1977-05-27

ROUTINE PROCEEDINGS


Mr. Walter Baker (Grenville-Carleton):: Mr. Speaker, I rise to move a motion of urgent and pressing necessity under the provisions of Standing Order 43. In view of the recent revelations of government evasion on the serious questions raised about the Department of the Solicitor General in the last few days, I move, seconded by the hon. member for High Park-Humber Valley (Mr. Jelinek):
That this House directs the government to institute a full judicial inquiry into the matter of the Agence Presse Libre and Praxis Corporation break-ins.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

to)


HARBOURS
Mr. John C. Crosbie (St. John's West):: Mr. Speaker, I rise under the provision of Standing Order 43 to move a motion on a matter of urgent and pressing necessity. This year the inshore fishery on the grounds off Cape St. Mary's shows signs of being very successful as the early catches in St. Bride's and Branch are encouraging. Further, Mr. Speaker, the fishermen of Branch must move ten to 12 miles to the fishery grounds in their inshore draggers and longliners but they cannot gain access to their harbour and the new fish plant because of sand in the channel.
I move, Mr. Speaker, seconded by the hon. member for Medicine Hat (Mr. Hargrave):
That this House direct the Minister of Fisheries and the Environment to cause the dredging of the channel at Branch immediately and to have the necessary repairs made so that this problem is solved on a long term basis.


Mr. Speaker:: Pursuant to Standing Order 43 presentation of such a motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


An hon. Member:: No.



ORAL QUESTION PERIOD


John Carnell Crosbie: Mr. Speaker, I will address my question to the Minister of Energy, Mines and Resources. In view of the findings of the National Energy Board that the export levels for light crude oil should be phased out by 1980-81, that our own crude oil will no longer be sufficient to meet our requirements between 1981 and 1983 and that we will need net imports of 450,000 barrels a day by 1985, that lack of action on the tar sands project means that the next tar sands plant will not come on stream until 1987 and in light of the lack of effective steps being taken for conservation through developing the tar sands, solar energy or hydro energy, will the minister tell the House when the government will adopt and implement effective energy policies and how they plan to meet this grim prospect outlined in the latest National Energy Board report? Would the minister also explain what he meant when he said that the National Energy Board report was "overly conservative"? Did he mean that the National Energy Board estimates were overly truthful rather than Liberal?


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources):: Mr. Speaker, I think the National Energy Board took the right approach when it assessed Canada's oil supply and requirements. The perspective is a conservative one and properly so for a regulatory agency. It is not in a position to build into its estimates of supply the sorts of things that I hope will happen and believe will happen, such as an upgrading facility for heavy oil. There is no mention of that in the report. There is mention of only one new tar sands plant. I hope we
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can get another going before then. That is why we have been in such active discussion and negotiation with the province of Alberta. There is no assumption with respect to the lessening of the demand for oil as a result of such matters as provincial initiatives and conservation. There is nothing in there for higher insulation standards for new housing. There is nothing in there for greater gas consumption in the province of Quebec, for example, replacing foreign oil. I am saying that this is a conservative approach to the next ten years, and I believe quite properly so, but I believe that with the assistance of the provinces we can assure there will be a greater supply than forecast by the National Energy Board.


John Carnell Crosbie: Mr. Speaker, the public of Canada cannot heat their homes or drive cars on the minister's hopes and beliefs.


SUGGESTED FEDERAL-PROVINCIAL CONFERENCE ON CONSERVATION POLICY-GOVERNMENT POSITION
John Carnell Crosbie: Mr. Speaker, I should now like to address a question to the Prime Minister in view of the minister's lack of serious response to my question, would the Prime Minister call together the ten provincial premiers for a conference open to the public, to television and the media, to discuss with them effective conservation policies in the energy field leading to a more efficient use of our energy resources and a reduction of the increase in demand? Would the Prime Minister take that action because if we cannot get our solutions on the supply side we must take strong action on the demand side. Would he call such a conference?


Right Hon. P. E. Trudeau (Prime Minister):: I thank the hon. member for the suggestion, Mr. Speaker, and I will consider it.


CONTINGENCY PLANS IF IMPORTED OIL NOT AVAILABLE-DATE OF IMPLEMENTATION OF NEXT TAR SANDS PROJECT
Mr. Arnold Malone (Battle River):: Mr. Speaker, my question to the Minister of Energy, Mines and Resources relates to the National Energy Board's prediction which seems to be based largely on this government's past performance in energy, that by 1985 this country will be importing nearly half a million barrels of oil per day. In view of the highly authoritative report from the workshop on alternative energy sources which suggests that there may be a world shortage of oil by 1985, will the minister tell the House what he plans to do if the half million daily barrels of imports are not available by 1985 and is his alternative to ration oil supplies for Canadians?


Alastair William Gillespie: Mr. Speaker, if the hon. member would refer to the "Energy Strategy for Canada, Policies for Self-Reliance" published one year ago, he would see that we fully anticipated these sorts of difficulties. Indeed, we set up a number of responses for increasing supplies. The hon. member may know that for many months we have tried to negotiate a different set of fiscal terms, to provide incentive for the development of the

yet underdeveloped leases of the tar sands and the heavy oils of Alberta. I believe it will be possible to produce close to a million barrels a day of oil and heavy oil from the tar sands by 1990.


Arnold John Malone: A supplementary question, Mr. Speaker. Since, according to the predictions of the National Energy Board, continued delays will slow down the development of the heavy oil sands in Alberta, may I ask the minister how quickly he expects the next development plan to be implemented and what is being negotiated at present to ensure that by 1985, not 1990, we will have another oil development project in the tar sands?


Alastair William Gillespie: Mr. Speaker, I think the chances are pretty good. Indeed, the energy minister of Alberta said, after the energy ministers meeting three weeks ago at which we discussed what the price of oil for Canada should be, that, given the scenario the majority of energy ministers accepted, Alberta would be prepared to develop aggressively-I think that was his phrase-the tar sands and heavy oils of Alberta. If we can secure the co-operation of the province of Alberta in this national task and reach the one million barrels a day production to which I referred, instead of the close to 500,000 barrels a day the National Energy Board set out in its report, we shall approach the target we set.
My figures indicate that we should be able to reduce our dependence on foreign oil to a lesser figure than we mentioned in the Energy Strategy one year ago. That will require considerable effort on the conservation side. It will require the implementation of measures which the government has already taken and will be taking, and considerable conservation measures on the part of the provinces. Some provinces think energy conservation is purely a provincial responsibility. It will require a much greater degree of urgency on the part of the government of Alberta with respect to the development of the tar sands.


RECONCILIATION OF CONTINUED HIGH EXPORTS TO UNITED STATES WITH ENERGY BOARD REPORT
Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, may I direct a supplementary question to the Minister of Energy, Mines and Resources. In view of the depressing report the National Energy Board brought down indicating that by 1985 our oil deficit will be at least 450,000 barrels a day and by 1990, some 600,000 barrels a day, how does the minister reconcile this serious situation in which Canadians find themselves with his offer to Mr. Schlesinger, the energy czar of the United States, at their meeting on March 4, that in certain circumstances he would be prepared to continue our export of crude oil at the rate of 250,000 barrels a day, for a period not exceeding five years. I ask this, since at present we export only 180,000 barrels a day, and the National Energy Board has recommended reducing such exports to 137,000 barrels a day. Why does the minister think we are in a position to offer the United States 250,000 barrels a day for not more than five years?
May 27, 1977


Alastair William Gillespie: Mr. Speaker, the hon. member was selective in his figures. He tried to leave the impression we only export
180.000	barrels a day.


Thomas Clement (Tommy) Douglas: Of light crude.


Alastair William Gillespie: If he had looked at the figures a little more closely he would have known that we are exporting considerably more than that. He used the phrase "in certain circumstances". I think it is important that those circumstances be understood. They include such things as a surplus to Canadian needs, swapping arrangements and protection to Canada in the event of some kind of embargo or interruption of supply.


REQUEST FOR CLARIFICATION OF OIL SWAPPING ARRANGEMENTS
Thomas Clement (Tommy) Douglas: Would the minister explain what he means by swapping arrangements? Is he telling the House that what the government proposes is that we should send to the United States
250.000	barrels a day of light, sweet crude oil in exchange for Prudhoe Bay oil which is sour oil brought by pipeline from Kitimat to Edmonton, which no oil refinery west of the City of Quebec is able to refine without a major overhaul involving heavy expenditure? Is that the swap the minister has in mind?


Alastair William Gillespie: No, Mr. Speaker. I have not talked about any arrangement involving a continuation of the export of light, sweet crude at the rate of 200,000 barrels a day. I have indicated that in certain circumstances we might be able to provide 250,000 barrels of crude oil but the major proportion of that will be in the heavy oils field. The allocation right now is roughly 140,000 barrels of heavy oil a day to the United States.
On the specific question of the surplus, I do not see the Prudhoe Bay swap as something which will happen very shortly. Maybe it will, I don't know. I feel the swap arrangements are more likely to be in other parts of the United States serving the eastern Canadian markets rather than one which would involve Prudhoe Bay oil coming to Canada from the west coast of the U.S.


POSSIBILITY OF ADOPTING HOME INSULATION PROGRAM AS CONSERVATION MEASURE
Thomas Clement (Tommy) Douglas: The
minister stated that he thinks the National Energy Board was too pessimistic in its report and that it had over-anticipated the demand, a situation which he hopes will be rectified by some type of conservation program. In his discussions with Mr. Schlesinger on March 4, according to the minister's memorandum to file of March 7, he said "The United States appears to be fully committed to reinsulation; we must take a further look
Oral Questions
at this". I want to ask him whether he and the government have, in fact, taken another look at this and in view of the fact that several provinces have indicated willingness to make loans with respect to insulation costs, is the government now ready to embark on a national home insulation program, particularly since such a program would save Canada $1.25 billion a year and $750 million annually in oil imports, and would save us about 40 per cent of the oil we are now having to import at world prices? Is the government seriously prepared, now, to embark on a national home insulation program?


Alastair William Gillespie: The hon. member has asked that question before and I have answered it before. Yes, the government is looking at such a proposal, but as I have explained to the hon. member this is an extremely expensive undertaking, probably of the order of a billion and a half dollars. Clearly this is a major stumbling block at a time when the government is trying to hold its expenditures down.


SUGGESTION HOUSING MINISTRY MAKE LOANS FOR HOME INSULATION AS CONSERVATION MEASURE
Mr. Jack Marshall (Humber-St. George's-St. Barbe):: supplementary question, Mr. Speaker. In regard to the figures the minister mentioned concerning the cost of home insulation, I am sure that the minister is aware that there is a program in existence now under residential rehabilitation assistance whereby all Canadians can borrow up to $10,000 and have $3,750 forgiven. The problem is that there is not enough funds. Is the minister prepared to recommend to the minister of housing that there be a direct thrust toward this type of program, which is already available, to provide insulation so as to extend it to many more Canadians who are in need of it, particularly those on low incomes?


Alastair William Gillespie: Mr. Speaker, I know that the Minister of State for Urban Affairs is very interested in and concerned about the problems to which the hon. member refers. He and I have had a number of discussions about how we can extend insulation programs to Canadians. As the hon. member knows, CMHC is administering the successful insulation program in P.E.I. and Nova Scotia.


ROYAL CANADIAN MOUNTED POLICE
Walter David Baker: Mr. Speaker, I should like to direct a question to the Minister with respect to the matters raised in this House involving the Royal Canadian Mounted Police. I should like to refer to what he said yesterday at the press conference. To quote the transcript, he said:
As soon as the ministers were apprised of the reality of the fact of the illegal break-in, they took action to make sure that the case was brought to the
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attention of the Attorney General of the Province of Quebec, which resulted in the trial being before the courts.
We now know that the three people charged in the province of Quebec all plead guilty. One of those unfortunately was an officer in the Royal Canadian Mounted Police. It seems to me an attempt is being made to cast some measure of ministerial responsibility on the Royal Canadian Mounted Police. I ask the Prime Minister whether he could tell us now-he could not yesterday at the press conference-on what date was the Solicitor General informed of the break-in, and which Solicitor General; and secondly, would the Prime Minister be able to assure the House categorically that the Minister of Supply and Services, who was at one time Solicitor General of Canada, knew nothing about this break-in?


Pierre Elliott Trudeau: First of all, Mr. Speaker, I would take exception to the suggestion that the government is trying to transfer the blame to the RCMP. It seems to me that that has been the object of most of the opposition's questioning in the past several days, to blame the RCMP for these actions.


Walter David Baker: Not true.


Pierre Elliott Trudeau: Then, if it is not true they should get together and make sure that they are not attempting to convey that impression. As far as ministerial involvement is concerned, I have ascertained that before the break-in there was absolutely no ministerial knowledge that there would be a break-in. That much is clear in my mind.
I said at the press conference yesterday that as to specific dates I would not be committed to them because I did not have them before me. I have since talked to the Solicitor General who feels that it is desirable, and I support him completely, to make a statement giving all the dates and all the facts as he has ascertained them. He has chosen, I think wisely, to do this after judgment has been rendered on the plea of guilty by the persons accused in Montreal. I am informed that this will be in a couple of weeks from now, and at that time I think it is his duty to make, and it is his suggestion that he make, a statement.
I understand the opposition's anxiety to get to the bottom of this. In order to make sure that the minister's actions are quite clear in the public mind, I myself am anxious that he make this statement. I hope the opposition will understand the desirability of not making it until the case is finally closed, which will happen when the sentence is given.


REASON FOR FAILURE OF MINISTER TO HAVE PRIOR KNOWLEDGE OF BREAK-IN AT L'AGENCE DE PRESSE LIBRE
Walter David Baker: A supplementary question, Mr. Speaker. I am happy to hear that there is going to be a statement with respect to the matter, but could the Prime Minister inform the House whether in the course of his statement the Solicitor General, who is going to be making the statement for the government, will be explaining how two former solicitors general, both in the cabinet, were so incompe-

tent as to have no inkling of these activities? Would that be part of the statement that would be made in the House?


Pierre Elliott Trudeau: Mr. Speaker, it seems to me there is a value judgment there about competency. I think the point will have to be dealt with. I do not think the hon. member should prejudge that there was incompetency. There may be another sequence of events which might explain the failure of the police to inform, at the right time, their superiors and the Solicitor General himself.


REQUEST FOR JUDICIAL INQUIRY INTO BREAK-INS AT L'AGENCE DE PRESSE LIBRE AND PRAXIS CORPORATION
Walter David Baker: Mr. Speaker, I moved earlier, seconded by another member of the House, that there be a judicial inquiry with respect to this matter. I moved it in good faith because I believe it is extremely important, not only from the point of view of the government, but certainly from the point of view of the Royal Canadian Mounted Police. Is it the intention of the government to have a ministerial statement in this House which will take the place of a judicial inquiry? Is this announcement this morning by the Prime Minister an indication the Prime Minister has decided today that there is no possibility and no need for a judicial inquiry with respect to this matter, and only a statement would suffice?


Pierre Elliott Trudeau: No, Mr. Speaker, I am not saying that. It may be entirely possible or desirable that a judicial inquiry follow. To be perfectly candid, I discussed this very matter with the Commissioner of the RCMP when the facts first came to my attention about the laying of charges against one of their former officers for illegal break-in and entry. I came to the conclusion then, and I have stated it to the House on many occasions, that I prefer, through due process, a judicial procedure to follow its course. If the opposition can, with absolute justification, claim all the facts are not known, then I will certainly consider setting up a federal inquiry.
My position in this House has always been that we do not set up inquiries if due process can bring the facts and the guilty persons to light. I do not see any reason for making an exception for the RCMP and to start an inquiry on them if the judicial process, which is operating in Montreal and in Toronto on the two cases in question, is going to bring the facts to light.


Walter David Baker: Can I assume the Prime Minister has in his mind the limitations on the judicial inquiry in the face of a plea of guilty, when facts are not brought out in the course of a hearing, as opposed to the carrying on of a case from the beginning through the calling of witnesses? That is one limitation. Does the Prime Minister have that in mind, and will he bear those limitations in mind, in terms of the judicial process, when he is considering the question of a judicial inquiry which has a much broader scope?
May 27, 1977


Pierre Elliott Trudeau: Mr. Speaker, I can take that into consideration, and I hope the House would, too. I fail to see exactly the point the hon. member is making. If the police make an inquiry and if the Attorneys General lay charges both in the Montreal case and the Toronto case, one assumes they lay charges against whom the facts seem to incriminate. If they do not lay charges against other people, presumably it is because the police have not found any evidence of involvement or guilt of other people. If the people accused then plead guilty, it seems to demonstrate the police have done their work effectively and have traced the accusations to the proper people.


Walter David Baker: It is the difference between criminality and impropriety.


Pierre Elliott Trudeau: It is difficult to follow the logic that we would be better off, somehow, if these people had not pleaded guilty and had forced the Crown to go through the whole process of proof by witness.


PRESENCE IN GALLERY OF VETERANS OF WORLD WAR I FLYING CORPS
Mr. Speaker:: Order, please. Before recognizing another question, I wonder if hon. members would join with me for just a moment in calling attention to the presence in our gallery of a very distinguished and very unusual delegation in the form of some extremely distinguished Canadians-a group of members of World War I flyers. All of these gentlemen served with either the Royal Flying Corps or the Royal Naval Air Service and were the forefathers of the Royal Air Force and hence the Royal Canadian Air Force. They are here for a reunion. They are in the ladies' gallery now, and I would ask them to stand because I am sure all hon. members would want to wish them a very pleasant reunion here this weekend.


Some hon. Members:: Hear, hear!


ROYAL CANADIAN MOUNTED POLICE
Mr. Erik Nielsen (Yukon):: Mr. Speaker, I have a supplementary question for the Prime Minister arising out of his weekly press conference yesterday. There are two unfortunate inferences which have been left as a result of the answers of the Prime Minister. First, there is the inference that the RCMP is somehow guilty of a cover-up vis-a-vis passing on information to the government; and second, there is an inference that it might be the government's intention to consider interfering with the disciplinary processes which are now in force in the RCMP. I would like to obtain from the Prime Minister assurance on his part, and on behalf of the govern-
Oral Questions
ment, that the RCMP still enjoys full confidence and faith of the government as a national police force, and that there was no intention by the Prime Minister to leave that inference of cover-up on their part, and no intention on the part of the government to interfere with their disciplinary processes.


Pierre Elliott Trudeau: Mr. Speaker, that is the most absurd question I have heard from a man who asks a great many absurd questions in this House. If there were any inferences, they were either in the hon. member's mind or perhaps in some form of questioning by his own members or by the media. There was no inference made to that effect by myself.


Erik Nielsen: Mr. Speaker, may I quote for the Prime Minister from page 5 of his press conference the answer to a question put to him by one of the members of the press where he is referring to the RCMP which reads:
... some disciplinary action was taken. That is my information. The extent to which that was enough ...
That is questionable. Now, if that does not raise an inference that the government is considering looking into the disciplinary processes of the RCMP, I do not know what does. I am being very bona fide in asking for the government's assurance that there is no intention to take that course. My more important question is: I am asking for the assurance of the government, through the Prime Minister, that the RCMP enjoys the government's full faith and confidence in their function.


Pierre Elliott Trudeau: Mr. Speaker, for the past several days the government has spent its full time defending the RCMP against insinuations coming from the other side.


Walter David Baker: That is not so.


Pierre Elliott Trudeau: That is why I felt the question is preposterous.


THE CANADIAN ECONOMY
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, in the absence of the Minister of Manpower and Immigration, I have a question for the Minister of Finance. On Tuesday in the House I indicated that the Department of the Minister of Manpower had prepared a forecast showing unemployment in the province of Quebec would rise again in 1978 to an average of 9.4 per cent. I would like to ask the Minister of Finance the following question: considering that this forecast simply indicates a worsening of the unemployment situation in Quebec, which has already experienced more than half of the new unemployment in Canada as a whole during the past two years; and considering that in a recent comprehensive survey in that province some 40 per cent of Quebecers under the age of 30 have indicated they are prepared today to vote for independence and give as their principal reason economic

May 27, 1977
Oral Questions
dissatisfaction with the economic policies of the federal government, particularly unemployment, I would like to ask the Minister of Finance if the government does not recognize now that the unemployment situation in Quebec is a principal cause of disunity and is reaching crisis proportions. Is the government prepared to come forward now with a comprehensive program to deal with this situation in Quebec?


Hon. Donald S. Macdonald (Minister of Finance):: Mr. Speaker, in the budget and under the programs which are under the responsibility of my colleague, the Minister of Manpower and Immigration, we have come forward with programs specifically directed at the slow growth areas of Canada, and Quebec in particular. I refer to the substantial funds being expended for special job creation, weighted as they are in favour of areas of high unemployment, and as well the fiscal policy put forward in the budget which favours investment in the province of Quebec. The hon. gentleman makes some reference to the separatist sentiment. One of the difficulties our efforts are meeting, in terms of stimulating further economic progress in the province of Quebec, is the uncertainty created by the Parti Quebecois government in that province.


POSSIBILITY OF STUDIES OF LEVELS OF UNEMPLOYMENT IN ALL PROVINCES FOR YEARS, 1977, 1978 AND 1979
John Edward Broadbent: Beyond all that rhetoric there is still the revelation that the government, in terms of another department represented by a minister who, for whatever good reason is not here today, has still forecast an increase in levels of unemployment in the province of Quebec, So there will be a worsening of the situation which the government must acknowledge and, one would hope, come to grips with. I should like to ask the minister also whether, with reference to other provinces, would he confirm that studies have been done in Canada for the years 1977-78 and 1978-79 which also indicate in a majority of all the other provinces in Canada there will be a worsening of the unemployment situation in the next two years.


Donald Stovel Macdonald: I would be glad to inquire of my colleague whether his department has done that, if there is any truth at all in the allegation of the hon. member.


John Edward Broadbent: I can tell the minister there is truth in the allegation and I will be happy to produce the figures prepared by the government. Given this alarming fact that unemployment will get worse in the country in the next two years, would the Minister of Finance assure the House that he will produce the tables and the reasons for the forecast for members of parliament but, perhaps even more basic than that, will he ensure that provincial premiers in Canada be given those forecasts for their provinces in at least the hope that some of them will take their responsibilities seriously about creating jobs for Canadians?


Donald Stovel Macdonald: I think that the most appropriate thing is to find whether or not the hon. gentleman is honestly in possession of the documents which confirm the allegations, or even dishonestly in possession of them.


NATIONAL REVENUE
Mr. C. A. Gauthier (Roberval):: Mr. Speaker, my question is for the Minister of National Revenue.
Could the minister tell me about this case. Lately, I phoned the Department of National Revenue (Taxation) and to my great surprise, I was answered by an officer of the Royal Canadian Mounted Police. I would like to know from the minister whether it is usual for the RCMP to have a permanent office at the department. I asked that guy what he was doing there, and he told me it was none of my business. He was right, it was probably none of my business. But it was his business to answer me decently on the phone.
I want to ask the minister whether she called on the RCMP lately to manage income tax offices.


Hon.   Monique@: Mr. Speaker, perhaps it was during lunch hour or coffee break. In any case, it shows that the public service is not as fragmented as some members of the opposition claim, and that people do cooperate. That being said, I think that the hon. member, who has been sitting in the House of Commons for many years, ought to know that the Income Tax Act allows for a certain degree of cooperation between a department such as mine and the Royal Canadian Mounted Police. I also assume that the hon. member dialed the right number and did not call the wrong office.


Charles-Arthur Gauthier: I have a supplementary question, Mr. Speaker.
First of all, I wish the minister to know that it was not during the lunch hour, but at 10 o'clock in the morning. It was the switchboard operator of the Department of National Revenue who received my call and who directed it to the Royal Canadian Mounted Police. I was quite surprised, because the RCMP has been tailing us for a number of years. I am afraid we shall suffer the consequences of this one of these days.


FINANCE
Mr. Heward Grafftey (Brome-Missisquoi):: Mr. Speaker, my question is directed to the Minister of Finance and has to do with forecasting procedures related to the consumer price
May 27, 1977

index and inflation. Since some weeks ago the Minister of Finance said the government's forecast was that it could live with a 6 per cent annual inflation rate and subsequently the minister had to revise it to 7 per cent and then to 1'h per cent and now we are informed that for the first four months of this year the annual inflation rate has skyrocketed way above these figures, is the minister now prepared to scrap the forecasting methodology in his department for inflation and the consumer price index and come up with something new and more reliable, given what just happened?


Donald Stovel Macdonald: The hon. member is perhaps not stating the situation correctly. The 6 per cent he referred to is the guideline which is set out in the anti-inflation program and represents the level that we would propose to apply at the end of the second year of the program. Indeed, the fact is that because of the impact of both the depreciation of the Canadian dollar and the increase in imported food prices, the hoped for levels were not attained. It seems to me that any intelligent use of the forecast would have to take into account that there will be external events of that kind which, from time to time, will make it difficult to meet the projected figures. I do not think it is a legitimate basis for criticizing those who prepared the forecast.


CONSUMER AFFAIRS
William Heward Grafftey: I have a supplementary question for the Minister of Consumer and Corporate Affairs. I cannot accept the premise in the answer of the Minister of Finance and since latter day prognostications regarding inflation and the consumer price index have proved to be very wrong-6 per cent, 7 per cent, 7.5 per cent, and for the first four months of this year going right beyond that-and in view of the fact that this forecasting procedure in the Department of Finance creates great instability among Canadian consumers-it is important at least to have proper forecasting procedures-has the minister, on behalf of the Canadian consumer, made representations to the Minister of Finance to correct his forecasting procedure so there can be a little stability in this regard?


Hon. A. C. Abbott (Minister of Consumer and Corporate Affairs):: Mr. Speaker, I cannot accept the hon. member's assertion that the forecasting procedures are erroneous and until I am persuaded of that, I do not see that I can properly make suitable representations.
Oral Questions FINANCE


REASON FOR GRANTING TARIFF REDUCTIONS WITHOUT CONCESSIONS IN RETURN
Mr. Jack Murta (Lisgar):: Mr. Speaker, my question is for the Minister of Finance. Since in the past the federal government has granted universal tariff reductions on a large number of horticultural products and recently, that is in the past year, it has granted them on processed pork, and since the General Agreement on Tariffs and Trade is essentially a bargaining exercise, why has Canada granted tariff reductions without- and I emphasize the word without-securing concessions in return in a good many of these cases?


Donald Stovel Macdonald: Ever since the introduction of these reductions for the purpose of restraining inflation in Canada we have made the point that they are of a temporary nature. Canada's bargaining position proceeds from the standard level provided in customs tariffs and that will be the basis on which we negotiate. So, in no sense should any negotiating party under GATT or any Canadian believe that the temporary tariff reductions are more than temporary or that we are negotiating anything more than on the customs tariff basis.

[DOT] (U50)


BILINGUALISM
Mr. Roch La Salle (Joliette):: Mr. Speaker, I should like to direct a question to the right hon. Prime Minister.
In view of the fact that the Federation des francophones hors Quebec had submitted a brief on April 13, that its president regretted this week that the government had kept silent about the submission of its first report; that this organization urges in its second report the establishment, through new arrangements, of a coherent and final policy aimed at helping French-speaking Canadians wherever they may live; and that the Prime Minister has agreed to meet this organization next week, on May 31 to be exact, could the Prime Minister or the minister responsible advise the House whether, under the present circumstances, the federation will be provided with the means to achieve its goal?


Pierre Elliott Trudeau: Mr. Speaker, no other date has been set for meeting the group. I indicated quite some time ago that I was willing to meet them, that their first brief would have to be studied, as well as the second which was to be published. Unless I am mistaken, that brief was published only a day or so ago. I then asked the hon. member for Ottawa-Vanier to study it for me; he told me that he had been unable as yet to get a copy of it. I am surprised that the hon. member for Joliette already has a copy of it.

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Oral Questions


Roch La Salle: Mr. Speaker, on a supplementary.
I feel that I am bringing up a very important matter, and the Prime Minister, I am sure, is willing to listen seriously to the claims of the federation. I am referring to documents which were given the minister last April 13. This week a second volume was handed over. I am merely asking the Prime Minister if he is willing to provide the means required by the federation to achieve its goals, namely a coherent act providing the necessary mechanisms to help Francophones living outside Quebec. That is all I am asking the Prime Minister.


Pierre Elliott Trudeau: Mr. Speaker, may I repeat my answer. The federation is producing a brief in two volumes. The second volume has yet to reach us, or in any event has not reached me. I cannot therefore give the hon. member a theoretical answer. As soon as I have examined that second volume, I shall meet the group. I feel that the date set for meeting them, namely next Wednesday, is really very early, but that is the date I am discussing with the Secretary of State. If there is enough time to study the brief and do it justice, the group will be seen Wednesday; otherwise that meeting may have to be postponed.


ROYAL CANADIAN MOUNTED POLICE
Mr. Allan Lawrence (Northumberland-Durham):: Mr. Speaker, I would like to ask one more question about the unfortunate matter involving the break-in at L'Agence de Presse Libre simply because the judicial proceedings and the sentencing of the police officers will have no bearing whatsoever on ministerial responsibility or ministerial knowledge of this matter, which I think the House has every right to know about now and not two weeks hence. My question is, therefore, to the Solicitor General. Has the Solicitor General's investigation within his own department turned up a letter sent immediately after the break-in by L'Agence de Presse Libre people to the then solicitor general, the present Minister of Supply and Services, complaining about the break-in and accusing the RCMP of involvement in it? If so, would he now table the letter and inform the House and the people of Canada what the minister did about that allegation made to him immediately after the break-in?


Hon. Francis Fox (Solicitor General):: Mr. Speaker, as stated by the Prime Minister in the House, I shall be prepared to make a full statement on all the events which occurred at that time once the judgment is rendered by the court. Personally, Mr. Speaker, I think that legal proceedings include the right for the accused to have a full and complete defence, and when we consider this full and complete defence, it seems to me that it includes the right for the defence of the accused who have now pleaded guilty to make the fullest representations

possible before the court at the time of the sentence. I have the impression that it has been understood almost implicitly among all hon. members of the House since March 31, 1976, when the then solicitor general stated that the case had been referred to the attorney general of the province of Quebec, that we should let justice have its full course before making any statement which could affect the rights of some individuals who are still before the courts now.


Allan Frederick Lawrence: I need no lecture about the rights of the accused from the minister. In my mind the minister and the Prime Minister are confusing two essential elements here, the rights of the accused with regard to the actual break-in and the whole question of ministerial and perhaps even governmental and cabinet knowledge of this matter.


An hon. Member:: Cover up.


Allan Frederick Lawrence: Right now there can be no possible reason for not revealing this letter to the House and to the Canadian public. Does the minister know of the letter addressed to his predecessor, can he table it for us and can he tell us what the result of that allegation to that minister was at that time?


Francis Fox: Mr. Speaker, if I were to accept the premises of the hon. member, I would go from question to question and make my statement right now. I believe we only have to wait a few days, that is until June 9, before the court makes a definite judgment. At that time, I intend to make a complete statement on the whole matter and the hon. member will surely be able then to ask any question he might have in mind.


HOME INSULATION PROGRAM AS CONSERVATION MEASURE-GOVERNMENT POSITION
Mr. Stan Darling (Parry Sound-Muskoka):: Mr. Speaker, I would like to address a supplementary question to the Prime Minister with regard to the insulation of homes. The Prime Minister is no doubt aware that it costs about one third as much to save energy as it does to produce it. This matter was mentioned earlier by one of my colleagues. The housing department, through RRAP, does provide loans for insulation, but I am asking the Prime Minister if he will recommend to the cabinet that it take an over-all look at this matter and grant special moneys to all people who insulate, in view of the great energy saving involved. This morning on "Canada A.M." it was suggested that over $ 1 billion per year could be saved if every home were properly insulated.


Alastair William Gillespie: Mr. Speaker, if I may answer, I have already indicated that the government is considering the whole question of extending the program which was introduced in Prince
May 27, 1977

Edward Island and Nova Scotia. I have made it very clear that such a program would involve a very large sum of money, on which at the present time it is not possible to put one's finger. In the meantime, I recommend to those who are contemplating insulating their houses that they go ahead and do so because, as the hon. member has pointed out, it is in their interest to do so.


PROPOSED REACTIVATION OF PRIVATE HYDROELECTRIC COMPANIES-GOVERNMENT POSITION
Stan Darling: Mr. Speaker, the minister is well aware of the tremendous cost of producing energy. I am wondering if the government will consult with the provinces with a view to reactivating some of the private electric companies which used cheap water power and which were phased out. Granted, they would probably produce only 1,000 horsepower each, but if 100 of them were reactivated, energy would be provided, and it would probably pay the government to give X number of dollars to the provinces if they were to look into the feasibility of this. Has the minister thought about that?


Alastair William Gillespie: I am not familar with the details of the hon. member's proposal, but I would very much like to consider it. If the hon. member would put this proposal in writing in some greater detail, I would take a look at it. I feel this is something to which the provinces might be able to respond, and I would certainly send the proposal along.


MARITIME POWER CORPORATION-DATE OF DECISION BY FEDERAL GOVERNMENT ON TAKING EQUITY POSITION
Mr. J. Robert Howie (York-Sunbury):: Mr. Speaker, my question is for the Minister of Energy, Mines and Resources. Has the minister yet made a decision on taking an equity position in the contemplated maritime power corporation?


Alastair William Gillespie: Mr. Speaker, discussions are still going on, but it is quite clear that the federal government does contemplate taking a position.


TAR SANDS-CO-OPERATION OF ALBERTA IN DEVELOPMENT
Mr. Gordon Towers (Red Deer):: Mr. Speaker, my question is also for the Minister of Energy, Mines and Resources. In answering a question related to the development of a further project at Syncrude a few moments ago the minister said: "If I can get the co-operation of the province of Alberta". Would the minister state what he meant by that and whether the government is giving co-operation to the province of Alberta?


Alastair William Gillespie: Mr. Speaker, as the hon. member knows, the province of Alberta owns the resources of Alberta. That is the jurisdiction which decides on royalty rights, on the rate of
Oral Questions
removal of the resource from the ground, on what projects will go forward and so forth. We are trying to work out with that province arrangements which would provide greater financial incentives for a new group to develop a new tar sands plant. Under present royalty arrangements I do not think there is any likelihood that a new tar sands plant will come on stream. We are trying to negotiate with the province of Alberta a system under which there would be reduced royalties, in return for which we would consider changes in the income tax arrangements with regard to the return from such a project.


POLAR GAS PIPELINE-POSSIBILITY OF GIVING PRIORITY TO ROUTE THROUGH MANITOBA
Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker, my question is to the same minister. Last month Mr. John D. Houlding, President and Chief Executive Officer of Polar Gas, stated that Polar Gas will file the necessary applications for permission to build a pipeline through Manitoba in September of this year. The completion of the proposed project is to be achieved within a five year period. The premier of Manitoba has stated that he does not believe such a pipeline through Manitoba would affect native people. The proposed pipeline would be up to 100 miles away from any of the communities in northern Manitoba. Is the government giving serious consideration to making the Polar Gas route the number one priority now in light of all the problems the Mackenzie Valley pipeline would present to the people of that area?


Alastair William Gillespie: Mr. Speaker, I do not think the hon. member can be serious with that question. He knows there is no application before the National Energy Board at the present time with respect to a polar route. There is no question that the resources of the high Arctic are very important and one would hope that in the future it will be possible to bring them south for the benefit of Canadians. At the present time, however, there is no application before the National Energy Board upon which the government can act.


THE CANADIAN ECONOMY
Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I would direct my question to the Minister of Finance in the absence of the Minister of Manpower and Immigration. In view of surveys made in all parts of Canada by the CBC and newspapers which indicate a very high rate of unemployment amongst new graduates of universities and community colleges in fields such as education, social work and many others for which there has been a real demand in the community colleges, could the minister tell the House if the government is giving consideration to helping find suitable employment for

May 27, 1977
Oral Questions
these young people who are amongst the best educated this country has ever had?


Donald Stovel Macdonald: Mr. Speaker, I would have to confirm this in discussion with my colleague, but in general terms the government is not specifically seeking to find employment for school teachers or the particular groups mentioned by the hon. member. Most of them have looked for employment at the provincial and local level. I think this is a recognition of the fact that governments in Canada have been putting their expenses under some considerable pressure and for this reason there has been a reduction in programs. I would have to confirm with the Minister of Manpower and Immigration, however, whether the specific functional groups the hon. member has mentioned are the subject of a special examination.


David Orlikow: A supplementary question, Mr. Speaker. In view of the fact that the university and community college programs are funded 50 per cent by the government and in view of the fact that we have spent hundreds of millions of dollars in the last six or eight years for these programs, will the minister, in co-operation with the provinces, initiate a very serious investigation into what lies ahead in these fields and whether we should be reconsidering the kind of program on which we have been spending so much money and also investigate the alternatives?


Donald Stovel Macdonald: Mr. Speaker, I would have to confer with the Minister of Manpower and Immigration on that aspect.


DATE OF ISSUANCE OF REGULATIONS GOVERNING OIL AND GAS EXPLORATION IN THE ARCTIC
Mr. Peter Elzinga (Pembina):: Mr. Speaker, my question is for the Minister of Energy, Mines and Resources. I am sure the minister is aware that Mr. Fraser Allen, president of Amoco Canada Petroleum Limited, in an interview with the Globe and Mail on May 14 said that Amoco would very much like to be back in the Arctic but the circumstances are not right. Among the circumstances that are not right are the absence of firm rules governing oil and gas exploration. Mr. Allen stated that his company just cannot go back to the Arctic or anywhere without firm land regulations being enforced. May I ask the minister when he is going to present to the House the new federal tenancy and royalty regulations and legislation? Is it true that these regulations and legislation are not now expected until 1978?


Alastair William Gillespie: Mr. Speaker, I have already answered a question with respect to that matter and indicated that I expected it would be in 1977.


Peter Elzinga: A supplementary question. Does the minister realize the urgency of an acceptable set of new federal land regulations in view of the fact that even if they were brought down this year Mr. Allen states that it would be 1980 or 1981 before Amoco could resume drilling oil and gas prospects in the Mackenzie River valley or the Arctic islands?


Alastair William Gillespie: Mr. Speaker, I am not prepared to accept the premise of the question.



ROUTINE PROCEEDINGS


[Stage Direction]
Sixth and seventh reports of Standing Committee on Justice and Legal Affairs-Mr. MacGuigan.

Donald Stovel Macdonald: Mr. Speaker, I should like to table the discussion paper on decontrol and post-control issues entitled "Agenda for Co-operation".


QUESTIONS ON THE ORDER PAPER
Mr. Maurice A. Dionne (Parliamentary Secretary to Minister of National Defence):: Mr. Speaker, I ask that all questions be allowed to stand.


Walter David Baker: Mr. Speaker, I rise on a point of order. This is the third day in a row that the government has decided not to answer questions on the order paper. Some statistics were given on the second day about their exemplary record-in their own minds-with respect to answering questions on the order paper. The questions are there because they raise certain matters in the minds of hon. members about the operations of the government, or seek information on behalf of constituents as part of the representative capacity of a member of parliament. This business of putting off answering questions for three days running is intolerable. It makes a mockery of order paper questions.
There has been a tendency on the part of the Parliamentary Secretary to the President of the Privy Council (Mr. Goodale) always to blame the hon. member for Leeds (Mr. Cossitt) for the delays. A long time ago the hon. member for Leeds exercised a right with respect to certain matters because he wanted questions answered properly in the House of Com-

May 27, 1977

mons. Some members may object to the way he took objection and to his reasons. I am sure there are some members who would object to anything the hon. member for Leeds does. But he had a right to have his questions answered properly, and all members of parliament have a right to have their questions answered properly today, the last day we called this matter for routine proceedings, and the day before that. However, we still have not received answers to those questions. Mr. Speaker, this makes a mockery of the system.
While I am on my feet, I want to mention something else that is important, and that is the matter of starred questions which has caused some difficulty. I think it is important that all hon. members consider the possibility of changes in our Standing Orders so that starred questions which require an oral answer in the House, and therefore must have some importance, be answered within a particular period of time and that there be some rule about the length of such questions. In the event that it is impossible to give an oral answer because that would take up a good part of the House of Commons day, then the government should be made to indicate much more than that the question is a long one and therefore cannot be answered.
There should be some procedure whereby members are assured of an answer in the House and that the question is not tabled for return and forgotten. The question should not merely be answered in writing, but answered in the House by a minister or parliamentary secretary. This should be done within a particular period of time except when there is legitimate excuse beyond the fact that the answer is complicated. I appreciate the position of the parliamentary secretary. He is handed a piece of paper on which is written: "Mr. Speaker, I ask that all questions be allowed to stand." The reason is there are just no answers that are proper. I am sure members on the other side of the House, as well as on this side, have had questions on the order paper month after month after month.


Mr. Beatty:: Jack Horner's go back to November.


Walter David Baker: Someone just said that the questions of the new Minister without Portfolio go back to November. I should like to see some answers to his questions. It is important that we develop this kind of procedure. I want to make it clear that I do not blame the parliamentary secretary personally. I know his position. I fault the government for putting the parliamentary secretary in the position of requesting, three days in a row, that questions be allowed to stand.
I suggest the government has been negligent. We are entitled to know why the parliamentary secretary has asked that these questions be allowed to stand. Are the questions too complicated to answer? Is that why some were not answered yesterday, the day before, and today? We are entitled to know. I can understand this happening once, but when it happens three days in a row we are entitled to an explanation. Many of the questions are neither long nor complicated. As I have said,
Order Paper Questions
the parliamentary secretary should explain why he is asking for the questions to be stood.


Mr. Stevens:: Mr. Speaker, I rise on the same point of order.
I support what my colleague has said about questions not being answered for three days. I asked the Minister of Finance (Mr. Macdonald) yesterday why question No. 749, which deals with his department, was not answered. It was set down last October. The minister indicated he had signed the question. It was sent to the Privy Council office where, presumably, it has remained. I urge an end to this practice. If an answer to a question is available, it should be tabled. The Privy Council office should not hold up the tabling of answers. Also, questions 750 and 754, set down in October, have not been answered. Surely the answers to these questions are long overdue.


Arnold John Malone: Mr. Speaker, I rise on the same point of order and support wholeheartedly what both my colleagues have said. May I suggest something constructive? If the government fails to answer a question within a specific time, say within two weeks or a month of its being set down, the parliamentary secretary should explain the reason for the delay. I say this for a particular reason. Constituents often ask members of parliament to raise such questions because information furnished in the answers influences business decisions. I have had experience of this.
If the government does not release the information or is tardy in answering questions, the end result may be that business opportunities are lost. If the parliamentary secretary, after two weeks or one month, could explain why the question has not been answered, the member or his constituent could seek other channels of information. If the government cannot answer an order paper question within a couple of weeks, say, I suggest someone in authority should immediately communicate with the member of parliament asking the question and say why the question cannot be answered within a reasonable period.


Mr. Speaker:: Order, please. The suggestions put forward today ought to be directed to the Standing Committee on Procedure and Organization. Suggestions have been made about the use of starred questions and the responses to them, and about the response or reaction to such questions if they cannot be answered within a few days. I am sure those worth-while suggestions will be borne in mind.
The practice is that the parliamentary secretary asks that questions be allowed to stand. It is improper to seek any explanation of that from any member of the government or to permit any member of the government to explain it. The Standing Order requires all such questions to be dropped from the order paper if they are not allowed to stand. Therefore, with the consent of the government they are allowed to stand, which means they are not dropped from the order paper. That procedure is followed each day for the benefit of the questioner, not for the benefit of the government. Therefore, I think the matter ought to stand, with suggestions for improvement to

May 27, 1977
Air Canada
the procedure committee as outlined today in valid contributions.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Wednesday, May 25, consideration of the motion of Mr. Lang that Bill C-17, respecting the reorganization of Air Canada, be read the second time and referred to the Standing Committee on Transport and Communications.
David Orlikow: Mr. Speaker, on Wednesday last we discussed two bills to do with air transport, the aeronautics bill, which we passed, and Bill C-17 dealing with the reorganization of Air Canada. As I said on Wednesday, this government's approach to transportation policy is fundamentally wrong. One week we discuss freight rates, another week a bill on railways, and another week a bill on airlines. Clearly, this country needs a comprehensive transportation policy which will promote the most efficient way of moving people and goods, encourage the conservation of energy, reduce pollution and make the most efficient use of manpower. We must use our airlines, railways, trucks, buses and private cars in the most efficient manner. This we have not done. By introducing bills of this sort the government is putting off, perhaps for years, the time when we can draw up the necessary and comprehensive plans which will enable us to use most efficiently all modes of transportation.
As I said on Wednesday, this simple bill will change the structure of Air Canada. On Wednesday we gave second reading to Bill C-46 to amend the Aeronautics Act. I suppose we shall today give Bill C-17 second reading. This bill merely changes the organization of Air Canada. Mr. Speaker, we are considering this legislation in isolation, as it were, ignoring the tremendous changes taking place, particularly in the field of air transport. Those changes have taken place without sparking any discussion in parliament. So far as I know, the Minister of Transport (Mr. Lang) has not made a single public statement on what is happening or what is the government's position. Obviously, some changes could not take place if the government did not approve. We do not know the basis for some changes or what their effect will be.
In this regard I direct the attention of hon. members to an important change taking place in the field of air transportation. Hon. members who read today's edition of the Montreal Gazette no doubt will have noted that Pacific Western Airlines has completed a deal to purchase Transair. I mentioned on Wednesday that had the minister possessed the authority which he will possess when the aeronautics bill is passed, he would have prevented the government of Alberta from pur-

chasing Pacific Western Airlines. That is a power he will have when we complete the passage of the aeronautics bill to which we gave second reading on Wednesday.
I am not opposed, as the minister for some considerable time said he was, to the idea of a provincial government getting into the air transportation business. I find it interesting that the minister should now have agreed to the expansion of Pacific Western Airlines, although it is owned by a provincial government, and I wonder what his response would have been and what the response of members of the official opposition would have been had it been the NDP government of British Columbia which had purchased PWA instead of the Conservative government of Alberta. However, that purchase has been made and, as I say, we are not opposed to provincial governments being in the air transportation business. But now Pacific Western Airlines, owned by the Alberta government, is proceeding to complete a deal through which it will purchase Transair. Transair is a company based in Winnipeg. It has a route into northern Ontario, a route between Winnipeg and Toronto, a route into the Northwest Territories. Suddenly we find that the Minister of Transport, who was long opposed to the government of Alberta purchasing PWA, approves and encourages the deal. Apparently he has given some commitment, verbal at least, that there would be sweeteners to Pacific Western Airlines if it put this deal through. One newspaper story said that PWA was purchasing Transair for less than it would cost the company to purchase one new DC-10.
It is interesting they should be able to do this and that they should be doing it with the approval of the Minister of Transport. According to the Winnipeg Free Press of May 10, the Premier of Manitoba, in which province the airline has its business office and overhaul facilities, was not shown the courtesy of being informed by the Minister of Transport of what was taking place or what had been agreed to. The Winnipeg Free Press reports that at the sitting of the legislature, when the news had become public, Premier Schreyer said he would raise with the federal minister some disturbing questions about the merger. The news story goes on to say:
He told the legislature he had tried in vain to reach Lang Monday because he intended to speak to him that day.


Thomas Clement (Tommy) Douglas: He was
probably flying around.


David Orlikow: He was probably flying around in that $750,000 jet aircraft of his. The report continues:
Schreyer said he was told by federal officials that the merger hung on whether Transair would give up its Toronto-Winnipeg run in return for some of Air Canada's viable western routes. He told the legislature this raised some disturbing questions about why such routes were not offered to Transair previously.
Mr. Speaker, surely when we are discussing a bill about Air Canada, the Minister of Transport could have used his time while introducing the measure to tell us which western routes Air Canada would be turning over to Pacific Western Airlines. Surely the minister could have given some information to the Premier of Manitoba who, according to the Prime Minister
May 27, 1977

(Mr. Trudeau), has been more willing to think as a Canadian rather than as premier of one province than any other premier in this country. Yet he did not even show him the courtesy of telling him what kind of deal he was making behind his back. This is a deal which is just completed, and it is one about which we ought to be given a good deal of information.
Today's Montreal Gazette carries a story on the front page of its business section, the headline of which reads: "Sale of CP Air to Pacific Western under discussion: federal official". Let me quote a couple of paragraphs from the story by Nicholas Hills.
Pacific Western, the Alberta government-owned airline will next take control of CP Air, the money-losing subsidiary of Canadian Pacific Limited, industry sources say.
The story goes on:
Rumour or not, good airline or not, there is one inescapable fact: Canadian Pacific is fed up with its airline losing money. The losses of $9.8 million in 1975-76 and $6.4 million in 1974-75 are a drag on the giant's corporate image, let alone its books.
With its recent acquisition of Transair Limited of Winnipeg, PWA is now the second airline in the country. It basically controls regional air travel in the west and runs head-to-head against CP Air on many DC routes including those into Prince George, Terrace and Prince Rupert.
It may make some sense to have competition on those routes, but if PWA purchases CP Air it will be in direct competition on the transcontinental route with Air Canada. So you will have the strange position of one airline owned by the federal government which carries passengers from Victoria to St. John's and another airline, PWA, owned by the Alberta government which will be moving passengers from Victoria to Montreal, both of which, in the last couple of years, have been losing money.
Hon. members to my right cannot say everybody knows that a government-owned operation cannot be run efficiently so we should not be surprised it is losing money. Here we have a privately-owned airline which has lost money in the last two years. There are several reasons for this. First, there is the tremendous increase in the cost of fuel, an increase in the neighbourhood of 300 per cent. Every airline in the world is in trouble, and virtually every airline, whether owned by its government or privately, is now being subsidized. That is part of the reason. The other part of the reason is the cost of air travel. Most planes flying in Canada and in other countries have substantial excess capacity, to the extent of having 30, 40 or even 50 per cent of their seats unfilled. This raises another question which we should examine.
The original decision of the Conservative government, which was expanded by the Liberal government, was to have competition, to have two airlines operating on transcontinental routes across Canada. We wonder whether this was a wise policy or whether we would not have been better off to follow the policy elaborated under a Liberal government by that great businessman and free enterpriser, C. D. Howe, where one transcontinental airline owned and operated by the people of Canada would operate in Canada for service and not for profit.
Air Canada
The acquisition of Transair by PWA will have vital consequences for the people of western Canada, regardless whether PWA is privately owned, as it was until a few years ago, or publicly owned, as it is now by the government of Alberta. The possible acquisition by PWA of CP Air will also have tremendous consequences for the people of Canada. I suggest that the least the people of Canada have the right to expect from the Minister of Transport is that he should tell them what is happening and explain the decisions that have been reached. If consideration has been given by CP Air to sell the company to Pacific Western Airlines, then what is the position of the government of Canada, and what are the reasons for the sale?
We have had not a word from the minister in this regard. He does not want discussion of public issues. He wants to make decisions in consultation with a few senior bureaucrats in his department, who have been consistently wrong on many of the most important decisions which have been made, as well, 1 suppose, as in consultation with some of the big business executives with whom the minister is obviously much more comfortable than he is with members of parliament or members of the public.
These are matters which need to be discussed now but which should have been discussed long before. This minister should have given us an explanation when he introduced the bill on Wednesday, rather than non-committal chatting concerning a few details. Until we have this kind of discussion of transportation and air policy, the members of this party will oppose this bill and any others which the minister brings forth.


Sinclair McKnight Stevens: Mr. Speaker, in joining in this debate on Bill C-17 I am rather compelled to repeat what I said in the House during debate on Bill C-54, the excise tax bill which we discussed last week. At that time I said that this government has shown a remarkable knack for bringing legislation before the House the provisions of which, for reasons known only to the government, end up 180 degrees off course.
The bill before the House today says, in effect, that Air Canada has what Air Canada's management feels is an uncomfortable weight of debt and somehow Air Canada should be restructured so as to relieve the corporation of the carrying charges of that debt. That is a nice way to express it. As we know, Air Canada officials have often come forward in committee and said they feel that if they were freed from the debt load they would be able to show relatively better earnings.
Having made that point, it is interesting how those who believe in state-run enterprises like Air Canada and love to posture this type of activity also love to cloud the issue and to disguise the mismanagement which is usually found in most state-run operations. The hard fact is that the reason Air Canada has such a heavy debt, which is owing to the government of Canada through the CNR, is that they have been running substantial losses. They are now comparing their operation with comparable airlines in the United States, and they say that the capital ratios in the United States so far as debt is concerned are higher than their ratio; that somehow

May 27, 1977
Air Canada
this should be adjusted almost magically by the government's accepting the capitalization of the debt owing to them.
The point the minister does not make clear, and the point the officials of Air Canada do not make clear either, is that the capital ratio they refer to in respect of private carriers in the United States was not something given to those concerns by a government. It was not something that was even paid in in the main by the shareholders of those concerns. It was the accumulated earnings which those airlines were able to build up over the years which gave them the wherewithal to be effective, viable entities in sharp contrast to Air Canada.
Later in my remarks I want to draw a contrast, for example, between Air Canada and Northwest Airlines, which is a very similar operation run, of course, as a private concern in the United States. In these two cases roughly the same revenue pours into the companies, roughly the same number of air miles are flown, and roughly the same number of aeroplanes are owned by the two companies. But Northwest Airlines made, in the period to which I shall be referring later, a profit of about $100 million, whereas Air Canada lost $20 million.
The number one point which stands out in contrast when you compare those two companies is the number of staff of the two airlines. Air Canada, with an approximate revenue equal to that of Northwest Airlines, has almost double the number of employees Northwest Airlines has. To me, that, in a nutshell, is the problem with state-run enterprises. Profit is not a motive. They realize they have government coffers to fall back on, so if it is a question of hiring a few more people, why not? The fact is that when a bureaucrat sees evidence of profit in a Crown corporation, he almost gets into a state of hysteria in making sure expenses increase fast enough so that the profit will not continue.
One of the things I am concerned about in the bill before us is that if we capitalize this debt, which is really notional, there will not even be notional charging of interest by the government to Air Canada from now on. In short, if this notional debt of Air Canada stands at, say, $70 million, just think what a boon it will be to Air Canada. If that is capitalized, they will no longer have to reflect that interest cost and, in short, they will be given a $60 million to $70 million subsidization by the government of Canada. Mark my words, if Air Canada is allowed to continue with no further restriction and no attempt to privatize it or somehow make it more conscious of the need to earn a profit, that subsidization will be used up in a matter of years and they will be back into a deficit position with some new rationalization as to why they are not viable.
Having made those few preliminary remarks, I would like to state that in the excise bill I have referred to we saw where the government somehow managed to devise a tax on tourism. I am referring to the air transportation tax. They devised that tax at a time when our travel accounts are in critical deficit. I am pleased the Minister of Finance (Mr. Macdonald) is in the House. I notice he is reading his green paper-I hope not for

the first time-on the decontrol mechanism which he is intending to explain at a press conference later this afternoon.
Is it not odd, when we have run up a $1.2 billion tourist deficit in this country and when the Financial Post estimates if the trend continues it could be a $10 billion deficit some time in the 1980s, that the government chooses this time to bring in a foreign air transportation tax to cover what they say are the user costs of the airport facilities? As was raised at the time the excise bill was before us, the fact is that the costs they refer to are in many ways costs we do not have to incur in this country. Airports could run on a profitable basis if there were better direction at the Ottawa level.
As far as the government's actions are concerned, we saw their refusal to abolish or decrease the sales tax on smaller, more energy-efficient cars. That was a measure which we felt would spur the economy and provide a direct and positive incentive to energy conservation. We saw this 180-degree turnaround as far as the government is concerned in this bill which is now up for debate at second reading. This is a bill which is supposedly designed to put Air Canada on a viable commercial and financial basis competitive with privately-run airlines. In essence, it would bring Air Canada under increasingly direct government control. It is an anomaly, I would suggest, of this administration which can be so successful at drafting legislation totally and completely opposed to the very spirit and aims which produced the legislation in the first place.
Few, if any, in this House wish to see Air Canada limping along with its wings clipped back by continuing losses. They have even given up their peanuts on certain of the flights which I have been on. I do not know whether it was because they were being called internationally the "peanut airline" or whether this is another measure of restraint on their part.


An hon. Member:: They were American peanuts.


Thomas Clement (Tommy) Douglas: They are mad at Jimmy Carter.


Sinclair McKnight Stevens: My colleague from the other party says they are mad at Jimmy Carter. That may be so, but I am not sure. Be that as it may, I do not think anyone wants to see a state-run operation such as Air Canada in a loss position. That is not a good advertisement for the nation. The losses Air Canada is referring to have grown in the past three years from $9.2 million in 1974 to $13 million in 1975, and last year the loss was down a bit, to $10.4 million. All of us, with the possible exception of the socialists to my left, want to see Air Canada operate on a sound, efficient and profitable footing. In this connection, at least, we support those provisions which would reduce Air Canada's staggering debt equity ratio and reduce its cost of financing.
Having said that, I would emphasize that hon. members should take a good, solid look at why that debt structure has been allowed to arise in Air Canada and should not assume it was something which could not have been avoided. What is astounding is that the government would pursue these laudable

goals in the framework of the legislation before us today, that is, the framework of Bill C-17 which has the laudable goal of trying to put Air Canada on a more viable basis. I would say the framework is not suitable for what the government claims they are attempting to do.
At present we have in this country an estimated 1,200 state-owned and operated concerns. Few, if any, of these are models of efficiency or sound financial management. One need only read the Auditor General's report to confirm what I am saying. Yet the government is proposing today that we get Air Canada to straighten up and fly right by removing it from the control of the Canadian National Railways and placing it firmly under the control of the Minister of Transport. In our minds, this is taking our national airline from the frying pan and pitching it squarely into the fire. Hon. members must remember who it is that is proposing to run Air Canada.


An hon. Member:: The Post Office.


Sinclair McKnight Stevens: Yes, Mr. Speaker, it is the same people who run our Post Office. Perhaps that is the best evidence of how inefficient they are at running a business. It is the same government which has demonstrated such acumen in developing mammoth airports that no one wanted or even needed. It is the same people who have master-minded such massive blunders as Pickering, where they have tied up $110 million in a stillborn airport. What is even worse is that they have taken 18,000 acres, 90 per cent of which is class one agricultural land, and have virtually put it into disuse as far as farming activities are concerned. Take Mirabel-and I wish somebody would: surely that is a classic white elephant so misconceived that airports in the United States are now using it as a drawing card for rerouting business.
I hope hon. members have noticed the ad which is now being run by the airport authority in Boston. It is openly advertising in Canadian magazines that Canadian travellers should use the Boston airport because it is more convenient than going to Mirabel.


Francis Fox: That is balderdash, and you know it.


Sinclair McKnight Stevens: Well, the Solicitor General (Mr. Fox) may call it balderdash, but the fact is that it is a clever ad. It shows the Simpson family thanking whoever was responsible for the 1 '/2-hour trip through scenic Canada, but they say they thought they were on their way to Europe. The airport authority in Boston is simply saying, "There is no need to waste time travelling for an hour and a half, whether you like the scenery or not. If you want to get to Europe rather quickly, come through Boston and we will expedite your trip to Europe".


Francis Fox: The moral of the story is wrong. They could have stayed in Canada and had a good time.


Sinclair McKnight Stevens: Yes, they could have stayed in Canada and had a good time. It is kind of hard to follow this government sometimes. We have the Prime Minister (Mr. Trudeau) who tells people who are out of work to go to another country to find a job, and then we have the Solicitor General who says
Air Canada
that somehow they should be controlled and contained in Canada so they can have a good time here. How dictatorial can you get? It is rather bewildering. The Solicitor General tells us that Mirabel is in his riding. I understand why he feels he really has troubles. I thought his current problems with certain of the operations in his department were enough to trouble him, but if he has Mirabel as well, my heart goes out to him. Maybe we should take it a little easier on him in the House after this.


An hon. Member:: Pickering is in your riding.


Sinclair McKnight Stevens: To continue what I was saying, let me point out that the Mirabel fiasco led to the loss of $56 million in the operation of that airport last year. I am simply citing these examples of these wizards in business who now say, "Give us direct control of Air Canada and we will whip it into shape". Let me cite another example. This is the same government that is putting together the de Havilland Canadair so-called aerospace rationalization in the country. We were told in committee that they have approximately $150 million tied up in the purchase price of de Flavilland, plus the various grants and loans they have made to de Havilland to produce the Dash-7. They are now at the point where they have to sell 250 of those Dash-7s just to break even. They have sold one at last count-


Mr. Blais:: Mr. Speaker, I rise on a point of order. I thought we were dealing with the Air Canada bill. I looked at the provisions of the bill and I do not see that the takeover of de Havilland has anything to do with the bill. I hope the hon. member will keep to the principle of the bill, which is usually what is debated on second reading.


Mr. Deputy Speaker:: Order, please. I happened to be looking at Beauchesne's and perhaps I should read the appropriate citation to the House. I know it is the responsibility of the Speaker to insist that members keep their remarks relevant to the subject matter of the debate. However, citation 119(3) reads:
Relevancy is not easy to define. A wrong comprehension of it may have a serious effect on the freedom of speech. Members are often deprived of their right to speak on pretext that their remarks are irrelevant when as a matter of fact they refer to matters perhaps remote but yet related, even indirectly, to the question under debate.
I have been following the comments of the hon. member, and I hope he will contain his remarks within the confines of the bill.


Sinclair McKnight Stevens: Thank you, Mr. Speaker. I do not doubt that the Postmaster General (Mr. Blais) is a little touchy. I cited his operation as a classic example of mismanagement so far as business is concerned, and as he has to live with his $700 million deficit-which, incidentally, used to be a profit back in 1970-I can well understand that he does not like to hear about another such Crown corporation or similar agency. But I am quite in agreement that it is relevant to cite examples of government mismanagement.

Air Canada


Jean-Jacques Blais: I rise on a point of order, Mr. Speaker. I suppose that the hon. member should cite, as well, the operations of the Bank of Western Canada as being an example of a properly managed private enterprise.


Sinclair McKnight Stevens: If the Postmaster General would like to have a debate in the House on what he calls the West Bank, by which, I presume, he means a bank in Canada as opposed to one in the Middle East, I would be willing to have that debate. In fact, I would welcome it to show the contrast between the minister's operation and the operation of that entity.
I was citing the government's mismanagement in various activities, their colossal blunders, and I can only conclude that portion of my remarks by saying that I do not think it shows they have the credentials to run Air Canada directly. One can only guess at the outcome, but if this reorganization of Air Canada is in line with this administration's track record in urban transportation, interurban rail service, airport development and management, or any other facet of the government's transportation policies, then the first 40 years of Air Canada's history may well be its last.
Hon. members will recall that the government, in the Speech from the Throne and again in the white paper entitled "The Way Ahead", promised increased reliance on the private sector. It was stated in the throne speech:
In a further effort to reduce the size of government as well as expand the range of opportunities for private enterprise, all federal programs will be reviewed to identify those government activities which could be transferred to the private sector without reducing the quality of service to the public.
Later in the speech the government again promised to "promote greater freedom and efficiency in the marketplace." Still later, in defence of its so called "middle road" between complete reliance on the free market and socialist intervention in the system, the government stated:
-that choice also implies that the working of the market must be improved and that less costly, less interventionist ways must be found to pursue social goals.
We welcomed these words, hoping they signalled a return to sanity, a recognition that the economy could sustain no more excessive government flab and grab. Subsequently, when successive news reports indicated the minister was investigating means of turning over Air Canada to private hands, we thought this would be the logical place to begin a constructive diminution of government control. Frankly, we were interested to see what would be the government's suggested method of making Air Canada a private enterprise. After all, the minister himself stated in his opening remarks to this bill: "Air Canada is no longer a fledging airline and no longer needs special protective measures". We had hoped that by preparing Air Canada-now 40 years old-to fly on its own, the government was setting the pace for other divestment of unnecessary state ownership. But we were wrong, for when we examine this bill we find that Air Canada has been merely shifted to ministerial management. We have only the minister's word that such direct government management will result in sound commercial and financial viability. As I said, given the track record of this minister and his government, that word is not enough.
May I call it one o'clock, Mr. Speaker?
(Mr. Stevens.]


Mr. Deputy Speaker:: Order, please. It being one o'clock, I do now leave the chair until 2 p.m.
At one o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
Sinclair McKnight Stevens: Mr. Speaker, before lunch I was stating that I felt in some ways members must be quite sharp in their observations concerning the bill before us, in that I think it is once again the type of rationalization that the government likes to go through to cover mistakes in the operations of one of the Crown corporations, in this case Air Canada.
I should like to state, also, that I believe the provisions of Bill C-17 are so wide and encompassing that the cabinet will have virtually complete control over the board of directors of Air Canada if the legislation goes through in the form in which it is now before us. Cloaked in language that purports a new era of Air Canada competition with private airlines, the bill, in its very broadness, merely points the way to massive interventions in the operation of Air Canada. In the minister's own words, the bill "provides for direct government ownership"; and, again, "Air Canada would be required to comply with direction from the governor in council." This direct ministerial control over Air Canada is unfortunate. It is businessmen, not bureaucrats, who know how to run a commercially successful enterprise.
The specifics of this new arrangement as far as the bill and the minister's speech are concerned are to come at a later date. But given the fact that the government has failed to bring the annual report of Air Canada for each of the three previous years before committee, we can only surmise that it will be even harder to scrutinize the airline's operations under the cloak of ministerial privilege. Clearly, the government is playing a game of monopoly again and, as usual, it spells out the rules only as it suits them and only when it suits their timing. It is playing monopoly with billions of taxpayers' dollars, secure in the knowledge that a multimillion blunder here or there will not break them as it would private industry. Being government, it can simply send taxpayers digging deeper into their pockets to cover government mistakes.
The government is playing big business with all the assets of what will surely be one of the world's most lavishly capitalized airlines-and I emphasize this. It will not have the risk, as far as operation is concerned, that most of the world's airlines have to accept as privately-run companies. It will be one of the world's most lavishly capitalized airlines, as I have stated, if this bill goes through. Frankly, we cannot find another airline that will have such naked capital to work with as Air Canada will if the amendment proposed by the minister sees the light of day.
May 27, 1977

It is an approach we have seen all too often in this House. The government, with their fondness for Crown corporations- as we know, they are planning two more in VIA rail and marine transport-are acting as would-be "captains of industry" with someone else's money. Too often these experiments go sour and prove to be wasteful and expensive exercises in bureaucratic bungling. Frequently, they are counterproductive and even hurt the industries they are supposed to be helping and, in some cases, spearheading development-PetroCan, for example. Sometimes they are even swollen and flabby retreats for party faithful: an incorporated pork-barrel of incompetence and privilege. Our experience with these state-run companies in the past clearly shows that what is needed for Air Canada is not another Crown corporation but systematic and phased conversion into a private concern. Free market competition and management by those who have a personal stake in the enterprise would get our national airline off the ground again and back into the profit column.
I referred earlier to the comparisons that can be made between the operational losses of Air Canada and the profits being made by private carriers in North America. Some time ago I saw a report that Northwest Airlines had a net profit of some $60 million in 1974. What struck me was not that Northwest had made a profit-that is fairly common among the privately-run American airlines-but, rather, that on closer examination we see that Northwest is similar in size and operation to Air Canada. Both operated in 1975 with revenues of under $1 billion. In Air Canada's case it was $957 million, and in Northwest's case it was slightly more than $800 million. Both operate the same size fleet, covering similar route distances. Air Canada ran 120 aircraft in 1975, while Northwest ran 113. Both pay, with two major exceptions, similar operational expenditures, including rental expenses which in 1975 were $10.4 million for Air Canada and $10.6 million for Northwest Airlines. Where they differ, however, is in profit- and they differ there in a shocking way. Northwest made more than $100 million in two years, while Air Canada incurred net losses of $22 million in the same two years.
Why is that, Mr. Speaker? Surely, when considering Bill C-17-which in a sense is a cover-up of the previous loss Air Canada has been incurring-we must ask ourselves why this airline has so consistently been in a loss position. No doubt there are several reasons, but chief among them is the fact that Northwest Airlines operated with a staff of slightly more than one-half that of Air Canada-11,268, compared to Air Canada's 21,293. Second, Northwest was faced with long-term debt financing amounting to $271.9 million in 1975, while Air Canada was saddled with more than $1 billion.
The 1975 Air Canada annual report drives home the importance of these two operating expenses. On page 3 we find that "wages and benefits rose by $45 million that year or 13 per cent and accounted for 45 per cent of the increase in operating expenses in 1975." On page 4 we find that "long-term debt increase rose by more than $8 million or 11 per cent". Page 5 of the report says that "if Air Canada had a more conventional
Air Canada
debt-equity ratio the company would have reduced expenses by more than $30 million and would have shown a net profit of about $2.9 million." Mr. Speaker, these two excessive expenditures, bloated payrolls and astronomical debt, are commonplace among Crown corporations and this, I believe, is the real story behind Air Canada's plight.
I referred to Northwest Airlines, and some may think I singled out a certain airline in the United States for unfair comparison. But I could refer equally well to other American air carriers, either bigger or smaller than Air Canada. In Moody's reports I cannot find a scheduled airline in the United States operating at a loss.


Mr. Gilbert:: Tell us about the Canadian Pacific.


Sinclair McKnight Stevens: Yet here Air Canada is telling us that it needs to convert its debt in order to make a profit. Consider the position of American Airlines Incorporated. It made a net profit of $56 million on total revenues of approximately $2 billion. Interestingly enough, American Airlines have retained earnings of $263 million. Their capital, incidentally, is $28 million and they have a paid-in surplus in addition. American Airlines in past years earned enough to pay taxes, pay dividends and retain earnings. Its retained earnings position at the end of last year was $263 million. Consider Air Canada's balance sheet. As of December 31 last year, Air Canada had retained earnings of $18 million. Contrast those retained earnings with the $263 million in retained earnings of American Airlines. In addition, Air Canada borrowed extensively from the government of Canada. It needed to borrow money, not having accumulated retained earnings.
Now it says to the government, "Do not ask us to pay interest any longer on the debt. We will be better off if you increase our capitalization and do not ask us to pay interest." There is an important contrast in all this. American Airlines has been able to accumulate capital, whereas Air Canada has not. American Airlines has followed the free enterprise approach, not the socialist or bureaucratic approach. Operating under principles of private enterprise, the airline competed, earned money and accumulated capital, which in turn will permit it to be more profitable in future. We can do the same. More profits will mean more jobs for Canadians. Unfortunately, few state-run operations have the incentive to drive for profits and earnings.
Let me mention other airlines. Eastern Airlines, in the year ended last December, made a net profit of $46 million on total operating revenues of $1.8 billion. Let there be no doubt: the company must pay interest on its debt; it borrowed from the general public, not from Washington. It went for its funds to the open market. I touch on this point to emphasize that the loss figures of Air Canada show only part of the story.
Air Canada, the largest air carrier in the country, is the biggest user of our airports. Our airports are subsidized and to that extent the airport subsidy is a subsidy for Air Canada. Air Canada benefits from the subsidy to the extent it uses subsidized airports. I suggest, in this regard, the government hides

May 27, 1977
Air Canada
from Canadians the true cost of Air Canada operations and the misoperation of our airports.
I said earlier that the Post Office was marginally profitable in 1970. Apparently it is running a deficit of about $700 million. The same is true of our airports. Our airports were run profitably in 1970, but they are currently being run about $100 million in the red if you include the Mirabel loss of $56 million a year. This must stop. We, as members of parliament, must press the government to be more prudent with Canadian taxpayers' money. I say this because when the government gets into difficulty, it tends to favour its Crown corporations, or it requires Crown corporations to bail it out, so to speak. Let me give some examples. Not long ago, for reasons still not clear, the Department of Transport built terminal 2 in Toronto. Please remember that Air Canada and other carriers had used terminal 1. The department built terminal 2, expecting international carriers to use it. When the terminal was completed and the international carriers learned how expensive it would be to use terminal 2, they told the government they would not use it. There was no way American Airlines, KLM, Lufthansa and other international carriers were going to use terminal 2, because it was exorbitantly expensive.
What happened? The government turned to Air Canada, a Crown corporation, and told it to use terminal 2. That terminal is probably the most unsatisfactory terminal of its kind in North America, and Air Canada is forced to use it because it is a Crown corporation. Therefore, because the other carriers refused to use terminal 2, Air Canada was forced to use that white elephant. 1 could give many examples to show the unfortunate relationship between government and Crown corporations. Let me give a second example to show how effectively and efficiently airports are used in the United States. In that country all airports come under the jurisdiction of local authorities. For example, the New York airport authority has jurisdiction over Kennedy international airport, LaGuardia and Newark. Those airports all make money, and the reason is simple. Before an airport is extended or a new airport built, the local authority seeks the assurance of carriers who will use the airports that the airport will generate sufficient revenues to retire the debt to be incurred for carrying out the improvements or extensions.
We do not do this in Canada. The government of Canada, operating in a centralized way, hands down a decision from Ottawa to Montreal, Vancouver, Toronto, Calgary, Edmonton, and so on. The government makes up its mind as to what facility should be built, finances the building of the facility and is surprised when carriers say, "We cannot make a profit from the new facility" and refuse to use it. The next step is to turn to the Canadian public and say, "Now you must pay user tax to make up for our mistakes". Why should we be ending up with the largest airports in North America being financed at the cost of the taxpayers or of those using the airports? The Chicago airport authority told me, for example, that they do not intend to build additional facilities in Chicago, as far as they can see, until 1990 or 2000 because they do not think they will need them. Here we are speaking of O'Hare airport in

Chicago which is handling seven times the number of passengers that are using Malton. But the Department of Transport is saying a new airport is needed in Toronto, notwithstanding the fact there is only one-seventh of the activity there is in Chicago, where they say frankly that they cannot afford a new airport.


Mr. Deputy Speaker:: Order. I am sorry to interrupt the hon. member, but his time has expired. Is there consent to allow the hon. member to complete his remarks?


Some hon. Members:: Agreed.


Sinclair McKnight Stevens: I thank hon. members for their courtesy. I shall be brief. It is a common trend, I would suggest, for companies such as I have been referring to-Air Canada, for example-to run up huge expenses. They go heavily into debt and eventually they come to us saying, "Let us off the hook". One need only compare the poor performance of Air Canada with that of Northwest Airlines or, for that matter, any other U.S. or privately-run airline such as North Central, Braniff, Southern Airways or Eastern Airlines, to see the difference which private control makes.
Leaner operations, smaller staffs, more efficient management-these are the trademarks of private enterprise, as opposed to enterprises run by public agencies commonly known as Crown corporations. I stated earlier there are now more than 1,200 federally-owned concerns in Canada, and we are still counting. To date we have poured more than $21 million into these enterprises, including hundreds of millions of dollars sunk into Air Canada. I suggest it is time to stop counting and to start subtracting. It is time to begin divesting ourselves of some of these Crown corporations, rather than creating new ones.


Walter David Baker: Mr. Speaker, the last statement made by my hon. friend from York-Simcoe (Mr. Stevens) is a significant one not only in terms of the present number of Crown agencies and corporations but in terms of suggested approach to national problems. If you look at developments in the last few years, Mr. Speaker, I believe you will agree with me that whenever there is a problem, whether it involves a certain field of business, transportation or whatever, governments everywhere, and this government in particular, appear to have decided that the only answer is an approach by way of a different from of the public service, namely, the Crown corporation.
I am not arguing that there is no place within the structure of a nation for government agencies, but there has been a growing temptation to look toward the public sector as an easy way out. I cannot believe that a country as vibrant as ours is supposed to be, or could be, a country as rich in human and material resources as ours, must go back to what I call a bottom line position, one which suggests that business does not have the initiative or the spark or the trustworthiness to secure the desired objectives. Unfortunately, this is an attitude which is easy to promote.
May 27, 1977

This morning we heard the hon. member for Winnipeg North (Mr. Orlikow) trying to justify the operations of a Crown agency by saying that even airlines in the private sector are finding themselves in difficulty today.


John Gilbert: Canadian Pacific.


Walter David Baker: This afternoon he had the
opportunity to hear a speech by my hon. friend from York-Simcoe who clearly showed that generalization to be untrue. Now that the hon. member for Broadview (Mr. Gilbert) has decided to interject by mentioning Canadian Pacific, I would remind him that the article to which the hon. member for Winnipeg North referred contained an interesting passage. Talking about the position of CP Air, that article had something to say which is of particular relevance to this argument. Perhaps the position of a private airline trying to compete against an airline whose operation is controlled by the government is an unique one. I quote from the article:
Apart from the fact that it is only allowed a quarter of the domestic market, CP Air finds itself on the outside looking in on many fat international routes. And even after it has won a lucrative service, Ottawa often dilutes the economic effect.
The Vancouver-based airline's service into the San Francisco, Los Angeles area is a case in point. This was a good money-maker for CP Air until the Liberal government allowed Air Canada to fly into the same region from Alberta thus syphoning off all those passengers who used to fly from Edmonton and Calgary to Vancouver and then take CP Air into California.
I am not standing here as an advocate of CP Air. They can be the advocates of their own cause. What I am saying is that the hon. member's remarks ought not to mislead us because, as the hon. member for York-Simcoe mentioned, many of these privately-owned airlines, enterprises which do not have unlimited funds upon which to draw, which have payrolls to meet and which pay taxes, federal, state and municipal, are making a profit. It is folly to say it cannot be done. It may be the case that CP Air finds itself in a little difficult position when it must compete, even on the level I have mentioned, with an airline operated by a government which has an all-pervading authority in regard to where that carrier may operate.
I started by saying that I had listened very carefully to the speech of my colleague, who I think has put his finger on one of the problems, namely, the belief there is in this country that only the government can carry out operations efficiently. The bill under consideration separates Air Canada from the Canadian National Railways, something for which the Progressive Conservative party has asked for over a period of many years. There is nothing at all wrong with the attempt being made to diversify the operations of Air Canada so it can pursue related areas of endeavour. But what concerns me is the demonstrated inefficiency of this government to manage its business enterprises, on the one hand, and, as the Auditor General has pointed out, the inability of this government to operate in an efficient accounting way.
This proposed diversification will be carried out under the aegis of a board of directors which will be appointed by, and subject to the direction of, the very group of men and women
Air Canada
in this country who have been castigated by the Auditor General as among the most inefficient administrators in the history of this country. That is the tragedy of this piece of legislation. I look upon it as something we will have to watch. We will have to see that this board of directors does not become merely a convenient burial ground for the party faithful.
The Minister of Transport has said that diversification is a good thing, and I happen to agree. But if Air Canada is going to diversify, if it is going to change its share structure so it can compete equally in a financial way with other corporations, if it is to be subject to the same licensing provisions and its objects are to be broadened, and if, as someone said earlier in this debate, it is going to get off its knees and start to run instead of walk, and perhaps to fly, then I do not think the public of this country are going to stand by and watch the same failure of management which has befallen other Crown corporations and government operations.
Is there anything in the proposals in this bill which indicates that all of a sudden, because of a restructuring of Air Canada and its objects, there is going to be a different check made of its operations on behalf of the people of Canada, who will have to carry the freight for the present deficit, or for deficits which are to come-because there is no indication that the government is going to change its operation, except on paper?
Is there any indication that this parliament is going to be treated in any different way in terms of its being able to call upon this Crown corporation, to a large extent operated by public funds, to account? Can we be assured by this bill that it will become the rule of both law and tradition that this Crown corporation will automatically have its annual reports and financial statements sent to a committee of this House to be questioned, persued and examined? Is there any provision in this bill providing that Air Canada officials will be any more subject to scrutiny under the rules of this House than they are today? Not one word, not one whit, Mr. Speaker.
There is nothing in this piece of legislation which in any way gets at the heart of the operations of this Crown corporation and others. So do not let anyone think that this bill is the last word. It is far from that. There is some question that it is even the first word regarding what has to be done about the operations of this government in a field which is successfully occupied in North America by the private sector. Let not one member sit back and think that things are going to be any different.
What else does the bill provide? Is there to be an independent board of directors? No, Mr. Speaker. The board of directors will be the creature of the government. The Minister of Transport (Mr. Lang) will be able to stand up, like the Minister of Finance (Mr. Macdonald) and other ministers, and say, "I have nothing to say about this; it is in the hands of the board of directors of Air Canada". Therefore, he will be able to slough-off ministerial responsibility for the corporation, as is the case with a whole host of other corporations. All of us have had questions answered in this way in the House.

May 27, 1977
Air Canada
In terms of the auditing provisions of the bill, when the minister made his speech in the House on May 25 he said, as reported at page 5945 of Hansard:
Associated with this change, the present arrangement whereby the auditors of CN are by legislation also the auditors for Air Canada should be discontinued. Therefore the bill provides for the appointment of Air Canada's auditors by the governor in council-
What assurance to the House is that in terms of financial accounting? Auditors for other organizations have been appointed by the governor in council, but no annual reports from some of those organizations have been before the committee. In spite of this kind of appointment, what did the Auditor General say about it? He said that the financial accounting of this government and the use of public funds- these are almost his words-has amounted to a breach of public trust. What assurance does this bill give that there will be any change? None whatsoever.
Those are some of the questions which will have to be examined in a much broader way when this bill goes to committee. I do not believe the people of Canada any longer believe that with respect to management of business affairs which could be just as well left to the private sector the government has done as well, or that any government could do as well, as properly motivated people in the private sector.
As a result of the movement of governments at all levels toward becoming involved in what was normally the preserve, reasonably regulated of course, but nevertheless the preserve, of the private sector, legitimate profit has become a dirty word. Reasonable profit has become a dirty phrase. It is now improper for a businessman to say that it is reasonable for him to make a profit. The party to my left are always attacking the large multinational corporations and seem to forget that the business people of this country, in terms of employment and generation of jobs, are not the large multinational corporations but men and women who are prepared to put their life savings, what they can borrow, their hopes and reputations behind an enterprise. That kind of philosophy ought to be fostered in this country, not subjected to pressure. It is important that we put out of our minds the concept that the truth is that government by itself has all the answers to all the problems and challenges facing this country.
We consider it is the job of government to create the atmosphere where men and women who so desire can run risks, make reasonable returns and from time to time losses, in order to realize their capabilities. It is this kind of philosophy which seems to be overtaking governments-the easy way out, the unlimited treasury and the unlimited deficits, which have sickened this country and weakened it. There is a whole host of problems, not just the ones which afflict us in the private sector.
This bill is going to be examined very carefully in committee. It is a reflection of a continuing sickness in terms of the attitude of governments generally. This government has been in power for a long time. During that time Crown corporations have not gone down in number but have increased, and Crown

agencies have not diminished but have increased. Why? It is because this government has decided that is the direction in which it will go. It will intervene, instead of asking the question: Is there some other way the job can be done just as well, and not place the burden upon the taxpayers of this country? This House and this country should examine that attitude and not just this bill.


Charles-Arthur Gauthier: Mr. Speaker, I would like to say a few words on this bill entitled An Act respecting the reorganization of Air Canada. The main purpose of this bill is to select means of transport properly. We have already done it by selecting Via Rail, an independent body for freight transportation, which is a great improvement within the CNR system. Today the government introduces a bill providing that Air Canada becomes a Crown corporation separate from the CNR. I think that after 40 years, Mr. Speaker, it is time for Air Canada to become an adult company that will manage its own affairs.
The first few years will not be easy as it is already burdened with over a billion-and then some hundred million-dollar deficit; fortunately, Air Canada will be able to get, in addition to the $25 million in share capital and the $750 million in authorized capital provided for under the current legislation, a direct loan of $750 million guaranteed by the state. Finally, if necessary it will be allowed under the new legislation to borrow on its own credit. Air Canada will enter areas of operation which are related to air transport, like tourism. We shall remain the true owners of Air Canada, with everything this entails, and I refer immediately to the expected deficit. We have learned through experience that Crown corporations are very difficult to administer. They are more expensive to operate than private corporations, but our system is made up of public and private firms and we are faced now with the need to re-organize transports, something which I feel is most necessary in Canada today. Still I am very glad we had to deal with this bill today.
Besides, we all would be happy if Air Canada were for once to belie the saying that private companies are always more profitable than state-owned ones. The corporation will be under the management of a board of directors comprised of a chairman appointed pursuant to subclause 5 and at least thirteen other directors to be appointed for a term not exceeding three years.
We are anxious, Mr. Speaker, to know the successful candidates to find out whether the minister will abide by his government's bilingualism policy. I happened to check the bill to see which qualifications the directors and board members should have. Here is what it says about those qualifications:
(2) No person is eligible to be appointed or to continue as a member of the Board ...
That is the first qualification: to continue as a member.
Here is the second:
.. . who
May 27, 1977

(a)	is not a Canadian citizen ordinarily resident in Canada; or
(b)	has attained the age of seventy years.
I thought it was sixty-five, but we read "the age of seventy years".
I remain somewhat puzzled because nowhere is there any reference to language requirements in the choice of those people, and yet that would be very important considering the bilingualism policy advocated by the government. There should at least be a short clause requiring the majority of directors to be bilingual. That is my criticism. I say that to the minister so that the question might be raised and discussed in committee because when the matter of bilingualism is not included in a legislation, we are likely to face many difficulties. Everyone is aware of the difficulties we had about the application of bilingualism and the use of French in this Crown corporation over which the government seems to have lost control. All members surely recall the notorious case of the Gens de fair, CATCA and CALPA, which is not yet solved, as we are still waiting for the decision of the various courts because the government cannot apparently decide anything by itself; they have to have this decision made by a court.
Today we see that there is still much room for improvement as far as bilingualism in Air Canada workshops is concerned, both among air traffic controllers and aircraft servicing personnel. Air Canada has certainly not shown much enthusiasm to try at least to submit to the will of the government. 1 see that the government is willing to force Air Canada to act but I think they do not take the means to do so. Again, I hope that the committee will discuss the possibility of including this matter of bilingualism in the bill once for all. We have been talking about bilingualism for years. I think this matter will remain a dead letter, as long as we talk about it, as long as it will not be included in a piece of legislation requiring that this or that group is bilingual or unilingual, or that it should at least try to learn the other language.
I think we have had enough problems, and the air pilots issue has still not been settled. We have had all the trouble in the world to solve that bilingualism problem, and all we got was the threat by the pilots' union to prevent French Canadians in Quebec from using their language in the air. Everybody said it was a scandal, and they were right. I think we have a good opportunity to discuss it here, while we are dealing with this bill to transform Air Canada into a Crown corporation independent from the Canadian National. If we miss this opportunity to insert in the law what the present government advocates throughout Canada, we will again postpone the settlement of the bilingualism issue and permit certain associations to quarrel between themselves and make the Canadian people suffer because they are too stubborn. I therefore hope to see this obligation included in the bill, because if it were the other way around, if English were at stake, if the survival of the English language were threatened, I am sure the problem would have been solved a long time ago.
In the meantime, we are told that both languages are recognized in Canada, and the government has launched its bilingualism campaign. I do not see why this would not be
Air Canada
included in the new legislation, to oblige employees of Crown corporations to abide by the law. If they refuse to do so, they can just go work elsewhere. The least we can ask is that laws be clear, so that people stop feeling insecure like today.
I was just saying, Mr. Speaker, that we have found evidence in the services and I believe it was quite conclusive. I read an article this morning which proves once again how the CBC neglects, not to say despises, this appeal from the government. And just to quote one case, I have here an article published in La Presse of May 26 and written by Mr. Raymond Laplante, a consultant announcer for the CBC. I mention his name lest some ministers accuse him of being a separatist. Yet he is not a separatist; he merely pleads in favour of the French language. This announcer was returning from a trip to Vancouver. I quote what he says:
Last May 13, a Friday, defying all superstitions attached to that fatal date, I was aboard Air Canada flight 150 from Vancouver to Montreal. Except for a few clouds above the Rockies ...
-and so on. Further on he says:
Is there no one among your French-speaking customers who enjoys classical music? Do you think it would be too lofty for French Canadians?
Because all he heard on board was English, English songs, English music and all.
Once the classical music concert over, I switched to French songs, presented in French, naturally. But what a French! Something horrible with lot of nonsense at such a pace that you would need six hours more of flight to note them properly.
That is why he headlined his article, and I quote:
Lousy French at Air Canada. And that is not all! How many times during my numerous flights on Air Canada did I seethe inwardly on hearing some of your hostesses and stewards speak broken French in such a way you cannot even manage to decipher the message. What would happen during an emergency landing, when information has to be clear and precise, particularly in such situations where nervousness makes it more difficult to communicate?
That is the point I want to stress, Mr. Speaker. If CATCA and CALPA were making a plea against bilingualism, while we cannot even get a single word in French, what would happen in an emergency? That is what is called working towards safety.
Mr. Speaker, I will not read the whole article because it is rather long but I hope the remarks which were made about bilingualism have been noted and, as I said before, I want this question to be referred to committee, included in the legislation and made mandatory. Mechanics, hostesses and management should not forget that Air Canada is a Crown corporation and, as such, the property of a bilingual country. They must try to get used to the idea that Air Canada is owned by a bilingual country. We are all paying for it and we are glad to do so as long as it is providing good service to the whole population. This service must necessarily be bilingual.


Mr. Stan Schumacher (Palliser):: Mr. Speaker, I suppose it is appropriate that we should be discussing this bill now as Air Canada enters its forty-first year of operations. Maybe after 40 years of operation it is time for any organization to be

May 27, 1977
Air Canada
reorganized, but I would have thought that the real reason for the existence of Air Canada or, as it was then called Trans-Canada Air Lines, was to provide a national air service for this country in the absence of any initiative by the private sector to provide such a service at the time.
Back in 1937 there was a great economic depression in the world and there was not a great deal of investment or development anywhere. I suppose there was clear justification for the establishment of a national air transportation service under the aegis of the Government of Canada at that time. I just regret that now, after 40 years of operation, many of which have been very successful, we are not moving toward a more independent type of operation which would give some incentive to this part of our air transport service to make a profit and to operate efficiently. This is a very important field of endeavour in Canada, and unfortunately, because of the way it has developed in the last number of years, it has not been particularly profitable for the people it is meant to serve. There have been examples of increasing deficits. We are being assured now that Air Canada is turning things around.
My friends in the New Democratic Party have suggested that losses have not been confined just to Air Canada but that other airlines have also suffered losses. They referred to the experience of Canadian Pacific Airline. I suggest that the reasons for the losses of Canadian Pacific are much different than the reasons for the losses sustained by Air Canada and relate primarily to the fact-which is a matter of government policy-that Canadian Pacific is restricted to 25 per cent of the available seats allotted to the national carrier, and Air Canada has the remaining 75 per cent. That puts Canadian Pacific at a disadvantage, and I personally think that the government should be trying to promote more competition with a view to making Air Canada more efficient and profitable rather than maintaining this protective mantle over Air Canada, as the government has done and seems to be persisting in doing.
Apart from that restriction we had the example last year of the bilateral routes. Canada obtained 20 new routes, 19 of which were assigned to Air Canada. I do not see any equity or any encouragement to Canadian Pacific there, and in my view that is one of the reasons why Canadian Pacific has not been doing very well recently. In particular, Canadian Pacific made a big investment in the west coast traffic to San Francisco and California generally. It developed that traffic, but what happened when these bilateral agreements were entered into? Air Canada was assigned new routes into California at the expense of Canadian Pacific. I think that was a very unjust and inequitable way for the Government of Canada to proceed.
Nevertheless, we are faced with Bill C-17, which is supposed to re-organize Air Canada and put it on a more businesslike and efficient footing. The bill affects all the major air carriers in Canada, but in particular it affects the protected flag carrier, Air Canada. Because it affects more than one carrier, I think something should be said about the Canadian air

industry in general. In 1975 commercial air carriers in Canada transported more than 20 million passengers. That came very close to moving the entire population of this country, and that only serves to point up the cardinal importance of air travel in Canada. In addition to that, three million travellers arrived in Canada by air from abroad. After having paid their air fares they spent half a billion dollars here. That accounts for a significant contribution toward a net gain in the economy of Canada.
On the whole, air travel has grown safer, faster, and more efficient. It has tried to maintain reasonable fares when the cost of living has continued to increase. It has reached out to serve isolated communities. It crosses oceans and continents in a matter of hours. However, there is a real fear that current government policies are severely damaging the industry. We hear a great many complaints about service and about delays in air travel. In our own travels to and from our constituencies we experience such annoyances and inconveniences ourselves. We certainly do not like being subjected to these situations, and we can fully understand and appreciate the feelings of vast numbers of other Canadians who complain about the inefficiency of the operations of Air Canada. Of course Air Canada tends to take the brunt of this because, as I pointed out, it is allotted 75 per cent of the transcontinental business through government policy.
In 1975 Canadian air carriers lost $18.8 million. Regional air carriers lost more than $750,000. It seems to me, from the information I have, that Air Canada's losses have been higher than any of the other carriers. The explanations of Air Canada have never satisfied me. Air Canada has been able to obtain the best routes. It has left the short hops and short hauls to the regional carriers, but nevertheless the regional carriers seem to be able to make a better go of this small potatoes type of business than Air Canada can with the cream of the crop.
It is quite clear that something needs to be done. The basic question is whether this bill will accomplish anything. In the ten years prior to 1975, that is, from 1965 up to 1974, air revenues increased four times. But net income fell to less than half, while the number of passengers carried increased three times, and revenue per mile went up three and one-half times. At the same time operating costs went up four times and wages doubled. However, there appears to be some hope.
The Ministry of Transport now says that no more airports will be built without the airlines being consulted first. That is a very refreshing attitude, and it is nice to see some common sense being injected into the operations of the government. I just wonder what would have happened to Mirabel if the airlines had been consulted in any way, shape or form about the construction of that massive boondoggle which was, in my view, built strictly for political reasons at the expense of the whole economy. They probably will turn out to be the wrong political reasons, and it is likely that nobody will be satisfied with what has happened there. Thank goodness the political situation which developed two or three years ago stopped a similar thing happening at Pickering, and we hope that the
May 27, 1977

new found reason of the Ministry of Transport in consulting the major users of these facilities will be lasting.
In the case of the airport at Calgary it looks as though we are going to have a wonderful facility. The difficulty is that as a result of design costs which have been built into it-which are the complete responsibility of the Ministry of Transport- most of the prospective users of that facility are unsure whether they will be able to utilize the facility at the cost being mentioned by the Ministry of Transport.
The key to operating any business successfully is profit, and I think that certainly should apply to Crown corporations as well as to any other type of corporation. Unfortunately Crown corporations seem to be insulated from that imperative more than corporations funded by individuals with their own money. Profit is important to any airline because of the cost of replacing aircraft, among other things. In 1970 a Boeing 747 cost $24 million. In a couple of years from now the same aircraft will cost between $45 million and $50 million. I must ask whether this bill will allow Air Canada to make a profit more readily, or if it will further hamper the airlines money making efforts.
I think at this stage we should look at some of the provisions of the bill. The most significant proposals are, first, authorization for Air Canada to engage in a wider range of activities; second, ownership would pass from the CNR directly to the government; third, the amount of authorized capital stock would be increased; and fourth, Air Canada would be permitted to seek debt financing in the market place and not be compelled to apply to the government for any future financing.
With respect to broader powers, Air Canada is rather restricted by the terms of the present act in the type of activities in which it can engage. The proposed act broadens the "capacities and activities" which the company may undertake, both within and outside Canada. Aside from operating the business of an air carrier, there are references to hotels and other accommodation; surface vehicles and facilities for the transportation and housing of persons, goods and mail; services, facilities and equipment for organizing and conducting tours; catering and providing other passenger-related services, including reservations for transportation and accommodation, computer and tele-processing systems, and technical, advisory and consulting services. Furthermore, the new act permits the company to establish or invest in subsidiary companies, provided authorization of the governor in council is first obtained.
On the question of ownership it will be noted that up to the present Air Canada's capital stock has always been held by the CNR-itself a Crown corporation-which meant that Air Canada was in effect a CN wholly-owned subsidiary. As shareholder, the CN was authorized to appoint five members to the Air Canada board of directors, while the governor in council appointed four. Of course cabinet appointed the board of directors of CN so it was pretty well able to control the appointment of all directors. The proposed act stipulates that shares of Air Canada will be held by the Minister of Transport
Air Canada
"in trust for Her Majesty in right of Canada", and that shares are not transferable. It further provides that the corporation will be under the management of a board of directors comprised of the chairman and the president and not more than 13 other directors, all of whom are appointed by the governor in council.
I think the words "governor in council" are the key to this bill and the dilemma in which the government finds itself. On the one hand it wants an airline operation that is set up under the guise of a Crown corporation and which should have some degree of independence. Because of the history of bad management in Air Canada, however, largely as a result of actions of people the government itself appointed to run the corporation, it did not want to give it too much authority to act on its own. On the face of it the bill gives Air Canada broad powers, but like so many Liberal ideas, appearances are deceiving. While it appears the reorganized company can do almost anything, the hooker in this situation is that nothing can be done without the approval of the governor in council.
As the hon. member for Grenville-Carleton (Mr. Baker) pointed, out, Air Canada which is supposed to be an independent Crown corporation, cannot even appoint auditors without the approval of cabinet. As far as auditors are concerned I think all Crown corporations should be subject to audit by the Auditor General of Canada. I do not want to slander the auditing profession of this country, but I have seen some rather strange certificates issued by auditors of government agencies and Crown corporations. I suggest the reason they are strange is that the auditors want to hold the accounts. We need a truly independent auditing service of government agencies if we are to get the best value for our dollar. I think it is very strange indeed that the government can use the appointment of auditors as patronage. That should not be involved with Crown corporations.
When this bill goes to committee I hope very serious consideration will be given to the appointment of the Auditor General of Canada as auditor of this organization.
I believe that Air Canada is being transformed into an agency of the Minister of Transport (Mr. Lang); it is going to join his fiefdom. This bill is not a step toward making the corporation compatible with normal commercial enterprise as should be done. I think the philosophy of this bill and the reason why so many possible objects of the corporation have been listed, is that anything that is not listed is totally beyond the power of the corporation. In itself that is a restriction on the flexibility the government says it is trying to give Air Canada in the management of its day-to-day affairs but, because of what is being done here making Air Canada an agency of the government, we are to have continuing troubles with language.
The hon. member for Roberval (Mr. Gauthier), who spoke before me, complained that Air Canada was not living up to the requirements of the government's bilingual program. I think part of the cause of the sense of alienation that has developed in the west is the fact that Francophone cabin crews-which the hon. member says are inadequate for use in

May 27, 1977
Air Canada
Quebec-are operating there. A lot of passengers complain of inadequate service because the crews do not understand English very well. That shows a lack of flexibility, or a breakdown of some kind. We find crews who cannot understand French operating in Quebec and ones who cannot understand English operating out west. It is not a good situation. I do not think the company's being closely identified with the government in its day-to-day operations will help the situation.
I use this opportunity to complain about the procurement policy of Air Canada, particularly with regard to meat. When I asked back in 1971 why Air Canada was not using Canadian beef exclusively for in-flight meals, I was told there was not enough to go around. That answer was not satisfactory then, and is even less satisfactory now, considering what our livestock industry has been through in the last three years and its present state.


Mr. Gauthier (Ottawa-Vanier):: Mr. Speaker, I rise on a point of order. I wonder if the hon. member would permit a question to clarify something he said about the linguistic capacity of Air Canada staff.


The Acting Speaker (Mr. Ethier):: Order, please.


Stanley Stanford Schumacher: Mr. Speaker, I permit the hon. member to ask a question and will do my best to reply.


Jean-Robert Gauthier: Mr. Speaker, if I heard the hon. member correctly, he suggested that Air Canada crews on duty in Quebec, in aircraft, and western crews working out west have difficulty in communicating in one or both of the official languages. Is the hon. member saying to this House that some Air Canada crew or staff out west cannot speak English?


Stanley Stanford Schumacher: Mr. Speaker, it has been my experience that a good number have a limited capacity to speak English, in the same way as the hon. member for Roberval complained that crews operating in Quebec have a limited capacity to speak or understand French.


Mr. Mazankowski:: Is that clear?


Jean-Robert Gauthier: Mr. Speaker, was the hon. member stating his opinion or stating a fact? I should be interested to know the basis for his statement. I wonder if he could give us that.


Donald Frank Mazankowski: Read Hansard.


Jean-Robert Gauthier: Could the hon. member table his facts, or was he only giving his opinion?


An hon. Member:: One cannot table a stewardess.


Stanley Stanford Schumacher: One may like to table a stewardess; I don't know.


Donald Frank Mazankowski: When did the hon. member last table a fact?


Jean-Robert Gauthier: I just want the facts.


Stanley Stanford Schumacher: I know my hon. friend does. Perhaps he feels this is not the place for opinions.


Donald Frank Mazankowski: This is not the place for debate, I suppose.


Stanley Stanford Schumacher: I remember the former member for Red Deer, Mr. Thompson, saying we must be careful because this place might turn into a political arena.


Jean-Robert Gauthier: Mr. Speaker, I rise on a point of order. If the hon. member is stating a fact, I will accept that; or if he is stating his opinion, I will accept that; but 1 want to be clear if he is stating an opinion and not a fact.


The Acting Speaker (Mr. Ethier):: Order, please.


Stanley Stanford Schumacher: Mr. Speaker, in my opinion it is a fact.


Mr. Roberts:: In your opinion it is a fact that what he says is a fact is an opinion.


Stanley Stanford Schumacher: Perhaps we can best resolve this question by leaving it in that spirit. I have concluded my remarks on Bill C-17 and thank hon. members for listening.


Mr. James A. McGrath (St. John's East):: Mr. Speaker, there is a distinct possibility that we may become involved in a debate this afternoon.


Donald Frank Mazankowski: That would be terrible.


James Aloysius McGrath: Heaven forbid that we should so spoil the tranquillity of a Friday afternoon in this House, the afternoon of the most productive day of the week. I hope hon. members will pay their usual, studied attention to the remarks I am about to make.
I will take advantage of the opportunity afforded by the debate on Bill C-17 to raise some questions about Air Canada and the service our national air carrier provides in my part of the country. It is appropriate that I should do so because we are considering what will probably be the most fundamental change affecting Air Canada since its founding 40 years ago.
I find that my position is somewhat different from that adopted by some of my colleagues. I come from a part of the country in which Air Canada enjoys a virtual monopoly in air transport. Consequently the provisions of this bill which would make the airline more accountable to government and hence parliament are all the more meaningful and relevant.
It has been somewhat difficult to raise questions in the House about Air Canada and the quality of Air Canada service, because of the ambiguity of Air Canada's position vis-a-vis the government and its parent Crown corporation, Canadian National Railways. Given the inflation which has overtaken our economy and the higher price of fuel, it is true

May 27, 1977

to say that air travel is being restricted to fewer and fewer people. Unless the government recognizes soon the importance of Air Canada and of air travel in this country, only members of parliament, senior civil servants, and businessmen on expenses allowances will be able to fly.


Arnold John Malone: Shame!


James Aloysius McGrath: That may be all very well in the corridor regions of central and western Canada where, because economies are buoyant, people can afford air travel. But the situation is somewhat different in my part of the country. Many people of my area depend almost exclusively on aircraft for travel to Montreal, Ottawa or Toronto. The hardships and restrictions arising from the present situation should therefore be obvious.
The crisis in energy prices is affecting the attitude of the airlines. I suppose one can hardly blame Air Canada for its attitude. It must pay the same inflated price for fuel and the same wages as its competitors must pay. Consequently the company has sought to reduce the number of its less profitable runs. That policy has reduced the frequency of air service available to people resident in my constituency. As I said, for many of my constituents Air Canada proves to be the only efficient way of travel to other centres of this country. Let me demonstrate what I mean.
Last year we were served by an L-1011. Because of the large number of empty seats on the flight, I felt the use of such equipment was not justified. That aircraft was supported by three DC-9s and one DC-8. That provided adequate service. Indeed, as a result of the L-1011 there was a surplus of seats. I knew this situation would not be tolerated for long. I made the point before hearings of the CTC on regional air transport that we did not want the big equipment, that the L-101 Is could be taken off and replaced by DC-9s-in other words, increase the flight frequency. This would result in increased economy in terms of utilization of seat capacity because more flights would be available throughout the day. That situation merely resulted in the present schedules. We have no L-1011. The number of flights has been reduced even further to the point at which, at the present time, we have only four flights. This has to be viewed with concern.
I began my remarks by saying I supported in the main the principle of this bill which, it seems to me, would make Air Canada more accountable to parliament and give us a better opportunity to monitor these arbitrary changes which are made from time to time by Air Canada in the interests of economy. After all, the people who depend on Air Canada, since it enjoys a monopoly position, are the ones who bear the burden of these economies.
I should like to lay before the Elouse the situation which prevails at the present time. There are no direct flights from St. John's though it has a catchment area of approximately 250,000 people. Air Canada is the only national carrier coming in there apart from the regional carrier about which I
Air Canada
shall have more to say later. Air Canada has no competition on this run from St. John's to Elalifax, Montreal and Toronto.
In the past we always enjoyed the privilege of a direct flight to Montreal. Now we have to go through Halifax, sometimes necessitating expensive stop-overs. On Saturdays there is only one flight to Montreal even via Halifax, so the situation at weekends is even worse than it is during the week. There is now only one direct flight to Toronto. Here is a market which depends solely on Air Canada.
My hon. friend made reference to EPA. EPA does not at this moment enjoy the right to carry traffic direct from St. John's through Halifax to Montreal. If it did, that would constitute a different situation entirely. Pending before the CTC at the present time is an application to provide such a service. Should it be granted, there would be some element of competition, and I submit it would result in some improvement in the service. The present service provided by Air Canada shows a marked deterioration the further east one gets. By the time it reaches my part of the country the service has deteriorated considerably.
If the CTC rules favourably on this application the situation will be changed not only in terms of better service but in terms of the financial viability of our regional carrier, Eastern Provincial Airways. This is a matter which is of vital importance because EPA has to cope with the same conditions as other airlines when it comes to equipment, fuel supplies, and personnel. Under its licensing conditions it has to provide service on uneconomic runs within the region, and unless it has access to profitable runs to offset the losses incurred, something obviously has to go. Either the service goes or flight frequency has to be reduced. In any case, the travelling public is the loser.
I can understand the importance of utilizing the substantial facilities which now exist at Halifax International Airport but I submit that a market with a catchment of 250,000 is sufficient, especially at this time of the year, to warrant special consideration. Why cannot we have a direct flight from St. John's to Montreal? Why cannot there be a direct flight from St. John's to the national capital, terminating in Toronto? We are the only major city in the country, indeed the only provincial capital in this part of the country, which does not have a direct service to the nation's capital. As I see it, there is not likely to be any substantial improvement. We will get an extra flight as of the latter part of June and this is supposed to handle a volume of traffic which is increasing annually as tourism grows.
In all this we have to consider the increasing importance of St. John's as a convention centre. This year a number of major national conventions are taking place in our city in addition to the Canada Summer Games. This is bound to mean a substantial increase in tourist traffic.
I take advantage of the second reading of this bill to put forward these complaints. I could spend time talking about the cancelled flights for which the excuse of adverse weather forecasts is given. Later it usually turns out that the flights had been cancelled because, in the opinion of dispatchers in Montreal, there was not enough traffic to warrant putting in
6030

May 27, 1977
Air Canada
the equipment. So the 15 or 20 people who have booked flights and who are depending on Air Canada are suddenly stranded. This happens frequently. I know it happens. I have established beyond any doubt that it happens, but I cannot prove it. Moreover, 1 have no means of redress open to me because the annual Air Canada report no longer comes before the Transport Committee as used to be the case.
I hope that some of the measures being taken in the bill will make the airline more accountable to the representatives of the Canadian people because, after all, we are in the position of being shareholders. It is our airline and it ought to be accountable to us.
Reference has been made to the provisions having to do with the board of directors. I should like to see some statutory term set for these directorships to give the directors greater independence and greater ability to respond to the needs of the airline while at the same time remaining accountable to parliament. This raises a question which was touched on by my hon. friend who just resumed his seat.
It is proposed to change the structure of Air Canada in such a way as to make it a separate Crown agency. I would draw the government's attention to the recommendation of the Auditor General with regard to the auditing of accounts of Crown corporations. Last year the airline got into difficulties over illegalities in connection with its transactions with a travel agency. As a result of some of the measures proposed in this bill, Air Canada will now be able to engage in necessary transactions of this kind without resorting to the methods which came under such criticism earlier. But if Air Canada were accountable to the House financially through the Auditor General it would be an even greater safeguard.
Getting back to the board of directors, I should like to see some kind of statutory term for people appointed to represent the interests of the taxpayer. I should like to see some account taken of regional representation, not in terms of one representative on the board for the Atlantic provinces but representatives of peak traffic areas where the airline is vitally important as the single carrier. For example, there is no other way at the present time out of my province, unless one wants to hazard a 600 mile drive along the trans-Newfoundland portion of the trans-Canada highway and then cross the Gulf of St. Lawrence, which takes at least two days, than to use Air Canada. I believe that representation on the board should take into account this kind of regional situation. Each province should be represented on the board of directors instead of one individual representing the interests of all of the Atlantic provinces, including the Gaspe region of Quebec, and several members representing central Canadian provinces like Ontario.
I could go on to outline the complaints I have received. Not a month goes by when a complaint does not come over my desk about the quality of service of Air Canada in my constituency. But I must say this about Mr. Taylor, the new president of Air Canada. I have noted a much more receptive attitude to

complaints. In his responses I have noted a much more positive approach to customer complaints raised through members of parliament. I congratulate him on the excellent job he seems to be doing. He has certainly succeeded in restoring morale, which had sunk to an all time low and which itself seriously adversely affected quality of service. I believe it was an enlightened appointment by the government of a man who had worked his way up through Air Canada from ticket agent to the top. He understands the people who work within the airline, and as well has had direct experience of dealing with people over the counter. He understands the problems encountered on a day to day basis by the travelling public.
With his comprehensive experience we have at the head of our national airline a man who is able to make a positive response to problems and to handle them in a most constructive way. I believe he has brought about a 1,000 per cent improvement over the former ambivalent situation where the chairman of the board had executive authority and the president of the company had administrative authority and you did not know with whom you were dealing. Not only that, but middle management and the operating personnel were having difficulty over what the line of command was within the airline.
I look forward to this bill proceeding to committee and to the government providing us with explanations as to what exactly is intended by some of its provisions, especially with regard to the appointment of directors. I should like to know what are the intentions of the government with respect to establishment of schedules and timetables. Surely the public has a right to give some input to the scheduling of Air Canada, although not so much in competitive situations because there the competitive factor has to be uppermost. The company must be allowed to compete on an equal basis with the private commercial carriers. But in areas where Air Canada enjoys a monopoly, of which there are a number, including my own province, the public should express its views through various organizations such as boards of trade and chambers of commerce. Air Canada can also hear what the public has to say by coming to parliament every year. There should be this kind of conduit, if you like, to provide direct public input into the scheduling of the airline.
With those few words 1 look forward to the bill going to committee and to hearing from the minister. I look forward to hearing what the transportation committee will encounter as it visits the Atlantic provinces. It begins to tour the Atlantic provinces on Sunday, and one of the areas it will look into is the role of regional airports and regional air traffic within the Atlantic provinces. This is something which has a direct bearing on Atlantic Canada because it raises the whole question of a regional air policy, one which will make it possible for regional air carriers to continue.


The Acting Speaker (Mr. Ethier):: The hon. member for Battle River (Mr. Malone).


An hon. Member:: Four o'clock.
May 27, 1977


Arnold John Malone: Mr. Speaker, I hear "four o'clock" from someone on the other side of the House. If they want to call it four o'clock I would not argue with that, but I will leave the decision to you.


The Acting Speaker (Mr. Ethier):: The hon. member for Battle River.


Arnold John Malone: Mr. Speaker, it is a privilege to speak on Bill C-19, even though it is not much of a privilege to see what is in the bill. Once again this is a bill which attempts, to give the government of this country more and more control of things which ought to be left, if not to the private sector, at least to the sense of initiative of the people who operate within the confines of the private sector.
Let me look at the track record of the government's socialization of Canada. I do not mean in terms of human relations but rather in terms of our economic structure. One thing that becomes readily apparent is that we are fast losing what we would call an enterprising mentality in this country.


The Acting Speaker (Mr. Ethier):: Order, please. [Translation]
It being four o'clock, the House will now proceed to private members' business as listed in today's order paper, namely, public bills, notices of motions and private bills.


PRIVATE MEMBERS' PUBLIC BILLS
The Acting Speaker (Mr. Ethier):: Motion No. 15. Shall the order stand?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Ethier):: Stand at the request of the government.
Order No. 16, the hon. member for Davenport (Mr. Caccia). Shall the order stand?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Ethier):: Stand at the request of the government.
Order No. 18, the hon. member for Hastings (Mr. Ellis). Shall the order stand?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Ethier):: Stand at the request of the government.
Order No. 19, the hon. member for Waterloo-Cambridge (Mr. Saltsman). Shall the order stand?


Some hon. Members:: Agreed.
Criminal Code


The Acting Speaker (Mr. Ethier):: Stand at the request of the government.
Order No. 22, the hon. member for York Centre (Mr. Kaplan). Shall the order stand?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Ethier):: Stand at the request of the government.
Order No. 25, the hon. member for Calgary North (Mr. Woolliams). Shall the order stand?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Ethier):: Stand at the request of the government.
Order No. 27, the hon. member for Victoria (Mr. McKinnon). Shall the order stand?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Ethier):: Stand at the request of the government.
Order No. 29, the hon. member for St. John's East (Mr. McGrath). Shall the order stand?


Some hon. Members:: Agreed.


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


CRIMINAL CODE
Mr. J. Larry Condon (Middlesex-London-Lambton) (for Mr. Turner) moved: that Bill C-230, to amend the Criminal Code (presumption from cheque issued without funds), be read the second time and referred to the Standing Committee on Justice and Legal Affairs.
He said: Mr. Speaker, I feel compelled to speak in support of this bill both out of friendship and respect for my colleague, the hon. member for London East (Mr. Turner). I share his concern for the effect of cheque frauds, as much for the sake of the consumer as for the sake of the businessman and the merchant, in particular. The bill proposes an NSF cheque is, in itself, sufficient reason to presume that something of value was obtained by false pretence, unless the accused pays his dishonoured cheque within 30 days of its presentation at the bank.
As a rule I am reluctant to speak on any matter which touches upon the Criminal Code. Since I am not a lawyer by profession I find myself at some disadvantage when it comes to understanding the full impact of changes in the Code, especial-
80016-41%

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ly as they might affect the incomes of lawyers and the economics of practising law. I notice the hon. member for Toronto-Lakeshore (Mr. Robinson) is nodding his head.


Walter David Baker: He blushed.


Joseph Lawrence (Larry) Condon: 1 would not want to cut into the livelihood of anyone in that noble profession, but it does seem to me that the clause under consideration, in its application and its operation if not in its wording, puts businessmen and merchants, in particular, through a great deal of unnecessary legal expense in order to recover payment for bad cheques.
It may seem that nothing could be more satisfactory than the law as it is presently worded. At present there is a presumption the accused has obtained something of value by false pretence, if he has passed an NSF cheque, unless the court is satisfied by evidence indicating when the accused issued the cheque he had reasonable grounds to believe that it would be honoured, if presented for payment within a reasonable time after it was issued. It seems to say that there is a presumption of intent to defraud whenever an NSF cheque is written. The law places the onus squarely on the accused to prove his NSF cheque is not what it appears to be and that there was no attempt to obtain something of value by false pretence.
Let us admit there are a good many reasons for writing a bad cheque. In cases of honest error, the maker or drawer, as he is called in the banking trade, will redeem his worthless cheque promptly, after having been notified that his cheque was dishonoured. Payment in such cases, or even arrangement to pay, is sufficient evidence to indicate the cheque drawer did not intend fraud, as it might otherwise appear.
Even if this allows the drawer the benefit of a large doubt in many cases, all the merchant wants is the payment he thought he had received in the first place. Truthfully, payment is the only completely satisfactory evidence that there was no intent to defraud. According to the wording of the present law, although the bad cheque writer is required to prove he thought his cheque would be honoured, he is not required to honour his cheque in order to satisfy the courts his intentions were honourable. In practice, and quite contrary to the wording of the existing law, the prosecution is required to prove the drawer obtained his goods under false pretence. Experience has shown chances for the prosecution to obtain a conviction are quite slim, I suppose because fraud is rightly considered a serious offence and the courts would rather err on the side of the accused.
In its operation the present law is so inequitable it sometimes seems even to conspire with other laws against the honest businessman, as in the case of a landlord who recently complained he was unable to obtain the assistance of police in prosecuting a tenant for fraud, even though the tenant had issued not one but several NSF cheques for rent which was now in arrears. The police explained the tenant's location was known to the landlord, with whom he was in a contractual relationship. There could, therefore, be no criminal offence. The tenant felt secure under Ontario's Landlord and Tenant
Act, at least until spring. The courts would rather look upon this tenant as a bad debtor and assume that writing NSF cheques for rent is just another way of not paying the rent on time.
The landlord in this case did not specify whether the cheques were postdated. If they were, I might agree with the courts in preferring to look upon this as a bad debt. It ought to be made clear a bad cheque is not the same as a bad debt when it is written and delivered, that is to say, issued by the drawer in payment for something of value, whether to buy a camera, a car, or to pay the rent.
I do not have to remind hon. members present that a personal cheque, like a bank note or dollar, is a piece of commercial paper, payable at sight or at the time it is presented for payment by the payee. Like the bank note, it is issued on the faith that there are funds to cover it; but unlike the bank note it is not legal tender and does not have to be accepted by a businessman. The personal cheque is a convenience and a protection to the consumer, but under the operation of the present law against cheque frauds it is nothing but an expensive risk to the merchant. When a merchant accepts a personal cheque, he does not intend to extend credit. He is not expecting payment at some future date. He accepts a personal cheque as a substitute for cash, usually banks the cheque with his cash the same day, and immediately receives payment from his bank.
When a cheque is returned to the merchant because of insufficient funds, it is charged back to him, and only then does he discover that, contrary to his expectation, it was not a cash sale. If the personal cheque he accepted represents a line of credit to his customer, or some vague promise to pay, the merchant could at least have verified the credit standing of his customer so as to determine the likelihood of his ability to pay, given the status of his present obligations and the record of his credit dealings in the past, not to mention his income. Instead, the merchant asks for identification, considering quite rightly his principal obligation at the time of sale is to verify his customer is whoever he says he is. After all, the law does presume an intent to defraud on the basis of an NSF cheque. This should inspire the merchant to have some confidence in the personal cheque as an alternative to cash payment.
As we have seen, the operation of the law does not live up to its wording. One of the inevitable results is that personal cheques are being refused everywhere by merchants who have been disillusioned by a law which does not mean what it says. When someone passes counterfeit bank notes for cash, not even restitution will save him from the slammer. When a customer deliberately passes an NSF cheque, a counterfeit cheque in other words, restitution or payment is not even required in order to show good faith and to clear him of the presumption of false pretence, which the law says his worthless cheque represents.
What kind of justice is this when the merchant must take all the risk; when the law requires nothing from the cheque counterfeiter by way of payment, but prefers to look only at his bank account and his circumstances in order to determine

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his guilt or innocence of fraud; when the merchant must then assume the cost of civil prosecution in what is most often a fruitless effort to recover payment for something of value, which the court thinks of as a debt, as though the merchant had somehow extended credit at the time of purchase? Having stolen the merchandise in the first place, the white collar thief is then confirmed in possession of his goods by the frequent misapplication of law by the courts which prefer to call the thief a borrower. Shoplifting may now be considered theft, but pay for your groceries with a worthless cheque and the courts will call you a bad debtor.
The advantages of writing a bum cheque are nowhere more striking than in the application of the present law whereby the cheque counterfeiter is, in practice and in contradiction of the evidence which his rubber cheque provides, presumed innocent until proven guilty of doing it deliberately. The criminal law offers no satisfaction to the merchant. It does not provide for repayment, nor does it deter others from committing the same kind of crime.
According to Sgt. Lewis Coray of the London police department, fraud division, one of the reasons for the 150 per cent increase in bank frauds since 1972 is the lack of risk in committing white collar crimes. Sergeant Coray agreed with a number of other participants at a recent seminar on fraud, sponsored by the Canadian Banker's Association, who found the courts at fault in not imposing fair sentences on the relatively few who are convicted of fraud. Cheque thieves, he said, too often "Get off with a slap on the wrist."
When a cheque thief is convicted and sentenced for his fraud, the crime is usually spectacular, and the conviction makes headlines, as it did in the London Free Press of February 3 this year, when one woman, unable to make restitution for 53 bad cheques, amounting to almost $5,000, was reported to have been given an indeterminate sentence not to exceed 18 months. Perhaps she has learned the lessons of successful cheque fraud. Keep the number of your bad cheques, and the individual amounts, to a minimum so that the courts will not feel obliged to slap your wrists and the merchant cannot afford to sue.
In passing sentence on this woman, the judge said:
It's no wonder law-abiding citizens encounter problems when they try to write a cheque. The stores have been taken already by too many persons like yourself.
But despite her conviction, any stranger who has spent much of his time reading our criminal court records would come away with the impression that Canadians, while rarely found guilty of fraud, are plagued with an abundance of bad bookkeepers.
There is no need to ask: what is the effect of the increase of cheque fraud on the use of personal cheques? The acceptance of personal cheques depends not so much on the credit of the issuer as on the confidence of the businessman in the value of the paper he is offered. Because there is so little risk involved in writing bad cheques, and also because the cheque counterfeiter knows he will not have to pay up in order to avoid
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conviction for false pretence, business confidence in personal cheques has been so badly eroded under our existing law that this type of commercial paper-the only ready substitute for cash-faces extinction as a method of payment for goods purchased.
The merchant who accepts a personal cheque-even from a known customer-is becoming as rare as the corner grocer who accepts telephone orders and lets you charge them.
The only alternative to cash for consumers is the credit card. The risk of this form of credit is assumed by the bank or department store which issues the card, and the cost of that risk is paid by us all, whether we use such a card or pay cash. Nor has the merchant been slow to see the advantage of Chargex and Mastercharge. He has learned that credit customers buy 33 per cent more than cash customers because credit customers, unlike those who write personal cheques, are not compelled to determine whether or not they can cover the cost of the purchase from available funds. Credit customers are merely mortgaging their future income.
For the sake of counterfeit cheque writers, therefore, we are forcing the ordinary consumer to purchase on credit, to become a debtor, and too often a bad debtor who gets in over his head. Is this what we want, or are we prepared to put some teeth into the present law against cheque frauds before cheques disappear altogether?
Cheque counterfeiters in this country should be grateful for having been born in Canada. In France, cheque fraud is a little more risky. French law treats the NSF cheque as an offence. The severity of punishment depends on the amount of money involved, but the fraud is considered serious if the NSF cheque amounts to $200 or more. The convicted person becomes subject to a penalty of one to five years in jail, and a fine of $720 to $7,200.
But, no matter what the amount of the cheque, the elements of the offence are the same: first, issuance of the cheque, which excludes post-dated cheques; second, lack of funds at the moment of issue; and, third, bad faith of the author of the cheque.
And just what is bad faith, you might ask? Bad faith does not suppose even the intention to cheat or defraud. It does not necessarily mean that the person who wrote the cheque knew there were insufficient funds. French courts assume that a person writing a cheque has the duty of knowing the state of his account and, therefore, bad faith may be proven in the case of a person who, in doubt of his situation, writes a cheque without taking the precaution of verifying the state of his account. I do not think that is too hard to accept.
If the amount involved is less than $200, the offence is considered a breach of regulations. Not only is the punishment less severe, but the bad cheque speaks for the bad faith of the author of the cheque, and off he goes to jail for writing a cheque without checking his balance.
I understand that penal legislation concerning cheques was temporarily altered in 1972 because the courts were clogged with NSF'ers waiting for their turn in the pokey. Since then,

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at least until last year, in order to clear up the backlog, a period of ten days was allowed the author of the bad cheque from the time of the issuance of the cheque during which he could make the repayment. The person who paid up was able to escape jail but was still liable to the payment of a fine.
By contrast, the present bill allows the cheque counterfeiter and bad bookkeeper alike 30 days to pay what they owe as evidence that they did not obtain something of value under false pretence. Anyone who thinks this to be too harsh should state why a Canadian crook deserves to be treated better than a French thief.
For the sake of every consumer in the market place and every merchant with whom he deals, I cannot urge too strongly upon the members of this House the need for a simple and effective law which would identify and eliminate the cheque counterfeiter by prosecution by the Crown without requiring the merchant to weigh the cost and the benefit of trying to collect payment for bad cheques. In my view, the proposed bill will provide such a law and I heartily recommend its passage.
Mir. Walter Baker (Grenville-Carleton): Mr. Speaker, I listened with an abiding interest to the hon. member who has just spoken and put forward this bill on behalf of the hon. member for London East (Mr. Turner). Because of the high position which the hon. member for London East holds in the House he is prohibited from presenting bills, and I understand that is the reason why he did not do it himself.
I want to commend the hon. member for Middlesex-Lon-don-Lambton (Mr. Condon) as a non-lawyer, as he identified himself, for the presentation which he made. If I should disagree with some of the things he said, I do not want him to feel that I am disagreeing in any way with the motivation behind the bill because it is indeed true in this country that we have to find a method of dealing with the increasing incidence of bad cheque writing and a whole host of other things that have afflicted me and other members of the House, and indeed, and in particular, business people throughout the country. We have to find that way. Listening to the hon. member elucidate on the problem-and I agree with the ramifications and the extent of the problem-I had to ask myself whether this was the way and whether we ought to depart from a principle of justice in Canada to meet a problem which we might be able to meet in another way.
The existing law as contained in the Criminal Code and as set forth in the fly sheet of the bill reads this way:
Where ... it is shown that anything was obtained by the accused by means of a cheque that, when presented for payment within a reasonable time, was dishonoured on the ground that no funds or insufficient funds were on deposit to the credit of the accused in the bank or other institution on which the cheque was drawn, it shall be presumed-
That is the law at the moment, a presumption.
-to have been obtained by a false pretence-
There is a presumption now existing in the law of a false pretence, and if the accused who has drawn the cheque cannot rebut that presumption, then certain consequences flow.

The Criminal Code then goes on to say:
-unless the court is satisfied by evidence that when the accused issued the cheque he had reasonable grounds to believe that it would be honoured if presented for payment within a reasonable time after it was issued.
The court is instructed to look into the mind of the issuer of the cheque, to consider the time of presentation and to consider the accused's circumstances. The bill which is proposed and which has been discussed in an able way by the hon. member who just sat down, changes the conditions. The proposed amendment would repeal the section, but it reads the same until it gets down to these words:
.. . unless the accused pays the amount of the dishonoured cheque to the payee thereof within thirty days after the bank or other institution on which the cheque was drawn notifies the accused by prepaid mail that the cheque was dishonoured.
If we stop to think about it for a moment, there is an element in this proposal which I do not think is intended by the drafter of the bill. The element is that it really allows 30 days' credit which could be used by the unscrupulous in a way in which I am sure the hon. member for London East never intended when he prepared the bill. A person could write a cheque knowing full well that his account had no money in it and would not have any money in it within a period of 30 days, and that cheque could be honoured.
What this bill really does is establish in the Criminal Code a rather unique line of credit, and what is lost is the opportunity for an accusation to be made, and information to be issued, and a person to be tried, whether or not the cheque is paid later on. As the section now exists it says that if anybody tries to use the existence of the Criminal Code to give himself a line of credit by issuing bum cheques, even though he should pay those cheques before he comes to trial, he is still guilty of an offence. He is subject to be examined with respect to that, and the circumstances of paying the cheques go only to the mitigation of sentence, but they do not take away from the case, at least at this point, the sanction of a penalty. I do not think the hon. member for London East intended that, but that could well be the effect of his bill.
I do not want hon. members to think that by saying that I am unmindful of the problems of business people, but I am also not unmindful of the problems of some people in the community. I carry no brief for the fraud artist, but I am prepared to carry a brief for people who are accidentally caught within the provisions of the Criminal Code. This has happened under this section, and it has happened within my experience.
A few years ago I was asked to defend a man who was engaged in a plumbing business and who subsequently went bankrupt. This person issued a series of cheques. For some reason or other some cheques were presented in time and were paid. One cheque, I suppose because of the negligence of the person to whom it was directed, the payee, was not presented in time, and when it was presented there were not sufficient funds in the bank because of the difficulties into which my client had got himself. Under the bill as proposed a person like this would have 30 days to raise sufficient money to pay the cheques, but in my client's circumstances there was no way on
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God's green earth that he would ever be able to raise the money.
This man was not a dishonest man. He was a foolish businessman, but he was not fraudulent. He did not try to conceal or withhold. He was married. He had two children. He lost his car, his home, and everything he owned as a result of this, but he was not dishonest. He was unfortunate, but had the bill which is being presented today for the approval of this House been the law of the land, this man would have been branded a criminal merely because he could not pay. He would not have had a chance to defend himself against a charge of criminality.
As a result of these circumstances we appeared before a magistrate, I think it was, in the city of Cornwall, which is represented by the hon. member for Stormont-Dundas (Mr. Lumley). We now call magistrates provincial judges. We advanced evidence at that time of the state of my client's bank account, his circumstances and the circumstances of his business, and we were able on that occasion to rebut the presumption which is set forth in the Criminal Code, the presumption that he issued the cheque knowing that it would not be honoured. The court found that this fellow had issued a bad cheque, that he had obtained goods on the basis of a bad cheque but that he did not do it on false pretences.
If that poor fellow had been found guilty, he would have been fined, and if he could not pay the fine, he would have spent time in jail. We would have resurrected, had this bill been the law of the land, the old debtor's prison. 1 know there are some businessmen in the country who would like there to be debtor's prisons. It would be a great place. That in effect is what would happen in a case like this, and I do not think my case is unique. My practice was never unique. These cases came up time and time again. The businessman is as much inconvenienced by cheque-bouncing artists as he is by the innocent, I suppose, but I think it is our duty with respect to the criminal law to ensure that it is administered in such a way that the truly innocent do not suffer, and that is the matter which concerns me about this bill.
The other thing about cheques is that they involve an element of volition. Cheques are volunteered by people who issue them, and they are accepted. When cheques are used, there is a certain amount of risk which a businessman has to take. That is why, as the hon. member said, a cheque is a different kind of instrument. That is the reason why I think the bill ought not to be supported. 1 say that with some regret because 1 know the motivation of the hon. member who advanced the bill, and I listened with great care to the hon. member who presented it for him. If the bill were approved I think it would bring something into our criminal administration that was taken out of it many years ago, and for good reason.
The courts of the country are equipped to look into these matters. Appointments to provincial courts in all the provinces are made with great care. Those are the courts that usually
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deal with this kind of matter and I think we should trust them.
I am not going to argue that the lists are not crowded, because they are; cases take some time to be heard, but it is within the hand and mind of man to change the procedures, to appoint more judges, or do a host of other things that would help the situation. I do not think we ought to undo an inconvenience by removing from our criminal justice system a protection that has been built in over a period of time for good reason.
There are two elements to consider in this matter. There is the element represented by the businessman who is angry because his goods have gone and all he has for them is a rubber cheque. But there is also the other aspect, the element of innocence. If anyone in our community, when he faces a presumption of guilt, does not have the opportunity to prove himself innocent, not just so that somebody gets paid but because of his own reputation in the community, his standing in his family, or his view of himself-if that is removed from the Criminal Code then I think it would be a tragedy. I do not think the hon. member for London East intended that by his bill, but unfortunately that is the effect of it. I therefore say with some regret that I do not believe the bill ought to be supported in its present condition.


John Gilbert: Mr. Speaker, I should also like to commend the hon. member for London East (Mr. Turner) for presenting this bill, as I have great respect and friendship for him. I appreciate his concern with regard to the passing of bad cheques.
I should like to direct my attention to the remarks made by the hon. member for Middlesex-London-Lambton (Mr. Condon) who made an able presentation. He said that in London there has been an increase of 150 per cent in bad cheques passed since 1972. Mr. Speaker, you do not have to be too old to appreciate that at one time we had a cash society; everything was paid for in cash, and some of our parents adhere to that principle. Unless they can pay cash for goods they do not buy them. The second phase was cash plus cheque, and the third phase, which we are now experiencing, is cash plus cheque plus credit card.
The hon. member for Grenville-Carleton (Mr. Baker) was at one time a Crown attorney in Ottawa. He knows as well as I, from my experience in criminal law, that the police are wary of laying a charge with regard to a cheque. Once the Crown authorities assume responsibility with regard to such a charge they may be exposing themselves to an action for false prosecution. My experience in Toronto was that Crown counsel were very reluctant to proceed with regard to cheques. They quite rightly said it was not a criminal matter but a civil matter, and advised the person who received the bad cheque to use civil proceedings.
The hon. member for Middlesex-London-Lambton said that the nub of the matter is that the person who received the bad cheque wants payment for the goods or services. We have therefore to determine whether the amendment would achieve that purpose. Mr. Speaker, I feel it will not achieve the purpose the hon. member seeks. It does not help the ordinary businessman to tighten the criminal law, and it does not help

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the ordinary person who receives a cheque for rent, say, to bring an action in the criminal courts. What will happen is not that the payment will be made to the person who received the bad cheque but that a penalty or prison sentence may be imposed on the person who passed it.
The hon. member for Grenville-Carleton picked up an important point very quickly when he said the effect of this bill will be to extend free credit for at least 30 days to the person who passes the cheque. In other words, that person would have 30 days in which to honour it; if he does that, then the case is at an end. He would not only have credit for 30 days but, according to the bill, for 30 days plus the time the bank took to notify him.
You can appreciate some of the things that could happen, Mr. Speaker. Someone could think he has certain moneys in the bank, present a cheque for payment for goods and services, and then go away on a month's holiday or be confined to hospital. This might far exceed the 30 days and the presumption of false pretences would arise immediately. I do not think most of us want this. What we want is what the hon. member who introduced the bill said: we want payment. I think we have to find ways and means of getting moneys to the person who accepted the cheque.
Again I give full credit to the hon. member for Grenville-Carleton for saying there is a certain risk when a cheque is presented as payment for goods or services. The person who accepts it has to be very careful about the person who presents it. At times people are foolish about accepting cheques and they have to accept the consequences. They have to accept that they should take action in the ordinary way through the civil court to receive their money. I do not think the criminal court should be cluttered with cases of false pretences concerning small cheques.
Once a person gets a criminal conviction it is very difficult to expunge it. This would impose a very heavy burden on a person who did not pay within the 30 days or the 30 days plus the time it took the bank to inform him.
That does not mean we should not study this matter. It seems to me that the Minister of Justice (Mr. Basford) should pick up this idea with regard to bad cheques and refer it to the Law Reform Commission for study, or to the Standing Committee on Justice and Legal Affairs, where bank officials and consumer associations, police, lawyers and others could be called for an opinion.
I could not help but smile when the hon. member for Middlesex-London-Lambton presented the bill and said that it may deny lawyers some form of income. The average lawyer thinks these cases a nuisance and makes little money from them as I am sure my colleagues, the hon. member for Grenville-Carleton, and the hon. member for Toronto-Lake-shore (Mr. Robinson) will agree.


Walter David Baker: Especially if he is paid with a cheque.


John Gilbert: Although the proposed change in the law would lead to no great loss of income for lawyers, it would not solve the problem confronting us. We must consider ways and means to adopt the principle on which the mover of the bill spoke, the principle of repayment of bad cheques. It seems to me that the present law is preferable to the proposed amendment.
At present the law says that the accused must show he had reasonable grounds for believing that if the cheque were presented within a reasonable time after issue it would be honoured. But the amendment would impose a time frame, and the time frame would give the cheque writer extended credit for 30 days, plus the time it takes the bank to notify the issuer of the cheque. Although I have deep respect and affection for the hon. member for London East and was pleased to hear the presentation of the hon. member for Middlesex-London-Lambton, I cannot accept the proposed amendment in its present form, and I hope the Minister of Justice will refer this question to the Law Reform Commission for study.
In law, there are federal cases and civil cases, for the most part, and in law presumption is a rarely invoked principle. In a criminal case the onus is almost always on the Crown to prove beyond a reasonable doubt mens rea, the guilty mind, or the intention of the accused to commit the offence. There are some narrow exceptions in which presumption is invoked. This proposed amendment would set up a presumption with regard to cheques. In the Criminal Code there is a presumption concerning the possession of stolen goods. Few other such presumptions exist in the law. Because a presumption shifts the onus from the Crown to the accused, and that onus is not light, 1 oppose this bill in its present form and hope the Minister of Justice will take steps to look into the matter.


Mr. W. Kenneth Robinson (Toronto-Lakeshore):: Mr. Speaker, I congratulate the hon. member for London East (Mr. Turner) for introducing Bill C-230, "an act to amend the Criminal Code (presumption from cheque issued without funds)." The explanatory note to the bill reads:
The purpose of this bill is to amend the Criminal Code to provide that the issuance of a cheque returned NSF shall raise a presumption that anything obtained thereby was obtained by false pretence, unless the maker of the cheque satisfies the debt within a period of thirty days after being notified that the cheque was dishonoured.
The explanatory note quotes the wording of subsection 320(4) of the Criminal Code, which at present reads as follows:
... Where, in proceedings under paragraph (l)(a), it is shown that anything was obtained by the accused by means of a cheque that, when presented for payment within a reasonable time, was dishonoured on the ground that no funds or insufficient funds were on deposit to the credit of the accused in the bank or other institution on which the cheque was drawn, it shall be presumed to have been obtained by a false pretence, unless the court is satisfied by evidence that when the accused issued the cheque he had reasonable grounds to believe that it would be honoured if presented for payment within a reasonable time after it was issued.
According to this provision there is a presumption of guilt, that is to say, the onus is upon the accused to provide proof that at the time he wrote the cheque he sincerely believed he had sufficient funds in his bank account to cover the amount.
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It would appear that this is in direct violation of the time-honoured presumption of innocence until guilt is proven.
I realize that we are dealing with a very complex issue here. Proving the intent to defraud is a very slippery matter. Intent is not necessarily a component of the proof of guilt. In this case unless someone actually said "I am going to write an NSF cheque" it would be extremely difficult to have actual, hard evidence. Canadian law is not alone in its demand that intent be proven. In England, for example, the law requires proof that the accused person acted dishonestly. Similarly, Australian law demands proof of the intent to defraud, although in this country the burden of proof lies with the prosecution rather than with the defendant to disprove. In the states of California, Maine, Michigan and New York a person can be found guilty of passing a bad cheque if, and only if, actual intent to defraud the victim can be found.
The solution to the acquisition of evidence proving the intentional writing of an NSF cheque would be some type of application of a test of intent. Bill C-230 provides the means for that test. If after 30 days a cheque was not honoured it could be assumed that intent had been proven by non-payment.
This bill is designed to rectify a deficiency in the current law governing commercial transactions. As we all know, the law dealing with bad cheques is plain in its intent, but difficult at best and impossible at worst to enforce. The law allows the accused to use as his defence the claim that when he issued the cheque he had reasonable grounds to believe it would be honoured if presented for payment within a reasonable time after it was issued. This is fine as far as it goes.
I am sure that many of us have inadvertently and innocently written an NSF cheque at one time or another. The present law rightly recognizes the possibility of making a legitimate error. But the law should also recognize the rights of those to whom the cheque is issued. I believe that this bill helps to right the balance between the cheque issuer and the cheque recipient, for we should recognize that the Criminal Code, as it stands, has opened not a crack but a superhighway through the law as it now exists. By failing to provide for restitution to the victim, it seems to me the law has missed the point.
I think the hon. member for Grenville-Carleton (Mr. Baker) and the hon. member for Broadview (Mr. Gilbert) know how reluctant police are to lay charges in these cases, and how reluctant justices of the peace, magistrates, or provincial judges, as the case may be, are to deal with them. It is often the case, as the police, magistrates or provincial judges know, that a charge is laid in an attempt to use the criminal courts as a collection agency. I think the suggestion of the hon. member for Grenville-Carleton has merit, namely, that part of the sentence should call for the restitution of the amount of money for which the cheque is issued.
The benefits of this change in the law will affect us all. The cost of bad cheques has been twofold. It has been added on to the prices the rest of us pay. It also increases the storekeeper's reluctance to accept a cheque, any cheque, as a means of payment. How many of us have been in stores recently and
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seen the increasingly familiar "We do not accept cheques" sign? How embarrassingly familiar is the current ad for one of the credit card syndicates that asks, "Will that be cash, or-?" By lessening the risk to the merchant in accepting a cheque and decreasing the proportion of bad cheques, the mark-up on merchandise may be lowered. At least some of the merchant's reluctance to accept a cheque will be reduced.
Lest my colleagues think I am exaggerating, allow me to illustrate my point. A local Ottawa merchant stated that in 1976 his company lost $100,000 owing to bad cheques. A clothing chain store controller reported that his chain no longer accepted cheques as a form of payment. They will accept cash or credit cards. The reason? One cheque in ten issued to his firm bounced. Some retailers have found that up to 10 per cent of their annual revenues have been wiped out because of bad cheques.
The London Free Press reported in February that one woman was convicted this winter of defrauding 19 merchants of more than $3,500. In fact she passed 53 "bad cheques" totalling $4,925. In sentencing this offender the judge stated:
It is no wonder that law-abiding citizens encounter problems when they try to write a cheque. The stores have been taken already by too many persons like yourself.
I received, this February, a letter from a woman whose husband has been a victim of NSF cheques and I would like to take the liberty of reading it.
Dear Sir:
May I say how much we appreciate your bringing the NSF cheque issue to light. My husband is a small businessman-he has a franchise for selling snap-on tools. He accepts cheques from customers in good faith, then, when a cheque "bounces", there is not a thing we can do about it. I can telephone day after day, and where they have moved to another location this costs us extra for long distance calls, but to no avail. We offer to take the tools back, but don't get too far on this very often as they need the tools for their line of work. We have paid for lawyers' letters, but to the type of person that writes NSF cheques a lawyer's letter doesn't mean a thing. They know there is no penalty so they can go on writing cheques. Nobody can prove that they didn't know the money was not in the bank.
As with most other small business people, we have to pay for the tools within the week. My husband works many more hours than the fellow who writes the NSF cheques.
It would be a fair ruling, that if the cheques are not honoured within 30 days, goods should be returned. That is a fair enough bill and should be passed.
Thank you for supporting the bill.
The benefits of the hon. member's bill to the shopkeeper are obvious. By attaching the international dishonouring of a cheque to the Criminal Code, the merchant will have recourse to the Crown attorney. This is particularly important, for this bill is aimed at helping the retailer who has lost $200 or less in the transaction. Often the cost of implementing private proceedings outweighs the value of the Items lost. If my hon. colleagues see fit to approve this amendment the merchant will no longer have to bear the burden of instituting proceedings himself, the cost of which must be measured not only in dollars, but in time and energy spent before the legalities begin. The retailer would have a specific time frame to operate within; after 30 days, legal action could be taken.
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The unfortunate person who, through miscalculation, has written an NSF cheque would not be subject to harassment by the retailer or a collection agency for both would know that there was a 30 day limit for repayment. The innocent offender could make quick restitution, and the shopkeeper be assured that the law was on his side after the 30 day limit had expired.
Obviously the honest customer will also benefit. He will be less suspect when he wants to write a cheque for merchandise. He will likely also benefit through reduced price tags.
The 30 day time limit will allow the police and the judiciary to determine real intent to defraud. If restitution has not been made within that time, it is likely that it will not be made. In Ottawa alone, last year the police recorded that in 1,372 cases of cheques and credit card fraud, involving $420,000 worth of goods, only 128 arrests were made. Guilt through intent is difficult to establish. While the 30 day limit is not the only measure that can be taken, it would allow an easier determination of guilt by the police and would consequently provide for stricter enforcement of the anti-fraud laws.
In conclusion, Mr. Speaker, let me say that I do not believe that this amendment is the ultimate solution. Certainly some less scrupulous individual is likely to make use of the 30 day grace period to purchase items by cheque knowing full well that there is no money in his account, but counting on his U.I.C., pension, family allowance, or income tax return cheque to come before the expiry date. However, I also believe these incidents would be few and far between and that the benefits of this amendment will outweigh this drawback, which could, incidentally, be overcome by the simple imposition of a percentage charge, as is done on overdue accounts.
1 would therefore urge my colleagues to support this bill of the hon. member for London East in his efforts to correct the injustices suffered by merchants and honest cheque writers alike.


Arnold John Malone: Mr. Speaker, I too would like to join with those who have complimented the hon.
member for London East (Mr. Turner) on his initiative because there can be no doubt that the intent of the bill he has put before us today is a good one. Any person who has been engaged in business would probably expect that each one of us here had at one time or another received an NSF cheque.


John Gilbert: But have we ever passed one? That is the issue.


Arnold John Malone: 1 have received them. I do not know whether they came from Liberals or not. But we have never passed them.


An hon. Member:: Are we getting our money's worth now?


Arnold John Malone: If the hon. member is placing a value on my speech I should like to have it in cash rather than by cheque. I know what side of the House he sits on.
I should like to reiterate a couple of thoughts which have already been put forward this afternoon. The first is that the bill has the effect of giving 30 days' grace, or licence. I know that the hon. member who has just taken his seat made a reference to' this. He said that innocent offenders would have 30 days in which to make restitution. But if the innocent can do this, so can those who are not so innocent. It is unlikely that 100 per cent of our population is composed of innocent individuals with the same high motives as the supporters of this measure. And there is no doubt that people without high motives would be in a position to abuse the privilege or loopholes which it provides.
There is another part of the bill to which 1 take exception. If the 30 day requirement is not met, an offence automatically becomes a criminal one.


Mr. Deputy Speaker:: Order. The hour provided for the consideration of private members' business has now expired. It being five o'clock this House stands adjourned until Monday at 2 p.m. pursuant to Standing Order 2(1).
At 5 p.m. the House adjourned, without question put, pursuant to Standing Order.

Monday, May 30, 1977