1977-12-09

Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, I rise to move a motion under Standing Order 43 on a matter of urgent and pressing necessity. In order to overcome our trade deficit of $11 billion a year in manufactured products-the ones that produce jobs-we must improve our productivity, and to do so, we must offer incentives which will persuade producers that they will be able to pay for the new plant, machinery and production systems they will have to buy in a reasonably short space of time, and in this way make it as easy as possible for them to make the usually high expenditures involved. Therefore, I move, seconded by the hon. member for Edmonton Centre (Mr. Paproski):
That the government allow all capital expenditures involved in improving productivity to be written off in one year; and second, a plant to be rewarded in the form of a cash bonus at the end of the year in direct proportion to its increase in productivity during the year.
By improving our productivity, we can lower costs and selling prices, and in this way greatly increase sales of our manufactured products.


Mr. Speaker:: Presentation of such a motion for debate requires unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.



LABOUR CONDITIONS


Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under Standing Order 43 to move a motion, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That since the British North American Bank Note Company is, according to the federal government's status of women co-ordinator, in clear violation of the principle of equal work for equal value, which is an integral part of the new
Canadian human rights legislation, this parliament calls on the minister responsible for the purchase of bank notes to stop such purchases from the British North American Bank Note Company until that company settles its labour dispute by paying its women employees wages equal to those paid to men doing similar work.


Mr. Speaker:: Pursuant to Standing Order 43, presentation of such a motion can be done only with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.



CANADA ELECTIONS ACT


Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, under the provisions of Standing Order 43, I ask for the unanimous consent of the House to introduce a motion dealing with an important matter of pressing necessity.
Considering that under the constitution the date of the general election is determined according to the whims of the Prime Minister; considering that this procedure is obsolete and has an effect on the national economy due to the suspense experienced by those who have an economic and financial impact, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That the House direct the government to introduce in the House a bill aimed at including in the Statutes of Canada a provision stating that from January 1978 the federal general election will be held every four years at a date set under the legislation.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
80027-40%

December 9, 1977
Indian Affairs
[DOT] (UI2)



THE CANADIAN ECONOMY


Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. As the Prime Minister (Mr. Trudeau) has now returned from his visit to the capitals of the nation I move, seconded by the hon. member for Vegreville (Mr. Mazankowski):
That this House request the Prime Minister to make an immediate statement on motions as to the state of our economy and on what new measures he intends to institute forthwith to relieve our unemployment, lessen inflation, narrow both our federal deficit and current account trade deficit and restore real growth in the country to its potential level.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



INDIAN AFFAIRS


Mr. J. R. Holmes (Lambton-Kent):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. The commission created by the Native Council of Canada in 1975 has recently reported its findings on the number of natives in jail. It has discovered that the major contributing factor to the disproportionate number of natives in jail is the lack of meaningful economic bases in the majority of communities from which the prisoners came. In view of the seriousness of the problem, which correlates with an unemployment rate of over 75 per cent in the native communities, I move, seconded by the hon. member for Egmont (Mr. MacDonald):
That the appropriate federal departments and agencies in consultation with the native communities meet immediately for the purpose of introducing programs to correct this serious problem.


Mr. Speaker:: The presentation for such a motion for debate can be done pursuant to Standing Order 43 only with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.



VACANCY

Mr. Speaker:: I have the honour to inform the House that I have received a communication notifying me that a vacancy has occurred in the representation, namely, Robert J. McCleave, Esquire, member for the electoral district of Halifax-East Hants, by resignation.
Accordingly, I have addressed my warrant to the Chief Electoral Officer for the issue of a new writ of election for the said electoral district.



ORAL QUESTION PERIOD


Miss Flora MacDonald (Kingston and the Islands):: Mr. Speaker, my question is to the Prime Minister. Since this is his first opportunity to report to the House following the completion of his visits to the provincial capitals and since I know he will want to divulge to the House any concrete plans he has arrived at with the provincial premiers, would the Prime Minister inform the House as to the dates, the format and the topics of discussion at the forthcoming federal-provincial conference which have been arrived at and agreed upon with the first ministers?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, I will be tabling later at the proper point, according to the rules of the House, copies of my letters to all the premiers on this matter. I would gladly table them now if the House desires it, but I certainly can answer in a sketchy way the questions of the hon. lady. We are suggesting a conference at the first ministers' level on February 13, 14 and 15. The dates are not absolutely final yet, but it looks as though those will be the dates upon which all the premiers and myself can meet in Ottawa, hopefully in an open meeting.
The agenda will cover, obviously, the economy and its various aspects. The final agenda will not be established until the premiers have put forward their suggestions to me in writing and we have agreed upon them, but the proposed agenda would cover general discussions of the economy and a series of reports on various sectors of the Canadian economy by region upon which the first ministers will attempt to take action resulting in increased jobs in Canada and an upsurge in the economy.


Mr. Speaker:: The Prime Minister has suggested that the tabling of the documents, which would normally be done later during routine proceedings, might be done now. I presume that
December 9, 1977

the House gives its consent to that. Perhaps with the consent of the House the Prime Minister could table them forthwith.


Some hon. Members:: Agreed.
[DOT] (MI7)


PROPOSED CONFERENCE OF FIRST MINISTERS-REQUEST FOR ASSURANCE CORRESPONDENCE CONTAINS ALL DETAILS OF AGENDA
Flora Isabel MacDonald: A supplementary question, Mr. Speaker. I should like to ask the Prime Minister to give the House the assurance that this exchange of correspondence which we have not yet had an opportunity to see will contain all the details I have asked for and that he will not be giving additional details later this day at a press conference which he would deny to the House of Commons?


Pierre Elliott Trudeau: Mr. Speaker, I am sure hon. members opposite will be every bit as intelligent as the press in asking questions and I shall try to be every bit as co-operative.


THE CANADIAN CONSTITUTION
Flora Isabel MacDonald: Mr. Speaker, having given that explanation, I trust that the Prime Minister will remain so that we will have an opportunity on motions to put these questions when we have had an opportunity to read the correspondence. I should like to ask him a further question. In view of the fact that press reports on the Prime Minister's discussions with the premiers have focused on matters relating to the economy-something we in the official opposition have been saying for some years is the most serious problem in the country-did the Prime Minister during his discussions with the provincial premiers arrive at any agreement with the first ministers on when a conference on constitutional reform will be held? Did he arrive at any agreement on subjects like patriation, an amending formula or jurisdictional changes?


Pierre Elliott Trudeau: Mr. Speaker, unlike the official opposition which has been saying the economy is important for some years, we have been saying it is important for the entire life of the government.


An hon. Member:: It is important to the life of the government.


Pierre Elliott Trudeau: For that reason discussions were centered mainly on the economy. The letter I sent the premiers refers essentially to a meeting on the economy. No mention is made of any further meeting on the subject of the constitution or national unity. We have, of course, discussed these matters but there is no plan for a meeting at this time.
Oral Questions


THE CANADIAN ECONOMY
Sinclair McKnight Stevens: Mr. Speaker, my question is to the Prime Minister. Following his meetings with the provincial premiers, could the Prime Minister indicate if any consensus was arrived at during those meetings which would allow new measures to be taken immediately to relieve the unemployment situation in Canada?


Pierre Elliott Trudeau: Mr. Speaker, the premiers and I in those conversations did exchange information on measures which have been taken to relieve unemployment in Canada in the short-run. It will be clear to the hon. member from the tenor of the discussions that most premiers, like members of the government, realize that in the short-run they are likely to be faced with unacceptably high unemployment. That is why all discussions between the premiers and myself centered on the immediate problem.


Sinclair McKnight Stevens: Mr. Speaker, my supplementary question to the Prime Minister follows on his answer to my last supplementary. Would the Prime Minister indicate if what he has just said means it is inevitable that we will be living with something over 8 per cent unemployment in the coming months-possibly one million people out of work. Is there no short-term measure that he intends to institute to try to relieve that situation?


Pierre Elliott Trudeau: No, Mr. Speaker. The final part of the question contradicts my earlier answer. There are many shortterm measures we have taken-


Sinclair McKnight Stevens: New?


Pierre Elliott Trudeau: -and will continue to take. The first part about the likelihood of an unemployment figure reaching up to 8 per cent within the next months is already there.


FINANCE
Sinclair McKnight Stevens: Mr. Speaker, a final supplementary question to the Prime Minister. The Minister of Finance has repeatedly stated in this House that he has failed to reach agreement with the provinces with respect to the possible reduction of sales tax across the country. Would the Prime Minister indicate if that subject was discussed with the provincial premiers, and if so was there any agreement worked out with respect to reduction of sales taxes which would lower prices, create consumer demand, and hopefully lower the jobless level in the country?

December 9, 1977
Oral Questions


Pierre Elliott Trudeau: If the hon. member will recall the Minister of Finance did raise this question with his provincial counterparts in the October meeting they had together, and the federal government did propose such a measure be embarked upon jointly by both the federal and provincial governments, each paying half of the cost for the total reduction. This measure was not accepted or desired by the overwhelming majority of the provinces. Therefore, we did not proceed with it, and it was not raised in the meetings I have just had.


CAPITAL WORKS PROJECTS-SUGGESTION PROJECTS BE ANNOUNCED BEFORE CHRISTMAS
Mr. Stuart Leggatt (New Westminster):: My question is also directed to the Prime Minister, Mr. Speaker. The indications from the press on Wednesday were that the Prime Minister had stated he had won support from all ten provincial premiers for a massive job creating economic development program. In view of the fact in August the Prime Minister also won support from the ten premiers for job-creating programs, and more particularly a capital winter works program on a shared provincial-federal basis, can the Prime Minister announce today in the House that Canadians are going to receive at least some Christmas consolation that we will see some federal capital works projects for this winter before the Prime Minister has his election meeting with the premiers next February?


Pierre Elliott Trudeau: Mr. Speaker, the reports as quoted by the hon. member are not correct. There was no talk of an immediate setting forth of a massive job creation program. I answered in the House earlier today that we were in a series of meetings looking at mid-term measures for the recovery of the economy.


Stuart Malcolm Leggatt: Incidentally, while the Prime Minister was away there were approximately 3,000 more people laid off in the country. It might be more useful if he were here in the House.


Some hon. Members:: Shame!


INDUSTRY
Stuart Malcolm Leggatt: In any event, my question relates to the shipbuilding industry on the east and west coasts which have suffered probably the worst conditions since the depression. Approximately 90 per cent in that industry are idle. At the present time the cabinet has approved the building of 20 ships under the ship replacement program, six of which will either be built or purchased in foreign countries. Could the Prime Minister advise the House why, in view of the continuing unemployment crisis in Canada we cannot build all

of our ships in our own shipyards, and put some of our shipyard workers back to work.


Some hon. Members:: Right on!


Pierre Elliott Trudeau: I am not
aware of the particular program to which the hon. member is referring. Ships are being built around the world all the time. The hon. member is suggesting all ships should be built in Canada regardless of the cost. The hon. member would perhaps need a short course in economics, which I can arrange at a later date.


Stuart Malcolm Leggatt: I would be happy to accept a course in economics if the Prime Minister would accept a course in civil liberties from me.


INCOME TAX
Joseph Adrien Henri Lambert: Mr. Speaker, my question is directed to the Minister of National Revenue.
Considering that the minister has sent to hon. members a letter on individual income tax statements and that he has given directives to keep those statements highly confidential, would he tell the House whether or not this decision stems from the indiscretion of an official who is alleged to have revealed the confidential information from a personal tax return and, if so, could this official who would have failed in his duty be brought before the courts in order to reassure Canadian taxpayers?


Hon. Joseph-Philippe Guay (Minister of National Revenue):: Mr. Speaker, I would rather not comment on the details of the hon. member's question but, to give him a straightforward answer, and considering the letter I have sent to hon. senators and members, I would say yes. I am thinking of the double security measures within the department which I have already mentioned in the House.


THE CANADIAN ECONOMY
Mr. David MacDonald (Egmont):: Mr. Speaker, my question is for the Prime Minister. In light of the Prime Minister's recent meetings with the ten provincial premiers and the tabling of the letter today in which he talked about the development of a medium term economic program as well as a restructuring of the economy, and since there does not seem to be any specific definition as to what the Prime Minister has in
December 9, 1977

mind with regard to that, does the Prime Minister plan to elaborate on these concepts later today? Will there be a tabling in this House or a presentation by him or senior ministers with regard to this in order that members of this House and the general public will have some idea of the leadership being provided by the federal government?


Pierre Elliott Trudeau: Mr. Speaker, I will be happy to answer this and any other questions bearing on this matter. 1 am not planning an announcement. The project put forth in the letter is for a series of meetings at the federal-provincial ministerial level on various sectoral subjects. The so-called structural reform of the economy is not a concept we have entertained. We are talking about structural reforms in various sectors of the economy, but certainly no restructuring of the whole economy of Canada. The list of possible federal-provincial meetings is alluded to in the letter, but the final list has not yet been settled. I would indicate to the House that just as we had earlier this week meetings of the energy ministers of Canada, we will have meetings of ministers concerned with agriculture, fisheries, tourism and various other subjects upon which the premiers and myself have agreed or will agree.


David Samuel Horne MacDonald: Mr. Speaker, 1 believe the Prime Minister is trying to be helpful in this, but there is not much by way of information provided in this letter. In the letter he states "I believe if the process were to be explained carefully, there would be full public appreciation and understanding of what is being attempted." I would like to give the Prime Minister an opportunity to do this. He does not seem very able or willing to do it. Can he establish for members of this House what the priorities are, in which sectors? I, of course, am specifically concerned about the rapidly deteriorating situation of employment in eastern Canada, the growing separation question and the forecast in terms of employment levels in the four Atlantic provinces. Can the Prime Minister indicate what priority he attaches to which sectors, when he will be providing the specifics in terms of the initiatives proposed by the federal government, himself or his ministers, or whether any of these priorities were given to the premiers for their reflection?


Pierre Elliott Trudeau: Mr. Speaker, after the premiers have had time to consider my letter and the propositions that were discussed with them, we will want to make public as soon as possible the list and dates whereupon these various sectorial meetings will be held and where. I gave some examples of various sectors such as fisheries, energy, tourism, mining, manufacturing industries, where we intend to set up and continue a whole series of meetings of that nature. However, dates and subjects have not finally been agreed upon by all premiers. For that reason, I cannot announce them today. I can say that as soon as the list is final and the agenda has been agreed upon, I will hasten to acquaint the House with the results of it.


David Samuel Horne MacDonald: There is no doubt the Prime Minister is going to solve the employment problem in minis-
Oral Questions
ters' offices with additional staff rushing to meetings. I want to know whether any initiatives are going to be placed before this House before we adjourn in a couple of weeks. In light of the fact the House will be in recess for a month, will there be any opportunity for members to participate in a responsible way with regard to the initiatives being proposed by the federal government? Will there be any advance warning to the people of Canada about the proposals made to the first ministers, bearing in mind the amount of discussions that will take place under the shopping lists of departments and issues that the Prime Minister enunciated? It is not clear to me that the government knows what it is going to do with regard to the serious economic problems facing the country.


Pierre Elliott Trudeau: The government is always ready and anxious to hear constructive proposition from the opposition. The process we envisage will culminate in a federal-provincial conference to be held, open, I hope, in February. Until then the sectional meetings will proceed and, of course, in connection with any of the subjects which are debated the opposition will be invited to submit whatever constructive proposals it might have.


LOWER CHURCHILL FALLS PROJECT-POSSIBILITY OF FEDERAL AID IN CONSTRUCTION
Mr. James A. McGrath (St. John's East):: I should like to ask the Prime Minister this question specifically: Could the right hon. gentleman tell us what specific proposals were discussed in some of the meetings he attended in areas of high unemployment, especially in the five eastern provinces where half the unemployment in the country exists, for example, when he met with Premier Moores in the province which has the highest rate of unemployment? He alluded to the fact that now the arrangements for the pipeline in western Canada have been completed attention could be turned to energy development in eastern Canada. Is the government prepared, for example, to think in terms of a joint venture in developing power from the Lower Churchill Falls in Labrador?


Pierre Elliott Trudeau: The Department of Energy, Mines and Resources is presently studying a variety of projects which would be productive of energy in the eastern part of Canada. There are many such projects on the table. I have alluded to them or discussed some of them with the various premiers. However, it is not for the federal government to make an announcement today of a unilateral nature. It is for the provincial and the federal governments together to determine which of these projects is most likely to enhance Canada's future and, in particular, that of the Atlantic region. That is the whole object of the operation-to make preparations at the official and ministerial level before any announcement is forthcoming.

December 9, 1977
Oral Questions FISHERIES


PROPOSED STRUCTURAL CHANGES IN INDUSTRY-REQUEST FOR CLARIFICATION
James Aloysius McGrath: Given the importance, for instance, of the fishing industry in the Atlantic provinces, may I ask whether the Prime Minister discussed with the Atlantic premiers what he described as structural changes in that industry and can he tell us what he means by "structural changes"? This is now a matter of jurisdictional dispute.


Pierre Elliott Trudeau: The hon. member will realize that thanks to this government a 300-mile limit has been proclaimed-


Some hon. Members:: Two hundred.


Pierre Elliott Trudeau: Well, in the face of an opposition which belittles everything I am inclined to overstate the case. In these new circumstances there is obviously a need for a structural change so that our fishing industry can equip itself in the years to come to take advantage of this great new bonanza for Canada.


TARIFFS
Mr. Allan Lawrence (Northumberland-Durham):: A supplementary to the Prime Minister with regard to the nine pages of verbose generalities in that letter. I note that among other subjects not mentioned is one which certainly cannot wait until the middle of February-its importance applies right across the nation and is not restricted to regions or sectors. I refer to the great uncertainty in the nation concerning current negotiations in Geneva with respect to GATT and the very real sense, not only in the minds of the premiers but in the minds of people engaged in industry, that there has not been any meaningful consultation between industry, the provinces and the government with respect to Canada's position at the Geneva talks. Would the Prime Minister tell us whether the tariff negotiations were discussed at these meetings and, if so, whether he intends to make more meaningful consultative arrangements not only with the provinces but with industry right across the country with respect to those negotiatons?


Pierre Elliott Trudeau: The subject of GATT and international trade was discussed at every meeting, generally at my initiative. But nowhere did I meet the kind of negative criticism the hon. member makes in his question.


Allan Frederick Lawrence: The Prime Minister can say it is negative. But what I am asking for-and I do not think it is negative-is some indication that there is to be immediate and worthwhile consultation with industry across this country. The Prime Minister can interpret that as a negative approach but I am

asking him to tell us whether there is to be consultation with regard to these negotiations apart altogether from premiers' conferences, apart altogether from conferences of officials.


Pierre Elliott Trudeau: I described the question as negative because the hon. member in his preamble indicated there had been no such consultation. On the contrary, we have received from many of the provinces many detailed briefs on this subject. We have responded to them and discussed them and made provision for further discussion.


FUNDY TIDAL POWER PROJECT-POSSIBILITY OF CONSTRUCTION
Mr. Lloyd R. Crouse (South Shore):: One brief supplementary, Mr. Speaker. During the discussion with Premier Regan in Nova Scotia did the Prime Minister, in the light of the high level of unemployment in that province and the reluctance of industry to locate in an area where there is not a sure supply of energy at a reasonable cost, discuss the possibility of making a start on the Fundy tidal power project which would put a lot of our people to work and, in the long run, encourage industry to establish itself in Nova Scotia in particular and in Atlantic Canada in general?


Pierre Elliott Trudeau: Yes, Mr. Speaker, this subject was raised and discussed along with other energy projects. The feeling was expressed regionally that it was a good thing the government has taken the initiative in carrying out several studies in depth of the possibilities of Fundy tidal power and that we now possess the basic information to permit us to make a more informed decision.


TARIFFS
Mr. Jack Murta (Lisgar):: Mr. Speaker, my question to the Prime Minister concerns the negotiations in Geneva. Bearing in mind that those engaged will be getting down to serious talks some time in the New Year can the Prime Minister outline to the House the government's negotiating strategy, at least in general terms? We on this side have received requests for information along these lines not only from the provinces but from representatives of industry and agriculture.


Mr. Speaker:: Order, please. I doubt whether an answer of that kind could be given within the constraints of the question period, though the Prime Minister might wish to try.
December 9, 1977


RESIGNATION OF MEMBER FOR HALIFAX-EAST HANTS
Pierre Elliott Trudeau: Mr. Speaker, 1 am sure members on the other side of the House, as well as those in my own party, would like to join me in wishing a fond farewell to the hon. member for Halifax-East Hants when he was such an excellent Deputy Speaker when he served in that capacity.


Some hon. Members:: Hear, hear!


SUPREME COURT
Mr. Louis Duclos (Montmorency):: Mr. Speaker, my question is directed to the right hon. Prime Minister. In light of the decision given last week by the Supreme Court of Canada which confirms the exclusive jurisdiction of the federal government in matters pertaining to cable television; and also in light of the dissent expressed by the three judges from Quebec who sit on that court, can the Prime Minister tell the House whether, in his opinion, the credibility of the Supreme Court of Canada in constitutional matters is threatened by that situation, especially in the eyes of Quebecers? In addition, can he tell us whether he would be willing to suggest changes with regard to the participation of the provinces in the appointment of judges to the Supreme Court of Canada, changes which could even go beyond what he proposed in the Victoria Charter or, again, to the provinces in the spring of 1976?


Pierre Elliott Trudeau: Mr. Speaker, with regard to the first part of the question concerning the credibility of the Supreme Court of Canada, I doubt that the citizens of Quebec, provided they are well informed, would reach that conclusion. We need but consider, Mr. Speaker, the fact that this decision of the Supreme Court confirmed that of the Court of Appeal, that is, a provincial tribunal whose decision, unless I am mistaken, confirmed a decision of the Superior Court of the province of Quebec. In other words, the various levels of jurisdiction reached the same conclusion.
Concerning the second part of the question, Mr. Speaker, during the meetings I have had with the provincial premiers, we did in fact discuss the possibility of various reforms, including the procedure for appointing judges to the Supreme Court. I must say that no province made any formal or specific proposal to me in that regard; on the other hand, we did make some suggestions, namely those of the Victoria conference mentioned by the hon. member. We are anxious to discuss the matter further with the provinces when they have had time to formulate a few proposals on their own in that regard.
Oral Questions


NORTHERN AFFAIRS
Mr. Wally Firth (Northwest Territories):: Mr. Speaker, I have a question for the Prime Minister. About two or three weeks ago I met with the minister of transport of Alberta to discuss the idea of building a gravel highway from Fort McMurray to Fort Smith in the Northwest Territories. I find that the Alberta government has done some studies on this question. I would ask the Prime Minister whether his government would support such a project.


Mr. Speaker:: Order, please. The hon. member might want to seek an opportunity to rephrase that kind of question, but he is clearly making a direct representation as opposed to asking a question.


THE CANADIAN ECONOMY
Mr. James Gillies (Don Valley):: Mr. Speaker, I have a question I would direct to the Prime Minister. While I have only had a cursory glance at the letter, is it the Prime Minister's view that what is suggested in the letter represents a major change in the direction of economic policy-making in the country?


Pierre Elliott Trudeau: Mr. Speaker, it depends on what you consider "major". Of course, 1 suppose for Conservatives it would appear to be major.


James McPhail Gillies: A supplementary question, Mr. Speaker. I think all Canadians would like to see some changes made in the direction of policy making. What I was really trying to find out from the Prime Minister concerns a matter which I think is very important, and it is this. Is the government moving away from reliance on basically macro-economic policies, major national policies, tax and fiscal policies, to more of a micro development in terms of doing things for specific sectors? Is that the direction in which the government is moving?


Pierre Elliott Trudeau: Well, Mr. Speaker, I think this is a very serious question. I would want to make sure that nothing in my answer could be construed as indicating that we are moving to a new society of any kind.


Some hon. Members:: Oh, oh!


George Harris Hees: Wait till Christmas Eve, Pierre.


Sinclair McKnight Stevens: How about a "jobless society"?


Pierre Elliott Trudeau: If the hon. member looks at the proposed agenda, he will see that we are concerned with both levels of

December 9, 1977
Oral Questions
preoccupation. There will be discussions of a macro-economic nature, but many of these proposals will, in effect, be attempting to ensure more efficient and effective structures of the
macro-economy.


SUGGESTION DISCUSSIONS BE HELD WITH VARIOUS SECTORS- GOVERNMENT POSITION
James McPhail Gillies: A final supplementary, Mr. Speaker. From the discussions at the conference there are bound to arise matters of great interest by sector. Would the Prime Minister consider holding a national conference which would involve representatives from the sectors discussing economic policy for individual sectors, such as mining, fishing and so on, thus involving the private sector in the process as well as the public sector?


Pierre Elliott Trudeau: Yes, Mr. Speaker. This very intelligent and constructive idea was explained in some detail in the government's policy paper last year, "The Way Ahead", and in the "Agenda for Co-operation". The hope was expressed there that there would be the type of consultation, the kind of consultative forum, to which the hon. member is alluding. We have run into some difficulty in that the CLC has cut its willingness to participate with the federal government and the management side in these discussions; but we are still hopeful that they will be able to resume in some more particular forum rather than in a general forum.


PERCENTAGE OF GROSS NATIONAL PRODUCT ABSORBED BY GOVERNMENTS-DISCUSSION WITH PROVINCES ON PROPER PERCENTAGE
Mr. Walter Baker (Grenville-Carleton):: A question for the Prime Minister, Mr. Speaker. The letter deals basically with the relationship to the economy of the private sector, although there is some reference to the public sector. In the course of the Prime Minister's meetings with his colleagues in the provinces, did the Prime Minister discuss that part of the gross national product, now up to 43 per cent, which is absorbed by government, really the highest jump of any industrialized nation? Was any agreement reached by the Prime Minister and his colleagues on what might be done about this; and was any target set as to what would be the appropriate portion of the gross national product to be occupied by government?


Pierre Elliott Trudeau: Mr. Speaker, the subject was very present in our meetings with the premiers.
I believe the hon. member is exaggerating the figure when he says it is 43 per cent; I believe it is presently closer to 40. The position has been taken by the federal government and shared,
I would say, by most provincial governments that the share should be brought under control. Once again, in the policy statement we made in the publication "The Way Ahead" we indicated that it was our desire to reduce the growth of the public service and of the public sector. The hon. member will realize, of course, that we have done this in the past two years,

reducing the growth of the public service to something under one per cent.
The provinces have different views, of course, about the final figure which should be considered as an objective, but I think it is fair to say that on one point, the point of considering the government as an employer, we are all determined to ensure that public service total compensation not be permitted to surge way out of line with compensation in the private sector.


Walter David Baker: A supplementary question, Mr. Speaker. The Prime Minister indicated that there was some concern among the ministers as to bringing this aspect under control. Was there any consensus reached at the conference between the Prime Minister and the first ministers as to what the appropriate target might be? Was a consensus reached in this cross-Canada tour as to this very important question?


Pierre Elliott Trudeau: Mr. Speaker, if the hon. member has in mind a precise figure as an objective, the answer is no. Various premiers have different views on what should be done in their province. I repeat that the over-all concern was great enough that there was a consensus on .the desirability of having the respective ministers of the treasury or other relevant departments in the provincial case come together with the Minister of Finance to attempt to reach such general goals as the hon. member is seeking.


INQUIRY OF THE MINISTRY
Hon. Robert L. Stanfield (Halifax):: Mr. Speaker, my question is for the right hon. Prime Minister. I gather from the letter that the sectorial meetings will be between his ministers and ministers of the provinces, with a view to suggesting some mid-term strategies within those sectors. I would simply ask the Prime Minister what in the world his ministers are doing.


NORTHERN AFFAIRS
Walter (Wally) Firth: Mr. Speaker, I should like to direct a question to the Minister of Indian Affairs and Northern Development concerning the idea of building a gravel highway from Fort McMurray to Fort Smith in the Northwest Territories, a project which the government of Alberta has been studying and is seriously interested in. Is it the intention of the minister and his government to help in the cost-sharing of this project?


Hon. James Hugh Faulkner (Minister of Indian Affairs and Northern Development):: I am prepared to look at that, Mr. Speaker. I have had discussions with the hon. member about it but frankly I thought priority should be given to the Liard
December 9, 1977

highway. Given a period of restraint, we will have to decide where our priorities are. That is where mine are at the present time.


PROPOSED CONSTRUCTION OF HIGHWAY BETWEEN LIARD AND FORT NELSON-DATE OF DECISION ON FEDERAL AID
Walter (Wally) Firth: Mr. Speaker, my supplementary question is directed to the President of the Treasury Board. Has a decision been made regarding the building of a highway to link Liard with Fort Nelson? Is the answer yes or no? If the answer is no, when can we expect a decision on that matter?


Hon. Robert K. Andras (President of the Treasury Board):: Mr. Speaker, that question should be directed to the Minister of Indian Affairs and Northern Development.


LABOUR CONDITIONS
Mrs. Ursula Appolloni (York South):: Mr. Speaker, my question is directed to the Minister of Labour. A recent editorial in the Toronto Star reports that 13 million man-days were lost last year due to illness and injury. As these Figures obviously beg prompt preventive measures, can the minister tell the House when he plans to set up his proposed centre for occupational health and safety?


Hon. John C. Munro (Minister of Labour):: Mr. Speaker, I hope legislation comes before the House early in the new year. That particular legislation has some degree of pertinency with reference to Bill C-8, which contains provisions for the setting up of health and safety committees at the plant level, as well as certain rights to the workers when conditions of work are perceived as unsafe. I hope the House will consider that particular legislation soon.


TARIFFS
Mr. John C. Crosbie (St. John's West):: Mr. Speaker, I have a very specific question for the Prime Minister. There have been many calls for more involvement from the non-government sector in advising our trade negotiators at GATT. Will the Prime Minister agree to representatives of commodity and industrial organizations sitting in on the negotiations at GATT in order for them to be involved in the actual negotiations, as is being done in the United States?


Pierre Elliott Trudeau: Mr. Speaker, the first part of the hon. member's question was not clear; but
Oral Questions
I will take notice of it and perhaps raise it with the Minister of Industry, Trade and Commerce.


SUGGESTED PROTEST TO UNITED STATES ABOUT TALK OF FREE TRADE
John Carnell Crosbie: Mr. Speaker, this is a suggestion which was made by the Minister of Agriculture in a speech on November 29. Will the Prime Minister also consult with the Minister of Agriculture who said: "Representatives of commodity organizations and industrial associations should sit in at GATT"?
My supplementary question is: has a diplomatic note been sent to the United States complaining of the United States ambassador running around talking about free trade, in accordance with the statement of the Minister of Agriculture on November 29 when he made a speech in Hamilton? He said that he was "sick and tired of the U.S. ambassador running around talking about free trade".


Pierre Elliott Trudeau: Yes, Mr. Speaker.


AIR TRANSPORT
Mr. Don Mazankowski (Vegreville):: Mr. Speaker, I should like to direct a question to the Minister of Transport regarding aviation safety. The minister has stated in the House that the very important matter of civil liberties respecting both the carrier and the citizens of that carrier service are most important in the enforcement of air regulations. Also he indicated that these factors must be taken into consideration when applying the regulations, particularly with respect to the suspension of a licence. For the purpose of clarification, is the minister suggesting that providing the service and keeping the carrier in business are more important, or of equal importance, to ensuring that the carrier is carrying out a safe operation? Or, does it imply that in some instances regulations can be overlooked because they are not mandatory in carrying out a safe operation? Is this an area where there may be room for political interference?


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, obviously safety is an overriding consideration. The regulations and the degree of safety implicit in them is very clear evidence of this. The point I was making, which is referred to in the correspondence from my officials at different times, is that to give inspectors the power on their own judgment to close down a service, without going through due process of law, is clearly a very strong level of power to have in the hands of any official or person, without giving a chance to appeal or to go to court before the effects of the judgment are suffered. It must be understood that what was in issue was whether our licensing inspectors who find something wrong are able to impose a penalty upon a carrier by closing that carrier down, with

December 9, 1977
Oral Questions
resulting serious effects for the carrier and the communities served, without having first the judicial process which would give the carrier and the community the right to make their case. It is only in that narrow area that hon. members opposite should have seen the very important point ensuring that the civil liberties of the subjects are defended before penalties are imposed.


PROPOSED PUBLIC INQUIRY ON ENFORCEMENT OF SAFETY REGULATIONS
Donald Frank Mazankowski: Mr. Speaker, the hon. Minister is not in a law class right now. There is a great deal of uncertainty and confusion in the application and the enforcement of the regulations. Since it is not clear in the minds of those people who are charged with enforcing the regulations, is that not a good case for having this matter referred to a public inquiry, or at least referred to a parliamentary committee so that the matter can be fairly aired? Obviously there is a conflict. The conflict is weighing the matter of civil liberties against the primacy of air safety. The minister has not clarified that for me, for any member of the House, nor for the public, in particular the passengers who are using that service. Will the minister seriously consider a public inquiry into this whole matter, or at least table the document in order for us to have a look at it?


Otto Emil Lang: Mr. Speaker, I hesitate to try to clarify it too much for the hon. member, because when I do he suggests I am giving him a law lecture. From his question and his lack of knowledge as to how the system works, it is clear a few extra lectures would be useful.
There are some very important issues in terms of civil liberties that perhaps should be looked at by a parliamentary committee. In the meantime, we have had an investigation by officials of my department. Surely hon. members opposite have to agree, because of the report furnished to the public by the Globe and Mail, that the investigation was very thorough and revealed significant problems. These significant problems related to the way the regulations were enforced, and also that there was a lack of inspectors. We moved immediately to add to the number of inspectors. We have passed the necessary regulation to transfer some power to regional directors to suspend operators' licences and the like, in order to make enforcement more effective. In other words, it is very prompt action to ensure safety will be guaranteed. On the other hand, if the civil liberty question is a problem, we will be glad to look at that further.


FEDERAL-PROVINCIAL RELATIONS REASON FOR FAILURE TO CONSULT TERRITORIES ON ECONOMIC CONDITIONS
Mr. J. R. Ellis (Hastings):: Mr. Speaker, my question is directed to the right hon. Prime Minister. In light of the

continued and growing reliance on the resources of Canada's north, why were the territorial councils not consulted in the Prime Minister's across-Canada quest for consensus?


Pierre Elliott Trudeau: Mr. Speaker, the hon. member will realize the constitution of Canada does not provide provincial status to the territories. They come under the direct jurisdiction of this House, and particularly that of the Minister of Indian Affairs and Northern Development.


John Raymond Ellis: Mr. Speaker, my brief supplementary is for the Prime Minister. Does he not feel, however, that the territorial councils might have a different view than the minister, and that they might be able to contribute something to the quest for consensus?


Pierre Elliott Trudeau: Of course, Mr. Speaker.


PROPOSED CONFERENCE OF FIRST MINISTERS-REQUEST FOR ASSURANCE PREMIERS WILL ATTEND
Mr. J. P. Nowlan (Annapolis Valley):: Mr. Speaker, my question flows from the letter tabled by the right hon. Prime Minister. In the discussions, does the Prime Minister have assurances from the ten premiers that they will attend the first ministers' conference, and that their respective ministers will attend the sectorial meetings proposed in the letter?


Pierre Elliott Trudeau: Mr. Speaker, would the hon. member please repeat his question?


John Patrick (Pat) Nowlan: Mr. Speaker, the letter confirms a lot of the discussion the right hon. Prime Minister had with the ten premiers. Is this letter confirming in effect what has been tentatively agreed upon between the Prime Minister and the ten provincial premiers and in effect do we have the assurance that all premiers will attend both the first ministers' conference and the central meetings?


Pierre Elliott Trudeau: Well, Mr. Speaker, barring the upset of any government between now and February, the premiers and ministers said they will be there.


John Patrick (Pat) Nowlan: I did not quite get the first part of the Prime Minister's answer but I will come to the second part of the question and try to summarize what this letter said. Is it fair to say that after the three weeks of meetings in the ten provincial capitals the Prime Minister had nothing specific to put before the provincial premiers? Judging from the thrust of his letter there was nothing specifically put before the central meetings by the federal ministers.


Pierre Elliott Trudeau: No, Mr. Speaker.


Jack Burnett Murta: Mr. Speaker, I rise on a point of order. My point of order relates to the question period, and I hope the Prime Minister will remain in the House for just a moment. It
December 9, 1977

has to do with my question on the negotiating strategies at Geneva about which we were questioning him. I feel it is a serious question, certainly one of the most serious questions that can be posed right now.
In my opinion, the answer would not have to be any longer than a good many answers in the House. I think the Prime Minister indicated he was willing to rise and at least give as much of an answer as he could to my question. I am wondering if I could be permitted to request the Prime Minister to give an answer to the question in terms of the negotiating strategies in Geneva, and Canada's position?


Mr. Speaker:: Order, please. The hon. member raises a point which I think is well taken. His question was seeking very general information on strategy or policy, which is not a proper question for the question period although I could not anticipate the length of the answer. However, I have some regret that I did not give the hon. member an opportunity to put a supplementary question in which he could have been more precise. As the hon. member said, the Prime Minister did want to give some kind of reply. Under the circumstances, if there is a minute now, perhaps the House could give its consent to allow the Prime Minister to give a brief answer. The question was put by the hon. member for Lisgar. Perhaps, with the consent of the House, he might be permitted to put a supplementary question to the Prime Minister.


TARIFFS
Jack Burnett Murta: Mr. Speaker, if I have the consent of the House, I should like to put a supplementary question to the right hon. Prime Minister in relation to Canada's negotiating strategy at the Geneva talks. Could he outline to the House the areas of discussions he had with the provincial premiers, and could he outline to the House what position Canada has taken in the Geneva negotiations which will evolve into final negotiations early in the new year?


Pierre Elliott Trudeau: I sense that the hon. member himself realizes that it would be inappropriate for the government to make public for all concerned the strategy we are going to follow in Geneva in order to attempt to get a better deal for Canada than others will get out of us. So I do not think I could answer that question, for strategic reasons.
With regard to my second answer, it is as you yourself said earlier, Mr. Speaker: it would take a great deal of time. But I could propose to the House, if it so wishes, to attempt to arrange general briefings perhaps by Ambassador Jake Warren who could meet with various caucus groups, if it would be helpful to them, to give them some outline of Canada's position, and perhaps when the Leader of the Oppo-
Order Paper Questions
sition gets back to the House or to Ottawa some time, he might want to suggest some arrangements along those lines.


Some hon. Members:: Hear, hear!



ROUTINE PROCEEDINGS


[Stage Direction]
First report of Standing Committee on Privileges and Elections, in both official languages-Mr. Collenette.
(Editor's Note: For text of above report, see today's Votes and Proceedings.)

[Stage Direction]
On the order: Government notice of motion:
December 7, 1977-The Secretary of State:
That, the document entitled "Legislation on Public Access to Government Documents" be referred to the Standing Joint Committee on Regulations and other Statutory Instruments; and
That a message be sent to the Senate to acquaint Their Honours thereof.
Mr. Speaker:: Pursuant to section 2 of Standing Order 21, this notice of motion is transferred to and ordered for consideration under government orders this day.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Yvon Pinard (Parliamentary Secretary to President of Privy Council):: Mr. Speaker, the following questions will be answered today: 226, 231, 237, 244, 249, 323, 466, 510, 536, 537, 538, 676, 687 and 690.
I ask, Mr. Speaker, that the remaining questions be allowed to stand.


Mr. Speaker:: Do the remaining questions stand?


Some hon. Members:: Agreed.

December 9, 1977
Order Paper Questions


Mr. McKenzie: 1.	What is the total number of persons under contract to the Machinery and Equipment Advisory Board and how many are retired public servants?
2.	What was the total amount in (a) 1975 (b) 1976 paid to those under contract and how much of this was to retired public servants?


Mr. Bernard Loiselle (Parliamentary Secretary to Minister of Industry, Trade and Commerce):: 1. None 2. Not applicable.


Mr. McKenzie: 1.	What is the total number of persons under contract to the National Design Council and how many are retired public servants?
2.	What was the total amount in (a) 1975 (b) 1976 paid to those under contract and how much of this was to retired public servants?


Bernard Pierre Loiselle: 1. None 2. Not applicable.


Mr. McKenzie: 1.	What is the total number of persons under contract to the Northern Transportation Co. Ltd. and how many are retired public servants?
2.	What was the total amount in (a) 1975 (b) 1976 paid to those under contract and how much of this was to retired public servants?


Otto Emil Lang: 1. None 2. (a) and (b) None.


Mr. McKenzie: 1.	What is the total number of persons under contract to the Textile and Clothing Board and how many are retired public servants?
2.	What was the total amount in (a) 1975 (b) 1976 paid to those under contract and how much of this was to retired public servants?


Bernard Pierre Loiselle: 1. There are no persons under contract to the Textile and Clothing Board.
2. Not applicable.


Mr. McKenzie: 1. For each year 1952 to 1976, how much has (a) CNR (b) CNR employees contributed to the railway employees' pension fund, excluding the cost of running the pension department, associated professional fees and the return on investment?
2.	Will Dr. Noel Hall's recommendation on the trusteeship of the Canadian National Railways pension fund be formally implemented to remove the trusteeship from the hands of the Directors and place it in the hands of someone completely independent and, if so, on what date?
3.	Notwithstanding the change in acturial assumptions in 1968 whereby the unfunded liability of the CNR pension plan was reduced from $671 million to $300 million, does the $371 million difference represent any of the pre-1952 liability in respect of the obligation of CNR to match employees' contributions under the 1935 pension plan?


Otto Emil Lang: The Management of Canadian Railways advises as follows: 1. Following are the contributions by years to the CN Pension Fund made by the CN and by its employees:
	CN	Employee
Year	Contributions	Contributions
	(millions)	(millions)
1952	16.200	2.2751953	17.400	1.0121954	21.600	13.2021955	31.000	16.4431956	32.000	12.9351957	31.400	12.4761958	31.700	12.6171959	31.400	16.5351960	20.300	18.7991961	22.600	19.3501962	26.200	19.9441963	28.100	19.6321964	29.000	20.4401965	31.900	20.9861966	38.600	21.2021967	42.000	22.3991968	44.200	21.0711969	31.600	22.8411970	33.200	25.3661971	39.500	30.6531972	53.700	35.7031973	87.700	36.9231974	95.900	47.8971975	109.500	51.6101976	141.800	50.0582.	CN cannot identify any additional benefit or security which would accrue to its employees if the Trusteeship of the CN Pension Fund were changed. The General Chairmen's Association has formally informed CN that it is opposed to the CN Pension Fund being administered by an outside trust company as proposed by Dr. Noel Hall.3.	Any obligation of the Company to match employees' contributions under the 1935 Pension Plan was not affected by the reduction in the unfunded liability from $671 million to $300 million. The full liability in this respect is included in the $300 million.

December 9, 1977


Mr. McKenzie: 1.	Has the National Design Council obtained (a) part-time (b) full-time employees from private employment agencies in (i) British Columbia (ii) Alberta (iii) Saskatchewan (iv) Manitoba (v) Ontario (vi) Quebec (vii) New Brunswick (viii) Nova Scotia (ix) Prince Edward Island (x) Newfoundland and, if so, in each case, how many?
2.	Are such employees paid from supplementary estimates and, if not, from what estimates are they paid?
3.	By province, what was the (a) average hourly rate paid to employment agencies (b) average hourly rate paid to employees (c) total amount paid by the National Design Council in (i) 1975 (ii) 1976?


Bernard Pierre Loiselle: 1. No.
2.	Not applicable.
3.	Not applicable.


Mr. Leggatt: In each fiscal year since 1970, what amount was spent in the Constituency of New Westminster by the Department of Labour and those agencies that report to it?


John Carr Munro: Cannot be answered by constituency, information only available by province.


Mr. Howie: As of November 1, 1977, how many persons were members of the Canadian Militia and how many were from New Brunswick?


Hon. Barney Danson (Minister of National Defence):: Canadian Militia Strength, 16,382; New Brunswick Militia Strength, 916.


Mr. Howie: By quarters, what was the real gross national product for Canada in (a) 1975 (b) 1976 (c) 1977 to date?


Bernard Pierre Loiselle: Statistics Canada reports that the real gross national product (in 1971 dollars) is as follows:
1st	2nd	3rd	4th	Quarter	Quarter	Quarter	Quarter	Year(billions of dollars)	Seasonally	1975	111.2	112.3	113.9	114.3	1.1Adjusted at	1976	118.0	119.0	118.6	118.4	4.9Annual rate	1977	120.3	119.6	not available	Not	1975	26.2	27.8	29.9	29.1	1.1Seasonally	1976	27.8	29.4	31.2	30.2	4.9Adjusted	1977	28.4	29.8	not available	
Order Paper Questions UNEMPLOYED CANADIANS


Mr. Howie: How many Canadians were unemployed in October (a) 1974 (b) 1975 (c) 1976 (d) 1977?


Bernard Pierre Loiselle: Statistics Canada estimates of unemployment in October, based on the labour force survey, are as follows: (a) 1974, 466,000; (b) 1975, 643,000; (c) 1976, 679,000; (d) 1977, 787,000.


Mr. Howie: How many Canadians were enumerated in Canada's work force in October (a) 1974 (b) 1975 (c) 1976 (d) 1977?


Bernard Pierre Loiselle: Statistics Canada estimates of the labour force in October, based on the labour force survey, are as follows: (a) 1974, 9,802,000; (b) 1975, 10,161,000; (c) 1976, 10,342,000; (d) 1977, 10,707,000.
POST OFFICE DEPARTMENT-ANNUAL REVENUE TAKEN IN BY STEINBACH AND BEAUSfiJOUR POST OFFICES


Mr. Epp: 1.	What is the amount of revenue taken in annually by the (a) Steinbach (b) Beausejour Post Office?
2.	What is the annual profit and/or deficit of the (a) Steinbach (b) Beausejour Post Office?


Hon.   J.-J. Blais@Postmaster General: 1. The amount of revenue taken in for the Fiscal Year 1976/77 is as follows: (a) Steinbach, $230,771; (b) Beausejour, $77,293.
2. (a) and (b) Profit and/or deficit is not determined by individual post office but rather for the entire postal service program.


Mr. Howie: 1.	For the fiscal year 1976-77, how many strikes occurring within federal jurisdiction were illegal or represented a breach of contract on the part of the parties to a collective agreement?
2.	As a result of such strikes (a) how many man-days of employment were lost by (i) the strikers (ii) other workers (b) what were the financial damages suffered by the government?
3.	In how many of the strikes did the government initiate legal action against the strikers and, in each case, what was the outcome?


John Carr Munro: 1. Forty-six (Strikes occurring during the term of the agreements and presumed illegal).

December 9, 1977
Income Tax
2.	(a)(i) 45,800 man-days lost; (ii) Not known, (b) Not known.
3.	None.


Mr. Howie: As of November, 1977, how many (a) Canadian-owned companies (b) foreign-owned subsidiaries operating in Canada were actively conducting research and development in the electronics field?


Bernard Pierre Loiselle: As of March 1977, the latest date for which information is available, 284 out of 712 companies in the electronics sector were known to be conducting research and development programs. This would account for 78 per cent of all companies in the sector with annual sales over $300,000 and 35 per cent of these are known to be foreign-owned.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Wednesday, December 7, consideration in committee of Bill C-l 1, to amend the statute law relating to income tax and to provide other authority for the raising of funds-Mr. Chretien-Mr. Turner in the chair.
The Deputy Chairman:: When the committee rose on Wednesday, December 7, 1977, clause 14, with amendments, was under consideration. Shall clause 14 carry?
On clause 14-Inventory allowance.


Mr. Clarke:: Mr. Chairman, there is a provision in the proposed bill concerning terminal loss and depreciable property. Subclause (4) of the amendment reads:
That for taxation years ending after March 31, 1977, in respect of depreciable property, a taxpayer be required to deduct a terminal loss in the year in which it arises whether or not the taxpayer has a source of income in that year.
I can see that would present difficulties to certain taxpayers, and I wonder if the minister or the parliamentary secretary- since the minister does not seem to be here-could explain the reasoning behind that clause.


Mr. Lumley:: First of all, Mr. Chairman, before replying to the hon. member I want to apologize for the minister's absence. Unfortunately, he is stuck on the tarmac in New York, where he was speaking to some businessmen last night and this morning. We hope he will be here for this afternoon's session. However, he wants to apologize to the House for his inability to be here. I wonder if the hon. member would be kind enough to repeat his question.


William Hillary (Bill) Clarke: My question was with respect to the amended subclause (4) of clause 14. Can the parliamentary secretary give an explanation of the subclause, because I can see a number of instances where it would be a definite hardship on the taxpayer to deduct a terminal loss, especially in a year when he had no other income.


Edward C. Lumley: First of all, Mr. Chairman, I think we have discussed this clause. The hon. member should be aware that one of the important reasons for this clause was to move this out of the regulations and put it in the act. It was the result of representations made to the department and to the minister. That is an important change from the past.
The technical change simply transfers the terminal loss rules from the regulations to the act. This loss arises when depreciable property is disposed of for proceeds which are less than the undepreciated capital cost. The amendment also ensures that a terminal loss can be claimed by the taxpayer whether or not he still operates the business in which the assets were used. Technically, under the existing act the terminal loss after the year the business has ceased is not deductible.


William Hillary (Bill) Clarke: Is the parliamentary secretary saying that it is simply the same provision taken out of the regulations and put into the act?


Edward C. Lumley: Yes, Mr. Chairman. It also ensures that the terminal loss can be claimed by the taxpayer whether or not he still operates the business in which the assets were used. That is the new part of this section.


William Hillary (Bill) Clarke: That was my next question. It now extends the right to that deduction in the event there is no income from that same business? It is an extension to that degree, is it?


Edward C. Lumley: Yes, Mr. Chairman.


William Hillary (Bill) Clarke: Mr. Chairman, I am not sure if this matter relates to the proper clause. I will let the Chair decide that, because I do not know where else this could fit in. A number of times the minister has said there would be reductions in federal tax because of the amendments in this bill, that people would therefore have more income, that that would help stimulate the economy, and so forth. It has come to my attention that, with the changes which have been made in provincial income tax rates, the average taxpayer will in fact have no extra income in his hands because the provincial tax will in many cases more than sop up the reductions allowed by the federal government. In support of that, instead of a provincial rate of 32.5 per cent in British Columbia, we will have a rate of 46 per cent. I wonder if the parliamentary secretary can comment on that.


Edward C. Lumley: First of all, Mr. Chairman, that affects provincial taxation; it does not affect federal taxation. However, some of the changes referred to by the hon. member are because of changes in the fiscal arrangements act.
December 9, 1977


William Hillary (Bill) Clarke: I thought I had conceded that in my preamble. Of course it is a provincial tax, but it affects the federal tax. The minister claimed credit for granting a reduction of some $200 and that taxpayers would have this money in their pockets in January and February so that they could spend it and stimulate the economy. I believe it is also a fact that the new provincial rates came about through negotiations between the provincial and federal governments. My concern is twofold. This seems to be a result of negotiations with the federal government. Furthermore, it seems to give the lie to what the minister says; that taxpayers will have extra money in their pockets. Will they, or will they not? Can we find that out? Does the federal government take any responsibility for these negotiations?


Edward C. Lumley: The changes referred to by the hon. member are over and above the changes which were announced prior to the fiscal arrangements act changes.


Charles Robert Turner: Shall clause 14 carry?


Sinclair McKnight Stevens: Mr. Chairman, like the parliamentary secretary, 1 regret the fact that the Minister of Finance is not able to be with us today. Is the government proposing an amendment with respect to the clause we are now considering?


Edward C. Lumley: 1 understand that we have already carried two amendments, 14(1) and 14(2), but I stand to be corrected.


Sinclair McKnight Stevens: Mr. Chairman, the amendment to which I am referring is the second amendment which became part of Hansard on November 28. It is the amendment dealing with line 21 at page 22.


Edward C. Lumley: That was alleviated by the second amendment which we passed the other day, 14(2).


Sinclair McKnight Stevens: I take it, then, that the earlier amendment has now been superseded by the new amendment?


Edward C. Lumley: Yes, Mr. Chairman.


Charles Robert Turner: Shall clause 14 carry?


Sinclair McKnight Stevens: Mr. Chairman, if I may put you at ease, it will be a considerable time before clause 14 carries.


Charles Robert Turner: The Chair always remains cool at all times.


James Hugh Faulkner: Advance notice of a filibuster!


Sinclair McKnight Stevens: What do you know about it? You do not even know what bill we are discussing.


James Hugh Faulkner: I know a hell of a lot more than you do. A lot of people are impatient with you. You are a total washout. You are wasting our time and everyone's time.


Sinclair McKnight Stevens: Come on, give us some more.


An hon. Member:: Harold Cardinal is going to get you.
Income Tax


Sinclair McKnight Stevens: Mr. Chairman, my question to the parliamentary secretary arises out of an inquiry which I know has been put to the minister by a group of chartered life underwriters in Montreal. They are concerned about an amendment to section 20(1 )(c) which they feel has been made in what they regard as a subtle way. They referred to the amendment which is proposed by the government to section 138(12) and, if I may, I would like to read to the parliamentary secretary what these Montreal chartered life underwriters stated in order to get the parliamentary secretary's response. They stated the following:
In order not to attract attention to a change in section 20(1 )(c) of the act the department in a subtle way has amended section 138(12) to read "in this Section and in addition sections 20(1 )(c) and others etc."
This is so that attention will not be drawn to the fact that interest on a loan from a bank in order to buy an annuity will no longer be deductible.
We feel that this is an unethical procedure and should be brought to the attention of the Commons.
Would the parliamentary secretary, after consulting his officials, comment on this allegation raised by these Montreal chartered life underwriters?


Edward C. Lumley: Mr. Chairman, I am not aware of the specific letter to which the hon. member refers, but I understand from the officials that they will have to look at the details in that clause. They will bring an answer back to the House.


Sinclair McKnight Stevens: Can the officials indicate the thrust of the amendment with respect to section 138(12)? Does it, in fact, have an impact on the clause which is now before us?


Edward C. Lumley: Mr. Chairman, with your permission, we would like to come back to this specific matter.


Sinclair McKnight Stevens: One of the most important aspects of clause 14 is the question of the inventory allowance which we discussed last time this clause was before the House. What is the anticipated impact of the 3 per cent inventory allowance on industry? To what extent will it help reduce corporate liquidity problems? This is one of the stated reasons for allowing the 3 per cent inventory allowance. Could the parliamentary secretary give us some help on the extent that corporate liquidity will be improved?
.


Edward C. Lumley: Mr. Chairman, it is "guesstimated", obviously, that business liquidity will be improved by $300 million in the current year.


Sinclair McKnight Stevens: Is the only improvement in liquidity, in effect, the tax saving or loss, depending on which side you look at, industry will share with respect to this new 3 per cent provision? I understood the $300 million was a federal loss of income or revenue. Is there not a provincial loss of revenue, as well, that might improve the liquidity of industry?


Edward C. Lumley: Yes, Mr. Chairman, there will be a corresponding provincial loss as well.


Sinclair McKnight Stevens: I wonder if we could go further with that. My main question was: If the 3 per cent allowance with respect to

December 9, 1977
Income Tax
inventory is to help the liquidity problems of industry, what is the extent of that help? I understood the $300 million was simply the federal tax loss of revenue. Could the parliamentary secretary indicate whether there will be an additional provincial loss of revenue? If so, to what extent, and what is the aggregate benefit in terms of liquidity as far as industry is concerned?


Edward C. Lumley: Mr. Chairman, obviously, that will depend on the various provincial rates. We do not have those figures on hand. They can be obtained, however, if the hon. member wishes.


Sinclair McKnight Stevens: I think that would be helpful. Perhaps we could get an estimate on that during the luncheon recess. I should like to deal with the general question of whether the government regards this as a stop-gap. I think all members of the House acknowledge that industry has been put in a disadvantageous position with regard to inventory and the inflationary impact on earnings. In short, earnings are often reported which are artificial in the sense that they are not true earnings if inventory is taken into account. As I understand it, the 3 per cent formula that applies to inventory as of January 1 is a sort of stop-gap thing, realizing it is not the most satisfactory approach. Could the parliamentary secretary indicate if any alternative approach is being considered that would be more equitable than this shot-in-the-dark, 3 per cent allowance?


Edward C. Lumley: Mr. Chairman, as the hon. member indicates, a serious cash flow problem faces Canadian business today. Many approaches have been examined by our officials and discussed with industry, and this was the one that appeared would obtain the quickest results. Obviously, this will have to be monitored on a regular basis to see if it has achieved the desired results with respect to economic conditions in the future.


Sinclair McKnight Stevens: I take it that as of now the government has no immediate alternative to bring in with the next budget, for example?


Edward C. Lumley: The hon. member is correct.


Sinclair McKnight Stevens: I wonder if the parliamentary secretary could indicate the impact of the investment credit that is almost running tandem with the inventory allowance. I believe that at the time of the March 31 budget it was estimated the tax credit would result in a loss to the federal treasury of $485 million. Could the parliamentary secretary confirm if that is still the estimate, that the benefit of the tax credit will cost the federal treasury about $485 million?


Edward C. Lumley: That is still the best guess, Mr. Chairman. Obviously, it is still an estimate and perhaps later, if we approve some of these clauses, we will get to the investment tax credit and have a good discussion on it.


Sinclair McKnight Stevens: In order to give us the complete package, I wonder if the parliamentary secretary could indicate if the

$485 million is the best guess at the federal level? Is that the total impact of that credit, or is there also a loss of revenue at the provincial tax level on account of the investment tax credit?


Edward C. Lumley: Mr. Chairman, the investment tax credit does not affect provincial revenues.


Sinclair McKnight Stevens: Mr. Chairman, the parliamentary secretary may wish to hold this question until the minister returns. The day before yesterday I asked the Minister of Finance if he could indicate whether any consideration was being given, with respect to investment credits, to tying them to some employment condition in the sense that an investment credit would be forthcoming provided the company could show some job-creation, and also that investment credits be tied to first-decision situations. As I understand it, in many cases industry is looking on the investment credit as a bonanza. A company might have planned to spend $1 million; that decision was made two or three years ago, so the investment credit is really a $50,000 windfall income because this is not a new decision. Has consideration been given to having the investment credit carry a little more clout, in the sense of being linked to some type of employment standard or first-time investment standard, in order to ensure it will provide the stimulus needed in the economy?


Edward C. Lumley: Mr. Chairman, this was contemplated at the time and it was felt it would be better to have an employment credit independent of this as opposed to including it with the investment tax credit.


Sinclair McKnight Stevens: I take it that what is visualized is three or four main industry-related tax benefits. There is the inventory allowance of 3 per cent, an investment credit ranging from 5 per cent to higher levels, some kind of employment credit is contemplated which will be worth about $100 million, and the dividend tax credit has been sweetened. The last figures we had were back in March or April. Could the parliamentary secretary indicate what this package of business-oriented incentives or benefits will cost the federal treasury?


Edward C. Lumley: Mr. Chairman, if the hon. member will wait until after lunch, I will total the figures. At the moment, all we have are the figures stated on October 20 by the minister. Since we have not firmly decided on the details for the employment credit, it would be difficult to give the hon. member a more exact figure.


Sinclair McKnight Stevens: We will be very pleased to get the figure after lunch, Mr. Chairman. Do I take it there has been some change of thought with respect to the $100 million the minister referred to in his statement on October 20 with respect to the employment credit program?


Edward C. Lumley: No, Mr. Chairman.


Sinclair McKnight Stevens: Then what is the uncertainty to which the parliamentary secretary refers?
December 9, 1977


Edward C. Lumley: I just do not have the total of the figures. I do not want to give the figure off the top of my head. The first chance I have, 1 will add it up.


William Hillary (Bill) Clarke: I wish to follow up on my colleague's questions concerning the 3 per cent allowance on year-end inventories. I ask the parliamentary secretary if this is not an allowance which in some measure may overcome the effects of inflation on profits. First of all, why was a fixed rate of 3 per cent of year-end balances arrived at, when inflation was obviously much higher than that?


Edward C. Lumley: Mr. Chairman, this provision was made to assist the cash flow of industry. It was a judgment call, rather than a figure of 3 per cent.


William Hillary (Bill) Clarke: Could the parliamentary secretary tell us why some other method was not used? An arbitrary figure of 3 per cent of inventory surely affects different businesses in different ways. If, for example, a business has a large inventory and a small turnover, it would get a bigger benefit than a business with a small inventory and a large turnover. There are many other methods of accomplishing what I think the government wanted to accomplish by giving this allowance. One would obviously be by the last in, first out method.
If the attempt is really to enable businesses to match inventory costs with revenues, then surely the system of last in, first out would be more equitable, and therefore a preferable system. I am not sure that it would not be simpler, as well. Why was something like that not adopted?


Edward C. Lumley: As I indicated earlier, Mr. Chairman, many methods were discussed by officials. We looked at what other countries were doing. This method was chosen because it was very simple to implement. The LIFO method, which the hon. member refers to, is a very complicated method, and although that could still be discussed with respect to the future, in terms of alleviating the situation in the short-term it was decided to use the simpler method which would also be beneficial to both large and small corporations throughout the country.


William Hillary (Bill) Clarke: I am not sure it is any simpler, Mr. Chairman, to try to fix the rate at 3 per cent. But if that is the case, if it was a matter of simplicity, I am surprised that the government has finally concerned itself with simplicity in income tax matters, because there has not been any simplicity or equity in the last little while. When one is attempting to match costs, the most recently purchased goods are probably what one is selling in any event. I suppose we cannot except the parliamentary secretary to change his answer; we will have to accept it.


Edward C. Lumley: I don't know if the hon. member has taken a look at the LIFO method which is used in the United States. If he has, he will see very readily the complicated area which he is addressing. As you know, one of the points the government is trying to implement is to eliminate a lot of paperwork particularly for small businesses. When trying to solve some of the cash flow problems, we felt very strongly that the simpler
Income Tax
method would be the one most readily acceptable for small businessmen throughout Canada.


Sinclair McKnight Stevens: Mr. Chairman, dealing with subsection (5) of clause 14, there is some wording which I feel should have a little explanation. With respect to applications concerning companies with fiscal periods after the end of March 31, 1977, they then go into a formula that the 3 per cent inventory allowance which may be claimed is an arithmetic calculation based on 365 days. Could the parliamentary secretary indicate why this arbitrary March 31 cut-off is put in? I understand it is causing problems to people who have year-ends that are following in the short period defined here. Unfortunately, sometimes it is the smaller businesses and retailers falling into this period who are having difficulty living with the provision as it is now worded. Could the parliamentary secretary explain why we have the date March 31-beyond the obvious; it was budget night-or could we not simplify it and say January 1 and save the problem of the distinction that is obviously being made?


Edward C. Lumley: The hon. member is right when he indicates that this is a problem area. If you will allow me, I would just like to read specifically some of the reasons for the change. The original ways and means motion of March 31 indicated that the measure would only be applicable to taxation years commencing after 1976. Many representations were received pointing out that this was inequitable for those taxpayers whose fiscal periods commenced in 1976 but were substantially in 1977. In response, the scope was expanded to cover a taxation year which started in 1976, in which case the new inventory allowance would kick in on March 31, 1977. This means some companies could start receiving the inventory allowance up to three months later than other companies, but that minor imbalance would have been costly to avoid.


Sinclair McKnight Stevens: Mr. Chairman, I was wondering if the parliamentary secretary could indicate if any consideration is being given to perhaps relieving whatever the inequity is in time for the next budget.


Edward C. Lumley: After the first year, there will be no inequities, so there will be no consideration given to the hon. member's request.


Sinclair McKnight Stevens: My next question concerns the applicability of the 3 per cent allowance with respect to inventory. What is the position of a company that is newly incorporated, going into business during this, if you like, transition period? When may they claim a 3 per cent allowance on their inventory?


Edward C. Lumley: They will not have any opening inventory, Mr. Chairman, so obviously it will be the beginning of their second year of operation.


Sinclair McKnight Stevens: As the parliamentary secretary has agreed to give answers on three questions that we have put to him under section 14, I wonder if we could stand clause 14 and consider some of the subsequent clauses, with a view to returning to clause 14, hopefully, right after lunch.

December 9, 1977
Income Tax


Edward C. Lumley: I can answer one question now with respect to total revenue cost for these incentives to industry. If you look at page 4 of the March 31 supplementary papers tabled by the Minister of Finance, you will see there are basically three figures which total approximately $700 million. The first is the tax relief with respect to business inventories, of $275 million-this is the fiscal year 1977-78-the federal investment tax credit of $385 million, and the enhanced depletion for the high cost of oil and gas wells is approximately $20 million. I would agree to stand clause 14 until I obtain the other answers which the hon. member has requested.


Mr. Peters:: Because of the time limit and the shortness of time remaining, I would object to standing clause 14 unless we can come back to it at a specific time. I would suggest, if someone wants it stood, that we have an understanding to come back to it at 2 o'clock.


Charles Robert Turner: I believe the hon. member suggested we come back to it right after lunch.


Sinclair McKnight Stevens: Mr. Chairman, before we go to the next clause, assuming that we will be standing clause 14, I wonder if the parliamentary secretary could reconcile the figures he has just given us, the tax relief as far as inventory allowance of $275 million, and the investment credit of $385 million, with the earlier figures on which we all agreed, $300 million for the tax allowance on inventory and the investment credit of $485 million. I take it one is a short year, the remaining part of a fiscal year, whereas the other figures would be the total for a 12-month period.


Edward C. Lumley: Mr. Chairman, the figures I referred to are for the year 1977-78. Figures of $300 million for inventory allowance, $485 million for the investment tax credit, and $20 million for depletion in the current year, are for the first full year.


Charles Robert Turner: Is it agreed that we stand clause 14 and take it up again at two o'clock?


Some hon. Members:: Agreed.
On clause 15.


Sinclair McKnight Stevens: Mr. Chairman, before we deal with clause 15, perhaps the parliamentary secretary can give us a brief summary of what the thinking is at the departmental level with regard to this clause, and what they hope to achieve by the amendment.


Edward C. Lumley: Mr. Chairman, this is a technical change consequent on the extension of the investment tax credit to scientific research expenditures. Expenditures on scientific research, both of a current and capital nature, may be deducted in the year incurred. However, since the investment tax credit will now apply to such expenditures, the effective cost to the taxpayer is reduced. Thus, the amount deductible by the taxpayer is limited by this amendment to his net cost; that is,
[Mr. Stevens.J
the amount of expenditure minus the investment tax credit. This is consistent with the tax treatment generally accorded government grants. The cost reduction is also consistent with the treatment given expenditures on machinery and other capital property eligible for the investment tax credit. The credit in these circumstances reduces the cost that may subsequently be written off by way of capital cost allowances. For example, the 5 per cent with the investment tax credit will come right off the tax payable, and the other 95 per cent will be deducted on the income side.


Charles Robert Turner: Shall the clause carry?


Some hon. Members:: Agreed.


[Stage Direction]
Clause agreed to.
On clause 16-Election re: disposition of Canadian securities.
William Arnold Peters: Mr. Chairman, I would like to know from the minister the purpose of this amendment. As I understand it, there will now be an election for corporations and trusts, as well as individuals. Previously, it was only individuals. It is one thing to permit an individual to elect so as to guarantee that his eligible gains will be taxed as capital in nature. However, to grant such an election of lifetime duration to a corporation may show a severe want of prudence. Can I have some indication as to why this lifetime permission is being extended to corporations? I agree that by law a corporation can be called a person or an individual, but to give them the same kind of grant does not mean it will be once in a lifetime or for the duration of life.


Edward C. Lumley: Mr. Chairman, this clause is written not only to assist individuals, but primarily venture investment corporations.


William Arnold Peters: Mr. Chairman, this is really the point. There is some merit to it being granted to individuals. An individual can establish his eligible gains as a capital gain over a lifetime. As indicated by the students at Osgoode Hall, this will create a decrease in litigation arising from the ability to guarantee one's capital gains. It is likely to more than compensate that which will flow from this potential to develop schemes to guarantee capital gains while still ensuring capital losses. When an individual plays his income losses against his capital gains over a period of time, that is one thing. However, for a corporation to do it would indicate great difficulty in being able to develop new schemes to avoid paying taxes.
God knows, the corporations do not need more schemes to avoid taxes. Even if they are multinational corporations or Canadian-controlled, like INCO and Falconbridge, they have enough ways of doing this. I am interested in knowing how much money this will give to the corporations. What is the estimate? If there is no estimate, what is the justification for putting it in?


Edward C. Lumley: Mr. Chairman, we do not have an estimate with regard to this provision. Under the existing rules, a
December 9, 1977

number of investors faced the possibility that profits arising from the disposal of their investments would be taxed fully as ordinary income because of the frequency of transactions in securities or the speculative nature of the investment. This was a particular problem for the venture capital companies who frequently invest significant sums in the equity of small Canadian corporations. As I recall, during the second reading debate the NDP was encouraging the government to do everything it could for small business. This clause falls into that category. Also, these investment capital companies hope to sell shares at a profit once the business becomes established. This amendment is designed to remove any uncertainty faced by such investors.


William Arnold Peters: The amending clause disqualifies a trader or dealer in securities from making this election. This provision probably intended to refer to security brokers and not simply to individuals who buy securities. Nevertheless, the wording in this clause will provide unnecessary litigation that could be circumvented by removing this ambiguity. If it is for the purpose of allowing small businesses to get an advantage, that is one thing. However, this does not only apply to small businesses. We would have to get rid of the ambiguity and put in a designation as to how extensive we want it to go.
If it goes to the individual, that is perfectly all right. However, if it goes to large corporations as well as small ones, and we put them into the same category as the protection for the individual in relation to his capital gain, we may be providing a benefit that is almost incalculable.


Edward C. Lumley: Mr. Chairman, in order to alleviate the hon. member's concern-which I think is justified-dealers who trade in securities, banks credit unions-this provision does not apply to them. I assume this is what the hon. member is referring to.


William Hillary (Bill) Clarke: Mr. Chairman, I want to follow the questioning of the hon. member for Timiskaming. I apologize to the parliamentary secretary: I think I missed the first question. As I read subclause (2), it is only an individual, a resident taxpayer, who can make this election and shall be deemed to have capital gains or capital losses. At the moment, the individual may be subject to paying regular tax; that is, having his profits and losses included in his income. I am not clear as to the initial intent of the government for proposing this change. Perhaps we should start there.


Edward C. Lumley: Mr. Chairman, basically, there are two points to this particular clause. The first ensures that the proceeds of a life insurance policy are not treated as capital gains except to the extent that the policyholder has, through his insurance policy, invested in a segregated fund. Second, the amendment permits taxpayers to elect to treat profits on Canadian securities as capital gains. This provision will be of particular benefit to venture investment corporations, and in that sense it particularly affects small business.
Income Tax


William Hillary (Bill) Clarke: Is it possible that subclause (2) could be used to the peril of an individual taxpayer who makes an election? I presume it is one he makes for life. A taxpayer might find himself in a position where he was in the business of trading in securities. If he had not made that election, he would have the right to declare his income and losses in the regular way. What about the man who might find himself in such a position?


Edward C. Lumley: The hon. member is correct: it is a very difficult decision for an individual to make. However, it is one he must make at a particular time; he cannot change his mind halfway through the process.


William Hillary (Bill) Clarke: Election is optional: he could put a decision off until such time as he believes it would be to his own benefit?


Edward C. Lumley: It is optional to the extent that he could do it whenever he wished.


William Hillary (Bill) Clarke: How would this affect a man who treated his capital gains as profit without making an election? I presume he is not obliged to make one. What would happen if subsequently the Department of National Revenue decided he was in the business of trading in securities? Could he then make an election retroactive to the year for which he was under examination?


Edward C. Lumley: I would answer no, but I will verify that opinion. We cannot see any reason why that would be possible.


Sinclair McKnight Stevens: The parliamentary secretary has referred to venture investment corporations in relation to this clause. Could he tell us how they are defined? I do not see any definition in the Income Tax Act. Is this made clear somewhere in Bill C- II?


Edward C. Lumley: There is no definition in the act.


Sinclair McKnight Stevens: I think it would be helpful if we were given an outline of what the government has in mind when it refers to venture investment corporations.


Edward C. Lumley: Basically, we are saying this applies to any small company which operates in the manner described.


Sinclair McKnight Stevens: I had hoped we could get a closer definition than that. By "a small company," does the hon. gentleman mean that the venture capital corporation would be small, or does he mean that it would invest in small companies? Again, what is meant by "small"? I know "small" is supposed to be "beautiful", but what does the department have in mind, and when does a company become not small?


Edward C. Lumley: Basically, we have in mind any company which has a pool of funds for investment in small or medium-sized companies.


Sinclair McKnight Stevens: Would that include, for example, open-end mutual funds? Would it include closed-end investment corporations? I think we all know what open-end mutual funds are.

December 9, 1977


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
Income Tax
But would this cover an Argus-type holding company or investment company?
Edward C. Lumley: I would not call Argus Corporation a venture capital company. But it could take advantage of this procedure.


Sinclair McKnight Stevens: Did I hear the parliamentary secretary correctly? Did he say that Argus and similar corporations could take advantage of this provision?


Edward C. Lumley: Unless they are among those specifically excluded, such as dealers in securities, or trustees, banks, trust companies, credit unions, and so on, such as I mentioned in reply to a question by the hon. member for Timiskaming.


Sinclair McKnight Stevens: As there is further reference to venture investment corporations later in the bill, I am wondering whether, over the lunch break, the parliamentary secretary could arrange to let us have a better definition of what the department has in mind with regard to such corporations. 1 make this request particularly bearing in mind that legislation has been proposed by the government of Ontario looking to the special incorporation of such companies. It would be helpful to ascertain whether the federal thinking is to co-ordinate its tax arrangements with what the provinces may be doing in this field.


Edward C. Lumley: This was certainly one of the factors which was taken into consideration, but we would prefer to discuss that aspect when we reach the particular clause.


Sinclair McKnight Stevens: Could we not stand clause 16? I believe one of my hon. friends has a couple of questions to which he is awaiting answers. Maybe we could go on to the next clause.


Edward C. Lumley: Much as I would like to accommodate the hon. member, I would remind him we still have many clauses to pass, and we would prefer to complete consideration of the clause before us.


William Arnold Peters: Mr. Chairman, I, too, was surprised to hear the parliamentary secretary say that Argus Corporation could qualify under this clause in certain circumstances. I should like to ask about the position of a number of other holding companies, particularly those engaged in mining, the field in which I am most closely interested. Speculation there is not practicable at the present time, but if this capital gains requirement were modified to the extent that only 50 per cent were collected, we would probably get much more money into the mining field. I am interested in the position of Rob Roy which operates, I believe, under the Canadian Imperial Bank in the forest industry particularly.
May I call it one o'clock?
At one o'clock the committee took recess.


Charles Robert Turner: Order, please. When the House took recess at 1 p.m., the hon. member for Timiskaming (Mr. Peters) had the floor on clause 16. However, we agreed to return to clause 14 at 2 p.m. Perhaps the House would let the hon. member for Timiskaming continue his speech, and then return to clause 14. Is there unanimous consent?


William Arnold Peters: Mr. Chairman, I am interested in the reference of the parliamentary secretary to holding companies which could declare that they wanted to use their gain as a capital gain rather than income. It was said that this was a lifetime decision not only for an individual but for a corporation. The parliamentary secretary said that as a long as holding companies like Argus were in the venture capital field, they would be able to make such a declaration. We have a very immediate and deep interest in venture capital going into primary development, such as the forest products industry or mining, although most of the companies in the venture field do not have much money or stocks available.
I should like to ask two questions. First of all, does this provision apply to companies like Noranda, Hollinger Exploration, or Lakeshore? Many companies in the mining field are, in effect, conglomerate holding companies-they engage in exploration-but at the moment there is very little money flowing into these venture corporations. Will mining companies, therefore, be able to benefit from this provision? So far as venture capital is concerned, the Argus Corporation is not really in the venture capital field. Much that they have is not ventured; it is assured.


Edward C. Lumley: As I indicated to the hon. member before we broke for lunch, Mr. Chairman, under subclause (2), if these companies are not on the excluded list, then the provisions apply to them.


William Arnold Peters: Supposing they make a lifetime decision and declare that they are in the venture capital field: they are allowed to take their profit in the form of a capital gain, and this gives them a tax advantage, I presume, of at least 50 per cent since capital gains are taxed at 50 per cent. But how is the rest of a company not involved in this field operated? The Argus Corporation, Noranda, Hollinger, McIntyre and such companies have holding companies in various fields, and sometimes they operate mines. I am sure we would not want indefinitely to keep such operations in this preferred category.


Edward C. Lumley: Mr. Chairman, this provision basically gives these companies an opportunity to make a declarator By and large, the companies the hon. member refers to will not make such a declaration because in most instances their share gains

are already capital gains. So they know exactly what situation they are in.


William Arnold Peters: Not if they are actually doing exploration, Mr. Chairman. Many segments of the Argus Corporation produce sure gains. 1 imagine there are other cases where, as the result of amalgamation, properties are acquired which are not sure gain propositions. In fact, their losses are more assured than their gains. This is why the capital gains tax section applies to them. It seems to me the only companies which will benefit are those which count on their losses being more frequent than their gains. They can handle these losses in a holding company because they have something with which to offset losses. If it becomes all venture capital, Argus will not take advantage of it, but some of the small mining companies might. If this provision is designed for them, that is good, because it is a method by which those industries may receive considerable help.


Edward C. Lumley: Mr. Chairman, certainly this procedure will help investment in small mining companies. This does not apply to mining properties; it only applies to Canadian securities.


William Arnold Peters: The money raised on securities for the development of the property would have to be established as a separate entity. The companies which handle the securities have been given a lifetime designation. They will operate on the basis of capital gains as a profit, rather than the normal profit and loss method?


Edward C. Lumley: Yes, Mr. Chairman.


William Arnold Peters: Primary development in Canada is the only field which can be developed today. It must be in forest or mining products, because we cannot expand in agriculture any more. Agriculture is being taken care of by the moneys available in that field. There is no money available for mining exploration or development at the present time. This cannot be raised on the stock markets because of the ups and downs.
If a company sells the securities and still retains control of the property, it can raise money against the property and perhaps can bring about development. It will be hard for those companies to operate on a security basis. The brokers and the money market have been excluded as such. The holding company will raise money to develop the property. Noranda Exploration, which is separate from Noranda, is the type of company that will develop if money can be raised. If a person puts money in exploration companies, he is gambling more on losses than on gains.
The present price of gold provides a potential of starting 20 or 30 gold mines in Ontario if money can be raised. Is this section sufficient to allow holding companies to raise money on the normal market, on the basis that profits can be written off at 50 per cent? Will this raise money for that type of development?
Income Tax


Edward C. Lumley: Mr. Chairman, that is exactly what this procedure is used for. I apologize to the hon. member for misunderstanding his previous question. The answer to his well-taken point is yes, including small business generally and not just particularly in the mining venture corporation field.


Charles Robert Turner: As was agreed prior to the luncheon adjournment, at this point we shall revert to clause 14 before continuing the discussion on clause 16.
On clause 14-Inventory allowance.


Edward C. Lumley: Mr. Chairman, prior to lunch, the hon. member for York-Simcoe asked some questions with respect to clause 14.1 am prepared to answer those questions.


William Hillary (Bill) Clarke: The hon. member for York-Simcoe is behind the curtain. He will return to the chamber shortly. My understanding of the situation before one o'clock was that the parliamentary secretary would return equipped to answer the questions posed. Since those questions are on the record, perhaps we could have the answers.


Edward C. Lumley: Mr. Chairman, I see the hon. member for York-Simcoe is entering the chamber. The 3 per cent inventory allowance which will reduce federal revenue by $300 million will also reduce provincial revenue by $ 130 million, for a total of $430 million. The hon. member's second question indicated that the effective changes proposed to section 138 was to make interest on money borrowed to buy annuity contracts non-deductible. The interest on money borrowed to buy annuities has always been non-deductible. Therefore, this bill does not change the intent of that treatment.
Clause 14 agreed to.
On clause 16-Election re: disposition of Canadian securities.


William Hillary (Bill) Clarke: Mr. Chairman, this morning I asked the parliamentary secretary about the election which can be made under subclause (2). I am concerned about this because it appears to affect individual taxpayers. The hon. member for Timiskaming was concerned about the promoters, the developers and the corporations, but I am concerned about the individual taxpayer. When an individual resident of Canada decides to make an election, he is bound by that election for the rest of his taxpaying years. Subclause (2) (5) indicates that an election under subsection (4) does not apply to a disposition of a Canadian security by a taxpayer who, at the time the security is disposed of, is a trader or dealer in securities. Whether a person is a trader or dealer in securities is a matter for argument. Often the Department of National Revenue has argued that a taxpayer has been a trader or dealer when that person claimed he was not. If the taxpayer made an election, under subclause (2), that all of his gains and losses would be treated as capital gains and losses, and if there was a dispute later on, the department could consider this man to be a dealer or trader in securities and the election he made under subclause (2) would not apply. Is my understanding correct?

December 9, 1977
Income Tax


Edward C. Lumley: Mr. Chairman, the answer to that question is yes. There is always a question of fact to be resolved in cases of this nature.


William Hillary (Bill) Clarke: Why did the government feel it was necessary or desirable to dig this large hole for taxpayers to fall into? The taxpayer has to make the election. He has to indicate that he wants this treatment. This morning, the parliamentary secretary indicated it was a serious decision which would not be taken lightly. Under what circumstances does the parliamentary secretary envisage any taxpayer wishing to make the election, since his gains can be treated as capital gains and his losses can be treated as capital losses under the present rule until he is challenged for being a trader or a dealer?


Edward C. Lumley: I think that most individuals will know whether we are dealing in capital losses or gains, but the basic premise is to try to reduce uncertainty where there is doubt.


William Hillary (Bill) Clarke: I like the thought which the parliamentary secretary is putting forward, but I cannot see how the clause removes any uncertainty. If a person was later adjudged to be a trader or dealer, he would then lose the exemption that he claimed under subclause (4).


Edward C. Lumley: We are talking about a professional, rather than an individual doing something on his own. I think the definition is pretty explicit. I do not think it would be an area where there is uncertainty or doubt.


William Hillary (Bill) Clarke: When I was practising as a chartered accountant, doing some tax work, it was a matter of whether a transaction was a capital transaction or an income transaction, which gave rise to many court cases and certain reassessments and appeals-frequently court cases. So for the parliamentary secretary to say that it does not apply to the ordinary individual because he is not a trader or dealer in securities is only good so long as the tax department holds that view.
Very often an investor will have a large portfolio and will be doing quite a lot of trading. On many occasions there has been a genuine dispute as to whether he is a trader or an investor. If he is a trader, then already the profits and losses are income items, and also he would not be able to take advantage of the exemption in subclause (4).
At the risk of repeating the same question, I have to ask what is the difference between a man who elects under subclause (2) to have all his gains treated as capital gains or losses, or the man who does not make that election because that is the law today, but claims that his gains and losses are capital gains and losses and continues to do so without making the election? So if he makes the election, there is no difference: he still does the same thing. Then we see that the only person who has the right to undo that election, if he makes it, is the income tax department and the courts, if they decide that the man is a trader. So I am afraid I have to restate the question more clearly. Under what circumstances would anyone want to make an election under subclause 2?


Edward C. Lumley: For example, the Venture Investment Company would know exactly where they stand before the fact, and that eliminates the uncertainty which we are trying to do away with in this clause.


William Hillary (Bill) Clarke: Like my friend to the left, the hon. member for Timiskaming, I have not examined the plight of the Venture Capital Company. I am looking at it from the point of view of the individual resident taxpayer. The phrasing used is "resident taxpayer and his income," so I presume it applies to individuals as well as to these venture corporations. On that basis, I suggest that if I asked the question again, perhaps the parliamentary secretary would answer it at this time.


Edward C. Lumley: We acknowledge there is some ambiguity in that situation with respect to individuals, but by and large that would be satisfactory.


Charles Robert Turner: Shall clause 16 carry?


Sinclair McKnight Stevens: Mr. Chairman, we would be ready to have the vote on clause 16, but we will be voting against it.


Charles Robert Turner: All those in favour of the clause will please rise. All those opposed will please rise.
Clause 16 agreed to: Yeas, 36; nays, 11.
On clause 17.


Sinclair McKnight Stevens: Mr. Chairman, I would be pleased if the parliamentary secretary could give us an explanation-we hope, a fairly full explanation-of clause 17 as it deals with principal residences.


Edward C. Lumley: These are fairly technical changes to section 40 of the act. The section sets out general rules relating to the calculation of capital gains and losses, technical deficiencies and formulae for determining exemptions for capital gains tax when a taxpayer has disposed of his principal residence. The final change removes a provision that is no longer necessary. If the hon. member for York-Simcoe wants me to give details on the two subclauses, I would be more than happy to answer his question. Clause 17(1) is on principal residence change in use. This technical change deals with the formula for determining the exempt portion on the gain on the disposition of a taxpayer's principal residence.
A defect exists under present legislation when there has been a change in the use of property that has previously been a taxpayer's principal residence. The defect would operate where, for example, a taxpayer ceases to reside in his home and rents it to others. In this case, there is ordinarily disposition of the principal residence when it becomes a rental property, and any gain accrued to that point is exempt from tax. Any subsequent gain while the property is rented should be taxable when the property is eventually sold, and under the current formula the portion of the gain accrued during the rental period will remain tax exempt. I have an example of this case, but I think it would be too long to read. We could have it appended, if the hon. member so desires.
December 9, 1977

The second subclause to clause 17 deals with principal residences with respect to land used in farming. This is the general explanation of the situation when the house is part of the farm and the two are separate because the house is also the principal residence. The third change is a technical amendment which repeals an unnecessary provision.


William Hillary (Bill) Clarke: Could the parliamentary secretary tell us whether this provision having to do with principal residence would relieve the case where an individual, through illness and infirmity, has left his principal residence but not sold it prior to death and then resides in a hospital or nursing home until death? In such cases, until now the department has assessed that as a non-principal residence because the person has not ceased to reside there. Will that relieve the case?


Edward C. Lumley: That does not apply in this case. This amendment does not relieve the situation referred to by the hon. member.


William Hillary (Bill) Clarke: What consideration was given by the government to relief in a case where a Canadian taxpayer has, through illness or infirmity, had to vacate his principal residence with the hope of recovering and moving back into his principal residence, has spent some time-months or years; it does not really matter-in a hospital or nursing residence and subsequently has died before he could go back? The estate, or the widow, suffers because the sale is no longer considered to be the sale of a principal residence and it is taxable as if it were an investment, when in fact it was never intended to be an investment and it was only through unfortunate circumstances that the individual no longer resided there.


Edward C. Lumley: I am not aware that there is a problem in the short term, but if the hon. member would care to refer this case to us, we would be more than happy to give it consideration for future budgets.


William Arnold Peters: Mr. Chairman, I am interested in a matter which is even more split up than the example cited. In this case the residence is a farm. As is quite often the case, an acre of land with a house is separated from the farm operation. Formerly, it was all part of the farm operation. When it is split up, what is the disposition of the farm operation? The disposition of that part is deemed not to be the same as if the whole package were sold in a single sale. It is an arm's length disposition.


Mr. Benjamin:: Short arm.


William Arnold Peters: Yes, a short arm. However, it is deemed to have changed from a business proposition to a residential proposition. There is another situation where there is trouble, not so much with tax officials in Ottawa but with district offices. In this situation, property does not change hands but its use is changed from that of a rental property to that of a residential property, or vice versa. A sale is deemed to take place where no sale actually does. There is a change from one type of
Income Tax
taxation to another. There is deemed to be a sale, and the capital gain on that sale must be taken care of although no sale has taken place.


Edward C. Lumley: Mr. Chairman, with respect to the example used by the hon. member, the $1,000 deduction with respect to capital gains would in essence provide for a situation where one acre would be involved.


William Arnold Peters: What about the second case? I am not sure whether it is covered by this clause or by the next one, because there is a similarity to both clauses as to what category is involved. In my example, a house is purchased for residential purposes. The owner is not resident for a period of time, and then moves into it. When he does, the rental property ceases to exist and he is considered to have sold it at whatever the market value might have been and whether it was voluntary sale or a forced sale.
In my example, it is considered to be a voluntary sale to a willing buyer from a willing seller, which in most cases is not the situation. Is there any relief offered in clause 17 for that problem? I understand that the proposed changes in clause 17 do not substantially affect the operation of the present law. Clause 17 is basically administrative in nature, correcting minor problems which have arisen in consequence of the wording used in the current legislation, but changing wording often changes the direction of legislation in more than just a minor way. Has that problem been given any consideration?


Edward C. Lumley: Mr. Chairman, I would like to correct the previous statement I made with respect to the $1,000 allowance of capital gain. I was incorrect in my answer. This is an area which the officials are examining. With respect to the second point, the answer is that this will not take care of that particular situation.


William Arnold Peters: I had the feeling that the parliamentary secretary was not correct about the $1,000. With farm taxation it is never so simple that there is a penalty of $ 1,000 and it is let go at that. If the parliamentary secretary wants to move an amendment to solve this problem where father or grandfather are given the family home with an acre of land, and if it can be settled for $1,000, I am prepared to second the amendment and give it speedy passage. However, I am afraid it is not quite that simple.


Edward C. Lumley: Mr. Chairman, if it were that simple we would probably have done it, but it is a very complex issue.


Mr. Foster:: Mr. Chairman, would the parliamentary secretary clarify whether this amendment will make it impossible for a husband and wife who own two properties-for example, a home and a summer home, one in the name of the husband and the other in the name of the wife-to dispose of the two properties, or either one, without a capital gain being realized?


Edward C. Lumley: Mr. Chairman, the situation referred to by the hon. member is not affected whatsoever. They are treated as two individual situations.
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December 9, 1977
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Clause 17 agreed to.
On clause 18-Exchanges of property


Leslie Gordon Benjamin: Mr. Chairman, I would like to discuss a matter with the parliamentary secretary. I have consulted some of his colleagues and I understand that this clause refers to replacement property under capital gains. The bill now relieves a taxpayer who makes a capital gain on the sale of a property-a farm or small business-and puts all the proceeds from that sale into a larger and better farm or small business. That person would be exempt from the capital gains tax on a first sale. However, he would be liable to pay capital gains tax if he subsequently sold the replacement property. He would be exempt from the capital gains tax on the first sale, but would be liable if he sold the second or replacement property.
I have specific cases in mind-there are probably a dozen other cases in my constituency of farmers and small businessmen who sold a property two, three or four years ago and used all the proceeds to purchase a more economic farm unit or small business enterprise. They were liable for the capital gains tax even though they used all the proceeds from the sale, plus additional borrowings, to acquire a more economic enterprise. I appreciate the fact that the bill makes provision to exempt such people from capital gains tax on the first sale, and that this provision came into effect on March 31, 1977. Could the parliamentary secretary tell me if he and his officials would sympathetically consider and act upon this suggestion right away, or perhaps we could stand the clause for 20 minutes while an amendment is drafted to make this retroactive or deemed to have been in place when the capital gains tax came into force.
I appreciate that the officials would need a few minutes to assess what such refunds would cost. I do not want to be misunderstood: I am fully in agreement with the principle of capital gains tax. I agree with Mr. Carter who said "A buck is a buck.". In the case I give as an example a small farmer who sold two small farm units and realized a capital gain of $8,000 in each case, so is liable for $3,500 capital gains tax. He used the proceeds to acquire a larger farm so that he and his son would have a unit large enough that they could farm together. The problem is that this took place prior to March 31, 1977. Therefore, I appeal to the parliamentary secretary to see if the wording of the clause cannot be changed. Perhaps a limitation of so much money or so many acres could be inserted. I would agree to that. Those who do not need the benefit should not get it.
Has the parliamentary secretary had time to consult his officials and come up with some fast wording that would allow a capital gain on the sale of property where the proceeds of the sale are used to buy another property in all such cases in the last three or four years. I am sure it would not involve too many cases. I would limit my request to small farmers and businessmen who are not out to make a capital gain but who want a more economic unit. I sense, from conversations with members on all sides, that there is some support for this idea.

It may involve $500,000 or $1 million in refunds, but surely that is a small amount to set against a fair application of the principle of capital gains tax.


Edward C. Lumley: Mr. Chairman, I am sure the hon. member understands that in any tax issue there is always the question of retroactivity. Nobody is totally satisfied when the government introduces changes. Obviously, we are very sympathetic to the hon. member's representation. I have made representations along the same lines on behalf of my constituents. Where would we draw the line, however? This could be an administrative nightmare. There would be reams and reams of work. Why pick on this particular tax change to be retroactive, and not some other area?


Leslie Gordon Benjamin: Mr. Chairman, I do not want to get into a long argument with my colleague. I know he agrees with me in principle, but I wish he would not obfuscate or run in back alleys with the matter. Obviously, the line would be drawn at a purely replacement sale. Where a person has bought and sold half a dozen farms in the last four years, exemption should not be considered. Such person is obviously out to make a capital gain without paying taxes, so I would not exempt this kind of transaction. Where there is a legitimate instance of replacement for the economic well-being of a small farm or small business, that is where I think retroactivity should apply.
Since the capital gains tax is relatively new, it is not as though it would be necessary to go back 100 years or even ten: at the most, it would involve five years. There should be no administrative nightmare either, because as I see it there would be no exemption or refund unless the taxpayer made application. It would be a relatively simple matter for the department to review the tax returns for the previous four or five years, and if they were satisfied that the capital gain on the original sale was totally reinvested in replacement property, an exemption or, if necessary, a refund could be made. At most, a few hundred or a few thousand cases would come to the department's attention, and surely they could handle that.
It seems to me, the way the bill reads, that in the area of replacement property there is sufficient limitation to eliminate people who have turned property over four, five or even ten times in the last five years. Obviously, such people are not trying to improve their farm or small business and should not be eligible for refund of capital gains tax on the first sale.
I appreciate that since the minister is not here, another minister might have to move an amendment to the bill on his behalf; but I appeal to the parliamentary secretary to give us better reasons than we have heard for not doing it.


Edward C. Lumley: Mr. Chairman, if the principle number of retroactivity which the hon. member suggests were applied, this would indeed be discriminatory. He is forgetting about all the small businesses in the country to which this clause also applies. Thus there are tens of thousands of files to be investigated, and this is an administrative nightmare.


Leslie Gordon Benjamin: Why wouldn't they apply?
December 9, 1977


Mr. Lambert (Edmonton West):: One of the principle reasons the hon. member for Regina-Lake Centre is under some misapprehension and I think the parliamentary secretary is at cross-purposes in answering him-is that if they went back to the Income Tax, and saw what section 44 was dealing with, it is exactly the deferral of gain on involuntary dispositions.
The hon. member for Regina-Lake Centre has been talking about the example of an individual who had sold or exchanged properties three or four times in a row. That is not an involuntary disposition. If we look at the involuntary dispositions that are considered in clause 44, we can go either to clause 13 or to clause 54 where the definitions of the dispositions envisaged by this particular clause are considered. These are, first of all, compensation for property unlawfully taken. That is compensation under an insurance policy for property that has been stolen and which by reason of inflation there has been, shall we say, an increase in value. Or there could be instances where land may have been unlawfully taken and compensation has been made to the rightful owner.
Second, I refer to the case where property has been destroyed, whether real or personal property. In the case of a house which was built or acquired 20 years ago, and this year is destroyed by fire, then of course the insurance value will be much greater than the acquired value.
Lastly, the one I am concerned with is where there has been expropriation. These are the rules that might apply, and there is a change in the whole of clause 44.
I say, Mr. Chairman, we would have had less refinement and amendment over the years if the government had heeded the advice and the action taken by the opposition at the time of the income tax changes in 1971. I then proposed, on behalf of the official opposition, seconded by the hon. member for Yorkton-Melville, who was then the financial critic of the New Democratic Party-at least, he supported me up to a point- that all farm lands sold or disposed of, or passed to heirs, which would continue in bona fide agricultural purposes would not be subject to capital gains, period. If that motion had been accepted, we would not have all these refinements. However, we have had some refinements since that time.
The then minister of finance, Mr. Benson, refused to accept that farm lands should not be subject to capital gains. Then there was the first amendment-if there was a legitimate passage from father to son, or from father to daughter-either by sale or by death-but it had to be in the immediate family: it could not be sold to a neighbour who was carrying on farming. Of course, it did not apply to family incorporated farms, which was absolute nonsense-bureaucratic nonsense. It still is, if I may say so.
In many parts of the country farmers have been encouraged to incorporate their farms for a number of valid reasons. When there has to be disposition of an incorporated farm, immediately the capital gains guillotine falls on them. This is wrong. As a matter of fact, we would not have a good number of these refinements with regard to farm land if there had been a total exemption provided the lands continued for bona fide agricultural purposes. I think the House would generally agree to
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that. But no, there has been this absolute insistence by the government that farm lands, unless they are exempt-even if they are going to be sold and continued as farms-will be subject to capital gains.
I notice that in this clause the effective date, where there has been an expropriation action, is deemed to be the date of the judgment of the lawsuit. I suggest, Mr. Chairman, that is wrong because there is a great deal of difference between the date of a lawsuit and the date the funds payable under the lawsuit become available to the affected landowner, who then has to go about to effect changes in property as envisaged under the act. In this connection I quote from page 28 of the bill which refers to the day on which the taxpayer's compensation for the property is finally determined by such tribunals or courts. That should be the day on which the compensation is paid following the determination by such a tribunal or courts.
In the case of the government of Canada-I think everyone here will agree-by the time the judgment of the Department of Justice traced through to the department affected-say it is an expropriation by the Department of Transport-the Department of Transport will have a demand on the Department of Supply and Services to issue a cheque. This can take not only weeks but months.
If there is any recalcitrances as I saw in the parks department following the decision concerning perpetual leases, it could take years before the department will acknowledge it was wrong and that it must accede to the decision of the tribunal. Here, again, is a complication following capital gains on farm land. I advise the minister, if I could have his ear, that capital gains tax as such brings in very little, relative to the administrative complexities not only of the Department of National Revenue taxation officials but also the ordinary citizen.
Having recourse to tax consultants, whether they be accountants or lawyers, from a national point of view is much ado about nothing. The mountain of labour is tremendous. There is a bureaucratic mountain on one hand and the public mountain on the other. The result of that joint labour is but a puny mouse. It is not worth a candle in this country at the present time.
Capital gains is nonsense. It is much more of a nonsense where it affects farm lands that are going to be destined for bona fide agriculture.
This tax came about as a result of claims that land developers were making great amounts of money and not paying taxes. Any lawyer worth his salt knows that in so far as income is concerned under the Income Tax Act, that is any income arising out of a venture. The purchase of a parcel of land for the purpose of subdivision or otherwise, other than for bona fide farm purposes by a farmer or one who intends to farm, is known as a venture. There are judgments galore in the Supreme Court of Canada which determine that the profit on such a venture shall be income and therefore subject to income tax.
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December 9, 1977
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There are those who want to be demagogic about property development, academics who could not find their way out of a paper bag when it comes to tax matters. Others give a cosmetic appearance about doing something about a particular problem that has been already covered. There are those who motivate on both sides who travail on these mountains.
I am sure the Minister of Finance would be the first to admit that the yield on capital gain, bearing in mind the action of the stock market and the value variations in other fields, has produced little tangible revenue. However, the pages in the Income Tax Act have been expanded inordinately. First, they set up the capital gains tax. Second, they set up and describe the exceptions. Those exceptions take pages and pages and pages. Precious few people understand them. The minister, like myself, is one who cannot understand them because the complexity is so great.
There is one value of a tax system which the minister and his officials always forget. In order for a tax system or a tax law to be just, it must be readily understood. That is fundamental to any tax system. If anyone in this country, barring a very limited number of people, understands the workings and ramifications of the Income Tax Act, whether they apply to individuals or corporations, I have sadly missed my guess.
In 1971 the government introduced legislation, Section 44 as it then stood. Now it is all being replaced. Why? Because there are some hard cases under it. If hard cases make bad law, then bad law makes hard cases. In so far as this act is concerned, most of the capital gains legislation and the exceptions thereto are bad law because they make hard cases. One should look at this amendment in the context of what I have said. I hope that some day we will be able to excise a great deal out of the Income Tax Act.
Income tax reform basically would be the simplification of income tax. Every time one seeks an exception or an exemption of a particular kind, the act is complicated. The return is complicated and the act and the tax are less understood. From the public's point of view, this is an extreme loss.
1 hope we can get a full confirmation from the minister of what he wants to do other than tinkering with this section which, frankly, 1 do not think should be in the act. Capital gains on farm land for farm purposes should not be there.


Leslie Gordon Benjamin: Mr. Chairman, I listened to the hon. member for Edmonton West. He was about as helpful as the parliamentary secretary. Some of the points he made had nothing to do with the point I raised. I was talking about voluntary sales, for example where a farmer sells a three quarter section farm to buy a one and one half section farm so that he has an economic unit.
I agree that in the case of an expropriation, an involuntary sale where the Department of Highways pays him "X" number of dollars for his farm, there is a capital gain. My point is this: if he spends all the proceeds of that voluntary or involuntary sale on replacement property, will he be exempt from capital gains tax, and only liable to capital gains if he sells the replacement property?

I am not interested in exempting the doctor or lawyer who buys a farm every three or four years as a hobby. That is not his prime occupation. That person should be liable for a capital gains tax.
The hon. member for Edmonton West was accurate when he said we supported his contention in 1972 to exempt bona fide farmers or storekeepers if that was their only livelihood. However, we are not interested in exempting a doctor or lawyer, who has a piece of land as a hobby, from capital gains tax. He should not be exempted if he only uses land to horse around on or make a few extra bucks. I am not talking about that kind of case.
The hon. member said we are just complicating the act. I am more interested in it being fair, with the good principle of a capital gains tax being applied in a good manner. The provisions in clause 18 give effect to what I am proposing. If this is a good principle in the bill to be effective March 31, 1977, why is it not a good principle effective March 31, 1972, or 1973, whenever the capital gains took effect? It is equally valid. I do not think it would be impossible from an administrative point of view. The onus would be on the taxpayer to prove that all the proceeds from a sale went into the purchase of replacement property. If he could not do that, he should be liable for capital gains tax.
I am asking that the principle of clause 18 be taken to apply as far back as the date upon which the capital gains tax was put into effect. In a case where a farmer or a small businessman was obliged to pay capital gains tax in such circumstances he would be eligible for a refund. I hope the minister's officials have been able to devise an appropriate amendment to give effect to what I have requested.


Mr. Chretien:: I was not here for the discussion, but I understand it would be extremely difficult to adopt the hon. member's suggestion. There is no justification for it.


William Hillary (Bill) Clarke: It seems obvious there is some discrepancy between the views of two hon. members on this side of the House and I am wondering whether the minister could not follow the precedent set by his parliamentary secretary and let us have an outline of the changes which are contemplated.


Joseph Jacques Jean Chrétien: I have nothing to add which could be clearer than what my parliamentary secretary had to say to the House on the subject.


William Hillary (Bill) Clarke: The point is that the parliamentary secretary, who has been giving us clear explanations throughout the day, was not asked to do so in this case; it might have saved time if he had been allowed to do so in this instance.


Joseph Jacques Jean Chrétien: I will read the explanation to the committee.
This is an important change. The section deals with the roll-overs on certain dispositions of capital assets used in a business. These rules permit a roll-over, that is, a deferral of tax, for amounts received under an insurance policy as com-
December 9, 1977

pensation for property lost or destroyed that are reinvested in the business. The rules are extended to insurance proceeds received for stolen property. The rules are also extended to cover proceeds received on a voluntary sales of certain capital properties that are reinvested in replacement properties. To qualify, the proceeds must be reinvested in a replacement property within a specified time-two years in the case of involuntary dispositions and one year for voluntary sales.
These rules are similar to the rules for depreciable property and eligible capital properties dealt with in clauses 6 and 7 of the bill.
While I am on my feet I should like to have the unanimous consent of the committee to table nine amendments, all technical in nature-some of them are intended to repair mistranslations or grammatical errors. If there is not unanimous consent I shall not table them. I am sorry, Mr. Chairman. They have already been tabled. I should just like to advise the committee, then, that 1 should like these amendments to be passed before the end of the day.


William Arnold Peters: I have no objection to the amendments being tabled, but there is a violent objection to the second request.


Joseph Jacques Jean Chrétien: I was indicating to members of the committee that I shall be trying later to get these amendments passed. However, I shall not seek to do so unless there is unanimous consent; I wanted to determine the will of the committee so that we might avoid a cumbersome situation later on.


Leslie Gordon Benjamin: I should like to tell the Minister of Finance that when I made inquiries about this particular matter I received an excellent letter from the Minister of National Revenue in which he said:
Section 18 of Bill C-l 1 proposes an amendment to the Income Tax Act dealing with the reinvestment of proceeds of disposition of a former business property in a replacement property. If the taxpayer so elects, the gain from the disposition of the former property would be the lesser of:
(1)	the gain therefrom otherwise determined, and
(2)	the excess of the proceeds of disposition of the former property over the cost to him of the replacement property.
I agree with that interpretation. I also agree with the intent of the amendment. I am asking the minister this: would he not agree that the good principle being applied to the capital gains provision in this case might not just as validly be applied retroactively to the bona fide farmer or small businessman who uses all the proceeds from the sale of his property to invest in a replacement property so as to continue his primary, if not his only, means of livelihood? The Minister of National Revenue told me that unfortunately for my constituent this amendment took effect only as of March 31 last. Surely it would be a relatively simple matter to deem this benefit to apply some three to five years earlier than that date. I ask the minister to reconsider his policy and not to allow the matter to be complicated by side issues such as were raised by the hon. member for Edmonton West.
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Joseph Jacques Jean Chrétien: For the third time, Mr. Chairman, I have to tell the hon. member that we have listened to his representation but we have no intention of changing the date.


William Arnold Peters: The minister has told us that if the change is of an involuntary nature involving a third party the term is two years, and if it is voluntary the term is one year. In the first case the person concerned has some control over whether he should make a disposition. I am interested in what happens when the government cannot make up its mind on certain issues with the result that a period of time goes by, as happened, for instance, in the case cited by the hon. member for Edmonton West. Does the two-year limit run from the time the court decision is made?
It seems to me we have not corrected anything here. Insurance companies will not make a decision within the two years if they are engaged in lengthy litigation, and there likely will be lengthy litigation because this is an involuntary disposition resulting from, say, expropriation by government, fire or theft. I do not see the purpose of the two year limit.
I agree with the minister that there is some sense in a one year limit, because then it is voluntary. There is control over it. In that case there is a rollover. But in the second case I do not think there is a rollover. It is not voluntary. The rollover is caused by extraneous considerations, something over which a company has no control. If a company is half way through litigation and it gets an offer, it will have to take the offer as being within the two year period.


Joseph Jacques Jean Chrétien: I do not think so. According to the act, section 44(2), the situation is quite clear. Paragraph (a) reads "the taxpayer has agreed to an amount as full compensation to him for the property lost, destroyed, taken or sold". If the taxpayer does not agree, later on in the act section 44(2)(b) provides that the day is "the day on which the taxpayer's compensation for the property is finally determined by such tribunals or courts". This means that if the taxpayer does not agree, the time starts to run once the court has made a determination or the taxpayer agrees to a settlement.


William Arnold Peters: Paragraph (c) reads "where a claim . .. has not been taken before a tribunal or court of competent jurisdiction within two years of the loss... the day that is two years following the day of the loss" will be the deciding date. My point is that in the first case a rollover is made on a voluntary basis. In the second case where a third party is involved, if the taxpayer goes through the courts he will have two years following the court's determination. In many cases the taxpayer does not want to take the matter to court, but he is under a compulsion to do so.
Every day I handle compensation cases which are 10 or 12 years old. People have been waiting for the company concerned or the compensation board to do something for them. I am sure many members of parliament are sitting back waiting for their automobile insurance companies to do something for them. We wait for other people to take action. If a person is

December 9, 1977
Income Tax
not in the wrong, then why the hell should he go to court? We are not talking about a voluntary action but something a person is forced into.
The hon. member for Edmonton West, who was trying to help the minister out, referred to a case where a considerable period of time elapsed following an expropriation and the government never got around to making out the cheque.


Marcel Joseph Aimé Lambert: On a point of order, Mr. Chairman, if I heard the hon. member correctly he is completely misinformed. He said that I was trying to help out the minister. My point was that the provision in this act is wrong. It provides that the period of two years shall run from the date of the order of the tribunal. To me, the date should be the date of payment of the cheque. Oftentimes government departments take months and months to pay money to the intended property owner. I was not trying to help out the minister; I was criticizing the proposed amendment.


William Arnold Peters: May I thank the hon. member. In my roundabout way that is the point I was trying to make. The two years was at the discretion of the department, or the courts, or somebody other than the person concerned. If the hon. member for Edmonton West was arguing the other side of the coin, I apologize for having misunderstood. I understood him to say that the delay in issuing the cheque was not the fault of the individual.
I appeal to the minister that this is a field where we could be more flexible. It seems to me that in so many fields today we are asking Canadians to defend themselves against government, whether it be in connection with unemployment insurance, compensation, expropriation, damages or income tax. I have had dozens of people write to me in connection with income tax problems they experienced last year. This silly department is now sending out unpleasant letters to everyone, informing them that it is time to start making payments and to fill in their 1977 tax forms. If I do not pay my income tax because the government is at fault, why should I have to pay interest on the money that I have not paid? After all, the government has made the mistake.
The roll over which takes place from a smaller operation to a bigger operation is only a portion of the business operation, the same as the purchase of a tractor, a combine or any piece of machinery. No restrictions should apply to that once in a lifetime, or once in an every-20-years proposition. Businesses are pleased to deal with capital gains because their capital losses can be written off. As far as the rollover in the agricultural field is concerned, that person is not talking about losses. He had those losses before making the transfer. He will not roll over that proposition and replace his present farm with a new farm in order to take a loss. There will be an expenditure involved, and it will take some time for him to pay back the money borrowed.
The point in time that should be considered is when a person receives insurance money for his property being destroyed, and

not two years hence, or at the conclusion of litigation. I should point out that a buck is a buck is a buck. A single farm operation cannot be put into the same category as the individual who turns over 50 farm properties a year. In both instances capital gains tax must be paid, but it should only be paid when the moneys are received.
People in the London and Chatham area are finding it impossible to acquire replacement land for one reason or another. Thus they travel to northern Ontario in order to look around. There is a vast difference between the type of farming in northern Ontario and that of southern Ontario. Prices are being exaggerated and accelerated because of this. These people require time because the farming structure is different, the season is different, and the types of crops are different. If these people are in receipt of money from the first proposition, it is mandatory for them to invest it within one or two years. They are faced with the possibility of not finding property in northern Ontario which is within their price or borrowing range. This is not a voluntary situation because they have been forced out due to the fact that no land is available in their area. They are hemmed in and boxed in thus they have to sell.
If hon. members give consideration to this section, they will be opposed to passing it as it is structured. Also they will oppose it because of the way Section 44 has operated over the last three or four years in relation to capital gains. I will vote against this because I think it should be turned down.


Joseph Jacques Jean Chrétien: Mr. Chairman, I have listened to the arguments put forth by the hon. member for Timiskaming and the hon. member for Edmonton West. They have put forth hypothetical cases which I will examine. These hypothetical cases could lead to problems in the future. I do not know if a change will be possible, but I think the representations have been useful.
I apologize to hon. members for arriving late, but I was stuck in the snow in New York city. I hitchhiked on a plane because I wanted to return to the Chamber.


William Arnold Peters: I commend the minister for his diligence to duty and his compassion for the problems raised. In the case of a rollover, perhaps it would be possible to make a deposit with the department. Even though this rollover is considered voluntary, actually it is mandatory because the farmer is hemmed in, cannot expand, and is having difficulty acquiring additional property.
When a person is dealing in $200,000 or $300,000 worth of property, considerable time is required for the paperwork and the legalities of the transaction. A year is not enough time for that to be done. Is it possible to give consideration to making a deposit with the department? In many cases the Farm Credit Corporation and other agencies are involved. Perhaps the deposit could be held in trust for a period of four or five years until the rollover takes place. Would that be possible? At the present time the entire transaction has to take place in a year, which means the purchase of the second property has to occur before the sale of the first property. It is difficult for lawyers to complete the transfer within one year. I am referring to
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properties used for agricultural purposes. Is the idea of a deposit possible? Can the minister give consideration to that?


Joseph Jacques Jean Chrétien: Certainly I will look at the suggestion of the hon. member. It is difficult to make exceptions in the case of farmers alone. Either a principle is good or bad. I think it should apply to everyone. To have to exempt one class of citizens from a rule that applies to others, even if it is a class of people who deserve special consideration, is a bad approach to solving problems arising under the Income Tax Act. I will certainly look at the suggestion of the hon. member, but with the caveat I have put forward.


Leslie Gordon Benjamin: I must disagree with my colleague, the hon. member for Timiskaming. I am not opposed to this clause of the bill because it brings about an application of the capital gains tax in a much more fair manner, so I agree with the clause as it reads and as it applies from last March 31. I also agree with the minister that if we are going to apply the principle to one group, we should apply it equitably to all the groups because the same thing would apply in the case of a fisherman with a small boat. If he does not get a bigger one, he will go broke all the quicker. He sells his small boat, makes a capital gain on it and uses all the proceeds to purchase a larger boat, and thus has a better chance of making a living. The clause would exempt him from the capital gains tax on that first sale.
I am sorry that my colleagues on all sides of the House have raised a lot of matters that do not touch on the point I raise, to apply the principle back to the time when the capital gains tax took effect. That is all I am asking. The move you are making in clause 18 is as valid and effective on March 31, 1972, as it is in 1977 and it is not some horrendous and insurmountable problem. It is a principle that I find, from talking with hon. members on all sides, meets with agreement. I do not understand the reluctance of the minister to extend a good provision in clause 18 back to the implementation of the capital gains tax. There is no justification for not doing so.
The other points raised by the hon. member for Timiskaming and the hon. member for Edmonton West are only partially in tune with the point I raise. Surely the minister is correct in saying that this provision should apply right across the board. All I am saying is: let us apply it right across the board back to the time when the capital gains tax came into effect. I plead with the minister again. There is no substantial reason for not agreeing to do that.


Joseph Jacques Jean Chrétien: Mr. Chairman, I have nothing to add to the answer I have already given the hon. member. I do not feel it would be either useful or desirable to make a change at this time.


Charles Robert Turner: Order, please. It being 3.45 p.m. it is my duty, pursuant to the order made on December 5, 1977, to interrupt the proceedings and put forthwith every question
Income Tax
necessary to dispose of the committee of the whole stage of Bill C-ll, an act to amend the statute law relating to income tax and to provide other authority for the raising of funds.
Shall clause 18 carry?


Some hon. Members:: No.


Charles Robert Turner: All those in favour of the clause please rise. All those opposed to the clause please rise.
Clause 18 agreed to: Yeas, 62; nays, 28.
Clauses 19 to 46 inclusive agreed to on division.
[DOT]	(1552)
Clause 47 agreed to: Yeas, 85; nays, 5.
Clauses 48 to 51 inclusive agreed to on division.


Charles Robert Turner: Shall clause 52, as amended, carry?


Some hon. Members:: Agreed.


Some hon. Members:: No.
Clause 52, as amended, agreed to: Yeas, 89; nays, 5.


Charles Robert Turner: Shall clause 53 carry?


Some hon. Members:: Agreed.


Some hon. Members:: No.
Clause 53 agreed to: Yeas, 86; nays, 6.
Clauses 54 to 57 inclusive agreed to on division.


Charles Robert Turner: Shall clause 58 carry?


Some hon. Members:: Agreed.


Some hon. Members:: No.
Clause 58 agreed to: Yeas, 93; nays, 6.
Clauses 59 to 72 inclusive agreed to on division.


Charles Robert Turner: Shall clause 73 carry?


Some hon. Members:: Agreed.


Some hon. Members:: No.
[DOT]	(1602)
Clause 73 agreed to: Yeas, 77; nays, 22.


Charles Robert Turner: Shall clause 74 as amended carry?


Some hon. Members:: Agreed.


Some hon. Members:: No.
Clause 74 as amended agreed to: Yeas, 72; nays, 29.
Clauses 75 to 114 inclusive agreed to on division.


Charles Robert Turner: Shall clause 115 (as amended) carry?
Clause 115, as amended, agreed to on division.

December 9, 1977
Parliament Hill Curator The Deputy Chairman: Shall clause 116 carry?


Some hon. Members:: Yea.


Some hon. Members:: Nay.
Clause 116 agreed to: Yeas, 73; nays, 29.
Schedule agreed to on division.
Title agreed to on division.


Charles Robert Turner: Shall the bill carry?


Some hon. Members:: Yea.


Some hon. Members:: Nay.
Bill agreed to: Yeas, 74; nays, 29.
Bill reported with amendments.


The Acting Speaker (Mr. Turner):: When shall the bill be read the third time?


Some hon. Members:: Now.


Some hon. Members:: At the next sitting of the House.


The Acting Speaker (Mr. Turner):: At the next sitting of the House?


Some hon. Members:: Agreed.


Yvon Pinard: Mr. Speaker, 1 ask for the unanimous consent of the House so that Bill C-212 be considered and that all preceding bills be allowed to stand.


Some hon. Members:: Agreed.



PRIVATE MEMBERS' PUBLIC BILLS


Mr. Ian Watson (Laprairie) moved: that Bill C-212, to provide for the establishment of the office of Parliament Hill Curator, be read the second time and referred to the Standing Committee on Management and Members' Services.
He said; Mr. Speaker, Bill C-212 has been on the order paper now for two or three sessions of Parliament. It has as its objective the creation of the post of Parliament Hill curator. [Translation]
Bill C-212 provides for the establishment of the office of Parliament Hill Curator. I came to think about such a bill because of an incident which occurred in the House last year or two years ago when I sought information from those people responsible for removing the glass windows in the House when
[The Deputy Chairman.]
it became necessary to replace them by these beautiful coloured windows we can see now around the House. The removal of those leaded windows was done quite simply-they used a sledge hammer to smash them off and not a single piece of those historic windows was salvaged. I am sure that museums and numerous other historical associations in the country would have been quite interested in keeping some of those window panes but none were saved.

For instance the episode when these windows were removed with a sledge hammer and replaced by the present beautiful coloured windows representing the floral emblems of all our provinces and territories was as close to a sacrilegious incident as you can come in the House of Commons. Every museum in the country would have treasured an item from this Chamber. This is one incident of many which have occurred here resulting from the fact that there is no one in charge of ensuring architectural integrity, that the furniture, the works of art, the sculptures in wood and stone are preserved or conserved in a way the people of Canada would expect them to be safeguarded.
Over the years furniture belonging to historic Canadian figures has either been sold, disappeared, or simply thrown away. Furniture of this kind is probably around Ottawa and would be worthy of a place in any museum if it could be found. It would certainly be appropriate for the refurbishing going on in the East Block. It has disappeared because there is no one individual who has taken it upon himself to keep an eye on these antiques.
During the refurbishing of the House of Commons this past summer I came in one day and discovered that under this carpet there was a teak wood floor of great value, which had been left during all the demolition period not covered-not even plywood or plastic over it. The workmen were just throwing things from the ceiling on to the floor. Some day an architect may come along and say in the interests of esthetics that the carpet should be removed and this beautiful floor exposed. Whether or not that happens, I simply make the point that no one is checking on all this. I feel strongly that because that is the case-

-because there have been many mistakes made here, either by Public Works or by Parliament staff, a member of the staff of the House should be entrusted with the necessary responsibilities to supervise.

I would hope that this person who would be appointed as curator for Parliament Hill would be able to advise the people responsible both in Ottawa and Hull as to what action they may or may not take with respect to all these items.
There have been a number of instances during the last few years where gradually the Parliament Hill panorama has been cut off from a large percentage of the people living in the Ottawa-Hull area. The view of the Peace Tower and Parliament Buildings has been obliterated by the skyscrapers which

December 9, 1977

have gone up in central Ottawa. The same thing is now happening on the Hull side. It is too late now to do anything about that. Before it is impossible for anyone in the surrounding area or anyone approaching Ottawa to see the Parliament Buildings and Peace Tower from afar, we should move to arrest further deterioration of this view. It means a lot to most Canadians.
I feel that the post of parliamentary curator would carry with it an obligation to advise and use whatever avenues are available to encourage the authorities who have responsibility for the height of buildings in the vicinity of Parliament Hill to use their discretion and prevent a further downgrading of the importance of Parliament Hill.
I do not feel that the wording of this bill is sacrosanct. It can probably be improved substantially. Frankly, what I would like to see is the subject matter of the bill referred to a committee.
I understand it would normally be referred to a committee dealing with members' services. If so, I would be prepared to accept that. I hope the subject matter will be referred to that committee. If it meets with the consent of members of the House, I would ask one of my colleagues to move that the subject matter of Bill C-212 be referred to the committee dealing with members' services.


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


The Acting Speaker (Mr. Ethier):: The hon. Parliamentary Secretary to the President of Privy Council.


Yvon Pinard: Mr. Speaker, does the hon. member wish to move a motion for the purpose of withdrawing his bill and another one for the purpose of having the subject matter of his bill referred to the committee? If so, I respectfully submit the hon. member would have to move a motion to withdraw his bill, obtain the unanimous consent of the House, and then move a motion to have the subject matter of his bill referred to the committee, pursuant to Standing Order 50.


Walter David Baker: Mr. Speaker, as I understand it, the hon. member has finished his speech. He may have missed that opportunity. I want to assure him there is a willingness that the subject matter go to a committee prior to the end of this day. There are one or two who want to speak for a short time with regard to it. It is an excellent subject.


The Acting Speaker (Mr. Ethier):: I think the parliamentary secretary has perhaps misinterpreted the rules. It should be done by another member, not by the member who proposed the motion.


Mr. Francis:: Mr. Speaker, I am prepared to so move at the appropriate time.


Mr. Howard Johnston (Okanagan-Kootenay):: Mr. Speaker, I rise very briefly to congratulate-
Parliament Hill Curator

-the hon. member for Laprairie (Mr. Watson) for his bill, an outstanding bill indeed, and I want to commend him for his interest in Parliament Hill.

I do not want to hold up the bill. It should go to the committee.
From time to time I have been concerned about changes that occur in this building. There does not seem to be any consultative process. Occasionally things that are historic, traditional, and meaningful, disappear. The most recent instance struck me a few weeks ago when I was showing visitors from the constituency through the Parliament Buildings. As I approached the Railway Committee Room, I stated that the room was full of tradition and history and that it contained some marvellous paintings. As I opened the door, there were no more paintings. Entirely without notice or indication, they had somehow been moved. I do not know where they are. I would be interested in finding out whether they can again be displayed somewhere in the building.
The Railway Committee Room was turned into a sort of boudoir by some interior decorator who was allowed to run tame, using every stale cliche in the interior decorator's trade. That room has lost its history, tradition, and significance. It had impressed many people. It had many functions.
When the bill goes to the committee, I hope we can have some explanation of what happened, particularly with regard to the vast painting of the Fathers of Confederation. I know it features fine old Conservatives such as Sir John A. Macdonald and Sir Georges Etienne Cartier. It had a place of honour. That place seems to have disappeared along with the excellent painting of the Vimy Ridge Memorial. That haunting picture has also vanished from the scene.
We very much need someone who cares to take care of and be concerned about the decisions that are made in this place, particularly when something may well be lost if someone who is sensitive to the nation's history is not in a position of some authority.


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I rise for only a moment or two. In doing so, I want to echo the sentiments that have been expressed by the mover of the bill and the previous speaker. I agree with them completely. I, too, would like to see either the bill or the subject matter thereof referred to the appropriate committee so that it can be studied. I hope that will not be a way of getting rid of it. Instead, I hope that committee will make a recommendation back to the House.
The points that the two previous speakers have made are well taken. It is a shame that some of the artifacts of this building have been destroyed or lost. Certainly we ought to do better in the future. The idea of a curator with responsibility is an excellent one.
If the hon. member for Laprairie (Mr. Watson) did not have my support before he made his speech, he certainly got it when
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December 9, 1977
Parliament Hill Curator
he referred to the way in which high rise buildings were going up around Ottawa, blotting out the view of the Peace Tower. I felt offended many years ago when this process started. It was a serious mistake. Like him, I hope it will not be pursued any further. If the curator proposed under this bill could at least have powers of recommendation, that would be a good idea.
I said I would be very brief. I shall keep my word on that. If there is a motion to refer the subject matter of this bill to an appropriate committee, it will have our full support.


Cyril Lloyd Francis: Mr. Speaker, I am prepared to move the necessary amendment. However, I would like to say a word or two first. I totally disagree with my friend, the hon. member for Winnipeg North Centre (Mr. Knowles), with regard to the last remarks he made. But I agree with him on very many other things.
I had the privilege not long ago of visiting Washington where the planners had free rein in preserving the so-called vista. The net result was to preserve a series of obsolescent buildings within view. It created a slum within the heart of the city.
I remember visiting that city in 1970 with other members of this House, including the hon. member who sits opposite, an old friend and former Speaker of this House, the hon. member for Edmonton West (Mr. Lambert). We did a tour of the dome. I am sure he can remember 1970. Every shop, every place of business had been burned by arsonists. They looted the centre part of that capital city. It was spoiled by misguided policies which prevented the erection of new buildings and drove all new offices out into the periphery. Thank heavens we have not repeated those errors in this city. But I agree with this bill and so I move:
That all the words after "that" be deleted and the following substituted therefor:
"the bill be not now read the second time but that the order be discharged, the
bill withdrawn and the subject matter thereof referred to the Standing
Committee on Management and Members' Services.
I believe I am seconded by the hon. member for York East (Mr. Collenette).


Joseph Adrien Henri Lambert: Mr. Speaker, first I would also like to congratulate the hon. member for Laprairie (Mr. Watson) on his Bill C-212 for the establishment of the office of Parliament Hill Curator.
I am convinced that the aim of this bill is quite laudable, according to the remarks made by hon. members who have taken the floor on this issue. I remember that some three or four years ago maybe, the right hon. member for Prince Albert (Mr. Diefenbaker) had raised before this House the issue of building construction in the vicinity of Parliament Hill, skyscrapers whose impact on visitors who come to the Hill is that they hide from them the sight of Parliament and tend to make visitors and Canadians alike forgetful that they stand before Parliament or if you want the Parliament Hill of the National

Capital of Canada, since, when arriving in Ottawa, which is after all the nation's capital, one would expect the Parliament buildings to espouse a predominent perspective in their own immediate surroundings.
The right hon. member for Prince Albert had at that time received the support of all parties represented in this House and the National Capital Commission was given a mandate with very limited powers to protect this environment and make representations to the authorities of the city of Ottawa, and also on the Quebec side to the city of Hull, so as to ask them not to engage in or make any progress toward the construction of skyscrapers.
Unfortunately, and I do not know exactly for what reason, the National Capital Commission has not been able to make its view prevail since year after year we notice that this trend continues unabated. And now we realize it is a little late to act, as the hon. member for Laprairie just said when he gave explanations on Bill C-212. In my opinion, starting from now, I think that we should take all the means at our disposal to preserve this surrounding.
The purpose of the bill is to preserve all that can be preserved from an historical point of view, and I am in favour of this bill. It should be passed as quickly as possible, precisely to stop other valuable things from disappearing for one reason or another.
Mr. Speaker, the motion just introduced by the hon. member who preceded me to have this subject matter referred to an ad hoc committee is quite rational. But the committee will have to consider the matter very seriously within the spirit of the bill. That committee will then have to report to the House and the House will then have to take the means to bring about the results sought under Bill C-212. Otherwise it would be a waste of time, nothing would get done and in five or ten years there will still be members around to regret here in this House the fact that we did not think far enough to protect things we should be proud to leave to the generations after us.
So I think this is a very serious matter, a matter of national pride and real, genuine nationalism, and I am convinced that if we go at the bottom of things we will be able to do something very practical and that in years to come this will give results. So the administrators who will come after us will continue in the same way and we will be able to preserve as much as possible what can be preserved.


Mrs. Jean E. Pigott (Ottawa-Carleton):: Mr. Speaker, I am delighted to add a few words to this debate. I have been here so short a time that I come with a fresh approach to these wonderful buildings and this highly cherished part of our national life.
I would like to see an advisory group established by the curators of our museums. It could perhaps be called the Friends of Parliament Hill. People in communities across the country might wish to loan things to the parliament buildings so that they could be shown to the whole country.
December 9, 1977

I have often wondered why our committee rooms do not have things hanging in them. I find those rooms just a little sad and I wish that, say, in the Parliamentary Restaurant, we could see some of the wonderful pictures which I know are in storage. We do not have a national gallery as yet and perhaps this place could be made even more beautiful if there was a committee which could plan to display these things in our wonderful buildings.
One of the things I could not get over last summer, as we sat here in July, was that when I went out in the evenings for a walk I would find whole families standing just outside the doors. They came from all across the country. If you asked them where they came from they would often ask about these wonderful buildings. I think there should be far more going on here in the summertime when families come to reach out and see their parliament buildings. There are public servants in this city-I think of those in Public Works and in the National Capital Commission-who dearly love this building and who have cared for it over the years. I do not think they get the support either from public opinion or from within the parliament buildings themselves to stage events out on that wonderful lawn in the summertime in order that the people who come here from across the country could see or do more right on the Hill.
Perhaps because I am a local member I see many classes of children coming here in the spring and at Christmas time. I tell them a little about parliament, and I know the security service here is wonderful about conducting tours for them. Children, when they return to schools, are often asked to write essays about their visit here and are asked to tell about what they saw.
I wish we had the kind of brochures I have seen given out at Queen's Park. They tell a little of the history of that place and some anecdotes about it. I think if we had a curator or someone who really cared about it perhaps he would turn out to be not only safeguarding our heritage but one who would be something of a marketer who would tell about this wonderful place.
Every time I take round a school group I always show them Vimy Ridge stone. To me, this was the first great national event in our history when we became a nation. Only recently did I hear the wonderful story about the masonic plate which fell down in the fire, how they found it, and it is now hanging outside the Library. These are all real stories concerning the history of this place. Whatever happens to the bill, I hope my hon. friend will think of it not only in terms of safeguarding our past but of telling our story to the Canadian people.


Mr. Paul Dick (Lanark-Renfrew-Carleton):: Mr. Speaker, I will speak only briefly. 1 hope that when the subject matter of the bill goes to committee the committee will take what I might call judicial notice that a number of the areas touched on by the hon. member for Laprairie (Mr. Watson) have also been dealt with very recently by a commission set up under Mr. Justice Abbott.
Parliament Hill Curator
The Commission on Parliamentary Accommodation, composed of members from both Houses of Parliament, dealt with other possible facilities for housing members and staff. It dealt not just with the chambers here but with other buildings where we work. I recommend that when this matter goes to committee and is studied with some care and in some depth, reference should be made to some of the material in the hands of one of the deputy ministers of public works seconded to Mr. Justice Abbott's staff, Dr. James Langford. There is a lot of good material there which would be invaluable in assisting the hon. member for Laprairie, his aims and objectives.
I am not going to take up time because I believe that private member's bills, if they are good, should go to committee. I do not intend to talk out this bill, as was the case last week when we were debating a bill having to do with by-elections in Canada. The amount of time before a by-election can be called in Canada is the longest of any western democracy. Liberal members, including the hon. member for York East (Mr. Collenette) in particular, decided they did not want to follow the democratic practice of representing the people, people who remain unrepresented because of the death or resignation of their member, and talked out a bill which would have required that a by-election be called earlier. I hope this bill goes to committee and I wish it the best of luck as I resume my seat.


Mr. Collenette:: Mr. Speaker, I rise on a point of order. I know you were otherwise engaged a moment ago when the hon. member for Lanark-Renfrew-Carleton (Mr. Dick) misrepresented some of the statements I made in the House last week concerning a bill which is not before us today. I do not want to encroach upon the time allotted to this bill because I fully share the sentiments which have been expressed, but I believe we should set the record straight. In no way did I oppose the sentiment expressed by the hon. member's bill last week.


Maurice Brydon Foster: Mr. Speaker, I join with other members in supporting the hon. member's bill. Judging from the opportunities I have had to visit other legislatures around the world, we have in Ottawa one of the finest examples of a parliamentary facility. Anything we can do to enhance this facility, especially to tell Canadians about it, is very worth while.
I hope that as this information is organized and prepared, not only will it be made available in book form but as a film, film strips or slides so that students, not only in Ottawa but across the country, can see for themselves how the Parliament of Canada-the House of Commons, the Senate, and the Governor General-functions.
Yesterday I attended a luncheon for Dr. Vogel from the Federal Republic of Germany, who was presented with a new book on the Parliament of Canada. I had not had an opportunity to see the book before but it really is an excellent document and I hope all members have the opportunity to see it. It would make an excellent document to present on formal occasions.
80027-42V2

December 9, 1977
Parliament Hill Curator
As this committee studies the subject matter of the bill before us, I hope that someone, perhaps under the auspices of the chairman of that committee, will consider the advisability not only of documenting the information about our wonderful parliament buildings but providing the information in a popular, readable form for student groups.
I should like a short film running for about 15 minutes to be prepared for the use of student groups. Then when student groups visit us here, or when we go to high schools in our ridings, we can show them parliament in action-something it is difficult to summarize in a short space of time. For example, we often get off on one aspect of parliament, such as constituency work, committee work or the question period, and as a result I do not think the students get an over-all view. This sort of information should be made available to members for use with students and school groups. We should also have a short written summary of the functions of the Parliament of Canada.
I will not take up any more time of the House. I support the bringing forward of this important topic in the House this afternoon, and I am sure that the standing committee which will consider this bill will come up with many worth-while suggestions as a result of its study.


Mr. Marcel Prud'homme (Saint-Denis):: Mr. Speaker, I support this bill and I am not going to talk it out. I just want to make a comment or two, prompted by my hon. friend from Ottawa-Carleton who talked about Canadian paintings. I should like to see more of these in the parliament buildings and in other buildings on the Hill. Members of parliament, not only ministers, should be given the privilege of hanging Canadian paintings on their walls. We have an abundance of such paintings hidden away in buildings in Ottawa.
When talking about the Parliamentary Restaurant recently some of my colleagues asked me about the big long hall which leads to the parliamentary restaurant. Some of my colleagues in Quebec have asked me why, since we have pictures of Prime Ministers of Great Britain, a country for which I have great affection since it gave us our British parliamentary traditions, which I support as one of the best of parliamentary systems, we do not hang pictures of prime ministers of France, since we believe in the two founding nations. I disagreed with them entirely. I do not want to create friction with anybody, but I think that when we have this museum in the new East Block we might transfer these paintings of Prime Ministers of Great Britain to the East Block, and this will relieve me of the pressure of explaining the presence of foreign prime ministers.
I should like to recommend the establishment of the office of Parliament Hill curator. I am sure the hon. member for Ottawa-Carleton (Mrs. Pigott) will join with me in my effort. Visitors to parliament hill have different ethnic backgrounds, and they should be able to see the creations of Canadian artists adorning the corridors. There is a richness in Canadian paintings because of the multicultural background of this nation.


Hon. A. C. Abbott (Minister of State (Small Business)):: Mr. Speaker, I rise in support of this bill. Perhaps future improvements could be made to it at committee stage. The hon. member for Laprairie (Mr. Watson) referred to various things which have occurred on Parliament Hill. One must think of things such as C. D. Howe recommending that it would be a good idea to tear down the Parliamentary Library in order to put up a more efficient structure; the vulgarity of the carpet in the Parliamentary Restaurant; and the ersatz grandeur of Room 200. These things deserve over-all authority by someone who can contribute taste and a sense of history in the selection of materials and decor.


The Acting Speaker (Mr. Ethier):: Shall the amendment carry?


Some hon. Members:: Carried.
Amendment (Mr. Francis) agreed to.
Motion, as amended, agreed to, and subject matter of Bill C-212 referred to the Standing Committee on Management and Members' Services.


Yvon Pinard: Mr. Speaker, it being nearly five o'clock, may I ask the Chair to call it Five o'clock.


Some hon. Members:: Agreed.


Ian Watson: Mr. Speaker, I rise on point of order. We had the motion. Am I to understand it was carried unanimously?


The Acting Speaker (Mr. Ethier):: Precisely. The amendment carried, so the subject matter of the bill will be referred to the standing committee.

Order. The hour appointed for the consideration of private members' business has now expired. It being five o'clock, the House stands adjourned until 2 p.m. Monday pursuant to the provisions of Standing Order 2(1).
At 4:55 p.m. the House adjourned, without question put, pursuant to Standing Order.

Monday, December 12, 1977