1976-11-03

ROUTINE PROCEEDINGS


Mr. Dean Whiteway (Selkirk):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. Since federally subsidized housing does not fall within the jurisdiction of provincial rent controls and in view of the injustices arising from low income earners being forced to pay rent increases far in excess of permitted wage increases and in excess of the maximum rental increase limitations established for private sector rental housing, I move, seconded by the hon. member for St. John's East (Mr. McGrath):
That the Minister of State for Urban Affairs take immediate action to ensure that all federal programs involving rental housing comply with the rental control legislation in their appropriate province.


Mr. Speaker:: Order, please. Such 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.


CONFLICT OF INTEREST
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, in order to avoid any further possible conflict of interest cases involving members of parliament, and following the initiative taken by the Leader of the Official Opposition (Mr. Clark) in writing to members of his caucus, I move, under the provisions of Standing Order 43, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House urges the Leader of the Official Opposition to disclose to this House any possible conflict of interest cases which he becomes aware of as a result of his letter to Conservative members of parliament and, that in the interest of maintaining the integrity of members of this parliament, he make such information open and public to the Canadian people.


Mr. Speaker:: Order, please. Such 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.


CONSUMER AFFAIRS
Mr. Bill Clarke (Vancouver Quadra):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of pressing urgency. Since Canadian artists are being irreparably harmed financially by the sale of factory produced paintings advertised right here, in Ottawa, as original paintings, even though federal customs officials have refused them free entry as original works of art, I move, seconded by the hon. member for Brome-Missisquoi (Mr. Grafftey):
That this House urges the Minister of Consumer and Corporate Affairs to investigate and lay charges, if warranted, against persons advertising as original works of art paintings which are in fact produced on an assembly line basis.


Mr. Speaker:: Such 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.


CONFLICT OF INTEREST
Mr. Walter Baker (Grenville-Carleton):: Mr. Speaker, I move, under the provisions of Standing Order 43, as a matter of urgent and pressing necessity:
That this House expresses its thanks to the Leader of the Opposition for the direction he has given to this House and regrets that other party leaders have not seen fit to follow his lead.


Some hon. Members:: Hear, hear!


Mr. Paproski:: Goodale and Pierre said no.


Walter David Baker: Try again, fellows.

November 3, 1976
Les Terrasses de la Chaudiere SOCIAL SECURITY


SUGGESTED PAYMENT OF OLD AGE PENSIONS TO WIDOWS, SPINSTERS, WIDOWERS AND BACHELORS BETWEEN AGES OF 60 AND 65-MOTION UNDER S.O. 43
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, my motion relates to a matter of serious urgency to many Canadians between the ages of 60 and 65, as members in all parts of the House realize. 1 therefore ask leave under the provisions of Standing Order 43 to move, seconded by the hon. member for Winnipeg North (Mr. Orlikow):
That this House urges the government to introduce without delay an amendment to the Old Age Security Act to provide for the equivalent of the spouse's allowance to be paid as well to widows, spinsters, widowers and bachelors between the ages of 60 and 65, provided they are out of the labour market.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


PUBLIC WORKS
[Stage Direction]
PROPOSED DELAY OF LES TERRASSES DE LA CHAUDlfiRE PROJECT-MOTION UNDER S.O. 43
Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, I rise on a matter of urgent and pressing necessity pursuant to the provisions of Standing Order 43. Whereas the economy of Canada is being detrimentally affected by government construction or participation in grandiose projects at a time when essential research and development and other more worthwhile endeavours are being starved for lack of funds, and whereas the Government of Canada has opted to lease at tremendous cost 1,825,000 square feet of office space in a project recently commenced in the national capital area called les Terrasses de la Chaudiere, I move, seconded by the hon. member for Capilano (Mr. Huntington):
That at a time when surplus office space in existing facilities is a very real possibility, particularly in view of decentralization initiatives by government, which have a lot of merit, that the government forthwith modify or postpone this ill-advised and poorly conceived arrangement for additional office space, and by so doing, save the taxpayers of Canada a sum in excess of $600 million.


Mr. Speaker:: Standing Order 43 requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


LABOUR CONDITIONS
Mr. Benno Friesen (Surrey-White Rock):: Mr. Speaker, I rise under the provisions of Standing Order 43. In view of the fact that the Bank of Montreal practices discrimination in refusing to hire people who suffer from diabetes, and in view of the fact that those who suffer from this disease have a statistically proven better work record than many other people, I move, seconded by the hon. member for Provencher (Mr. Epp):
That the Minister of Labour commission an investigation into the hiring practices of the Bank of Montreal and that the Minister of National Health and Welfare who is at present launching a campaign against alcoholism, also launch an information campaign encouraging the victims of diabetes and related disorders to withdraw their funds and all financial dealings from the Bank of Montreal.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADIAN INTERNATIONAL DEVELOPMENT AGENCY
Mr. Douglas Roche (Edmonton-Strathcona):: Mr. Speaker, I rise to present a motion under the terms of Standing Order 43. In the interests of good management of government and to correct the serious internal confusion in CIDA, a $1 billion agency, I move, seconded by the hon. member for Wetaskiwin (Mr. Schellenberger):
That the Prime Minister immediately implement his own answer to a question of the Leader of the Opposition given at page 625 of Hansard, that a minister be named expressly for the purpose of supervising CIDA.


An hon. Member:: Joe Guay.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. Standing Order 43 requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.
November 3, 1976



ORAL QUESTION PERIOD


[Stage Direction]
LES TERRASSES DE LA CHAUDlfeRE PROJECT-REQUEST FOR INQUIRY AND REPORT
Mr. Ron Huntington (Capilano):: Mr. Speaker, I note that the Minister of Public Works is in the chamber. I would like to ask him if at this time he would give to the House or table in the House the details of the report that he asked for from the members of his staff in the Department of Public Works. Can he advise if he is satisfied with the agreement that was made with Campeau on the Les Terrasses de la Chaudiere project and whether he considers it a good one for the people of Canada?


Hon. Judd Buchanan (Minister of Public Works):: Mr. Speaker, basically the information to which the hon. member makes reference was not in the form of a report. It was a considerable quantity of information relating to Les Terrasses de la Chaudiere project as well as phase three and phase four in Hull and the York Olympia project here in Ottawa. I am still going over some of the details of this information. I am not yet in a position to comment on the final parts of the question.


Arthur Ronald Huntington: Does the minister not agree that the taxpayers of Canada are entitled to a full and open inquiry on this contract, particularly in view of its magnitude, as well as the negotiations and circumstances leading to the contract? Can he assure the House that documents and files in his department pertaining to the Terrasses de la Chaudiere deal are not being removed in order to obscure the situation with regard to a subsequent investigation on this project?


J. Judd Buchanan: Mr. Speaker, to date my investigations have not lead me to believe that there was any wrongdoing, as suggested by the hon. member. Until I am convinced that there was a shred of that type of activity, I do not see the reason or justification for an inquiry.


LES TERRASSES DE LA CHAUDIERE PROJECT-REQUEST FOR ASSURANCE TREASURY BOARD PROCEDURES FOLLOWED
Arthur Ronald Huntington: Mr. Speaker, I will address my final supplementary to the Prime Minister. Has the Prime Minister reviewed the circumstances leading to Les Terrasses project and can he assure the House that there was no circumvention of normal Treasury Board procedures in the negotiations leading to the signing of this contract?


Right Hon. P. E. Trudeau (Prime Minister):: As I believe 1 reported to the House a few days ago, I have already discussed this matter with the Minister of Public Works. He reported to me that he was conducting an inquiry and every reply we have had to date is to the effect that Treasury Board procedures were followed in the most normal fashion.
Oral Questions


LES TERRASSES DE LA CHAUDIERE PROJECT-TENDERING PROCEDURE-ROLE OF A. J. PERRIER IN EVALUATION OF PROJECT
Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, my question is to the Minister of Public Works. As the Department of Public Works has a tendering procedure applicable to office lease-purchase proposals, would the hon. gentleman tell us whether that procedure was followed with respect to the Campeau project, Les Terrasses de la Chaudiere, and, in particular, was the evaluation of the project carried out by a committee chaired by the Assistant Deputy Minister (Realty), Mr. A. J. Perrier, a former employee of Campeau, as was the case when tenders were sought for the Olympia-York project to which the minister has just referred, now being built on Sparks Street?


J. Judd Buchanan: There is a significant difference between that situation and the Olympia-York situation. The situation here involved a blend of Crown-owned and privately-owned land so in this case the builder-developer, or builder-lessor, actually made the submission because he owned a portion of the land with which we were concerned. To date there is no set procedure, as the hon. member implies, as far as these purchase arrangements are concerned.


Sinclair McKnight Stevens: Since the minister is reported in the press to have stated yesterday, referring to the Campeau project, that in retrospect it would have been better had the government expropriated the land and invited public tenders, would the hon. gentleman tell us whether he or the department are now considering such an expropriation with a view to either dropping the project or, at least, following proper tendering procedures before continuing any further?


J. Judd Buchanan: I think that as a matter of policy in the future, while I am minister, I should like to expropriate the land. But, again, as I said to the hon. member for Capilano, I wish to emphasize that I have found no suggestion or indication of wrongdoing in this particular case, although that was not the procedure followed.


GOVERNMENT ADMINISTRATION
Sinclair McKnight Stevens: My final supplementary is directed to the President of the Treasury Board. The Minister of Finance having stated yesterday, with reference to the Chaudiere project that an expenditure of this kind would in due course have to receive Treasury Board approval, would the minister inform us whether such approval was granted and whether he is satisfied there were no irregularities in the procedures followed?


Hon. Robert K. Andras (President of the Treasury Board):: I believe this transaction was vetted and approved by Treasury

November 3, 1976
Oral Questions
Board. I am so informed. Insofar as the propriety of what took place is concerned, I have given the matter a preliminary examination and I say again I see no ethical problems involved in it; I think it will stand examination although it is admittedly a very complex transaction.


CONFLICT OF INTEREST
John Edward Broadbent: In addressing this question to the Prime Minister, Mr. Speaker, I think it is important to note that it was only members of the Conservative Party who said no to an important conflict of interest motion yesterday. Would the Prime Minister assure the House that the government will bring forward legislation before Christmas which will make it mandatory that all members of parliament publicly declare, on an annual basis, their financial interests and those of their spouses. I have in mind a parliamentary financial interest registry of the kind established last year in the parliament of Great Britain.


Pierre Elliott Trudeau: Mr. Speaker, 1 feel compelled to remind the House of what the government has done already in this regard, more than two years ago.


An hon. Member:: Nothing!


Pierre Elliott Trudeau: The hon. member says "Nothing". He has obviously not been doing his homework.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: The policy statement was very elaborate and 1 made it myself in the House. It was a policy statement regarding conflict of interest as it concerned members of parliament generally and members of the ministry in particular. So far as the members of the ministry are concerned, I indicated the policies we were following and every member of my ministry has made a public declaration in front of a trustee.


Mr. Grafftey:: They have not, and you know it.


Pierre Elliott Trudeau: So, it is open to scrutiny whether or not ministers have complied with the guidelines that have been laid down.


Walter David Baker: Tony hasn't made his.


Pierre Elliott Trudeau: With regard to members of parliament themselves, naturally the government did not want to legislate until members of parliament had been given an opportunity to study the guidelines proposed for their conduct, part of the intention being to clarify some provisions of the present Senate and House of Commons Act which are not perfectly clear.

This statement of policy was handed to the Commons committee and to a committee of the Senate. They were some year and a half or two years bringing in a report but we now have a report from the two Houses which was received early this summer. The government intends proceeding with a new statement of policy or legislation, one I would be inclined to say which would follow a rather tougher route than some of the recommendations of the committee. But it is completely erroneous to indicate that there have been no guidelines. The government has stated its policy for ministers and for members of parliament, and it is up to members of parliament themselves to follow those guidelines or to modify them.


John Edward Broadbent: Mr. Speaker, the Prime Minister knows that I did not say in my question that nothing had been done vis-a-vis the ministry. My question pertains to members of parliament of all parties and has, of course, come up because of a very recent case involving one member of this House. I listened with care to what the Prime Minister said, but given the fact that members of parliament on both sides have to make decisions on trade policy, or on taxation policy, for example, would he not agree that in order to avoid the appearance even of a conflict of interest in such important matters it is essential not simply for the ministry but for all members of parliament, to have on record a detailed outline of their financial interests? If so, would he assure the House that the measures that he intends to bring forward will in fact go as far as those in Great Britain on this important issue?


Pierre Elliott Trudeau: Mr. Speaker, if the hon. member refers to the proposals which were made by the government in its policy statement, he will find they would involve members abstaining from making any decision or speech or taking a position in areas where they might have a conflict. As a matter of fact, these very days the House leader of the Senate is ensuring that a committee which will examine banking legislation shortly has no member on its membership who might be in a conflict of position situation. So, as far as the chairmen, ministers, the public service and the staff in our offices are concerned, all of the guidelines have been enunciated and followed. So far as members of parliament are concerned, the hon. member will remember that there was quite a large area of disagreement on both sides of the House as to what should be implemented, and that is what the government is presently studying.


John Edward Broadbent: A final supplementary question, Mr. Speaker. The Prime Minister took a long time not to answer the question. I should like to ask him this. Does or does not the government believe that it is essential to maintain at least the appearance of public integrity for members of parliament, and therefore believe that all members should declare on a regular annual basis their financial interests in the way that has been established in other democratic bodies, including that of Great Britain?


Pierre Elliott Trudeau: The hon. member insists that I am evading the question. I assure him that so far as the people who are under my control as Prime Minister in minister's offices, in the public service and in the ministry are concerned, their interests
November 3, 1976

have been declared. So far as the Elouse of Commons is concerned, I think it is up to the House of Commons to make up its mind.


Some hon. Members:: Hear, hear!

[ Translation]


INQUIRY OF THE MINISTRY
Mr. Leonel Beaudoin (Richmond):: Mr. Speaker, I would like to ask the right hon. Prime Minister a question.
Considering that the press reported yesterday that the statements recently made by the former minister of transport, who is now a Liberal candidate in the Louis-Hebert riding in Quebec, to the effect that, should Quebec choose to separate from Canada, he would fight along the sides of those who think like him, I would like to ask if the Prime Minister could advise this House whether Mr. Jean Marchand had consultations with him or whether he mentioned his intentions to him on this matter?


Pierre Elliott Trudeau: Mr. Speaker, I do not think it pertains to the House or to myself to comment on the provincial elections now in process. It is not our custom to do so and 1 do not see why the hon. member would expect the federal government to interfere with those elections. The former minister of transport now stands as a candidate in provincial elections. Being a former minister of transport, he is no longer a member of the federal cabinet.


BILINGUALISM
Léonel Beaudoin: Mr. Speaker, I have a supplementary question.
Since the current elections are of paramount importance especially to Quebecers and indirectly involve the federal government, could the Prime Minister advise the House, since they talk about teaching our children in the other language, French or English as the case may be, whether some Canadian provinces, including Quebec, have applied to the federal government for more funds for the teaching of the other language in schools?


Pierre Elliott Trudeau: Mr. Speaker, the hon. member knows or should know that for many years now the government has followed a policy which provides provinces with funds for the teaching of the second language or the other official language in the case of a minority group speaking it. 1 think the funds available in the budget for the current year amount to about $125 million. Those funds are distributed among the provinces under a formula which is also known to the House. I do not know the detailed distribution to
Oral Questions
tell exactly what amount goes to which province, but if the hon. member would put his question on the order paper, he would surely get the answer.


PUBLIC WORKS
Elmer MacIntosh MacKay: Mr. Speaker, I would like to ask the Minister of Public Works another question about the Chaudiere project. In view of his very constructive answer to the hon. member for York-Simcoe to the effect that in future he would favour expropriation and tendering procedures for vast projects like this one, and in view of the fact that this project is still in its infancy, will the minister undertake to consider very seriously reviewing this project and instituting this type of action now rather than limiting it to the future?


J. Judd Buchanan: Mr. Speaker, as I indicated in reply a few days ago to the hon. member for Capilano, this project is one where in fact a contract was negotiated over a period of 12 to 15 months and was entered into in good faith. It is my understanding that the government now stands in the position of having entered into a full and binding contract, so I would find it awkward to follow the course of action advocated by the hon. member.


LES TERRASSES DE LA CHAUDIERE PROJECT-INTEREST RATE AND MANAGEMENT FEE
Elmer MacIntosh MacKay: I would like to remind the minister that at times governments do have the power to abrogate, on a fair basis, binding contracts, as has been recently shown, and I would like to ask the minister one detailed question with respect to this project. Is it the case that this project is amortized at the rate of 11IA per cent over a period of 35 years? The project presently appears to have had no competitive bidding or supervision by government with respect to its proposed construction? Is it a fact that the Campeau Corporation will receive a management fee of 5 per cent of the total cost of this project, which will add approximately another $7.5 million?


J. Judd Buchanan: There are two parts to that question. The 11 'A per cent is only for the first 15 years, as I understand it, not for the full period of 35 years.


An hon. Member:: Does it go up?


J. Judd Buchanan: It is not binding for the full period. I am sorry, but I forget the last part of the question.


Elmer MacIntosh MacKay: The management fee.

November 3, 1976
Oral Questions


J. Judd Buchanan: I will verify that point, but to the best of my knowledge there is not a management fee. I will check that out.


THE CANADIAN ECONOMY
Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, I have a question for the Prime Minister. As West Germany has achieved an inflation rate of 4 per cent, an unemployment rate of 3.7 per cent and last year had a trade surplus of $13 billion brought about by cooperation between management, labour and government, with government giving great leadership, is the government examining the methods used in that country to see whether they could be tried here as an alternative to the government's policy of confrontation with management and labour which has produced such unsatisfactory results for our economy.


Hon. Donald S. Macdonald (Minister of Finance):: Mr. Speaker, the various methods used for arriving at an incomes policy have been a matter of scrutiny within the government and it is indeed for the purpose of achieving some national consensus on the fair share between the various elements in the community that we are having meetings with leaders of organized labour, business leaders and with other groups in the country to arrive at, perhaps not the same kind of agreement, but a similar type of agreement that the Germans have achieved in the past.


George Harris Hees: Mr. Speaker, I have a supplementary for the Prime Minister. As latest reports are that the government's chance of success with these latest approaches to management and labour are no better than during the past few years- which has been zero-does the Prime Minister not agree that it is desirable to examine the methods used by those who have achieved such very spectacular results in fields where we need to show great improvement if the economy is to continue in a viable position.


Donald Stovel Macdonald: Mr. Speaker, the hon. gentlemen is pessimistic about the reasonableness of business and labour in accepting some kind of formula for restraining the growth of inflation in Canada. I think, as to the experience of my predecessor in the spring of 1975, one should not be too sanguine in that regard, but we all stand to gain if that kind of an initiative can be successful. I would only say that in Germany where you have a social democrat government elected by the trade union movement, there is an intimate relationship between organized labour and the government of the day there which does not exist here.


George Harris Hees: Mr. Speaker, I will try a final supplementary to the Prime Minister who has ducked the first two questions. I
[Mr. MacKay.J
would say to him, as he is taking no interest in examining the very spectacular results produced by West Germany, as there are none so blind as those who will not see, does the Prime Minister ever get migraine headaches-


Mr. Speaker:: Order, please.


George Harris Hees: -from keeping his head in the sand so much of the time.


Mr. Speaker:: Order please. The hon. member for Annapolis Valley.


COMMUNICATIONS
Mr. J. P. Nowlan (Annapolis Valley):: Mr. Speaker, my question is directed to the Minister of Communications. Is the minister aware of today's application by Bell Canada for another phone rate increase ranging in 1977 between 9.5 per cent and 12.5 per cent, and will she insure that there is active and adequate consumer representation at the hearings before the CRTC.


Hon. Jeanne Sauve (Minister of Communications):: Yes, Mr. Speaker, I know about the application by Bell Canada for a rate increase based on its investment needs for the future. However, I would point out to the hon. member that there are regulatory bodies whose function is to consider the revenues of public utilities. Such bodies are specifically created to protect the consumer against unwarranted increases, in view of the fact that those companies often hold monopolies or near monopolies.


John Patrick (Pat) Nowlan: I appreciate the function of the regulatory body, but in view of the fact that we have another regulatory body that has been created because of the problems of the government in respect of the economic conditions in this country, namely the AIB, will the minister confer with the regulator and find out if there are any restrictions or adverse regulations or directives of the AIB that are affecting adversely the profit picture, the investment portfolio or the profit ratio of this company which is one of the reasons perhaps that it has to have another rate increase.


Jeanne Sauvé: Mr. Speaker, the CRTC is empowered to implement the anti-inflation program, and the measures we established to fight inflation are submitted to the consideration of the CRTC with respect to the requests it gets. Those bodies
November 3, 1976

are quite flexible because companies such as Bell Canada or others are not always subject to the normal laws of the market.


SUMMER GAMES AT ST. JOHN'S-TERMS OF COMMITMENT TO SUPPLY FUNDS
Mr. Dave Rooney (Bonavista-Trinity-Conception):: Mr. Speaker, my question is for the Minister of State responsible for sports and fitness. It concerns the summer games to be held in St. John's, Newfoundland, in 1977. In view of the fact that the chairman of the summer games committee, with the concurrence of the committee largely appointed by the chairman, has awarded the major contract for the games to a company owned by himself without public tender, can the minister inform the House whether or not the government has already made commitments which carry an obligation to provide funds for this transaction and, if not, can the minister inform the House whether or not the government intends to do so.


Hon. Iona Campagnolo (Minister of State (Fitness and Amateur Sport)):: Mr. Speaker, the Government of Canada has promised to contribute $750,000 in capital to this particular event. Of course this will be contingent upon acceptable tendering practices.


CANADA PENSION PLAN
Mr. Lincoln M. Alexander (Hamilton West):: Mr. Speaker, I should like to direct a question to the Minister of National Health and Welfare regarding the Canada Pension Plan and the provincial borrowing in that regard. In light of the fact that the preferred rate of interest on borrowing by the provinces from the Canada Pension Plan fund, except in respect of the Quebec plan, is being seriously questioned in that such a practice seems to be at the expense of the over-all investment return of pension plan assets and thus to the detriment of participants in the plan and their beneficiaries, has any agreement been reached with the provinces regarding interest rates on borrowing and has the government submitted an alternative to the present practice which can be revealed at this time.


Hon. Marc Lalonde (Minister of National Health and Welfare):: Mr. Speaker, I have tabled in this House a report of the advisory committee on the Canada Pension Plan. This report recommends several alternatives to the present system which I have indicated both inside and outside the House is
Oral Questions
indeed unsatisfactory to the Government of Canada, as well as to the contributors to the plan, and to the future beneficiaries of the plan. Unfortunately, those alternatives have not as yet received very active consideration by the provinces as yet, and I would appreciate it if the hon. member would help me convince the provinces, particularly the government of Ontario, to go ahead with a review of this matter in order to arrive at a better solution than that which we have at the present time. I might say that the Minister of Finance of Ontario has not been very cooperative in this respect because he seems to have the view, according to his declaration, that the Canada Pension Plan is among his very first objectives as a source of cheap revenue for the province, a statement with which I do not agree.


ADVISORY COMMITTEE RECOMMENDATIONS ON INTEREST EARNED BY ASSETS HELD BY PLAN
Lincoln MacCauley Alexander: Mr. Speaker, that is a cheap partisan shot. Let me ask him another question relating to the pension advisory committee report. The Canada Pension Plan advisory committee, in a report to the Minister of National Health and Welfare dated August 18, 1976, recommended that the investments held to meet plan liabilities bear or earn a fair rate of return. It further recommended that the interest rate on provincial bonds held in the fund should be brought to a realistic rate as soon as possible. I ask the minister whether the above recommendations are now government policy and because of the urgency of the matter stated by the advisory committee in this regard, as the minister indicates that they are policy, when can we expect these recommendations to be enforced by way of legislation or otherwise given the urgency of the situation?


Marc Lalonde: Mr. Speaker, I totally agree with the statement the hon. member has made from this particular report, but again I have to remind the hon. member that in order to have this particular reform put into effect I would need the assent of two thirds of the provinces with two thirds of the population which, in effect, gives the province of Ontario a right of veto on the implementation of any such change.


FISHERIES
Mr. Lloyd R. Crouse (South Shore):: Mr. Speaker, I wish to direct my question to the Minister of Fisheries and the Environment. In light of the serious social and economic problems presently facing fishermen and fish packers in Atlantic Canada, and the necessity of establishing a meaningful management plan by the industry in order to provide steady employment for our people, would the minister indicate when

November 3, 1976
Oral Questions
we can expect an announcement in this Elouse of the quotas for all areas and all species that will be made available effective on January 1, 1977 for Canada's fishermen within the economic or 200-mile zone, and at the same time will he give an indication of the quotas to be given to foreign nationals fishing within our zones in 1977? Finally, will he indicate the date on which the 200-mile limit will be declared since 1 have difficulty finding the exact date in the Canada Gazette which he tabled yesterday or in his comments?


Hon. Romeo LeBlanc (Minister of State (Fisheries) and the Environment):: Mr. Speaker, the fishing plans for 1977 are the subject of discussion with the industry and with fishermen's organizations at this very moment. In fact, I will be meeting the regional directors from the Atlantic area tomorrow morning to have further discussions with them. Both sides of the industry have been asked to give their opinion on the allocation of quotas available.
As for the other part of the question regarding the date, the order in council yesterday meant the date for the extension will be January 1, 1977.


PLANS FOR SURVEILLANCE OF 200-MILE ZONE
Mr. Jack Marshall (Humber-St. George's-St. Barbe):: Mr. Speaker, the minister is aware that in spite of the agreement of other nations on specified quotas and the fact that they agreed to reduce their catch by 30 per cent, there have been many incidents of over-fishing by foreign nations. I wish to ask the minister how far in advance, if the 200-mile limit becomes effective on January 1, are the plans made by him, the Minister of National Defence and the Minister of Transport with regard to surveillance and the patrolling of this vast area which will have to be covered.


Roméo LeBlanc: I cannot accept the allegation of over-fishing until I have checked the facts, which I am quite willing to do. I might say that some members of the Canadian fishing industry also have over-fished. As regards the matter of surveillance, we have doubled the capacity in the number of days at sea and number of flights over the past few months, and we will increase this level with the cooperation of other departments. I might point out that one of the conditions of entrance into the new extended zone will be the reporting of the exact location which would mean that violation of that condition could result in charges before Canadian courts.


FOREIGN INVESTMENT
Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, my question is directed to the Minister of Industry, Trade and Commerce. Recently the Foreign Investment Review Agency approved the takeover of Union Oil by Husky Oil, an Ameri-

can firm. The takeover was of a refinery in Prince George. The Independent Petroleum Agents Association wrote to the Prime Minister and the cabinet asking that that decision be delayed in order to give them an opportunity as a Canadian operation to make a competitive bid on the Prince George refinery. Would the minister advise the House whether his government interceded on behalf of those petroleum agents to delay the decision in order that they may have the opportunity of making a bid on the Prince George refinery?
[ Translation]


Hon. Jean Chretien (Minister of Industry, Trade and Commerce):: No, Mr. Speaker. In cases like those, according to the law the government must analyze each proposal to see if it is of benefit to Canada. We found that the proposal made by Husky Oil Ltd. offered Canada certain advantages. In fact, 62 per cent of its shares are Canadian-owned, and we are not required to take any other proposal into consideration. According to the law, we need only analyze the proposal before us; in view of circumstances, we feel advantages will accrue to Canada so we approved it.


Stuart Malcolm Leggatt: I am aware, of course, of the difficulty with regard to the law, and that is something the minister might indicate to the House that he is going to correct by providing a notification procedure. But my question is as follows; Is it the government's policy not to intervene with regard to foreign takeovers so that Canadian corporations have an opportunity of matching foreign bids on Canadian assets?


Joseph Jacques Jean Chrétien: Mr. Speaker, the law forbids me to do so. The law is not some sort of middleman acting as a go between; it is a matter of analyzing each offer of purchase and seeing where its advantages lie, and I am surprised the hon. member is asking me not to respect the law.


SUPPLY AND SERVICES
Mr. Herbert Breau (Gloucester):: Mr. Speaker, I should like to put a question to the Minister of Supply and Services.
In view of the apprehensions expressed by the workers' union of the SMI Industries of Bathurst in New Brunswick because the units to be sold to the Canadian government would be built by an American plant belonging to the same interests, and because that plant is now on strike legally, can the minister tell the House whether the contract his department has signed with the firm allows the latter to transfer some work, that is articles originating from outside?


Hon. Jean-Pierre Goyer (Minister of Supply and Services):: Mr. Speaker, the purchasing department has revised its requi-
November 3, 1976

sition; it now covers four vehicles. The Bathurst plant can supply four vehicles manufactured in Canada.


POSSIBILITY OF FEDERAL GOVERNMENT SHARING COST OF HOME CARE PROGRAMS
Mr. P. B. Rynard (Simcoe North):: Mr. Speaker, my question is directed to the Minister of National Health and Welfare. In view of the escalating health care costs and the necessity for substituting health care facilities to cut down the time spent in active treatment beds-and 1 refer to home care programs-which, adequately serviced, could reduce costs substantially, I should like to ask the minister whether he has conferred with his provincial counterparts to share costs or tax credit this program so it may be enlarged?


Marc Lalonde: Yes, Mr. Speaker, there have been discussions with the provinces over the last year and a half on this very subject, particularly with regard to the development of a five year plan aimed at increasing lower cost alternatives. I have received answers from most of the provinces at this stage. As the hon. member knows, we are also presently in discussion with the provinces in order to arrive at a new financing formula which would give the provinces greater flexibility in the administration of funds in the health care field than that presently accorded under the medical care and hospital insurance acts. There will be further discussions with the provinces on this subject in the next few months and in particular with their ministers of finance. I hope a satisfactory solution will be arrived at which will give the provinces the necessary flexibility to develop the type of services to which the hon. member has referred.


LABOUR CONDITIONS
Mr. John A. Fraser (Vancouver South):: Mr. Speaker, my question is for the Minister of Labour and I have given him notice of it. Yesterday my colleague, the hon. member for Okanagan Boundary, raised the question of the 200 workers of Chapman Transport in British Columbia, a subsidiary of the CNR. The Minister of Transport said that was a labour problem. In view of the fact that the minister appointed a commissioner, whose report apparently supports the position of the employees that their contract should be comparable with other truckers in the province, can the minister advise the House why there is apparently no initiative on the part of the company to reopen negotiations, even though the union was told by a terminal manager this would happen?
Oral Questions


Hon. John C. Munro (Minister of Labour):: No, I cannot, Mr. Speaker. That would be very much the business of the employer himself, and he is not communicating that to our officials. However, we have advised the parties that we are available. As the hon. member knows, we have competent mediators in Vancouver who are ready to do anything they possibly can in this situation.


John Allen Fraser: In view of the fact that there have been rumours that CNR intends to hang tough and also of radio reports that Chapman's would close up their operations, would the minister tell us if the CNR, which is a publicly owned corporation, is in fact about to close down its subsidiary, which would of course end the jobs of 200 workers in British Columbia?


John Carr Munro: At this stage I can only say that I certainly hope that is not the case.


CENTRAL MORTGAGE AND HOUSING CORPORATION
Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, my question is directed to the Minister of State for Urban Affairs.
My question deals with the Residential Rehabilitation Assistance Program in rural areas. I have here a letter I am going to quote from to enable the minister to grasp the scope of my question. In this letter, the Central Mortgage and Housing Corporation said the following:
.. . because of a lack of funds for the rehabilitation program, must discontinue their commitments for the year 1976.
Could the minister advise the House whether he was informed of this situation and whether he thinks that there may be other credits for this program before the adoption of the new estimates?


Mr. Jean-Robert Gauthier (Parliamentary Secretary to Minister of State for Urban Affairs):: Mr. Speaker, let us first note that the Residential Rehabilitation Assistance Program in question is one of the most successful programs in our country. Unfortunately, there was not enough money for this year and we have problems in meeting the applications from rural and urban areas.
I would ask the hon. member to show a little patience. We are reviewing the program to see whether there is any possibility of finding funds from another source and if possible of turning to Treasury Board to be able to get funds to meet the applications. I would invite hon. members to encourage municipalities to go on making applications because we did not say that applications were rejected; we simply said we lacked funds.

November 3, 1976
Oral Questions


Joseph Adrien Henri Lambert: Mr. Speaker, I am grateful to the parliamentary secretary for his answer which is quite clear but I have also a straightforward question for him.
This program does respond to a need, evidence has been given, there are lots of applications. Given the fact that it happens some time that there are programs with no actual import, would it be possible to ask the President of the Treasury Board to transfer funds allocated for that kind of programs which the population does not want since it does not use them, to a program such as the one on housing rehabilitation so we may continue to answer positively to applications made by municipalities and by taxpayers?


Jean-Robert Gauthier: Mr. Speaker, again I will say to the hon. member that we are perfectly aware of the success of this program. Incidentally we are very proud of it. Nevertheless applications this year have exceeded the amount of money we had planned for this purpose. The President of the Treasury Board is aware of that. I think he is giving it consideration and as for us, we are looking into the question to find a solution.


ADMINISTRATION OF JUSTICE
Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, my question is for the Minister of Justice and refers to a man by the name of Latta a former law professor convicted of murder now serving a life sentence. The minister directed a term of reference to the court of appeal of Alberta in connection with new evidence which they ruled inadmissible. I understand it is now alleged there is further new evidence. Is the minister going to have a further investigation and direct another reference to the same court that heard it twice or direct a new trial?


Hon. Ron Basford (Minister of Justice):: Mr. Speaker, the position is as I indicated in a recent letter to the hon. member. I have received the view of the court of appeal of Alberta on the question I referred to them about subsequent information which came to my attention, and I am examining that before deciding on the next step I should take.


Eldon Mattison Woolliams: A supplementary question, Mr. Speaker. Now that we have had another reference to this convicted person serving a life sentence, surely in light of the reasonable doubt that exists the minister could now direct a new trial so that this man could at least enjoy the civil rights that every citizen of Canada expects from the administration of justice?


Stanley Ronald Basford: Mr. Speaker, I am examining the information that has come to my attention to determine whether there is, in fact, a question of reasonable doubt which should be settled either by way of reference or by way of a new trial.


EXTERNAL AFFAIRS
Mr. Roch La Salle (Joliette):: Mr. Speaker, I would like to put a question to the Prime Minister.
On October 28 last, Mr. Daoust, a Montreal barrister, sent to the Secretary of State for External Affairs a request concerning the case of Marie-Andree Leclerc. Since the family of this young Quebecer is deeply concerned, given all the publicity surrounding this case, would the Prime Minister be in a position to indicate to the House whether his government will give favourable consideration to Mr. Daoust's request and whether the result of the inquiry or all information related to this matter will be made public?


Mr. Fernand E. Leblanc (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, the Leclerc case has often been discussed in the House and the High Commissioner in India continues to make representations to Indian authorities so that charges will be brought before the courts as soon as possible. But, at this time, we have to deal with laws that are not ours, and unfortunately this Canadian girl is subject to the laws of India. However, we are making every effort to help her family. Mr. Raymond Daoust made representations and we already had made every effort to try to deal with this case as soon as possible.


Roch La Salle: Mr. Speaker, I thank the Parliamentary Secretary for his reply. Since Indian police authorities obstinately refuse to give the reasons for Miss Leclerc's incarceration, could the parliamentary secretary inform the House whether his government knows the real reasons for this incarceration and whether they will be made public?


Fernand-E. Leblanc: Mr. Speaker, the Leclerc family has retained a lawyer and we have met others to consider the case. However, as I said and have often repeated in the House, we are subject to the legislation of the countries where our Canadian citizens are imprisoned, either in India, Mexico or elsewhere. We are now making efforts to learn the details requested by the hon. member. However, Indian authorities have their own laws and we must obey them. But since a Canadian is involved, we are interested in that case and we are making all possible efforts to have it settled as soon as possible. Moreover, we can say that as a result of our interventions, we know that the physical condition of Miss Leclerc has improved appreciably as did the conditions of her detention.


CONFLICT OF INTEREST
Mr. Bob Brisco (Kootenay West):: Mr. Speaker, my question is for the Minister of Justice. In view of the fact that the
November 3, 1976

late distinguished New Democratic Party member of parliament for Kootenay West, Mr. Herridge, resigned his seat before his private member's bill concerning a conflict of interest by members of parliament who are lawyers could be dealt with, and in view of the fact that in spite of his request the former leader of the party, David Lewis, did not wish this bill introduced because of his own circumstances, would the Minister of Justice consider introducing such legislation or, preferably, encourage the NDP to submit the public bill again which was first drafted by the late distinguished member of this Elouse?


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


Stanley Ronald Basford: Mr. Speaker, I think the Prime Minister made the government's position very clear at the beginning of the question period. I would be very happy, however, to make a representation to the Leader of the New Democratic Party that he adopt the policy of the late Mr. Herridge.


ALLEGED FAILURE OF NEW MINISTERS TO FILE DECLARATIONS-GOVERNMENT ACTION
Mr. Perrin Beatty (Wellington-Grey-Dufferin-Waterloo):: Mr. Speaker, my question to the Prime Minister arises from the statement he made earlier in the question period that every one of the ministers had complied with the government's conflict of interest regulations. In view of the fact that in the last half hour a Mr. Taylor in the office of the Registrar General confirmed that not one of the seven new ministers appointed seven weeks ago has a public declaration on file with respect to compliance with the conflict of interest regulations, can the Prime Minister correct the statement he made? Can he also indicate whether he is prepared to give the House an assurance that he will do everything possible to ensure that every minister complies with the conflict of interest guidelines, including the Minister for Consumer and Corporate Affairs who has responsibility for the office of the Registrar General?


Pierre Elliott Trudeau: Mr. Speaker, I think the hon. member would agree that there is a test of reasonableness in this particular matter. All members of our ministry have complied with the guidelines, although I doubt whether those who were named this morning have done so yet. It is possible that some who were named a month ago have not complied yet either. As a matter of principle, I have allowed the ministers from one to three months to comply with the guidelines. In some cases, it means a complex setting up of a trustee and as the hon. member opposite knows, this cannot be done overnight.
As to the statement that none of those named one month ago has complied with the guidelines, that is not correct. This
Privilege-Mr. Jelinek
week-end I remember writing to at least two of them, to tell them I had received the declaration, and to thank them.


Mr. Hnatyshyn:: Are you the registrar?



ROUTINE PROCEEDINGS


Mr. Otto Jelinek (High Park-Humber Valley):: Mr. Speaker, this is the first opportunity I have had to rise on a question of personal privilege pertaining to the article that appeared in Saturday's Globe and Mail concerning my constituency office, as well as to the allusions made on the matter in this House.


An hon. Member:: Shame.


Otto John Jelinek: As I read it, Mr. Speaker, that article implied that I was guilty of a misuse of funds voted by this House for the establishment of a riding office. I am accused of conniving with an old age pensioner, my constituency secretary, to pay her money she had not earned. I believe the accusation is as serious in its implication for my reputation as it is erroneous in fact. My constituency office is established in conformity with the spirit as well as the letter of the law; it provides a complete and accessible service to my constituents, and it is similar in location and operation to that of the most effective offices set up by many of my colleagues in this House.
Mr. Speaker, allow me to deal briefly with the specific accusations implying a misuse of funds. The article states that I have committed the government to $200 per month for partial use of a tiny room and kitchen which are so inadequate that interviews must be held in the living room of Miss Pattison, my constituency secretary. This, of course, is false. The fact is that the whole bottom floor is used for riding office purposes. This includes the living room, which is used for interviews, the dining room, which is set up for group meetings or discussions, and a third and smaller area which is used for filing. The kitchen is also available, as an incidental convenience, for coffee. From the $200 per month rent, approximately $45 is deducted for an answering service available to all constituents 24 hours a day, seven days a week, and a phone bill of approximately $15 per month. In addition, Miss Pattison pays all heat and light charges. Far from being a suspicious arrangement, this is as good a value for the taxpayers' money as any, the net result being a saving of roughly 50 per cent to the taxpayer from the government's established allowance of $3,600.
It was stated, as well, that Miss Pattison and the office were not easily accessible to constituents. On the contrary, the office, which is centrally located on a main thoroughfare close to one of the central intersections of the riding, keeps the

November 3, 1976
Privilege-Mr. Jelinek
constituency secretary occupied over six hours a day, six days a week. Certainly, as was stated in the article, Miss Pattison has other community interests in the High Park-Humber Valley area; this only makes her more, not less, suitable as a constituency secretary in helping people with their problems, as her long and extensive community involvements bring her to the heart of local and current affairs.
As for the charge that she refers many problems to my office here in Ottawa, the reasons for this must be obvious to everyone except perhaps the irresponsible Globe and Mail reporter who authored this slanderous article. It is true that the office does not have a sign, because I believe the zoning bylaws do not permit one, and as a result both the address and phone number are listed on a great number of mailings that go from my office to every household in the constituency.
The writer of the article makes much of the fact that my party's constituency president has never been to the riding office. He never has, because I take great pains not to use the office for partisan purposes. All executive meetings and party functions are held elsewhere, as I am sure they are with most members, for a constituency office is not the place to advertise or play party politics. One must wonder how a once reputable newspaper like the Globe and Mail could stoop to such low levels of yellow journalism by utilizing a large portion of its front page with a story so misleading and erroneous.
In any event, I believe the article was so full of half-truths, innuendoes and outright lies that it constitutes a malicious and slanderous attack on my conduct as a member of parliament. I also believe that I would be fully justified in proposing a motion to send this matter to the Standing Committee on Privileges and Elections so that the mechanics of assembling this vicious and unsubstantiated attack on the character of a member of parliament could be exposed. However, I do not wish to take the further time of the House on this subject matter; and, being aware of suggestions in some of the procedural authorities that libel and slander should be dealt with by the courts, I have instructed my lawyers to proceed accordingly on that basis.


Mr. Speaker:: Order, please. I have no difficulty concluding, as I have on numerous occasions in the past, that the hon. member for High Park-Humber Valley (Mr. Jelinek) has raised what he considers to be a grievance in respect of the reporting of his activities. To be consistent with my reasoning and the manner of treating the hon. member for Madawaska-Victoria (Mr. Corbin) whose case was, I think, the most recent example, and also the hon. member for Athabasca (Mr. Yew-chuk) with respect to complaints about the reporting by newspapers of the activities of members, I must say that where there is no suggestion that the reporting is so coloured as to represent contempt of parliament, a question of privilege obviously does not arise.
Also, to be consistent with the treatment accorded both the hon. member for Madawaska-Victoria and the hon. member for Athabasca, it would be appropriate if the Chair were to allow reasonable time for the development of a thesis counter to that contained in examples of the sort alluded to. However,

I would be completely disregarding the rules of procedure and precedence as I have recited them if I were to indicate that this matter constitutes a question of privilege, or even the suspicion of a question of privilege, and so permit a contribution from the other side. The matter is not partisan in nature. It does not involve accusations against other hon. members.
Questions of privilege which involve differences or disagreements between members have been raised. In fairness, in such circumstances I have always allowed countervailing comments in order to equalize time in such discussions. But that is not the case here, and I really think there is no justification for allowing the matter to go further.


MISS BEGIN-ALLEGED CONFLICT OF INTEREST
Hon. Monique Begin (Minister of National Revenue):: Mr. Speaker, I rise on a question of privilege. My case is far simpler than the one just exposed before the House. I should like to answer the hon. gentleman opposite whose constituency contains several names, the last of which is Waterloo, by saying that he can choose between being frozen and being blind, but I filed quite some time ago my declaration of conflict of interest, and I understand I am not the only one. I should, therefore, like Your Honour to ask the hon. member-
[ Translation]
-and I will say it in French-to make a retractation. It is the only thing which I ask him and it is quite simple.


Mr. Lawrence:: How about the rest of them?


Some hon. Members:: Withdraw.


Henry Perrin Beatty: Mr. Speaker, on the question of privilege, I am pleased that the hon. minister raised the question and I invite her to contact Mr. Taylor, the registrar-


Some hon. Members:: Oh, oh!


An hon. Member:: You do it.


Henry Perrin Beatty: I did, within the last half hour.


Mr. Speaker:: Order, please. I really do not want to raise the subject again, but we are dealing with a confined question of privilege. The hon. member for Wellington-Grey-Dufferin-Waterloo (Mr. Beatty) indicated in his question that none of the ministers appointed a month ago filed a declaration. The minister takes a question of privilege, saying that she in fact filed her declaration. That is the point at issue. If the hon. member for Wellington-Grey-Dufferin-Waterloo seeks the floor to contribute to that point, I am prepared to listen.


Henry Perrin Beatty: Mr. Speaker, Hansard will show that I in fact said that not one of the new ministers has yet a declaration in the public file of the registrar. That is correct. I checked within the last half hour to see whether any of the new
November 3, 1976

ministers had a declaration in the public file. According to Mr. Taylor, not one of them is yet in the public file.


Some hon. Members:: Hear, hear!


FINANCE, TRADE AND ECONOMIC AFFAIRS
[Stage Direction]
First report of Standing Committee on Finance, Trade and Economic Affairs-Mr. Cafik.
[Editor's Note: For text of above report, see today's Votes and Proceedings.]

Donald Stovel Macdonald: Mr. Speaker, I wish to table two references to the administrator under the Anti-Inflation Act.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Ralph E. Goodale (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, the following questions will be answered today: 8, 184, 505, 619, 620 and 684.


Mr. Cossitt: Since June 1, 1975, has the Prime Minister used any privately owned aircraft for trips made to points outside Ottawa and, if so, in each case (a) on what dates (b) to what destinations (c) what are the names and addresses of the owners of such aircraft?


Pierre Elliott Trudeau: No.


Mr. Crouse: Is it the government's intention to construct a new building in Bridgewater, Nova Scotia and, if so (a) what funds have been allocated (b) on what date will construction begin?


J. Judd Buchanan: Yes. (a) $70,000 for site acquisition and preliminary design in 1976/ 77. (b) It is anticipated that construction will begin in the 1977/78 fiscal year.
Order Paper Questions MR. BRIAN FLEMMING


Mr. MacKay: 1.	What are the terms of Mr. Brian Flemming's contract with the Prime Minister's Office?
2.	What is his per diem?
3.	What are Mr. Flemming's specific duties?
4.	What is Mr. Flemming's current status with the Halifax law firm of Stewart, Covert and MacKeen?
5.	What positions does Mr. Flemming hold with any other government agency besides the Prime Minister's Office?
6.	What allowances are being made for Mr. Flemming's travel expenses to and from Halifax?


Pierre Elliott Trudeau: 1. Mr. Flemming was appointed under 37(1) of the Public Service Employment Act.
2.	Annual salary: $35,500-$47,500.
3.	To advise the Prime Minister on policy related matters.
4.	Mr. Flemming resigned effective August 31, 1976.
5.	None.
6.	Removal expenses Halifax-Ottawa in accordance with Removal Regulations. Mr. Flemming is based in Ottawa and is subject to Treasury Board Travel Directive when on duty outside of Ottawa.


Mr. Herbert: Did the government of Quebec refuse to accept, at this time, the transfer of the Ste. Anne de Bellevue Veterans Hospital to their jurisdiction and, if so, for what reason?


Hon. Daniel J. MacDonald (Minister of Veterans Affairs):: Discussions on the transfer of Ste. Anne's Hospital will, it is expected, be undertaken during the 1977-78 fiscal year.


Mr. Herbert: 1.	Is it the intention of the government to attempt to transfer the Ste. Anne de Bellevue Veterans Hospital to the government of Quebec and, if so, what is the approximate date on which such a transfer could be effected?
2.	What is the minimum period of time that employees and patients at the hospital can anticipate remaining under federal control?


Daniel Joseph MacDonald: 1. The policy of the Government concerning the transfer of hospitals remains unchanged. If the Department can negotiate a transfer agreement for Ste. Anne's Hospital, it will do so. At this time there are no discussions concerning the transfer of this hospital, therefore no date of transfer can be forecast.
2. Employees will remain under federal control until the effective date of an agreement of transfer. Since determination of a date for transfer is not wholly in the hands of the Department of Veterans Affairs no information is available concerning the minimum period of time employees and patients can anticipate remaining under federal control.

November 3, 1976
Order Paper Questions


Mr. McKinnon: What was the total (a) regular military (b) reserve (c) civilian strength of the Department of National Defence as of October 1, 1976?


Hon. Barney Danson (Minister of National Defence):: (a)
77,996; (b) 21,768; (c) 38,828 (This includes 5,990 term employees).


Ralph Goodale: Mr. Speaker, I ask that question No. 764 be made an order for return, and also ask for the consent of the House to table immediately the information which has already been submitted. The balance of the information will follow as soon as it is submitted to me.


Mr. Speaker:: Is this agreed?


Some hon. Members:: Agreed.


Mr. MacKay: 1.	Did Statistics Canada discover that G. Snyder, F. L. Torrington, I. E. Altman and Y. Goulet, employees of the Merchandising and Services Division, were transmitting data derived from Statistics Canada sources to outside interests for direct or indirect remuneration and, if so (a) on what date (b) in what way did Statistics Canada become aware of these activities?
2.	Was the Royal Canadian Mounted Police notified of these activities and, if so (a) on what date (b) by whom (c) in what manner (d) what is the name of the person notified?
3.	Was the (a) Department of Justice (b) Public Service Commission (c) Privy Council Office notified of these activities and, if so, in each case (i) by whom (ii) on what date (iii) what is the name of the person notified?
4.	Was the then Chief Statistician of Canada, Dr. Sylvia Ostry, notified first of these activities and, if so (a) on what date (b) by whom (c) in what manner?
5.	Was the then Minister responsible for Statistics Canada informed about these activities and, if so (a) on what date (b) by whom (c) in what manner?
6.	What other persons were informed by officials of Statistics Canada, the Public Service Commission, the Privy Council Office and the RCMP, of these activities?
7.	Were any steps taken by officials of government agencies to investigate the activities of G. Snyder, F. L. Torrington, I. E. Altman and Y. Goulet or Allan Jefferies Associates (or an entity with a similar name) and, if so (a) what were they (b) on what dates (c) by whom and (d) in each case, what (i) was the result of the investigation (ii) recommendation was made and what action followed such recommendation?
8.	Was any data transmitted or offered to the U.S. firm Decision Sciences Corporation by the four employees or Allan Jefferys Associates and, if so, what data?
9.	Was data derived from Statistics Canada sources sold or offered by the four employees or Allan Jefferys Associates to any other organizations or individuals and, if so (a) what data (b) to whom (c) what were the actual or proposed amounts of transactions?
10.	Was data referred to in Parts 8 and 9, derived exclusively from material available at that time to the public and, if so, was the source material available to the public and in what form?

11.	Was the source material for the data referred to in Parts 8 and 9 made available to the public after the data had been transmitted to Decision Sciences Corporation and, if so, in what form and on what date?
12.	Was data referred to in Part 8 and 9, in whole or in part, produced by the four employees or by Allan Jefferys Associates, on the premises of Statistics Canada and, if so, was it produced in whole or in part, during hours when the four were receiving remuneration as public servants?
13.	Did the four employees or Allan Jeffery Associates, use in any way, for private gain, any of the following resources of Statistics Canada (a) computer programming (b) computer services (c) clerical or other support (d) professional services (e) office supplies or materials (f) other resources and, if so, what was the estimated value of each?
14.	Did the actions of the four employees constitute a breach of (a) Public Servants' Conflict of Interest Guidelines (Canada Gazette, January 9, 1974) (b) affirmation of office and secrecy, administered to all public servants (c) Statistics Act (d) Criminal Code?
15.	(a) What recommendations for disciplinary action or prosecution were made as a result of investigations of the activities of the four employees and Allan Jefferys Associates (b) what disciplinary actions or prosecutions were in fact taken and (i) by what authority (ii) on what date?
16.	What were the official titles of the positions occupied by the four employees, or by any persons connected with Allan Jefferys Associates, at the time that Statistics Canada became aware of the dealings of Allan Jefferys Associates?
17.	What were the salary ranges of the four employees at the time that Statistics Canada became aware of the dealings of Allan Jefferys Associates?
18.	As of October 14, 1976 were the four employees still employed by the government and, if so (a) in what capacity (b) in which agency (c) at what salary range?
19.	What was the involvement, if any, of Mrs. Roslyn Snyder in Allan Jefferys Associates?
20.	Was Mrs. Snyder an employee of the government at the time that Statistics Canada became aware of the activities of Allan Jefferys Associates and, if so (a) in what capacity (b) with which agency (c) at what salary range?
21.	As of October 14, 1976 was Mrs. Snyder an employee of the government and, if so (a) with which agency (b) in what capacity (c) at what salary range?
22.	(a) What was the legal form of Allan Jefferys Associates (or any variation of this name) (b) on what date was it established (c) what was the address and who were the owners, officers and employees (d) on what date was it dissolved and for what reason?
23.	Were all payments made to Allan Jefferys Associates or any individuals associated with them reported for federal tax purposes and, if not, what action has been taken?
24.	Were any of the expenses claimed for tax purposes by Allan Jefferys Associates or any individuals associated with them, paid for with public funds?
25.	Was data transmitted directly or indirectly by Allan Jefferys Associates or any individuals associated with them to the Campeau Corporation or any of its subsidiaries for their retail studies or for any other purpose?
Return tabled.


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


Mr. Speaker:: Shall the remaining question stand?


Some hon. Members:: Agreed.


Ralph Goodale: Mr. Speaker, notices of motions for the production of papers Nos. 4, 5, 9, 12 and 13 are acceptable
November 3, 1976

to the government, subject to the usual reservations concerning confidential documents and to the authorization of the government authorities concerned.


Mr. Speaker:: Subject to the conditions and reservations mentioned by the parliamentary secretary, shall notices of motion for the production of papers Nos. 4, 5, 9, 12 and 13 be deemed to have been adopted?


Some hon. Members:: Agreed.


Mr. Speaker:: Are the other notices of motion for the production of papers allowed to stand?


Some hon. Members:: Agreed.


[Stage Direction]
Motion No. 4-Mr. Marshall:
That an humble Address be presented to His Excellency praying that he will cause to be laid before this House copies of all correspondence, minutes of meetings, telegrams, contracts and/or agreements between the government and the Province of British Columbia having to do with the transfer of Veterans' Hospital in Victoria, B.C.
Motion agreed to.
[Stage Direction]
Motion No. 5-Mr. Marshall:
That an humble Address be presented to His Excellency praying that he will cause to be laid before this House copies of all correspondence, minutes of meetings, telegrams, contracts and/or agreements between the government and the Province of British Columbia having to do with the transfer of Shaughnessy Hospital in Vancouver, B.C.
Motion agreed to.
[Stage Direction]
Motion No. 9-Mr. Marshall:
That an humble Address be presented to His Excellency praying that he will cause to be laid before this House copies of all correspondence, minutes of meetings, telegrams, contracts and/or agreements between the government and the Province of Ontario having to do with the transfer of Sunnybrook Hospital in Toronto.
Motion agreed to.
[Stage Direction]
Motion No. 12-Mr. Marshall:
That an humble Address be presented to His Excellency praying that he will cause to be laid before this House copies of all correspondence, minutes of
Motions for Papers
meetings, telegrams, contract and/or agreements between the government and the Province of Quebec having to do with the transfer of St. Foy Hospital.
Motion agreed to.
[Stage Direction]
Motion No. 13-Mr. Marshall:
That an humble Address be presented to His Excellency praying that he will cause to be laid before this House copies of all correspondence, minutes of meetings, telegrams, contracts and/or agreements between the government and the Province of New Brunswick having to do with the transfer of Lancaster Hospital.
Motion agreed to.
Ramon John Hnatyshyn: Mr. Speaker, 1 rise on a point of order with regard to the questions just enumerated by the parliamentary secretary, in particular question No. 764 which 1 believe covers questions raised by the hon. member for Central Nova with regard to the Statistics Canada matter which the Minister of Industry, Trade and Commerce indicated he would be filing today. Can the parliamentary secretary explain why it has to be made an order for return, as opposed to being printed, in view of the substantial interest there is in this particular matter and the undertaking of the minister to make the fullest possible disclosure of the answer to the question raised by my colleague?


Ralph Goodale: Mr. Speaker, there were two physical difficulties with the answer to the question to which the hon. member just referred. In the first instance, we have been working to try to compile the information requested in the question. It is a rather extensive collection of facts and figures. The material that we have been able to collect so far relates specifically to the responsibilities which the Minister of Industry, Trade and Commerce has in this House. Some parts of the question sought information from other ministers and the agencies of government. That information, although we are sure it will be on its way to us very quickly, is not yet in our hands.
In order to facilitate the presentation of the material which the Minister of Industry, Trade and Commerce wanted to provide to the House as quickly as possible, we felt this was the most expeditious way of doing it. Further, when hon. members see the material which we have just sought to table, they will notice that it is very voluminous. That is one of the physical problems which led us to try to answer in this way.

Protection of Borrowers and Depositors



GOVERNMENT ORDERS

[Stage Direction]
November 3, 1976

[Stage Direction]
The House proceeded to the consideration of a ways and means motion to amend the Excise Tax Act.
Donald Stovel Macdonald: That a ways and means motion to amend the Excise Tax Act, laid upon the table on Thursday, October 28, 1976, be concurred in.


[Stage Direction]
Motion agreed to.
Donald Stovel Macdonald: for leave to introduce Bill C-21, to amend the Excise Tax Act.


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

[Stage Direction]
The House proceeded to the consideration of a ways and means motion to amend the Income Tax Act.
Donald Stovel Macdonald: That a ways and means motion to amend the Income Tax Act, laid upon the table on Tuesday, November 2, 1976, be concurred in.


[Stage Direction]
Motion agreed to.

[Stage Direction]
The House proceeded to the consideration of a ways and means motion to amend the Income Tax Application Rules, 1971.
Donald Stovel Macdonald: That a ways and means motion to amend the Income Tax Application Rules, 1971, laid upon the table on Tuesday, November 2, 1976, be concurred in.


[Stage Direction]
Motion agreed to.

[Stage Direction]
The House resumed, from Tuesday, November 2, consideration of the motion of Mr. Abbott that Bill C-16, to provide for the protection of borrowers and depositors, to regulate interest on judgment debts, to repeal the Interest Act, the Pawnbrokers Act and the Small Loans Act and to amend certain other statutes in consequence thereof, be read the second time and referred to the Standing Committee on Health, Welfare and Social Affairs.
William Hillary (Bill) Clarke: Mr. Speaker, last night when 1 called it ten o'clock I was saying that although we on this side were giving agreement to the principle of this
{Mr. Goodale.]
bill, it was necessary to find fault with the lack of consultation with consumer groups and with the absence of specific rates and other details which the minister says will be spelled out in the regulations.
I want to deal for a moment today with the unwarranted credit charge rate, which rate is not stated in the bill. It seems that the minister wants to leave the determination of the unwarranted rate to the courts and that in each case it will be determined on the merits of the particular case. This, of course, will clog up the courts. It will put the burden of proof on the lender, which is a complete change from the rule of law in this country whereby one is innocent until proven guilty. Here, the lender will be assumed guilty until he can prove himself innocent. There will be a serious trend here. The tendency of this rule will be to restrict the making of loans to good risks. Further, it will restrict the rights of the bad risks and improve the chance of business going to the loan sharks.
We have always had a matter of choice in our life in Canada, bad as the choice might be. For example, a tenant might prefer to pay a higher rate of interest than is allowed in order to avoid a court order eviction. The minister, in his remarks, referred to the unwarranted rate and said that when the ceiling rates for small loans were lower than prevailing credit market rates, lenders had refused to grant small loans, forcing higher risk borrowers to seek funds from loan sharks. Mr. Speaker, nothing he is proposing now is going to change that situation.
Further on, the minister said interest rates would be set "according to the cost of funds and the risks involved in a particular transaction." This, of course, will be the defence in court. The minister says that if a borrower, after seeking sound professional advice, believes that the rate he is being charged is too high, he can choose to apply to a court for a review of the credit charge and the court will determine whether or not the rate is warranted. But why not make such a determination beforehand instead of going through the courts after the fact? I believe the lender has a right to choose the risks he wishes to accept, and the likelihood is that the source of funds will be dried up to the disadvantage of the very people the minister seems to wish to help.
I turn now to the computation of interest on sums deposited. The minister intends to require the interest calculation to be made on a daily basis. This seems a good idea and I am sure people whose savings vary from day to day will agree with it. However, on examination it becomes evident that this would impose a penalty on steady savers, those who deposit every month, who do not need computation of interest on a daily basis but who will be asked to share in the cost of daily calculation in order to benefit other depositors.
I see a number of other specific problems arising. An administrator is to be appointed. Heaven knows, Mr. Speaker, there are already enough senior bureaucrats around Ottawa. The powers to be given him are enormous. For example, he will be permitted to enter any premises at any time to conduct
November 3, 1976

audits, seize records, and so on. All this will involve huge cost to the taxpayer. In addition, there are, of course, many clauses in the bill which impose additional obligations on lenders, the costs of which obviously will be passed on to the borrowers.
One noteworthy-I might say "notorious"-feature of the legislation as it affects lenders is that a payment made on a loan is deemed to have been made on the day it is sent by mail. In Canada today, mail sometimes takes weeks to arrive. No exemption is provided in the case of disruption of the postal service, and I suggest that lenders are being made subject to a heavy penalty which is particularly serious when large sums are paid on a Friday after banking hours.
It might be said that I am pitying the lenders too much and that lenders can take care of themselves. However, I would point out that lenders, in the main, are only trustees of funds belonging to small depositors. Union funds are used to make loans. Funds entrusted to trust companies for the care of widows and orphans are similarly used. Life insurance companies are, after all, investing the funds of millions of Canadians. Even the banks, the so-called beasts of the financial world, number many thousands of Canadians among their shareholders.
I want to say a word now about loan-sharking. The minister told us last week that he wanted to help our police forces to fight the ever-increasing crime of loan-sharking. That is a very fine objective. But he did not tell us what loan-sharking is, and the details given in the bill are illusive if not invisible. Perhaps a better picture will emerge when the regulations are forthcoming, but as things stand we are being asked to pass the bill as presented.
In his speech the minister told us the government had not been able to end the activities of loan sharks, and that any rate today was a legal rate. We might ask ourselves why the government did not move effectively into this area during the past 14 years, and why they have not been able to define an appropriate rate. In fact, only the ceilings on small loan interest rates have been removed. We know the industry will get along somehow, no matter what restrictions the government may impose. But why cannot the minister tell us what the criminal rate under this bill is to be?
I am concernced about the methods used by loan sharks to enforce their claims. Certainly, the description of those methods is awful. But tactics of this kind are already illegal-one cannot go around threatening people or beating up people in Canada today. I do not think the minister is correct when he says that the provisions he is putting forward in this respect will really help the police.
The minister did refer to the "criminal rate" in the course of his remarks and said the bill would establish one. But there is no mention of such a rate in the measure before us. He said he would be clear and concise, and that the rate would be of great value to those launching criminal prosecutions. He told us the level would be set well above the rate normally charged in the market. Well, what is it? Evidence given in committee during examination of tfye Small Loans Act would indicate that the warranted rate is something like 80 per cent. Does this mean
Protection of Borrowers and Depositors that the criminal rate will be 150 per cent or 200 per cent? We are not told, yet there is a penalty clause, clause 38, which sets out in great detail the penalties which can be imposed under the act.
On the subject of tax refund discounting, the minister said such discounting was "clearly an unscrupulous practice". Well, the government has the solution to this problem in its own hands. The only reason for which a person needs to get his tax refund discounted is that he cannot get his money from the government. I suggest there is no difference between a man borrowing on the strength of a promise to pay from the government in the shape of a future tax rebate, and a man borrowing on the strength of a Canadian bond. I read in a newspaper yesterday that certain bonds issued by the government of Canada are being quoted at a discount rate of 72 per cent of their value. That is a fairly normal figure. The most infamous case is that of the 3 per cent perpetuals which are being discounted at $47.
The government has the ability to eliminate this problem entirely. It could accept an application from Canadians in, let us say, November to have an interim calculation made of the amount of tax they will have to pay and they could get a refund. The government has lots of clerical capacity, especially in this day of computers, and so on, to make this calculation. The government makes deductions from wages on the basis of a full year's work. We all know that particularly those workers who suffer hardship and who need to borrow money do not work for a full year. Therefore, I suggest the government owes it to them to make interim calculations so as to eliminate this particular problem.
The minister has been insistent on knowing what suggestions we on this side would make in view of the fact that we are not in agreement with all of his proposals. 1 have listed a few for the minister and will give them to him now, and no doubt we will be discussing them in committee. First of all, the government has it within its power to control to some degree rates of interest by controlling the rate of inflation. Naturally, as long as the inflation rate remains as high as it is, interest rates are not going to be any lower. We recommend that the government regulate this industry as it does others, but not compete as it does in other fields. We suggest that clear rules are necessary. However, apart from the principles laid out, this bill gives us no clear rules whatever and puts far too much power in the hands of the ministry.
A government that was concerned could regulate in order to require retailers to provide credit at certain rates on all sales that they make on credit. That is the kind of regulatory device that would not require that the government be directly involved. The government should allow the marketplace to set rates; that is, to encourage competition. That, as we have seen in other fields, is the most effective way of providing properly priced services for Canadians.
I have already mentioned the streamlining of the tax system which would eliminate the need for tax refund discounting. It

November 3, 1976
Protection of Borrowers and Depositors
is obvious that banks and trust companies now compete vigorously to obtain depositors' business. All one has to do is look around in January or February of any year to see the many different rates offered on registered retirement savings plans. Just at the moment, in the present general business climate there is a lot of investment money and plenty of competition for borrowers in the money market. If rates are controlled too much, then credit will not be available to all those who need it, and that is not what the government says it wants.
Finally, on Monday the minister said that he hoped I would be on the committee to help with amendments. All I can say is that I hope the minister is not just being naive, because it has been my experience, Mr. Speaker, during my four years in this House that usually the government does not accept amendments easily, even though in the case of one specific bill in the last session the government approved 54 amendments. Even although the Globe and Mail has reported the minister as saying that this in no way is the final form of the bill, I will have to be convinced in committee that the minister is sincere in his wish to have this bill amended. I have never felt that it was the opposition's job to perfect government's legislation and to give the government credit for producing a good bill. However, I shall be in attendance in the committee, and I hope that we will get fuller information at that time so that for the benefit of the borrowers of Canada we can perfect this bill.


Mr. John Gilbert (Broadview):: Mr. Speaker, I thought that Bill C-16 would provide me with an opportunity to congratulate the Minister of Consumer and Corporate Affairs (Mr. Abbott) and wish him every success. But having read Bill C-16, all I can do is congratulate the minister on his appointment and wish him no success in regard to the passage of this bill. He has failed miserably and dismally in regard to solving the problem of exorbitant interest rates, commonly called loan-sharking and he has not dealt with excessive interest rates. I can appreciate the problem the minister faced. He is a former corporation counsel, and when he was appointed to this position he had to decide whether he would be an advocate for the corporate boards or whether he would be an advocate for consumers.


Mr. Abbott:: I rise on a point of order, Mr. Speaker.


The Acting Speaker (Mr. Ethier):: Order. The Minister of Consumer and Corporate Affairs Mr. Abbott is rising on a point of order.


Anthony Chisholm Abbott: Mr. Speaker, I want to point out that if the hon. member wants to describe the defects in this bill, that is his business. But if he is trying to describe the dilemma that I faced personally on assuming this portfolio, he is quite mistaken and out of order.


John Gilbert: Mr. Speaker, I am just giving my interpretation of the problem the minister had. He has the background of a corporation counsel. To me, he must have had a problem deciding whether he would be an advocate for the corporate boards or whether he would be a consumer advocate. Having

read the bill, I realize that he opted for being the advocate of the corporate boards.
This is a bill of least resistance to the credit institutions, with little or no protection to borrowers. It is what is known as a candy-floss bill-all sweetness and no substance. I direct the minister's attention to the title of the bill. He has the nerve to call it the borrowers and depositors protection bill. What protection does it give the borrower? What protection does it give the depositor? He should have called the bill the lenders and loan sharks protection bill.


Anthony Chisholm Abbott: Obviously you have not read the bill.


John Gilbert: The main principle enunciated in the bill, namely, that of protecting the Canadian borrower from loansharking and excessive interest rates, will not succeed because it is based on two approaches-on self-policing by credit institutions, and on comparative competition on the money marketplace. These approaches are like asking a starving cannibal to stop eating the missionary. It is like asking the loan sharks to start acting like Sister Theresa. The main principle is wrong and unworkable. It is a surrender to the credit institutions and a rejection of the necessity for basic protection for the borrower, and more especially for people of low income.
All members of the House can quickly and readily agree with the other three principles which the minister outlined in his speech: (a) to provide information with regard to credit and deposit dealings; (b) to eliminate complexities and confusion in the credit field; (c) to regularize and rationalize credit legislation. May I remind Your Honour and all members of the House that these other corrective measures are the direct result of the chicanery, greed and duplicitous dealings of credit institutions. These dealings have required provincial legislation to protect the borrower against lenders, and now we are introducing federal legislation.
Returning to the main principles of the legislation put forward by the minister, protection of the Canadian borrower from loan-sharking and excessive interest rates by imposing self-policing on credit institutions and comparative competition in the money market, if the minister had made the same speech as the hon. member for Windsor West (Mr. Gray), I would be tempted to agree with him. The hon. member for Windsor West cut right into the heart of the problem when he asked whether this measure deals in the best way with loansharking and excessive interest rates. The substance of his speech indicates it does not.
It is striking that the hon. member for Windsor West makes far better speeches now that he is out of the cabinet. I suppose the reason is that he can now tell it the way it is. The hon. member for Windsor West reminded the minister of the Liberal policy and program in the 1974 election when they put forward the consumer protection package. The hon. member enumerated some of those principles but he omitted two main parts of the Liberal program. I shall point them out to hon.
November 3, 1976

members because I am sure they would like to have their memories refreshed.
In the 1974 election campaign, the Liberal party said that it would have a loan insurance scheme for low-paid workers who could not establish a credit rating. Second, the Liberal party said it would have consumer-help storefront offices the number of which would be increased to 20 by the end of 1974. The hon. member for Windsor West did not mention these two main items in the Liberal program. The reason is that the Liberals do not have them. They have established no storefront credit counselling offices to help people who are borrowing money and to make them aware of interest rates and some of the nefarious schemes of credit institutions. More importantly, the Liberal party has not adopted the other principle, that is, loan insurance for people with low incomes who have difficulty obtaining loans.
The minister said he is going to protect people against loan-sharking and excessive interest rates by having credit institutions police themselves. Have hon. members ever heard of such an approach for protecting borrowers from loan-sharking and excessive interest rates? The government is asking the very people who are guilty of these practices to police themselves in order to protect the borrower. The minister is relying on those credit institutions.
Let me tell the House about banks. What is the practice of banks with regard to paying interest on deposits? Twice a year they pay interest on the lowest minimum deposit in depositors' accounts. The banks talk about red convertible loans in times of inflation. The minister is asking these institutions to police themselves in order to protect the borrower. Let us consider the front-end loading charges and service charges, the costs, the credit reports, the prepayment charges and the misleading advertising as to rates of interest of finance companies. Let us consider the kickbacks car dealers receive for turning over credit notes to finance companies. These are the finance companies we are asking to police themselves in order to protect the borrower against loan-sharking and excessive interest rates.
By exhortations and warnings, the government is going to ask loan sharks to lower their interest rates. The government is going to do this in the face of recent releases by the minister and a speech by him saying that loan sharks charge in excess of 1,000 per cent to borrowers who are disadvantaged and must seek high-risk loans. The minister suggests a rate of seven times the prime rate. The prime rate for loans in Canada at the moment is 10 per cent, so the minister is saying that as long as lenders charge a rate less than 70 per cent or 75 per cent, they are not charging the criminal rate.
The minister is asking these people to police themselves with regard to loan-sharking and charging excessive interest rates. Can we rely on bank officials, finance companies and loan sharks to protect the borrower? The answer is no. I am surprised at the naivety of the minister in thinking that these groups are capable of self-policing. Their past practices have forced the minister to write into legislation the need to inform and protect the public with regard to information on credit and
Protection of Borrowers and Depositors deposit dealings and the need to define strict and uniform rules to protect borrowers and depositors respecting effective rates of interest. This is why relying on credit institutions to police themselves will not work.
With regard to the second principle the minister has enunciated, competition in the money market, the minister feels that by some strange osmosis we are going to have competition in the money market. We have never had real competition in the money market. Bank rates are exactly the same for their three different types of loans. With regard to finance companies, they are practically the same, and loan sharks do not use competitive rates. There has never been any real competition in the money market. Any competition has been on a service basis only, never on an interest rate basis. The result has been slick advertisements by financial institutions which say, "We are your friendly finance company", or, "Don't borrow money needlessly". For a former member, a great hockey player and a great coach, Red Kelly, to advertise on behalf of Beneficial Finance does not do him or advertising ethics any credit.


Mr. Knowles (Norfolk-Haldimand):: It puts money in the bank.


John Gilbert: It is quite true that it puts money in the banks and finance companies, but we must remember that all this advertising gimmickry is a cost factor to be included in interest rates. Competition has been illusory or non-existent. What is the defence of the minister? He says that if a person has been overcharged, he can take court action or default on his payments and force the lender to sue him. What bravado by the minister! Can hon. members imagine a low income worker having sufficient bravado to say, "Let them sue me; let them take me to court and I will prove that they have charged excessive interest rates"? What would be the result? In the first instance, it would be no contest because of reluctance by the borrower to sue and because of the legal costs involved. Second, the possibility or probability of blacklisting or blackballing the borrower by lenders in the future would be very real. The third result is the probable action by these institutions in respect of contracting-out provisions in the loan agreement.
We have had experience with regard to contracting-out and warranties given by companies concerning goods. We have had contracting-out with regard to leases under the landlord and tenant act. The law says that the landlord shall not unreasonably withhold consent to transfer, but we have found leases which contain clauses in respect of contracting-out. We will find the same thing with loan agreements and credit applications. I am sure the minister will jump quickly to the defence in this respect and say he has a provision within the act which will prevent contracting-out.
There is a very practical problem with regard to contracting-out. I can see the wording that will be in the agreement. The borrower will say he is satisfied and accepts the interest rate therein and will acknowledge that the "Meet 'em and

November 3, 1976
Protection of Borrowers and Depositors
Cheat 'em" credit company has taken into account all the provisions and criteria set forth in the protection of borrowers and depositors act and he hereby waives his right to independent advice and any or all legal proceedings. That is an example of the typical contracting provision that we will find. In any contract we will find that provision. It will contain the amount of the loan, the interest chargeable, and the payment date.
The minister says that in his legislation, in order for the borrower to use such an instrument as a defence, or if the company is to use it, the company shall give 15 days' notice if the action is to be commenced. I say that provision will be part and parcel of the contract. Under the ordinary rules of evidence, if the borrower is to prove excessive rates he will have to file the agreement in order to show the terms of the contract, and by putting that provision in he is consenting to the terms of the contract and to the contracting-out clause and is thereby limited in his defence.
We have had experience with regard to the unconscionable transactions act of Ontario. We know there have been very few actions under that act and very few successes. The reason is that the people who draw up these contracts consider all the possible defences of the borrower and tighten the contract to the point where the borrower has little or no hope of success when he goes to court. We will have the same results in respect of any action a borrower may take with regard to excessive interest rates. For these reasons, my colleagues and I think the bill is a sham and constitutes a surrender to the credit institutions.
Let me deal with one final argument the minister set forth in his press release. The argument goes like this: the credit institutions have a certain investment in dollars. They are in the business of making a profit. I do not use the word "reasonable", because they make unconscionable profits. If they cannot make these profits in the credit field, they will go elsewhere to invest their moneys, and what a tragedy would befall the poor, defenceless borrowers: this is the argument of the minister. It is much like the argument of the little boy who had a ball and said, "If you don't let me play the game my way, I will take my ball and go home".
We have had similar experience in the building field. In recent months builders have said they do not like the economic and taxation climate in Canada and therefore they will go to the south. They have gone to the United States to invest in real estate and building to the tune of $l'/2 billion to date. This is the type of attitude the builders have, and it is the type of attitude the minister thinks the credit institutions will take, that is: if you do not let me make all the profits that are obtainable, I will not invest in the field and the poor people will suffer.
Surely the making of a reasonable profit should be the basis of credit lending in Canada. It should not be an unconscionable profit; it should not be usury. How much is enough? When one sees the profits that the various finance companies and loan sharks make, it is evident that they are more than enough. There is a social responsibility on the credit institutions to use the moneys of Canadian depositors and investors

to the fair advantage of both borrower and lender. There is a biblical proverb to the effect that the borrower is the servant of the lender. In Canada, the borrower is becoming the slave of the lender. I remember George Bernard Shaw in one of his books saying that the rich man will do anything for the poor man except to get off his back and keep his hands out of the poor man's pocket.
Members of the New Democratic Party have a different approach to the problems of excessive interest rates and loansharking. We would replace the approach of the minister, of self-policing and the competitive money market aspect with four things. First, we would institute the requirement of loan insurance for the borrower. Second, we would impose ceilings on loan amounts and interest rates. Third, we would have a massive program of budget counselling in schools, churches, social agencies and community centres to teach budget counselling. Fourth, we would appoint a credit ombudsman to protect the borrower and to license, regulate and control the lender by use of court action by the ombudsman, by the use of class actions and by the use of cease and desist orders and consent orders.
Let me speak briefly on the four principles we would adopt. First, the requirement of loan insurance would be a cost factor in determining the rate of interest. This is not new. As I reminded the minister, this was part of the Liberal program in 1974. I shall read this, Mr. Speaker:
-loan insurance scheme for low-paid workers who cannot establish a credit rating.
This is what the Liberals said they would do in 1974, and it is what they are not doing in 1976. The federal government uses loan insurance in a variety of ways. First, it uses it in the mortgage field; all NHA mortgages and CMHC direct loan mortgages and AHOP mortgages have insurance. The purchaser pays a premium of 1 per cent of the loan. It has been a success with regard to default in payments by the borrowers. It is what is known as "spread the risk". The federal government uses it in respect of student loans, small business loans, farmers' loans, and fishermen's loans-to protect whom: to protect the banks and other institutions with regard to default by a student, fisherman or farmer.
The government is prepared to protect the banks against default by the borrower. The government is prepared to protect multinational companies such as International Nickel when loans are given by the Export Development Bank to stimulate exports. When loans are given by the Export Development Bank to stimulate exports, the government says to International Nickel, "We will provide insurance against a company in any other country defaulting on its payments". The government is assuring payment to the multinational corporations.
The final insurance aspect is deposit insurance, that is, to protect bank depositors from the bankruptcy or failure of a bank. Surely, .if we can protect the banks against default by borrowers, we can give the borrower some protection against
November 3, 1976

the lender. At this stage, the banks, some finance companies and credit unions use a limited form of loan insurance in case of the death of a borrower. If a borrower dies, the loan is paid up. There is no reason why we cannot adopt loan insurance, especially for low income workers. If that is the case, how does it affect the problem of loan-sharking and excessive interest rates? It spreads the risk, which is the principle of insurance, and it should, and would, reduce high interest rates because it would sweep away the argument of the banks, the finance companies and the loan sharks regarding high-risk loans.
It would result in a reasonable return to the lender and a reasonable and fair chance of repayment by the borrower. It would rid us of the problem of determining the unwarranted rate or the criminal rate, and it would rid us of loan sharks.
You, Mr. Speaker, have the right to ask what happens if the borrower does not pay loan insurance. It is obvious that no further loans would be made to him. This is the practice with regard to student loans. A constituent of mine who went to university back in 1972 and borrowed money for it, quit the university in 1974 and did not pay back his student loan. In 1976 he wanted to go back to university to take a course and he applied for a student loan. He was advised by the administrator of the fund in Ottawa that he could not get a loan because he had already an outstanding loan. Surely that principle should apply to borrowers under this act, because no person has the inalienable right to borrow. Before a person borrows, he must establish need and he must establish himself with regard to the risk; he must indicate a payment record. In those circumstances, the borrower would try his utmost to repay the loan. I am amazed at the number of people who go to finance companies and are most anxious to maintain their credit rating. They try their darndest to keep up the payments.
If we had loan insurance, we would have no multiplicity of loans with finance companies. It is rather sad to have people come into my constituency office with credit problems. When you ask what credit they have outstanding, you find they have loans with different finance companies, sometimes three or four of them. If we had loan insurance we would not have such a multiplicity of loans with different finance companies. In certain circumstances we could impose a requirement on a borrower to take budget counselling when necessary.
With regard to the second proposition put forward by the NDP for the imposition of ceilings on loans and on interest rates, we agree with the loan amounts imposed by the Consumers' Association of Canada of $7,500 plus a consumer price index adjustment. We have the same approach with regard to AHOP loans. Those loans are adjusted from time to time and there is no reason why a ceiling of $7,500 cannot be imposed with a consumer price index adjustment.
I have heard it said by the minister and by some members of the House that the Small Loans Act did not work. It is the intention of the minister to rescind the Small Loans Act. The reason the act did not work was that it was circumvented by the lenders. What would happen if a person went to a credit institution? They had a limit of $1,500 on loans. A person would asked for a loan of $1,000 and the credit institution
Protection of Borrowers and Depositors would say to him; "No, we will not lend you $1,000"-the reason being that $1,000 would bring low interest rates-"but we will lend you $1,600, $100 over the limit of $1,500, and we will charge you 25 per cent". That is the reason the Small Loans Act did not serve the purpose for which it was intended. It was circumvented, not by the borrower but more especially by the lender. All that had to be done was to adjust the loan limits under the Small Loans Act and in some cases adjust the interest rates. It makes no sense to rescind the Small Loans Act and say it did not work, we know it was circumvented by the lending institutions; let us make no mistake about it.
The practice of credit institutions is to impose different loan interest rates on different customers. But the banks have different types of loans. They have business loans, on which they usually charge a prime rate of about 10 per cent, they have consumer loans at 13 per cent and 14 per cent, and they have mortgage loans which are at the moment 11 Vi per cent, and farm improvement loans which are practically the same, 11V2 per cent. Banks serve a business community and the middle and upper classes, but they have limits on the amount of the loan and limits on the interest rate.
Finance companies deal in consumer loans and they have limits on the amount of the loan and on the interest rates, and usually the interest rates vary from 24 per cent to 33 per cent. They serve the low income and the lower middle income people who have a basic fear of the banks and therefore go to the finance companies. Then there are the loan sharks who impose their own rates. According to the minister, some of those rates are 1,000 per cent. They impose them on the poor and disadvantaged. Some might say that those are not loan limits or limits on the interest rates, but they are market interest rates. I rather doubt that there is any competition with regard to the market interest rate, because banks get the money from the depositors and lend it out at the highest rate they can obtain. There may be a little competition, but not much. What do finance companies do? They borrow from banks and add on to what they pay to the banks to make their profit.
Mr. Speaker, if the minister is worried about the competitive rates of the banks, all he has to do is use them and add a reasonable rate of return by banks, finance companies and loan sharks. When the former finance spokesman for the Conservative party sat on the Standing Committee on Finance, Trade and Economic Affairs in 1967, he knew that there was a formula for interest rates which was used for CMHC mortgages. It was the rate of return on Canada savings bonds, plus an adjustment of W2 per cent or 2 per cent. So there is no reason the minister cannot use the basic prime rate imposed by the banks and add a reasonable rate of return. Anything beyond that is unwarranted, unjustified and criminal.
I am rather impressed with the minister, Mr. Speaker, because I think he is morally a very fine gentleman. I find it morally reprehensible, however, that he puts in his press release a suggestion of seven times the basic interest rate to determine the warranted rate.

November 3, 1976
Protection of Borrowers and Depositors


Anthony Chisholm Abbott: Mr. Speaker-


The Acting Speaker (Mr. Turner):: The hon. Minister of Consumer and Corporate Affairs (Mr. Abbott) on a point of order.


Anthony Chisholm Abbott: Mr. Speaker, I wonder if the hon. member would allow me an intervention?


John Gilbert: Certainly.


Anthony Chisholm Abbott: Mr. Speaker, I have not anywhere in a press release or the bill suggested a multiple of the prime rate. I should like the hon. member to understand that. It was members of the opposition who suggested a high rate of interest.


An hon. Member:: Your member said 70 per cent.


Anthony Chisholm Abbott: Who did?


An hon. Member:: Your member.


An hon. Member:: Windsor West.


Anthony Chisholm Abbott: The hon. member for Windsor West (Mr. Gray)? That is his business, but he is not a member of the government and I am not taking my orders from him.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


John Gilbert: Mr. Speaker, I think the least the minister can do-and he did not do it in his speech-is to set out what he thinks would be a reasonable rate of return over and above the basic interest rate. That is all I am asking. I am almost positive I read that in one of the press releases from his department. I notice that the Conservative members used it, and I notice that the hon. member for Windsor West (Mr. Gray) used it.


Mr. Peters:: Even I used it.


John Gilbert: My colleague, the hon. member for Timiskam-ing (Mr. Peters), used it.


Anthony Chisholm Abbott: That confirms it is false.


John Gilbert: It was not drawn out of a hat. After I finish speaking I shall get it from the press release and send it to the minister, or if I have made a mistake I shall apologize. Conservative members and New Democratic members suggested it was seven times the basic rate. It might not be a criminal rate, but when it is suggested that it amounts to 70 per cent or 75 per cent, I say it is morally reprehensible.


Anthony Chisholm Abbott: That is not true.


John Gilbert: In his speech the minister failed to state what in his opinion would be the warranted rate, and I urge him now to tell us what he thinks the warranted rate for banks, finance companies and loan sharks should be to enable them to

make a reasonable profit. He says this information will be in the regulations, but that is not satisfactory, Mr. Speaker. Last night the hon. member for Windsor West said that before we have any further discussion on this bill, the least the minister should do is set forth the regulations he proposes. I am concerned about this, because we want to protect people against loan-sharking and excessive interest rates. The New Democratic Party would do this with loan insurance for low income borrowers, limits on loans and limits on interest rates.


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


Some hon. Members:: Agreed.


John Gilbert: Thank you, Mr. Speaker, and I thank my colleagues. 1 shall not take more than five minutes. The New Democratic Party's proposition is a far better approach than that of the minister, that of self-policing in the competition of the money marketplace. We would have a massive program of budget counselling, but not the type the hon. member for Vancouver South (Mr. Fraser) was worried about yesterday. Surely not every borrower needs to take a course in budget counselling. We say this should be instituted in the schools, community centres, credit unions and churches so that people would get a good idea of how budget counselling works.
We propose the appointment of a credit ombudsman, separate and apart from the minister. I am not the least impressed by the appointment of an administrator who would be an arm of the minister and an arm of the credit institutions and would afford little or no protection to the borrower. I propose a credit ombudsman to license lenders, impose cease and desist orders, consent orders and to put some strength into this matter.
Mr. Speaker, I have to give some credit to the minister on the matter of interest on bank deposits, but surely there should be a daily interest rate instead of the present practice where banks give interest on the lowest minimum balance every month, payable twice a year. I notice many of the credit institutions have agreed to this proposal, and I was surprised to hear some members speaking on behalf of the banks trying to make out that this is a difficult system. Many of the institutions are doing it already, so it is no problem.
With regard to the privilege of the repayment of mortgage loans at 10 per cent on the anniversary of the interest payment for the first year, 10 per cent on the principal payment of the second year, and all or any on the anniversary of the third year on payment of three months' interest, I find this a very interesting provision. I should like to know how many people with CMHC mortgages, and how many with NHA mortgages-which are government insured-have taken advantage of that privilege.
Members might be interested to know that on a $50,000 mortgage, at the current interest rate of 11-% per cent for a period of 25 years, which is how long it takes the average person to pay off a mortgage, the monthly payment of princi-
November 3, 1976

pal and interest is $498.54. After 25 years the mortgagee has paid, in principal and interest, a total of $143,562. I am not too impressed with that "privilege" clause, Mr. Speaker; it is just a sop. If I were minister of consumer and corporate affairs I would be more interested in bringing down the interest rate so that people who buy a home are given a reasonable chance, with reasonable payments, to pay it off in a reasonable time.
Finally, I say this bill has little to commend it. The saying, "Neither a lender nor a borrower be" should be, "Never a borrower be, under the provisions of this bill." The minister made a tragic mistake when he insisted on calling the bill the borrowers and depositors protection act. To be honest, he ought to have called it the lenders and loan sharks protection act. I congratulate him on his appointment, wish him no success with passage of the bill, and give him this advice, "Consult the people in the department and return to this House with a bill of which you and we can be proud, a bill which will protect borrowers fairly and will limit the gouging of lenders."


Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, it is always pleasant to rise after the hon. member for Broadview (Mr. Gilbert) has spoken in this House. As usual, he presented his own version of Alice in Wonderland and, in suggesting what he did, went wandering about in the clouds. I should think we would be in general agreement with the purported aims of this bill. No one is compelled to be a borrower, Mr. Speaker. Those who borrow today perform a conscious act. They know that they have not got the money to buy what they want, so they borrow to take a trip, to go on holiday, and so on. They even borrow money to go to the races. People borrow money for all sorts of foolish pleasures. An examination of the history of credit will show, I think, that the number of borrowings which are justified and not justified is about the same.
To say that everything is loaded on the side of the lender is wrong. 1 admit that some unconscionable lenders operate on the fringe of credit granting. But there are just as many, if not more, unconscionable borrowers-skippers, people who borrow with no intention of repaying. They are drifters, grafters, people who abscond with goods originally bought on time. They are dishonest, and what they do is no better and no worse than what the unconscionable lender does.
From time to time legislation like the Small Loans Act and the Interest Act has appeared on our statute books but has gone by the boards. These laws are out of date because inflation has been allowed to take such a free run in the economy and the amounts recited in those acts are no longer relevant. Now the government of Canada has come forward with a bill which I say is largely cosmetic. It acts as if it has sole responsibility in this field. Actually, statutes passed by the provinces, particularly by Ontario and Alberta, have covered most of this ground for 20 years. Those provincial laws are still adequate.
Protection of Borrowers and Depositors
Let me illustrate my experience with the Alberta legislation. I remember, as solicitor for a department store, participating in negotiations with the then attorney general as to terms which would be included when any document, conditional sales agreement or chattel mortgage evidenced the purchase of big-ticket items. Provisions in provincial laws are better, I think, than the ones contained in this bill. Yesterday I asked the minister a question to which he failed to reply. I will ask it again: Does he believe that this legislation will override pertinent legislation existing in almost all provinces and covering property and civil rights? Have we developed another version of the theory that father knows best, or big brother knows best? Does the minister believe that the legislation is superior to and overrides, for example, the credit and loan agreements act of Alberta which came into force in about 1955? I invite the minister and his officials to read what is meant by time sale agreements.
Bill C-16 purports, with a great deal of horn-blowing, to represent itself as the new charter for those buying on time. Nothing could be further from the truth. Both the Alberta and the Ontario laws have for many years required all this disclosure. Actually, provincial disclosure requirements are more honest than those proposed by the minister or by his advisers who may have put certain words in his mouth, words which 1 think he may want to reconsider. I refer to the minister's words as reported at the foot of page 635 of Hansard for November 1:
It is now possible for lenders to stack a variety of other charges on top of the quoted cost of borrowing. Insurance premiums, various administrative charges, legal costs, registration costs and the like are very often charged to the consumer and, in most cases, excluded from the calculation of the cost of borrowing. As a result, the consumer is not apprised of the real interest burden that he actually has to carry.
I repeat what I said previously, the minister is lumping together apples, oranges, cherries, bananas and other things in the same basket. The point is that provincial legislation in Alberta and other provinces provides that if a big-ticket item, such as furniture, is sold pursuant to a conditional sales contract or a chattel mortgage, such document, to be enforceable, must be registered. Usually it is registered at the courthouse, at a rate set by the provinces which depends on a sliding scale, the amount of the purchase, and so on. That is part of the cost of borrowing.
Another cost is that of insurance. It is there for the protection of the borrower in the event that he or she should die and the family should be faced with a claim. Remember, under a time contract or chattel mortgage the lender or vendor is not limited to repossessing the goods. There is an obligation to repay the money, at the election of the lender or vendor. There could be an unpaid balance, under a conditional sales agreement, of many thousands of dollars for an automobile, tractor or combine.
I am sure that a farmer purchasing a combine today costing thousands of dollars would be most happy to have a few dollars of insurance costs that guarantee his estate would be protected
80001-47>/2

November 3, 1976
Protection of Borrowers and Depositors from any unpaid balance should he die before completing the payments under the contract. That is only sensible. There are other legitimate charges, such as the cost of doing business, and legal costs. After all, the loan is not for the sole benefit of the lender; it is the borrower who wants to borrow the money. I am sorry that the minister left to attend a meeting, but I would like, from his parliamentary secretary or his officials, clarification of this part of the minister's remarks on Monday afternoon.
Charges such as insurance, registration charges and legal costs are certainly costs of borrowing. No one denies that. However, to then say that was the real rate of interest, in other words, that legal costs, insurance costs and registration costs are really interest costs, is poppycock. It is misleading. For a person concerned with the Department of Consumer and Corporate Affairs it is totally irresponsible to make such a statement in the House.
I wish to deal with the three main goals of the minister. I am going to comment on the first two. I quote the minister:
The first is to impose uniformity in the practices used for the calculation, crediting and description of interest on all those who take deposits from or make loans to consumers in Canada, and to require a full, uniform and comprehensible disclosure system so that the consumer, before he enters into a deposit or borrowing transaction, will know all his rights and the obligations he will have to bear.
Will this legislation override the credit and loans agreement act of 1967 of the province of Alberta, should it vary in any pertinent detail, or the consumer protection act, Revised Statutes of Ontario, 1970, particularly regulation No. 128 which details it? It may be that the regulations which will form a great part of Bill C-16-and we have seen but the tip of the iceberg-will be apparent in the legislation of some of the provinces. I suggest there may be a real battle. Somehow or other, Big Brother has said we are going to pass an act in this House of Commons in a jurisdiction that is undeniably that of the provinces and has been for well over a century. The provinces will all have to line up, touch their forelocks, bend the knee and say that the federal legislation is going to override their legislation, and they will conform.
If it is the desire to establish uniformity, let the minister say that he and his officials are going to convince the appropriate ministries in the provincial governments to establish uniform legislation. That would be a positive act, and I would agree with it. However, to say that this bill will establish such uniformity is sheer poppycock. I again quote the minister:
The second goal is to facilitate the proper functioning of the market by encouraging more vigorous competition and providing the consumer both with protection and with the right of civil recourse.
We will see whether there is greater accessibility of credit for potential borrowers. We will see whether there will be meaningful civil recourse against unconscionable contracts.
Thirdly, this bill will establish a clear and easily provable criminal offence to act as a strong deterrent to the cancer of loan-sharking that has spread throughout this country.
Why not amend the Criminal Code, if loan-sharking should be a criminal offence-and it is not at the present time. We have bills like Bill C-83, of non-lamented fame, of the last

session. Loan-sharking could have been described in that bill and made part of the criminal law, something the minister is trying to do under this law. There is one thing about a lot of this regulation and the so-called attempts to increase competition by increasing regulations and making it more difficult for lenders to operate. There is something that does not click in the bureaucratic mind. Every regulation requiring an act on behalf of a manufacturer, distributor, supplier, merchant, lender, or what-have-you, results in a cost. Who pays it? The consumer-the very person this legislation is alleged to benefit.
Take the banks and the trust companies which are already covered by a great deal of legislation, inspection and practice, and impose further requirements. Has any one of the people who talk about the daily calculation of interest determined how much it costs to calculate that interest, verify it and balance the books? Many years ago, for some two years I exercised what little grey matter I had-


An hon. Member:: It's all gone now.


Marcel Joseph Aimé Lambert: It became honed-in very well, compared to the stuff you people put out. I worked on interest rates as a bank clerk. Hon. members may remind me how long it used to take to figure that out manually some 35 years ago. I am reminded of the hours and the days and the cost involved in calculating interest; and in those days it was 2'/i per cent on savings accounts. I remember, also, calculating interest at IVi per cent on savings accounts. That was done on the minimum quarterly balance, as I recall it. Later, the calculation was made on the basis of the minimum monthly balance. So I can tell hon. members just what is involved in the cost of calculating interest payments, bearing in mind the far greater volume and complexity of savings accounts today. We say to the banks and to the trust companies, "Just calculate this interest on a daily basis." Well, perhaps they will calculate interest on loans on a daily basis. Let us see, then, if the smile goes on the other side of the face. This is a two-edged sword.
If costs for the operation of savings accounts go up because of the requirements of this bill, all that will happen is that the interest spread will have to be widened. In other words, the interest rate will have to be lowered. It is not the banks which are going to pay for this. Moreover, if there is a decline in profits, the federal treasury will suffer because 50 per cent of this additional expenditure will be deductible from taxable income. Thus, in the end, the requirement could be self-defeating; I think the bottom-line figures on the balance sheet would be zero or something less. It sounds good and it reads well but, frankly, it is a purely cosmetic operation as far as the consumer is concerned.
I thought I would go over the list of legislation in the two provinces to which I referred, Ontario and Alberta. In Ontario, the first is the personal property security act. These are all in the Revised Statutes of 1970; I do not know when they may have been passed in their original form. Then there
November 3, 1976

is the credit unions act, the mechanics liens act, the conditional sales act, the loan and trust corporations act, the consumer protection act and the bills of sale and chattel mortgages act. In the province of Alberta there is, as I recall, the judicature act, the mortgage brokers' regulation act (1964), the direct sales calculation act (1966), and the credit and loan agreements act (1967). There are any number of parts to that act, one which from the consumer's point of view is a real refuge. It is said that some provinces are havens for the absconding debtor, the person who buys on time and then wants to beat it.
On the other hand, do you not agree, Mr. Speaker, that business losses incurred when customers do not pay their debts must be recovered at other points in the operation if the company concerned is to stay in business? This is what happens when, for example, an automobile dealer makes a loss in connection with a car he has repossessed or when one of his debtors absconds. Such losses have to be taken into consideration in the course of other transactions, otherwise the dealer will go under.
The situation is the same for a furniture dealer, a radio and television dealer-any type of store or business operation which operates on credit. If things are made too easy for the so-called poor borrower or poor purchaser, one of two consequences will ensue. Either the business will become more discriminating in granting credit, thereby narrowing the field for borrowers-an effect which is counterproductive to the bill before us-or losses will be such that additional costs will be placed on the shoulders of consumers. There is nothing like sharing the load! Again, I submit that this is counterproductive to the spirit of this legislation.
Society certainly has the right to ask that when there is a transaction all relevant information should be clearly stated. In the case, say, of the purchase of a refrigerator, the cash price of the unit in question should be stated. So should the price with trade-in, if a trade-in is involved. Then there will be the dates and the amounts and number of regular payments, payments which may be blended so as to include interest, or calculated on the basis of a declining amount of interest, leaving a balance to become payable on such and such a date. To the amount to be paid there would be added the cost of a credit report, if it is part of the transaction, as well as the cost of insuring the purchaser, if such were part of the contract. Registration charges, if required by provincial law, would also be listed and, finally, the total cost.
Having arrived at that figure, it is simple to take the cash price of the product, subtract it from the total cost and arrive, by simple mathematics, at the cost of borrowing, the cost of the transaction. It is spread over so many months. I do not underestimate the capacity of a purchaser who buys a refrigerator to understand the type of contract in which this is spelled out. Incidentally, there are many provinces in which a person buying under such a contract has the right to go back within, say, five business days and say that he is sorry, he has changed his mind. I do not see that provision in this bill, but it may be the answer sometimes to the practices of some pretty high pressure salesmanship. Salesmen of home appliances, automo-
Proteclion of Borrowers and Depositors biles, radio and televisions are pretty skilled. They have to be; theirs is a highly competitive world. Take the case of a purchaser who cannot afford to buy. He goes back home, talks to his wife and says, "What were we thinking about? Buying this is absolutely crazy". Having reflected on the matter, he can go back and say to the salesman, "I am sorry; we have changed our minds".
That, Mr. Speaker, is the ultimate protection and I am quite prepared to see that here. When it comes to the purchase of an automobile, every blessed cent of the cost of that vehicle which will go into every monthly payment should be listed in appropriate columns-no fine print so small one almost needs a magnifying glass to read it-so the figures are there in tabular form before the purchaser, readily explainable to him or her. That I would agree with, and it is provided for in some provinces.
Are we going to see such provisions as this in the regulations, Mr. Speaker? My colleagues have expressed some concern about the regulations, and I hope the minister will break with tradition and disclose the regulations during the committee hearings. After all, this is not a bill that was dreamed up two weeks ago and is being rushed through; we have been hearing about it over eons of time almost. I am sure the department has had every opportunity for consultation and examination of provincial legislation which has preceded this measure by up to 20 years. I have before me a copy of a letter dated October 20 from the Consumers' Association of Canada which raises some points of query about which there is legitimate argument.
My final point, Mr. Speaker, has to do with loan-sharking. It sounds great to say that there are going to be penalties imposed on loan sharks. But it is not so much the loan-sharking that is the bad thing; it is the coercion and the efforts at extortion today that are so reprehensible. These are the offences of which people are convicted.
Does anyone in their right mind believe that there is going to be a written agreement between a lender and a borrower who enter into a transaction on, say, the docks in Montreal, where there has been evidence of loan-sharking? What about a transaction that takes place on some construction sites, where judicial inquiries have elicited that loan-sharking has been carried on by various individuals both inside and outside the industrial personnel? Will there be any agreement between gamblers and among the underworld where this type of operation known as loan-sharking takes place? Do you think, Mr. Speaker, that an agreement will be signed between a lender who is going to put up, say, a couple of thousand dollars for some poor fool who has gambled away that much money with a bookie, and that enforcers will collect this loan? What if he says, "No, I am not going to pay; you take me to court?" What will happen to him will be the baseball bat across his legs and arms. That is what happens under loan-sharking.
I say that combating loan-sharking is no function of a bill of this type. Give the police the authority to deal with loan

November 3, 1976
Protection of Borrowers and Depositors sharks. Put it in the Criminal code where it belongs. Then we will not have to go through all this nonsense of talking about agreements and civil recourse. In that league, Mr. Speaker, there is no civil recourse. Where does one imagine so-called loan-sharking is carried on? There may be usurious loan practices carried on at times among some pawnbrokers, but in such cases what was the purpose of the loan? Was it necessary to pay the rent or to buy food? Not all of those transactions is so, shall I say, humdrum and for such a useful purpose, not by a long chalk. Such transactions usually are on the wrong side of the law or for some purpose that cannot stand examination by the light of day. Let us put this kind of activity under the Criminal Code. I hope we can persuade the minister that he should try to persuade his colleague, the Attorney General, to include appropriate provisions in the bill that is to follow what was Bill C-83.
We should send this bill to committee. The principle of it is to amend certain acts. We are going to repeal the Small Loans Act and do a number of other things, but the principle of the whole bill is to amend certain acts. That is fine; I am quite agreeable to it and the bill should be sent to committee. Outside of that though, Mr. Speaker, I think this is a very cosmetic bill which will not accomplish the purpose the minister has set out for it.


Benno Friesen: Mr. Speaker, I should like to begin by commending the new Minister of Consumer and Corporate Affairs (Mr. Abbott) for bringing forward this bill as his initial piece of legislation on entering the cabinet. I think he has established a legitimate beachhead from which to launch his ministry. We may well disagree with some points in the legislation, but we certainly agree on the necessity for it. I hope he will be open-minded enough to listen to what members have to say during second reading debate, that he will listen to the proposals that are made, and gather together some of the hints that members offer relative to the amendments that he should expect at committee stage and at report stage.
I hope he will be open-minded enough to realize that even the best minister cannot bring forward perfect legislation, and that it is not a sign of weakness to allow amendments later on, but a sign of strength. Again I congratulate him for bringing forward this piece of legislation. It is his responsibility to act on behalf of the public to protect either the unwary or the defenceless, and not to encourage or reward unrestrained impulse buying.
The kind of legislation we are discussing lends itself to the creation of many victims in the marketplace. The very term "consumer", which is part of the title of the minister's portfolio, gives us some hint as to what the marketplace thinks of the ordinary individual. He is no longer a person or a human being; he is now completely depersonalized and is simply a consumer. The term has obviously been invented by some unfeeling genius of the market system whose responsibility it is to provide devourers of the unending array and supply of

gadgets spewed out by the industries which have hired these callous hawkers of the marketplace. It is not the responsibility of the minister to encourage that kind of depersonalization in the marketplace. Rather, it is his responsibility to humanize the whole process by which we buy and sell.
The bill sets out the responsibilities of a lender and puts on him the onus to disclose certain very important information, such as the total amount of the loan being discussed, the total amount of repayment, the dollar amount of interest per annum, the effective annual percentage rate, the amounts and rates of payments to be made to the lender or to a designated third party, the conditions regarding payment of penalties and the computation of the same, and the effective date of the beginning of the transaction.
It has been said that the only thing money cannot buy is poverty. I suppose at one time that was true, but in the market place and in the marketing system today that is already becoming a contradiction because of the ready availability of debt or finance. Indeed, today money can buy poverty.
I would like to address myself for a few minutes to the whole business of consumer finance as it relates to the credit card system. I do not suppose there is a member in this House who does not use a credit card; they are a very convenient way of buying.


Mr. Parent:: I don't.


Benno Friesen: I see there is an hon. member opposite who does not have one. I respect him for that. I respect his self-control.	*


Gilbert Parent: I can't get one.


Benno Friesen: The hon. member says he cannot get one. I suppose he cannot pass the character test. Perhaps he has come to the point, as other people have, where obviously his credit must be good because he owes everybody. However, in all seriousness I think anybody who can resist the pressure to borrow is to be commended.
I was talking to the minister just today about the fact that there is too much pressure on the public to apply for credit cards. There is unending pressure through television ads, magazines end even the mail service. At the present time the post office is operating, but it is strange that credit is now possible even through provincial schemes. Where the credit card companies get their mailing lists, I do not know. It would be interesting to find out. The fact that a credit card company can mail out credit cards or applications for credit cards is something which deserves serious examination by the government. It seems that consumers face no relief from the endless barrage of credit card companies saying how easy it is to borrow and how good and how convenient it is. We see happy young people pictured flicking out credit cards and making purchases, but there is never any mention that the rate of interest is 18 per cent or 24 per cent.
We see these people walk away in ecstasy, but we do not see them getting their statements at the end of the month or
November 3, 1976

paying usurious interest rates. I think the government has a responsibility to put a curb on this pressure which is always facing the consumer. I know we are not dealing with such things as subliminal advertising, but the private citizen no longer seems to have the freedom of independent decision. He is being pressured and conned into making decisions and he is caught off guard. I know we cannot endure a "buyer beware" market, nor can the government be paternalistic in this sense and protect the public from all the pitfalls there may be, but I think the government has some responsibility and should have these companies exercise restraint in this area.
Just last week when I was home I went through some of my mail and came across a letter from Master Charge. I do not even have a Master Charge card, but that letter in effect said, "Congratulations, it is now possible for you to borrow up to a limit of $1,500". I never even asked for that privilege. These companies are inviting people to go into debt. The government has a responsibility to put pressure on such companies to restrict that kind of advertising.
The government is taking away the percentage limits the lending companies can impose on their borrowers. The government says that if it puts loan-sharks out of the market-which is a happy thought, if it can be done-then taking away the ceiling on lending rates will simply make the market more competitive. I am not convinced that that is true. That could be the case, but I am not convinced. However, if the government is going to take away that ceiling, it certainly ought to take a very close look at the number of dollars these companies are spending in advertising to convince the public that it ought to use their credit, just as I think we ought to look at the amount of advertising used in other industries to convince shoppers that their product is best.
Why should General Motors have a multimillion dollar advertising budget to convince me that 1 should buy a General Motors' car? Surely most people know whether they want a GM, Chrysler, Ford, American Motors' or any other kind of vehicle. We do not have to be convinced by that kind of advertising, and the same is true with regard to credit. If the government is going to take the restraints off the lending market by taking away the interest ceiling, it also has a responsibility to consider the amount of money credit card companies are spending on advertising.
I thought we had an excellent presentation before the House last night by the hon. member for Windsor West (Mr. Gray). I believe he spoke from a very informed position, since he is a former minister of consumer and corporate affairs. I thought he gave a very responsible and well thought-out presentation regarding this legislation. The criticisms he had for the bill were not vitriolic; they were constructive. He pointed out the gaps in the legislation and offered alternative proposals which the government might introduce if it wants to improve this legislation.
I want to emphasize that the minister would display his strength as a minister if he had the courage to entertain the
Protection of Borrowers and Depositors kinds of amendments that will be suggested during this debate and at the committee stage. The hon. member for Windsor West said, as recorded at page 704 of Hansard'.
However, this bill does nothing to ensure that the low income borrower who has in the past found it difficult to obtain credit from legitimate institutions, will not continue to be forced into the hands of loan sharks rather than getting that credit from legitimate lenders. The bill does nothing to ensure that the borrower, who found it difficult in the past to get credit except from companies licensed under the Small Loans Act, will, when this bill is passed, get credit on terms as favourable as those now provided for loans under the act, either from small loan companies or other credit granting institutions. The minister in his speech on second reading said at one point:
"That is why we propose the repeal of the Small Loans Act. Instead we are proposing a strong and comprehensive set of protective devices applicable to all forms and levels of consumer credit so that consumers will be assured of access to loans bearing fair and reasonable credit charges."
It is a truism among the people who have to go to the lending market, to the regular financial institutions to borrow money, that the only time money will be lent to them is when they can prove that they really do not need it. That is another way of saying that one needs so much collateral that one probably could get along very well without borrowing the money unless one wanted to expand his enterprise. The fact is that some of the lending institutions are so careful in establishing their criteria and in examining their prospective clients that it becomes very difficult to borrow money from them.
A friend of mine went to his local bank. He wanted to do some renovations to his house. I think he was a school teacher; at least, he seemed to be a very respected person in the community. He had good credentials but he simply did not have too many resources, as is the case with most teachers. This man went to his banker and said he wanted to borrow "X" number of dollars for the purpose of renovating his house. After discussion the banker said that he did not think he could do that for him because he did not have very much collateral. They made small-talk for a while and when my friend went to leave, the banker, in the usual closing remarks said, "any time I can do something for you, please come and see me". My friend said that the time was then.
The fact is that these institutions tend to be so secretive and security-oriented that only the most prosperous clients stand a chance of getting the kind of terms they need in respect of loans. As the hon. member for Windsor West pointed out, if you do not have blue chip kind of credit, it is not likely that you will get that kind of loan. So a person who might in every other sense qualify for this type of credit, eventually ends up going to the loan-sharking business.
The minister proposes to do away with loan-sharking. I hope he is successful. I hope that this bill makes it possible. However, human nature being what it is, and because of the unscrupulousness of the people already engaged in that kind of business, I am not inclined to be sanguine about- the hope. Because of the very nature of these people, who are dangerous and usurious, they will continue to operate in a devious fashion and there will always be a market for their product. They will simply go further underground. The borrower who does not have blue chip collateral will end up in some kind of financial arrangement like this.

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Protection of Borrowers and Depositors
The hon. member for Edmonton West (Mr. Lambert) asked, what is the recourse? The bill says the recourse is the law and that the lender will have to prove before the law that the rates are not usurious or criminal. That kind of lender has other ways of handling his client who would have the temerity to go before the law. There is the matter of the baseball bat, the slashed tires or the threatening phone calls at three o'clock in the morning. These unscrupulous people take matters into their own hands. Their method is intimidation. So what is the borrower to do in this kind of situation? If, in normal circumstances, he has good credit but cannot borrow at an ordinary lending institution, what is he to do?
I suggest the hon. member for Windsor West came up with a very reasonable solution which I think deserves examination by all members of the House, certainly by the members of the committee and the minister. As recorded at page 706 of Hansard, the hon. member said:
A simple approach would be to require the licensing, the registration, of all moneylenders not subject to be licensed under other federal or provincial laws. One can agree that duplication of licensing is not necessary. But why remove even the requirement for licensing from those now subject to it under the existing law? Whatever may be said for the authority to be given to the new administrator under the act, that authority is not to exercise a licensing jurisdiction.
The simple solution is a licensing requirement. This government, of all governments, ought to have some kind of experience in licensing. When we think of the government's proposal in respect of Bill C-83, one would think with that kind of reflex action the government would have thought of that proposal when it came to the matter of moneylenders.
I understand that the government of British Columbia has brought forward legislation which requires moneylenders in British Columbia to be licensed. What is wrong with that? Why not take the people who want to be involved in the moneylending business and require that they take a course of study which would prepare them for this kind of business? During that course of study the licensing process would soon eliminate people who are not equipped to be involved in this kind of business. We have this situation in other areas. It happens in the insurance business. To be a reputable insurance salesman a man must pass a course; then he is given a licence to sell insurance.
We do it in the real estate business. Banks have to be licensed. It seems to me that the hon. member for Windsor West has come up with a very legitimate proposal for the government to examine and to bring forward in committee. The government should let it be examined in amendment form. I do not know why the government should not want to adopt this suggestion. One of their own members brought it forward. It seems to me that it deserves examination.
This whole business of pressure to buy, pressure to borrow, has very invidious dimensions. I have already mentioned the credit card business and consumer orientation, but when you see how the marketplace operates today where, for example, large department stores also become lending institutions for one who is buying their merchandise, it takes you back to the

company store, "Sixteen stone, and what do you get? Another day older and deeper in debt." We have examples of large, chain department stores charging what may be a legitimate mark-up on their merchandise, but they are making another 18 per cent to 24 per cent on the money they lend to the consumer who purchases from them.
That kind of vertical organization lends itself to a lot of abuse. I am not saying that the chains we have in Canada are abusing the system; I am saying the system lends itself to abuse. Then you have a company such as the Power Corporation, for example, which is an enterprise involved in transportation, in communications, in advertising and in moneylending.


An hon. Member:: Also, in politics.


Benno Friesen: You have those kinds of relationships. We have to get away from the pressure on the consumer encouraging him, almost forcing him, into impulse buying. Let me get back to the borrower who comes to the lending market with what would be classed, I suppose, as secondary qualifications to borrow money. The present legislation says there is the litigation process which he can go through if he feels he is being charged too much. On the surface, it sounds reasonable-the lender now has to justify the rates he is charging. But it seems to me, if I understand the bill correctly, that that is after the fact. After they have engaged in an agreement and the borrower realizes that he is being charged more than he should be charged, it is then his prerogative to go before a judge and engage in litigation.
However, in so many cases the very people who become victims of this kind of money market are those who are not accustomed to going before the law; they cannot afford it. They are not accustomed to going before the law because they are not in that kind of world, and they do not have that kind of income to hire a lawyer or even to get legal advice. While the proposal seems to be legitimate, I am afraid that it will break down and the very people whom the legislation is designed to help will continue to be the victims because they have a fear of the legal system, they stay away from the courts and they are not accustomed to being in that kind of position.
The hon. member for Windsor West said that the criminal rate of interest for which sanctions will apply to the institutions, transactions to be exempted from the act, and the kind of information to be spelled out in the advertising in which credit is mentioned cause him concern. He said the government must table a complete set of draft regulations with the committee studying the bill. He hit the point right on the head. We have had too much exposure to legislation which provides that regulations will come at a later date or will be drafted after the legislation has been passed. We have experienced that, especially with Bill C-83. We faced it in immigration laws where the government could change the regulations overnight and simply impose them on the public without providing the people with prior information.
The hon. member for Windsor West has a very strong point. He said there can be no meaningful parliamentary debate, nor can there be meaningful public input as to the content of the
November 3, 1976

bill without these regulations being put before us at the earliest possible date which, he says, should not be later than the beginning of the committee hearings. 1 should like to encourage the minister to draft those regulations and give himself that much time before he moves forward with this legislation, so that the committee can examine the regulations and provide the kind of input that the legislation needs if we are to do the best we can for the public.
If we do not have the best kind of bill issuing from this debate and from discussion in committee, only the public will suffer. The very people whom the minister wants to help will be hurt the most. The tragedy is that the people will have confidence in this legislation, but that confidence will be betrayed if the minister does not submit it for scrutiny. I encourage the minister to give himself more time so that the regulations can be drafted and presented to the committee. We should allow amendments to come forward and let the public benefit from the best possible discussion and scrutiny of this legislation so that we will get the best protection that the public deserves under it.


Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker, I welcome the opportunity to take part in this very important debate on Bill C-16, an act to provide for the protection of borrowers and depositors, to regulate interest on judgment debts, to repeal the Interest Act, the Pawnbrokers Act and the Small Loans Act and to amend certain other statutes in consequence thereof. I am afraid we are off to a very bad start with Bill C-16, as the hon. member for Surrey-White Rock (Mr. Friesen) stated. It is similar to Bill C-83, which was very poorly drafted. If it ever comes back, which we hope it will not, about 100 amendments will be presented to try to improve the bill.
The Globe and Mail of October 29 reported the Canadian Bankers' Association as saying that this bill, rather than achieving the stated objective of eliminating unnecessary complexities and confusion in the credit field, in its present form could confuse and dislocate consumer finance to the detriment of all Canadians. It reported that the CBA has serious reservations as to the contents of the bill in the form in which it has been introduced, saying it appears that rather than meeting specifically Canadian needs, based on Canadian experience and the need to operate within the Canadian institutional framework, foreign precedents and procedures have been adopted. It claimed that as the bill stands, the cost and availability of credit to consumers would be adversely affected since legitimate lenders would face difficulties in their administration and assets and liabilities management. It noted that another stated objective of the bill is to rationalize federal credit legislation, saying that with this the bill attempts to cover such a diverse range of topics as consumer credit, mortgages, deposits, advertising and disclosure, without having regard to existing federal and provincial legislation.
The newspaper noted that the CBA argues the public would have been better served, and more effective and useful legisla-
Protection of Borrowers and Depositors tion would have emerged more quickly, if the government had allowed for adequate public discussion of the proposals before the introduction of the legislation, perhaps through a white paper process. The report continued that the CBA said after it has had an opportunity to study the bill it will prepare detailed alternative submissions for parliamentary committees to consider.
On November 1, the hon. member for Edmonton West (Mr. Lambert) put the following question to the minister:
I hesitate to interrupt the minister, Mr. Speaker, but I wonder if by the time he completes his explanation on this point he could tell me how he believes he can lump together charges under provincial legislation for the registration of chattel mortgages or other forms of incumbencies with interest charges that are to the benefit of the lender. Those are two different things. I should like to know how the minister believes he can lump together apples, oranges, cherries, bananas and other things in the same basket and come out with common interest charges and rates.
The minister replied:
I would prefer not to attempt to answer that question because it opens the problems of provincial instruments-
That indicates how ill-prepared the government was and how poorly the bill is drafted. Under a heading "Loan bill constitutionality queried", an article in the Montreal Gazette of November 2 refers to the hon. member for Brome-Missis-squoi (Mr. Grafftey), saying:
-he has doubts about the constitutionality of a government bill aimed at halting loan-sharking and protecting borrowers from unfair interest rates.
The article goes on to say that the hon. member doubted there had been full consultation with the provinces before the bill was introduced. Mr. Speaker, this is evidence of complete lack of consultation, and now we doubt if the bill is even constitutional. Now let us look at some clauses of the bill, Mr. Speaker. Clause 2 (2) (a) reads:
Where the payment is in the form of an amount paid that is sent by mail to the lender at his latest known mailing address and, on the day it is sent, the payment is in a form that is negotiable by the lender, on that day-
With the mail service, we have, Mr. Speaker, that clause could cause very serious problems and will have to be looked at in committee. Clause 33 reads as follows:
Where, in any proceedings in relation to a particular lending transaction, a dispute arises as to whether a payment by a borrower under the transaction was made on or before the day on or before which such payment was, under the terms of the lending transaction, required to be made, such payment shall, in the absence of any evidence to the contrary, be presumed to have been made on or before that day.
I do not know how this is to be recorded. I would imagine lenders will have to photostat all letters. I will be interested to hear them explain, when they appear before the committee, how they will carry out this provision. On the matter of the obligations of lenders, clauses 17 and 18 provide that all lenders shall maintain records and books of account which would enable the administrator to identify credit charges in individual transactions. These records shall be kept by the lender until such time as prescribed by regulation. Here we get into the question of the regulations. This matter has been mentioned by other members during the debate.
It is puzzling to see how all the regulations can be administered, when little bombshells are dropped from time to time.
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Protection of Borrowers and Depositors
The bill says that the records may then be destroyed; a lender shall provide a periodic statement of account to a borrower without charge; frequency and form will be specified by regulation; upon the payment of a fee in an amount to be specified by regulation, the lender shall provide to the borrower an interim statement of account. All these procedures should be stated in the bill and not by regulation, Mr. Speaker.
Because of the considerable dependence of this section on unrevealed regulations, analysis of it would not be fruitful. However, the extent of the use of regulations is itself significant. Why, for instance, the length of time the records must be kept should be at the discretion of the governor in council is an interesting question. On the matter of depositors, clauses 19 to 21 state that a deposit is defined as the aggregate of moneys, including interest, accepted or held by the institution in return for which the institution is primarily liable, for which it must issue a receipt and give credit to the depositor's account. To retain the character of a deposit the institution must also be obligated to repay the moneys on demand or on notice.
Advertisements shall not claim to provide a deposit interest payment, except as provided by regulation; the amount of interest earned shall be calculated in the manner prescribed by regulation; the frequency with which interest is credited to accounts shall be monthly, or at such more frequent intervals as may be prescribed by regulation; all deposit-taking institutions shall disclose to the depositor the annual rate on the applicable class of deposits, the method by which that interest is calculated and such other information as may be prescribed by regulation. Mr. Speaker, we will have a longer list of regulations than there are clauses in the bill. These sections apply to all deposit-taking institutions except to classes of institutions that are exempted by regulation.
Emphasis has been placed on the words "by regulation" because of the magnitude of what these sections will regulate. In chartered banks, trust companies and mortgage loan companies alone there are over $40 billion of savings deposits. That discretionary powers over the treatment of such an enormous amount of money should be proposed at all is a frightening thought. A further source of alarm is that control over transactions involving this amount of money is vested in the Department of Consumer and Corporate Affairs, a department that has no mandate to concern itself with the stability of the monetary system.
A possible scenario where these deposit provisions could interfere with monetary stability is here outlined. Assuming that the regulations will specify that interest payments are to be calculated daily, it will become more profitable for depositors to use chequing and non-chequing savings accounts rather than personal chequing accounts which bear no interest. There will thus be a shift from demand deposits to notice deposits. In terms of the classifications used by the Bank of Canada, funds will shift from M-l, currency and demand deposits, to M-2, currency and privately-held deposits, including savings deposits and non-personal term and notice deposits. Since the Bank of Canada fastens upon M-l as the principal method of regulating the size of the monetary mass, to the extent that

funds move from M-l to M-2 Bank of Canada control is reduced.
Further, chartered banks currently must maintain reserves of 12 per cent on demand deposits and 4 per cent on notice deposits. If funds shift from demand to notice deposits, a reduction in the aggregate level of reserves maintained by the banks will occur. This would not only reduce Bank of Canada control of the money supply but would also release large quantities of funds into the monetary system. The above scenario is not meant to suggest that this will occur but that it might. Surely, there should be a requirement that any regulations proposed for deposits by the Department of Consumer and Corporate Affairs should be first checked and approved by the Department of Finance and or the Bank of Canada.
Although these sections leave much of their substance to regulation, yet a further point can be made. Inasmuch as Canada savings bonds are available only to consumers, it should be incumbent upon the government of Canada to lead the way in interest rate disclosure by agreeing to treat Canada savings bonds in the same manner as deposit-taking institutions are required to treat interest on non-chequing deposits.
I now come to the powers of the administrator, dealt with in clauses 24 to 30, inclusive. The administrator shall keep a register about lenders which is likely to be of interest to borrowers, including judicial proceedings, under the BDPA or any federal or provincial statute. Borrowers, upon payment of a fee, may inspect the register or obtain a certificate of compliance concerning the lender's activities. The bill states that the administrator may require a lender to submit information regarding lending transactions. Also, the administrator may enter the premises of the lender at reasonable times, examine or audit his books, obtain assistance in his examination from the lender and, if it appears to the administrator that an offence has been committed, seize all relevant information. Entry can only be approved by a judge, and only when a complaint has been received from a borrower.
Information obtained in this manner is privileged and may only be made public in enforcing the act. The power of the administrator is considerable but is protected from abuse by the requirement that judicial authorization shall be sought in advance of the use of any extraordinary remedies. If it is granted that the strictures specified in the act are necessary and beneficial, then it is apparent that a person must be vested with the power to apply them. In one area, however, the administrator has power that may be abused and for which there is no judicial authorization required.
The administrator shall keep a register which will include any information which, in the judgment of the administrator, is likely to be of use to the borrower. This information will include records of judicial proceedings against lenders, whether under the BDPA or any other act. The legislation does not specify whether these records of court proceedings only will include cases in which the lender has been found guilty. Failure to limit the judgment of the administrator in this way
November 3, 1976

could allow the administrator to conduct a campaign of innuendo against a lender by simply listing the actions brought against a lender whether or not they were successful.
1 now deal with clauses 37 to 40. inclusive, which have to do with offences. Persons who demand an excessive credit charge, unlawfully destroy records or accounts or employ any threat or coercion against a borrower, are liable, on summary conviction, to a fine of between $1,000 and $10,000 and/or to imprisonment for two years or, upon indictment, to a fine not less than $1,000 and to imprisonment for five years. Illegal types of threat or coercion are identified. They include: intent to use violence, threat of public accusation, threat of sale or assignment, threat of arrest or seizure of possessions. Activities which constitute threatening are identified: use of obscene language, placement of anonymous telephone calls, collect calls or calls at inconvenient times.
The purpose of the very detailed list of illegal practices is to prohibit practices used by loan sharks or unscrupulous lenders in obtaining payment. But since practices of intimidation or of abusive conduct or of threat or coercion are already deemed criminal offences under the Criminal Code, it is unlikely that this bill will create any new deterrent to criminal acts. The problem is one of enforcement rather than of law.
May I now make some general comments. Much of the borrowers and depositors protection bill will be of considerable benefit to consumers who borrow or deposit, and is not likely to impose an undue financial or administrative burden on the various classes of financial institutions which either lend or accept deposits. Certain features of the bill, however, are manifestly unfair to lenders and, indeed, may be counterproductive for consumers. Implementation of the legislation in its current form may disrupt loan markets to the extent that funds available to borrowers through legal sources will be reduced. Other sections of the bill may only serve to confuse consumers, when the object is to allow them to be better informed. For depositors, benefits are not clear at this time, as most of the procedures by which interest on deposits is to be advertised, computed and credited will be prescribed by regulation.
Few would dispute that new legislation in this area is required. The principal federal borrower protection laws are the Interest Act and the Small Loans Act, last amended in 1917 and 1956 respectively. It is clear that many significant changes in the financial system have occurred since these times, including a much greater willingness of consumers to borrow, much higher general interest rates, greater sophistication in advertising, the large-scale entry of chartered banks into the consumer loan market, and a proliferation in the range of financial services available to consumers.
Bringing the act up to date, however, is not the only change required. The Small Loans Act only regulates designated moneylenders and loan companies. There are many other classes of financial institutions, not the least being the banks, which are not affected by the provisions of this legislation. Provincial governments have implemented some legislation which is of assistance to borrowers, but these protections have
Protection of Borrowers and Depositors neither been complete in their coverage nor consistent between provinces.
Bill C-16 proposes protection that will be uniform in degree throughout the country and will affect all institutions which lend to consumers or closely-held corporations. The Interest Act will be repealed and replaced by one piece of legislation. At the same time, responsibility for administration of the act will be vested in a different minister. Although there was no privy councillor assigned to administer the Interest Act, it was assumed to be under the general authority of the minister of finance of the day and in practice required no administrative guidance, being used primarily by the courts. Administration of the Small Loans Act is the responsibility of the minister of finance of the day. The new BDPA will be administered by the minister of consumer and corporate affairs.
This change in administration itself raises some questions which may be of some importance. The objective of the BDPA is to protect consumer borrowers and depositors. The objective of the Department of Finance in administering small loans legislation is not only to ensure the propriety of management policies and operations of small loans companies but also to ensure their financial solvency. Further, the Department of Finance is charged with maintaining an orderly financial system. It is possible that the goals of borrower and depositor protection may conflict with those of the financial solvency of loan companies or of an orderly financial system. Since it is within the mandate of the Department of Finance to examine policies proposed by other departments and agencies of government having an effect on economic or financial conditions, it may be useful to direct questions to the Minister of Finance (Mr. Macdonald) as to the likely impact of the BDPA legislation.
I said a moment ago that the BDPA intends to provide national standards of protection. Thus, where a provincial statute is in conflict with a federal one it appears that the Minister of Consumer and Corporate Affairs intends that the federal act shall be supreme. This presumption of jurisdiction is based on a constitutional premise. Section 91(19) of the BNA Act indicates that matters pertaining to interest are within federal power. Federal reasoning is that "all transactions where interest is involved must therefore be considered to be within federal jurisdiction."
This interpretation may seem to be sound, but is suspect for two reasons. First, in this bill the definition of "interest" is often extended somewhat beyond its original 1867 meaning, as when "credit charge rate" is used in place of the notion of interest rate and is only defined precisely by regulation. Second, although a loan or deposit is a transaction where interest is involved, the bill regulates aspects of a loan or deposit transaction which have little or nothing to do with interest, as when late or early penalty payment procedures are specified, when loan account statements are demanded or when unacceptable collection procedures are designated. Rules in all these areas may be desirable, but the federal jurisdiction-
80001 -48>/2

November 3, 1976
Protection of Borrowers and Depositors al power of interest is being stretched in interpretation when it is used as justification for regulation of these practices. Objections from provinces may be expected.
A rather alarming number of the provisions of Bill C-16 are deliberately vague. Details will be filled in by regulation. In a bill of 44 clauses there are at least 20 distinct cases where clarification as to the meaning of terms or the procedures to be followed will be given in regulations which will be proclaimed by the governor in council. The only check on the unrestrained power to make regulations is the provision in clause 31(2) which requires that an opportunity to hear representations shall be provided to interested parties.
Many of the regulations will specify matters of substance rather than of detail. Examples of definitional or procedural matters which will be revealed by regulation include, (1) the definitions of "credit charge rate", "lowest rate quoted" for prime or non-chequing rates, and "variable rate" of a loan, and (2) the procedures to be followed in advertising credit availability, making full disclosure of the cost of a loan, providing statements of account to borrowers-manner, form and periodicity-advertising, calculating and crediting interest on deposits. Application for so many discretionary powers in a bill should give cause for concern in itself, but the extent of the powers sought is quite astounding. The bill proposes to give unchallengeable power to the governor in council to control the manner and form in which billions of dollars of deposits and loans are made every year. Whether such power would be used wisely is a question which pales into insignificance beside the question of whether such unchallengeable power should exist at all.
I now wish to deal with the principal provisions of the bill. The interest rate ceilings are removed in clause 3. Apart from restrictions imposed by this and other acts of parliament, any rate of interest may be charged "that is agreed upon." This provision constitutes the removal of the interest rate ceilings imposed by the Small Loans Act. Under that act a rate of interest could not be charged on a loan that would exceed, (a) 2 per cent per month on any unpaid balance less than $300, (b) 1 per cent per month on any unpaid balance over $300 but less than $1,000, or (c) one-half of 1 per cent per month on any unpaid balance exceeding $1,000 but less than $1,500. Longer term loans were subject to even lower rates.
The removal of interest rate ceilings is a source of benefit to both lenders and consumers. The ceilings were imposed at a time when general interest rates were at a much lower level. Under more recent conditions, where a loan company has had to pay rates in excess of 11 per cent to purchase the money it loans, it is impossible to expect loan companies to lend at rates of 12 per cent and less and still remain solvent. Under certain conditions, for certain amounts of money, a loan company would have been expected to lend at rates less than those offered by chartered banks exempt from small loans legislation which have, because of superior leverage and lower costs of raising funds, a much lower cost of doing business. Such a situation causes moneylenders and small loan companies to turn down all but the most credit-worthy borrowers or to lend

amounts above the regulatory coverage of the act, which is $1,500.
Loan companies affected by rate regulation have generally been opposed to it. They have argued that rate regulation is unnecessary. They say:
The degree of competition among various credit suppliers and among the member companies of our own industry guarantees the vast majority of borrowers that adequate credit will be available to them at fair, efficient and competitive rates.
This was contained in a submission by the Canadian Consumer Loan Association to the Department of Consumer and Corporate Affairs. The CCLA is now part of the Association of Canadian Financial Corporations. Consumers will be satisfied in one respect, that loans will be more freely available to borrowers. However, the Consumers' Association of Canada maintains that the retention of a graduated rate ceiling of up to $7,500 is still necessary, arguing that the competitive rate model is "theoretical" only, particularly for low income and or sophisticated borrowers. They recognize that rate regulation may deprive high-risk borrowers of access to credit, but if the problem of the high-risk borrower can only be salved by giving him access to high-cost credit, this is not, in our view, an objectionable effect. Although explicit rate regulation is removed by this clause, control over rates exists in another section, clause 8. To a certain extent, then, rate regulation appears in a more flexible though not necessarily a more satisfactory form.
May I call it six o'clock, Mr. Speaker?


The Acting Speaker (Mr. Turner):: The hon. member for Grenville-Carleton (Mr. Baker) on a point of order.


Walter David Baker: Mr. Speaker, before embarking on the point of order, may I formally express in this chamber the congratulations that are due and owning to the hon. member for St. Boniface (Mr. Guay) who has now been elevated to the ministry.


Some hon. Members:: Hear, hear!


Walter David Baker: Members on all sides have always enjoyed his company. We hope this elevation will not deprive us of the day to day contact we have had with him as a person who has exhibited the utmost accessibility. On behalf of our party, I congratulate him on this elevation. I also want to have the honour of asking him his first question as minister. Can he advise us of the business of the House for tomorrow?


Mr. Guay (St. Boniface):: Mr. Speaker, I wish to thank the opposition House leader for his kind words and good wishes. I will answer his question. We anticipate carrying on with Bill C-16 until it is completed. If that is done tomorrow, possibly we could proceed to Bill C-5 dealing with currency and exchange.


Stanley Howard Knowles: Mr. Speaker, I am sure you will agree that it is appropriate for a fellow Win-nipegger to join in congratulations to the new Minister of State for Urban Affairs (Mr. Ouellet). I do so very heartily.
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Protection of Borrowers and Depositors


Some hon. Members:: Hear, hear!	The Acting Speaker (Mr. Turner): Order, please. It being
six o'clock this House stands adjourned until two o'clock Mr. McKenzie: Perhaps the new Minister without Portfolio tomorrow afternoon.
(Mr. Guay) will inform the House as to his responsibilities, as At 6:02 p.m. the House adjourned, without question put, we may wish to ask him the odd question.	pursuant to Standing Order.

Thursday, November 4, 1976