happening today. He is a businessman who can usually see beyond the end of his nose and who is well known by the economists. I quote: [English]
It has recently been said in NDP political circles-
[Stage Direction]
And it could be applied to the Liberals to demonstrate the same thing.
[Stage Direction]
-that the British Columbia forest industry is not paying sufficient tax and is not bearing its fair share of the cost of government. Let me give you some figures from our own company, so that you can judge the truth for yourselves. ... the profit of our Company was $38.8 million for 1968 .. .
We paid $36,500,000 in current income and logging taxes and set up a provision of $3,500,000 for deferred taxes, making a total liability of over $40,000,000 by way of income taxes. Then we paid another $20,000,000 odd to all levels of government by way of property taxes and fees, property rentals, federal and provincial sales taxes, stumpages, royalties and severance tax. In other words, in order to earn $38.8 million last year, this Company had to pay to governments at all levels $60.3 million.
[Stage Direction]
Even before McMillan & Bloedel Limited could make a profit of $38.8 million, they had to pay $60.3 million in taxes to the government. Here is what he said:
(English]
In 1968, after allowing for interest expense, we made only 6.7 per cent on our net total assets. ... last Thursday the bids for treasury bills, and as you all know treasury bills are 90-day obligations of the government of Canada, ranged up to 6.78 per cent. ... Considering the risks, then, it cannot be said that 6.7 per cent is too great-
[Stage Direction]
And this is what he said about Mr. Rasminsky who was then the Governor of the Bank of Canada.
[Stage Direction]
-government costs are still rising and expenditures increase as government departments continue to seek out more and more areas of our national life in which they feel that they should intervene. Federal spending has risen from $7.7 billion for the fiscal year ended March 31, 1966 to $10.7 billion budgeted for the fiscal year ending March 31 of this year.
[Stage Direction]
Mr. Speaker, that was in 1966-more than ten years ago. And this is what he said when comparing the Canadian and the U.S. tax system which the Minister of Finance
[Stage Direction]
May 27, 1976
The Budget-Mr. Rondeau
likes to interpret as being comparable with that of our country.
[Stage Direction]
A Canadian earning, say, $30,000 a year, married with two children and paying, say, $2,800 a year in interest and property taxes, would pay about $9,550 in income taxes in Canada ... In the United States, a man with a similar income would pay about $5,750. Now, what concerns me is this, that in that income bracket are men with the kind of talent which Canada badly needs-men with leadership qualities and capacity for innovation. When they are attracted to the United States by improved earning conditions there, Canada loses a resource more valuable than her trees and her minerals.
-the danger of increased taxation ... is a threat to our economy. Canada, with her great resources, faces a future which may bring great prosperity, or it may, by reason of poor government and ill-advised taxation policies, fall into a state of stagnation such as has been experienced from time to time in other countries.
[Stage Direction]
Mr. Speaker, I could go on speaking all day to show that this taxation system, this fiscal system, this monetary system, on the one hand penalize the worker, and on the other, discourage businessmen except those who have learned to evade income tax by the means that I shall enumerate, except the big companies-and I cannot blame them-who take indirect means to evade taxes and manage not to give away all their profits.
I also have here an extremely interesting article which appeared on page 31 of the March 1976 issue of MacLean s and which was written by two highly qualified reporters, Jean Pare and Walter Stuart, about Tax Evaders, and I would like to quote a few very concrete examples:
With $100, you can set up a ghost company, and with $500, you are tax exempt for 30 years.
And I would like to go a little further and read a few extracts from this article in order to make my point.
In the Cayman Island Handbook, a tourist-oriented brochure, it is said:
Taxes are the scourge of the twentieth century, just like world wars, overpopulation and pollution.
Social Creditors for their part say "pollution through finance". I quote:
There are people who are victimized by overtaxation such as existed in the worst tyrannies of Ancient times ... It is quite natural that you should want to protect your property against thieves and income tax collectors!
I am quoting from the Grand Cayman tourist magazine.
It is estimated that there are 155,000 ghost companies that only serve to protect profits which should normally have been taxed. Last year, there was a travel agency selling a world tour of tax havens.
This means that tax havens were specially advertized.
-(there are more than 30)-
-in one island only.
-for the ridiculous sum of $1,750, which is deductible from taxable revenue in any case.!
-every dollar sent under the tropics by a large company or a rich spendthrift must be replaced with a dollar taken from the income of a worker, most often a poor one. The Gaspe fishermen, the Port-Cartier lumber workers, even the Olympic stadium plumbers are unable to hide their income from the tax collector: They are the ones who pay for "fiscal tourism".
The federal Department of Revenue is completely in the dark as to the amounts lost in this manner: "We do not even have enough information to give us an idea of the scope of the problem. Until now, we have

recovered $10 million, but this is only the tip of the iceberg. Some people are talking about $100 million a year, others of $1 billion!
... Even the most famous and the most pretentiously honest banks do chip in. There are 186 of them in Grand Cayman, that is one for every 63 people!
... Any individual may set up a Grand Cayman ...
-And I could quote, Mr. Speaker, a host of other countries where at present, through multinational companies, Swiss banks, banks in the Bahamas, in Panama or in Grand Cayman, companies may evade taxation and this is perhaps one of the reasons why we now see that companies-I will give other figures later on-are not increasing the federal tax intake. Because today they want to save their undertakings they use all legal means at their disposal. I do not say these companies are acting illegally, no they are acting legally. I continue this quotation:
.. . Any individual may set up in Grand Cayman a joint-stock company by paying $100 in incorporation fee and an annual contribution of $50. As long as this company's profits are coming from outside, Grand Cayman will not collect any taxes. They can even get a tax exemption for 30 years on paying a $500 permit!
Profits made in Canada by your "foreign" company and directed to Grand Cayman are tax free until you decide to get them back ... if someone happens to discover it. "You go on holidays over there, a Toronto Bank manager explains, you draw a cheque on your local company and come back with cash in hand ...
Between sunrise and sunset on December 22, 1966, three days before Christmas, Seagrams succeeded in converting $17 million of taxable profits into non-taxable money simply by having them switched around from one to another of the many branches of the Bronfman empire ...
Imperial Oil.. .
Mr. Deputy Speaker:: Order. I regret to interrupt the hon. member, but his time has expired and unless he gets the unanimous consent of the House, he will not be able to carry on with his remarks.
Does the House agree to allow the hon. member to proceed with his remarks?


Some hon. Members:: Agreed.


Gilbert F. Rondeau: Thank you, Mr. Speaker. I also wish to thank my gracious colleagues for giving me the chance to complete my remarks because I was only beginning. I was surprised to hear that my time was up; however, I will try not to take advantage of the kindness of the House.
I go on with my quotation:
Imperial Oil... three directors and a secretary succeeded, from their homely little office in the Bermudas, in making a net profit of $35 million in less than five years! If that profit had been made in Canada rather than in the Bermudas, Imperial Oil would have paid $17.5 million additional taxes ...
Mr. Speaker, I could give many more examples just as down-to-earth and as Canadian; however, I have here a list of other Canadian companies that are slow in paying even the Canadian taxes they should pay.
Steel Company of Canada, Limited, have tax arrears of $149 million; Dominion Foundries and Steel, Limited, $101 million; Alcan Aluminum, $149 million; Aluminum Company of Canada, Limited, $139 million; International Nickel Company of Canada, Limited, $102 million; Imperial Oil Limited, $87 million; Domtar Limited, $53 million; (U.S.) Crown Zellerbach, $59 million; International Business Machines, $49 million; all the above mentioned compa-
May 27, 1976

nies have at the moment arrears each exceeding $50 million.
Mr. Speaker, a mere look at the Canadian taxation and monetary systems shows we must be blind not to realize or admit that they are sick. In 1963, we paid $1,431 million in interests on the public debt; in 1964, $1,546 million; in 1965, $1,675 million; in 1966, $1,862 million; in 1967, $2,081 million; in 1968, $2,391 million; in 1969, $2,774 million; in 1970, $3,183 million; the banks are making a remarkable progress; however, it is very surprising that they are not restricted to quotas; only the farmers who milk the cows are being imposed quotas. In 1971, $3,563 million; in 1972, $4,104; in 1973, $4,699; in 1974, $5,297; in 1975, over $4 billion and in 1976, $4,600.
Mr. Speaker, more than $45 billion. Canadian in Canadian taxes have been paid to big Canadian finance from 1963 to 1976. Indeed, 94 per cent of the interests on the national debt is paid directly to banks because 94 per cent of the bonds, the liabilities of the federal and provincial governments, are held by Canadian banks and 6 per cent is held by corporations or individuals. To those who would have me believe that if the Bank of Canada should finance interest-free the provincial, municipal, school and federal bonds, it is the low-income earners, the poor who will lose the interests, I say that it is utter nonsense when 94 per cent of the interests on the public debt is now paid only to banks in Canada. And at the same time, as Maclean magazine reported on December 15, 1975, the Royal Bank increased it s profits by $86 million, the Imperial Canadian Bank of Commerce, by $93 million, the Bank of Montreal by $81 million and the Bank of Nova Scotia, by $64 million.
Mr. Speaker, I could go on indefinitely. This budget clearly demonstrates that the Minister of Finance does not control finance in Canada. He should be the one to dictate the monetary policy to the Bank of Canada, and the chartered banks should follow the orders of the Bank of Canada following the recommendations of the Minister of Finance. Unfortunately, we find that 26 per cent of municipal budgets comes from property taxes and that 25.3 per cent of municipal budgets is assigned to interest payments to the chartered banks. I say again, because those figures are fantastic, that as reported in the Revue municipale du Quebec and other provincial magazines, 26 per cent of municipal budgets comes from property taxes and that 25.3 per cent is assigned to interest payments on the public debt, in other words there is a 1.3 per cent gap in municipal budgets between paid interests and collected property taxes.
Mr. Speaker, that is further evidence that our financial system is sick and the Social Credit Party has a solution to that problem. From 1973 to 1974, interests on the public debt, as I said, increased by 270.2 per cent. And as I just mentioned, interest charges for 1976-77 will reach approximately, as shown in the budget, $4.6 billion, that is $12.6 million a day, $500,000 an hour. Presently in Canada we pay $500,000 an hour in interest on the public debt, half a million an hour in interest, 24 hours a day, 365 days a year; that is what we pay to the banks to make money instead of using the Bank of Canada to finance our own public outlays as the Social Credit Party has always advocated in the House. This means that within 72 days, only with the
The Budget-Mr. Rondeau
interest on the public debt, we could wipe out the Olympic Games' debt that is causing so much fuss. We suggest that the Games' debt is of the order of $1 billion. This means that within 72 days, with the money given to the banks, because the banks finance our federal bounds we could save enough by using the Bank of Canada and without paying any interest to wipe out the public debt.
Mr. Speaker, in the province of Quebec, according to the Canadian Tax Foundation magazine Provincial and Municipal Finance 1975, on page 57, our international balance of payments on the automobile trade alone registered last year a deficit of nearly $5 billion:

Of Quebec's $3.4 billion in outstanding bonded debt at March 31, 1974-
The latest year for which I have figures is that ending March 31, 1974.

These figures are not up to date since they were released two years ago-

$2.9 billion was in negotiable bonds, $326.6 million in Quebec Savings Bonds, $131.6 million in federal employment loans and $35.6 million in Canada Pension Plan fund bonds. Negotiable bonded debt was payable in the following funds: $2,154.2 million in Canadian, $646.5 million in United States, $87.1 million in Federal Republic of Germany, $25.2 million in French, and $32.7 million in Japanese. Other loans outstanding included funds advanced by the federal government for Expo '67, $6.1 million and under the special areas agreement, $74.5 million; funds advanced by the Bank of Nova Scotia, $36.2 million. Other direct debt totalling $97.6 million included debt assumed by the province on behalf of the following entities: Montreal Metropolitan Boulevard, $39.5 million; universitarian institutions, $46.6 million; Quebec Municipal Commission for the settlement of school debts, $2.1 million; Institut de microbiologie et d'hygiene de Montreal, $4.4 million; Hopital St-Luc, Montreal, $4.7 million.

Mr. Speaker, I could carry on like this for a long time.
According to the same magazine, page 56, the provincial debts for the year ending March 31, 1974 had reached $11,406 million, indirect debts $17 billion, bonded debts assumed by provincial governments $15,203 million, and this does not include debts for education.
Mr. Speaker, I want to apologize and I am going to try to conclude as quickly as possible but I would like to draw your attention and that of my hon. colleagues on a book which has been published in November 1975 not, to my knowledge, by a Socred but by one of the best journalists in Canada, Mr. Peter C. Newman. I believe that several members of Parliament know of this book which is entitled The Canadian Establishment. This book presents an extraordinary documentation. Perhaps the organizations of our two traditional political parties will not find that it is in their interest to promote this book because it brings to light a wealth of information which is extremely valuable and which shows that in Canada we no longer live in a system of free enterprise, in a system of competition and in a system of private enterprise. This book makes one understand that one lives in a system of monopolies. Peter C. Newman mentions that 100 directors of Canadian banks control 1,022 companies: 35 Royal Bank directors control 471 companies, 31 Imperial Canadian Bank of Commerce directors control 317 companies, 16 Montreal Bank direc-

May 27, 1976
The Budget-Mr. Rondeau
tors control 178 companies, 4 Toronto-Dominion Bank directors control 56 companies, 14 directors of other banks control 180 companies. All told, 100 directors of various chartered banks control 1,022 Canadian companies.
I would like to quote him just on the subject of insurance to demonstrate that the Canadian banking system and the production system are one unique monopoly system with finance on one hand and on the other hand the same individuals acting in the consumer industry where for example one can see a Royal Bank director controlling Dominion Stores and Steinberg-production on one side and consumption on the other.
I want to quote what Peter C. Newman has to say about insurance. I say that this book is extremely valuable and I intend to use it often. On page 105, he writes:
The bank boards distill business power. Among them, the three hundred directors hold more than three thousand directorships of corporations with assets totalling $700 billion.
The bank directors are drawn from the corporate clusters interconnected with each of the banks. All but four of the top one hundred Canadian bank directors (ranked on the accompanying table according to the amount of the corporate assets with which they are involved) sit on the boards of the three largest banks. Each bank maintains special relationships with these client-directors and also with selected underwriters, law firms, auditing houses, trust and insurance companies. Some sixty-three bank directors sit on the boards of Canada's sixteen largest insurance firms, which control 83 per cent of their industry. Here is a tabulation of the extent of interlocking between banking and insurance boardrooms:

I shall mention only one: 14 banks directors sit on the board of the Sun Life Company. One could keep on reading this book: it is quite valuable. To prove the interlocking or the banking and production monopoly, we read this on page 115:


Mr. Herbert:: Mr. Speaker, on a point of order, I wonder if in fairness to those who are following the speaker would indicate for just how long he intends to continue with his speech?


Gilbert F. Rondeau: I had intended to continue for another seven or eight minutes, if that does not displease my hon. colleagues too much. I would appreciate more time: there are so many other good things to read here that I could spare hon. members quite a lot of reading time.

The banks will not disclose any figures on how high a proportion of their credit is extended to their own directors. The only estimate ever published was in the report of the Royal Commission on Banking and Finance, which appeared in 1962. It stated that about 30 per cent of all authorized credit lines of $100,000 or more were "to directors, their firms or corporations of which they were officers or directors."

Mr. Speaker, if one keeps on reading that book, one gets a clear picture of the banks and the companies they control and soon realizes, as I did, that our system is one of monopoly, of production, and of finance from which we cannot extricate ourselves. When, for instance, workers go on strike to get a raise of, let us say, $20, after a one-week

strike and a settlement, they get their $20 increase in their pay envelope. The man who granted the increase in salary is the same one who controls, directly or indirectly, the cost of food at Dominion's or at Steinberg's. That is why, in our present-day system, strikes lead to absolutely nothing because we are part of an economic system where production and finance operate on a closed circuit. This is what the right hon. Prime Minister had to say about it on January 1 last, and I quote:

The free market system in Canada does not exist any more. [Translation]
He was absolutely right: the private enterprise system, the free enterprise system, does not exist any more in Canada. He was right. He is still right. But the same government deeply regrets that we have no competition system and no private bussinesses any more in Canada because they gave a few individuals the power to build an economic empire where finance, production and consumption are controlled.
Mr. Speaker, I regret that I do not have more time to continue my remarks because I have always been particularly interested in finance. I am convinced that it is not possible to make social and economic reforms without giving first our attention to the area of finance. Today, the federal governement, the government which is or should be sovereign, is at the mercy of financial instututions and in his book entitled The Canadian Establishment, Peter C. Newman proves that this system exists today. Thus, it is not by passing petty legislation and by changing some taxes that we are going to correct the situation.
For example, some years ago, a U.S. Senate subcommittee was asked to make an inquiry on trusts, monopolies and finance and at the end of the inquiry, the chairman of this committee, the Chief Justice of the U.S. Supreme Court said there was only one monopoly, namely the monopoly of credit; then we realized that Peter C. Newman said in his book that with one hand we extend credit to companies, generous credit through banks at a given moment this credit is withdrawn or restricted as far as these companies are concerned. It says in the book that banks grant credit to the tune of $100,000 or more to their own managers in order to purchase the controlling shares of the company. Problems have been created through the use of credit, the debit balance of bank accounts.
Mr. Speaker, I would have fantastic examples to give in Canada, but I know that at the present time in the province of Quebec a company must accept to be controlled by the banks or go into bankruptcy. Banks have a 40 per cent control over that company which has become a multinational company. The chairman of that company is reluctant to yield the controlling shares of the company to a group very well known in Montreal, Power Corporation, which wants to take over that company, and we know that Power Corporation has tremendous connections with the Royal Bank, as Peter C. Newman mentions in his book.
What struck me in the book by Peter C. Newman, Mr. Speaker, and I would not like to displease my hon. friends opposite, was to find out that most of the Anti-Inflation Board officials were at one time executives of Power Cor-
May 27, 1976

poration in the province of Quebec or in other subsidiaries controlled by Power Corporation.
Mr. Speaker, I do not understand how executives who were under the authority of Power Corporation can serve the interests of the Canadian people unless Power Corporation, through the AIB, wants to control small businesses so as to take them over eventually through the Royal Bank, which is behind Power Corporation.


Harold Thomas Herbert: Mr. Speaker, I rose on a point of order to ask the previous speaker, the hon. member for Shefford (Mr. Rondeau), how long he would be because possibly this is one opportunity we should take to revise our rules. I was in a similar position on another occasion when the right hon. member for Prince Albert (Mr. Diefenbaker) asked for a few minutes in order to finish his speech. At that time he continued for half an hour. The hon. member for Shefford took another 20 minutes. In fact he spoke longer than the representative of the official opposition when that gentleman made his remarks.
The hon. member for Waterloo-Cambridge (Mr. Salts-man), when he began his speech, said that he would forgo the luxury of rebutting the previous speaker, the hon. member for York-Simcoe (Mr. Stevens). I will give the hon. member for Waterloo-Cambridge credit for producing a speech in which he made some positive suggestions even if I do not agree with them. I shall not go over them simply because my experience is that socialists act completely differently when in office. This is well illustrated by the socialist governments in this country.
However, I do wish to deal with the remarks made by the hon. member for York-Simcoe. This is a luxury I do not think I can afford to forgo. His remarks were so full of platitudes, and so on, that at times I found it difficult even to credit them to the hon. member for York-Simcoe. He said that it is hard-working Canadians who pay for the government's spending program. I find that a little hard to take. Who else but Canadians will pay for the government's spending program, whether it be the spending program of this federal government or of any provincial government? It is a nice pat expression to say that it is the taxpayers who will pay. Whether it be the consumers or the taxpayers, someone must pay for whatever the government's level of spending may be.
He then went on to mention what he said amounted to $1 billion in spending cuts. Let us analyze some of these cuts. He talked about energy price increases. He spoke of the $1.05 and the 70 cents. He mentioned the ten cents levy put on by the government. He did not say that he objected to this.
He did not say that he supported one price. He did not say, if he was supporting one price, how he would set it up. He did not indicate whether he thought this was a good thing. He mentioned that we are spending $1.8 billion in price support in respect of oil in this country. He did not say whether he thought it would be preferable to let the price for gasoline and heating oil rise to the world price so that we would not have to subsidize gasoline and heating
The Budget-Mr. Herbert
oil in this country. That would be one method by which we could save 1.8 billion. He did not mention that.


Sinclair McKnight Stevens: You should read the speech. You missed the point.


Harold Thomas Herbert: He talked of foreign markets. We know they are there. He did not make any specific suggestions about how to get greater access to those markets. He did not mention the competitive factor or that perhaps we should subsidize our exports to increase our exports. He just said the markets are there. Of course they are there. We could sell to them if we are competitive. One of the reasons we have not been able to sell is that our competitive position has somewhat decreased.
Then he had a real nice pat expression. He said that the family farm is an efficient unit of production. This should be good for getting some farm votes, so I shall repeat it. The family farm is an efficient unit of production. He mentioned that four tenths of the capital regulation is in the private sector and following that, because he wants to see capital generated, he spoke against profit control. I repeat that: he spoke against profit control.
I want every salaried worker in this country whose salary presently is under the wage guidelines of this country to take note that the hon. member for York-Simcoe spoke against profit control.
He wants to stimulate the economy to provide more jobs in the private sector. He did not mention the amount of money we should spend. He studiously avoided talking about any more spending although he mentioned several programs which would require an input of dollars in order for them to be effective.
He then mentioned the Post Office. This is interesting. He mentioned some figures, just as he has so often at committee meetings. I cannot miss this opportunity to talk about the hon. member for York-Simcoe and his performance in committees. He is what I call a flitter. Like a butterfly which goes from flower to flower the hon. member flits from committee to committee. On some occasions he will attend a committee meeting and make a proposal because, after all, as the official spokesman for the official opposition he must show that he has studied the estimates. He will make some amendments to cut the estimates to lower government spending.
I shall not read from the Minutes of Proceedings and Evidence of the committee but I would refer any interested member to the meeting of the Committee on Finance, Trade and Economic Affairs of May 4 when the hon. member suggested a cut in the budget of the minister of Finance (Mr. Macdonald). I shall not go into all the details, but there is an interesting point to this. He took a look at the estimates and made an assumption which was indicated to be false assumption. He then found himself in the ridiculous position of being a financial critic notwithstanding the fact that he really had not done his homework.


Sinclair McKnight Stevens: Balderdash.


Harold Thomas Herbert: The next item he mentioned was the $300 million that has to be raised by Crown corporations such as, for example, Canadian National. I did not really understand him. Was the hon. member suggesting that he was in
May 27, 1976

The Budget-Mr. Herbert
favour of having all the money for the Crown corporations raised by the Minister of Finance? After all he should be consistent. We should follow the same procedure for all Crown corporations. Would this not in some way dig into the independence of the Crown corporations? Would it not be contrary to what we are trying to do, for instance, in respect of Air Canada by separating it from Canadian National and making it independent? Would it not be wrong under those circumstances for a Crown corporation to be reliant on the government for its financing by having the government raise the money for Crown corporations?
He mentioned another little cut of $90 million. He wants to get rid of all the outside contracts. This has been the favourite theme of the Tory party. He says we can save all of that because we are going to improve the efficiency of the public service. Presumably all that work will be done by our present public servants with no increase in salary, and nobody extra will be brought in. It will be an additional load on these public servants. In the next breath he says that he would take another $50 million out of the public service-I do not know how. Will he reduce their salaries and have fewer bodies doing more work? He did not say, but anyway there is a nice, neat $90 million worth of extra work to be done by the public service and they will get $50 million less for doing it.
His next remark concerned the number of ministers. He does not want 29 ministers, he wants fewer. It occurred to me that not so long ago there was a Tory convention at which it was proposed that there be more ministries. I wonder has there been a change once again in the Conservative policy, or is this just the idea of the hon. member for York-Simcoe. If we are going to have fewer ministers- which is perhaps not a bad idea and I myself have suggested a different structure-if we have to get rid of some, which ones should be eliminated and which ones should we put together? No mention was made of that. The hon. member just said that there are too many ministers, that we should get rid of some, but he made no positive suggestions on this.
Then he went on to the subject of spending. He is going to let everybody share $350 million. We should give everybody a tax break, he says. That is a good one. I do not know where they money is to come from. He says it would come from some millions of dollars that he has decided to cut off spending, but as I listened to, item by item, I did not find any moneys in actual dollars. This was another of these figments of the imagination without any follow through. Despite that, the hon. member would like to distribute some of these moneys, and he would give a tax break to those earnings $16,000 and less. He is also going to give $100 million to the private sector to increase research. He did not go on to do much explaining about this, so I will put a question to him.
The pharmaceutical industry in this country has had some problems with research work. Is he suggesting that it might be a good idea to infuse some of his $100 million in the pharmaceutical industry so that perhaps this industry could do some of the important research that is presently being done in other countries, specifically in Ireland, where they get a better tax break than in this country, and

also in the United States? He did not say, but at any rate he is keen on giving the private sector $100 million.
In the next breath he is willing to give another $25 million for medical research. That is a good one, of course, because everybody wants to find cures and prevent diseases, as he mentioned, and this ties in very well with the demonstration which we witnessed here last week at which, incidentally, this particular group was asking for $6.4 million. It occurs to me that if we are going to be popular, then why limit this to $25 million? There does not seem to be any sense in the figures. It does not tie in with anybody,s request. It might be one way of saying, "Let us give a handout to everybody while we are giving money away, let everyone share in the bonanza."
The hon. member for York-Simcoe mentioned small businessmen. He did not say what benefits were put in the budget for small businessmen but he mentioned the horrors of filling out government forms. His way of solving this problem is not to suggest a specific form which may be unnecessary. Incidentally, may I say here that to every businessman who has written me on this subject I put these questions: What specific form do you object to? Will you send me a copy of that form so that I can explain to you why it has to be filled in and can get your response? I can say that although I have posed this question to every businessman who has complained to me about filling in forms, I have still to receive the first form.
In the next sentence the hon. member for York-Simcoe went on to complain about interest rates which are 3 per cent higher in Canada than in the United States, he maintains. He did not say anything about the fact that we need capital in Canada, nor did he say that the reason for higher interest rates is that money is coming into Canada and that interest rates have to be higher here than in the United States to attract the capital we need. He did not mention if there is a real effect on, for example, construction.
We have heard a lot said about construction and interest rates in this country, but it is quite interesting that although mortgage interest rates in Canada at present are nearly 50 per cent higher than rates in the United States, housing starts in Canada per capita are twice as great as in the United States. The United States, with all its wealth and power, is only building shelter at half the rate on a per capita basis that we are in Canada.
I should mention another thing also because there has been another Tory theme proposed many times, namely, that mortgage interest be deductible for tax purposes. It is deductible in the United States. How is it, since interest rates are so much lower and since the interest on mortgages is deductible for tax purposes, that there has not been the stimulus in housing that he seems to indicate would occur if the same situation prevailed in Canada? I suggest that there is not too much wrong with the housing program in Canada at present. The government's housing programs have been highly successful, and are certainly nothing to be ashamed of in this country in so far as the number of houses we have built in recent years is concerned.
The hon. member for York-Simcoe, the official Conservative financial critic, was complaining in a Toronto Star report on March 26, 1975, that the November, 1974,
May 27, 1976

budget did not provide a sufficient stimulus to the economy and that a new budget is needed. "It is needed now more than ever," he stated. During the debate on the June, 1975, budget in which a stimulus was injected into the economy, the same hon. member contended that major cuts should be made in government spending so as to reduce both the government's budget deficit and its cash deficit, which would of course reduce the amount of economic stimulus.
Up to the time of the May 25, 1976, budget the same Conservative spokesman continued to call for an imposition of restrictive fiscal and monetary policies, but after the budget the hon. member for York-Simcoe appeared to want to go both ways at the same time. He contended on television that there should have been a cut in government spending, a cut in taxes for those in lower income brackets, and a cut in the deficit.


Sinclair McKnight Stevens: That is what I said today.


Harold Thomas Herbert: In starting the debate on Thursday night he criticized the budget because it failed to make a commitment to provide real economic growth this year of 6 per cent and to bring about a reduction in employment.


Sinclair McKnight Stevens: What is wrong with that?


Harold Thomas Herbert: May I ask the hon. member to explain by what sleight of hand he proposes to pull off this amazing piece of fiscal magic whereby government spending is reduced, taxes are reduced, and the government's deficit is reduced, but the growth of output and employment is increased?


Sinclair McKnight Stevens: Because the private sector is given a chance.


Harold Thomas Herbert: May I call it six o'clock, Mr. Speaker?


Mr. Deputy Speaker:: It being six o'clock, I do now leave the chair until eight o'clock tonight.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
Harold Thomas Herbert: Mr. Speaker, when I stopped at six o'clock I was pointing out that the totally contradictory position espoused by the hon. member for York-Simcoe, the financial spokesman for the Official Opposition-I notice he has disappeared since the supper break-is the ultimate in economic nonsense. Apart from some brief reversals of position in the past the Conservatives have advocated the adoption of tight fiscal and monetary policies since 1974, from the time the economy was heading into a slump as a result of world-wide recession, and throughout that period. Now that the economy is pulling out of recession the Conservatives seem to be advocating the adoption of restrictive expansionary economic policies.
The Budget-Mr. Herbert
If the government had followed the course advocated by the Conservatives over the past few years, Canada would undoubtedly have suffered a more severe and prolonged recession than that of any other major industrial country, and unemployment today would certainly be at the double digit level.
The latest position of the Tories seems to involve jamming down hard on the accelerator and the brakes at one and the same time so as to achieve the best of all possible worlds. They call for the injection of massive stimulus to hasten the growth of output and employment. If there was any lesson to be learned from the hard experience of the earlier years of the 1970's it was that trying to push the economy ahead too hard and too fast only laid the groundwork for future inflation and recession.
Let me mention, in the few moments remaining to me, some of the main spending programs not touched upon by the hon. member for York-Simcoe. Some two thirds of the government spending programs which he has been criticizing in such broad and general terms today involve money transferred into the pockets of individuals-such as old age pensions, veterans' pensions, subsidies for bread, or money transferred into the pockets of other levels of government. Moneys are transferred as a result of the payments made by the Department of Regional Economic Expansion, and huge sums are spent in equalization payments. I recognize that the hon. member for York-Simcoe comes from the rich province of Ontario, but he did not mention whether he approves or disapproves of the transfer of these federal funds to the "have not" provinces; he did not mention whether he approves or disapproves of the large sums already put into the housing programs to increase even further the building of housing that is presently taking place. He made no mention, for example, of the large sums being spent on training programs for the unemployed.
I note, for example, that Canada has had and continues to have the most rapidly growing labour force in the western world. Each year over half a million young people leave school and enter the labour force. Once there they experience major employment difficulties-younger workers account for nearly half our unemployed.
Our adult training program is now considered one of the largest in the world on a per capital expenditure basis. In 1975 over 80,000 people, a number equal to 2 per cent of the labour force, successfully competed training. Expenditures on the program in 1975 amounted to more than $475 million. Does the hon. member for York-Simcoe approve or disapprove?
When he was talking about the cost of the Post Office he did not mention that only 9 per cent of all the material going in and out of the Post Office is private mail. He did not mention the multimillion dollars subsidy that goes to business as a result of the Post Office deficit. He did not suggest that we should substantially increase postal rates to remove that subsidy to the businesses he has been supporting so well.


Sinclair McKnight Stevens: Just run it efficiently.

May 27, 1976
The Budget-Mr. Herbert


Harold Thomas Herbert: He did not mention the large sums of money for cultural spending. He did not suggest it might be a good idea to cut back on cultural programs.


Sinclair McKnight Stevens: Do you?


Harold Thomas Herbert: He did not suggest that we are spending too much money, although some people think that we may be. Only 11 per cent of the total television viewing time is through CBC channels.
He did not mention the large sums of money being spent on foreign aid for the Third World and CIDA.
He did not mention one of the favourite whipping boys of the official opposition, the bilingualism program, particularly in view of the recent comments of Mr. Spicer. Of course these moneys are being spent to try to make Anglophones bilingual.
He did not mention welfare and all the moneys transferred to the provinces. He did not mention that his party seemed to be opposing some limitation on the moneys being spent on these programs by the federal government. He did not mention indexing, which is one of the reasons why the federal government expenditures are increasing. He did not say whether he approved or disapproved of the fact that some of our best programs, pension programs, for example, are indexed. He did not mention specifically any of the government programs in a fashion in which we could judge whether the Conservatives were for or against them.
One of the things quite obviously we have to be very careful of is labour cost's going up and making us less competitive. Figures show that in the last five years in the United States total labour costs per hour have gone up by some 43 per cent; in Canada they have gone up by some 77 per cent. This indicates that whereas we had an edge on labour rates five years ago, today we are lagging behind. Figures show that on a per unit basis we are running 3 per cent or 4 per cent higher than the United States.
In introducing the budget the Minister of Finance said:
The world economy is launched on recovery from the worst recession since the great depression of the 1930's. As an exporting nation, Canada was bound to be affected by the slump among its trading partners.
Yet the performance of the Canadian economy during this period in terms of output, employment and real incomes has been better than virtually every other industrial nation.
In other words, Mr. Speaker, the Tory party are just preachers of gloom and doom.
Everyone has read negative comments in the mass media. Different interest groups have adopted a defeatist attitude. The government urges everyone to stop being pessimistic. To demand that the anti-inflation program be abolished even before it is applied, to be on the look out for anything that can discredit it, and to break off talks with the government, are clearly negative attitudes.
The government urges everyone to consider objectively the economic situation of Canada, the problem of inflation, the inequities it creates, the groups it penalizes, and the means we have to deal with it. The government has warned that the evils of inflation can only get worse if effective measures are not adopted. It was not afraid of becoming unpopular when it warned that the program

might involve a degree of rough justice and that it might cause hardship in some instances.
The government has shown leadership, Mr. Speaker. It invites everyone else to do the same. Forget the critics and the pessimists. Be positive. Be proud we have so much for which we can be thankful. A constructive attitude will speed the return to an inflation-free, full employment economy.


Mr. Jacques Lavoie (Hochelaga):: Mr. Speaker, I would like to start by saying that from the remarks of the hon. member for Vaudreuil (Mr. Herbert), the people might wonder whether the hon. member for York-Simcoe (Mr. Stevens) is the Minister of Finance. Unfortunately for Canadians, that day may come!
After bringing down five budgets, one of which was rejected by Parliament, Mr. John Turner resigned as finance minister. During his mandate as finance minister, the real economic growth dropped from about 6 per cent to near zero. The trade deficit increased tenfold. Inflation jumped from 4.8 per cent to 10.8 per cent. Over 145,000 additional workers found themselves jobless and federal expenditures doubled.
After putting up with so many economic troubles, Canadians were entitled to expect an improvement in their economic position. Hemmed in by the limits of the antiinflation program, the people wanted to see the light at the end of the recession tunnel. Canada needed renewed confidence in the future. And good federal leadership could have given it to them. That will be for 1978.
In his first budget speech since he became Minister of Finance (Mr. Macdonald) he showed he was just as incapable as his predecessor. Instead of alleviating the problem of inflation and unemploment he Minister of Finance only promises a situation that is barely improved, that is an unperceivable improvement in the rate of inflation and a rate of unemployment that will still remain high. Instead of taking Canada out of the recession the minister proposes a pious game whereby increased trade with other countries, more specifically the United States, will put an end to the recession. He therefore sheds his responsibility to work at maintaining the rate of real growth of the economy. And instead of inspiring trust by showing federal leadership, all the minister provides is uncertainty about the intentions of the federal government and total renouncement of its leadership in the fight against inflation.
This budget is impregnated with inability to meet the expectations of Canadians. Government expenditures are a good example although the paper "Fight against inflation" suggested federal expenditures would not grow at a greater rate than economic growth. The information contained in the budget indicates an increase in federal budgetary expenditures of 16.3 per cent for the fiscal year 1977 over the fiscal year 1976 while the economic growth for the year 1976 will be 14 per cent.
The minister managed to reduce his estimates on expenditure increases to 14 per cent during that period using those very same obscure accounting practices made famous by the President of the Treasury Board (Mr. Chretien). The increase in federal expenditures was minimized with
May 27, 1976

two kinds of subterfuges. First, expenditures for the fiscal year 1976 rose by $725 million more than the final budgetary estimates brought in by the President of the Treasury Board. That increase was not caused by unforeseen costs but rather a voluntary policy of stepped-up non-budgetary expenditures.
Second, this government excluded from its books the financial needs of two Crown corporations to arrive at the illusory saving of $300 million. If those little games with figures had not taken place, that is if the whole activity of supposedly cut back non-budgetary loans put back in time or destined to disappear under another method had been properly charged to the accounts, federal expenditures would have soared by more than 16 per cent.
The minister wanted to prove to the Canadian people that he had nothing to do with this excessive spending, which he did not say to Canadians. To clear himself, he had to confuse the figures. The 16 per cent increase in federal spending stands in sharp contrast against the restraint applied by other sectors of the economy. For instance, let us consider the labour sector which is restricted to a maximum wage increase of 12 per cent; let us consider the business community which is forced by these estimates to limit its profits to 85 per cent compared with previous levels; let us consider the provinces which keep their spending increases at 11 per cent; let us consider the Bank of Canada which succeeds in maintaining the money growth at about 10 per cent. The financial critic for the Progressive Conservative party, the hon. member for York-Simcoe (Mr. Stevens), in his preliminary remarks on the budget, summarized the situation in more or less the following terms:
Although the federal government is asking all Canadians to participate in the anti-inflation program, it has carefully excluded itself from participation. This is another example of the lack of leadership of the part of the government and deceived of expectations: the failure by the Minister of Finance to commit himself to correct the losses in the economic growth which Canada has experienced for the last two years. In terms of long run economic yield, the real GNP was $7.7 billion below potential in 1975, after allowing for inflation. Such a decrease in relation to potential means per capita a loss of $339 in real GNP. Faced with such a considerable loss, all the minister of Finance has to say he hopes trade improvements will bring actual growth up to 5 per cent this year. We hear from him no long term commitment for compensating the losses faced by all Canadians.
In fact, he ventured no growth projection for the coming years. Because the economy was allowed to bog down in such a dangerous way, Canadians have experienced tremendous losses in potential jobs, revenue, productivity and well-being. If nothing is done now to recoup those losses, they may very well become of a permanent nature. That the minister should acknowledge those losses without doing anything to straighten them out is one of the great tragedies in this budget.
There are relatively few measures of a true budgetary nature in this budget. As a matter of form, some tax reductions were included for the average taxpayer, and the
The Budget-Mr. Lavoie
tax burden of small and medium firms was somewhat alleviated. Some changes were also made for energy conservation purposes. This is all very well, but the bulk of these measures certainly have no real significance, considering that they represent a reduction of only $75 million in government revenue, whereas the total revenue increase will reach $4.5 million for the current year.
Once all the rhetoric is taken out, this budget offers Canadians nothing to indicate that the federal government is ready to practice restraint. Nothing for recouping the losses in actual growth, nothing for housing, nothing for agriculture, nothing for productivity, nothing in the way of jobs, nothing to eliminate regional disparities. In other words, discounting the bad news in the budget, one is justified to ask, as did the leader of the official opposition (Mr. Clark), why the Minister went to the trouble of introducing it.
I would now like to comment on some of the more specific aspects of the current economic situation, which are of great concern to me. The first aspect is unemployment. There are now upwards of 760,000 Canadians unemployed. During the year 1975, we had an average of 697,000 unemployed. The fact that more and more Canadians become jobless is in my view a new and very inauspicious trend.
Indeed, since December 1975, almost 50,000 more Canadians have been looking for a job. Will this figure grow? I do not want to sound like an alarmist, but I am afraid it will. In his budget speech, the minister said he expected that more than 250,000 jobs will be created in 1976. This figure seems very impressive. I feel I still have to ask the following questions. The first one is important enough: how can the government increase the number of jobs when, in the Department of Manpower and Immigration and in Statistics Canada, people are being laid off and told there is a lack of work. I wonder if those people will be put on the minister's list of new jobs; I hope so in any case.
And in another aspect, I would like to ask the minister in what industry, in what province, these jobs will be created. And moreover, a question of so great importance: will these jobs be enough to allow first-time job seekers to find employment? Where will these jobs be created? The budget speech does not give any indication of it, nor does the reply given by the minister of Finance (Mr. Macdonald) to our spokesman in financial matters. The minister does not know either. Where are those incentives in the budget which would allow industry to generate jobs? Certainly not in the anti-inflation program where it is stated that profits should be maintained at 85 per cent of their proceeding level. Certainly not in this insignificant cut of $30 million allowed to small and middle-size industries.
Those jobs may come with export industries which the minister expects will experience a miraculous recovery in the coming year but export industries expected to recover during the year are those which export our resources and not our manufactured goods. It is a well-known fact that industries in the primary sector contribute far less than those in the secondary sector to job creation. This is why I am convinced that little employment will be directly creat-

May 27, 1976
The Budget-Mr. Lavoie
ed by the recovery of industries which export our resources.
Can we expect any recovery from Canadian industries exporting manufactured goods? I hope so, as this area can certainly be largely improved, but the minister has already informed Canadians that the manufacturing industry has lost all competitiveness in the international field. An illustration in the economic review of the Department of Finance clearly demonstrates today that even manufacturers are not competitive. How could this industry create employment when it is not competitive?
I am not enough of an expert in the financial field to be in position to criticize the minister's forecasts concerning job creation. I have my doubts and I think they are justified. What I ask the minister is to explain how he can expect to create 250,000 new jobs considering the present economic situation and the proposed budgetary policies. I wish, and I think that the Canadian people wish it too, to be convinced of the validity of his projections and of the fact that the minister does not raise false hopes in the minds of Canadians.
In what areas of Canada are those jobs to be created? Are they going to be created in the wealthy and affluent provinces? This will not solve the problem of regional disparities? In my own province, Quebec, there are 224,000 unemployed accounting for 8.3 percent of the manpower. Even if a third of the 250,000 new jobs which are to be created this year were directed to the province of Quebec tomorrow morning, the unemployment rate in my province would still be over 5 percent.
Such an unemployment rate would still be unacceptable in my province, but even more so is the fact that Quebec will probably go through another year with an unemployment rate much higher than the national average. If the minister has the courage to tell Canadians what industries will create these jobs, I hope he will tell us as well in what provinces these jobs will be opened. I want to hear from the minister whether the inflation and recession that took place recently in this country have increased regional disparities.
I asked earlier if 250,000 new jobs would be enough to prevent the unemployment rate from rising if not to reduce it. He says that all these jobs will be created but he does not say anything about the number of new workers who will enter the labour market. If we knew the growth rate of the labour force, we could say whether there will be more people searching for a job than new jobs created. A projection of the growth of the labour force provided by the Conference Board in Canada referred to a little more than 310,000 people. On this basis, it is obvious that the minister tries to tell us that even though 250,000 new jobs will be created, 310,000 people be looking for work, which means a net increase of 60,000 unemployed people. This means that the unemployment rate will go up in 1976. However, in his budget speech, page 32, the minister states that "the rate of unemployment will continue the recent level trend in the near term". Can he explain this statement? After all, the livelihood and welfare of several thousands of people are at stake and I do not think he should play statistical games with the Canadian people.
I would like to deal with another matter in my speech today, in relation with the above. There is nothing in this

budget that will assist the workers, the backbone of our economy and our greater resource. According to the guidelines brought forward by the present administration in its "Fight against inflation", workers wages are frozen at a maximum increase of 12 per cent. According to the minister, page 11, "compliance with the program is widespread". Well, the worker is therefore following the wage control and showing personal restraint. But what is he given in exchange? In this budget, the minister is only providing for another $15 million in deductions for child care costs. It also offers $60 million in cutbacks for those who make important investments in retirement pension plans, but how many average Canadians can, according to their salaries, take advantage of such a policy?
Most Canadian consumers must face higher provincial sales taxes, higher property rates, sickness insurance costs, education taxes, and other costs. I do not blame the federal Minister of Finance (Mr. Macdonald) if the provinces need revenues, but he must surely notice that higher taxes reduce the net salary of the worker. Why does this budget provide no advantage to the worker to incite him to comply with the salary freeze? Not only is there no advantage for the worker but the worker whose salary is freezed must tolerate a 16 per cent increase in government expenses. The rules of the federal government apply to everyone except itself.
This budget is highly incomplete and much too shy; that is the least one can say. I am sure that in their speeches my colleagues will know how to demonstrate all its inadequacies.
Mr. Speaker, I would like to deal with a last subject before I resume my seat. I would like to join all those who protested against the cutbacks this government made in the funds allocated to medical research. Even for a government which says it is interested in cutting its expenses, such a cut makes no sense at all and it is like going backward.
The present administration complained many times about soaring health care costs. In my opinion, it is more reasonable to spend money to try to find the best means of protecting health than to cure diseases which could have been prevented. Obviously such an approach would give results in the long run. At least it would be a slightly more humane and more enlightened way of dealing with such an important and vital field as medical research.
As I said in my previous remarks, this budget is a source of disappointment. It contains innumerable shortcomings and, on the whole, creates only confusion. The least we can expect from the minister is that he clarify the misunderstanding that surround his estimates. When the minister has the opportunity again to take part in this debate, or when his colleagues speaks, I hope they will tell us where all these jobs come from. Will there be enough of them? I hope they will point out those aspects of the budget and concern themselves with the workers. I shall not be the only one to listen to the answers of the minister.
The people in my riding, in my province and in my country will do the same. Suffice it to say that the impression the people are left with today, about the budget, impression that I share with them, corresponds to a large extent to what Claude Ryan of Le Devoir said about it in his editorial this morning, and I quote;
May 27, 1976

Mr. Macdonald took care not so specify what amounts he hopes to recuperate through the new restrictions he will be proposing for eligibility for unemployment insurance benefits. One must wonder, however, whether it might not have been preferable to try to recover those amounts from the categories of high-income taxpayers who have all sorts of means at their disposal for sheltering themselves against the consequences of inflation. From that specific aspect, Mr. Macdonald's budget is disappointing. No other measure having otherwise been put forth to improve the lot of the small taxpayer, one must conclude that he will be, during the coming year, the main scapegoat of the federal government fiscal policy.


Mr. Bill Clarke (Vancouver Quadra):: Mr. Speaker, I should like to give a little praise to the minister-


Robert Lorne Stanfield: Not too much, of course.


Stanley Howard Knowles: Just a little.


William Hillary (Bill) Clarke: The minister has included a few things in his budget which the party I support has been advocating for some time. In particular I should like to refer to the adjustments to the unemployment insurance plan with special emphasis on the extension of the qualifying period from eight weeks to twelve weeks.


Mr. Hogan:: Down in the maritimes you would not say that.


Stanley Howard Knowles: That is where he went wrong.


William Hillary (Bill) Clarke: I sense some opposition in the House, not only from my left but from across the way. Another thing I welcome in the budget is the removal of the dividend freeze and the increase in the deduction allowable under retirement savings plans. Lest the minister think we are altogether in favour of these changes I should like to make a comment about the ending of the dividend freeze. This is something I have advocated on a number of occasions and I should like to think the minister was listening sympathetically.
Large numbers of Canadians rely on dividends to a greater or lesser extent as a source of income. The minister could never explain how he expected retired people living on dividends to cope with the rising cost of living, which was not frozen, while relying on dividends which were frozen. I am sure pensioners will welcome the change, particularly if the minister can bring down the rate of inflation to something like 8 per cent, as he suggests he can. Of course the problem affects more than just pensioners-it affects pension plans in general, and practically every working person in Canada has an interest in a pension plan. I might add that practically every pension plan has an interest in the profitability of Canadian companies.
There is a factor in the dividend proposal, however, which I cannot understand. It ties in with the rate of profits which will be allowed. Corporations were allowed to earn 95 per cent of their previous taxable incomes but the proportion is now to be lowered to 85 per cent; profits must not rise above 85 per cent of profits during the base period. So we are now in the position of saying to business, "You cannot make as much money as you used to, but you
The Budget-Mr. Clarke
may increase your dividends." I cannot see how a businessman acting in a proper manner can reconcile those two requirements.
Furthermore, having been a businessman before I came here, I have difficulty in understanding how a corporation is expected to control its profits. Volume plays a tremendous part in the profit picture. As one example I might cite the Bricklin Automobile Company; it certainly had no problem in controlling its profits because it did not make any, so the regulations restricting profits were not difficult for that company to comply with. But take the case of Chrysler Corporation-I recognize that this is an American company but I am sure there are many similar Canadian examples. The new models they put out in 1976, the Volare and Aspen, proved to be their salvation; the cars sold like hot cakes. How anyone can expect to control profits when a company is fortunate in hitting upon a hot sales object such as that, I cannot imagine.
With regard to the changes in the pension plan contributions, may I say they are certainly to be recommended and were long overdue. The pension plan legislation was introduced in 1970. I believe, and the limits set at that time have been unchanged ever since, so the increase of roughly 14 per cent was overdue. However, I would remind the minister that there is an extremely limited market for an improvement of this kind. For most Canadians the question is how to arrange to have a few extra dollars left over to invest in anything, let alone to put $3,500 or more into a registered retirement savings or a pension plan.
My hon. friend from York-Simcoe noted the fact that this budget would leave the little man bearing the burden of taxation. He quoted statistics which clearly support that contention. I should like to give another example because I feel the government does not understand the problems of the little man.
A few days ago we were debating the estimates of the Post Office Department in the House. At that time the Postmaster General (Mr. Mackasey) told us that the cost of first class mail would rise 50 per cent over the next year or so. He said that the average Canadian wrote only four or five letters anyway so the cost to him would be only 8 or 10 cents every year. I made a quick calculation before putting some questions to the minister and it seemed to me the increase in the postal rates was likely to be some $200 million. Dividing that sum among the population I found it came to more like $10 per Canadian than 10 cents. Put this into a family context and we shall probably find that the average cost of the projected increases will be more like $50 a year rather than $10, or 8 or 10 cents.


An hon. Member:: What about the business mail?


William Hillary (Bill) Clarke: That is a point which was stressed by the Postmaster General. He said that 80 per cent of postal costs were paid by 20 per cent of the customers and, of course, he was referring to the business community. What he failed to explain was that the business community will pass the increase along to its customers. Business has a way of doing this because, after all, business has no money of its own-it only gets its money from outside. There is no other source of funds. Furthermore the increased costs to corporations are deducted in arriving at taxable income.

May 27, 1976
The Budget-Mr. Clarke
A sum, which could be estimated at approximately $100 million roughly as a part of that increase in the postal rates, will be a cost to the taxpayers through reduced revenue to the government because taxable incomes will be lower until the cost actually is passed on to the customers. When the minister was questioned on this he agreed- the error was 100 times; it was not 8 cents or 10 cents but $10 per Canadian-that my analysis was probably correct but said in defence that the Post Office deficit was also paid for by the little man. I will have something more to say about what is or is not paid for by the little man later on.
It is interesting that members who sit to my left and members who sit opposite do not understand that all the government's money is taken from the little man, the taxpayer. They do not seem to understand that the government has no funds of its own to spend and furthermore that the corporations have no money of their own to spend. It is all taxpayers' money. It is the individual who pays.
Another aspect in dealing with the little man is that wages in this country are not expected to rise by more than 12 per cent in the current year. Personal exemptions are indexed at a rate which I understand is 11.3 per cent, which is designed to take care of most of the effect of the increased wages. This too reflects on the tax burden of the individual. Yet the minister in his speech on budget night indicated that the yield from direct taxes on individuals is expected to increase by 26 per cent. I cannot reconcile how a small increase in wages of 12 per cent, which is supposed to be offset by the increase in personal exemptions, will result in an increased yield of 26 per cent.
We can look at that from another unexplained point of view. The minister said that the gross national product was expected to increase by between 14 per cent and 15 per cent in the current year. I cannot relate that to an expected increase in direct taxes on individuals of 26 per cent. I feel there is something wrong with the arithmetic the minister used in respect of his budget.
The hon. member for York-Simcoe (Mr. Stevens) referred to his suggested cutting of expenses and the suggested allocation of those savings. He indicated that $100 million should be applied to the relief of those Canadians who earn under $8,000 a year. The latest figures available in respect of personal income taxes are for 1973. They reveal that Canadians who earn-and this is the gross rather than the taxable income-an income of $4,000 or less paid $104 million in the form of personal income taxes in 1973. Those Canadians who earn what both the provincial government and the federal government declare is the minimum wage earn at the federal minimum wage of $2.90 per hour $6,000 per year, and at the provincial minimum rate of $2.65 an hour earn an annual income of $5,500. Yet in 1973 those who earned $4,000 a year paid $100 million a year in the form of personal income taxes.
There are other measures in this budget to which I would refer as housekeeping measures. At least I did refer to some of them in that manner until today. One example of what I call housekeeping measures would be the control of abuses in the operation of charities in Canada. I thought it was quite revealing that there are estimated to be 35,000 charities in Canada and that the annual contribution taken
in by these exceeds $1 billion. I think it is fair to observe at the same time that the government makes an involuntary and indirect payment through forgiven taxes to that $1 billion since the contributors to the charitable organizations deduct the contribution in computing the tax payable. Of course the tax bracket would have to be taken into consideration. However, a large amount is involved.
Further there is the reduction of the capital cost allowances in respect of leased equipment, electrical generation equipment, and advertising signs. There are also increased write-offs allowed on roads, computer hardware, taxi cabs and a few other items. Today representatives of the leasing industry say that the result of their inability to make the normal deduction for capital cost allowance to which they had been accustomed will result in higher leasing rates. Very little arithmetic is required to figure out where the higher leasing rate will be directed in order to finance this change in the budget.
Another factor that has developed today is the higher tax on construction companies which operate heavy equipment. Because the capital cost allowance on heavy equipment has been reduced, the payments that heavy equipment operators receive for their work will be higher in the future in order that they can cover the higher tax bill that will result from the fact that they cannot reduce their incomes by way of capital cost allowance in the way in which they were accustomed.
Another housekeeping measure would be the increased deduction for child care. I am certain the minister experienced much pressure in this regard. Certainly there were inequalities and inequities existent in the realm of child care. The adjustment in respect of deductions for disabled persons and students probably was overdue.
Another area that has been given a great deal of attention by the minister involves the advantages of small business. The rate of 25 per cent on small business incomes is to be increased from $100,000 to $150,000 a year with an accumulated maximum of $750,000 instead of $500,000. I was disappointed to note that there is still no relief for small corporations which, for some reason or other, are deemed not to be in active business. If a business is deemed to be an inactive or investment-type business the small-business rate does not apply and it is taxed at the normal rate of 50 per cent. There seems to be no attempt to plug the loophole which allows a small active business that has achieved an accumulated income of $750,000 to be wound up, another company started up and permits the new one to receive more relief.
I think it would be more appropriate if the minister had given some kind of relief to small businessmen who for some reason cannot afford or do not wish to incorporate. If you operate a business without the benefit of incorporation, no matter how much income you realize you pay at your normal personal rate and there is no way in which you can accumulate funds for the expansion of the business. Many small businessmen feel they cannot justify the costs of incorporation and they have to go along with the rules as they were before.
There is another matter in connection with small business in Canada which needs attention and which was ignored by the minister in this budget, and that is relief for the businessman who operates an unincorporated business

May 27, 1976

and who wishes to employ a member of his family, particularly his wife. The salary for a wife is not an allowable expense, and that applies also to professional men whose wives may wish to assist in the office. I realize that there may be room for abuse there, but I do not think that that is any reason for the minister not having given consideration to this matter.
The hon. member for York-Simcoe also stressed the need to reduce the number of forms required to be filled and filed by small businesses. I suppose the problem is just as bad for big business, but at least big business has the staff and the expertise needed to fill out these forms in some manner that is less painful to big business than to small business.
If a small businessman cannot complete his forms on his own, he needs to employ professional help, such as lawyers or accountants, to help him in this area. The hon. member for York-Simcoe suggested that small businessmen should be paid a fee for each form they are required to fill out. I think that was a dramatic suggestion that the hon. member made, but I am sure he realizes that that might tend to increase the bureaucracy, and in fact another form would be required to be filled out in order just to get the refund or credit, as he suggested, for filling out forms. But the point needs to be repeated that the hon. member for York-Simcoe was making, that small businessmen need relief from this kind of government intervention in day to day business affairs.
Another area that was touched on in the budget was the write offs for the oil industry. I thought it was interesting that individuals are now to be allowed to write off 100 per cent of their exploration costs. It is interesting to note that the budget was silent on the treatment of development and acquisition costs in the oil industry. I am not sure how useful these provisions would be because in Canada, I suggest, there would be very few individuals who would go into the oil exploration business, which is a very high risk business requiring immense amounts of capital usually not available to individuals. However, there is the possibility of forming syndicates which result in a co-operative effort, and the individuals in the syndicate are treated as individuals for tax purposes.
As I said, the budget was silent on the matter of development and acquisition costs. I was able to get the latest figures available, which were for 1974. We find that in 1974 exploration expenditures were just over $900 million for oil, and development expenditures in that year were $600 million. Both of the figures are admittedly small when compared with the royalties collected from the oil industry in that year which were $1.3 billion, almost equal to the total exploration and development costs. The point is that fully 40 per cent of the total exploration and development expenditures have not been dealt with in this budget, and I feel the minister has done a disservice to the industry and to individuals who might wish to go into a syndicate to explore for oil which Canada and the world needs so badly when he failed to deal with $600 million figure in 1974, which undoubtedly will be larger in the current year.
Today I met some officers of a major Canadian oil company and I find that under the present rules, which
The Budget-Mr. Clarke
were not changed by this budget, it is still better for a Canadian owned oil company to explore in a foreign country. This strange set of circumstances arises because the government has not given sufficient encouragement to Canadian companies to explore in their own country. The combined operation of world oil prices and government involvement by way of taxes and royalties has combined to produce a situation where Canadian oil is less profitable to the Canadian oil company than U.S. oil or oil from some other foreign land.
I was most disappointed with the budget for a number of reasons. I suppose I can summarize them and say it was because the budget in no way deals with the basic problem. I think it was called a stand pat budget, or a few other calm words like that. Certainly it was not much different from last year's budget in regard to the bottom line, so to speak. We have another deficit of some $4.5 billion. The government does not seem to realize-although the hon. member for York-Simcoe explained it very carefully, I thought, and certainly the hon. member for Vaudreuil (Mr. Herbert) did not agree-that the only way to balance the budget and to change things materially in this country is to cut down government expenditures. The government at the federal level is the only one that can control these things.
There is no way that any other government, any other corporation or business, or any individual could operate as irresponsibly as the federal government itself operates. In the budget the minister even ignored the advice of the Economic Council of Canada which earlier this year in a lengthy report had recommended that one of the solutions for the unemployment insurance dilemma was to create government jobs. There is no suggestion in this budget to create government jobs, and I sense from the feeling of the House that many members will have trouble going along with the proposed regulations on unemployment insurance cut backs, the extended period for qualifying, because of the situation in their areas. Certainly the government should have had a closer look at the creation of government jobs in order to cut down on the abuses, because if a man is offered and refuses a government job which has been created to fill his needs then he has no right to continued benefits.
One of the big expenditures still is the carrying charges on government debt, which I believe amount to $400 million, and yet there is nothing in the budget, and the government apparently continues to refuse to consider, any method that might reduce government investment and therefore reduce the interest charges contained in the budget. If we got rid of a few of these huge government investments we would find the annual deficits reduced on these various government enterprises. I do not want to go into a great deal of detail on these but I would like to mention a few examples. One of them is the hotels which CNR runs for no apparent need.
There are many hoteliers in this country who are able to provide adequate if not luxurious hotel rooms and make a profit at it. Our government requires the CNR to invest the taxpayers' money in hotels and, not only that, they create a loss and a cash drain every single year. I have asked before, and I repeat it now, that the government consider the reduction of investment in such things. I do not restrict

May 27, 1976
The Budget-Mr. Clarke
it to these ventures only; I refer also, for example, to the Canadian Broadcasting Corporation.
I do not think there is any reason for the government of this country to run a radio system or television system and incur huge losses every year. Those installations are a drain on taxpayers' capital, and interest and operating cost are enormous as well. Someone may well say that we would not have that service if we did not have the government providing it, but it is easy to point to telephone companies all across this country which are not government operated, and with licensing it is a simple matter to ensure that the licence holder provides service in unprofitable areas.
I deplore the investment of taxpayers' dollars in this country in public works. There are huge, huge investments. The Department of Public Works is the largest landlord in the country. There is no evidence to indicate that the department is able to provide space for government departments at anything like a competitive rate because there is not any competition. The stories of waste and inefficiency in that department are legend, and I think some examination of the problem in that enormous area is warranted, but we see none.
The Post Office bears consideration. There is a licensing possibility in the Post Office which is going to need over $1 billion in funds this year, and that is a questionable use of taxpayers' money when there is a huge deficit year after year.
I was interested to read and to compare two statements which I would like to read. One of them was by the Prime Minister (Mr. Trudeau). It was made in Ottawa in January of this year at the Canadian Club. The Prime Minister said-


The Acting Speaker (Mr. Turner):: I regret to interrupt the hon. member, but his allotted time has expired. He may continue with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


An hon. Member:: No.


The Acting Speaker (Mr. Turner):: The hon. member for Vancouver Quadra.


William Hillary (Bill) Clarke: I had no idea that my time was-


Jean-Jacques Blais: Mr. Speaker, I rise on a point of order. When the consent was requested, I shook my head, and I did not wish the hon. gentleman to continue. The hon. member for Scarborough East (Mr. O'Connell) will be seeking the floor in order to contribute to this debate, and I think we should continue in that manner.


Mr. O'Connell:: Never mind.


The Acting Speaker (Mr. Turner):: Order, please. I would suggest that the parliamentary secretary should say no. I cannot recognize a head shake. Does the hon. member have unanimous consent?


Some hon. Members:: Agreed.


Jean-Jacques Blais: No.


Martin Patrick O'Connell: Mr. Speaker-


William Hillary (Bill) Clarke: Mr. Speaker, I rise on the point of order raised by the Parliamentary Secretary to the President of the Privy Council (Mr. Blais). I distinctly hear the question, but unfortunately we did not hear the headshake of the parliamentary secretary, and I would question the procedure of putting the question twice when unanimous consent has already been given.


The Acting Speaker (Mr. Turner):: Does the hon. member for Vancouver Quadra (Mr. Clarke) have unanimous consent to continue?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Martin Patrick O'Connell: Mr. Speaker-


Mr. Johnston:: Mr. Speaker, I rise on a point of order. This is the Parliament of Canada, not a gathering of Shakers.


Some hon. Members:: Hear, hear!


Howard Earl Johnston: The only way a contribution can be made in this Chamber is surely by word of mouth and by voice, and I heard nothing at all when Your Honour put the question. With all due respect, the hon. member for Vancouver Quadra (Mr. Clarke) received unanimous consent to continue.


Mr. Baker (Grenville-Carleton):: Mr. Speaker, I listened to the debate, and I share the view expressed by the hon. member who has just spoken with respect to the shaking of a head. Moreover, if that was not enough, the hon. member for Scarborough East (Mr. O'Connell), being the gentleman he is and who would have been the next speaker on the list, rose and indicated that he was prepared to allow the hon. member for Vancouver Quadra (Mr. Clarke) to finish his speech.
Frankly, I do not think Your Honour made a ruling on the second and third occasion. I think, however, that Your Honour did make a ruling when you called upon the hon. member for Vancouver Quadra to finish his speech. That was the ruling you made, and I say that with respect. If that is the case, and if Your Honour agrees with that-and I hope you do, and I hope you agree with the spirit of good fellowship displayed by the hon. member for Scarborough East-I would ask that you allow the hon. member for Vancouver Quadra to finish his remarks.


The Acting Speaker (Mr. Turner):: The Chair does not operate by sign language, and I suggest that the hon. member for Vancouver Quadra continue with his speech.


Some hon. Members:: Hear, hear!


Steve Eugene Paproski: Go shake your head behind the curtain. What a jerk!


William Hillary (Bill) Clarke: Thank you, Mr. Speaker.
May 27, 1976


Harold Thomas Herbert: Mr. Speaker, on a point of order, there was more than one no, but apart from that I just point out that the reason we are not acceding to the request is the misuse which has been made by the opposition of the privilege to continue. On two separate occasions I have been held up, for half an hour while the right hon. member for Prince Albert (Mr. Diefenbaker) was supposed to be finishing a speech, and again today for twenty minutes while the hon. member for Shefford (Mr. Rondeau) was finishing his speech. I think the rules should be changed to allow two or three minutes for a member to finish his speech, but not a continuation for another speech on top of the speech already given.


Andrew Hogan: Mr. Speaker-


Mr. Deputy Speaker:: Is the hon. member rising on a point of order?


Andrew Hogan: Yes, I am.


An hon. Member:: He is infallible.


Andrew Hogan: Do you guys think that's funny? You get paid for it.
Despite the ignorance on the other side, Mr. Speaker, in making reference to a member of this House getting up on a point of order, and making religious overtones, I want to protest strongly that the rules as I have seen them used as a result of gentlemanly courtesy in this House ought to be extended to hon. members when they go overtime for a few minutes, and even though there was an abuse by an hon. member who has served as a prime minister of this country, and so on, that should not be a reason to stop somebody from having a few extra minutes, especially when we consider that Tuesday night we sat here for an hour and a half while outside the whole thing had been given to television and the press before hand, and a big farce was made of this parliament. Let the man go on for a few minutes.


Some hon. Members:: Hear, hear!


Mr. Deputy Speaker:: Order, please. I am given to understand that unanimous consent was given, and the only member who seemed to have opposed in time was an hon. member who shook his head. Only after the Chair recognized the hon. member for Vancouver Quadra (Mr. Clarke) so that he could complete his remarks did somebody stand up and raise the question again.
Rather than hon. members asking the Chair to read the minds of hon. members on both sides of the House, I think it would be very much more simple if we would allow the hon. member to complete his remarks within the next few minutes, and then we can proceed to another hon. member. At the same time I understand that some members might complain about some unanimous consent that they might have given in the past, or even this afternoon. But this is their choice and their responsibility. The Chair should not be put in a position where it has to decide how much reasonable time should be allowed to another member to complete his remarks. If consent is given to allow the hon. member to complete, I am sure the privilege has never been abused, so I think the hon. member for Vancouver Quadra should be allowed to complete his remarks.
The Budget-Mr. O'Connell


William Hillary (Bill) Clarke: Mr. Speaker, I should like to inform hon. members opposite that I would have been finished several minutes ago if I had been given the opportunity. As far as the deputy House leader for the government is concerned, I would simply say that next time he should shake his head a little louder.
I was going to read two short paragraphs which I thought were significant, Mr. Speaker. One was a statement made by the Prime Minister in January this year before the Canadian Club in Ottawa. I should like to compare it with the statement made a few days later in the National Diet in Tokyo by Prime Minister Miki.
The Prime Minister said:
The most pressing reality is inflation. The most urgent national need is for all of us to co-operate in making sure that our anti-inflation program works. An essential part of the program is to search for ways to make the economy work better in the future .. .ways which will prevent a serious recurrence of inflation, promote healthy growth, reduce unemployment, and reduce the need for imposed controls.
In the same month Prime Minister Miki of Japan said:
We are surrounded by many pitfalls, recession, unemployment, and increasing prices. But we must promote economic development without inflation, without stumbling into any of these pitfalls, and we are determined to achieve this goal, without resorting to autocratic economic controls, by liberal and democratic means based on intelligence, forbearance and co-operation, of the government, corporations, labour unions and individual citizens.
I would end my remarks by saying that the problems facing these two great countries are similar. I think it is interesting that the Prime Minister of each stressed cooperation. It is obvious from this budget that the Government of Canada does not intend to seek co-operation in a meaningful way. That is evidenced by the fact that it announced cuts in expenditures, but in fact expenditures are going up by 16 per cent.


Some hon. Members:: Hear, hear!


Hon. Martin O'Connell (Scarborough East):: Mr. Speaker, it is a pleasure to follow the hon. member for Vancouver Quadra (Mr. Clarke). In my remarks I should like to refer to what appear to me to be some of the general questions arising at this time on the matter of economic management and I am going to include, to some extent, social management.
Before getting into that I want to add my words of congratulations to the Minister of Finance (Mr. Macdonald), and I want to do this, in a broader context than on this budget alone. The budget has, I think, been accepted by the public as pretty finely tuned to the needs in the economy of today. The general acceptance of it and the fact that it has been described by some as a neutral budget is in itself testimony to the broader economic policies set in motion by the minister and the government eight or ten months ago. To the extent, and I believe it is a significant extent, that the minister and the government have their role in managing the economy, the course has been well set, and this budget is not required to alter it in any significant way. I offer my congratulations to the minister on a general economic management role that I think is being carried out very effectively.


Some hon. Members:: Hear, hear!

May 27, 1976
The Budget-Mr. O'Connell


Martin Patrick O'Connell: It is at that level that I should like to talk about some economic questions. I want to do it in the shadow, one might say, of the constitutional discussion that is again in front of us.
Some people look upon the shared-cost programs-the DREE type of program where the federal and provincial governments are quite closely interwoven in their economic and social activities-as reflecting intrusions of the federal government into provincial spheres. Other people might say there is so much ambiguity in our constitution that it invites this kind of intrusion and what we need is a constitution that has more clarity in it; that we want to get it back to Canada to change the respective legislative responsibility of the two levels of government; that we want to amend sections 91 and 92 to place the fiscal resources in the hands of those who have certain legislative responsibilities and, perhaps, change the whole level of responsibility. I am one of those who does not believe the latter course is necessary. I think the ambiguity itself of the constitution is one of the benefits of the Canadian Constitutional process for it permits the process in which the political dynamics are more important than the nice legal questions that arise when a constitution is clearly set out. That is a general reflection, Mr. Speaker.
When one discusses these questions in terms of the shared cost programs one finds that today there is the federal desire to put a cap on some of the programs. I am going to use the word capping to refer to the federal and, I suppose, provincial desire to bring some general control to the open-ended character of the shared-cost programs.
The other approach is for the provinces to say, "We want you to transfer tax points to us and let us clarify our jurisdiction; ours is the health jurisdiction; ours is the educational jurisdiction; give us the fiscal resources; let us disentangle ourselves from this rather ambiguous circumstance of shared costs."
We all know too well the arguments about pre-empting provincial priorities for me to try to repeat them here. I want to suggest that the capping process hopefully will succeed in bringing expenditures under control without leading to the disentanglement and the transfer of tax points to the provinces, since it is really the provinces with the greatest incomes where a transfer of tax points, one percentage point, for example, will yield the greatest revenues and that we are likely as the parliament of Canada to lose the capacity to perform the role of the parliament of Canada in inter-regional equities, was through the DREE program, for example, as through other shared-cost programs, and also the role of inter-personal equities through various programs that some would say are more logical in the provincial jurisdiction, such as, for example, family allowances.
I should like to make an argument to the House that capping is the right expenditure policy to follow, that it should not lead the parliament of Canada to agree to the disentanglement approach that some of the stronger provinces are seeking.
If we are to stay with the shared-cost approach, an approach permitted by our constitutional ambiguities, then we owe it to the provinces to make changes and not

maintain a rigid stance. And here I criticize the government stance, as I understand it. It seems to me that if present legislation means that we shall have to put caps on shared-cost programs, we ought to be prepared to consider closely relevant legislation.
In introducing programs we have laid down rigid national standards to which we say the provinces must adhere. That is to say, we have asked the provinces to participate in high cost programs, when lower cost programs which would not be cost shared may have been available to the provinces. We are, in that sense, by passing rigid legislation, forcing on the provinces high cost programs which do not seem appropriate in light of over-all national policy. Instead of putting a cap on such expenditures would it not be better to introduce more flexible programs of the kind I mentioned? Would that not be more advantageous than puting a cap on expenditures?
I think, too, that capping, or tying these expenditures in areas of the national economy to the percentage increase in the gross national product obliges us to respond to provincial overtures for greater provincial participation in or influence on national economic policies. Surely if we have drawn provinces into social programs in fields of health, hospitalization, education and other fields which require high expenditure flows, we should give the provinces some assurance that the economic policies of the government will lead to economic growth and, therefore, that tax yields on provincial resources will be great enough to permit the provinces to meet the growth of their social programs. I say, therefore, that more than capping is required.
We need a closer interweaving of federal and provincial economic and social policies. I would add, and I am thinking in terms of the post-control period which is now being discussed, that there must also be a greater involvement in policy-making of the major elements of the economy, including the labour movement, the industrial sector, and the agricultural sector. Let us in general say that we must adopt a different approach from the one we adopted in the past when we thought too much in terms of the federal-provincial approach and neglected other elements of the economy.
All this is possible because of the ambiguities in our constitution. These areas are not so clearly spelled out that we can say that they are confined within certain jurisdictional boundaries. Our constitution makes possible a planning process under which some programs are centralized in one period, and decentralized in another. It permits a shared approach to problems of national significance and permits the government to play a role in equalizing income as between one region and another.
Our DREE programs are perhaps the clearest model of this process involving a sharing of policy formulation and management. Perhaps such programs will not do as models for other areas of concern, yet we should stop to consider what is taking place under DREE by virtue of the ambiguities in our constitution. One sees the provinces involved in the administration of programs; at the same time policy is developed jointly with the federal government, as is the management of some programs. I trust hon. members will agree that this is not happening because some provinces are fiscally weaker than others and have therefore allowed the federal government to act in areas under their jurisdic-
May 27, 1976

tion because they are weak. Instead we should see in such examples signs that it is possible to undertake, federally and provincially, joint planning in these areas.
I shall now raise what may be a heresy on my side of the House and ask hon. members to consider whether, when they talk about patriating the constitution, they are prepared to bring it back with the addition of a rigid amending procedure which allows various regions of the country a veto. It is possible that unanimous consent would be needed to amend sections 91 and 92. That might make no sense, until we remember that our history and experience show that these things do not matter all that much. Yes, there is in that ambiguity-I use the word again-room for us to come to a consensus through the political process. In that way we can develop programs which meet national concerns and which are sometimes under federal and sometimes under provincial jurisdiction.
Having levied criticisms at the federal government for not seeing this process as a two-way street, and having suggested that we are prepared for the sake of national objectives to participate in DREE programs, and that the provinces by allowing us to participate are allowing us to share in the management, development, and planning of policies which fall under provincial jurisdiction, I now ask are we prepared to let the provinces play a bigger role in over-all economic planning?


An hon. Member:: That is a very good question.


Martin Patrick O'Connell: Can we reach our social objectives by following that route? Perhaps we could respond to the opening the Minister of Finance gave us in his budget speech when he suggested that perhaps we might adopt a new approach to the budgetary process, and approach different from that of the past. I hope and trust that he was talking not only of secrecy in the formulation of the budget but also of greater federal-provincial collaboration, and of collaboration by other elements in the economy which play a necessary role. If there is any reluctance in this regard surely it is a reluctance of the federal government. We must ask ourselves why is this so?
Does the government feel, having followed for the last 40 years the prescriptions of the Keynesian approach to economics, that it cannot devolve the responsibility for fiscal resources to the provinces? Is that the reason? Or has the government felt that so great is its responsibility for managing the economy that it cannot permit the intrusion or intervention of provinces in the development of general national policies? In this regard let me allude to the industrialization of western Canada, and to the kind of policy which might emerge if there were greater provincial input in that particular area.
I now wish to refer to government revenues. Before me I have a table which shows revenues by level of government before and after intergovernmental transfers on a national accounts basis. If we go back 25 years to 1950 we find that the federal government's share, after intergovernmental transfers, was 61 per cent. Today that figure is 40 per cent. Clearly there has been a significant drop in the federal government's share of revenues, from 61 per cent to 40 per cent. In the same 25-year period the provincial share of revenues rose from 22 per cent, in round numbers, to 39 per cent.
The Budget-Mr. O'Connell
Is our reluctance based on the fact that we feel we need all the control that is left at the margin so that the leverage we do have in fiscal and monetary terms does not have to be over-utilized in order to get effects on the national economy to perform a stabilization of growth? I do not think that is a satisfactory argument. However, there may be some validity to it.
It seems that the way out of the dilemma, if there is one, is to involve the provinces and other segments of the economy, as the Minister of Labour (Mr. Munro) is attempting to do in his tripartite Council to involve them in the process of policy development. I am sure it would be performed in a responsible way so that the provincial fiscal policies would be adjusted to some extent with national policies. The social policies at both levels of government could be in accord with some consensus as to the capabilities of the economy from time to time and the appropriate policies which would enlarge those capabilities, which must be both levels of government. The federal government cannot do it on its own nor can the provinces on their own.
What one sees happening is that over the past 25 years where we have seen a dramatic shift in the control of revenues between the two levels of government, the total spending of the state has risen dramatically. I have here a statistic that is important for the case I am trying to make-total expenditures of all levels of government as a proportion of the gross national product over 25 years. In 1950, 21 per cent of the gross national product was spent by the three levels of government. Today it is 41 per cent. Therefore the state as a whole plays a much larger role in the national economy.
The federal government's leverage in spending has been a reducing share while the others have grown, it might be argued from the point of view of a reluctant federal government to see more provincial participation in policy making. It might be argued that the provinces have so much control over fiscal resources now that they could frustrate national economic policies. They do have that leverage, but what they are asking for is to get into the national policy making where they could play a more responsible role than if we disentangle.
If we say, "Here are some tax points, go your way, this is your jurisdiction". I do not think that would not serve the best interests of the country as a whole because the problems arose in a comprehensive context. They arose in different ways in different regions. Therefore we must be implicated as a national government and they must be implicated because of their jurisdiction.
As I see it, the approach to the post control period lies in the fact that problems are more comprehensive. There is greater uncertainty with regard to policy because of the great degree of change and more interrelatedness between one thing and another.
We can only meet these difficulties by developing an institutional framework for a more interwoven process. We have a constitution that has sufficient ambiguities to permit this. We have experience in such programs as DREE plus the federal contribution to education, medicare, and hospitalization. We have all that background to guide us.
13924

The Budget-Mr. Andre
We have needs that involve both levels. The plea I make to the minister is that he not fall for disentanglement. Do not go that route. Instead, have an institutional structure that will permit capping to be the right process. The price is to make our legislation more flexible so that programs can change. The provinces should be able to choose lower cost programs over the most expensive ones because they happen to be cost shared. That would bring in a process of much greater involvement of all levels of government. In my opinion the problem in the past has resided in a rather reluctant federal process.
I again congratulate the Minister of Finance for opening that corridor, as it were, giving us that opening through saying I would like to look at a different approach. I hope that other members of the House will agree that it lies in federal-provincial action rather than disentanglement.


Mr. Harvie Andre (Calgary Centre):: Mr. Speaker, I wish to begin by congratulating the hon. member for Scarborough East (Mr. O'Connell) on his address. I was particularly interested in his latter remarks with regard to increased co-operation in an institutional way between the federal and provincial governments. He has brought to the attention of the minister and the House a very interesting and useful concept.
The past few years have seen the growth of regional difficulties and divisions within this country. This has caused a great deal of concern to a lot of thinking Canadians. I share many of the views of the hon. member for Scarborough East. This arises from the fact that I have considered this particular problem and possible ways of arriving at a solution.
One notion that intrigues me is the possibility of an institutionalization of the federal-provincial conference in a manner that might work toward accomplishing the sorts of goals the hon. member has brought to the attention of the House. I notice the minister paid attention to that address. I hope that tonight has seen the germination of an idea that will grow, bringing with it political institutions in this country that will better serve the needs of Canadians.
I am sure this is a first for me. After congratulating one member opposite, I move to congratulate the Minister of Finance (Mr. Macdonald) on one part of his budget. In particular I am referring to the amendments to the Income Tax Act as they apply to individual taxpayers investing in the oil and gas industry. This is in reference to the principal business test.
It may be of value to outline a bit of the history of this particular aspect of the Income Tax Act and the effect it has had on this country. There is a lesson there that we would do well to learn in order to prevent similar mistakes in the future. The Income Tax Act rightfully provides that when filing an income tax return and paying income tax, one must consolidate one's income. Otherwise someone who makes, say, two incomes of $5,000 from two separate sources and files two separate returns would pay less than the man who made $10,000 from one source of income, which would be unfair. That applied almost universally as a principle thoughout the Income Tax Act with one solitary exception, and that had to do with the oil and gas industry.

In the oil and gas industry, if one formed a company and drilled an oil well and the hole turned out to be dry, that was an expense which could be deducted from one's income if one were in the oil industry. But if one were not in the oil industry as a principal business one could not deduct that expense from business income. This meant that fresh capital for the industry had to come from outside sources. In this respect Canadian law was unique, at least as far as developed countries were concerned. It had no equivalent in the United States or in Europe. The result was that Americans came to drill wells in Canada. Doctors, lawyers, those with discretionary income could use pretaxed dollars for this purpose, but Canadians could not.
This aspect of Canadian law more than any other single aspect is responsible for the oil and gas industry presently being 90 to 95 per cent foreign owned. It has been a source of grievance on the part of the oil industry for as far back as anybody can remember. It has been a grievance felt by the people of Alberta as far back as anyone can remember. Delegation after delegation came to Ottawa to seek amendment to this law. There are scores of examples of geologists coming up with what is called, in the terms of the trade, a "good play", seeking people willing to invest, but finding it difficult to interest Canadians, or, to put it in a more positive way, finding it easier to attract Americans to invest, with the result that a number of American millionaires were created-American owners of Canadian oil and gas businesses. This situation has been with us these last 25 years and, as I have said, it is the single most important reason for our oil and gas being largely foreign owned.
Finally, in the budget last Tuesday the minister removed that restrictive provision, and for doing so he deserves the thanks of all Canadians because it is a move which is long, long overdue. It is a temporary provision as matters stand but I am certain that after three years of examination the finance minister, whoever he may be, will realize that this was a positive step and will make it a permanent part of our taxation system.
My hon. friend from Vancouver Quadra raised the question of the application of development and acquisition expenses in regard to the principal business'test. This is an area which warrants examination and I am hopeful the minister will look into that aspect of the provision and see fit to improve it so as to place Canadians on an equal footing with nationals of other countries when it comes to investing in their own industry. This makes such good common sense that I am at a loss to understand why it took so long for the government to come around to that point of view. I notice that the minister has departed and perhaps that is appropriate since I have just voiced the last compliment I intend to pay him, maybe for a long time. There are other features of the budget which are far less laudable.
One most important omission as far as I am concerned is the lack of any measures addressed to Canada's outstanding trade deficit. "Outstanding" is almost too mild an adjective to apply to our trade deficit in manufacturing, in high technology, because in 1975, the last year for which figures are available, it amounted to $8,400 million, an astronomical figure. Had it occurred in any other country in the western world it would have shaken the govern-
May 27, 1976

ment; it might even have brought it down. Think of what that represents in jobs. Think of what it represents in terms of the capacity of our economy. That sort of trade imbalance is what caused the government of Britain to bring in the draconian measures to which Britons have been subjected, measures which have included devaluation and currency controls, as well as other forms of control.
The mere existence of this horrendous trade imbalance has caused a considerable number of Canadians, more than just a few, to examine their personal portfolios-I am speaking now of those Canadians who have a few dollars invested-from the point of view of transferring their assets abroad before the government is forced to impose currency control to prevent such transfers. This feeling is abroad in Canada based on the figures which have been published, and it is startling to find that the government has failed to address itself to this problem with positive measures intended to reverse a disastrous trend. The figure I gave was for 1975 but it reflects a five or six year trend which is devastating in its implications. Mr. Speaker, may I call it ten o'clock?



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. David Orlikow (Winnipeg North):: Mr. Speaker, two nights ago the Minister of Finance (Mr. Macdonald) brought down his budget. It was at best what the economists call a neutral budget. It was neutral in the sense that the minister saw no reason to cut taxes in order to give Canadians more purchasing power or to indicate any intention on the part of the government to begin a program of public works which could create jobs in large numbers.
It was, to say the least, a surprising budget in view of the fact that unemployment for the month of April, the last month for which we have figures, stood at a 15-year high. The national employment rate jumped sharply to 7.4 per cent of the work force during April. According to Statistics Canada, 769,000 people were out of work, the highest number of unemployed and the highest rate, seasonally adjusted, which Canada has seen since the year 1961.
The only two provinces in which the unemployment rate did not rise in April over the month before were New Brunswick and Manitoba. In British Columbia the rate rose to 9.7 per cent. In Ontario it rose to 6.2 per cent, and in Quebec to 8.3 per cent. In Nova Scotia the rate increased to 9.1 per cent. Newfoundland had the dubious honour of having the highest rate of 14 per cent. That unemployment
Adjournment Debate
rate is particularly serious for the young people, the students.
According to studies completed by the Department of Manpower, last year the unemployment rate among students was 10 Vi per cent. That was at a time when the unemployment rate for all Canadians was much lower than it is now or will be this summer. Last year close to I'A million young people, students, were looking for jobs at some time during the summer; 10 Vi per cent of them were unemployed during the summer at a time when the Government of Canada had established programs which provided well over 50,000 jobs for students who were looking for work.
This year we have seen the end of the Opportunities for Youth Program and the LIP Program. We have also seen the end of most of the programs which the Government of Canada operated in other years. This year the government proposes to hire not more than 12,000 students, a decrease of more than 30,000.
The minister's answer to my plea was that the government is working with private employers and is encouraging them to hire more students than they hired in other years. I am sure the government will try. I am sure the public servants will work at that, but at a time when unemployment is at the highest rate at which it has been for 15 years employers will not be in a position to give much help in this way. It is obvious to me this is one more instance of government bungling.
The concern of the government about inflation is so great that no attention is being paid to the serious problem of unemployment. The Globe and Mail reported a few days ago that the Department of Manpower and Immigration had in fact realized the gravity of the situation and had worked out very detailed and complete plans for job creation programs, programs which would employ somewhere between 100,000 and 200,000 of the people now unemployed. Of course such programs would be expensive. The department has estimated that such programs would cost $1 billion.
I do not suggest for one moment that $1 billion is a small amount of money. However, we must realize that the Government of Canada last year had to subsidize the unemployment insurance fund to meet the claims of those people who were unemployed and eligible to draw unemployment insurance by an amount of $lVi billion. This is money that was collected in the form of taxes, to be paid to people who were not working. That seems to me to be a form of insanity. Surely it would be far better that people who want to work and are able to work should be working at productive jobs. There are many things which need to be done in Canada, there are people to do the work, and there are projects which need doing.
I urge the government to stop focusing its attention on the problem of inflation and to begin to pay attention to the very serious problem of the unemployed, particularly of the unemployed students who need jobs this summer if they are to go back to their studies this fall.


Mr. Arthur Portelance (Parliamentary Secretary to Minister of Manpower and Immigration):: Mr. Speaker, as the active student population is expected to stand at 1.3 million this summer, the federal government encourages
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May 27, 1976
Adjournment Debate
the private sector to hire students during the summer, as temporary employees.
In the past, the private sector used to provide 85 per cent of the jobs to students during the summer. In order to encourage Canadian employers to hire students, the Department of Manpower and Immigration is organizing an advertising campaign whose theme is "Hire a Student". We sought the cooperation of five major Canadian banks which agreed to display our advertisements in about 6,000 branches throughout the country. The purpose of this campaign is to urge employers to hire students for the whole summer or on a temporary basis. This program has been broadened for the past years without however any increase in costs. We managed to save money by taking up last year's campaign, which enabled us to spend more money on advertising in the medias, thus increasing the diffusion of publicity material.
Moreover, it is expected that our network of some 300 manpower centres for students across Canada will contribute to finding jobs for about 200,000 students. The staff in those centres will directly contact prospective employers and urge them to hire students, either for the whole summer or for casual employment. In this respect, the first reports indicate an increase in placements made by manpower students' centres amounting to 54 per cent in some areas while the average increase rate reaches over 8 per cent.
The Minister of Manpower and Immigration (Mr. Andras) has personally written his provincial counterparts requesting that they do their utmost, in spite of the present budget cuts, to create as many summer jobs as possible. Canadian provincial authorities are expected to spend some $48 million to create 60,000 jobs.
Federal government action is two-fold: 1): The students' activities and summer employment program, within which eight federal departments administer 18 specific programs which make it possible to hire 12,000 students for a total cost of $24 million and to involve 109,000 people in volunteer work; 2): Direct hiring of students by federal departments to substitute for permanent staff on vacation or expand their normal activities during the summer months. However since funding for this program comes from the regular resources of each department, it is difficult to assess the total cost of the direct hiring of students. In September 1975, the various departments provided for the creation of 10,000 jobs in 1976, for a total cost of $17 million.


AIR CANADA-REQUEST FOR INVESTIGATION OF FINANCE BRANCH AT WINNIPEG BY AUDITOR GENERAL
A. Daniel McKenzie: Mr. Speaker, over the last couple of weeks I have been requesting an investigation into the Air Canada finance branch in Winnipeg and an assurance that the finance branch will not be moved to Montreal. I have received some rather ridiculous answers from the Prime Minister (Mr. Trudeau) and from the Minister of Transport (Mr. Lang). The Prime Minister stated that the government should not run one of its Crown corporations from the floor of the House of Commons. I certainly agree with that. If Air Canada appeared before the Standing Committee on Transport and

Communications on a regular basis, then we most certainly would not have to discuss this Air Canada operation on the floor of the House. But Air Canada has not been before the standing committee since the last parliament, in 1973, and thus this is a lot of utter nonsense.
I would also like to point out that we recently spent almost $400,000 doing an Air Canada inquiry report on the operations of Air Canada, and all through the whole document the problems within the finance branch in Winnipeg and problems of communications right through the whole Air Canada operation are pointed out. All we can assume is that this has been dumped into the garbage and that the only thing which has been done is that the former Air Canada president has resigned and we have a new president. I certainly hope we get an explanation from the parliamentary secretary tonight as to why this $400,000 study has been completely ignored by the government. I see that there is a smirk on the face of the parliamentary secretary. Obviously he is picking this up from his minister, who is always quite jovial about the matter.
Yesterday we found out that the president of Air Canada, Mr. Taylor, said that he is going to be applying for an air fare increase. There is an absolute catastrophe in the Air Canada finance branch in Winnipeg, a complete breakdown in the auditing system, a loss of millions of dollars, and he has the utter audacity to say he is going to ask for a fare increase. I have taken some steps myself because I do not expect the government to do a damned thing about it. I have written to Mr. Benson, the head of CTC, and requested that he not allow any more fare increases. I asked him to review the last one. Obviously the CTC was not aware of the financial fiasco and the financial mess in Air Canada, and had he known, perhaps Mr. Benson would not have allowed the last increase, which took place on April 18.
I have received much information from CALEA members with regard to the financial breakdown, and it would appear that they are more concerned about Air Canada's financial problems and its operation than the government and Air Canada management are. I would just like to point out some of the problems they are experiencing. Here is an example. This is a document which came out of the Air Canada office at Heath Row, London, England. That office points out the following:
Several times a year we have been traced and on one occasion threatened with legal action by our Grosvenor Hill landlord lor non-receipt of quarterly rental payment (14,000 pounds). Last year the manager, disbursements, was provided with copies of twenty representative letters from suppliers all relating to their need to have invoices paid within ten days or 'cash on delivery'. Cash flow is a very real problem in the U.K. firms today.
The information that office received from the Winnipeg finance office was as follows:
I understand from the accounts office supervisor that we cannot expect any positive action for the next 12-18 months as he has been informed that the delay is due to a backlog of programming time in the C & SS branch in Winnipeg.
What an embarrassment to an Air Canada office overseas. They cannot pay their bills and, as I pointed out about six weeks ago, this Air Canada office was threatened with having its gas and light cut off because the finance

branch in Winnipeg could not get money over there to pay the bills. This is a lot of nonsense.
In addition, billings to Air Canada from other airlines do not receive a complete audit. Items billed for $75 or less are assumed to be correct and paid without question.
Air Canada's own internal auditors endeavoured to audit the refund bank drafts account in 1975. This account is not less than $2.5 million per month, about $30 million per year. They finally gave up, and that account remains unaudited since 1972. Therefore over the past four years a $120 million account has been in question. When I bring matters like this up, what do I get? I get a snickering grin from the Minister of Transport and he says that he trusts Air Canada to do a great job. Well, I do not think it is doing a great job. I also wrote a letter to the Auditor General asking him to get his staff in there and to get this ungodly mess straightened out.
In the CALEA members' bulletin dated September 12 they mentioned that there was at that time a backlog of
250,000	unreported Air Canada tickets in the ticket inventory and control section of the revenue accounting department. Those are tickets sold by Air Canada sales offices, travel agents, commercial accounts, etc. Those are the very reasons why Mr. Taylor should be before the standing committee, so that we can ask him and get this mess straightened up rather than putting out news releases to tell us that he needs a fare increase.
This is one of the highlights of the reports from CALEA. When we hear corporate management talk about a $90 million loss in revenue this year, and when we see load factors reported that refuse to accommodate such a large loss, it takes little intelligence to determine that something is wrong.
It has been much belaboured by the media that Air Canada has an antiquated "Mickey Mouse" accounting procedure-


Mr. Deputy Speaker:: Order, please. I regret to interrupt the hon. member but his time has expired. The Parliamentary Secretary to the Minister of Transport (Mr. Goodale).


Ralph Goodale: Mr. Speaker, I do not propose to dwell at any length on the hon. member's rude, insulting, and thoroughly ill-founded allegations with respect to the status of the Estey report or the other items which are on the agenda of the Standing Committee on Transport and Communications. If the hon. member were to attend that committee from time to time, or talk to members of his party who sit on the steering committee, he might be better informed about what is going on.
In his allegations this evening the hon. member is wrong, of course. But in view of his performance on this particular issue and others in this House that is not particularly unusual.
To deal specifically with the issue that prompted the hon. member's original question, Air Canada deals with approximately 500 different commercial accounts every year, including Warnock Hersey Ltd., and the total annual amount involved in transactions with these accounts is approximately $33 million.
Adjournment Debate
A simple clerical error on the part of Warnock Hersey resulted in ticket sales reports not being forwarded for a period of several months, but when this error was discovered the matter was rectified and any outstanding amount paid immediately.
During the past few months Air Canada's finance branch in Winnipeg, has been subjected to a series of disruptive actions by its clerical workers, who are members of the Canadian Airline Employees Association. These disruptions have hampered the over-all performance of the company's finance branch. Consequently Air Canada has implemented portions of a contingency plan in an effort to maintain fair and reasonable levels of productivity. This initially involved supplementing the normal work force with management and other non-union clerical employees on a temporary basis. This arrangement is quite properly within the authority of the management of the company.
Contract negotiations between Air Canada and the Canadian Airline Employees Association, which represents the finance branch clerical workers, are currently being conducted under the guidance of a federal labour mediator. It has been pointed out to the hon. member already and repeatedly that the kind of commentary he is trying to engage in this evening on the floor of this House is not a helpful or constructive exercise.
Generally, it should also be noted that as a basic matter the management of Air Canada operations should, in the proper course, be left to Air Canada management personnel who have been employed to do that job and to do it well.


EXTERNAL AFFAIRS-CONSIDERATIONS ENTERING INTO SALE OF MILITARY EQUIPMENT
Mr. Heath Macquarrie (Hillsborough):: Mr. Speaker, on December 3, 1975, I asked the then acting Prime Minister for information on Canada's sales of military equipment. This was but one of many efforts through oral and written questions to learn the facts of this country's extensive dealing in arms.
After being on the order paper for over a year, a question of mine elicited the reply that we sold arms to 73 countries, ranging from A to Z-Abu Dhabi to Zambia. Taiwan bought arms as recently as 1974.
While the minister declared that we did not sell arms of any kind to countries in the Middle East, I found the list included Iran, Israel, Kuwait, Muscat and Oman, Saudi Arabia, Union of Arab Emirates, countries either in or very interested in the Middle East.
In reference to the Middle East one notes in the reply at page 9367 of Hansard for November 24, 1975, that Israel appears on the list for every year from 1963-1974 while the few Arab states noted are much less frequently on the market. One is struck by the fact that none of the so-called confrontation states, Egypt, Jordan or Syria, are shown as having been sold any Canadian military equipment.
In such a sensitive area and in regard to a situation of such delicacy, this seeming discrimination may be serious indeed. This is especially the case in light of the minister's

Adjournment Debate
denial that the government viewed sales of conventional arms as purely business transactions where the dollar value was the only value worth considering. Indeed the ministerial disquisition on arms sales was one of the most fascinating if totally mystifying verbal exercises I have heard in my 19 years in this Chamber. Some of the gems were, "We do have regard to sales of military equipment of all kinds in all directions"; and again: "We also have some categories that might be termed military equipment of a rather innocent character..." The minister also declaimed, "There are certain types of arms and equipment for warlike purposes that we do not supply. Many of the things we supply are not intended for the purpose of killing people." So moved was he that the sedate and normally restrained member for Prince Edward-Hastings (Mr. Hees), could not forbear the comment, "They are 'soft arms' are they?"
But while the response may have had its hilarious aspect, the subject matter is far from amusing. In absolute terms Canada ranks sixth among the world's arms salesmen, exceeded only by the U.S., the U.S.S.R., France, the U.K., and Italy. Among the merchants of death our peace-loving country is by no means in the background. Although Canadians are often accused of lacking aggressiveness in seeking world markets, we are not such shrinking violets when it comes to peddling death-dealing weaponry or related implements of military conflict.
It is very difficult to get a clear picture of what exactly is our role in the field of arms sales. We are told that much must remain secret lest the breach in confidentiality injure the competitiveness of certain Canadian firms. Because of changing formats and departmental reorganization it is not easy to obtain data on the full role of government in the process. The annual report of the Canadian Commercial Corporation is about as quantitatively informative as the average container of breakfast cereal. To those hon. members desirous of information on this very serious matter I would commend the book "Making a Killing" by Ernie Regehr, and the article in Saturday Night, volume 86, 1971, "Dealing Out Death Discreetly; The Traffic in Canadian Arms", by William Cobban.
I believe we must be more realistic and more revealing on this question. I do not think we can on this or any other question have it both ways. We cannot trot out our selfrighteous purity in the nuclear field and then sell arms of another kind to anyone who wishes to buy them, whether they be in the Third World or elsewhere. If we are to adopt the attitude that business is business and who kills whom with Canadian arms is not an issue, then let us say so. But to suggest seriously that Canada sells only gentle, kindly items of military hardware is a bit much even in this age of double talk and slick salesmanship. If our considerations are based on moral judgments and values it does not matter whether we are talking about the nuclear destruction of 100,000 people or the killing of a few hundred so-called political enemies by rifles or machine guns which were in their heyday in the second world war.
In my school days I recall a poem which reflected upon the then sophisticated armaments of the so-called civilized west and their destruction of the peoples of other areas. The author described these machines of mass killing as,
"means of death, and so may be a dagger in a damsel's hand."
I hope we will have an end to the notion that Canada sells not hard but soft, not bad but good military arms. I hope, Sir, that we will have the whole matter examined, and check out the relationship of principles to pocket books.


Miss Monique Begin (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, this subject is of great concern to all Canadians, and quoting Saturday Night, with all due respect to the magazine, is making a farce of providing proper information on this most important and serious matter of arms sales.
I suggest that the hon. member for Hillsborough (Mr. Macquarrie) cannot be serious when he suggests that arms are necessarily for killing. He quoted the House leader who answered in the absence of the Secretary of State for External Affairs (Mr. MacEachen) and who, in all good faith, gave as many details as he could. The mixing of answers made to the hon. member for Fundy-Royal (Mr. Fairweather) and taking them out of context is, in my opinion, tantamount to intellectual dishonesty.
It is obvious to anyone who takes five minutes to think about it that there are commercial sales of equipment that are not military in nature, not specifically designed for military purposes or that do not have a military function. For example, there is the laser, not to mention almost the complete electronic industry.
I find the rhetoric of the hon. member for Hillsborough nothing more than words; very moving in the way he presents them but absolutely empty. What is worse, they are misleading the Canadian public. It would have been more helpful if he had asked questions about the statistical categories under which fall the so-called sales of arms to foreign countries.
It is important to note that we should distinguish three categories of arms. The first is weapons and ammunition; then military support equipment; and then commercial equipment which may have a military application. I underlined what this might be. The joke of the hon. member for Prince Edward-Hastings (Mr. Hees) was really not appropriate in the debate on December 3, 1975.
In general terms our policy is based on the principle that weapons and ammunition and military support equipment will not be supplied to countries considered as representing a possible military threat to Canada; to countries involved in hostilities; to countries where there is an imminent threat of hostilities; to those countries to which U.N. resolutions forbid the export of such equipment, or to regimes pursuing policies contrary to Canadian standards and practices.
I will finish with one additional piece of information, although we should be discussing this question at length. The fact of a sale to an individual country may indicate either that the product sold was military in nature or that the end user would be the military in that country even though the equipment itself was of a purely commercial nature. Some of the countries mentioned by the Minister of Industry, Trade and Commerce (Mr. Jamieson) fall into that category.
Motion agreed to and the House adjourned at 10.29 p.m.

Friday, May 28, 1976