1976-12-20

ROUTINE PROCEEDINGS


Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, I rise under the provisions of Standing Order 43. The urgent and pressing nature of this motion concerns the investigation now underway under the Combines Investigation Act relating to the United Fishermen and Allied Worker's Union of British Columbia. In view of the clear provisions under that Act which exempt trade unions, and Section 27(1) which provides that these hearings may be held in public at the discretion of the chairman, and in view of the request by the union in question for a complete public inquiry, and the importance of this industry to British Columbia and to Canada, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House request that all such hearings be held in public in order that the public may be fully informed and aware of these proceedings.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


OLD AGE SECURITY ACT
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I ask leave under Standing Order 43 to present a motion of urgency. I would, therefore, move, seconded by the hon. member for Oshawa-Whitby (Mr. Broadbent):
That this House urges the government to introduce without further delay the legislation to amend the Old Age Security Act announced by the Minister of National Health and Welfare on April 14, 1976, and to include in the legislation, along with the changes in residence requirements and the provisions for reciprocity announced by the minister, a substantial increase in the basic amount of the pension and a lowering of the eligible age for all persons out of the labour market.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, I have a question for the Minister of Industry, Trade and Commerce, but in his absence I will direct it to the Prime Minister. I know of his intense interest in the textile industry because of its great importance to the Canadian economy. In view of the fact that three Canadian textile companies: Cirtex Knitting of Caraquet, New Brunswick; Associated Textiles of Montreal; and Bill Knit Industries of Toronto, have been forced to close down during the past few days due to competition from low wage countries, and since the minister introduced his new policy aimed at correcting the troubles caused by the low wage imports, is the government planning to revise its policy in order that it will be able to adequately deal with this very serious problem before many more companies are forced to go to the wall, as a number of these companies are known to be in serious difficulty today and such layoffs would cause very serious hardships to the people of Canada and the economy of the country?


Mr. Hugh Poulin (Parliamentary Secretary to Minister of Industry, Trade and Commerce):: The hon. member says the industry has suffered. That is, indeed, one of the reasons the policy was originally announced. Last week, the minister did make some amendments to the policy in order that those who had established businesses since 1975 and did not have a basis would be assured of ability to carry on in business. It is for the reasons the hon. member mentioned, that we did not want this industry to be struck by a great deal of unemployment, that the policy was originally established.

December 20, 1976
Oral Questions


FOOTWEAR-MEASURES TO DEAL WITH IMPORTS FROM LOW-WAGE COUNTRIES
George Harris Hees: As the Prime Minister does not deign to answer a question about this important matter, despite the fact that the government introduced a new policy and that all textile companies in the meantime have been laying off increasing numbers of employees day by day, so obviously this policy is too little and too late, and must be revised or else this whole industry would go down the drain; since 1 cannot get an answer from the Prime Minister I should like to direct my question to the Minister of Industry, Trade and Commerce.
In view of the fact that I drew attention a few weeks ago to the serious situation faced by the footwear industry in Canada caused by imports from low-wage countries and asked the minister if he would try to devise a policy to combat these serious troubles in the industry, I would ask the Prime Minister, knowing what his ministers do and do not do to look after these important industries, whether the government intends to introduce a policy to deal with the problems facing the footwear industry so that this important industry does not go down the drain.


Fabian Hugh Poulin: Mr. Speaker, the minister has made comments on the position of the footwear industry in parliament and elsewhere. This matter is under constant consideration by the department and the minister, and a policy will be announced in due course.


George Harris Hees: As these are the answers which are stock answers given to cover up the fact that absolutely nothing is to be done by the government, and since the government and the Prime Minister in particular do not seem to give a damn about two very important industries in this country going down the drain, I want to ask the right hon. gentleman whether he will begin taking his job a little more seriously and do what he has been elected to do by the people of Canada?


TEXTILES-REQUEST FOR EXTENSION OF SURTAX ON IMPORTS OF POLYESTER YARNS
Miss Flora MacDonald (Kingston and the Islands):: Mr. Speaker, I should like to direct a question to the Acting Minister of Industry, Trade and Commerce. In view of the fact that the measures recently implemented by the government have not had the desired effect of restoring the textile industry to a healthy state as, I believe, everyone would like to see happen, I would ask the acting minister whether the government would give consideration to extending the surtax on imports of Polyester yarns past the expiry date of January 8, 1977?


Hon. Len Marchand (Acting Minister of Industry, Trade and Commerce):: I shall have to check on that particular matter, but the policy which was announced only a short time ago has not had much of a chance to start working yet.


Flora Isabel MacDonald: I appreciate the fact that the Acting Prime Minister-


Some hon. Members:: Oh, oh!


Flora Isabel MacDonald: I should have said the acting minister, has undertaken to check into that matter. In view of the fact that the surtax will expire while the House is in recess and that it was introduced in July of this year for a period of 180 days only, and has not yet had time to take effect, I put the following question to him: Since these measures have not yet had time to take the effect which the government and other members want to see, will the hon. gentleman give us some indication, before we rise, whether or not this surtax will be extended past its expiry date?


Len Marchand: Yes, Mr. Speaker, I hope that by tomorrow I can have an answer to this question.


THE CANADIAN ECONOMY
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I have a question for the Prime Minister. Considering that after two months of sittings parliament has passed only two bills in all stages, and considering that on October 20 the government House leader assured the House that we would have a bill of substance dealing with our serious level of unemployment, would the Prime Minister assure the House that at least that bill will be introduced before we adjourn for Christmas, or will this parliament become officially known as the do nothing parliament?


Some hon. Members:: Oh, oh!


Right Hon. P. E. Trudeau (Prime Minister):: I think that if a name is to be given this parliament, it will be the do nothing opposition.


Some hon. Members:: Hear, hear!


George Harris Hees: Of all the childish rejoinders I have ever heard!


UNEMPLOYMENT-STUDY OF POLICY ANALYSIS GROUP AT UNIVERSITY OF TORONTO-POSSIBILITY OF TAX CUT
John Edward Broadbent: One can see this is Monday. We ask a serious question of the Prime Minister, and all we get is a lousy joke.


Some hon. Members:: Oh, oh!


John Edward Broadbent: In the naive hope that at least some minister will take his responsibility seriously, I would like to ask the Minister of Finance if he has yet received a copy of the study of the Policy Analysis group at the University of Toronto which has just completed a forecast of unemployment for 1977
December 20, 1976

in which the group states that unemployment will average 7.4 per cent and in 1978, 7.8 per cent. I ask him to confirm that his department has received a copy of that study and also confirm his department's agreement with it.


Hon. Donald S. Macdonald (Minister of Finance):: Mr. Speaker, we have received a number of outside studies, all of which are based on certain hypotheses. Naturally, we would take these into account in our own estimates.


John Edward Broadbent: Since more than 2Vi million Canadians will be directly or indirectly affected by unemployment this winter-which is a scandal for any advanced industrial nation- will the Minister of Finance accept this group's suggestions, as well as that made by any other group inside or outside the House, that the government bring forward a tax cut soon, at least as one means of indicating they are concerned with the problem of unemployment.


Mr. Speaker:: Order, please. To be consistent with the position I took on Friday in respect of the same question put by the hon. member for York-Simcoe, I will point out that I am sure the answer will be that this is a budgetary matter.


TEXTILE IMPORT QUOTAS-EFFECT ON CONTRACTS-REQUEST FOR TABLING OF LIST OF BINDING CONTRACTS
Mr. Bill Jarvis (Perth-Wilmot):: Mr. Speaker, my question is for the Minister of State for Small Businesses and it relates to the textile industry with which, I presume, he is concerned because so many of those companies are small companies. On December 13, I asked the Minister of Industry, Trade and Commerce whether the announced import limits on textiles superseded contracts with countries exporting textile products to us, specifically contracts with Hong Kong. He was unable to answer because he did not know whether contract formalities had been completed. Would the Minister of State for Small Businesses say whether limits on textile imports announced by the minister supersede or abrogate contracts the formalities of which have been completed in cases when these contracts would have the effect, if fulfilled, of exceeding the limits announced by the minister?


Len Marchand: Mr. Speaker, I will have to check this out. This is a rather complicated matter which gets into the area of contracts and legal questions. I know the minister is looking at each case as it comes along and each will be judged on its own merits.


An hon. Member:: You are the minister.


Len Marchand: It is very difficult to make a blanket statement that this will apply or this will not apply.
Oral Questions


William Herbert Jarvis: In order to attempt to clear up some of the uncertainties which are disappointing to textile manufacturers, would the Minister of State for Small Businesses undertake to table a list of contracts regarding textile imports, the formalities for which have been completed, and which are therefore viewed as binding contracts? Will he give us an undertaking now to table such a list of contracts in the House tomorrow?


Len Marchand: I am not sure if this kind of procedure would be possible or whether the companies want this kind of information tabled in the House of Commons. I am sure they would not want all the dealings they have with importing companies made the subject of public debate because that is their own private business. However, I will check this out and get back to the hon. member. I want to assure him that we are very concerned, especially about small companies. We want to have everything possible done to make sure they will not be hurt, and more especially about the ones which are importers of high fashion clothing and that kind of thing. We are taking every measure possible to make sure that they are not unduly hurt by the measures taken by the minister.


IMMIGRATION
Mr. David MacDonald (Egmont):: Mr. Speaker, my question is for the Minister of Manpower and Immigration. I believe he has had notice of this question.
In light of the minister's recent letter to the hon. member for Montmorency, the hon. member for Greenwood and myself with respect to the Argentinian refugee program stating that the current registration program of the government there is more of a census than anything else and that Argentina has no intention of suddenly clamping down on refugees through mass arrests or deportations, how does the minister explain the recent deportation to Chile of Chilian refugees? In addition, and more importantly, how does the minister explain the absolutely firm statement made by the minister responsible for migration in Argentina and his under-secretary to we three members of parliament and a senior officer of the Canadian embassy in Buenos Aires to the effect that those who fail to register or who do register but are unacceptable will be sent either to a third country or, failing that, returned to their country of origin?


Hon. Jack Cullen (Minister of Manpower and Immigration):: Mr. Speaker, we are endeavouring to fulfil our responsibility to those people we see as refugees and we cannot comment in any appropriate way on the internal workings of the government of a particular country. We are satisfied that we are doing everything we can with the United Nations High Commission on Refugees to expedite the movement of those who wish to come to Canada. We have three Spanish speaking

December 20,1976
Oral Questions
immigration officers there at the present time. The average period for moving people is between two and four months, and if someone's life is in danger or there is a real problem, he can be moved in a matter of days.


David Samuel Horne MacDonald: In view of the comment in the minister's letter to the effect that the United Nations High Commissioner for Refugees has been generous in mandating persons who do not fall completely within the refugee convention definition, and in view of the urgency of the situation as reflected upon by the three hon. members previously named and other senior church people who have visited the area, can the minister indicate whether he thinks the UNHCR is acting irresponsibly or unjustifiably with respect to the administration of its mandate in Argentina, and could he also indicate what source of information he has been relying upon since it seems to be so much at odds with almost every individual who has visited that country in recent months?


Jack Sydney George (Bud) Cullen: First, I would not say that they are not discharging their responsibility. There are many people down there who are saying "Thank God for the United Nations High Commission on Refugee". It is performing a very important and a very difficult task under these conditions. We receive representations from the other side of the coin to the effect that we are not being careful enough and that there is a chance we may allow some terrorists or others we would not want to come here. We have a double-barreled responsibility. The hon. member shakes his head, but that is the kind of question raised by hon. members of his own party. It is suggested that there are not enough security checks being done and that one RCMP officer is not enough down there. We have to balance this and in the final analysis take what Canada can be proud of, namely, a very humane and humanitarian approach.


REFUGEES IN ARGENTINA-CO-OPERATION WITH AMNESTY INTERNATIONAL
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, I have a supplementary question on the same subject matter, namely the refugees in the Argentine. The minister responded to a detailed request from the three hon. members who visited that country by, in effect, disregarding every representation they made. What is the basis for the statement in his letter that the Argentine authorities are showing a softer and more humane approach to refugees in respect to human rights, particularly in light of the fact that the authority cited for this statement about the more humane approach is their willingness to cooperate with Amnesty International? I would like to join in this question. Has the minister received a recent report from Amnesty International which says exactly the opposite to what his statement says and includes the statement that there is continuing and uncontrolled terrorism, detention without trial of 10,000 political prisoners and daily incidents of bombing, reprisals and kidnappings?


Jack Sydney George (Bud) Cullen: Mr. Speaker, we rely on our sources who are present, namely the embassy officials down there. There has been a tendency to utilize hyperbole in advocating what is essentially a very well meaning concern for people who are refugees. We have to sort that out and do what we think is appropriate. We have increased our numbers from 5,000 to 6,000. We have sent down extra officers. The hon. member says we did nothing, but in fact we have three additional Spanish-speaking officers down there. We have indicated that we are going even beyond what the United Nations High Commission has suggested in deciding who should be considered a refugee to see if there is some approach we might apply in the interests of being more humane. I do not think that kind of hyperbole really generates too much in the way of action but we will look at all reports that come in.


Mr. Louis Duclos (Montmorency):: Mr. Speaker, I wish to ask a supplementary of the Minister of Manpower and Immigration.
Could he tell the House whether his departmental officers told him that the United Nations High Commission for refugees in Argentina is said to have complained recently to the Canadian embassy in Buenos Aires about the slow admission procedure in Canada to which political refugees of Chile and Uruguay are subjected, and whose physical security cannot be adequately ensured by the Argentine government? Does he think that his negative response to my representations, as well as those of my colleagues from Toronto, Greenwood and Egmont, to send a special mission to Argentina to speed up that procedure takes into consideration that reality we perceived a little more than two months ago, while visiting Argentina?


Jack Sydney George (Bud) Cullen: Mr. Speaker, we have to rely on our officers who are on the scene and we have not received those specific complaints. We have indicated to the United Nations High Commission that there was little point in sending people to us who did not want to settle in Canada. We have done a bit of culling of individuals so that we can move more rapidly in dealing with the refugees who want to come to this country. I think we have a proud record down there and if more information is forthcoming we will secure it.


REQUEST TO ACCELERATE ADMISSION OF REFUGEES FROM CHILE AND URUGUAY
[Stage Direction]
December 20, 1976

Mr. Bill Kempling (Halton-Wentworth):: Mr. Speaker, my question is for the Minister of State for Small Businesses. Is the minister aware of the takeover bid of Monogram Industries for Royal Industries and for Royal Industries' two Canadian subsidiaries who are Peerless-Page of Penticton, British Columbia and Royal Certified Automotive Products of Rex-dale, Ontario? It is my understanding that Monogram has not made application to FIRA regarding the Canadian subsidiaries and that the takeover offer expires December 28.


Len Marchand: Mr. Speaker, the legal counsel of Monogram has been in touch with the agency to advise that the company intends to file an order so that the FIRA will apply if and when its bid to acquire Royal Industries in the United States is successful. Until and when Monogram gets some indication of what the shareholders of Royal and the other companies are going to do with regard to the bid, there is really nothing that can be done. I want to assure the hon. member, however, that if and when this transaction takes place FIRA will certainly assess the application in accordance with the significant benefits to Canada test.


William James Kempling: Mr. Speaker, I thank the minister for his answer and would like to put a supplementary question. If we wait until December 28 and the takeover is successful then FIRA will be presented with a fait accompli. Would the minister consider applying to the United States courts for an injunction to prohibit the takeover-not to stop it but to prohibit it until such time as Monogram has had an opportunity to make application to FIRA and FIRA has had an opportunity to see if the takeover is in the best interests of Canada. I ask this because the two Canadian companies export a significant portion of their production to the United States and in one case the Canadian subsidiary administers both the Canadian and United States divisional operations from Canada.


Len Marchand: I will look at this Mr. Speaker, but it seems to me that perhaps this would be trying to have a Canadian law apply in the United States which would not be acceptable. I will look at the hon. member's proposition and assure him again that the best interests of Canada are considered in connection with that kind of procedure.
2137
Oral Questions


BROADCASTING
Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, my question is for the Prime Minister.


John Edward Broadbent: Good luck!


Pierre Elliott Trudeau: Thank you.


Stanley James Korchinski: Since the Secretary of State has introduced the motion to provide for television coverage of the proceedings of the House of Commons and since many areas of Canada, including northern Saskatchewan, in this day and age do not have radio coverage, never mind television, may I ask if the Prime Minister places a higher priority on televising the proceedings of the House of Commons than on providing coverage for the many people in northern and outlying areas?
Right Hon. P. E< Trudeau (Prime Minister): Mr. Speaker, I suppose that would depend on the importance one attaches to the House of Commons. I attach very high importance to it.


POSSIBILITY OF PROVIDING RADIO OR TELEVISION COVERAGE FOR COMMUNITIES OF LESS THAN FIVE HUNDRED IN NORTHERN SASKATCHEWAN
Stanley James Korchinski: Mr. Speaker, may I direct a supplementary question to the Secretary of State? Since the accelerated coverage program is to provide coverage only to communities with a population of at least 500, may I ask, even though the Prime Minister does not consider that Indians are important enough in Canada to provide them with television coverage, if we can get coverage for areas with a population of fewer than 500?


Hon. John Roberts (Secretary of State):: Mr. Speaker, I point out to the hon. gentleman that his comment on the Prime Minister's attitude is a travesty of the facts. As for the substance of the question, it is, indeed, under consideration.


THE SENATE
Mr.  R. Gordon L. Fairweather@Fundy-Royal: Mr. Speaker, my question is for the Prime Minister. Will the right hon. gentleman consider summoning some women from the 11,413,700 women of Canada to the upper chamber?


Pierre Elliott Trudeau: Mr. Speaker, as the hon. member knows, this has been, of course, very central to our consideration. The number of women in the last few years who have been appointed to very high offices in our

December 20, 1976
Oral Questions
courts, to lieutenant governorships and to the Senate of this country is indicative of our concern for that important sector of our society.


George Harris Hees: In other words, Pierre says there are no women available. Pierre is the Earle McLaughlin of parliament.


Mr. Fairweather:: We fixed Earle McLaughlin; now we will fix the Prime Minister.


Mr. Jamieson:: How are we to take that?


Robert Gordon Lee Fairweather: Take it any way you like.


Some hon. Members:: Oh, oh!


George Harris Hees: We always want to help Pierre.


An hon. Member:: How do you stand it?


Robert Gordon Lee Fairweather: This is a very difficult location in the House from which to speak. I have learned that, even with a certain amount of horror.
Does the Prime Minister think that six women from among 104 Senate places is a fair and adequate representation of the 11,413,700 women in Canada.


Pierre Elliott Trudeau: No, Mr. Speaker, it is not sufficient representation. We know the historical reasons why women have not been as active in politics as men. Fortunately, on our side, we are beginning to correct that. I hope the other side will support us.


INCOME TAX
Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, my question is for the Minister of National Revenue. Twelve days ago the minister said she would give a reply within two days to my question as to whether, as a result of our present income tax system, aggregate personal taxes go up 50 per cent faster than the growth in our gross national product, without any increase in rates.


George Harris Hees: Pierre is conferring with Otto.


Mr. Clark:: Are you sending Adrian or the nanny up?


Some hon. Members:: Hear, hear!


Hon.   Monique@: Mr. Speaker, the fact is that I promised to answer the hon. member within two days, but I was waiting for him to recognize the minister and I can see that today is the day. I am pleased to inform him that as a person's income increases, he pays a larger proportion in taxes. That is a great truism which the hon. member did not seem to have observed. Depending on the composition of the GNP and its various elements, income tax

revenues may increase between 10 per cent and 50 per cent faster than the gross national product. The 50 per cent referred to by the hon. gentleman, however, is upper limit and rarely reached.


FINANCE
Sinclair McKnight Stevens: Mr. Speaker, my supplementary question is for the Minister of Finance. Would the minister indicate if personal tax revenues in the aggregate are running ahead or behind the May budgetary forecast which anticipated a 26 per cent jump in such revenues in the current year, that being the 50 per cent faster increase than the rate of increase anticipated in the gross national product?


Donald Stovel Macdonald: Mr. Speaker, because of the adjustments made in the national accounts, it has been concluded the tax revenues will be below the May 25 estimate.


Sinclair McKnight Stevens: Mr. Speaker, may I direct a supplementary question to the Minister? Because of those adjustments, would the minister indicate what percentage of increase in the aggregate he anticipates out of personal income tax revenues in the current year?


Donald Stovel Macdonald: Mr. Speaker, I would be glad to get those statistics and bring them to the attention of the hon. member.


EXTERNAL AFFAIRS
Mr. Ray Hnatyshyn (Saskatoon-Biggar):: Mr. Speaker, I should like to direct a question to the Prime Minister, if he has a moment.


Some hon. Members:: Hear, hear!


George Harris Hees: He is conferring with Otto. Who is it going to be, Adrian or the nanny? What do you think of it, Otto? Whom are you for?


Some hon. Members:: Oh, oh!


Ramon John Hnatyshyn: Mr. Speaker, so long as the appointments come from Saskatchewan, I guess I cannot complain. May I ask the Prime Minister if he has received a representation from the Canadian committee for Soviet Jewry in connection with a proposed symposium on Jewish culture in Moscow, to be held from tomorrow through to Thursday? I wonder if the Prime Minister will make representation against the harass-
December 20, 1976

ment which is taking place in connection with this particular symposium, as requested by the committee. This is a matter of interest to many who are concerned about minority rights behind the Iron Curtain, pursuant to the agreement arrived at in Helsinki.


Pierre Elliott Trudeau: Mr. Speaker, I have no record of such representations having been made. They might have been received by my office during the weekend and I will look into it.


Ramon John Hnatyshyn: A supplementary question, Mr. Speaker. Since this symposium is to start tomorrow, will the Prime Minister instruct his Secretary of State for External Affairs to have our representative at the United Nations take up this matter in that forum?


John Edward Broadbent: A fat chance.


REQUEST FOR LIST OF PRISONERS IN SOVIET UNION ON BEHALF OF WHOM REPRESENTATIONS MADE
Mr. Jake Epp (Provencher):: Mr. Speaker, may 1 direct a supplementary question to the Secretary of State for External Affairs? Shortly after his return from the U.S.S.R. I asked him whether he had made representations for the release of Georgi Vins as well as other dissident prisoners in the Soviet Union? The minister indicated that he would inform me of the names of the prisoners on behalf of whom representations had been made to U.S.S.R. officials. Can he now indicate what direct representations and on behalf of which prisoners have been made by Canadians?


Donald Campbell Jamieson: Mr. Speaker, I do not recall having said that I would submit the whole list. I am not averse to doing that, unless that might be harmful to the interests of those concerned. I remember undertaking to inquire about a particular person, and my recollection-and I ask the hon. member to be understanding since I do not have this in front of me-is that that particular name was not on the list to which I referred. Once again, I will be glad to communicate with the hon. member privately or personally and give him the latest word on it.


AIRPORTS
Mr. Norman A. Cafik (Ontario):: Mr. Speaker, my question is for the Minister of Transport. In light of the controversy surrounding the proposed awarding of car rental concessions in Canada's international airports, is it intended to delay from tomorrow at 2 p.m., the time presently scheduled for the entering into of formal contracts, to a later date in order to allow time for further in depth consideration of this important question to take place?
Oral Questions


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, not necessarily in total for the reason quoted by the hon. member, but I can inform him that the meeting scheduled for tomorrow has been postponed to January 7.


AGRICULTURE
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, my question is for the Minister of Agriculture. It arises from a question put to him at the Outlook Conference. It is with regard to reports that the Alberta Export Agency earlier this year turned down the opportunity to sell 1,500 calves to Germany. Were any other provinces told of this offer and why did the agency turn down the offer to sell those cattle when there is such a surplus in this country?


Hon. E. F. Whelan (Minister of Agriculture):: Mr. Speaker, I am not sure what actually did take place. I have asked my departmental officials to give me a full report. I want to make it clear that we are not responsible for what the Alberta Export Corporation should or should not do.


Some hon. Members:: Hear, hear!


Lorne Edmund Nystrom: In view of the fact they supposedly sent a Telex to many Canadian embassies in Europe, including those in Germany and Italy, stating that there should not be any further inquiries until they were notified, will this minister, a federal minister, state the effect this has had on our exports through the European common market and bring us up to date? I ask this because of the Telex sent by the Alberta Export Agency.


Eugene Whelan: Mr. Speaker, I can report that at one time we sold thousands of calves to different countries in Europe. These were shipped by air. However, because of the economic slump that occurred in those countries, they quit buying them. Also, it was costing them a great deal of money. In addition, their own production increased and we therefore lost the sale of several thousand calves and other animals which we had been shipping to them. This year, we have shipped almost 9,000 purebred cattle to Europe. I am requesting my colleague, the Secretary of State for External Affairs, to determine the replies given to the Alberta Export Corporation by the embassies. As soon as we have a more detailed report, I will report directly to the hon. member.
80005-67^4

December 20,1976
Oral Questions EXTERNAL AFFAIRS


GARRISON DIVERSION-REASON MORATORIUM ON CONSTRUCTION NOT REQUESTED IN VIEW OF DELAY OF REPORT OF INTERNATIONAL JOINT COMMISSION
Mr. Dean Wbiteway (Selkirk):: Mr. Speaker, I wish to direct a question to the Secretary of State for External Affairs. It has to do with the Garrison diversion project. At the time the government of Canada agreed that the IJC should have an extension of time to bring in its report, did Canada ask for a moratorium on the construction of the Garrison diversion project?


Donald Campbell Jamieson: Mr. Speaker, my recollection is that there were general representations made that the whole project ought to be deferred pending the conclusion of that study. However, I would have to check to be absolutely certain. In the meantime, a detailed letter is being prepared for the hon. member. I hope to have it in his hands within the next day or two, before the holidays. It outlines the whole background of this issue.


Dean Waldon Whiteway: Perhaps the minister could indicate in that letter or indicate to the House now why Canada did not insist on a moratorium at the time it agreed the IJC should receive an extension. Why did the government not insist on a moratorium at that time?


Donald Campbell Jamieson: Mr. Speaker, not being totally familiar with the authority of the IJC, I can only give a layman's reply. However, I suspect it was because we had no legal capability of insisting. We did make representations. As I understand the matter, and this will be more fully dealt with in the letter to the hon. member, we could only file our reservations and indications of our concern, but we were not in a position to oblige the United States authorities to refrain from continuing as they obviously have.


HARBOURS
Hon. Robert L. Stanfield (Halifax):: Mr. Speaker, I have a question for the Minister of Transport. I indicated to his office this morning that I would be asking him a question about the land fill operation necessary for the construction of the second container facility in Halifax which is of importance to the whole region. Can the minister tell the House when that whole operation will be commenced and when he envisages it will be completed? I ask this in view of a report that a request for $10 million for this purpose in the estimates for the fiscal year 1978-79 has been cut by his department to $1 million, indicating there will be no commencement of this operation for the next two or three years?


Otto Emil Lang: Mr. Speaker, there was some preliminary examination of doing specific land

fill work in the relatively near future. We are proposing the necessary item in the estimates for the further studies that are required. We have been looking at the actual date when the facility is likely to be required in operation and attempting to be sure that the steps which must be taken are taken in time to meet that date. While the land fill will not go ahead as soon as it might have been contemplated, I am still confident the required date will be met.


Robert Lorne Stanfield: Mr. Speaker, I take it from what the minister says he is not prepared to give any commitment at all as to when this operation will start. May I ask the minister whether he has given any consideration to the length of time it will take to complete this operation even if it were started tomorrow, and the enormous concern there is, not only in the Halifax region but in the whole area that serious and permanent damage will be done to that region by the failure to complete this project.


Otto Emil Lang: Mr. Speaker, we are very conscious of the time requirement. We have been looking at the traffic which is operating and likely to operate in the years ahead and have determined the courses of action required according to the need to meet that date. Of course, given that, we will not try to do preliminary work ahead of a time period that is required, but will do it at that time in order to have the facility.


HALIFAX-POSSIBILITY OF PROVINCE CONSTRUCTING SECOND CONTAINER FACILITY
Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, will the Minister of Transport indicate whether the position of his department would in any way preclude the province of Nova Scotia proceeding on its own?


Otto Emil Lang: Mr. Speaker, I am not sure that anything would necessarily stop a different attitude being taken by the province of Nova Scotia. However, we have been agreeing together on the work up until this point.


MANPOWER
Mr. Paul Dick (Lanark-Renfrew-Carleton):: Last summer, for the first time in many years, the Department of Manpower discontinued the student employment surveys thus making it impossible for Manpower, Unemployment Insurance Commission, Canadian student organizations and others to know exactly how high the student unemployment rate was. Can the minister assure the House that this unfortunate and misguided step of last year will not be repeated and can he assure the House that proper Student Employment Surveys will be reintroduced in 1977?


Mr. Alexander:: Give him the same answer you gave me.
December 20,1976


Jack Sydney George (Bud) Cullen: Mr. Speaker, I like to give the same answer all the time in order not to confuse the opposition. They are having enough trouble as it is. The answer I gave in committee is that it is a matter of finding the funds for what I think is a very worthwhile survey.


LOCAL INITIATIVES PROGRAM-PROPOSED EXTENSION OF PERIOD FOR ACCEPTING NEW APPLICATIONS
Paul Wyatt Dick: As the Minister of Manpower is trying to stimulate employment in Canada this winter by another LIP and since an increase in the allocation to many high unemployment constituencies has been announced, can the minister say whether he can extend the period for accepting new applications from December 31, 1976 to January 15, 1977 so that perhaps even better and more meaningful applications can be considered and brought to fruition by local community associations and councils, considering that in the meantime there will be Christmas and New Year's.


Jack Sydney George (Bud) Cullen: Mr. Speaker, considering the fact that we are looking at older projects that were already on the books and the fact we have extended the period to bring in more worthwhile projects, as the hon. member indicated, I think we have been about as flexible as we can be by having the projects operational before the end of the fiscal year.


REQUEST FOR PRECISE DATE OF APPLICATION OF PROVISION OF BILL C-69
Mr. Jacques Lavoie (Hochelaga):: Mr. Speaker, my question is for the Minister of Manpower and Immigration.
Following a letter I received from his office dated December 7, 1976, informing me that section 7 of Bill C-69 was amending paragraph B of section 25, a provision that, in the opinion of the minister's office, was effective July 4, 1976, and in view of the information I got from my research that this act has been indeed effective since January 4, 1976, and since many citizens are faced with that discrepancy in the dates of enforcement of the acts can the minister explain to the House the reasons for that really obvious contradiction?


Jack Sydney George (Bud) Cullen: No, Mr. Speaker, I will look into the issue for the hon. member.
Oral Questions


SEARCH AND RESCUE
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, my question is for the Minister of National Defence. I am wondering whether the minister would join me in expressing thanks to the United States Coastguard and navy who, for the lack of Canadian helicopters in the vicinity, were so promptly on the spot last Friday when an Airwest twin Otter unfortunately made a forced landing at sea just near Victoria and rescued all passengers and crew, even though the plane itself sank.


Hon. Barney Danson (Minister of National Defence):: Yes, Mr. Speaker, I would be delighted to reciprocate the thanks that the Americans give us, as when we lifted some of their people out of the Niagara gorge just several weeks ago. We have an excellent arrangement with them. Because of weather conditions they cannot always operate and we cannot always operate. Our equipment compatibility is shared and it is a very good relationship between two partners. I am sure that they will appreciate our thanks, as I did theirs.


Some hon. Members:: Hear, hear!


STATIONING OF HELICOPTERS CLOSER TO AREAS OF NEED
Donald W. Munro: A supplementary question, Mr. Speaker. I wonder whether the minister would explain what measures he now plans to take to ensure that standby helicopters with lift capability are available closer to areas of need, where the U.S. coastguard cannot help, such as in the vicinity of scheduled air routes or near our fishing grounds off the east and west coasts?


Barnett Jerome Danson: Mr. Speaker, I hope that the hon. member saw the releases relating to the new search and rescue program, which is upgrading facilities very considerably on both coasts, in central Canada and indeed right across Canada. I would be pleased to send him a further copy which would provide him with information on what will be greatly improved service as soon as it can be phased in, including lift helicopters.


REASON FOR STATIONING HELICOPTERS IN GANDER, NEWFOUNDLAND
Mr. James A. McGrath (St. John's East):: Mr. Speaker, I have a further supplementary question for the minister. In view of the recommendations made by his senior military officials that the helicopters in Newfoundland be based in St. John's as a result of their feasibility studies which have been carried out, will the minister tell the House what prompted his decision to station helicopters in Gander in face of that advice?


Barnett Jerome Danson: Two
principal factors, Mr. Speaker. One is the somewhat better

December 20, 1976
Oral Questions
weather conditions in Gander. One of the great difficulties in the great province of Newfoundland is getting helicopters off the ground when the weather is bad. The other factor was that the advisers' information did not include further additional information for which I am grateful to the member of parliament for Gander-Twillingate. He brought to my attention that facilities were available in Gander and this had not been made known to me otherwise.


LABOUR CONDITIONS
Mr. Maurice Foster (Algoma):: Mr. Speaker, I have a question for the Minister of Labour. In view of the delay in the conciliation commissioner's report on the wage dispute between Bell employees of the Communication Workers of Canada and Bell Canada, can the minister say whether this report has now been received so that this dispute can be settled for these employees, who have been working for over a year without a contract?


Hon. John C. Munro (Minister of Labour):: Yes, Mr. Speaker. I appreciate the hon. member's interest. I received the conciliation commissioner's report today. We are sending it out to the parties as quickly as we possibly can. We are figuring out ways to get it to them by hand so that it does not get caught up in the Christmas mail, and they should have it within the next day or two. We will be able to indicate what promise there is for further help in terms of placing ourselves in a mediation role, and we will try to resolve the dispute after the parties get the report.


REGIONAL ECONOMIC EXPANSION
Mr. Bob Brisco (Kootenay West):: Mr. Speaker, my question is for the minister responsible for regional economic expansion. In view of the fact that British Columbia has been waiting for some years now to see a concrete development proposal under the DREE program, and in view of the fact that the minister has now had the opportunity of meeting with his counterparts in British Columbia and has discussed the DREE program, I wonder whether the minister could give us an idea what type of DREE program British Columbia can expect, how much money, and how soon?
[ Translation]


Hon. Marcel Lessard (Minister of Regional Economic Expansion):: Mr. Speaker, I am not in a position to say to the hon. member and to the House how much money could in fact be poured into all the departmental programs, in cooperation with the government of British Columbia. But, as the hon.

member knows, we had indeed recent meetings and I do hope that we will be able to announce the progress made between both levels of government in the coming weeks.


Robert Hylton Brisco: A supplementary question, Mr. Speaker, which I would address to the Minister of State (Small Business), the seatmate of the minister. In view of the fact that the DREE program for industry no longer applies to Kootenay West, and in view of the fact that a very viable industry called Quadra Manufacturing is now on the verge of going out of business, would the minister be prepared to accept representations to save 90 jobs in an industry that is viable and has orders to sustain it in business for a number of years?


Mr. Speaker:: Order, please.


UNEMPLOYMENT INSURANCE
Mr. Bruce Halliday (Oxford):: Mr. Speaker, my question is for the Minister of Manpower and Immigration. In view of the present high rate of unemployment, can the minister tell the House whether any consideration is being given to extending unemployment insurance coverage to provide benefits to claimants who are setting up a small business operation which would provide jobs for themselves and others, but who by so doing are presently deemed to be unavailable for work under the terms of the existing legislation?


Jack Sydney George (Bud) Cullen: Mr. Speaker, this is an area where we have some difficulty administering the program. First of all, we have to determine whether the self-employed are ready, willing and able to work, and whether over a length of time they are in fact unemployed. We have some difficulty covering selfemployed people under the unemployment insurance program. For that reason I would not want to raise any false hopes that that position will be taken. May I thank the hon. member for giving me notice of the question.


NATIONAL PARKS
Mr. Howard Johnston (Okanagan-Kootenay):: Mr. Speaker, my question is for the minister of northern affairs responsible for national parks. Has the minister had time to consider the suggestion which I made last week, that he submit recent rental increases in the B.C. portion of our national parks to the B.C. rentals man for adjudication?
December 20, 1976


Hon. Warren Allmand (Minister of Indian Affairs and Northern Development):: Mr. Speaker, following that question I prepared a letter to the hon. member and it is on its way. I cannot recall the details of the answer right now.


NATIONAL DEFENCE
Mr. Allan B. McKinnon (Victoria):: Mr. Speaker, my question is for the Minister of National Defence. The Minister of National Defence has in the past month been promising replacement aircraft both for our Voodoos and our Starfight-ers as well as new ships for the old St. Laurent class. Would he tell the House by what year we can expect to see the first of the new fighters in squadron service, and also the year that he expects the first of the new ships to join the fleet for operational duty?


Barnett Jerome Danson: Mr. Speaker, I do not know whether I can be that precise at this time. These are very major considerations so far as the new fighter aircraft are concerned. I am in the process of becoming familiar with the requirement which I will address with some urgency at the beginning of the year. I expect that the assessment of the various options would take about a year to a year and a half, and then delivery will follow that. This will bring us into the early 1980s.
So far as the ship program is concerned, that follows shortly after and I want to spend some time with maritime command to become more familiar with this requirement. I cannot give the precise schedule as to when we can see those in service without being misleading at this time.


Allan Bruce McKinnon: A supplementary question, Mr. Speaker. May I thank the minister for his answer, but can he say whether he has government backing for the necessary capital budget to permit these purchases? Or is he announcing that we are going to get these craft without knowing when or how we are going to get them?


Barnett Jerome Danson: Without going into detail, Mr. Speaker, may I say I always have government backing. With the backing of this government we have already increased capital spending by 12 per cent, after allowing for inflation, for the next five years, and this will take into account any future procurements and allow us to make purchases. How tight it might be I will know when we get down to specific figures when we make these acquisitions.
Oral Questions TRANSPORT


ALLEGED FAILURE TO CONSIDER PROPOSAL FROM NORTHLAND NAVIGATION-RECOMMENDATIONS OF ACRES REPORT
Stuart Malcolm Leggatt: Mr. Speaker, my question is for the Minister of Transport and it concerns the continuing problems facing water transportation on the coast. In May 1974 Northland Navigation offered to invest some $20 million in upgrading its shipping facilities for Ro Ro and Lo Lo systems which would have the effect of reducing or eliminating subsidies over the years, as I understand it. Would the minister advise why his department did not give serious consideration to this proposal, or even reply to it prior to his precipitous action that cut off the subsidy in November of this year.


Otto Emil Lang: Mr. Speaker, I understand that very serious consideration was given to the proposal at the time it was first received. It did involve, however, a very significant commitment of government money in the development of alternative service and was basically a proposal for service of a sort which was not considered to be the best for passengers and freight in that area.


Stuart Malcolm Leggatt: Mr. Speaker, the minister would not, of course, have had the opportunity to abandon passenger traffic either, except for that proposal. The Acres consultant report, which I understand is a confidential document in the hands of the Cabinet, contains such a recommendation, providing for the government to allow the massive investment of capital in the existing Northland system so the government could retire from the subsidy position it was in. Would the minister advise whether the report did in fact make such a recommendation, and why the report cannot be released to the public now?


Otto Emil Lang: Mr. Speaker, I do not propose to indicate what the recommendations are. They are far too complex to be discussed in any intelligent fashion at this time. The document was, of course, prepared as an internal confidential memorandum and, therefore, has to remain condidential. A summary of it which contains some of the basic analyses has been made available, however.


MANPOWER
Lincoln MacCauley Alexander: Mr. Speaker, I have a question for the Minister of Manpower and Immigration. Given the fact that he caused advertisements to be placed in all national newspapers and others last week regarding Canada's work-sharing and job creation program to be launched in January, 1977, does this mean that the entire consultative process the minister had envisaged with the prov-

December 20, 1976
Business of the House
inces has been completed, have all the details been submitted to the provinces and have they approved of the same?


Jack Sydney George (Bud) Cullen: Mr. Speaker, almost immediately upon assuming this portfolio I met with my provincial colleagues and, with my officials, I gave them an in-depth briefing of the program and how it would be applicable. I indicated it would be ongoing for a five-year period and there would be in each year two opportunities to get into the program. I indicated that we were in fact hoping to interest chambers of commerce, private institutions and others to get involved in this process, and they seemed to accept this. They were very supportive of the fact that it is an ongoing program rather than having the ad hockery of wondering whether it was ongoing. The fact that it is ongoing will provide two opportunities each year to get into a particular program, which seemed to be acceptable to them. There were some other areas where they expressed less then satisfaction. I think this was primarily in the area of the innovative or pilot project operations of work-sharing and job creation using UIC funds.


Lincoln MacCauley Alexander: Mr. Speaker, I would indicate to the minister that not only the provinces showed some concern with respect to work-sharing, industry and labour did as well. Although the minister spells out in some little detail the criteria regarding the Canada works program, there is no indication as to when the moneys will be available. I think this is one of the most important matters to be disclosed. Has the minister now had an opportunity to determine when in fact this money will be available, particularly the $200 million, keeping in mind that the program will be launched in January and applications will be made available in that month? When will the moneys be ready for allocation?


Jack Sydney George (Bud) Cullen: Mr. Speaker, we would anticipate in respect of the Canada works project that approximately one-third, and this is a round figure, of the money will be made available in April 1977, with the balance for the second section of the Canada works program being made available probably in October of next year.



ROUTINE PROCEEDINGS


Mr. Baker (Grenville-Carleton):: Mr. Speaker, I wonder whether I might direct a question to the government House leader by way of a point of order, asking if he can enlighten us as to his intentions in respect of government business for the balance of this week, however long it may last?


Mr. MacEachen:: Mr. Speaker, I propose to have the income tax bill before the House until it is completed. If it is not

completed today, we will deal with it tomorrow, in spite of my intention earlier to call the resolution in respect of television.


AGRICULTURE
[Stage Direction]
First report of Standing Committee-Mr. Douglas (Bruce-Grey).
[Editor's Note: For text of above report, see today's Votes and Proceedings.]

Donald Stovel Macdonald: Mr. Speaker, I should like to table a reference under the AntiInflation Act from the board to the administrator with regard to the health-labour relations associations of British Columbia.


PRAIRIE FARM ASSISTANCE ACT
Eugene Whelan: for leave to introduce Bill C-29, to repeal the Prairie Farm Assistance Act.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.
Stanley Howard Knowles: On a point of order, Mr. Speaker. When you called the bill in the name of the Secretary of State, there seemed to be no one to move it. Would it not be possible for the government House leader to move the holidays bill in the absence of the Secretary of State?


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: 158, 744, 830, 961, 967, 988, 995, 1,008, 1,015, 1,153 and 1,154.


Mr. Macquarrie: 1.	Prior to the adoption of the present national flag, how many Canadian Red Ensigns were in use in Canadian government buildings?
2.	What is the number presently on hand?
December 20, 1976

3.	On what basis were Canadian Red Ensigns distributed to Canadian groups and individuals?


Mr. Alexandre Cyr (Parliamentary Secretary to Minister of Public Works):: 1. While it is not known precisely how many Canadian Red Ensigns were in use in Canadian Government buildings prior to the adoption of the present national flag, there were then 3,801 Crown-owned or Crown-leased buildings within Canada which had the necessary facilities to fly the Canadian Red Ensign and 323 such buildings outside Canada.
2.	As of October 18, 1976, there are 465 Red Ensigns in stock.
3.	On March 28, 1973, the Hon. Jean-Eudes Dube, then Minister of Public Works, gave the following reply to a question raised in the House of Commons: "A decision was taken that, in general, distribution would only be made in response to the requests made by, and on behalf of, recognized veterans' organizations such as the Royal Canadian Legion and other official institutions or associations. In addition requests from individuals deserving of special consideration were granted, such as Silver Cross Mothers, war amputees and others with disability pensions resulting from war service."


Mr. Muir: Has the Cape Breton Development Corporation been involved in assisting any radio station on Cape Breton Island with grants or loans or has any technical assistance been provided to the management of any radio station and, if so, what are the details of such actions and for what reasons?


Mr.   Ed. Lumley@Parliamentary Secretary to Minister of Regional Economic Expansion: The Cape Breton Development Corporation has not been involved in assisting any radio station with grants or loans, nor has any technical assistance been provided to the management of any radio station.


Mr. Yewchuk: What was the rate of hospitalization of treaty Indians in Alberta in (a) 1965 (b) 1970(c) 1975?


Hon. Marc Laionde (Minister of National Health and Welfare):: Records with respect to provincial and municipal hospitals in Alberta should be obtained from these sources. The Charles Camsell Hospital in Edmonton is the only federally operated hospital in Alberta. Its records indicate the following separations from the hospital with regard to Alberta Registered Indians: (a) Unavailable; ethnic breakdown not maintained then, (b) 2,412 Alberta Registered Indians, (c) 2,403 Alberta Registered Indians.
Order Paper Questions


Mr. Howie: For the year ending November 1, 1976, how many riots or significant similar disturbances took place in federal prisons and what is the total estimate of property damage incurred?


Hon. Francis Fox (Solicitor General):: For the year ending November 1, 1976, three major incidents resulted in property damage estimated at approximately $2,750,000.


Mr. Marshall: What are the details of Contract 76-11 under the Department of Regional Economic Expansion and the Newfoundland Department of Forestry and Agriculture on horizontal and vertical surveys in Corner Brook, Curling, Sum-merside, Mclver's and Lark Harbour awarded to Eastern Surveys Limited at a cost of $44,000?


Mr.   Ed. Lumley@Parliamentary Secretary to Minister of Regional Economic Expansion: Contract 76-11, for the Second and Third Order Horizontal Control Surveys in the Corner Brook Area, is funded under the Canada/Newfound-land Land Surveying-Mapping Agreement, signed October 5, 1972. The tender closing date was August 8, 1976 and the contract was awarded on August 27, 1976 to Eastern Surveys Ltd. The Eastern Surveys bid of $44,000 was the lowest evaluated bid of six submissions. The project is designed to update and coordinate horizontal control surveys for the Corner Brook area which will serve as a base for future land mapping efforts. The anticipated completion date of the contract is February 15, 1977.


Mr. Howie: 1.	What is the present minimum annual value of manufactured goods permissible before a manufacturer must be licensed under the Excise Tax Act?
2.	Is any consideration being given to increasing this level to $15,000?


Hon.   Monique@: 1. A
regulation is presently in force under which the following small manufacturers are excluded from licensing: Manufacturers who produce goods for their own use or for sale exclusively to users if the value of such goods does not exceed $3,000 per annum; A specific list of manufacturers who produce goods to the specifications and requirements of individual users irrespective of their sales volume; Manufacturers of lumber whose sales volume does not exceed $5,000 per annum.
2. My department has a study in progress to ascertain whether the present annual sales volume barriers should be modified.
2146

December 20,1976
Order Paper Questions


Mr. Howie: Is the Technical Services Branch of the Department of National Revenue, Customs and Excise, required to assist taxpayers requiring assistance in administering and complying with the provisions of the Excise Tax Act and, if not, is consideration being given to this as a means of offsetting the need for extensive sales tax audits through such an open door policy?


Hon.   Monique@: When a taxpayer is unsure of his liability, responsibilities or benefits under the Excise Tax Act he may bring his problem to the attention of the Manager of his District Excise Office or to the Regional Director, Excise who are available to provide guidance and assistance on compliance matters. The Excise Branch also publishes information on new tax rulings so that taxpayers may be continuously kept aware of matters affecting their operations under the Excise Tax Act. Excise Branch has recently implemented a taxpayer information service in which experienced Excise Officers visit new licensees and other taxpayers to provide guidance and to assist in the resolution of problems pertaining to sales and excise taxes. While this programme has not been in operation long enough to measure its true impact, early indications are that it will significantly reduce the need for detailed audits of taxpayers records such has been the norm in the past.


Mr. Howie: Was a study conducted that would indicate the estimated number of swine flu cases that could occur in Canada before June 30, 1977 or any other date if no vaccination programme is instituted and, if not, what is the basis for supporting such a vaccination compaign?


Marc Lalonde: Swine influenza is known to be related to the virus which caused the pandemic of 1918-19. In that pandemic, and estimated 40,000 Canadians died and there were approximately 20 million deaths worldwide. It has been learned from serological studies that less than two percent of the population under 50 years of age have antibodies to swine influenza, 60 per cent in the age group 50-64 years and 80 per cent in persons 65 years of age and over. If 40 per cent of those without antibody were to become infected in the first wave of a swine influenza epidemic, as happened last year with the A/Victoria epidemic, approximately 7.5 million Canadians would be involved. The proportion of these who would die or suffer severe illness compared with a milder form of the disease is unknown. If the severity of disease is similar to the Asian influenza epidemic of 1957, in which 5,000 Canadians died, preliminary studies have shown the benefit cost/ratio of the vaccination program to be approximately 11.1 dependent on an acceptance rate of 65 per cent in those eligible for vaccination.


Mr. Howie: Are any studies underway relating to a procedure to provide a simplified and informal appeal procedure for taxpayers disputing assessments arising from an audit, value or ruling under the Excise Tax Act?


Hon.   Monique@: An
informal appeal system now exists. Taxpayers are encouraged to discuss audit assessments, and questions involving interpretations of the law informally at the District Excise Office level, at the Regional level, and at the Headquarters level. Failing resolution of these problems at those levels, a formal appeal may then be made to the Tariff Board or to the Federal Court.


Mr. Robinson: What amount was paid to doctors in Ontario for performing abortions in the years 1970 to 1976?


Marc Lalonde: Information of this nature is not available from the Department of National Health and Welfare. Enquiries should be directed to the provincial government concerned.


Mr. Lambert (Bellechasse): During the 1975-76 financial year, what was the total amount paid in (a) old age security pensions to (i) women (ii) men over 65 years of age (b) allowances to (i) wives (ii) husbands 60 to 65 years of age?


Marc Lalonde: (a) (i) and (ii)* $2,975,787,978.-(basic Old Age Security Pensions), (b) (i) and (ii)* $34,936,432.-(Total amount of Spouse's Allowances paid from October, 1975, when the program was implemented, to the end of March, 1976).
*Note: Statistics differentiating the sex of benefit recipients are not maintained.


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

December 20, 1976



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Friday, December 17, consideration in committee of Bill C-22, to amend the statute law relating to income tax-Mr. Macdonald (Rosedale)-Mr. Turner in the chair.
The Deputy Chairman:: Order, please. When the committee rose on Friday, December 17, clause 1 of the bill was under consideration.
On clause 1.


Stuart Malcolm Leggatt: Mr. Chairman, you may recall that at four o'clock on Friday I believe I had completed my remarks. I will not take too much more of the time of the committee. I had indicated during the course of my remarks that the minister had said that those of us in this party who had spoken seemed to be arguing in favour of the abandonment of the RRSP principle. He went on to point out that there had to be something for the private sector, and in terms of the wage earner sector this was simply equality, or the RRSP was simply the equivalent device which would permit this section of the community to provide for retirement in a similar way. He pointed out that wage earners are allowed certain tax deductibility as a result of retirement plans developed in that area.
I hope I am not misinterpreting what the minister has said, but that is the way I interpreted one of his replies-that by arguing against RRSPs we were, in a sense, condemning all these of plans which are in operation on the part of wage earners. What we are saying is that if you examine the equivalent tax advantage to those who earn wages, as against the tax advantage to those in the private sector, and compare the incomes of the two groups, you will find that those in the wage area are receiving far less tax benefits than those who are in the professional and private areas who set their own tax plans under the RRSP system.
Imagine the dollar value to a man who is working in a mill and making $10,000 a year, in terms of the tax advantages he receives as a result of the deductions from his cheque as part of a retirement plan, as compared to the amount which is received by someone at the level of income in this House. There is no comparison whatsoever. That is why we still insist that the RRSP principle is taxation in reverse, the redistribution of income upward to the rich and away from those of average or below average income.
On the evidence before the minister's own eyes there is no valid argument against that proposition. If the minister wants to argue that the purpose of the tax system and of the RRSP, in terms of the distribution of wealth, is in line with the theory that it is appropriate that the greater tax advantage showed flow to higher income earners, I could accept that argument
Income Tax
and understand it as representing a philosophy behind this tax legislation.


Mr. Francis:: Would the hon. member accept a question? Does he think that people who are self-employed or employed in companies without pension plans should be denied any tax exemptions for retirement purposes whatsoever?


Stuart Malcolm Leggatt: Of course, that is not our position. What I am saying is that the tax advantage should be reduced on a scale which runs upward dependent upon the income, so as to be fair to both ends of the income scale. Under this proposal you are rewarding the higher income level and penalizing the lower income level. I do not believe this is a concept with which the hon. member who asked the question necessarily agrees. He has not quite grasped the concept yet. I see he is shaking his head. He has grasped the concept and I hope he agrees with it-that if you change the dollar amount of the deduction received as a result of the RRSP, and if you take the wage earner and give him a higher exemption in terms of what he is allowed to deduct, and work a progressive tax right through the legislation, I would, perhaps, find some reason to support this proposal. But on its present basis, the principle chosen awards the rich and penalizes the poor.


Cyril Lloyd Francis: Does the hon. member believe that the same ceiling should be applied to the combined employer-employee contributions under pension plans? Does he not admit that under existing pension plans the combined employer-employee contribution sometimes exceeds the limit placed upon RRSPs?


Stuart Malcolm Leggatt: Almost never, or very rarely. What we are talking about at the upper end has not really been a retirement plan at all, but a tax shelter, a tax dodge, a convenient way to put money in and out of a plan. You put it in at a high rate, and take a tax deduction, and withdraw at a low rate, denying the treasury $513 million every year, a very substantial sum. That is one tax dodge. There are all kinds of other tax dodges. The RHOP is to some extent a tax dodge as well. The principle of our opposition to clause 1 continues to be this: if you examine Carter's approach to taxation, you begin to introduce fairness in taxation, but as long as you build these anomalies which reward the rich and penalize the poor and those of average income in the tax system, you are doing nothing in terms of creating a tax system which embodies justness and fairness.
My hon. friend from Waterloo-Cambridge tells me the program also distorts the capital market. I think it does, by moving money into certain kinds of investment plans and away from other forms of savings such as Canada savings bonds which might be more desirable from a public point of view; other forms of public investment might be more desirable from the point of view of the economy as a whole.
I do not intend to take up the time of the committee much longer, but I do want it to understand that our opposition to clause 1 is not simply an attempt to deny the passage of this bill. We wish to give the government time to recognize what it
80005 - 6814

December 20, 1976
Income Tax
is doing, to take account of the effects upon society of a program which continues to redistribute income in reverse.


Donald Stovel Macdonald: 1 shook my head to the hon. gentleman. I have listened to him, and still I shake my head. He draws a comparison between the private sector and wage earners. It may be a matter of his personal definition, but it seems to me he should recognize that the vast number of people having the benefit of registered pension plans will themselves be in the private sector. It is true there are also many in the public sector; for example, employees of the government of Canada.
I am not sure how many days we have been debating this bill, but four or five days ago, on the first day of the debate on clause 1, the figures I put forward at that time indicated that the majority of those who are participating in RRSP are in receipt of incomes of $15,000 or less. So the hon. member's objection covers this particular group of people, one which obviously, from his viewpoint, does not consist of upper income people. It is fair, too, to point out that the percentage value of the RRSP deduction is greater for those at the lower end of the income scale than for those at the upper end of the scale, not in absolute terms but in terms of their income.
The hon. member shakes his head but that is a mathematical fact. What the hon. member is really saying is this: he feels that incomes should be equal throughout Canada, and if that is his theory the proposal he is making would be perfectly consistent with it. I would point out that we do have a progressive income tax rate and that a maximum is set under this program so that benefits do not go all the way up the income level: there is a ceiling. So if there is any rethinking to be done about the position which has been taken, I think it is the hon. member who should be doing the rethinking.
First, there are wage earners both in the private and public sector. Second, a majority of those having the benefit of RRSP are in receipt of incomes of $15,000 or less. Third, the percentage value of the deduction is greater for those at the lower income scale than for those further up in terms of their incomes. Finally, the hon. member for Waterloo-Cambridge, in advising that RRSP funds would, presumably, not be put in government investment. That is not true at all. Indeed, very many of them are held in the form of government of Canada and other government bonds.


Mr. Saltsman:: I was advising the hon. member on something else. I was suggesting that the government is distorting the whole capital allocation system and in many ways forcing every other savings device to pay higher rates of interest in competition with the attractiveness of RRSP.
The minister has repeated what he said earlier, and I do not doubt the particular set of figures he is putting before the House. He said there are more people getting the benefit who make below $15,000 than people making over $15,000, and we accept that. We have asked the minister the dollar value of the total group below $15,000 in terms of the benefits they are

getting, in terms of the tax saving they are getting, and the subsequent loss to the treasury as against the total amount of dollars in the group above $15,000; and how does that work out on the basis of the number of individuals involved as against the tax savings for the individuals below $15,000 and the tax savings for those above $15,000?
When we asked the question a few days ago, the minister said he did not have that set of figures. That is the set of figures relative to the kind of argument we are making. What we are saying is that people in the higher income brackets are getting much more benefit because they can set aside larger sums of money than those in the lower tax brackets. I hope the minister has had a chance to review the request we have made for those figures regarding distribution and will be in a position to give them to the House.


Donald Stovel Macdonald: The figures I cited to the hon. gentleman are those prepared from taxation statistics. I have to say that the particular orientation which the hon. gentleman seeks to support his argument has not been prepared by Revenue Canada.


Stuart Malcolm Leggatt: Mr. Chairman, I have a brief comment with further reference to what the minister had to say. We are trying to make our point abundantly clear. The dollar limits that a person is allowed to take in terms of his retirement income are not fixed. The minister is right in saying that you can only go so far.


Donald Stovel Macdonald: They are fixed.


Stuart Malcolm Leggatt: I am agreeing with the minister. The thing the minister has not put his mind to, or does not want to put his mind to, is the value, to a person making $50,000 a year, of that particular deduction. It is something like 50 cents to a dollar that he is putting into the plan. If the guy is taxed at a 20 per cent tax rate or less, the value to him is in reverse; it is much less. That is why we say that this is income distribution in reverse. Can the minister answer that point?


Donald Stovel Macdonald: In percentage terms, it is of greater value if you have an income of $10,000 and you can put $2,500 of it in RRSP or RPP, or even a lower amount. Obviously, you then have a greater percentage of your income going into the retirement plan than if your income is $25,000 and you are putting in $2,500. It is simple mathematics.


Stuart Malcolm Leggatt: It is the value of the money to the individual.


Max Saltsman: The minister is saying, then, that it is good to have a low income because you then have a low tax rate. It is a terrible thing to be making a lot of money because then you have to pay tax at a higher rate. If those earning under $5,000 manage to have $5,000 in savings, then the minister's argument would be very apt. The point is that there is a relationship between the amount of money they make and the amount they can set aside in savings. It is only those with high incomes who can set aside larger sums of money. Then the argument is accurate that those with higher incomes, no matter which way
December 20, 1976

the minister wishes to explain it, get a much greater benefit out of these kinds of devices than those with lower incomes. I do not know of many guys working in the factory who can put aside $3,500 a year, let alone $5,500 a year. So it is really a spurious argument that is being made to suggest that those who are making less money are getting a greater benefit just because they have a lower marginal rate of tax.


Donald Stovel Macdonald: In percentage terms, they are.


Francis Andrew Brewin: Mr. Speaker, I am anxious to enter this debate for three main reasons. The first is that it is of great interest to my constituents. There are many elderly people in my constituency, most of them of very modest means and very self-respecting people but without substantial income. Many of them own houses and they are finding things increasingly difficult, because of higher municipal taxes and higher cost of repairs, to keep their houses. Therefore, anything to do with pensions, particularly those pensions that are payable fairly soon, for this group of people who are getting older and need these pensions is of great interest to them.
The second reason for which I want to speak on this matter is that I think the very essence of the democratic socialist faith which I share with my colleagues, and which I think is a faith held fairly widely throughout the world, is equality, fairness and equity between individuals. There are some people, even those who write dictionaries and things like that, who see the essence of socialism in the proposals for public ownership. I, for one, think public ownership is a useful method, but it is not part of a sacred writ so far as I am concerned. It is only one method of dealing with things.
I think that most of what I learned about socialism came from R. H. Tawney, a famous English theologian, writer and economist, who wrote a book on the subject of Equality. I notice the minister is very kindly listening to me and I would recommend Equality to him as it is a very inspiring account of this basic philosophy.
The next point I want to make, the third reason why I am very anxious to speak on this subject, is that my own profession of law is based on the theory of equality. I share that profession with the minister and, indeed, the Prime Minister, for that matter. According to our English system, there were two bodies of law. There was the common law, and under the common law doctrine one of the basic rules was that everybody was entitled to equal justice before the courts. There was no discrimination, because you were well off or you were not well off. There was no discrimination between persons. The law, therefore, was based upon the principle of equality. But equality under the common law was not adequate, so it was extended through the doctrine of equity with which the minister is familiar. A whole new body of law came into being. One of the basic principles of the doctrine of equity which has been incorporated into our legal system is that equity is equality. That was one of the famous sayings that is constantly being referred to by the courts when they discuss the question of equity.
Income Tax
For these three reasons I was very anxious to speak on this subject. What I wanted to stress particularly has to do with the subject that has been raised a good deal in this debate, the so-called deferred income plans, the registered retirement savings plan and the registered pension plan. As I understand it, this legislation is changing, making more available and perhaps more attractive some of the provisions in regard to these matters. What I wanted to try to do was draw to the attention of the committee an excellent report by the National Council of Welfare on the personal income tax system in Canada. It is called "the hidden welfare system", and it deals with that which is paid to poor people by way of what we commonly know as welfare. However, it points out that while those payments have been made, another massive spending program continues virtually unnoticed. Like the highly visible welfare system for the poor, this program transfers money from government to individuals. In fact, it transfers far more money than the poor ever receive from their welfare system and its benefits go to millions of people.
By any reasonable definition of the term, it is a welfare program, except that it is not called a welfare program, and its principal beneficiaries, most assuredly, are not the poor. It is called the Income Tax Act, and I want to call to the attention of the minister once again-and I am sure he has had this called to his attention before-that we have in this country a welfare program which does not work for the poor, but under the various provisions of the Income Tax Act, in fact, works for those who are by no means poor and are by no means in serious need. I want to elaborate on that and refer again to the report I have mentioned. The report refers to various provisions of the Income Tax Act dealing with the collecting of taxes, as follows:
All the remaining sections of the Act constitute the hidden welfare system. In contrast to the first group of provisions (the collecting side of taxation), these sections bear no relation whatever to the tax system proper and would be unnecessary for its fair and efficient operation as a means of raising revenue. They were put in the act not because they are necessary for a technical measurement of income, but to give certain people a tax break-in other words, to provide financial assistance to certain groups and individuals.
These provisions take the form of deductions and exemptions from income, credits against tax, preferential tax rates, deferrals of tax and tax reductions. They are variously called tax incentives, tax preferences or loopholes.
Sometimes I think they are referred to, in a more general sense, as opportunities for tax shelter. The writer of this report says as follows:
A more accurate terminology, and the one we will use throughout this paper, would be to call them tax subsidies or tax expenditures. Taken together they define the spending side of taxation.
That these provisions are government subsidies is clearly demonstrated by an example. Let us consider someone who has an income of $20,000, $19,000 in wages and $1,000 in interest from a savings account. Under the existing tax provisions, a taxpayer is allowed to deduct up to $ 1,000 in interest to arrive at his taxable income; so he pays $380 less than the person whose total income is made up of wages. The subsidy is accomplished through an exemption from taxes. It never

December 20,1976
Income Tax
appears as a government expenditure at all. Through these various savings schemes of special allowances and exemptions, a very large amount of money-I have seen the figure of $560 million-is paid out and, of course, there is no stigma attached to this. If a person is on welfare and gets a straight payment from the state when he needs it, there is certainly a stigma attached to that. However, on the other hand, if a person has a good tax lawyer and is able to maximize the benefits under the Income Tax Act, he is regarded as being rather clever, intelligent, up to date and shrewd. His efforts are applauded, generally speaking.
Those efforts are not only applauded, but they are encouraged by the form of the legislation we have. I, personally, do not have a great deal of admiration for astute lawyers or accountants who obtain tax subsidies for clients. I have a high opinion of the legal profession generally, being a member myself, but of all the shady parts of their activities, their work to get tax subsidies for those who do not need them is one of the shadiest. Just to give an example of the benefits-this point has been made before, but it is worth making again- this is a summary of the benefits under these various tax schemes:
-The temporary tax reduction provision cost Canadians $6.4 billion.
That is worked out as follows: if taxable income is under $5,000, the average benefit is $243.75. For a taxable income of between $5,000 and $10,000 the average benefit is $484.65. Then skipping some of the intermediate incomes, for an income of over $50,000 there is a tax benefit of $3,989.78. I find it difficult to imagine how in anything but a tax bill we could get away with giving a benefit of $3,989.78 to the wealthy and a benefit of $243.75 to those earning modest incomes.
How can we get away with that? The National Council of Welfare says this is unfair, wrong and not proceeding in a sensible manner. The amount is ten times higher for the well-to-do. This is something which has to be changed if we are to make reality of phrases like the "just society". I know most people do not like reading about income tax. I am not a particulary enthusiastic reader on the subject myself. People do not care to read about it, but when we look at the whole picture and find the hidden tax exemptions, we begin to understand that a gross injustice is being perpetrated throughout our tax system.
I wish to proceed and deal specifically with registered retirement savings plans. As is well known, each taxpayer is allowed to put a certain portion of his income into a registered retirement savings plan, and that amount is totally exempt from taxation. There are, of course, limits, and I understand that one of the purposes of this bill is to extend or expand the limits to some extent. However, these deferred income plans do not work equally for the poor as they do for the well-to-do. With regard to benefits, the provision cost Canadians in 1974 an estimated $515 million. About half a billion dollars went in benefits primarily to those with high incomes.
Let me illustrate that. The average tax saving for those earning under $5,000 is $1.02, or .5 per cent of all tax savings.

Those earning from $5,000 to $10,000 save $9.81, or 7 per cent of all tax savings. Those earning between $5,000 to $10,000 save $9.81, or 7 per cent of all tax savings. Those earning between $10,000 and $15,000 have an average tax saving of $38.43. Those earning $15,000 to $20,000 save $125.01. Those earning over $20,000 have a tax saving of $551.88, or 57.3 per cent of all the benefits. That percentage is for people earning over $20,000, people who surely do not need special subsidies to enable them to save money for their old age. If the latter percentage is added to the savings of those earning between $15,000 and $20,000, the total tax benefit is 76 per cent of all tax savings. I think the effect of the present legislation will increase the benefit for this particular group of high income people.
I want to deal with another aspect of the subject, and then I will be through. I want to deal with the question of the option in connection with the savings plan given to people at age 71. In this respect I am getting my information from a brief submitted to the minister by the National Association of Canadian Credit Unions which deals with section 146 of the act and the registered retirement savings plan.
According to the bill, at age 71 you have two choices: you may use all, or a portion, of the funds to purchase a life annuity, or you may receive, all or a portion, of the funds in taxable income. If you receive it all in taxable income at one time, a very substantial amount of it is taxed away-so that is not a very satisfactory option. If you take the other option you are forced to go to a life annuity-you are forced to take out an insurance policy. It is a rigid, inflexible and unsatisfactory choice, and something has to be done about it. It certainly does not suit the elderly people in my riding to be told, when they reach the age of 71, that they have to take all their savings at once and be taxed on it for one year or, alternatively, that they have to buy a life annuity-not a term annuity, but an obligatory life annuity.
As I understand it-and if I am wrong I am sure the minister will correct me-this was well put in a brief submitted by the Consumers' Association of Canada which said that life annuities are very profitable-but for their issuers, not the buyers. I see no need for this bonus to assist or aid the life insurance companies to sell their annuities if they are having any difficulty selling.
To conclude my remarks, Mr. Chairman, may I say that I feel obliged to oppose this bill because it seems to me to perpetuate an unjust system, a hidden welfare system; it seems, to me, contrary to the principles I believe in and, lastly, I believe it is quite contrary to the interests of my constituents.


Donald Stovel Macdonald: Mr. Chairman, the hon. member for Greenwood, as he always does, has clarified the discussion considerably by restating the arguments that have been put forward. I should like to deal with them briefly. He lays considerable emphasis on the quality of equity as being important. Perhaps the best thing I can do is refer him to my remarks at page 1626 of Hansard where I pointed out that it

December 20,1976

was specifically because of the concern about equity as between recipients of retirement pension and registered retirement savings plans that the annuity requirement was inserted in the first place. To have done otherwise would have been to give to the person the hon. member for New Westminster was talking about, the self-employed person, a benefit which the recipient, a union member of an employee pension plan, would not have been able to have. Perhaps 1 could refer him to that because it was in the interests of equity that the provision was put in.
With regard to the question of householders, I must say that I know the hon. member's riding and I have people in similar situations in my own riding. I have to say quite clearly that this provision is not of any assistance to retired people. It does not pretend to be, because there are other provisions in the Income Tax Act such as the exemption for people over 65 which in the year 1976 amounts to $1,307 and the $1,000 exemption for either interest or pension income which are obviously directed to the group the hon. member referred to. I think that group would agree, if we put the question to them, that they would support measures in the Income Tax Act which will enable their children to set adequate sums aside to provide for their retirement income. That is the purpose of the RRSP as, indeed, is the case with deductions for registered pension plans.
On the question of equity or equality on which the hon. member laid some stress, he really clarified the debate here. What he is talking about is equality in terms of tax money saved. What we are talking about is equality in terms of up to a certain limit-a percentage of income against which the registered retirement savings plan deductions can be taken. I suppose the real question one would have to put to them is this: Given three incomes-$7,500, $10,000 or $15,000, what is the equal amount that it would be reasonable to save throughout the whole community in relation to pension incomes? We have said: Up to a certain point, equality in percentage terms; then it drops off as the income goes up. I think the suggestion on the other side is that there should be a fixed amount of tax benefit available for people saving for retirement income. That is a different concept and it is not one I happen to agree with because it seems to me there is fairness in it up to a certain point and then, of course, it falls off again.
The hon. member set out some figures with regard to the value of these deductions on particular incomes. I am not going to accept or deny their accuracy. They illustrate that the higher you go in the income scale, the larger absolute amount of tax-the larger percentage amount of income you pay in tax. In that case, quite naturally, a deduction like this is going to save them more tax than those on lower incomes. The hon. member's figures illustrate the fact that the income tax system is structured to lighten the load at the lower end and make it progressively heavier as it goes up.
It seems to me the crux of the debate is as between equality in actual dollar amounts or percentage equality up to a certain point when that falls off as income goes up. I go back to the point I made to the hon. member for New Westminster: in
Income Tax
percentage terms, this represents a greater value at the lower end of the income scale. In absolute dollars it does not. On the other hand, the tax burden at the upper end of the income scale is heavier.


Francis Andrew Brewin: Mr. Chairman, I want to put two questions to the minister. He compared his constituency with mine, and I agree they are similar. He suggested that I have been referring to retired people. I appreciate that retired people are not included in this, but there are a lot of people in both our constituencies, in their sixties, not yet retired but who will retire soon. They do not get the full benefit of this. On the other point, he says the provision provides for equality of opportunity. I say there should be actual equality in fixed deductions.


Donald Stovel Macdonald: In actual dollar terms?


Francis Andrew Brewin: That is exactly what I am saying. I should like to suggest to the minister that that is precisely what we need if we are to have a fair system generally.


Donald Stovel Macdonald: The hon. member is saying that as the majority of contributors have an income of under $15,000, we would have to decide at what limit we set the maximum tax benefit. Should it be $7,500? It seems to me, in our system, which is on a percentage basis, that should be subject to a certain maximum and the percentage is better. At least the hon. member has made his party's position clear.


Sinclair McKnight Stevens: Mr. Chairman, at page 2110 of Hansard for last Friday there was an exchange between the minister and the hon. member for Winnipeg North Centre. I should like to put some questions to the minister arising from that exchange. From my reading of the proceedings of that day touching on clause 1 of the bill, I see that the hon. member for Winnipeg North Centre made it a particular point to comment on the government's pension plan and employee superannuation plans. As reported at the top of page 2110 of Hansard, the minister said:
I suppose the most difficult question hon. members have had to deal with in this pension debate has been the question of the indexing of public service pensions. I am inclined to say to the critics that it seems to me that their objections fail to come to terms with a rather more fundamental issue in our community; that rather than taking away the opportunity to keep the pension in real terms to wherever the economy takes it, we should be concerned about the fact that many private plans do not have this, so that private plans being sold now will not yield in real terms what the participant is expecting. This is a matter of real concern.
The hon. member for Winnipeg North Centre said, as reported at the top of page 2111 of Hansard:
-that if there is a difference between public plans and private plans, the thing to do is not to take escalation away from the public plan but to build escalation into the private plans.
My first question to the minister is this: Is the minister suggesting that somehow private plans which are now in existence or will come into existence should be indexed to take into account whatever inflationary forces the government may

December 20, 1976
Income Tax
permit in the economy? If so, how does he envisage private pension plans being funded if there is that type of indexing?


Donald Stovel Macdonald: Mr. Chairman, the hon. gentleman did not quote my rejoinder, printed on page 2111, namely: "If it can be done." As I have told the House previously on a number of occasions, one of the purposes of the retirement income study is to see to what extent we can contrive to protect the people who are making private arrangements with benefits comparable to those in the public sector. It may not be possible to do that; but I am suggesting that unless this is done, over time there will be a very substantial pressure on whatever government happens to be in power for converting the retirement arrangements to public pensions.


Sinclair McKnight Stevens: Will the minister indicate if the hon. member for Winnipeg North Centre was correct in stating, as reported on page 2111, that if there is a difference between public plans and private plans, "the thing to do is not to take escalation away from the public plan but to build escalation into the private plans?" I am not talking about any supplementary plan which may be applied in conjunction with the private plan. The hon. member's wording is clear. He was talking about an escalation in the private plan itself. I see the minister laughs. Perhaps he can tell the committee what he finds so funny.


Donald Stovel Macdonald: That is exactly the point. I said that if that can be done it would be very desirable to keep the pensions of private pension recipients stable in real terms.


Sinclair McKnight Stevens: Mr. Chairman, that brings me back to my initial question. Can the minister suggest how a private plan could actually fund such an indexed program? Private plans do not have the access to tax revenue which is available to the federal government. They do not have the right to change plans. The federal government may find in future that it must change its plan in order to skate itself "on-side". In short, why would the minister even imply that private plans may somehow fund indexed pensions in future, unless he has some hard facts or some suggestion to make to show how this can be done in the private sector?


Donald Stovel Macdonald: Mr. Chairman, I have repeatedly said in this debate, as I said a moment ago, that is a purpose of the retirement income study.


Ramon John Hnatyshyn: What is this royal jelly?


Sinclair McKnight Stevens: Mr. Chairman, would the hon. member reply to the suggestion raised by the hon. member for Winnipeg North Centre, namely, that it would be preferable to shift private pension plans more into the public sector? I notice that the minister commented about there being worth-while investment funds in private sector plans and that he would sooner see them left in the private sector. Actually, I am asking for an assurance rather than raising a question. I want the minister to assure us that there will be no move on the part of his ministry or the present administration which will somehow alter the position of private pension plans in the general pension structure of this country in favour of more public plans.


Donald Stovel Macdonald: Mr. Chairman, may I read what I said, as reported on page 2110 of Hansard:
My preference would be to leave a maximum amount of enterprise in private hands.


Sinclair McKnight Stevens: Mr. Chairman, that answer alarms me. The minister suggested that it would be his preference. Can he not give an assurance now that the government does not further intend to shift pensions in the private sector to the public sector?


Donald Stovel Macdonald: Mr. Chairman, I would have to await the outcome of the retirement income study, but my preference is to leave it in private hands. I think that is what I said previously.


Sinclair McKnight Stevens: Mr. Chairman, many hon. members asked the minister if it is possible to have funds in an RRSP placed, on retirement, in a separate trust for the benefit of the plan holder. They would be placing such funds in a trust instead of an annuity. Some plan holders might find the annuity provision less advantageous than the privilege of being allowed to handle their funds independently and placing them in a separate trust. If I understood correctly, the minister said that the government would review such situation or that the committee reviewing the private incomes would look at the matter.
May I ask the minister if it is correct that several months ago Revenue Canada provided Canadians with what was called a third alternative, an amended registered retirement savings plans which Revenue Canada indicated was within the purview of the act. In short, they proposed that the capital in the amended plan would remain in the hands of a trustee, to be distributed at death to the beneficiaries of the plan holder if there was a residual amount. In the meantime, no annuity would be required, according to Revenue Canada.


Donald Stovel Macdonald: Mr. Chairman, I am advised that there is no provision in the law for this. I would have to check the accuracy of the hon. gentleman's suggestion, namely, one that Revenue Canada have been offering the proposal the hon. gentleman has described.


Sinclair McKnight Stevens: Mr. Chairman, may I direct the minister's attention to a column written by Diane Cohen, an expert in whom the minister takes great stock. I have often heard him extolling her virtues. The column which I shall quote in part appeared in the Calgary Herald on May 21, 1976, and says exactly what I have just said, namely, that such a trust could be established within the act. Miss Cohen then went on to say:
When news of this third alternative became known across the country, trust and insurance companies, as well as federal tax bureaux were inundated with requests for further details. Trust and insurance companies knew nothing about it. Revenue Canada reaffirmed its new interpretation of the Income Tax Act-
She went on to say:
But. . . the Department of Finance, which writes income tax law, disapproved of the new interpretation. It was not, they said, their intention to favour self-employed people who could put more money into RRSPs than wage and salary earners. Why, they said, should a self-employed person be able to control his/her own investments, when a salaried person who contributed to a company pension had no control over his/her investment?
December 20, 1976

Revenue Canada responded that while the Department of Finance may write the law, it is within the purview of Revenue Canada to interpret it. Revenue Canada said its interpretation ... the third alternative... stood. Finance countered that if Revenue Canada persisted, Finance would rewrite the law.
I ask, is what Miss Cohen related in that column substantially true? Was there a kind of feud going on with Revenue Canada interpreting the Income Tax Act one way, and Finance saying they did not agree, and if they persisted in their approach, they would have to rewrite the law?


Donald Stovel Macdonald: Mr. Chairman, considering the hon. member's source, I would have to say probably it is not true.


Sinclair McKnight Stevens: We have been assured by certain members to our left that this debate may go on for a considerable time. If it does, will the minister consult with his staff to find out whether this type of interpretation was put forth by Revenue Canada? This is quite important. The minister has repeatedly stated that this is under study. If, in fact, the Department of Finance are so adamantly opposed that they have even suggested to Revenue Canada they would amend the law to ensure that it would not be done, before the committee on the whole stage ends the minister should be asked at least to check with his staff to find out whether there was this type of debate between Revenue Canada's interpretation of what could be done under the Income Tax Act and whether they in fact stated that if Revenue Canada persisted in that interpretation, they would have to rewrite the law.


Donald Stovel Macdonald: Mr. Chairman, I am advised it was not a battle, but under clause 56 any possibility of such an interpretation will be headed off.


Lorne Edmund Nystrom: Mr. Chairman, I rise to take a few minutes to make the central point we have been making in the debate to the government, namely, that we do not feel we have an equitable tax system in this country. The minister stated in the debate that the percentage savings in pension plans, and so on, are greater or can be greater for those at the low income end of the scale than for those at the high income end. I agree with him. However, we in this party are interested in equating equality of condition. That is the most important thing we have to do. The bill before us has good in it.
Some clauses will help widen the gap between the rich and the poor, as has been argued by many members of this party during the past few days.
The Minister of Finance has been playing Santa Claus with some of the wealthier people. It is a Christmas bonus he is giving to some wealthier people just before Christmas. This is being done in three or four places in the bill before us. It is that type of Christmas bonus I am in no hurry to expedite. We do not need to give any more gifts to the wealthier people of this country. This was recently summed up in a report by the National Council of Welfare on the personal income tax system in Canada. We heard about this in November, 1975. I quote from page 1 of the report:
Income Tax
There are two welfare systems in Canada-one for the poor, the other for everyone else.
Of the welfare system for the poor, little need be said. It is well known to every Canadian. The high visibility of social assistance and other income security programs keeps them continually in the public view. The fear that these programs are being rampantly abused, in spite of all the evidence to the contrary, is constantly invoked. The question of whether government can afford this expenditure, regardless of the number of families who must rely on these programs as their only source of income, is passionately debated.
Later in the report they talk about the other welfare system in this country, namely, all the tax loopholes that are available to many Canadians. Of course, the tax loopholes are widened in this bill. It gives a few extra benefits to primarily the middle and upper income people in this country.
In their report they give some statistics to back up what they are saying in their assertion that there is a hidden welfare system. I quote:
Only 17 out of approximately 60 subsidies in the Income Tax Act are included in that $6.4 billion.
They are talking about $6.4 billion that was in effect lost to the treasury in 1974 because of the various income tax clauses and the various benefits available to the people of Canada. They point out that for the most part these give-aways and exemptions are primarily for the upper and middle income groups. On page 17 of the report there is an interesting table. It should be studied by all members of this House who are interested in creating equality of condition in this country. The table points out that for those earning under $5,000, the average benefit from the taxation system, including all the various benefits and deductions, is $243 a year. For those earning between $15,000 and $20,000, the average benefit is $1,177. That is significantly more than the guy earning $5,000. For those earning over $50,000, the average benefit is $3,989.
I am not complaining about this. I am saying that the dollar value being paid out by the government goes much more sharply to those in the middle and upper income brackets. One of the ironies of the situation is that people do not complain about this type of welfare or transfer payment to individuals if it is through the taxation system. However, they do complain if it comes from the government in the form of a welfare cheque, unemployment insurance cheque or something of that sort. I do not think that is right. At page 18 of the report the council talks about benefits going to the wealthy of this country. They show a chart with the percentage in total benefits from the various tax subsidies. They analyse 17 tax subsidies in our tax system. They first look at those who earn under $5,000 annually.
The percentage of all tax filers who made under $5,000 in 1974 is higher than most of us in this chamber think. It was 38.4 per cent of all Canadians. Well over one-third of all Canadians earned less than $5,000 that year. The percentage in total benefits under this system, drafted by the Government of the "just society", was 12.5 per cent. If you earned between $5,000 and $10,000 a year two years ago, you were in a group with 31.5 per cent of the Canadian people and received 27.9 per cent of the total benefits available under our income tax

December 20, 1976
Income Tax
system. You were slightly better off if you were in that tax group. However, you were still being cheated or were losing out with regard to receiving your fair value of the tax benefits available under the laws drafted by this parliament.
If you earned between $10,000 and $15,000-a decent middle income two or three years ago-you were in a group along with 18.7 per cent of the Canadian people. That group received 26.5 per cent of the taxation benefits. It will be seen that once you get a middle income figure, you start to receive more than your fair share of the taxation benefits available under the law drafted by this government which believes in equality and justice. If you earned slightly over the middle income salary in 1974, between $15,000 and $20,000, you were among 6.8 per cent of the population. That group received 14.3 per cent of the benefits of the taxation system. In other words, the ratio is almost two to one in favour of the upper middle income Canadian. If a person makes over $20,000, which is the final figure in the table, he is a member of a very select group because only 4.6 per cent of Canadians make over $20,000. Yet this same small select group receives 18.8 per cent of the tax benefits.
This type of table and the table that I referred to briefly a few moments ago essentially summarizes the point that we in this party are making, namely, that the tax system of this country, in terms of real dollars and equality of condition, is a very unfair one. It is, therefore, incumbent upon us as parliamentarians to make sure that we make this point as often as possible to the minister and his officials. We are not satisfied with a taxation system that discriminates in terms of constant dollars against the poor or those of low income, or even those taxpayers of middle income.
The bill before the committee today, Mr. Chairman, is going to widen the gap in three or four respects. This is why, in essence, it is a bill that the government wants to rush through before Christmas. It contains a Christmas bonus for a number of the more wealthy Canadians. It is a Santa Claus bill containing a Christmas bonus for some of our wealthy Canadians. Let me list what these bonuses are. I am sure Conservative members are interested in the first one, which is the famous surtax on incomes which was implemented during the inflation debate a year ago in this chamber. A 10 per cent surtax was placed on incomes of individual taxpayers in Canada who paid more than $8,000 a year income tax. This provision is to end at the end of this year, but I do not see why it should end. As I say, this provision will be a Christmas bonus for the more wealthy people of this country. Very few people in this country, certainly in my area, pay more than $8,000 a year in income tax; those who do do not need this kind of bonus. The money should be spent on helping the poor, on stimulating the economy, on reducing inequities and providing jobs for the people of this country.
This provision means that a person paying $8,100 income tax would have had to pay an extra $ 10. He will now save this extra $10. A person paying $9,000 income tax will save $100

once this bill goes through. This is the kind of gift I am not that anxious to give the wealthy people of this country. It is a Christmas gift of $100 by the government of Canada.
The second bonus has already been referred to today by my colleagues, namely, the deferred income plan. We are increasing the limit on the amount we may contribute to a registered retirement savings plan or a registered pension plan. The minister says that the average wage is around $15,000 or less, but as my colleague for Waterloo-Cambridge has said, we would like to see some statistics in terms of constant dollars. My guess is that people in the upper half of the income scale get a lot more in terms of tax savings and benefits down the road from registered retirement savings plans than do those in the bottom half of the income scale. If we raise the limit even more, we are providing even bigger tax shelters, tax give-aways or tax breaks to those already making a lot of money.
I know that the minister argues that if a person makes $10,000 and receives tax benefits amounting to $5,000, he is getting a tax shelter for one-half of his income, whereas if a person makes $50,000 a year and he receives back $5,000 he is only getting a tax shelter for 10 per cent of his income. But the minister knows it does not work that way. If you are making $10,000 or less in this country, you do not save a very large proportion of your income through a tax shelter plan; you have a progressive taxation rate. You are really dealing with a 50-cent dollar or an 80-cent dollar, which again works against the interests of the low-paid people of this country.
This bill seeks to raise the amount that can be contributed to a retirement pension plan from $2,500 a year to $3,500 a year. I maintain that if you look down the road a few years you will find that the overwhelming good received by Canadians from this will fall primarily into the pockets of the wealthy Canadians in this country. The same is true of registered retirement savings plans; the limits are being raised from $4,000 a year to $5,500 a year for people with no employer pension plan, and for those with a plan from $2,500 to $3,500 a year. Again I suggest that the benefits that flow from this in the main go to people in the upper income brackets.
Then we have the deferred profit-sharing plans. The ceiling on the amount employers may contribute is being raised from $2,500 to $3,500. This kind of plan helps the wealthier 5 per cent, 10 per cent, 15 per cent or 20 per cent of the Canadian population, rather than the lowest paid 5 per cent, 10 per cent, 15 per cent or even 50 or 60 per cent of the Canadian population.
In his budget papers on May 25, I believe it was, the minister said that all the changes regarding RRSPs, and so on, would effect about 300,000 people who were presently contributing to these plans. As I have said, Mr. Chairman, a lot of the money the Canadian government is giving away in terms of tax shelters for high income people which have been developed over the years should be redirected to those of low income; the money should be shifted away to those who really need it so they are given a financial break and the economy is stimulated. Rather than create tax shelters for the wealthy and middle income people in this country, we should put more
December 20,1976

money into improving pension plans, something the hon. member for Winnipeg North Centre has been advocating for years in this House, be it improvement of old age pensions, widows' pensions or war veterans' pensions. If this were done, I maintain this would be a much better country to live in.
However, Mr. Chairman, I realize that my priorities are different from those of the government across the way. I believe in an egalitarian society. I believe in equality of condition. I believe that those who are wealthy in this country must be willing to sacrifice a great deal in order to help those at the bottom of the income ladder. Under this government the very reverse of this has been happening; the gap has been growing since 1968, instead of diminishing. I can quote table after table to prove that. We should create more jobs so the poor can make a contribution to society, rather than provide more jobs for lawyers and accountants to figure out how their wealthy clients can take advantage of various tax shelters that have been built into this system by this and previous ministers to the tune of $6.4 billion, according to the welfare report of 1974.


Mr. Ritchie:: I have just a few points, Mr. Chairman. First of all, I am glad that the surtax on incomes has been taken off, since I think it is retrogressive in many ways. In levying income tax we tend to forget what the take-home pay is, which is the important thing to a worker. If income tax is too high, wages become too high since each group in society attempts to justify what it receives-in other words, what a person takes home. This tendency has been accentuated by the surtax.
In the province of Manitoba, with an NDP government, those with taxable incomes in excess of $30,000 are taxed at the rate of 70 per cent. Not only is this heavy tax detrimental to working, but it promotes operations outside the tax system. As a result, there are many operations of a commercial nature that take place outside the tax system and are therefore not subject to the tax. There are many examples of this.
Let me bring to the attention of the minister a matter on which I have received representations. I think it is an important matter in that we all want to promote small business. Many small businessmen are active in the contracting business, and one such area relates to the operation of earth-moving machinery. Let me refer to the regulations and schedule D regarding heavy equipment. The allowable depreciation has been drastically reduced from 50 per cent to 30 per cent. According to my information, this change resulted in a television program on "W-5" which indicated this was a tax shelter for certain people. My accountants have indicated to me that this is in fact the case.
When the government moved to reduce this summarily from 50 per cent to 30 per cent, it put a lot of small operators out of business. The suggestion is that the minister should try to restore the 50 per cent depreciation and find some regulation that would do away with those opportunities for people to use this as a tax shelter. Perhaps it should be confined to those
Income Tax
individuals who have a bona fide record of bidding for these jobs.
It is my understanding that these earth-moving machines cost from $50,000 to $100,000. Most contractors prefer contract bidding as it encourages individuals to get into the business with one machine, perhaps as a one-man operation. This particular regulation puts these one-man operations at a disadvantage in comparison to the larger firms which have many machines and a much better access to financing. The regulation, as I understand it, has had the effect of preventing many individuals from entering this contracting business. They might buy one machine and gradually expand, but they find it difficult to finance $75,000 or $100,000, particularly when they are only allowed to depreciate to the extent of 30 per cent in the first year. Perhaps if this could be returned to 50 per cent it would make it more easy for the small operators to get into this heavy-equipment contracting business.
Perhaps the minister might care to reply.


Donald Stovel Macdonald: Mr. Chairman, I can advise the hon. member that following an order in council of December 2, the 50 per cent rate was restored in respect of power earth-moving equipment, class 22, and this will be published in the Canada Gazette for December 22, 1976.


William Gordon Ritchie: I am sure this will be received with enthusiasm by these individuals. Let me turn now to the proposal regarding cattle that must be destroyed by government order. As a result of representations, I understand this is a contentious matter. The amendment will, in effect, allow a farmer to spread his income as a result of the destruction of his cattle over two years. If this is the case I should like to ask the minister if it has received the approval of cattlemen. I think there are certain weaknesses in relation to the two-year period, and I would appreciate an explanation from the minister.


Donald Stovel Macdonald: Mr. Chairman, this comes under clause 30, and I wonder if we might postpone it until that time.


William Gordon Ritchie: I would be glad to hear from the minister then, Mr. Chairman. If this measure is not passed by the end of the year, will there be any lapsing provisions and, if so, what are they?


Donald Stovel Macdonald: No, Mr. Chairman.


Mr. Peters:: Thank you, Mr. Chairman.


An hon. Member:: Merry Christmas!


William Arnold Peters: Mr. Chairman, it seems it will not be a merry Christmas for some of the poor people, if we pass this bill. I understand some hon. members would like to see it passed as soon as possible as it will be of great advantage to a certain segment of the population. It amuses me to note that apparently it is only in ridings represented by the NDP that we have minimum and low-wage earners. This is rather surprising when we consider the fact that 38.4 per cent of the workers in

December 20, 1976
Income Tax
this country earn less than $5,000 per year. That fact seems to have escaped the attention of a number of members in other parties. I presume they are not very familiar with the incomes of a number of people in their areas.
The Parliamentary Secretary to the Minister of Finance said the other day that in his opinion there was equality under the Income Tax Act and that there was no inequality developing in the general population. It seems to me that is not true, and should be obvious to almost everyone. It may not be obvious to a lot of members of parliament who do not get much time to talk to the general population, but it should be a fact readily discernible in the various municipalities and from the increasing number of people on welfare. It should be obvious from a consideration of income tax brackets and the number of people living on minimum wages below the poverty line. I do not expect the parliamentary secretary to realize this from his lofty position. Perhaps it is time that we had another look at the situation.
It was very interesting to me when I considered the number of clauses in this bill and then looked at the hidden welfare system referred to by the National Council on Welfare. Perhaps this organization is directed toward welfare. When you read the list, you see mentioned tenants' associations, poverty groups, and low income groups-so probably it is slanted in that direction. There are a number of inequities in the act, and every member of parliament knows it. I am sure that many members of parliament, just as private industry across this country, have hired tax experts to look for the tax loopholes in order to get the greatest tax benefit. That is highly commendable; but in many cases it is cheating. They know it, and everybody else knows it. It may not be cheating from the moral standpoint of some people, but from my own it is.
I, as a member of parliament, paid $6,816 last year on a gross income of $27,000, with a taxable income of $21,000. It would not have been difficult for me to have reduced that figure by $2,000 or $3,000. I own farm property, and all I need to do is list the farm property and write off some of that money. I have never done so, because I consider it would be dishonest. I do not believe many members of the House feel that way, or we would look at some of the deductions we allow.
I am not thinking about the exotic tax havens used by some people. I am talking about the whole of the tax structure. I am talking about the loopholes in the general taxation laws which allow for great expenditure out of the tax dollar of those able to afford it. Seventeen of these examples out of approximately 60 subsidies to the wealthy produce approximately $6.4 billion. The National Council of Welfare, referring to personal income tax, considers this to be the spending side of income tax. If the government does not raise this money by exemptions, then obviously they are spending the money. Because they have collected it, it must be available for the general population.
What would $6.5 billion provide? I presume that if we had a sum as large as this to spend, we would be able to provide everyone in the country with an income above the poverty

level. That might be worth-while, because I find that poverty begets poverty. Those who are living below the poverty line are not able to raise themselves above that level. Family after family falls into this category. We have kept the native population in that category for years and years, and even with considerable government assistance it has been impossible for many of them to raise their standards to the point at which they can see an end to poverty. We hand them a few bucks, as we have done in connection with the James Bay project, and say this should satisfy them for a little while. It may satisfy one generation, but the money will go and they will not get out of the poverty syndrome; they will not get out of it until they have money to spend like other Canadians.
If we allow the rich to write off income tax, we are giving them a subsidy, we are making an expenditure of $6.5 billion in their direction, and we are not making that kind of expenditure upon the poor to make sure they are no longer poor! That is the wish of the people I represent and I am sure it is the wish of the majority of people in every riding who have an opportunity to know what we are doing with our expenditure from income tax. In the United States the government must explain not only the expenditure they make but the expenditure they allow in deductions through the tax structure. Both items are presented and must be justified.
One of the insidious things about the deductions allowed for income tax is that many of them were considered to be expediencies on only one occasion and then they continued indefinitely in the tax structure, known only to tax experts and to those who are out to tell people how they could save considerable sums of money beyond the expense of such professional advice. We now have an opportunity to look at many of these taxes and to read the information which the Welfare Council has provided. That information is very damaging to the whole of the income tax structure and to the idea of a progressive income tax.
Everyone in this country believes in progressive taxation. I am sure the minister does. I am sure I do. The difference is, the minister knows we do not have a progressive tax structure, and I do not know this. I am still foolish enough to think that if we pay the rich by providing demogrants, we should get the money back. But that is not true. If we pay the old age pension to a millionaire who does not need it, we do not get the money back. There is no reason why we should not get that money back. As the former member for Temascamingue said in the House so many times, there is no reason we cannot pay, as a demogrant, a guaranteed annual income of a reasonable amount to everyone and take it back if it is not needed under the income tax structure. But we cannot do this because there are so many loopholes available to those in the higher brackets but not to those at the bottom level.
Let me give one example. We are going to allow the saving of some money to buy a house and then we say it is necessary, first of all, for people to save $1,000. I do not know of many young people in this country who have never owned a house, who are making $10,000, who are renting an apartment, paying for furniture, paying for their car, paying for a young
December 20, 1976

family they may have acquired, and making the other expenditures they have to make as newlyweds and who are fortunate enough to be able to save SI,000. Of course, no difficulty is encountered by persons in the higher income brackets who have lived in a luxurious apartment for a long time: they can get this tax benefit. If hon. members look at the figures, they will find there are many more people taking advantage of this concession in the high level brackets than in the low level brackets. There are a couple of tax experts sitting on the floor of the House advising the minister. Both of them are young people. But I will bet they never advise the minister in terms of what their needs are. They advise him in terms of what the act provides and what the government wishes to accomplish in that respect. I am sure there is very seldom any practical application when it comes to changing the income tax structure. If you were to raise the personal exemption of the poor people by $100, they would be very grateful. It would not amount to very much, but they would be very grateful.
If you give that same benefit to those in the high income bracket, they would not be very grateful; they would want considerably more and they would get more even out of $ 100. The benefit to them would be considerably larger than it would be to those on lower incomes.
I have heard of a large corporation in this country, a multinational corporation which is worth probably $1 billion. 1 understand that in 1974 they paid $8,000 in income tax. You and I may have come close to paying that ourselves, and yet we are certainly not in their class, but the tax structure in this country is such that all the time we are giving a hand-out to those who do not need it. In the case of income tax, we take it out of the hands of those who need the money, because if you can save $61/2 billion out of the income tax structure it comes from those who most need benefits from the government. The only reason we collect taxes is to help pay the expenditures of the country. If there is any other reason for collecting money, I fail to see it because this government has not done very much to establish corporations, industries or Crown corporations for the benefit of the ordinary Canadian. In fact, many of the directions in which they have gone have been contrary to the wishes of the general population. That includes CDC in which I, for one, had very high hopes, it being the kind of corporation, I thought, that might work for the average Canadian.
The benefits that the Canadian population will get from the Canadian government will come out of taxes, the great bulk of which is raised from corporation taxes. Therefore, if you use the tax structure to help the rich, this will be done at the expense and to the detriment of the poor. In my opinion, that income tax structure would be a much better one if no deductions of any kind were made, which would mean that you could keep the rate of tax very low. You could set a floor below which taxes would not be paid, and all those above that level would pay their taxes. This would be done on a progressive scale. In many cases, I do not see any benefit in us giving the rich this $6'A billion. They have not invested in this country. In talking to people in other countries, one finds out
Income Tax
something that all of us should know but which I did not realize. I was talking to a person about the province of Quebec, and we were saying it would go it alone. That person said that rather than going it alone, it would become a state of the United States because the United States already owns the province: 70 per cent of the capital of Quebec comes from the United States, and if it is going anywhere, that is where it would go.
Why is the U.S. putting that kind of money into one of our provinces, or perhaps into all our provinces? They are doing so because those people to whom we allow these huge tax exemptions are not investing in Canada. They own insurance, they own stocks and bonds, but in many cases they own them in countries other than Canada.
The minister has been interested in discussing with us equality in our tax structure and how it applies. He pointed out one section in the pamphlet which indicates how the system works. For instance, in child-care they use the example of a tax credit in lieu of an income tax arrangement. A tax credit of $350 is mentioned in the pamphlet, and two women would be eligible for the same $350 credit. For the woman earning $6,000 this would mean a reduction of $93 in her tax bill. Instead of a tax saving of $257, her taxes will be reduced by $93. The woman making $20,000 would have her tax bill increased by $30. Since the present tax deduction gives her a saving of $380, but the credit only allows $350, she has to pay $30 more.
Probably everybody agrees that we should be providing free child-care in this country and we should establish free daycare centres. But we can only provide them if we obtain money from taxes to make that possible. Is there any reason why one woman with a child should be allowed greater compensation in child care allowance than another woman with a child, the only difference between them being the amount of income they earn? Is there any equality in that? These children need to be looked after in the same way. But we are giving one woman a greater allowance by giving her a tax deduction. I am sure most hon. members would say that the woman who was earning $20,000 wants her child to be better looked after. She will have to pay more for a nanny. There is a section here which discusses nannies. I understand that the Minister of Transport charged the nanny he hired half the cost of the aeroplane fare. We should look at his deductions to see if he charged a full deduction for that.


Charles Robert Turner: Order, please. I regret to interrupt the honorable member, but his time has expired. He will have another chance to speak on other clauses of the bill.


Mr. Hamilton (Qu'Appelle-Moose Mountain):: Mr. Chairman, I speak to the minister in support of the registered retirement savings plan and in support of the raising of the maximum amount from $2,500 to $3,500. I have already mentioned this in the budget debate, and I repeat it today. The reason I support the principle of RRSP is very simple. One of the ways to make our system work is to make it possible for our people to set aside some of their current earnings for their

December 20, 1976
Income Tax
future. The RRSP is far from a perfect technique, but under the present system it is a good form of saving. When this type of plan came in during the war, the principle was that if you paid into your RRSP you would defer your income tax on the amount you contributed to the plan as an inducement. That inducement, provided over the last 30 odd years, has resulted in close to 20 per cent of our Canadian wage earners participating in this form of individual saving for their future. The type of inducement the Department of Finance can provide to the Canadian people, as individuals, to look after their own individual futures has to be marked out as a success.
I do not intend in my remarks today to lay down what I think is a better system. I am speaking primarily to the minister in the hope that when he brings in his next budget he will improve on what he tried to do in his last budget in so far as registered retirement savings plans are concerned. I said that I approved the raising of the maximum from $2,500 to $3,500, for a very good reason. I do not accept the position of the NDP that his only helps rich people. This type of program is already subscribed to by approximately 20 percent of the working people of our country. In this group of working people I include not just the man who works for wages on an hourly, weekly or monthly basis; I also include the self-employed farmers of this country. I know something of the variability of income of people who are self-employed in the farming business. For years and years they went along with a net income of $2,000 per year or thereabouts, and with that amount of net income they were not able to participate too widely in plans such as this.
However, in the last three or four years, particularly in 1974 and 1975, farmers realized net income went up very dramatically in every province except Ontario, and farmers were faced with a peculiar problem which RRSPs allowed them to handle. The income of the farmer is generally very low when compared to that of the working man in the city or to that of the small businessman. When a farmer does get two or three good years and earns money beyond his immediate needs, he is able to put it into a form which will be useful to him on his retirement. Many thousands of self-employed people, particularly in the agricultural sector, have used this plan in the last two or three years.
I will now go on and discuss what the obvious next step should be, but I want to make it very clear that the opportunity for self-employed people to put aside up to $5,500 is good for this country. It is good for the individual in that he is setting some money aside with the knowledge that he saves income tax in the current year but that down the road when he wants it and does not have any more income from his selfemployment he can draw it back and pay income tax on it then.
My requests to the minister is the same request other hon. members have made. For ten years I have known, as an individual, that the weakness in the registered retirement savings plan comes about when the money is taken out. Under
(Mr. Hamilton (Qu'Appelle-Moose Mountain).)
the act it has to be taken out in the form of an annuity, and this seems fine until it is found out what these annuities yield. I know from personal experience. I got the shock of my life, when I tried to turn an RRSP into an annuity, when I realized all the sacrifice I had made to put my $700 or $800 per year into this plan, and then realized what I was going to get out of it. I could not live on that amount.
My interest has been personal, and from talking to many hundreds of people who have retired in the last six or eight years and who suddenly were caught up with inflation, I found out that the amount of money they had hoped to live on comfortably to the end of their lives-$5,000, $6,000 or $7,000 per year-turned out to be inadequate in view of the inflation of the last three or four years.
There is nothing more touching to a member of parliament than to get letters from people who have done all we have asked them to do, who have worked hard all their lives, saved their money and put it away with the expectation that the amount they would have as a result of their own effort, plus the things which are available universally, would give them a moderate standard of living until they died. This observation applies particularly to the working man. Most working men want to achieve in their lifetime a job well done, to own their home, to raise their children and to save an amount of money which, on top of the pension from their company, will be sufficient so they can live what they think is a reasonable, comfortable life without worry in the last 10, 20 or 30 years.
For these reasons the question is obvious. Since it is not really possible at this stage in this bill to get the minister to move amendments-because I know the time it would take-I ask the minister and the experts in his department to give serious consideration to preparing two or three alternative plans which could be put into the act to deal with the payment when a person wants to take out his registered retirement savings for legitimate retirement purposes.
Several alternatives have been suggested, and I am going to list two or three of them. The first one is the simplest. Since the inducement was given to the individual to put money aside in his big earning years to look after his personal needs in his retirement years-and only then would the government tax him on the money received as income-I think that principle should be held to, but held to in a way which gives the individual some choice. The first choice is obvious, to set up a special fund, which can be done at any bank, any credit union or any financial institution in Canada which allows the holding of this money, and every time the individual takes money out of that account, whether it be every month, every year or whatever, a form could be sent to the Department of National Revenue, and this should be counted as income.
There would be no bookkeeping required on the part of the Department Finance. There would be no extra administration required. This would be a simple device, and believe me, the banks and credit unions would like the business. This individual account would leave the individual maximum freedom to draw down his money as he sees fit, and if he does not need it in the first two or three years, he would not draw it down. The
December 20, 1976

interest would accumulate, and he would be asked to pay tax only when he received the income. It would be his money. The question of what happens when the man or woman dies has to arise, and the answer is very simple: it goes into the estate, and the estate is taxed.


Charles Robert Turner: Order please. It being five p.m., it is my duty to rise, report progress and request leave to consider the bill again later this day.
Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Turner):: It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised at the time of adjournment are as follows: the hon. member for Windsor West (Mr. Gray)-Trade-Date and method of application of measures governing international boycotts; the hon. member for Scarborough East (Mr. O'Connell)-Trade-High level of duty imposed by Soviet Union on gifts-Possible breach of trade agreement; the hon. member for York-Simcoe (Mr. Stevens)-Finance-Possibility of budget before February-Government position.
It being five o'clock p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, notices of motions and public bills.


PRIVATE MEMBERS' MOTIONS
The Acting Speaker (Mr. Turner):: Standing Order 19(1) applies. Notice of motion No. 4, in the name of the hon. member for Ottawa-Vanier (Mr. Gauthier). Shall the motion stand at the request of the government?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Turner):: Notice of motion No. 7, in the name of the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall). Shall the motion stand at the request of the government?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Turner):: Notice of motion No. 8, in the name of the hon. member for Selkirk (Mr. Whiteway). Shall the motion stand at the request of the government?


Some hon. Members:: Agreed.
Government Organization Act


The Acting Speaker (Mr. Turner):: Notice of motion No. 10, in the name of the hon. member for Egmont (Mr. MacDonald). Shall the motion stand at the request of the government?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Turner):: Notice of motion No. 14, in the name of the hon. member for Wetaskiwin (Mr. Schel-lenberger). Shall the motion stand at the request of the government?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Turner):: Notice of motion No. 15, in the name of the hon. member for High Park-Humber Valley (Mr. Jelinek). Shall the motion stand at the request of the government?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Turner):: Notice of motion No. 16, in the name of the hon. member for Scarborough West (Mr. Martin). Shall the motion stand at the request of the government?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Turner):: Notice of motion No. 17, in the name of the hon. member for Hamilton West (Mr. Alexander). Shall the motion stand at the request of the government?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Turner):: Notice of motion No. 20, in the name of the hon. member for Bellechasse (Mr. Lambert). Shall the motion stand at the request of the government?


Some hon. Members:: Agreed.


GOVERNMENT ORGANIZATION ACT
James Aloysius McGrath: That in the opinion of this House, the government should consider the advisability of bringing in legislation to amend the Government Organization Act providing for a separate Department of Fisheries.
He said: Mr. Speaker, on January 1, Canada will join those countries which will declare a 200-mile limit for the purpose of fisheries management. That is the newest, and in my opinion, probably the most compelling argument for the government to reinstitute a separate Department of Fisheries. Probably at no time in our history as a nation has fisheries assumed the importance to our country it has with the advent of this

December 20, 1976
Government Organization Act
important move by the government. The purpose of my motion, which will certainly commend itself to the House, is also to give the House an opportunity unanimously to support a resolution adopted by the Liberal party at its national convention in 1973. That resolution reads as follows:
That in view of the increasing importance of the fisheries to the people of Canada, particularly to the people of the coastal provinces, that there be re-established immediately, a department to take charge of this area to be known as the Department of Fisheries and Marine Resources.
In further support of my resolution, I place on the record of the House another important resolution passed by Liberal candidates of the Atlantic provinces who met in Halifax during the 1974 federal election campaign. That resolution was incorporated into the Liberal platform and called for the establishment of a separate Department of Fisheries.
During the election campaign in 1974, in a speech in Digby, Nova Scotia, the Prime Minister (Mr. Trudeau) did not go as far as the Liberal candidates: he merely indicated that in view of the importance of fisheries to coastal provinces he was prepared to appoint a full-time minister to look after fisheries programs. I quote the Prime Minister because 1 understand how important it is here. That part of the Liberal program was implemented following the election of 1974 with the appointment of a Minister of State for Fisheries. That was better than nothing; at least we had a minister who was able to devote his full time and attention to the very serious problem of the Fishing industry on both coasts and in the inland waters.
The problem has been seriously exacerbated by the most recent cabinet shuffle. During that reorganization of government we lost the full-time Minister of Fisheries and are now back to the situation that prompted the resolution of the Liberal convention in 1973 and the Liberal Atlantic provinces candidates' resolution of 1974; we are back to having very important questions relating to fisheries and the implementation of the 200-mile limit and the organization that is going to be necessary in relation to that important event: we now have a minister who has to devote a great deal of time to things other than fisheries. We now have a Minister of Fisheries having responsibility, once again, for the environment, notwithstanding the fact that the Fisheries Service of the Department of the Environment occupies a great deal of the minister's time, and rightly so.
In addition, it accounts for almost 50 per cent of the total budget of the Department of the Environment. Not only do we not have a separate Minister of Fisheries at this most important time in the evolution of the fisheries industry, but we do not even have a deputy minister of fisheries. The Department of the Environment is organized so that one deputy minister presides over two senior assistant deputy ministers. We have in the fisheries section of the Department of the Environment a senior assistant deputy minister who answers to the Minister of the Environment, and he has under him two assistant deputy ministers.
Ever since the government's reorganization bill of 1971 very serious problems have been created for the men and women who have the responsibility of administering Canada's fisheries

program. It has resulted in a very serious undermining of the morale of the fisheries service and the highly qualified and dedicated people who carry out our fisheries programs. Their efforts have been thwarted by the government and, as a result, morale is at an all-time low.
If that were not enough, we now have the situation whereby the implementation of the 200-mile limit will require considerable additional resources which the Department of the Environment does not have at the present time. Just a few days ago Treasury Board turned down a request by the Minister of Fisheries and the Environment (Mr. LeBlanc) for additional personnel to administer the 200-mile limit. I understand that the Minister required 100 additional personnel just for the east coast alone, mostly within my own province. That was reduced to a nominal number. It is regrettable because these officers are going to be overtaxed at a time when morale is low, at a time when the budget has been very seriously restrained, and at a time when we need more than ever a full-time Department of Fisheries presided over by a full-time minister of fisheries.
I suppose a certain amount of credit has to be given to the present minister who has to carry the burden of both offices and the burden of looking after Canadian fishing interests while at the same time giving attention to the very important environmental problems facing the country today. My colleague, the hon. member for Perth-Wilmot (Mr. Jarvis), has put these problems forward on many occasions. I am sure he would support my motion because it would be in the interests not only of the fishing industry of Canada to have a separate Department of Fisheries but it certainly would be in the best interests of the environmentalists and those tackling the ecological problems of our society to have a Department of the Environment dealing with the problems of clean air, clean water and all the attendant problems of a highly industrialized state.
I believe it is essential to have a separate Department of the Environment, but I believe it is even more essential to have a separate Department of Fisheries. As a result of the belated action of the government, and after a long period of gestation and consideration to implement a 200 mile limit, the Fisheries Service in Canada is going to be called upon to perform very important tasks in relation to the management of this vast zone now within our jurisdiction. The management of resources, required surveillance, scientific research, conservation of existing stocks and methods of returning depleted stocks to the point where they can again be economically viable are all serious questions.
The motion we are considering has been on the order paper ever since the government reorganization bill of 1971 was first introduced. It has been brought forward year after year. I believe it commends itself to the House; I believe it commended itself to the Liberal party when it met in convention in Ottawa in 1973, and commended itself to Liberal candidates who met in caucus in Halifax in 1974. I commend it to this House for favourable consideration.
December 20,1976

In this motion we are merely asking the government to consider doing something. Surely it commends itself to the support of the House. I am looking forward to hearing from that great fisheries man, the Parliamentary Secretary to the Minister of Fisheries and the Environment (Mr. Fleming), that good and honourable friend of mine. I know he is trying to do his best; he always does. I look forward to his speech on this most complex subject. I know he will make a good speech, for I know that he does not approve of what has taken place in Canada since the Liberal party, in national convention assembled in Ottawa in 1973, passed the resolution calling for a separate department of Fisheries.
I urge the parliamentary secretary to impress on his colleagues the importance of this motion for the morale of the department with which he is now associated and for the morale of the men and women of the Fisheries Service of Canada who are now members of the Department of the Environment and who have been thwarted in their efforts to give the fisheries question the importance it deserves, the importance which is so essential in this most crucial historic era when Canada is to implement the 200-mile economic zone.
All the arguments have been placed on record during the past three or four years and I will not repeat them. However, I believe there is a new and more compelling argument for the establishment of a separate department of fisheries, namely, the 200-mile limit. If the government will not implement the recommendations or resolutions of its own party's convention, I urge it to adopt the compromise solution it worked out following the 1974 election campaign and reinstitute a separate ministry for fisheries. That, at least, would be an improvement over the present situation. I hope the House will support this motion.


Donald W. Munro: Question.


William Arnold Peters: Mr. Speaker-


Mr. Anderson:: That great fisherman!


William Arnold Peters: -last night I heard a colleague of the hon. member opposite speaking on television of the great inland fishery of northern Ontario. That is not why I am rising to support the motion proposed by the hon. member for St. John's East (Mr. McGrath). I agree that it is timely.
In the last two weeks, fishermen from both the east and west coast of Canada have visited me and asked me to make representations. Both groups expressed the concern expressed by the hon. member for St. John's East (Mr. McGrath) about the present difficulties of the fishing industry. Both groups of fishermen were concerned because although negotiations had allowed fishermen of other countries to take fish from our waters, little assistance was given to our fishermen for providing the Canadian public with the benefits of fish caught by our coastal fishery. That is to say, on neither coast have we provided much protection for our fishermen.
In the last several months this House has debated motions calling for the establishment of a Canadian coastal and mer-
Government Organization Act
chant fleet. As we said, our country's coastline is among the largest, if not the largest, in the world. As the hon. member for St. John's East just said, the government is to impose a 200-mile limit. The question is, how are we to administer it? We were unable to administer properly the three-mile limit, and still less able to administer the 12-mile limit. Therefore, I say that our chance of administering or enforcing the 200-mile limit is nil; there is zilch chance of our being able to administer that limit, given our present type of operation. The fishermen indicate that they cannot be protected against abuses taking place.
Mr. Speaker, we do not have enough people to inspect ships entering our ports to determine if excessive amounts of fish have been caught. We cannot tell what type of fish other countries are taking. Fishermen have suggested that Canada has been lax in that we are not capable of looking after our own fishery operating off our coasts. We are not as capable in that regard as either Iceland or Greenland.


An hon. Member:: That's the hon. member's opinion.


William Arnold Peters: Mr. Speaker, an hon. member opposite makes noises from his seat, but rarely says these things when he is on his feet. The member who previously represented the hon. member's riding was always willing to speak on this subject; he spoke intelligently, and not while sitting down. He spoke in support of both the canning industry and fishermen. Coming from the coastal area, he was familiar with matters of concern on the coast. The previous hon. member said that we will neither be able to enforce the 200-mile limit nor, given our present operation, provide assistance to our fishermen who will be fishing off our own shores. We shall not be able to help them unless we pass immediately marketing legislation which will enable our fishermen to compete with the fishermen of other countries. We must be able to compete with the offshore fishery. I hope the hon. member opposite who interjected, I think, and comes from a coastal area will make a speech on behalf of our fishermen.
A few moments ago I mentioned the inland fishery of my part of Canada. I am concerned about the fishery and, frankly, I do not care if the minister of fisheries, whoever he may be, comes from the east or the west coast. If the hon. member opposite stands up and makes an impassioned appeal in favour of a separate department, he may become the new minister of fisheries, especially if he shows that he understands the subject. I am not opposed to his being so appointed because I think he is most capable, even though he makes comments while sitting down. As I say, I am not opposed to his being appointed minister of fisheries. I do say that there should be a minister of fisheries. He should not be a minister of state; I think such designations are stupid. I think the minister should be known as the minister of fisheries, and let us stop playing games with English whereby we try to make some ministries seem more important than others.
I was asked to say by my leader, who had to leave, that the fishery is as important to the Canadian population as agriculture, and therefore deserves a full-time minister.

December 20,1976
Government Organization Act


Some hon. Members:: Hear, hear!


William Arnold Peters: We need a minister who will allow Canadians to reap the benefits of the sea. We have the fish. Our fishermen are willing to work hard to ensure a good supply of fish, and it is up to the nation to enforce terms arrived at through negotiation, terms which say how much fish other countries can take. From what fishermen tell me, we did not do too well in those negotiations because we did not have a minister solely responsible for the fishery taking part in the negotiations. We need a minister who is totally familiar with the subject and whose responsibilities are not divided between two departments, both of which are important. We are in favour of such a development. Possibly the new minister could be the hon. member opposite who comes from a coastal area. I wanted to make sure I had the right area. I would think that no matter where you live on Vancouver Island, you would be close to the sea. I know that Port Alberni is close to the sea and in order to be elected there you must know something about the subject. I hope that is the kind of minister who will be appointed to head this department. I honestly believe we have not paid enough attention to our fisheries.


Some hon. Members:: Hear, hear!


William Arnold Peters: There is no question about it. If we had, we would not now be in such a stupid position with regard to the Gulf of St. Lawrence. If the French enforce their 200-mile limit, they will take away from us the whole Gulf of St. Lawrence. In fact, they seem to be in a better position to enforce it with gunboats, and so on, than we do. We should have taken over those islands during the last war when they were available, instead of playing "footsie" with the Japanese and other people. Most citizens of those islands would have appreciated someone liberating them. It could have been done previously in a much more peaceful way.
This raises a problem. If we had a 200-mile limit and someone else had a 200-mile limit, who would get the Gulf of St. Lawrence-the biggest, or the closest? I think it would be the biggest. The French fleet is probably still bigger than ours. These are major problems in the St. Lawrence where there are very large shrimp beds. If not properly handled, they could be fished out very quickly. If international fleets are allowed to enter the Gulf of St. Lawrence to harvest these shrimp, we will be buying from somebody else, as we now do, from the more aggressive fishing nations.
The members in this party may not represent coastal areas, but we are very interested in seeing a ministry of fisheries being established. There are other ministries with a lot less scope for development. They have certainly proven to be very limited in their ability. The minister in charge of penitentiaries seems to be going backward, instead of forward, as do many other ministers.
We must provide the right kind of husbandry if our fisheries resource is to be available to Canadians in the future. The 200-mile limit will be a totally empty gesture if we are not able

to enforce it. The billion dollars we spend on aircraft which will fly at 50,000 feet at 500 miles an hour certainly will not be able to enforce it.
Unless hon. members believe the government cannot afford a ministry of fisheries, unless the members of the government party believe the government cannot afford a minister of fisheries, or unless they believe there is no one on the government side capable of being a minister of fisheries, I am sure that members opposite will support this resolution.


Mr. Jim Fleming (Parliamentary Secretary to Minister of Fisheries and the Environment):: Mr. Speaker, I will try to be as brief as possible and yet, hopefully, cover some of the concerns expressed by the hon. member for St. John's East (Mr. McGrath). I know that many members on both sides of the chamber share his view on this matter. I also want to give my colleagues from Comox-AIberni (Mr. Anderson) and the hon. member for Restigouche (Mr. Harquail) a chance because they are very anxious to express themselves on this bill.
In beginning, I must say, with all equanimity and tolerance, I have not heard as much clap-crap in my life as the comments a few moments ago by the hon. member for Timiskaming (Mr. Peters) on the question of the enforcement of the 200-mile limit and the issue of St. Pierre and Miquelon. I wish I had seen the hon. member at the Standing Committee on Fisheries and Forestry when these matters were discussed or at the special briefing that was held so that members could have a better view of these matters.
I agree that the government has a tremendous challenge ahead of it, particularly the Department of Fisheries and the Environment with regard to surveillance. However, a very responsible and adequate program has been set up. It should be given a fair chance. The many Canadians who work in those services and feel the challenge of their responsibility should not be given that kind of attitude in the beginning when they obviously feel they can fulfil this new obligation which will arrive January 1.
I wish to move for a few minutes to reasons which I think show a very real connection, a very real common line between fisheries matters and environmental matters and one which I think justifies to a considerable degree, if restraints and circumstances make it necessary, those two very vital areas of authority of the federal government coming under the umbrella of one department: the condition of water, the condition of our oceans which flank Canada, the conditions of our inland freshwater waterways, our lakes and our streams determine, in fact, the entire life-cycle of our fisheries in terms of survival of that natural wildlife which has been with us since time immemorial and its survival in the future.
The conditions of those waterways is not only the survival of that wildlife, but in fact the finding of jobs, the supplying of essential food sources to all Canadians and other people around the world. Therefore, nothing could be more directly linked than environmental concerns, the health of our waterways and the survival of the fisheries.
December 20, 1976

Aquatic science and oceanography are major concerns of the Department of the Environment. They, of course, play a key role in the conditions, planning and the future of the fisheries of Canada, the jobs being provided for fishermen and the food that will be caught through the fishing of our fishermen in Canadian waters. They are inextricably tied to the responsibilities of the environment and an obvious link-up. It is only good sense that all the elements of government over oceans, freshwater lakes and streams should be under the same roof unless we can afford the luxury of dividing them and continuing on. I even argue, although there are some people on both sides of the House who feel there should be a separate department of the fisheries, that by linking them together under one umbrella the environmental side will be all the more sensitive and reactive to the needs of our fisheries and our fishermen employed in that industry.
The quantity, the quality and the accessibility of water, which are all basic key responsibilities of the Department of the Environment, have a direct relationship on the condition of Canadian fisheries. Each change in any of those areas affects the health of fish stocks. Hydroelectric developments in the Ottawa-St. Lawrence watersheds over the past 50 years has drastically affected the ecosystem as that water flows down into the Gulf of St. Lawrence-it affects the Scotia shelf and also the Gulf of Maine. The levels of those waters, the quality of the water, the accessibility because of the building of dams, the building of changes and structures to affect the waterways for hydroelectric development, affects how the fisheries can operate and how the salmon can move upstream to spawn. It affects all the elements that ultimately will mean a healthy or unhealthy fisheries in Canada.
If we talk about quality of water, quantity of water, accessibility of water, all environmental concerns related to the fisheries, I also want to suggest that even out of the water and in the atmosphere the question of atmospheric quality, toxic materials and the control of those materials, has a real effect on the quality of water and, thus, the survival and health of our fisheries. The close co-operation between fisheries programs and the atmospheric pollution control section of the Department of the Environment are, therefore, essential to an ongoing healthy fisheries and an ongoing healthy fishing industry.
Oil spills which can critically affect the survival of shellfish, the fisheries in our shallow waters along our coasts and our sea mammals, are all environmental responsibilities that are especially sensitively treated because of the joining within one department of the problems of fisheries and the environment.
One of the major services for our fishermen, both recreational and commercial, is the marine weather forecasting system, again a traditional responsibility within the environmental services branch. Their biggest customers are the commercial fishermen. The ice forecasting of atmospheric and environmental services is fundamental to the planning of northern fisheries off Newfoundland and Labrador, and to the
Government Organization Act
planning and conduct of the seal fishery; again this is an environmental responsibility which plays a key role for the fisheries. Even the control of chemicals used to control forest pests, and the environmental powers which stop chemicals being used in proximity to waterways are once again environmental responsibilities; since fisheries is within the same jurisdiction, extra sensitivity can be shown and our inland fisheries in particular can be protected.
If I may make a final point or two, Mr. Speaker, the Environmental Contaminants Act of 1975, which was proclaimed earlier this year, the regulations of which I hope will be set down shortly, is going to play a major role in protecting us in the future from an environmental concern of the past which did terrible damage to our fisheries. Substances like PCB's mercury pollution, and DDT-all of these are now placed under this powerful, new Environmental Contaminants Act, which plays a key role in protecting our fisheries.
I have tried to point out a number of the links where it is obvious that fisheries and environmental concerns are one and the same and are well placed within the same department. The 200 mile limit, which the hon. member for St. John's East mentioned, is a new extremely important and massive responsibility that the government will have to face in only a couple of weeks. But the Fisheries Act which over the years, under that title, has played a major role in environmental protection will, with the extension of the limit to 200 miles, also extend those parts of the act concerned with environmental aspects. So once more we see the automatic and direct link-up of environmental and fisheries matters.
The hon. member of St. John's East made some reference to resolutions of my party, the Liberal Party of Canada, having to do with a separate ministry of fisheries or, at the very least, a secretary of state for fisheries. I think there is a great sympathy on all sides of the House for this proposition, especially among members from areas of the country with numbers of people employed in the fisheries. I can think of a number of areas where, if money were available, separate and special ministries could be set up. Personally, because of the composition of my riding, I have a very strong feeling for a ministry of multiculturalism. I think a separate ministry of immigration is an important consideration for the future. Certainly a ministry of fisheries should be given consideration if that were possible in these times of restraint.
I hope that the points I have tried to make concerning the obvious link-up between environmental concerns and the umbrella of the Fisheries Act together prove that fisheries and environment operations can function very well and, it might even be argued, more sensitively than if in fact they were divided.


Mr. Ron Huntington (Capilano):: Mr. Speaker, I welcome this opportunity to join in supporting my colleague, the hon. member for St. John's East (Mr. McGrath), in regard to a separate department of fisheries. I should like to see environmental matters separated from the present department and each put into its own slot, so that both fisheries and the environment would individually be more accountable. As the

December 20,1976
Government Organization Act
department is presently managed, there is no economy of scale in combining both activities under the one minister. I should like to see the contest for funds removed and an end to the power play for funds that goes on within the department.
Fisheries has become an increasingly important aspect of life in Canada. Reference has been made to the 200 mile limit. This will mean additional patrol needs and research needs on the west coast. We also have new hatchery needs. We have a need for stream maintenance. We have patrol vessels on the west coast lying idle in the closed season and on weekends, and their crews cannot even clear streams blocked during the fish runs. This kind of activity, which has frustrated and bottled up the fisheries department on the west coast, is inexcusable, a total waste of money, and indicates the deplorable lack of supervision of the various operations on the west coast.
With a separate department we would get a better accounting of the dollars used and applied for, and we would have a less complicated and cumbersome accounting in that we could get closer to fisheries activities. However, even with this we need an independent review committee to assess the performance of senior departmental officials who have perhaps moved from an expertise in the scientific world to an expertise in the world of politics.
It is my experience that senior officials within the fisheries department have political power far beyond that which is healthy for the community, for the department of fisheries and the functions it is supposed to perform. It is not possible for MP's or even ministers to assess properly the performance of these senior officials in the Department of Fisheries and the Environment, particularly when dealing with professional scientists who have been for too long in administrative posts.
One suggestion that might remedy these abuses of power is the creation of a committee independent of government-I am speaking of a committee of scientists-which would meet once or twice a year to oversee the regional work of the department. Such a committee should be a directive committee, not an advisory committee. It should have the power to change the course of the department's regional program where it has become self-defensive or self-defeating. Such a committee should have access to the region's parliamentarians and should not have to report or be responsible to the deputy minister or regional director, for therein often lies the trouble. Such a technical committee seems to me to be the only way to restore to the community some means of overview and assessment of performance of senior, entrenched bureaucrats in the Department of Fisheries and the Environment.
The role of this committee, which I think should be limited to, say, three persons, would be to function something like an ombudsman; but because much of the work of the environment department is self-initiated and self-evaluated, the ombudsman concept should be expanded to consider not only the frustrations of the public but also the general quality of work inside the department. The universities in British Columbia have often requested and even encouraged such visiting committees to assess and to criticize the performance within their own highly technical departments. Why not do the same with the

environment department, particularly the department of fisheries on the west coast?
For an enlightening example of the influence and the power that these entrenched regional directors exercise, I commend to the House an article that appeared in the November issue of Reader's Digest at page 81, entitled "The Salmon and Uncivil Servants". The article covers the sad story of an entrepreneur with a $500,000 investment in a commercial hatchery and a fish feeding operation, who was driven to his knees by the most audacious bureaucratic behaviour that one could imagine. And this is not an isolated case, Mr. Speaker. I am told by responsible scientists on the west coast that the Department of Fisheries is some 40 years out of touch with scientific knowledge of their subject.
It is time that an independent committee had the opportunity to review the performance and files of the Department of Fisheries and the Environment, particularly those pertaining to fisheries activities on the west coast, so that some life, excitement, and creativity can be brought to the tremendous opportunities that exist in the west coast fisheries today.
I am also concerned with the bricks and mortar complex that seems to be built into the department of the environment. How many billions of dollars have we spent since the fisheries and environmental responsibilities were put into the same department? How much money has been spent on buildings, and what has been the cost of the additional man-hours required? Whatever it is, we still have mercury pouring into our waterways. We still have raw sewage pouring into our waterways. We have plugged natural streams which our fisheries patrol vessels are unable to clear because of the constipating nature of the fisheries regulations. It is time parliamentarians, the public, and the science community outside the civil service had a chance to appraise the present direction of this massive expenditure. We are simply not getting our dollar's worth.
I commend my colleague, the hon. member for St. John's East (Mr. McGrath), for his motion, and urge the government to give serious consideration to separating the department of fisheries from the department of the environment. Believe me, it is the only way to go. There is no economy of scale with the present structure of the department of the environment. The need for both fisheries and environmental studies is too important for us to continue on our present path. This country in this day needs a modernized and vitalized department of fisheries.


Hugh Alan Anderson: Mr. Speaker, I should like to commend the hon. member for St. John's East (Mr. McGrath) on the motion he has brought before the House at this particular time. During my short time in parliament I have felt it imperative that we have a separation between environment and fisheries. It has always been my feeling that the appropriate title would not be the minister of fisheries but the minister of aquaculture. This would take into account a responsibility for the farming of the resources of the
December 20, 1976

sea, which in my opinion have barely been touched upon to this date.
Let me also congratulate the hon. member for Timiskaming (Mr. Peters). I will certainly clip his speech and pass it on to the Prime Minister (Mr. Trudeau) for his consideration. Let me also commend my predecessor, the hon. member who held this seat before me, for his many hours of hard work, both in this House and in committee, in order to enhance the fisheries aspect of government, and the work he did to give fisheries a much higher profile than it had previously.
Let me also bring to the attention of some hon. members the fact that the commercial fishing business in Canada at the present time on both coasts is worth approximately $700 million a year, of which $400 million is related strictly to exports. There is no question but that this could be doubled or quadrupled with proper management of aquaculture, and for this reason I support the hon. member's motion to have a separation between environment and fisheries.
There certainly are some instances in which environment and fisheries do go hand in hand. However, the fact that the environment does play a part in fisheries does not lend itself to a logical argument in support of one minister in charge of both. I think one could make an equally strong rationalization for the argument that the Ministry of Transport could be put under a minister of state for water, a minister of state for land, and a minister of state for air. We have a similar situation in which the Minister of Transport has a very difficult job looking after the various aspects of transportation in Canada. There could well be a redefinition of his department.
I agree entirely with the resolution brought out in 1973 by the Liberal Party of Canada to the effect that there should be a separate department of fisheries. As pointed out by the hon. member for St. John's East, in 1974 this did in fact take place with a minister of state for fisheries and a minister of the environment. I am very disappointed with the government which, in its wisdom, decided to combine environment and fisheries under one minister at a subsequent date.
I hope the government will look at this debate today and realize that on all sides of the House there is agreement for a separation of power between fisheries and the environment, with a new minister appointed as soon as possible to represent fisheries. An attempt to represent fisheries and the environment is something I feel no one man is capable of, no matter how capable that individual may be. Let me hasten to put on the record that, in my opinion, the present minister of fisheries is one of the better ministers we have had in the last 30 or 40 years, comparable to a former minister, Jimmie Sinclair, who did a great job for fisheries on both the east and west coasts.
With the complexity of life in Canada today it is obvious we have to decentralize some departments, making sure that a minister's area of responsibility is not too broad, such as fisheries and the environment, in order that the job can be done by a minister in charge of one of those two areas. To have one man attempt to represent environment across Canada would be a full-time job.
Government Organization Act
If we were to advise the government I think all of us would agree that the present minister should be assigned to a fulltime job in environment or in fisheries, but not a full-time job in both. One man could not do the job in both areas to the complete satisfaction of members of this House. I trust that this debate will not bring to the attention of the government just our criticism, or the suggestion that the minister has not done a good job. The debate is not in that context. We are attempting to give the minister more scope in one of the two departments in order that we might have an excellent department of the environment as well as an excellent department of fisheries. I support fully the concept of two departments as suggested by the hon. member for St. John's East, and as suggested many times in policy conventions of the Liberal party.


Donald W. Munro: Mr. Speaker, I rise to support the motion of my friend and colleague, the hon. member for St. John's East (Mr. McGrath). He has argued in favour of the creation of a separate ministry of fisheries. No one denies the relationship between environmental matters and fisheries. That is not the question tonight. What we are questioning is whether one minister can handle both portfolios. We have a minister without portfolio who wanders about, and we have this minister with two portfolios.


An hon. Member:: And the one without is having trouble handling that one.


Donald W. Munro: Yes, he keeps looking for that portfolio. I was pleased that the hon. member for Comox-Alberni (Mr. Anderson) saw the light and argued in favour of the division of this ministry. I made a comparison of the size of this ministry with others, not in terms of personnel but in terms of the number of directorates which require some attention by the minister. The directors of these directorates obviously want to get the minister's ear from time to time.
I once thought the Treasury Board was a monster, but by comparison with environment and fisheries it is small. There are 77 directorates in the Department of Fisheries and the Environment, and there are only 33 in Treasury Board. The Department of Finance has only 25 directorates. Of the 77 directorates in Fisheries, there are 33 concerned with fisheries matters. On statistical grounds alone one would think there is cause to divide this department, putting fisheries under one minister who can focus on that area of representation in cabinet. Then the message which the fishermen have to convey to the cabinet would be conveyed by a single voice.
As my hon. friend from St. John's East has said, we are about to embark upon an interesting adventure. Some of us may not realize the dimensions of this adventure. With the introduction of the 200 mile limit at the beginning of the year, we are adding basically one third to our present land mass over which we propose to exercise a certain jurisdiction. Fisheries management will really be the concern of the government as

December 20, 1976
Government Organization Act
from January 1, 1977. This has vast implications in terms of research alone.
We have heard from fisheries experts on the west coast, and I am sure the same is true on the east coast, that there are no statistics presently available to the research officials in the Department of Fisheries to show where fish stocks are being bred, what their migration patterns are, and when they are best caught. We have had fisheries services since the beginning of this country. On the research side alone much more attention by the minister is needed. He could talk with more authority to his cabinet colleagues, and in particular to the President of the Treasury Board (Mr. Andras).
On the question of surveillance I get the impression that the minister is anxious to follow up and is aware of the need, but is not being heard by the cabinet when he draws attention to the requirements in this area. The future food of the world could easily depend on the management which developed countries devote to their 200 mile limits as those jurisdictions are successively undertaken. The food needs of the world are increasing out of all imaginable proportions. The grounds are there for every reasonable person to see. I find it distressing that after all the resolutions which have been mentioned on the Liberal side in favour of a separate ministry of fisheries, we should now find a backing down, at least by the parliamentary secretary. I think he would find, if he were more concerned with the fisheries, that his time would be fully occupied by being parliamentary secretary to a minister of fisheries.
We did at one time have a minister of the environment and a secretary of state (fisheries). That was not a very satisfactory solution. It is of some interest to know that the value of the fisheries catch to Canada in 1972 was well over $250 million and that it has grown in the last 16 years from just over $100 million to this figure. This also argues in favour of having a separate minister of fisheries.
I do not wish to prevent the House resolving this question and I will therefore resume my seat so that we may proceed to it, hoping we shall determine the matter in favour of the motion proposed by my hon. friend.


Some hon. Members:: Question!


Mr. Herb Breau (Gloucester):: Mr. Speaker, I am sorry hon. members on the opposite side want to prevent me from speaking, for if they really wanted to study seriously this issue, they should certainly listen to what I have to say. First I would like to have more time to discuss such an important question, which was raised by the hon. member for St. John's East (Mr. McGrath). As I do not have much time, I will try to summarize.
I think what is important is not the administrative or legal structure this government is going to give to fisheries. The only thing fishermen in my constituency are interested in is action. They want somebody to deal with their problems, somebody to intervene in the fish markets for a while so as to ensure that the prices are maintained, somebody to take care of their ports and wharves, somebody to take care that the fishing industry,

as a whole, gets the attention it needs and deserves. Now whether it is the Department of Fisheries within the Department of Environment or another one, it does not make such a difference. What is important is the political attention which the government will be willing to give to fisheries. I know that many members in the past and again today have referred to the neccessity of having a separate department, that is a legal structure with a separate administration, but I do not think that it is absolutely necessary.
I feel that the arrangement in effect for example in 1974 where a minister of state was responsible for fisheries within the Department of Environment has been quite successful because in fact, taking into account the different problems which we now encounter in fisheries, we can say that the government has given more attention to the fishery industry and its problems since 1974.
It is not the structure as such which is important, but the attention granted by the government, when its intervention is necessary either in marketing or other fields. Mr. Speaker, I would like to discuss that important problem at length, but unfortunately the time allotted to me has already expired.


Mr. Deputy Speaker:: Order. I regret to interrupt the hon. member but the hour appointed for the consideration of private members' business is now expired. Does the House agree to resume consideration in committee of the whole before six o'clock is being declared?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration in committee of Bill C-22, to amend the statute law relating to income tax-Mr. Macdonald (Rosedale)-Mr. Laniel in the chair.
Gérald Laniel: It being six o'clock, I do now leave the chair until eight o'clock this evening.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS
[Stage Direction]

The House resumed at 8 p.m.
Francis Alvin George Hamilton: Mr. Chairman, when the committee adjourned at five o'clock I was trying to make very clear to the minister that in my view an
December 20, 1976

RRSP is a good device for saving for the middle class people who work hard during their lifetimes to pay for their homes, educate their kids and have something on which to retire. What I was proposing was that we should consider one or two alternative ways for making the withdrawal from a registered retirement savings plan a little more flexible and a little more equitable.
I mentioned earlier that personally I was somewhat shocked, eight years ago, when I found out how limited were the opportunities to make use of an RRSP if you needed to live on that money. Having learned the lesson personally, I can now report to the House that over the last number of years I have heard of increasing numbers of people who have done the very thing we had asked them to do, that is, worked hard all their lives to save money for their old age. Now they are caught in an inflationary spiral where the amount of money they thought was sufficient is proving less and less able to carry them. This type of complaint to a member of parliament moves me tremendously, because the type of people I am talking about are the ones who make our system work. These are the working people in our factories and shops, the self-employed on the farms and in small businesses. They are not the men who make tens of thousands of dollars a year and who do not participate in RRSPs because they know the limitations of the plan.
I would like to conclude by outlining one or two alternative forms to make the closing out more flexible. The first idea I propose is simply to allow the person to take his or her money out of an RRSP and put it into an account in a credit union or any other organization available to him in his community. He would simply report to the Department of National Revenue the amount of money he took out, and the amount of money that comes in on the T slip would be the income on which he is charged that year.
The question arises as to what will happen when he comes to the end of his life. I suggest that this is something that experts could look at, but one of the simplest devices would be to put that money into his estate. If the tax collector has made certain that the man or woman during their lifetime paid their taxes on their income, that would meet the philosophy on which these plans are based. However, if the department wants to get the last cent in the actuarial sense, a formula could be worked out regarding the proportion of the tax that has to be charged. I am not quarreling with the final stages because, to do justice to the person who has saved for himself and his family in his lifetime, once his life is over what happens is not as important as whether the system was fair to him while he was alive. It is the only principle the government should be watching.
The second proposal concerns the number of set payments. We have set this precedent in other regards. If a lump sum comes to a wage or salary earner, he can spread it over five, ten or fifteen years under the act. I think that the same type of condition should apply to the person taking out money from an RRSP. He can decide whether he can take a chance on lasting five, ten or fifteen years to make certain he will get the money
Income Tax
out in those years. When he takes it out, of course he pays tax, but he has the choice of making certain that he can take the money out when he sees fit, whether it is in a five, ten or fifteen year period.
Another alternative is the present one, namely, that you have to take your money out of an RRSP and put it into an annuity. This meets the requirements of many people and should be left as one of the alternatives.
The fourth choice is to take out the payment and to pay the full tax on it, which is logical. Therefore there are four alternatives, some of which already exist as precedents under the Income Tax Act, and others that could be put in there.
If I may speak politically for a moment, let me say that I do not think anything that has happened in the last two years regarding investing for your old age has been as serious as the news story that came out in the Financial Post this last year. That newspaper printed a table of figures to make people aware of what would happen if you compared the two systems. Whether or not that comparison in the Financial Post was accurate, it really made an impression on people who invest. They feel convinced that what they felt before was true because now the Financial Post has stated it. This is also what I felt eight years ago.
Many other people have felt in the last six or eight years that the system in unjust, that one is a prisoner of the person from whom one buys one's annuity. If you had asked all the insurance and trust companies for their rates, you would find quite a gap between them. Even when you take the best offer, sometimes it is not quite as good as what you could get by putting money into straight bonds and living off the interest. That is how bad it is. I suggest you could add a lot to this program if you set aside some money each year on which tax would be deferred, and instead of having about 20 per cent of the working population, or nearly two million people, putting their money into RRSPs, as they do now, if you could get the number up to 60 per cent, 70 per cent or 80 per cent of the people, the great majority of the working force and the selfemployed, they would feel part of this country.
That would do two things. First, it would reward these people for the hard work they put in to save; second, it would have the advantage of providing for the capital structure what we need desperately at this time. We are now in a period of capital intensive structures to develop our energy resources and all other resources, and everything we touch today seems to be capital intensive. With this demand for capital being so strong in developing nations like Canada, our interest rates have arisen to prohibitive levels for many people.
Essentially the only way to get interest rates down so the ordinary person buying a home, a farm, a business, or buying on credit can live is to increase the capital supply or to increase the rates of capital turnover. I am suggesting that one of the ways to increase the capital supply would be by following up on what the government did this year in the budget in enlarging the amounts for RRSPs to $3,500 for people contributing

December 20, 1976
Income Tax
to pensions, and to $5,500 for people who are self-employed, to be used as a national device to fight inflation, and by not only encouraging them to go into this but also by making sure that they know there are several flexible options to choose from when they get out. If we can get the number of people investing in RRSPs up from the current level of 20 per cent of the work force to 40 per cent or 60 per cent, the whole nation would benefit, as well as the individual.
Mr. Chairman, I have made my proposals to the minister. Obviously I am on the same wavelength as I have been for the last number of years. Economically the number one objective in Canada today is to increase the individual savings and productivity of every person, regardless of what he does. As I said in the budget debate, I suggest that this device is good and should be reinforced by a flexible way of getting out of it. The tax collector does not lose-the person has to pay his income tax-but at the same time it is a little more humane and does give people the opportunity of making whichever choice is most suitable to them as individuals. The RRSP's are good, but let us make the pay-out more flexible, give the individual some choice, and make it easy to administer, with no red tape.
I would like to conclude by asking the minister and his officials to give this matter consideration in the next budget.


Some hon. Members:: Hear, hear!


Donald Stovel Macdonald: Mr. Chairman, as is customary with the hon. member, he has given careful thought to this question, and I think his speech is one which we will want to read very carefully, and in particular the committee on retirement income will want to read it very carefully in preparing recommendations with regard to the Income Tax Act. 1 thank the hon. member for his comments.


Max Saltsman: Mr. Chairman, as I listened to the hon. member for Qu'Appelle-Moose Mountain, an hon. member for whom I have the greatest respect-and I know that respect is shared by many hon. members of this House-I was struck by how different his philosophy is from mine. I am always somewhat concerned that he can never see the fundamental error in what he is proposing. I agree with the hon. member- and I do not think anyone in my party would disagree-about the need for social security. No party has fought harder and longer to provide adequate retirement pensions for people in Canada than has the New Democratic Party, and the CCF before it. The hon. member will recall that.
The difference is that the kinds of proposals we put forward and the kinds of proposals we have fought for have had two elements: first, they had an averaging element in the sense that the younger, and the better able to pay, helped to subsidize those who were not able to pay; and second, it was universal. I agree with the sentiments of the hon. member when he says that instead of 20 per cent getting benefits from RRSP's he would like to see 80 per cent. There is a very good way of doing that. Why monkey around with things like RRSP's? Why give enormous tax benefits to a select few in our society, when obviously we want to do it for everyone? The way to do

it is either to increase the old age pension or to increase the amount of contributions which are made into the Canada Pension Plan. We are not talking about 80 per cent; we are talking about the entire population, and in that way we are making sure that there is adequate provision for people's retirement and for their old age.
If the hon. member is worried about capital, the capital is there as well. I shudder to think what the provincial governments would be doing today if they did not have that pool of capital which exists in the Canada Pension Plan at the moment.
With the agreement of the province of Quebec there would be nothing to prevent us from passing a very simple amendment which would fulfill the very worthy objective stated by the hon. member for Qu'Appelle-Moose Mountain. It would be simple to do something about increasing the benefits of the Canada Pension Plan, enlarging that program and making it a more comprehensive program than it is at present. It is as straightforward as that. Perhaps it is too straightforward for enough hon. members in this House to agree with it. Instead, we distort the tax system; we do the very thing we set up a tax commission under a government in which the hon. member was a minister to tell us not to do.
The hon. member's government set up the Carter Commission in order to simplify the tax system, to remove the anomalies, and to report on the hidden benefits which exist and about which most people were not even aware. The report finally came down, and in it the Carter Commission recommended a much simpler structure in our tax system which would not have all these hidden benefits. But what are we doing now? Everything which is in the act before us virtually negates the work of the Carter Commission. There are special benefits, special privileges and almost under the counter deals, and the cost is not visible to the public.
We have before us a very straightforward way of meeting these objectives, objectives which are worthy, and are even endorsed by the hon. member for Qu'Appelle-Moose Mountain and the minister himself. We should simply enlarge the Canada Pension Plan and increase the old age pension. Then we could have a universal kind of security for every Canadian, a security which does not depend on rewarding unduly those who have large sums of money, which enables them to provide for their retirement. These people are also assisted by the tax system, but those who do not have the cash are not being helped. The result is that we have this curious situation where a minority of the public benefits from RRSP's, but for the vast majority of Canadians, even though the opportunity is there, the money is not there, and therefore the opportunity is meaningless to them.
We do not object to savings plans; we do not object to thrift; we do not object to accumulating capital which can be used in this country; what we do object to is giving bonuses to the rich and helping the rich without having any real concern for those who have just as great a claim to security in their old age as the rich.


Some hon. Members:: Hear, hear!
December 20,1976


Charles Robert Turner: Shall clause 1 carry?


Some hon. Members:: Agreed.


Stanley Howard Knowles: On division.
Clause 1 agreed to on division.
Clauses 2 to 10 inclusive agreed to.
On clause 11.


Sinclair McKnight Stevens: Mr. Chairman, clause 11 is one of the clauses in this bill which touches upon capital gains. I believe the clauses which touch on this are clauses 9, 11, 27, 31 and 54. I wonder if the minister can tell the committee what has been the experience with regard to capital gains. How much of a revenue producer has it actually become? If we review the record, we find that there was considerable comment at the time of the Income Tax Act revision regarding capital gains tax, and the then minister of finance, Mr. Benson, felt there would be a substantial capital gains tax revenue from this source. I think the time has come, now that we can look at two or three years of the record, to see exactly how remunerative this tax has been.


Donald Stovel Macdonald: Mr. Chairman, I wonder if we are talking about the right clause. This clause is with regard to recaptured depreciation. It is consequential on the already adopted clause 3(1) by virtue of the new recaptured appreciation rule. In that clause, section 44(1 )(c) of the act becomes redundant and is therefore repealed.


Sinclair McKnight Stevens: Mr. Chairman, as I indicated, capital gains is indirectly covered by various clauses in this bill. Whether this is the correct clause or not, I was hoping that the minister would have some comments tonight on the general subject of capital gains. I do admit that perhaps clause 11 is not the most appropriate on which to deal directly with capital gains but perhaps the minister could indicate what clause he would raise it under if he does not want to make comments with respect to clause 11.


Donald Stovel Macdonald: Mr. Chairman, there is no substantial change in the capital gains but I am advised that clauses 14 and 15, which deal with the principal residence rule, might give an opportunity to talk about the subject.


[Stage Direction]
Clause agreed to.
Clause 12 agreed to.
On clause 13.
Donald Stovel Macdonald: Mr. Chairman, this amendment is consequential upon the proposed amendment to section 100 contained in clause 39 of the bill. It will ensure that appropriate adjustment will be made to the cost base property as a right to receive partnership property acquired as a result of the death of an individual by a taxpayer who is not part of the partnership. The amendment is applicable to 1970 and subsequent years. I should like to ask one of my colleagues to
Income Tax
put the redrafted amendment, as a result of certain discussions about this.


Marc Lalonde: That Bill C-22 be amended
(a)	by adding thereto immediately after line 5 on page 13, the following subsection:
"(5.1) Paragraph 53(2)(o) of the said Act is repealed and the following substituted therefor:
'(o) where the property is a right to receive partnership property within the meaning assigned by paragraph 98.2(a) or 100(3)(a), any amount received by the taxpayer in full and partial satisfaction of that right.'; and
(b)	by adding thereto immediately after line 31 on page 13, the following subsection:
"(11) Subsection (5.1) is applicable to the 1972 and subsequent taxation years."


Charles Robert Turner: Shall the amendment carry?


Some hon. Members:: Agreed.
Amendment (Mr. Lalonde) agreed to.
Clause 13, as amended, agreed to.
On clause 14.


Sinclair McKnight Stevens: Mr. Chairman, if I may now take up the question I originally put in clause 11, I ask the minister for some indication of what has been the actual experience with respect to the capital gains tax revenue? We have had two or three years' experience of it now and I think it would be appropriate for the minister to indicate if this has been a significant source of revenue for the government or if it has been a rather disappointing revenue producer?


Donald Stovel Macdonald: Mr. Chairman, I am afraid I cannot give actual figures but I think I could make a generalization about the experience. The revenue that was anticipated has not been attained principally because of the performance of the stock exchanges in recent years. Since share values, rather than appreciating, have dropped in many cases even below the base year, there has not been the same capital appreciation and therefore not the same capital gain as was anticipated.


Sinclair McKnight Stevens: I am sorry that the minister has not been able to give us some figures, Mr. Chairman, but perhaps as the debate goes on his assistants will be able to produce them. I understand that the net take by both the federal government and the provinces with respect to capital gains tax was a mere $54 million in 1972 and only $90 million in 1974.1 say "mere" in terms of the $40 billion odd budget that the government has now proposed.
In view of the statement that the revenue has been a bit disappointing, and the minister attributes that in part to the lack lustre performance of our stock exchanges, could he indicate if his department or other branches of government have done any review to determine to what extent the thought of a capital gains tax has been a deterrent to investment in the country? As I understand it, many businessmen are disturbed

2170

December 20,1976
Income Tax
by the fact that the possible gains they felt justified investment are no longer attractive because of the capital gains tax, and so they have decided to shift their investment activities outside Canada. This has been demonstrated to some degree by the fact that for the first time in two decades the net outflow of funds from Canada is greater than the inflow. Could the minister indicate to what extent his department has reviewed the situation in relation to the capital gains tax to determine if it has been a deterrent to investment in Canada?


Donald Stovel Macdonald: As the hon. member knows, and as is indicated by the budget, we have been giving particular attention to the question of venture capital in Canada, and ways in which taxation of the financial system might be adjusted to provide a more propitious environment for venture capital in Canada, that is, the capital gains tax as well as regular taxation of income have been a matter of study. We do not have a study of the capital gains tax in general under way. Of course it relates to many other kinds of property as well as to investment in equity stock.


Sinclair McKnight Stevens: Mr. Chairman, following on the minister's comments about the capital gains tax, and leaving them to consider how to encourage venture capital into the country, could the minister indicate to what extent he has had discussions with his counterpart in Ontario, who in one budget proposed a new venture capital corporation concept? The venture capital corporation contemplated by Ontario was entirely dependent upon special legislation being passed to allow for the proper income tax position if such venture capital corporation were formed pursuant to Ontario law.


Donald Stovel Macdonald: There has been extensive discussion at the official level, and I have personally had discussions with Mr. McKeough on this question. Indeed we pursued that question as well with officials in Alberta and Quebec, to see if we could arrive at some agreement for some better means of favouring venture capital in Canada. Venture capital is a comprehensive phrase, and is understood to mean different things by different people. For example, the chairman of the Toronto Stock Exchange would have one viewpoint, and the owner of a small business would have another. Obviously we must give particular attention to some areas, one of those being the case of smaller companies taking on a new venture or, indeed, larger companies which might be prepared to finance a venture under the appropriate economic circumstances.


Sinclair McKnight Stevens: Mr. Chairman, may I ask the minister a general question? Since the capital gains tax has generated a disappointing amount of revenue, has the minister's department considered amending the capital gains tax provision so that it will have less impact in future on the gains of those who wish to invest in our country? Perhaps the act can be amended, even with a view to eliminating that tax entirely.


Donald Stovel Macdonald: Mr. Chairman, we have under consideration at this point an extensive examination of differ-

ent viewpoints with regard to investment, particularly equity investment. I should not like to say at this point in which direction we are going, but it is a matter receiving active attention.


Sinclair McKnight Stevens: Mr. Chairman, may I ask the minister another question? Could the minister give us the benefit of his knowledge concerning the workings of the capital gains tax in other countries? To what extent is our capital gains tax either more severe or less severe than the tax imposed in the United Kingdom, Germany, the United States or Japan? Can the minister be of any help in this respect?


Donald Stovel Macdonald: Mr. Chairman, as a generalization-it can be nothing more than that-our tax is roughly comparable to that of the United States and not so severe as that of the United Kingdom.


Sinclair McKnight Stevens: Mr. Chairman, may I deal with the provisions of clause 14 which have to do with the principal residence of a taxpayer and the fact that such residence does not attract capital gains tax, whereas other investments do attract the tax? Will the minister indicate if he has given consideration to exempting from income tax income arising from the investment of the proceeds coming from the sale of one's principal residence?
Many elderly people say-and I am sure the minister has received correspondence in this connection-that while they like the idea of their principal residence being excluded from capital gains tax, they face a dilemma when they approach retirement inasmuch as if they sell the property and put the proceeds into some comparable investment, the income from the investment is taxed. Such people may wish to live in an apartment and live either wholly or in part on the revenue derived from the investment. Such people are in a dilemma, or in an awkward position. In order to obtain the advantage, if you like, of not paying capital gains tax, they must stay in their residence; on the other hand, if they sell the property and invest the proceeds, they must pay tax on the revenue of the investment, revenue which they may use in order to rent a property. I am thinking in terms of those who rent, as opposed to those who continue to own their properties.


Donald Stovel Macdonald: Mr. Chairman, I do not think I would agree with that analysis. I do not think it is good financial thinking on the part of such people to maintain a property which is more expensive than they need, because such ownership of course involves the cost of maintenance, including municipal taxation, the cost of maintaining the house and heating it in winter. What they may think they are saving in income tax they may actually be losing in maintaining a larger property than they need.
In effect, the owner of a property which is his principal residence of which he disposes has the advantage of a tax break already, a tax break which the owners of other kinds of property do not have in our economy. In that sense it is fair that they should have such tax break, that is, of being able to sell without having to pay tax on the proceeds. But after that
December 20, 1976

they are in the same position, if they are retired people, as those receiving a registered pension or people who have held their assets in another way. They will have a certain income; they will have the benefit of the old age exemption I mentioned this afternoon and, of course, the interest exemption provided under the Income Tax Act. It does not seem to me that it would be equitable, merely because they once owned a tax-free property, that they should continue to have that tax-free status.


Sinclair McKnight Stevens: Mr. Chairman, to be specific, am I to take it that the minister's department has not given consideration to exempting from income tax the income arising from the investment of these proceeds coming from the sale of one's principal residence?


Donald Stovel Macdonald: Mr. Chairman, for reasons of principle that would be hard to justify.


Sinclair McKnight Stevens: Mr. Chairman, as a generator of revenue, the capital gains tax, as I think hon. members must admit, has been a dismal failure. Despite the claims of the former minister of finance, Mr. Benson, the scheme neither generated so much new revenue that personal taxes could be reduced across the board, nor has it "soaked the rich" as was originally intended.
It is such a poor generator of revenue that the Minister of Finance this evening cannot put his finger on the amount that has been raised by the capital gains tax.


John Edward Broadbent: Are you for it or against it?


Sinclair McKnight Stevens: Taxation statistics for the years 1972, 1973 and 1974, the first three years since the introduction of the capital gains tax and the latest figures available, indicate the net take by both Ottawa and the provinces was a mere $54 million in 1972 and only $90 million in 1974.


Walter David Baker: That is hardly enough to fly a good sized aircraft full time.


Sinclair McKnight Stevens: Not surprisingly, the failure of the tax to raise revenue is due, in large part, to the government's colossal mishandling of the economy. In 1974 every single income category of taxpayer filed losses on market investments; the only fairly consistent investment winner has been real estate and I suggest that is probably owing more to inflation than anything else. Even here, all income classes below the $25,000 category claimed net income losses from real estate. On all other investment, except stocks and real estate, in each year the capital losses for virtually every income class have outstripped the gains.
In its best year the capital gains tax is sufficient to pay only 75 days of the CBC's annual subsidy. To put it another way, assuming that the federal government's share of capital gains taxes is about 70 per cent of the total collected, the total take this year is estimated at $100 million. Based on the current levels of federal spending, a full year's capital gains tax revenue does not even cover the government's expenses for one
Income Tax
full day. So much for the revenues that this tax was supposed to provide; and so much for the across-the-board tax cut which was supposed to follow the introduction of the capital gains tax.
You will recall that earlier today, in reply to a question I had asked concerning the amount of personal income tax paid by the rank and file taxpayers of this country, it was revealed that the personal income tax revenue of the federal government is rising by as much as 50 per cent more than the total growth rate of our gross national product. Clearly the substantial revenues which those who advocated the capital gains tax anticipated, have not materialized. The personal wage earner is paying-


John Edward Broadbent: Are you for it or against it?


Sinclair McKnight Stevens: -for the spending programs of this government. When we speak of the capital gains tax in its present form and its continuing effect in Canada, we should bear in mind one single point. Contrary to public belief, it is not the rich who are actually getting soaked by the capital gains tax. Of the 230,000 taxpayers reporting taxable capital gains in 1972, all but 32,000, or 86 per cent, had total incomes including taxable gains of less than $25,000. Let me repeat that: 86 per cent of those claiming taxable capital gains were in the income bracket of less than $25,000. They paid about 40 per cent of the total gains tax collected.
The lower and middle income brackets still represent 86 per cent of those taxed in 1973, and they forked over about 35 per cent of the total gains tax. By 1974, 83 per cent of those taxed were the non-wealthy, while their share of the take was still 30 per cent.
Let me quote an authority in which this Minister of Finance undoubtedly has tremendous confidence. I refer to the former leader of the Liberal party in Manitoba whom this minister, through the Canada Development Corporation, apparently feels should be supported with a $7 million investment from CDC. The person I am referring to is, of course, Mr. Israel Asper, former Liberal leader in Manitoba. In a column in the Globe and Mail, if you will pardon the expression, of October 14, he wrote and I quote:
What is crystal clear... is that the tax falls and will continue to fall on those already hard hit by taxation; the wealthy will not pay the tax because they can afford to hold on to their assets and thus avoid realizing their capital gains tax.
That was Mr. Asper in whom the government has sufficient confidence that it is willing to turn over $7 million of public funds to help him with a new investment venture in the west. If the government has that much confidence in Mr. Asper, they should listen to what he has to say concerning the capital gains tax.
In dollar terms, the lower and middle income brackets have had nearly $70 million taken from their consumption, savings and investment capital in these three years of capital gains taxes, according to Mr. Asper. This capital erosion, plus
2172

December 20,1976
Income Tax
inflation and the government's irresponsible fiscal and monetary policies, have left them in an unfair position.


Charles Robert Turner: Order, please, I regret to interrupt the hon. member but his allotted time has expired.


Max Saltsman: Mr. Chairman, with the permission of the House I wonder if I might ask the hon. member for York-Simcoe a question about his most interesting intervention. I would like to ask the hon. member-


Charles Robert Turner: Order, please. I cannot accept the suggestion of the hon. member for Waterloo-Cambridge as the time of the hon. member for York-Simcoe has expired.


Donald Stovel Macdonald: Mr. Chairman, I will not deal with all the points made by the hon. member for York-Simcoe.
I should point out that he is being less than honest with the committee when he says that this government has approved investments made by the Canada Development Corporation. As he and this House know, the CDC has been set up with an independent board of directors and independent management. It has been operated in that way. The government through its participation participates as do other shareholders, the members of the public, in the decisions that are made. However, the government does not make the decisions by which the various investments are made by the corporation. To suggest otherwise is to mislead the committee. I had hoped to have this occasion to correct the record in that regard.
The hon. member made a comment about the fact that this Government of Canada had been responsible for the drop in equity markets. It is fair to point out that equity markets throughout the world have been down for the last three or four years. If the hon. member is saying that the fiscal policies of the government have been responsible for that, I am glad he thinks we are followed by the rest of the world. However, the most intelligent analysts would not accord us that much authority.
The hon. member's insistence that the capital gains tax was to be a great generator of revenue is, of course, in defiance of the discussions that took place at the time of the tax reform. It was recognized that at least in the early years it would not be a substantial generator of income. At the same time, it was recognized that it was patently unfair for an owner of property to be able to liquidate that property and enjoy the benefits totally tax free, when persons who were dependent upon earned income had to pay at progressively increasing taxation rates. On that basis I must say that the suggestion that this in any sense was to be a major revenue source is completely misleading the committee.
With regard to the 1974 taxation year, the net taxable capital gains that occurred in that particular year were $282 million. If you assume a 30 per cent taxation rate against those, the tax would amount to about $84 million.
Breaking down the income for those having income under $20,000 a year, that is 177,557 taxpayers, the net capital gains were $108 million. For those with income over $20,000 a year,

the number of taxpayers was 61,216 with a net capital gains of $174 million-making, as I indicated, $282 million for net taxable capital gains in the year 1974.


John Edward Broadbent: Mr. Chairman, I think the Minister of Finance was less than charitable with the hon. member for York-Simcoe when he said he was being less than honest. It would have been more appropriate to describe what he had to say as being more than dishonest.


Some hon. Members:: Shame!


Walter David Baker: Withdraw.


John Edward Broadbent: This is very straightforward language.


Charles Robert Turner: Order, please. I suggest that the hon. member for Oshawa-Whitby should not refer to the hon. member as dishonest and that he withdraw his last remark.


John Edward Broadbent: You misunderstood, Mr. Chairman.


Some hon. Members:: Oh, oh!


John Edward Broadbent: I do not want anyone to draw the wrong conclusion from what I had to say. I certainly do not want to suggest the hon. member was stating a blatant untruth in the House. If that were the implication, I would more than willingly withdraw the comment. If anyone can make this Minister of Finance look progressive, it is the hon. member for York-Simcoe.
If anyone can ooze around a point for 20 minutes without coming to his own implied conclusion, it is also the hon. member for York-Simcoe. He gave a lot of erroneous and misleading information about what a capital gains tax is supposed to do. As the Minister of Finance pointed out, at the time this tax was introduced in the country, no one ever argued that it was supposed to generate a substantial amount of revenue for the treasury of Canada.
The hon. member for York-Simcoe was very straight-forward in his analysis. However, he missed entirely the equity point in the capital gains tax because he is never concerned with equity. I am not surprised it missed him that people who get income from a capital investment or capital gain should be taxed like a coal miner in Cape Breton, a farmer in Saskatchewan, or a'cab driver in the hon. member's own constituency.
The point of a capital gains tax is not in generating revenue for the treasury, but is one of fairness in the tax law. If the hon. member reads the debate at the time of the Carter Commission, he will find that is the point of the capital gains tax.
I am going from memory. However, when we introduced it in this country, if I recall correctly, we were one of two countries in the advanced world without a capital gains tax. I do not know the other. It may have been Argentina or some such country.
December 20, 1976

The point is that Carter had said that a buck is a buck is a buck. If you earn a buck without doing productive labour, that is a capital gain and you should have it taxed, just as any other man or woman would pay tax on hard earned money from other sources. I accepted the argument of the Minister of Finance on principle but, as I said a minute ago, the hon. member for York-Simcoe can make even this Minister of Finance look progressive. If you follow the argument of the Minister of Finance logically-though Liberals always stop short of the logic of any argument-a capital gain should be taxed like any other form of income, yet under the law of this country only half of a capital gain is taxed. The hon. member for York-Simcoe wants us to go back to the eighteenth century; the Minister of Finance wants to leave us in the nineteenth century. The New Democratic Party believes that a capital gain should be taxed like any other revenue. As Carter said, a buck is a buck is a buck, and the tax law should see it that way.


Donald W. Munro: Mr. Chairman, I have a couple of questions for the minister on clause 14. One has to do with the capital gains tax which we have been discussing. If it is the negligible source of revenue that it has been admitted to be, I wonder whether any representations have been made to the minister with regard to exempting those on pensions, such as the elderly and senior citizens who have tried to put some money away for their old age. I might remind the minister that the investments that these people made were with after tax dollars. They are now being asked to pay a second tax on money required for their wants or needs-and I think we should accord the elderly their wants as well as their needs. Have any representations been made to the minister to exempt the elderly from the rigours of the capital gains tax?


Donald Stovel Macdonald: Mr. Chairman, I think I would have to say that, certainly to my recollection, the answer is no. There are provisions in the Income Tax Act with regard to the special exemption of the elderly, and these have already been referred to in this debate. But I cannot personally recall a recommendation for a special capital gains tax regime for this particular group.
Again I would have to raise the question of principle involved. If the holders of property make a capital gain, they will have only half of that capital gain included in their taxable income, which means a more favourable exemption than that accorded other taxpayers. In principle I cannot see the basis for differentiating them from other taxpayers.


Donald W. Munro: Mr. Chairman, if I might I should like to go into it a little more deeply. Whether representations have been made directly or to the minister in the form of letters from groups of senior citizens or not, I cannot say. But representations have been made and are to be found in Hansard. I happen to know, because it was I who happened to make them. I honestly believe that there ought to be a special regime for this particular class of citizen, they having demonstrated their prudence in their earlier days to lay
Income Tax
aside funds so as to not to be a public charge when the day came for them to retire. These people might find they have to go into a home and have to pay a very high sum for their residence there. Or they may feel they were denied being able to travel readily during their working career and they now have an opportunity, when their working life is over, to cash in a $2,000 investment they made in a common stock issue 20 years ago which is a little nest egg for them. I am surprised the minister is so rough on this class of individual.
The other matter I wanted to raise with him is underlined frequently on page 13 and following pages, and has to do with the "taxpayer, his spouse or former spouse". I should like the assurances of the minister that these provisions relate to the legal spouse only, that there is no interpretation which would extend these provisions to a common law relationship.


Donald Stovel Macdonald: Mr. Chairman, if I may comment on the first of the points, as I observed to the hon. member for York-Simcoe, for most of the period since valuation day there have been very few stocks which will have appreciated in value because-


Donald W. Munro: -we have been under this government.


Donald Stovel Macdonald: As I also pointed out, the same is true of markets all over the world, though I thank the hon. member for his compliment that the world follows the Canadian Department of Finance in this regard. In any event, Mr. Chairman, it does not seem to me that the hon. member has made out a case for this group being treated differently. If their stock has enjoyed a capital gain since valuation day, only half of the appreciation is brought into taxable income. It is fair that they pay tax on that, just as they have to pay tax on that portion of their income which is left after their exemptions have been deducted.
If I might just explain clause 14, this covers the situation where, by reason of separation, divorce or other enforced absence of a spouse from the home, the spouse who is absent will still be entitled to claim a principal residence exemption in respect of the property. "Spouse", of course, means the spouse recognized under the law.


Max Saltsman: Mr. Chairman, earlier I wanted to put a question to the hon. member for York-Simcoe and I hope still to be able to do that, because I think he is being grossly misunderstood by the committee in raising the objection he raised to a capital gains tax. I think what he was intending to say was that the government had not been rigid enough in enforcing the capital gains tax, with the result that the government has not got enough revenue from it, and that the government should be tougher in this regard.
Just to clear that up, I should like to ask the hon. member for York-Simcoe whether it is his position that the government should be tougher on collecting capital gains tax; or is it the case, as some people think, that he does not want a capital gains tax at all but wants to see it abolished? Would the hon. member for York-Simcoe reply to that?
2174

December 20, 1976
Income Tax


Sinclair McKnight Stevens: Mr. Chairman, before this debate goes on much longer I hope to have another chance of asking more questions of the minister concerning the capital gains tax. I only point out at this time that it is rather interesting to see how hysterical the socialists seem to get every time we talk about something that they regard as progressive. I need only point to Great Britain as being a clear indication of where the NDP-Labour type of "progressiveness" has got that country. If I may, I would like to respond to the question raised by my colleague a little later after we have had a few more facts from the minister.


Max Saltsman: Mr. Chairman, I am sorry that the hon. member for York-Simcoe has not really responded to my question. I think it is terribly important, particularly since the Conservative party fancies itself as the next Government of Canada.


Some hon. Members:: Hear, hear!


Max Saltsman: I said fancies itself. With answers like that, I am afraid it will remain just a fancy. I think it is important that we understand just where the Conservative party stands on this question of capital gains. If the Conservative party is all for abolishing the capital gains tax, then I do not see why they are ashamed to say so. That is a perfectly legitimate right-wing position, so let them come out and say so. Certainly if they are for capital gains they should come out and say so as well. I had to listen with some degree of incredulity to the hon. member for York-Simcoe.


Some hon. Members:: Oh, oh!


Max Saltsman: I wish you would enforce some discipline on my leader, Mr. Chairman. He is very unruly today. I must say that I take exception to some of the remarks made by my distinguished leader, the hon. member for Oshawa-Whitby, who used terms terms like "dishonest" or "more than dishonest". This is the point; if he is more than dishonest he is not just dishonest, but more than dishonest. Unfortunately my leader did not explain it as well as he might have, but more than dishonest means being a spendthrift.
The other day the President of the Treasury Board made a statement about a $6 million error in the accounts of Canada. He was really taken to task by the hon. member for York-Simcoe. He said that was horrible, and asked us to imagine the dismissal of $6 million as a mere bagatelle. Then, when using a different figure, that hon. member attempted to dismiss $54 million. It did not seem to bother him at all, and I have in mind the money coming in from capital gains tax, which is even higher.
I can forgive an hon. member for being a little dishonest on occasion, particularly if he is honest most of the time, but to be profligate in respect of some $54 million of Canadian taxpayers' money, that is something else again. This is a man who perhaps fancies himself as being the Minister of Finance some day, sitting in that distinguished spot now occupied by the

present Minister of Finance, whose decisions shake the capital markets of the world and whose every sentence causes stocks and bonds to fluctuate from here to Kenya.


An hon. Member:: Especially in Kenya.


Max Saltsman: I certainly cannot have much confidence in that kind of Minister of Finance. It is bad enough living with the present one, whose President of the Treasury Board only dismisses $6 million, but if the hon. member for York-Simcoe wants the job and he is going to kick away $54 million without blinking an eyelash, I would hesitate to give him an endorsa-tion for that position.
I do not know how we ever got into this sort of general subject of capital gains, because when looking at the clause it seems difficult to understand how it works. In any event, we did get into this discussion which shows how impossible it really is to understand this business of half capital gains. One of the reasons we are not getting the revenue from capital gains, aside from the arguments put forward by the Minister of Finance, which are valid up to a point, is that we are very close to or not far away from valuation day, and there is a question of what valuation you placed on the asset in the first place. Stock markets have not been paying heavily in dividends, so the revenue has not been that great. You still have the problem with half capital gains that you have when you do not have a capital gains tax, in that enormous energies are used changing things around making sure they show up in one way so as to avoid tax.
Let me refer also to a comment made by the hon. member for York-Simcoe regarding investment in Canada. This is one of the arguments always advanced. People say that Canada was one of the last countries in the world without a capital gains tax. Certainly during all those years there was no evidence of Canadian investors having invested in this country because there was no capital gains tax. It was quite to the contrary in that during the years Canada did not have a capital gains tax our tax laws aided and abetted the sellout of the Canadian economy. One of the reasons the Canadian economy was sold out was the lack of a capital gains tax.


Some hon. Members:: Oh, oh!


An hon. Member:: Where did you invest, Max?


Max Saltsman: My friends are upset, particularly the hon. member for Saanich.


An hon. Member:: You mean squeamish.


Some hon. Members:: Oh, oh!


Max Saltsman: Perhaps that is not fair, as that is a lovely riding.


An hon. Member:: He asked where you invested your money.


Max Saltsman: I have invested most of my money in Canada, I assure you, and 1 do not question where you invested your money. I would ask hon. members to consider
December 20, 1976

what I am saying to them. I am sure if hon. members had talked to businessmen the way I have talked to a great many in my area and in other parts of Canada, they would understand the proposition I am putting to them. These businessmen say they are running businesses, working very hard and making some money, but all that money is subject to taxation. Before the advent of a capital gains tax they knew that if they sold out to an American there would be no capital gains tax and they would have enough money tax-free to live on for the rest of their lives. That is why they sold out; not because we had a capital gains tax but because we did not have a capital gains tax.


Some hon. Members:: Oh, oh!


Max Saltsman: I know my friends to the right do not want to believe that.


An hon. Member:: Why did you sell out?


Some hon. Members:: Oh, oh!


An hon. Member:: You do not believe that yourself.


Max Saltsman: My friends to the right do not want to believe that, but they should ask many Canadian businessmen why they sold out to Americans. They will find out that those businessmen felt it was better from a tax point of view to sell their businesses than to operate them, because they got the benefits under capital gains that they could not get under corporate tax laws.


An hon. Member:: Nonsense!


Mr. McKenzie:: Mr. Chairman, we are debating a tax bill this evening. I am sure all of us on this side would like to see a reduction in income taxes.
There was a startling revelation today in the Argus Journal, the newspaper of the Public Service Alliance of Canada. We find this statement:
The fact that the government doesn't much care about costs involved doesn't help either. In this case, the transfer of 650 employees would mean at least $6.5 million in relocation costs.
This was in reference to the DVA move to Prince Edward Island. The article continues:
The move also means the construction of a new federal building to house these employees, as stated by Deputy Minister Bruce Brittain in a letter dated October 26 to the DVA Component of the PSAC.
"We estimate that the total cost could be more than $20 million."
I see the minister has now come back in.
The letter in the article further states:
"This expenditure of millions of dollars after introducing a program of controls on all sectors of the economy is an insult to the Canadian people,"-
This is a statement made by the PSAC-


Gérald Laniel: Order, please. I must interrupt the hon. member as the point he is raising does not at all refer to the clause before the committee at this time. The hon. member must realize that, when we are engaged in a clause by clause
Income Tax
study of the bill, questions, remarks and interventions should be directly related to the clause under study-in the present case dealing with the capital gains tax. The clause has nothing to do with general government policy, administration, or the decentralization of government departments,


A. Daniel McKenzie: Perhaps the minister would like to comment on this. He came back into the House when I raised the issue and I think he would welcome the opportunity to comment.


Gérald Laniel: Order, please. If I allowed a question and a reply by the minister I am sure the hon. member would come back with a supplementary question, and I would perhaps then have to allow a discussion of other government policies by other hon. members. This would open a general debate. A general debate has already taken place on clause 1 and during second reading of the bill. If the hon. member wants to raise the question he should try to find a clause in this bill that is directly related to it. I cannot allow the question, or the minister to reply at this time.


Francis Alvin George Hamilton: Mr. Chairman, I have listened to this discussion with more than a little attention because my interest in this particular bill is in trying to improve the equity tax structure. There have been points made tonight, which lead me to conclude that there is one suggestion which might be helpful in getting at the problem.
I do not think there is any question, and I am looking now at the party to my left, but that the Conservative party believes in equity in taxation. This means we support a legitimate capital gains tax. What we are trying to say is that in getting at the principle, if we can make this work as we thought it would when we voted for it, so much the better. Naturally no one wants to see a system where a certain element of the population lives entirely on capital gains. It is not equitable. But there is a place for another principle, that of trying to encourage people to invest in their own country in equity stocks. This is where the Conservative party stands absolutely opposed to what the NDP stands for. They are attacking us here tonight, and amusing the Minister of Finance no end because he sees happening, for the third time in his experience, a political party committing suicide. I am talking about the NDP.
When you find a political party to the left of the official opposition spending all its time attacking the official opposition, you know very well, Mr. Speaker, it is committing suicide. The previous leader of that party, Mr. Lewis, supported the Liberal government for two years. He kept them in power.
I will come back to the capital gains tax by pointing out that there is a time in this House to discuss capital gains from the point of view of trying to improve it. But I want to emphasize that in the capitalistic system which we support there has to be an equitable tax system. In what way can we make it more equitable?
The hon. member for Esquimalt-Saanich was getting at a human problem, one which should interest the Minister of
80005 -70V2

December 20, 1976
Income Tax
Finance. We are not opposed as a party to the principle of taxing income on a fair basis, but we also have another principle. We are not opposed to universal programs because we know they are necessary. But we want people to look after their own future as individuals. If people are to invest in their own country we must make certain no penalty is imposed upon them beyond an equitable demand for payment of tax on income.
Cases similar to those raised by the hon. member for Esquimalt-Saanich come to the attention of many of us every week. We hear from people who are trying to save as individuals by purchasing equities in equities in addition to their pensions and universal plans. They reach the last ten or 15 years of their work life and realize that they have a few equities which they would like to put into a more liquid position so as to be better able to retire. They find out, for instance, that they own stocks which have appreciated slightly during the ten or 15 years they have held them, despite the drop in stock market prices in the last few years. They want to change them into investment certificates and other forms of cash that retirement homes want before they get into them- they do not want any stock in a mining company-and they make a capital gain of a few dollars. The capital gains tax then comes into effect.
If you look back you will find that most of these people bought their stock long before valuation day, and valuation day levels are so low that there is a capital gain. When they translate this stock-type of ownership into other types of ownership, say investment certificates or bonds, they have to pay a capital gains tax, which has the result of reducing their estate to a lower figure. As a result, when they turn around and buy investment certificates or other stocks which are more readily saleable, they are in a negative position.
My proposal, which I make quite seriously to the minister- I have made it on earlier occasions to his predecessor-is that in the application of the capital gains tax in accordance with the principle of equity, where a person has held a portfolio and switches from one stock to another, from one stock to a bond, or from one stock to a certificate, in an attempt to get into a better position, as long as he does not take that return as income but puts it back into another investment, the roll over principle should apply, and it should not be taxed. I think that proposal meets the human needs expressed by the hon. member for Esquimalt-Saanich. It meets the equity principle which we all support, and I believe it has merit.
When I raised this suggestion some years ago we had just started our experience with the capital gains tax and the problem had not arisen. But any honest, sincere, hard-working member of parliament who is trying to serve his constituents by bringing before the House examples of things which are inequitable and unfair to these people, because they are not being taxed on income, they are being taxed on their capital savings, will recognize the justice of what I am saying. The acceptance of this roll over principle would make the capital gains tax more equitable and encourage more people to continue to invest in Canada. There are many arguments which

might be used to support this proposal to use the roll over principle so that the capital gains tax will not apply until investments are sold for income purposes.
Where there is income there should be a tax, and on that basis the Conservative party has supported the capital gains tax, but we are objecting to the application of this principle in a way which is discouraging people from getting into the equity field. In its place must be a scheme which is flexible enough not to hurt people as they approach retirement. I might add that this situation affects not a few thousand people but 20 or 30 per cent of the total population, those who at present are striving to get something in addition to the universal plan to allow them some dignity in their retirement, while at the same time providing capital for the developing needs of the country. I do not think we should punish these people in the course of the roll over procedure.
The minister should take a look at this proposal and ascertain whether it could not be followed with a minimum of bureaucratic complication; for example, if the money were reinvested within a certain number of days or weeks there would be no capital gains tax payable. By getting more people into capital investment now, the minister will be able to say in the long run he is getting more money out of the capital gains tax, and that will make the NDP happy.


Mr. Clarke:: Mr. Chairman, I thought I had an idea of the purpose of the capital gains tax, but the leader of the New Democratic Party has put that understanding into question. Perhaps the minister would give us an idea of what the purpose of that tax was in the mind of the government, whether it was, as the leader of the New Democratic Party says for the sake of fairness or equity, or whether it was to raise money for the treasury.


Donald Stovel Macdonald: I answered that a few moments ago. I said it was a question of equity as between taxpayers.


William Hillary (Bill) Clarke: Yes; I thought there was probably some method there to raise money.
I would like to ask the minister about his earlier comments on the value of the investment in a residence. I forgot the words the minister used because it was a few minutes ago, but he implied that the investor possessed a good investment in his own home. I recall that the minister's predecessor had speculated a year or two ago on the imputed value of the taxpayer's investment in his home. At that time it seemed to me that the minister was trying to find some method that would be usable to tax the value that the investor obtains by living in his investment, so to speak, when he invests in his home rather than selling his home, as the hon. member for York-Simcoe had suggested he might do, paying the tax and investing in securities of one sort or another which then attracted tax and reduced the taxpayer's ability to pay rent on the residence of his choice.
I think I heard the minister say earlier that the taxpayer was better off renting a home on which he did not have to pay for
December 20,1976

heat, maintenance, taxes, and so on. My question is: what is the minister's view on the possibility of taxing this imputed value of one's home?


Donald Stovel Macdonald: There is no such proposal. If the hon. member had been following closely the argument, the observation I made was that to continue to occupy a house when only one or two of the bedrooms were used may be involving the couple in a substantial cost above any tax consequences of liquidating that investment with no capital gains consequences and thereafter investing the proceeds.


William Hillary (Bill) Clarke: I thought that is what the minister had said. But surely this is an extension of the minister's big brother type of thinking. He is saying, as I understand it, that the person who wishes by choice to live in a larger home than he needs should be penalized by the government by having his investment made subject to tax, which then the taxpayer spends on rent which is not a deductible expense, whereas if he left his money invested in his home he would not be subject to that exposure.


Donald Stovel Macdonald: I do not know how I can explain it any more clearly to the hon. member. Of course that person does not pay any income tax on the imputed value of his home, and there is no intention to impose tax on it. The observation I made was that the hon. member for Esquimalt-Saanich had said it was unfair to have to pay tax on the proceeds of selling a home once the owner reinvested. I made the observation that as a pure investment decision it might well be a sound argument to liquidate the household into cash and reinvest the cash rather than pay the carrying cost. Nobody has to do that, and there will be no adverse tax consequences if they do not do that, but in terms of personal budget they may wind up paying more than they would have to pay in income tax. I am not sure how I can make it any more clear to the hon. member than that.


William Hillary (Bill) Clarke: I think I understand what the minister is saying. What he is saying to me is that the government does not consider that taxpayers should be treated equally, and if a taxpayer chooses to invest his money in a building or a property in which he chooses to live, then the government says, that is all right, and he will not pay any tax on the imputed value of that investment. But if he chooses to pay rent for any type of dwelling, then the government says that the money he invests in order to produce the rent that he wishes to pay will be taxed at the taxpayer's highest rate. I do not see how the minister can say that that is equal treatment for the taxpayers of Canada and, if he thinks so, perhaps he can try to explain that again.


Sinclair McKnight Stevens: Mr. Chairman, in my few brief comments on clause 14 may I say, first of all, that I was rather surprised to see the near hysteria which I seemed to trigger among the socialists in our midst.


John Edward Broadbent: In your midst?
Income Tax


Sinclair McKnight Stevens: In our midst in this House. I was only asking what I felt were a few rather innocent questions after we had had three years of experience with the capital gains tax in this country. I was asking the minister whether he could tell us how much revenue the tax has actually produced. Surely even a socialist would be willing to get to those facts to find out whether it is a large or a small amount. I also thought it would be interesting to find out from the minister to what extent they have done any monitoring to see if the tax has been a deterrent with respect to investment in the country. Have people tended to be less inclined to invest than they might otherwise have been without a capital gains tax? I also asked the minister if he could give us any comments on how our capital gains tax compares with taxes of a similar nature in other countries.
To have the socialists come on so strong and in some way insinuate that somehow I am being dishonest when I raise these points and that I am back in the eighteenth century, I find most remarkable. Clearly we seem to tramp perhaps almost inadvertently on the toes of the socialists when we get on to the question of the capital gains tax. As you will recall, I had simply quoted certain things that Mr. Asper had said in a column in the Globe and Mail concerning the capital gains tax, not agreeing or disagreeing particularly with Mr. Asper, but rather stressing the fact that if the government, through the CDC, is willing to back Mr. Asper with a $7 million investment from the people of Canada, surely the government would pay great heed to what this former Manitoba Liberal leader has to say concerning the very facts we are reviewing in this clause. I was quoting Mr. Asper in the belief that that would be one of the few authorities in Canada with whom the Minister of Finance would immediately agree.
I would like to continue to quote some of the statements made by Mr. Asper as reported in that article. You will recall that it was generally pointed out by Mr. Asper that the capital gains tax is contributing to the shrinking of the Canadian pool of capital so necessary to maintain a growth rate which could reduce our ever increasing unemployment. In commenting on this glaring deficiency Mr. Asper, as reported in the article to which I referred, said the following, and I hope the minister will be ready for a question after I have read the quote. Mr. Asper asked:
Is the dislocation cost of taxpayer compliance, the bureaucracy of keeping books and records, etc., really worth it for so little revenue?
I would like to put that question to the minister. Is the cost of taxpayer compliance, the bureaucracy of keeping books and records, etc., really worth it for so little revenue?


Donald Stovel Macdonald: Mr. Chairman, for reasons of equity, as stated, I think it is sound to have the tax there. I think that in terms of equity it is well worth it.


Sinclair McKnight Stevens: I wonder if the minister could go further. Using the words of Mr. Asper, what positive effect would a revision of the law have on investment patterns, risk taking capital, job creation, and general economic growth? Those are

December 20, 1976
Income Tax
Mr. Asper's words in the form of a question, and I would like to direct them to the minister.


Donald Stovel Macdonald: Mr. Chairman, 1 think Mr. Asper has very clearly exaggerated the impact. If the impact has been so slight, to use the analysis of the hon. member for York-Simcoe, then very obviously it has not been a deterrent, and I think I would have to say that it has not been.


Sinclair McKnight Stevens: When the minister says that the influence has been slight, I suggest with all due respect that perhaps he misses the point. As I understand the anxiety and the reaction of many investors, it is that they should put their affairs into a position where they will be subjected to a minimum of capital gains taxes and that they should do that either by deciding not to make new investments, or to make investments in some other jurisdiction which they feel is more hospitable.
Perhaps the greatest indication of the extent to which that anxiety has taken hold in Canada is the fact that the actual revenue which the National Revenue people are able to get into the federal treasury as a result of this tax is so small, obviously people are avoiding the tax as much as possible, which indirectly means they are likely taking fewer chances, and are less inclined to make investments than they otherwise would have been if the capital gains tax had not been put in place. Would the minister not agree that it is not so much a question of the actual revenue which falls into the till, but that it may be much more important to try to determine to what extent people are actually being deterred from making investments as a result of the impact of the capital gains tax in the country? I suggest that the only way this could be done would be by way of a survey or some monitoring apparatus.


Donald Stovel Macdonald: With the capital gains tax an investor gets half the capital gains totally tax-free, in addition to the dividend income they have in the meantime. I think it is clearly an attractive investment. If in a particular period of time the equity market is depressed, as it has been throughout the world, obviously that is not the time to be looking for dramatic gains in this particular area. However, even with a capital gains tax on half the capital appreciation which may have occurred since 1971, I think it is still an attractive climate for an equity investor.


Sinclair McKnight Stevens: In the figures we were able to get from the minister I believe it was stated that in 1974 about $84 million was produced through the capital gains tax, on the assumption that the average tax would have been about 30 per cent. In the spirit of being quite frank on this I gave the government the benefit of the doubt when I used the $90 million figure. Taking the minister's word that it was only $84 million-and perhaps I was $6 million too high as far as the production of revenue is concerned-I must explore this. I was quite startled at the reaction of the minister at the suggestion that the Canada Development Corporation investment in the proposed new venture of Mr. Asper was somehow something we should not be concerned about; that it is a corporation which has $300 million of public funds; that somehow it is in orbit and that the

minister should not be called upon in the question period to respond with respect to that corporation. Mr. Chairman, I know your anxiety, but basically this point was raised by the minister. He stated that I was being something less than honest, to use his words, to suggest that $7 million of public funds were going into this venture.
Does the minister not hold virtually all the voting shares in the Canada Development Corporation on behalf of the people of Canada which, as I say, are worth something over $300 million? Does he not have the right to appoint four of the directors to that corporation? In his opinion does that right not also extend to asking them to step down if he feels they have not done a job properly, or for any other reason? Perhaps the minister could reply.


Gérald Laniel: I should remind the hon. member that referring to a question is different from asking questions. That will bring about further development of a subject which is completely irrelevant to the clause before us at this time. I hope the hon. member will come back to clause 14.


Sinclair McKnight Stevens: I will put the question directly. I have reviewed what I understand to be the minister's position with respect to the Canada Development Corporation, and he did say that I was less than honest in suggesting that somehow the government was investing those funds. Can he explain the points I have already put to him? By that I mean does he indicate that I am wrong in saying that he holds the voting stock in this company and has the right to appoint four directors?


Donald Stovel Macdonald: Mr. Chairman, you are quite right; this has nothing to do with clause 14, and I will not abuse the House by going further into the details of the Canada Development Corporation.


William Gordon Ritchie: Mr. Chairman, I would like to have the opportunity to say a few words on this clause. I have gone through the white paper on taxation and the changes in our taxation laws of the 1970's. I think it was felt then that those changes would deter investment, and I think there is no doubt that at the present time they are deterring some investment. What seems to be a bit unfair about the tax has been the fact of the severe and rapid inflation and the very great difficulty in applying the tax fairly.
In my own area where there is farmland, assessments are being made very autocratically, illogically, and really off the top of the head of the assessor. This is partly due to the fact that, at the time of the beginning of the tax, land prices were low. They have now multiplied two or three times, and in effect the tax on capital gains is a tax on inflation. It is no more noticeable than when taxing farm land.
Presumably the tax assessors are making up for lost time in many instances by being unnecessarily severe in their assessment of what the base price of farmland was at that time. I think this clause deters the small investor who is investing in land or in a utility of some sort, and it is a disadvantage to good business.
December 20, 1976

I understand the West Germans allow people who hold property, utilities or buildings for ten years to pay no capital gains tax, the assumption being that a person who buys something uses it to create jobs or to carry on business. If he keeps it for the full ten years, it is presumed that he uses it for the benefit of the community.
I would like to ask the minister if he has any intention of instituting any kind of relief whereby inflation could be taken into account in assessing what the rate should be? Second, with regard to farmland, can there not be any method whereby a federal assessment from the beginning of 1970 could be arrived at when the tax is applied? I certainly think that this tax, which yields so little money, is a deterrent to investment in any property or business that would [DOT] be of benefit to the community.


Donald Stovel Macdonald: Mr. Chairman, one of the reasons for bringing only half of the gain into taxable income is to recognize the fact that there may be some element of inflation involved in the disposal cost. As well, of course, the tax brackets are indexed, so to that extent the amount of inflation will be minimized, although not totally. A taxpayer in that situation has the advantage of engaging in arrangements for an income averaging annuity so as to forward average the tax.


Allan Bruce McKinnon: Mr. Chairman, I should like to ask the minister a question or two on the capital gains tax. Has the minister, in consultation with the Minister of State for Urban Affairs, considered restoring the beneficial scheme that was in effect a few years ago concerning apartment construction? A person could trade up in the apartment field without having to pay the capital gains tax which was only levied when he eventually got out of the apartment business. This enabled him to continue with the construction of places for people to live in without facing a disastrous tax bill for every new project. Was some consideration given to reverting to that? I ask this because in the present situation the types of housing on which subsidies are being paid make it extremely difficult when the subsidy period runs out after say, two years, and suddenly apartment suites are quite expensive. It makes it difficult for the landlord, and even more difficult for the tenants.


Donald Stovel Macdonald: Mr. Chairman, unless I am mistaken, the hon. gentleman is thinking not so much of capital gains tax as the recaptured depreciation. I am advised that the rule has been re-established to enable assets to be continued as one stock for the purpose of carrying forth depreciation.


Allan Bruce McKinnon: I wonder if the minister would care to elucidate on the part about the principal dwelling. How many principal dwellings can a person have? Say he has a summer home in the country and a condominium in the city, or he is a person with business in two parts of the country and sets up a home in each part. Can they both be counted as principal dwellings by the same person?
Income Tax


Donald Stovel Macdonald: One only, at his option.


Sinclair McKnight Stevens: Mr. Chairman, in response to the hon. member for Dauphin, if I understood the minister correctly, he indicated that he felt there were two things that compensated for the fact that many times when people are required to pay on a so-called capital gain they are actually paying on an inflated gain. The minister said that was all changed by the fact that only half the gain was taken in and, second, that eventually the tax paid is indexed. I wonder if the minister could be more explicit in view of the fact that inflation has been around 35 per cent to 40 per cent since the capital gains tax evaluation date became operative. Has his department done any study to see how his figures work out? If you only take half the gain plus the indexing as far as the income tax itself is concerned, it means that in effect you are not paying tax on a capital gain. It is nothing more than taxing an inflationary gain in real buying power.


Donald Stovel Macdonald: Yes, Mr. Chairman, there have been internal analyses and the view is that it is still satisfactory in relation to capital gains.


Sinclair McKnight Stevens: To be more explicit, Mr. Chairman, is the minister saying that there is not an element of confiscation in the present capital gains tax to the extent that it is taxing an inflationary gain and not a real gain as far as the taxpayer is concerned?


Donald Stovel Macdonald: We do not believe so, Mr. Chairman.


Sinclair McKnight Stevens: I wonder if the minister has any figures to give us. A ready calculation of the inflationary impact of a 35 per cent increase in the value of a $10,000 investment would appear to indicate that if you are required to pay capital gains tax on half of $3,500, which is $1,750, and have that added to your income, it can only be confiscation when all that gain is reflecting is the inflationary gain since you acquired that, let us say, on valuation day.


Donald Stovel Macdonald: We arrived at the conclusion that it is not so, Mr. Chairman.


Gérald Laniel: Shall clause 14 carry?


[Stage Direction]
Clause agreed to.
Clause 15 agreed to.
On clause 16.
Stanley Howard Knowles: Mr. Chairman, I should like to ask the minister a few questions relating to clause 16, with particular reference to subclause (3) thereof. Perhaps before I ask my question the minister would like to give an explanation of clause 16.


Donald Stovel Macdonald: The amendment in the first paragraph is consequential upon the introduction of the new subsection 61.1(1) by subclause 19(1) which will be reached shortly, with respect to income averaging annuity contracts.

December 20, 1976
Income Tax
Under subclause 16(2) a taxpayer is allowed to deduct fees or expenses in connection with appeals from or objections to decisions handed down in respect of his application for unemployment insurance. As a consequence, paragraph 56.1(1) requires that where a taxpayer recovers these costs as legal costs awarded to him, he must bring the amount recovered into income where he had a deduction in respect of it. Unfortunately the bodies handing down decisions in respect of unemployment insurance claims are not courts and therefore have no authority to award legal costs. The wording is therefore meaningless, and the technical amendment corrects the deficiency and ensures that where a taxpayer is reimbursed for such costs after he has deducted them, the receipts are included in income.
Under the third clause the amendment makes clear that provincial family allowance receipts must be included in a taxpayer's income if the province provides the deduction for the child under its own income tax legislation. This is to be the case whether or not the taxpayer is able to take full advantage of the deduction having regard to the child's income level.


Stanley Howard Knowles: It is with respect to family allowances that I should like to question the minister further. In particular may I ask whether this results in any double taxation of family allowances-that is, taxation by both the federal government and a provincial government?


Donald Stovel Macdonald: The advice I have is that it does not.


Stanley Howard Knowles: There is another question about the taxation of family allowances that I should like to put to the Minister of Finance, and I am glad his colleague, the Minister of National Health and Welfare, is in his place.
I have in mind the fact that when a grandparent is looking after a grandchild and the family allowance is paid in respect of that grandchild, if the grandparent is receiving the old age security pension and the guaranteed income supplement, the income received as family allowance counts as income under the guaranteed income supplement and results in that supplement being cut back. I might say that the nub of this is in the Income Tax Act itself, but I must refer to the Family Allowances Act to make my point.
Even though I oppose the means test which applies to the guaranteed income supplement, I can understand the philosophy which says that if a senior citizen is receiving some other money which he can use for himself, he should lose some of his supplement. But in this case the grandparent, the senior citizen, is receiving family allowance money for a child. Obviously it is not a benefit to the grandparent because actually the grandparent cannot fully maintain the child with that family allowance money, yet the grandparent loses some of his guaranteed income supplement. When I have taken this matter up with the Minister of National Health and Welfare the answer has been that nothing in the Family Allowances Act causes
(Mr. Macdonald (Rosedale).]
this; but there is somthing in the Old Age Security Act which says that income for purposes of the guaranteed income supplement is any money defined as taxable income in the Income Tax Act. I ask the minister if the point is clear?
Because the Income Tax Act says that family allowances are taxable, family allowance money becomes money charged against a grandparent receiving the guaranteed income supplement. I suggest that the place to correct this is in the Income Tax Act. May I ask if there is any chance of that correction being made right now while we are dealing with the Income Tax Act?


Donald Stovel Macdonald: Mr. Chairman, I think I would have to say that there is not, in the present circumstances. However, my colleague, the Minister of National Health and Welfare, points out to me that there is an anomaly here which he, for one, would like to see corrected. I think the best I can do at this point is to undertake to give the question active consideration before the preparation of the next budget. I might say, more generally, that we now have under way a study of the integration of the various transfer payments with the tax act, a study of which the hon. member may be aware. One of the objectives of that study would be the removal of this anomaly under which we pay out a series of payments which may be given conflicting treatment under the Income Tax Act.


Stanley Howard Knowles: Mr. Chairman, I wonder if either the Minister of Finance or the Minister of National Health and Welfare have come to an understanding as to which piece of legislation ought to be amended? Is it to be the Family Allowances Act or the Income Tax Act? If it is to be the Family Allowances Act, I cannot pursue the matter now as the matter is not now before us; but if it is the Income Tax Act I think I ought to pursue the matter now because, as matters stand, some grandparents are losing money because income for the purposes of the guaranteed income supplement is money which is defined in the Income Tax Act as taxable, and family allowances are so defined in the Income Tax Act.


Donald Stovel Macdonald: Mr. Chairman, I think the collective ministerial view in this case would be that the matter relates to legislation under the jurisdiction of my colleague.


John Edward Broadbent: Because it is not before us.


Stanley Howard Knowles: Mr. Chairman, it does not matter to me which minister corrects it, but I have a sneaking suspicion-


An hon. Member:: Oh, oh!


Stanley Howard Knowles: -I have a sneaking suspicion that if we do not get it corrected when we are considering the Income Tax Act, when the other legislation is before the House that minister will say, "This should have been corrected when the Income Tax Act was under consideration."
December 20, 1976

The Income Tax Act defines family allowances as taxable income. I feel strongly that this anomaly should be corrected. I do not say that there are thousands of such cases; there may be only a few hundred, at most. Certainly it is not fair that a grandparent who gets a bit of money because he or she is looking after a child should have the guaranteed income supplement reduced as a consequence of getting that money. Whichever minister is responsible, I hope something will be done about this question.


Donald W. Munro: They will pass the buck.


Stanley Howard Knowles: It is not a matter of passing the buck. The bucks are being taken away. I hope that the two ministers will confer further and, if possible, make the necessary correction before we finally pass Bill C-22. I wish it would be done now.


William Arnold Peters: Mr. Chairman, my colleague raised an interesting point which is of wider application than he supposes, because I have heard of old age pensioners whose children are eligible for the family allowance. I think this general situation may be more widespread than is supposed and may affect more than 200 or 300 cases. It may affect those who are fortunate or unfortunate enough to be old age pensioners and the parents of school age children.
Not long ago I heard of a case in which an old age pensioner had six children under the age of 15.


An hon. Member:: He should be commended for a medal.


William Arnold Peters: It seems to me that this anomaly should be corrected in the Income Tax Act, since I do not see how it could be corrected in legislation coming under the jurisdiction of the Minister of National Health and Welfare. Frankly I do not see how any changes in the family allowances legislation could make one hoot of difference to the definition of income in the Income Tax Act. May I call it ten o'clock, Mr. Chairman?
Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Hon. Herb Gray (Windsor West):: Mr. Speaker, on December 15 1 asked the Minister of Industry, Trade and Commerce (Mr. Chretien) whether the measures the government had announced on October 21 it would be taking to deal with the
Adjournment Debate
application of the Arab boycott in Canada had as yet been put into effect and, if not, exactly when and how this will be done. The minister replied as reported on page 2034 of Hansard:
I have already had conversations with some of my officials in this regard and ordered them to act and implement as soon as possible the rules passed by the cabinet. I believe the orders given by cabinet are, in the main, being followed by governmental organizations.
What exactly does "in the main" mean? Giving the most optimistic construction possible to the minister's answer, it would appear that the measures in question are not yet fully in effect two months after that statement was made. To what extent and in what way has the government ceased to provide the full range of its support and services to companies engaged in transactions involving compliance with the Arab boycott? This was to be one of the two measures.
The statement did not say what steps the government will take to monitor the accuracy of reports required from the companies about their complying with the Arab boycott and what it will do to investigate complaints of non-reporting and what penalties there will be for non-reporting. In fact, we do not know yet what the reporting system will be.
The government will have to be able to answer these types of questions on the two measures in question. Will firms seeking government facilities have to sign certificates or affidavits stating boycott compliance is not involved in the transaction for which support is sought? Also, if government support was being given to transactions under way or pending at the date of the statement, will that support be cancelled or will the measures be retroactive only to the date of the statement, and apply to transactions or activities undertaken since that date, or will they apply only from a future date still to be announced? In fact, what is the effective date of the measures in question?
What sanction or penalty will the government be imposing on those who fail to disclose a transaction which involves boycott compliance when they are seeking government support for it? What sanction will there be against firms who fail to report boycott compliance requests, when they do not seek government support? What monitoring or investigative work will the government carry out to ensure ongoing compliance by business with the measures announced? Exactly what system of reporting to the government instances of complying with the boycott will be required of firms? In fact, what exactly does the government mean by the term "complying?" Perhaps most important of all, exactly what information in these reports will the government make public?
The press and many observers interpreted the October 21 statement as saying the names of firms complying with the boycott and likely details of the compliances as well, would be made public. However, this is not exactly what the statement says. It says only that the "information obtained from such requests will be made available to the public". This could mean the government intends to publish only vague summaries at infrequent intervals without giving the actual names of companies involved and the exact nature of their compliance.

December 20, 1976
Adjournment Debate
Unless the exact names of companies and the details of their compliance are published, and this is done at frequent intervals, the value of the reporting requirement mentioned in the statement would be just about nil.
Would not the government have been wiser to delay making the boycott policy statement until it had decided both what to do about the boycott and, more important, was also in a position to implement the measures it had decided to take in an immediate and meaningful way? As more and more weeks go by without even the limited steps promised in that statement being put into full and complete effect, the government has put itself in the position where its good faith and credibility in this key policy area are more and more open to question.
The government's delay and vagueness about implementing the measures in question also put the Canadian business community in an awkward position. It would appear that no guidelines have been as yet formally conveyed to it by the government about how firms should conduct themselves now that the statement has been made. The statement itself, I gather, has not been brought by the government officially to the attention either of major business organizations or of individual companies. The measures that the government said in the statement it would take, are not really fully in effect. Yet there are many concerned Canadians who are aware of the statement, and when they learn of activities by firms, and possibly even of continuing action by government in support of these activities, not consistent with the statement, they may well be critical of the firms in question and of the government.
The result of the government's present approach can only be to create otherwise unnecessary tension between the business community and the public at large, and further to erode public confidence in business.
The answer, therefore, is not only the full and immediate implementation of the measures announced on October 21, but also forthright and immediate federal legislation of general application, so that all Canadian companies are put on the same basis, whether they need government supporting services or not. Thus none will have to be put in the position of relying on their own individual decision involving the balancing of a sense of business ethics and fear of a possible loss of profit, though as I have said on other occasions resistance to the boycott, is, on the evidence, unlikely to mean loss of business and profits for a company if it offers goods of the quality and price that are being sought. Only through fully effective federal government action to deal with the boycott will real meaning finally be given to the words about Canadian ethics and what the government stands for, which the Prime Minister (Mr. Trudeau) spoke a year and a half ago, and the words in the government statement of last October 21.


Fabian Hugh Poulin: Mr. Speaker, may I say that the debate launched tonight by the hon. member for Windsor West (Mr. Gray) demonstrates how valuable these adjournment debates can be. I will insist that the department take very clear note of the words and very many detailed questions

posed by the hon. member for Windsor West to ensure that he gets all of the answers to his so carefully researched questions.
With that, Mr. Speaker, I suppose I am indicating that I am not adequately prepared to answer at this time all of the very important questions asked by the hon. member.


Sinclair McKnight Stevens: Shame!


Fabian Hugh Poulin: No, not shame. I am just indicating that this adjournment debate is a very valuable proceeding.


Mr. Oberle:: Only if you get the answers.


Fabian Hugh Poulin: The hon. member has deeply researched his questions, but may I inform him that there have been no actual undertakings, that the department is aware of, by Canadian companies, which are contrary to government policy, that have been reported at this time. The department realizes the importance of putting into full effect practices to implement the statement of policy on international economic boycotts, as is so well recognized. However, the need to provide accurate guidance to the Canadian business community to guard, as far as practicable, against specific actions abhorrent to Canada, as outlined in the Secretary of State for External Affair's policy statement, and at the same time to safeguard and develop our export opportunities, is also most important and, unfortunately, time consuming.
Officials are drawing up, as quickly as is reasonably possible, guidelines. The purpose of these guidelines is to provide direction to the Canadian business community on observance of the Canadian policy and to provide elaboration for the public on the government's position. The guidelines will explain the coverage and extent of the policy, as well as outline the reporting requirements. It is difficult to be more precise, due to the complexity of the various components of the policy, and the desire to remove, to the fullest extent possible, uncertainties surrounding the government's policy and its implementation.
Canada's stated position is to carry on trade in peaceful goods with all nations. Canada's policy with respect to economic boycotts is designed to protect Canadian companies from being forced to act by foreign regulations in a manner contrary to the best interests of Canada.


TRADE-HIGH LEVEL OF DUTY IMPOSED BY SOVIET UNION ON GIFTS-POSSIBLE BREACH OF TRADE AGREEMENT
Hon. Martin O'Connell (Scarborough East):: Mr. Speaker, my purpose is to seek the help of the Minister of Industry, Trade and Commerce (Mr. Chretien) to reduce the problems that Canadians face when sending small gifts to relatives in the Baltic countries and in the Soviet Union.
The situation is this. When Canadians send gift parcels of clothing, household articles, food and personal items to relatives in the Soviet Union, they pay certain standard charges for packaging, postage, insurance, foreign exchange charges and fees to the forwarding agency. One cannot complain of such charges, although they are substantial. It is far different,
December 20, 1976

however, with the duties or tariffs levied by the Soviet government on these modest gift parcels, and there is a serious complaint to be lodged here. These duties are substantially higher than duties levied on similar commercial articles, and have recently been raised from their already exceptionally high levels.
The objective of the Soviet government appears to be the prohibition of gifts within families by using the guise of duties. These duties vary from gift item to item, but in the past have averaged between 30 per cent and 40 per cent of the value. In June of this year these duties were raised by what seems to be a factor of two or three times from those already high levels. The minister's own department is having difficulty in ascertaining what the new duties are in precise terms.
Let us consider these facts. These are small gifts, for example window curtains, stockings, overcoats, gloves, children's games, Christmas toys and food parcels. The typical parcel will be worth between $100 and $300. These are gifts of a completely inoffensive character. They are gifts specifically permitted to be sent as gifts and are not for commercial purposes. They are sent to a member of one's own family.
Finally, these new duties are in effect prohibitive in economic terms for most families. They are an affront in terms of human justice.
I want to appeal to the minister to investigate whether such duties violate Canada's trade agreement with the Soviet Union. If they do, I ask him to raise the matter with Soviet authorities with a view to correcting the situation. If they do not violate trade agreements, I ask the minister to convey to the Soviet Union the intense dissatisfaction and concern of Canadian citizens at these artificial barriers to human contact.
These new barriers came only months after the signing of the Helsinki accord in which Canada and the Soviet Union, among many other states, pledged to facilitate human contact, individually or in groups. Yet Canadians know too well how virtually impossible it is to arrange visits to Canada of relatives in the Baltic countries or in the Soviet Union. Short visits cannot be arranged even in cases supported on clear humanitarian grounds. Many family reunifications have to be dragged out of the Soviet government one by one, and then only on humanitarian grounds by direct representations made by the Canadian government.
An average of only 14 persons per year, for example, has been permitted to immigrate to Canada from the three Baltic countries combined in the past eight years. How can Canadians believe in the Helsinki pledge to strengthen friendly relations and trust among the peoples of our two countries when they are sealed off by the Soviet Union from visits by relatives, when they are sealed off from family unifications, and when they are now sealed off from sending small gifts by these new tariffs which seem to have no foundation in reason except to prohibit a natural human practice, or to exploit family relations for monetary gain?
Adjournment Debate
This action by the Soviet Union is cynicism piled upon cynicism before the ink is dry on a document pledging humanitarian contacts. If the Soviet Union had sought a means of increasing distrust among Canadians in respect of detente it could not have found a better means than to block simple human desires for family contact through inoffensive gifts within families. We know too well that distrust was already growing because of the build up of conventional arms in the Soviet Union, in spite of detente. This latest move will further confirm Canadians in their growing realization that the Helsinki document contained hollow pledges.
In the case of family visits and family unifications, the Soviet authorities have frequently hidden behind the decisions made by local authorities, but in the case of these exceptionally harsh new tariffs it is the central government itself that imposes them. This will surely be taken as a signal to local authorities to be even more restrictive, and can only lead to a worsening of the prospects for family visits and unifications.
I ask the minister, therefore, to protest to the Soviet Union its excessive use of trade mechanisms such as tariffs to deny Canadian citizens the opportunity to send small gifts to relatives. I ask that he seek levels of duty equivalent to those levied in the case of small commercial transactions with Canada under the most favoured nation agreement. I ask him further to seek bilateral arrangements with the U.S.S.R. with respect to duty payable on gifts sent to family members. I make this request conscious of the fact that the Helsinki Accord itself pledges the signatory nations to conclude such agreements among themselves as might be needed to facilitate human contacts. Surely this is a situation which calls not only for simple justice for Canadian citizens but also for insistence that solemn pledges made between Canada and the U.S.S.R. be honoured.


Fabian Hugh Poulin: I thank the hon. member for Scarborough East (Mr. O'Connell) for his representation. May I say that I intend to join with him in supporting the principle to which he has addressed himself? The matters he discusses are so fundamental to the Canadian sense of justice and to our trade policy that their resolution is to be desired by us all.
We have, however, encountered some difficulties in this field. For example, it has been difficult to obtain complete information from Soviet officials on this subject. Although we know that the rates of duty applied to gift shipments to the U.S.S.R. were substantially increased last summer, we are still trying to ascertain whether or not gift parcels are assessed higher rates of duty than commercial shipments of like products to the Soviet Union.
We are pursuing our discussions with Soviet authorities, and until we have completed our investigation of this question and are sure of our facts, it would be premature to comment on whether or not the Soviet Union is in breach of its trade agreement with Canada.

December 20, 1976
Adjournment Debate
As the Secretary of State for External Affairs (Mr. Jamieson) said in the House on November 30, a good deal of work is already under way with regard to the preparation of documentation leading up to the Belgrade Conference next year. We shall be giving some thought as to whether or not the Soviet action to increase duties on gift shipments will be included in our documentation.
When we have concluded our investigation we will consider what further action, if any, might be appropriate.
May I add that a couple of months ago I accompanied the Secretary of State for External Affairs on a trade mission to the U.S.S.R. At that time an important protocol was signed with the Soviet minister of trade, Mr. Patolichev. He indicated that he wished to see relations with Canada improved not only in trade but in all other ways. May I suggest to the Soviet authorities that acceptance of the proposition put forward by the hon. member is one way in which these trade and other relationships can be improved, and improved very quickly.


FINANCE-POSSIBILITY OF BUDGET BEFORE FEBRUARY- GOVERNMENT POSITION
Sinclair McKnight Stevens: Mr. Speaker, last Friday, in the true Christmas spirit, I asked the Minister of Finance (Mr. Macdonald) whether he could tell us if there was any hope of a new budget some time in February, or before, or even later. The Minister of Finance, in his response, dwelt on the word "later" and said there would be a budget within the first six months of 1977.
Continuing in the spirit of Christmas I should like to make a few observations on my reasons for asking whether there would be a budget brought down before the end of February. With this in mind, I should like the minister or his parliamentary secretary to assure us that there will be no more humbug in their approach to unemployment and economic stagnation in this country.
First of all, may I express the hope that in offering a new budget-and a new budget is certainly needed-he would show a softening of the hard heart he appears to possess. May I suggest that this budget include a Christmas present, if you like, of unprecedented scope-a tax cut, as we have been advocating in this party since last May. The minister, in a new found spirit of humanity and humility, and, as I have suggested, in the spirit of Christmas, might give a 10 per cent tax credit to all those earning $8,000 or less, and a similar credit to those earning between $8,000 and $16,000. Such a gesture of good will would put a $100 bill in the Christmas stockings of those in the lower income tax brackets. From the taxpayers of this country- everyone of us a Tiny Tim in relation to this mighty government-might still be heard across the land "God bless us, everyone".
These cuts would increase real wages for employees and would provide badly needed stimulus to the economy, which in turn would result in more jobs for Canadians. For the 760,000

unemployed in this country, this would be the brightest Christmas present of all.
As it was confirmed this afternoon by the Minister of National Revenue (Miss Begin) that aggregate personal income tax revenues may increase between 10 per cent and 50 per cent faster than the GNP, the Minister of Finance may well say, as his namesake, the hamburger chain, reminds us, "You deserve a break today-from Macdonald".
While the Christmas mood still holds sway over our hardhearted finance minister, we might also suggest he consider a small incentive to small businesses by way of thanking them for all the forms and statistics they are required to supply to the federal government. These small businesses, most of whom are also Tiny Tims, desperately need an incentive to help them compete more effectively at home and in the international export market.
The minister might also prove to the retired or soon to be retired that Santa Claus does indeed exist in the hard heart of this administration, and allow the convertibility of RRSPs at retirement into a personal trust without the necessity of purchasing an annuity which is often less advantageous. Imagine the surprise of our senior citizens in finding that Christmas is not merely for the young!
The minister could grant to Canadians the one request that tops everybody's Christmas list this year-the speedy end to the government's wage and price control program which has had a marginal effect on the cost of living, yet costs over $22 million a year to administer and which is proving increasingly more counterproductive. Certainly such a change of heart would be regarded as a first class Christmas miracle.
Perhaps we might even persuade our Minister of Transport (Mr. Lang) to join in the holiday mood and take Air Canada-first class if he wishes-rather than those $7,000-a-flight government jets. If Santa can get by with a few ancient reindeer and a sleigh, surely Otto can tough it out with Air Canada.
Finally, our Christmas wish suggests that "Old Thumper" and the ten provincial finance ministers when they meet at the end of January should invite Santa Clause to chair their meeting to ensure that all, especially Thumper, keep the proper spirit and agree to get along together.
These things accomplished, we feel that the nation will truly face a brighter and more prosperous new year and, like Bob Cratchet, we can also say, "Merry Christmas to all!"


Mr. Bob Kaplan (Parliamentary Secretary to Minister of Finance):: Mr. Speaker, I am not as big a target as Big Mac, and unfortunately, although my heart is wrenched by what the hon. member had to say tonight, I cannot offer the enormous tax cuts he has asked for, and I cannot remove the anti-inflation controls, but I can tell you this, Mr. Speaker, we would not be thanked by the people of Canada if we were in a position to dole out the kinds of tax cuts that he described to all sides, putting hundreds of dollars in everybody's pockets, if they turned around and went to the market place with them and found the other side of the coin, the inflation generated by
December 20, 1976

that kind of super stimulus which would take away from them the beautiful Christimas presents which we would want them to have.
As much as I might like to see the red tape removed and the officials who run the anti-inflation program laid off or fired, again I do not think the people of this country would thank us very much if they turned around and found that by this Christmas present, as we would like to call it, we have stimulated and rekindled inflation across this country and put people far behind. I would like to remind the hon. member that in this past year under the controls program there has been a significant increase in the real income of the average Canadian.


Sinclair McKnight Stevens: How about those who are out of work?


Robert Phillip Kaplan: The hon. member knows the statistics about the way real income has increased.
Before the Minister of Finance (Mr. Macdonald) can put forward his budget for the consideration of the House and the country, there are a number of things which ought to take place. First we ought to have some time to look at the effects on the economy of the doubling of the winter direct employment program of the government. We ought to have an opportunity to assess the impact of the decline in the external value of the Canadian dollar. That is something which has only taken place in the last few weeks, and it will have significant implications for the Canadian economy, for our
Adjournment Debate
export position, and for external pricing. This also ought to be assessed.
The first ministers have just completed a meeting of tremendous importance to the Canadian taxpayer so far as the position of the federal government is concerned because that meeting cost Canadian taxpayers more than was expected. That will affect the financial position of our government and will be one of the factors which will have to be taken into consideration. Then there will be the finance ministers' conference at the end of January, at which time there will be an examination of the positions of the provinces. Provincial ministers of finance will have the opportunity to put forward their cases, report on their regions, and indicate the kind of budget they would like to see.
I do not want us to be so moved by the eloquent pleas of the hon. member opposite, or so affected by the natural feelings Christmas evokes in all of us, that we would want to take some measures in the next few days as rash, ill-considered, and possibly in the very short run damaging to the average Canadian as those measures which the hon. member has asked us to put under the national Christmas tree.


Sinclair McKnight Stevens: And let the unemployed be damned.


Mr. Deputy Speaker:: The motion to adjourn the House is now deemed to have been adopted. Accordingly, the House stands adjourned until tomorrow at 2 o'clock p.m.
Motion agreed to and the House adjourned at 10:29 p.m.


END OF VOLUME II