1977-05-25

ROUTINE PROCEEDINGS


Mr. Otto Jelinek (High Park-Humber Valley):: Mr. Speaker, pursuant to the provisions of Standing Order 43 I rise on a matter of urgent and pressing necessity. In view of the fact that yesterday the Minister of State (Fitness and Amateur Sport) said that the government had failed in trying to mediate a truce between major junior hockey teams and professional leagues regarding the payment of development fees because "the federal government has neither the legislation nor the jurisdiction to resolve the dispute", and since this same government has in fact established a precedent in introducing legislation dealing specifically with professional sports, namely by intervening in professional football, for the sake of preserving a healthy continuation of our national sport as well as the development of other amateur participation I move, seconded by the hon. member for Edmonton Centre (Mr. Paproski):
That this House instruct the Minister of State responsible for sports to take all necessary steps for legislation to be introduced whereby all professional teams, leagues or shows, including the NHL and WHA, contribute realistically toward the development of their respective sports, in accordance with such legislation.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


ANTI-INFLATION BOARD SUGGESTION BOARD NOT APPLYING RESTRAINT TO SALARY INCREASES FOR EXECUTIVES-MOTION UNDER S O. 43
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I ask leave to move, seconded by the hon. member for Nanaimo-Cowichan-The Islands (Mr. Douglas):
That this House, noting that if one executive receives an increase in compensation of more than $60,000 a year, as in the case of Kaiser Resources Limited, 24 other executives in the same group or company would have to receive a zero
increase to produce an average increase not in excess of the $2,400 a year limit provided in the anti-inflation guidelines, finds it difficult to believe that the Anti-Inflation Board is applying restraint to the incomes of those at the top the way it is holding down the incomes of those in the lower and middle income brackets, and this House calls on the government to correct this situation forthwith.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FINANCE
Mr. Eudore Allard (Rimouski):: Mr. Speaker, pursuant to the terms of Standing Order 43, I request the unanimous consent of the House to present a motion for the discussion of an urgent and important matter.
As most municipal administrations are now having tremendous difficulties in paying back their debts, which results, on the one hand, in making it very difficult for them to borrow money on which they have to pay 13 and 14 per cent interest, without increasing their taxes and, on the other hand, in making it impossible for them to meet their expenses; as there is an imbalance between their income and their needs because land and property taxes, their sole source of income, are really inadequate to meet their financial responsibilities; and also because the interest on their public debt affects greatly their respective budgets; and also because municipal governments are the very foundation of our democratic system and, as a consequence, are the level of the government which is closest to the citizens, I move, seconded by the hon. member for Richmond (Mr. Beaudoin):
That this House order the government, and through it the Bank of Canada, to authorize loans to municipalities, at cost, so that they can finance non-profitable public development projects such as hospitals, schools, roads, etc.; and this, to enable municipal administrations to reduce their debts and meet their needs adequately.


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


Some hon. Members:: Yes.


Some hon. Members:: No.

May 25, 1977
Resources


PUBLIC SERVICE
Mr. F. Oberle (Prince George-Peace River):: Mr. Speaker, my motion is under Standing Order 43. The urgency of this matter relates to a report highlighted by a Toronto news publication over the weekend, and the exposure of a list containing the names of 21 Canadians who were placed under suspicion by a former solicitor general of conspiring to overthrow the government and replacing it with an alternative alien to the present socio-political system. Because of the fact that these persons were subjected to procedures which offended the most basic civil rights adhered to in our country, I move, seconded by the hon. member for Central Nova (Mr. MacKay):
That the government be required to set up a tribunal through which these individuals can gain access to the files compiled about their personal and private lives and kept by the security section of the RCMP and that they be given the opportunity to respond to the allegations and to clear their names.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


RESOURCES
Mr. John C. Crosbie (St. John's West):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In view of the admission yesterday by the Minister of Energy, Mines and Resources that legislation to confirm and ratify an alleged agreement announced on February 1 between Canada, Prince Edward Island, Nova Scotia and New Brunswick concerning off-shore mineral resources cannot be introduced since important points have not yet been agreed between the parties, I move, seconded by the hon. member for Selkirk (Mr. Whiteway):
That this House regrets the premature announcement by the Prime Minister of the signing of an historic document now "unhistoricized" and the statement by Premier Regan that this was the finest example yet seen of co-operative federalism in that there is as yet no example to be followed and thanks the minister for his unusually frank admission.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker-


Some hon. Members:: Hear, hear!


Mr. Hees:: That was a lot better than yours, Pierre.


Charles Joseph Clark: Let me begin, Mr. Speaker, by extending to the Prime Minister et le Parti Credit Social du Canada my congratulations on the success of their candidates in the six federal by-elections yesterday.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: I should like to direct a question to the Solicitor General. The minister will be aware of news reports attributing to Superintendent Venner of the security service of the RCMP the information that documents in relation to the Praxis Corporation have been destroyed by the RCMP. I would like to ask the Solicitor General if he can confirm to the House of Commons newspaper reports that the security service of the RCMP either confiscated or is in receipt of property obtained through illegal break-ins.


Hon. Francis Fox (Solicitor General):: Mr. Speaker, the hon. gentleman's question refers to activities with regard to the Praxis facilities a few years ago. The RCMP was not involved in any form of illegal break-in with regard to the Praxis facilities. As far as documents relating to the Praxis incident are concerned, those documents were all turned over to the metropolitan Toronto police in the middle of last February.


Charles Joseph Clark: Just so we might be clear, the Solicitor General is telling the House of Commons that no documents related in any way to the Praxis Corporation were destroyed or are now in the possession of the security service of the RCMP. When the minister is up, would he also tell us how those documents, if they are now in the possession of the metropolitan Toronto police force, came into the possession of that force?


Francis Fox: Mr. Speaker, as I indicated in my first answer, all the documents in our possession were turned over to the metropolitan Toronto police department. The documents came into the possession of the RCMP through a variety of sources, but the RCMP did not participate in any illegal break-in, nor did it obtain the documents in question in any illegal manner.


POSSIBLE USE OF ILLEGAL ACTS TO OBTAIN SECURITY
Charles Joseph Clark: Mr. Speaker, I wonder if the minister could tell the House whether it is standard operating procedure for either the security service of
May 25, 1977

the RCMP or the police security planning and analysis group or any other group associated directly or indirectly with the government of Canada on occasion to obtain security information through covert activities or illegal acts.


Francis Fox: No, Mr. Speaker. The standing instructions given to the RCMP in general and to the RCMP security service at the same time is that all the activities of the RCMP, be they on the criminal side or on the intelligence and security side, are to be conducted in accordance with the law of this land.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Perhaps by accident the Solicitor General omitted reference in his answer to the police security planning and analysis group. I would like to know whether that stricture applies to that group as well. I would like also to ask a policy question of the Solicitor General so that we might be clear. When the security service of the RCMP or the police security planning and analysis group or any other group decides that it is in the national interest to obtain security information by way of covert activities, is it a matter of policy that those activities require the minister's personal authorization?


Francis Fox: Mr. Speaker, the police security planning and analysis group does not obtain information through covert activities.


Charles Joseph Clark: Would the minister advise us whether as a matter of policy in any instance when any security apparatus of the government of Canada decides that it is in the national interest to obtain security information through covert activities those activities must be approved by the minister himself or by some other member of the cabinet?


Francis Fox: Mr. Speaker, as I indicated before, all activities of the RCMP security service are carried out in accordance with some of the laws passed by parliament, including the Official Secrets Act, which requires that 1 approve in a certain number of cases the operations of the RCMP security services, and in order to carry out these obligations in accordance with the law, they have to report to me.


MINISTER'S KNOWLEDGE OF ALLEGED ILLEGAL ACTIVITIES BY FORCE AT &quot;L'AGENCE DE PRESSE LIBRE&quot;
Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, I have a brief question for the Solicitor General. On the basis that he has now had ample time and opportunity to consult departmental records and so on and also on the basis that he does not wish to see officers in the security service carrying the can for activities for which they are not directly responsible but were carrying out orders from some higher authority, what was the basis upon which the Premises of the Quebec newspaper L'Agence de Presse Libre du Quebec were bugged and as a result of which certain officers, including an RCMP officer, find themselves under criminal charges? Was this particular scenario known in advance by the then solicitor general, and if
Oral Questions
not, when did this first come to the attention of the then solicitor general or the present incumbent?


Francis Fox: Mr. Speaker, this whole matter to which the hon. member refers is presently before the courts in the city of Montreal. During the course of the prosecution we were asked to furnish documents and related evidence to the judge who was hearing the matter. We co-operated fully with the judge. The judge decided to send the matter to trial a week ago. The trial is set to start tomorrow so I believe I should not make any further comments at this stage.


Elmer MacIntosh MacKay: A supplementary question, Mr. Speaker. I am not asking for details about this matter that is before the court. What I am trying to find out from the Solicitor General is the basis on which operations like this are carried out. Is it the case in this particular instance that the then solicitor general had knowledge about this before it took place? If he did not, would the Solicitor General tell the House at what point in time he learned about it?


Francis Fox: Mr. Speaker, as I indicated, the general standing directions are that the RCMP security service operates within the confines of the criminal law of Canada. The whole matter was referred to the courts by the Attorney General of the province of Quebec.


An hon. Member:: That is not the question.


An hon. Member:: You are evading the question.


Francis Fox: The relevant information was brought to the attention of the judge and he was charged with investigating the matter.


An hon. Member:: That has nothing to do with it.


An hon. Member:: Answer the question.


An hon. Member:: Come clean and answer the question.


An hon. Member:: You did it before and you are at it again.


Francis Fox: We happen to have an independent judiciary in this country.


Charles Joseph Clark: Except when you phone them.


Mr. Baker (Grenville-Carleton):: Until you telephone them.


George Harris Hees: Independent until you dial a judge.


Francis Fox: If hon. members opposite are interested in the answer to the question-


An hon. Member:: Let us have one.


Francis Fox: -it is that the presiding judge, after having looked at the evidence in camera, decided that charges ought to be laid against three senior police officers, one of the

May 25, 1977
Ora! Questions
RCMP, one of the Quebec Provincial Police and one of the Montreal Urban Community Police. It was up to the judge to decide against whom charges ought to be laid in that case.


CENTRAL MORTGAGE AND HOUSING CORPORATION
Mr. Arnold Peters (Timiskaming):: Mr. Speaker, my question is directed to the Minister of State for Urban Affairs. In view of the unanimous support of the House yesterday for relief for the residents of Cobalt where 65 to 70 houses and businesses were destroyed by fire and in view of the fact that the Ontario government has declared Cobalt a disaster area and has pledged financial support, will the minister indicate his willingness to have senior Central Mortgage and Housing officials go to Cobalt to plan the rebuilding of the disaster area and insure that the normal red tape is eliminated so that rebuilding can start with CMHC support within the next few weeks?


Hon. Andre Ouellet (Minister of State for Urban Affairs):: Mr. Speaker, I answered similar questions yesterday in the House and indicated CMHC's willingness to co-operate fully.


William Arnold Peters: A supplementary question, Mr. Speaker. They always co-operate fully; what I am asking is the elimination of red tape. One-third of the town has been destroyed. They are anxious to rebuild and can only do so if we get rid of the red tape. If CMHC really wants to help it will send in senior officials to look at the situation and advise the council and others on what steps can be taken so that there will be no delay. If we are to rebuild it has to be done this summer. They will be living in tents during that period. We are not interested in the normal co-operation, we want something special.
[ Translation]


André Ouellet: Mr. Speaker, I can report to the House that my colleague the Postmaster General will be there tomorrow to see what can be done by federal authorities. Then I can assure the hon. member that there will be cooperation on the part of officials in my department and if my talents as an organizer can be of any help, I will certainly be available.


NATIONAL DEFENCE
William Arnold Peters: Mr. Speaker, a further supplementary question to the Acting Minister of National Defence. 1 wish the government would not play politics with this important matter.


Some hon. Members:: Oh, oh!


William Arnold Peters: The Postmaster General cannot handle his own department never mind handling the problems at Timiskaming.


Some hon. Members:: Hear, hear!


William Arnold Peters: May I ask the minister if it is possible for the Department of National Defence to supply some of the necessary equipment such as beds, tents and other mobile equipment that should be supplied to these people so that they can move into one area and be handled by the municipality over the next three or four months while this proposition is being considered? I hope the minister will go into that area, to indicate his support, instead of sending the Postmaster General who cannot even look after his own department.


Mr. Maurice A. Dionne (Parliamentary Secretary to Minister of National Defence):: Mr. Speaker, that would constitute aid to the civil powers, which is one of the responsibilities of the Canadian Armed Forces. That-


An hon. Member:: Who are you?


Maurice Adrian Dionne: If you don't know now we will let you know after the next election.


Some hon. Members:: Hear, hear!


Maurice Adrian Dionne: That would require an official request from the Attorney General of Ontario. If such a request is made to the Department of National Defence, the department will respond in its usual manner and do everything in its power to see that the necessary assistance is supplied to those who were so unfortunate. We will probably ask the Postmaster General on his return for his assessment of the situation as well.

[ Translation]


POST OFFICE
Eudore Allard: Mr. Speaker, my question is directed to the Postmaster General.
Since January 13, 1978 will mark the one hundredth anniversary of the birth of one of the most distinguished men in our history, the great historian Lionel Groulx, and since Quebecers are generally proud of this great Canadian, could the minister tell the House whether or not he would consider issuing a postage stamp to commemorate this anniversary and thus revive the memory of this eminent Canadian?


Hon.   J.-J. Blais@Postmaster General: Mr. Speaker, I am grateful to the hon. member for Rimouski for his representations. I have received many from government members who believe Canon Groulx would be an appropriate subject for a 1978 postage stamp. I would consider him as a most serious choice because of national unity and the influence of Canon
May 25, 1977

Groulx on that matter. Of course, I cannot announce today what decision is to be made but I can tell the hon. member and others who have made similar representations that I am giving full consideration to their request.


BILINGUALISM
George Harris Hees: Mr. Speaker, my question is for the Prime Minister. In view of the statement made yesterday by the Commissioner for Official Languages, that the government should go back to square one and produce a language policy more in keeping with the needs of those who require a second language in the work place, I ask, does the Prime Minister intend to heed the suggestion of the extremely able Commissioner for Official Languages and institute a policy consistent with what he recommended?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker,-


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: -I was unaware of the statement made by the Commissioner for Official Languages and would hesitate to accept the enjoinder to go back to square one, when one remembers that the Official Languages Act was adopted with the support of all parties in this House. I think it would not be in keeping with the wishes of parliament, and probably not with the wishes of the official languages commissioner, if we were to go back to square one. As mentioned in the Speech from the Throne, we will obviously go forward and improve the application of the act. This is what we suggested in the Speech from the Throne that we were prepared to do.


George Harris Hees: I was simply quoting the form used by the Commissioner of the Official Languages Act. I remind the Prime Minister that although all parties did support this languages act in the House and still do, it does not mean that the languages act cannot be working adversely to the needs of those who would use it, as the commissioner has said. I simply ask the Prime Minister if he is going to have enough sense to follow up the excellent suggestion that obviously is very necessary.


Pierre Elliott Trudeau: Mr. Speaker, that is a different matter than going back to square one.


George Harris Hees: That is what he said.


Pierre Elliott Trudeau: If he said we should go back to square one, obviously the hon. member is not supporting him. Indeed, the hon. member is suggesting that we bring some improvements to the application of the act. I repeat, this is what we said in
Oral Questions
the Speech from the Throne that we intended to do during this session of parliament. We are prepared to discuss this whole matter. If the opposition wants to move a debate on this subject on any of the opposition days, we will be happy to put our position on the record and to hear what the opposition has to say in terms of improving the application of this act. I do not think it is worthy of the hon. member for Prince Edward-Hastings not to have thoughts of his own on this, but to hang on to the skirts of the official languages commissioner.


Some hon. Members:: Hear, hear!


George Harris Hees: Is it that difficult for the Prime Minister to comprehend a very simple statement by the commissioner in which he is dealing with teaching techniques, suggesting that the teaching techniques employed in the carrying out of this act can be greatly improved. We are not disagreeing with the principle of the act. We are simply suggesting great improvements that can be made following the commissioner's suggestion for making the teaching techniques more effective.


ROYAL CANADIAN MOUNTED POLICE
Frank Oberle: Mr. Speaker, the Solicitor General seems to have left the House.


An hon. Member:: He is getting briefed.


Frank Oberle: I apologize. It seems that the Solicitor General may now be in a better position to answer some questions since he has just received instructions.


Some hon. Members:: Oh, oh!


Frank Oberle: With regard to the situation relating to the break-in at Praxis Corporation or institute in Toronto, in light of the statements yesterday by the Prime Minister and the Minister of Justice that the RCMP has been required to fully co-operate with the metropolitan Toronto police and in light of the fact several legal people are now assessing the posture and the interests of people named on the extra parliamentary opposition list, will the Solicitor General undertake to co-operate with those people who are acting on behalf of the 21 and give them or the House the names of the two officers who dealt with the agents who actually committed the crime? Can he also provide the House and these legal people with the information with regard to the agents who are acting on behalf of the RCMP.


Francis Fox: Mr. Speaker, I am not too clear on the question the hon. member is putting to me. Is he asking me whether we have information as to people who committed the break-in at Praxis Corporation? If that is the case, we are co-operating with the metropolitan Toronto police force. Any information at our disposal is being made available

May 25, 1977
Oral Questions
to them. My understanding is that all we have in our possession are the documents which were turned over to the metropolitan Toronto police force sometime in February.


Frank Oberle: My question relates to facts that are already known and have been exposed by the RCMP, namely that two RCMP officers were involved in the investigation and that there are agents whose lives are in danger if they are named. It is terribly important that the names of these people are known to those who are assessing the legal position of the people on the list. Is the Solicitor General prepared to provide us with the names of the two RCMP officers directly involved in the investigation and the name of the agent who turned over the original documents to the RCMP, if that was not an officer as well.


Francis Fox: Perhaps I should ask the hon. member if he would be willing to turn over to the RCMP the name of the person who gave him the alleged letter that he read-


Some hon. Members:: Hear, hear!


Frank Oberle: I ask the Solicitor General what good that would do because I turned over to him the list and the letter containing the names one day before it was exposed in the House. Will the Solicitor General tell me to what agent he wants me to turn over the rest of the information that I have, since he obviously is not prepared to receive it from me because he has chosen consistently not to have it aired.


Francis Fox: Mr. Speaker, I of course am more than willing to receive from the hon. member any information he has in his possession which may lead to stopping the dissemination of classified information.


TRANSPORT
Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, I have a question for the Minister of Transport. If I might beg the indulgence of the House, on behalf of my wife and myself I want to thank Your Honour and the House for the warm wishes on the occasion of the Standing Order 43 motion of Thursday of last week.


Some hon. Members:: Hear, hear!


J. Michael Forrestall: I will now move to some of the matters with regard to the Quebec-Windsor corridor. In light of the minister's statement of May 20, 1976, on the government's proposal to begin a program of improvement of rail passenger service in the Quebec-Windsor corridor, will the minister advise whether they are about to begin this? He stated that construction would begin in the spring of 1977. May I ask the minister whether improvements on this line have in fact begun. If not, is there a reason for the delay?


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, some work is being done on the line. However, I will have to obtain further details for the hon. member. We are proceeding with the evaluation of the bids which have been received with regard to the new equipment. I hope later in the summer to be able to announce decisions in that regard.


QUEBEC-WINDSOR RAIL PASSENGER SERVICE-REASON FOR DELAY IN ACCEPTING TENDERS FOR EQUIPMENT
J. Michael Forrestall: The minister stated in February that the Ministry of Transport had received and reviewed the tenders for three to ten sets of trains for the Quebec-Windsor corridor service. As it is now May, some three months later, why is it that the department has not yet made its evaluation of those tenders and taken some action?


Otto Emil Lang: Mr. Speaker, that date is not accurate. The tenders were received in that time, but the evaluation is a fairly extensive procedure. A preliminary conclusion has now been reached. Certain further refinements of the analysis are taking place. At that point the government will have to make a decision about the extent of the order to be placed. All of those decisions will likely be taken by the later part of the summer.


J. Michael Forrestall: Because of the interest of those who use rail passenger commuter services in that corridor, may I ask the minister about the numbers of the train sets. I feel almost as though I am promoting Mattel toys. How many train sets is the minister in fact considering? He has indicated all the way from three sets up to ten. Can he tell us whether it is three, four, five, six, seven, eight, nine or ten?


Otto Emil Lang: Mr. Speaker, bids were received in the range essentially of three to ten train sets. That is a decision the government will take when we have finished the analysis of the bids. We will decide at that time whether to complete an order for the lower number or the higher number.


THE CANADIAN ECONOMY
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I have a question for the Minister of Finance arising out of a very disturbing government document which has been brought to my attention. Will the minister confirm to the House that his department has indicated to the provinces, in relation to the green paper on decontrols, that in order to have a successful decontrol process it is necessary to continue deliberately a policy of high unemployment and extensive slack in the economy? Furthermore, will the minister tell the House the specific reasons which led the government to adopt in this straightforward way this very callous economic policy?
May 25, 1977


Hon. Donald S. Macdonald (Minister of Finance):: No, Sir. That is not the purport of the message which was communicated to the provinces.


John Edward Broadbent: The minister says that is not the purport of the document. I should like to quote from the document, one which came out of his department on April 27 of this year. I shall ask the hon. gentleman whether it reflects government policy. The quotation reads:
The most important factor conducive to successful decontrol is the restriction of wages and prices provided by the current degree of slack in the economy.
In the same document it is asserted that the government expects the continuation of this slack for another year or two. In the light of these statements in the document produced by a very senior official in his department I should like to ask the minister whether this represents government policy.


Donald Stovel Macdonald: It does not represent policy. It is a recognition of the fact, one which I have stated many times in the House, that it will be difficult to bring about a more rapid rate of growth in the economy. The document also states-and I am surprised the hon. member did not refer to this-that the conditions of extreme demand which existed in 1973 and 1974, and which was so conducive to inflation, are not present at this time.


John Edward Broadbent: I should like the minister to deal specifically with the categorical assertion in the document that the most important way of containing prices in a period of inflation is the maintenance of the government's full unemployment policy, that is, of maintaining a situation where there are a million and a half people unemployed. Is this not the central contention of the document and would this explain the government's total failure to introduce measures in its most recent budget to stimulate the economy?


Donald Stovel Macdonald: I suggest to the hon. gentleman he had better wait until the green paper is made public on Friday. I do not think the House should have to rely on the rather selective readings of the leader of the New Democratic Party.


Some hon. Members:: Hear, hear!


EXTERNAL AFFAIRS
Mrs. Simma Holt (Vancouver-Kingsway):: Mr. Speaker, my question is addressed to the Secretary of State for External Affairs. In consideration of the Helsinki Accord and the commitment between Canada and Russia to guarantee human rights and fundamental freedom for all people, my question relates to the case of Ioseph Begun who has been refused permission to emigrate to Israel since 1971, who since then has
Oral Questions
been unable to obtain any employment in the Soviet Union although he has the equivalent of a Ph.D in technical sciences and who has been charged, because of his unemployment, with parasitism and is to be tried in Moscow on June 8, 1977. Has the Canadian government, through the Secretary of State for External Affairs, made representations on behalf of this man, Ioseph Begun, so unjustly persecuted in absolute violation of his fundamental rights and in contempt for the terms of the Helsinki Accord?


Hon. Donald C. Jamieson (Secretary of State for External Affairs):: As I have said in the House previously, it is not the practice of the Canadian government to make representations on behalf of individuals of the type to whom the hon. lady refers when immigration to Canada is not involved or when persons in Canada, such as relatives, are not involved. However, as the hon. lady is aware, we have made a number of general representations to the Soviet Union and to other countries urging that the maximum degree of freedom be permitted with regard to the flow of immigrants. I will make some inquiries into the particular case the hon. lady mentioned to determine whether any of those representations might relate to the gentleman named, and I will respond to her later.


PUBLIC SERVICE
Walter David Baker: Mr. Speaker, my question is directed to the President of the Treasury Board. I have given him notice of the question. Has he had an opportunity to investigate the unfortunate case of Jirvan B. Shah, a public servant dismissed by the Department of Transport?


Hon. Robert K. Andras (President of the Treasury Board):: I shall have to look into that matter and give the hon. member an answer later.


Walter David Baker: In view of the fact that a review committee composed of public servants of considerable ability concluded that Mr. Shah was, in fact, a competent metallurgist and recommended that he be provided with alternate employment, and that this recommendation has not been carried out, resulting in a loss of $8,000 in severance pay, not to mention professional damage, would the hon. gentleman undertake to investigate this matter as quickly as possible with a view to rectifying what I believe to be a deplorable situation?


Mr. Speaker:: That is, really, a representation.


IMMIGRATION
Mr. Lincoln M. Alexander (Hamilton West):: A question to the Minister of Manpower and Immigration, Mr. Speaker. I

May 25, 1977
Oral Questions
am sure the minister has now had an opportunity of considering a very significant proposal from his counterpart in the Province of Quebec where, as I understand it, they regard a certain amount of control over immigration as being necessary. Would the minister confirm he has had an opportunity to consider this proposal and, if so, what will his reply be when he meets with his counterpart in Quebec some time this week, perhaps on Friday?


Hon. Bud Cullen (Minister of Manpower and Immigration):: I appreciate the courtesy of my opposite number, the Hon. Jacques Couture, in attending at my office in Ottawa to discuss areas of mutual concern, primarily francophone immigration to Canada. He has extended that courtesy one step further by inviting me to Quebec to discuss subjects included in a letter which he has made public. His concept is a very interesting one. Implicit in the new bill is the assumption that provinces should perhaps be given an opportunity to make more input into the process. The points system is not engraved in stone; the new approach is one which I believe has some merit but it seems to me that in order not to be discourteous to Mr. Couture I should give my response to him before I make it here or to the press.


Lincoln MacCauley Alexander: The minister does, however, have a responsibility to this House and since he has probably made up his mind I will ask him a specific question: as I understand it, out of 100 points available to an applicant the Province of Quebec wishes to control 55, leaving 45 to the federal government. Given the fact that an applicant must acquire 50 points I believe the hon. gentleman owes it to the House to disclose his position with regard to this unique and interesting proposal. In other words, does he agree with the proposition that Quebec should control 55 of these points?


Jack Sydney George (Bud) Cullen: The hon. member hits the nail on the head when he says this is a unique proposal. I am, frankly, resisting some suggestion made to me that the points system should be incorporated into the bill. There must be some flexibility there. I want to keep an open mind on the subject. I want to draw attention to some of the strengths and some of the weaknesses in the suggestion made by Mr. Couture and, as I say, the points system is not engraved in stone. However, as I say, out of courtesy to him I ought not to go further at this time. I am keeping an open mind and I am ready to discuss the matter.


Lincoln MacCauley Alexander: Would the minister not agree that in the event that any particular province controls 55 of the points the federal government would have lost control over immigration?

[ Translation]


HOUSING
Mr. Jacques Lavoie (Hochelaga):: 
REGIONAL ECONOMIC EXPANSION
Mr. Bob Brisco (Kootenay West):: Mr. Speaker, my question is directed to the minister responsible for DREE. Now that the minister has had an opportunity to turn his mind away from the ceremonial sinking of Mercator One, I would ask the minister if he could give us an indication as to how his ministry is progressing with the signing of the remaining subagreements with the province of British Columbia? Are we looking at a timeframe of days or weeks?


Hon. Marcel Lessard (Minister of Regional Economic Expansion):: Mr. Speaker, we have in fact announced last week the signing of a third subagreement with the government of British Columbia regarding the development programs and the assistance to be offered to the native population. I have been told that we have completed some discussions with the B.C. government regarding an agreement which would allow a more orderly development and perhaps foster the industrial growth of this area. Therefore we hope to be able to conclude an agreement in the next few weeks and to make an announcement, with all the details it implies and the hopes it can raise among the population of this province.

May 25, 1977


COMMUNICATIONS
Mr. Benno Friesen (Surrey-White Rock):: Mr. Speaker, my question is for the Minister of Communications. The minister has apparently determined that pay TV is inevitable for Canada. In view of the enormous social implications for the future of Canadian thought and life; and in view of the fact the Ottawa hearings, incidentally temporarily postponed at great expense and inconvenience for some who wish to participate, at best are open mostly to members of the industry itself and to local residents, are there now any plans or will the minister consider initiating plans to conduct public hearings on the subject of pay TV across Canada, thereby permitting rank and file Canadians concerned about the social implications to express their views?


Hon. Jeanne Sauv6 (Minister of Communications):: Mr. Speaker, we have proceeded in as comprehensive a way as possible. The first phase of our consultations were in the form of briefs which were received from the industry and people concerned. Subsequently, I asked the chairman of the CRTC if he would consider conducting public hearings, which have not been postponed incidentally. Those public hearings are taking place. A report will possibly be available around mid-October.


Benno Friesen: Mr. Speaker, my question to the minister was precisely as to whether those public hearings will be extended across Canada and not only within the urban area of Ottawa. Since other federal departments conducting hearings and forums within their ministries are helping to defray expenses of those who want to participate-for example the Kitimat hearings, the Berger report and so forth-will the minister do the same for those individuals across Canada who feel very strongly about the social implications of pay TV and want to participate in the hearings but cannot do so because they cannot afford to do it?


Jeanne Sauvé: Mr. Speaker, the procedure for the public hearings is a matter which the chairman of the CRTC decides. He has established that he will have a number of hearings in Ottawa, which is probably in response to the kind of need he thinks exists at the present time. People have had occasion to send their briefs to the CRTC and express their views on pay TV. If some people felt that they have not had sufficient access to public hearings, I am sure the chairman of the CRTC will take the necessary measures to allow anyone, with something to say, an opportunity to express his views.
Oral Questions TRANSPORT


CREATION OF JOBS BY IMPROVEMENT OF RAIL, ROAD AND AIR FACILITIES IN ATLANTIC REGION-GOVERNMENT POSITION
Mr. William Rompkey (Grand Falls-White Bay-Labrador):: Mr. Speaker, my question is for the Minister of Transport. In view of the great need to improve rail, road and air facilities in the Atlantic area-and I am particularly thinking of the need to upgrade the Trans-Canada highway in Newfoundland-and in view of the high unemployment rate in the Atlantic area and the need to create jobs there, can the minister say what initiatives he is prepared to take in his department to upgrade those rail, road and air facilities thereby creating those very necessary jobs?


Otto Emil Lang: Mr. Speaker, I am happy to say the decisions have been made in connection with the Atlantic transportation program. Yesterday I was able to telex the information to the four premiers. Therefore, we will be ready to go ahead with the highway strengthening program and the rearrangement of freight subsidies to be more selective for development in the Atlantic of certain air and bus improvements as well. We will be having discussions immediately with the Atlantic provinces in regard to this. I will be tabling the background details on this as soon as possible.


NATIONAL PARKS
Mr. John Rodriguez (Nickel Belt):: Mr. Speaker, my question is somewhat supplementary to the previous one, and it is directed to the Acting Minister of Indian Affairs and Northern Development. In view of the fact the government has budgeted $3.6 million for a golf course outside the Terra Nova national park, and in effect the bulk of this money will be used to build a new access road to some very exclusive summer homes owned by ministers of the provincial government of Newfoundland on the Eastport Peninsula, and in view of the fact at the same time a new golf course 30 miles away is being put in by the people of Gander, can the minister tell the House what he is doing, or what his government is doing, with respect to renegotiating the original agreement so that the people of that particular area and the people of Newfoundland can obtain better value for the $3.6 million which is being proposed for this purpose.


Hon. Judd Buchanan (Acting Minister of Indian Affairs and Northern Development):: Mr. Speaker, I must admit I am not current on this problem. I will be happy to draw it to the attention of my colleague when he returns.

May 25, 1977
Oral Questions URBAN AFFAIRS


DEPARTMENTAL POSITION ON SUSTAINING OR REPLACING OLD NEIGHBOURHOODS
Mr. Robert McCleave (Halifax-East Hants):: Mr. Speaker, this is a good riding to recognize at a time like this. May I pose this question to the Minister of State for Urban Affairs? It arises from the recent demolition in the south end of Halifax of many houses, all structurally sound, within a "put", of a street with houses which qualified for a Central Mortgage and Housing Corporation grant for improvement and which received a CMHC reward for the same-so much for local enterprise. The demolished houses will give way to a high rise apartment building.
Could the minister say whether his department has resolved the philosophical dilemma of either supporting improvement of old housing to sustain old neighbourhoods or supporting urban destruction which will destroy parts of old neighbourhoods to replace them with high rises?
[ Translation]


André Ouellet: Mr. Speaker, I find the question of the hon. member quite interesting, but it requires a very long answer I would not be able to provide during the oral question period.


RESOURCES
John Carnell Crosbie: Mr. Speaker, I would like to direct a question to the Prime Minister. On February 1 the Prime Minister, Premier Regan of Nova Scotia, Premier Campbell of Prince Edward Island and Premier Hatfield of New Brunswick had a meeting here in Ottawa and made an announcement of the signing of a memorandum of agreement concerning the question of jurisdiction over offshore oil and gas resources in those provinces. The Minister of Energy, Mines and Resources yesterday informed the Standing Committee on National Resources and Public Works that legislation could not be introduced yet because there has been no agreement on certain important points. Could the Prime Minister tell the House why such a fuss was made about this alleged agreement of February 1, and what the points of differences are which still have to be agreed to?


Pierre Elliott Trudeau: Mr. Speaker, this agreement was signed several months ago. All the premiers and I agreed it was a very important step forward in indicating the principles on which we would co-operate. We all recognized that the very short document we signed did not contain all the details of the eventual agreement to be embarked upon between the provinces and the federal govern-

ment. There were clear indications by the premiers and myself concerning the lines which should be followed in working out these administrative details. I understand it is in accordance with the wishes of the premiers and myself that these administrative details be worked on down to a final position.


John Carnell Crosbie: Mr. Speaker, would the Prime Minister explain, if there were gaps in this agreement, why he called the document an historic one? Has that historic moment gone forever, or why did Premier Regan say it was the finest example of co-operative federalism ever seen in this country, when there is no agreement as yet?


Charles Joseph Clark: That is a typical Liberal statement.


Pierre Elliott Trudeau: Mr. Speaker, I am afraid the hon. member misunderstood my previous answer. It was a very important agreement entered into between governments of provinces of different political stripes. Everyone agreed it was an important step forward. I am indicating to the hon. member that you cannot merely legislate general principles. It is important to legislate the actual operating administrative aspects of the agreement, and that is what all parties are constructively working toward now. I hope the hon. member will consult somebody in the provinces to confirm what I have said.


G500) TOURISM POSSIBILITY OF UNITED STATES WITHDRAWING TAX DEDUCTIBILITY PROVISION CONCERNING CONVENTIONS IF PARTS OF BILL C-58 WITHDRAWN
Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, I have a question for the Minister of Finance. In view of the loss of American conventions amounting to tens of millions of dollars due to section 602 of the United States tax reforms act, and in view of the raising of the matter by the minister with Mr. Blumenthal, as it was raised by the Minister of Industry, Trade and Commerce with commerce secretary Krips, has there been any indication from these U.S. officials that if the tax provisions of Bill C-58 relative to broadcasting are withdrawn, an accommodation might be reached?


Donald Stovel Macdonald: Mr. Speaker, I would have to confirm whether or not that has been the position of the United States officials. Personally, I do not regard the two issues as being connected. I regard Bill C-58 as being important to Canadian cultural development, and in that sense in no way comparable to the relative tax treatment of conventions on both sides of the border.


William Gordon Ritchie: A supplementary question, Mr. Speaker. Is the minister saying that under no circumstance will Bill C-58 be changed in order to reap any benefit from withdrawal of the convention tax by the United States?
May 25, 1977


Donald Stovel Macdonald: Mr. Speaker, I do not think the U.S. treasury should dictate our cultural policy.


Mr. Speaker:: The hon. member for St. John's West on a question of privilege.


PRIVILEGE
John Carnell Crosbie: Mr. Speaker, my question of privilege has to do with a question just asked by the hon. member for Nickel Belt (Mr. Rodriguez), which contained a slur and an imputation against certain cabinet ministers of the government of Newfoundland in connection with the Terra Nova golf course. Either the hon. gentleman should produce some information or he should withdraw the implications of his statement. The question-


Mr. Speaker:: Order, please. I fail at the start to see how it is possible that any slur, intended or otherwise, by a member here of a person outside this House can in any way constitute a question of privilege. There may be remedies which can be taken in many other ways, but privilege would have to be extended to take into account representations which may adversely affect members of this House. Even if privilege could in certain circumstances be extended that far, surely it could never be extended to persons outside the House. I would have to be persuaded by the hon. member or others that this in any way constitutes a question of privilege.


John Carnell Crosbie: Then may I advance argument on that point, Mr. Speaker. I am referring to members of another legislative assembly in this country who, as a group, are being slandered by the hon. gentleman. They are former colleagues of mine. The hon. member alleges in his question-


Mr. Speaker:: Order, please. If there is any alleged connection with the privileges of this House I would be glad to hear what it is. If there is an alleged slur cast by any member of this House then remedies can be taken in other ways. They may be taken by the member in other ways here, if he so wishes, or in fact by those ministers who feel themselves aggrieved by anything which has been said in this Chamber. However, I am not aware that there is any definition of a question of privilege in our precedents which in any way extends to any such representations against any persons outside this House.


Robert Jardine McCleave: Mr. Speaker, as I understand the circumstances-and admittedly I have not been exactly zealous in following them up-some of the money involved reflects on a vote that was taken in this House to support this particular development at a national park within a province of Canada. I believe here we are within the area of federal and provincial decision making or participation, and in that sense it is probably a reflection on the members of this particular Chamber, even though we may not have been
Privilege-Mr. Crosbie
aware, at the time when certain votes went through parliament, that this was where the money was going to be spent. In any event, I suppose we would have to be considered responsible for setting that particular spending in motion, and in that sense I think the hon. member for St. John's West (Mr. Crosbie) has founded a case.
The hon. member for Nickel Belt (Mr. Rodriguez) is, in effect, saying to us, as well as through us to other people, that he is reflecting on decisions which were taken. I gather that he did not, at the time our decision was taken, raise any objection whatsoever to it. Therefore, I cannot see how he can now come late in the day and make the kind of remarks he did.


John R. Rodriguez: Mr. Speaker, 1 rise on the same question of privilege. Any agreement that was reached between the federal government and the provincial government of Newfoundland was reached prior to my being a member of this House. Agreement was reached that a golf course would be placed inside the Gros Morne national park in Newfoundland. Subsequent renegotiations placed it in another national park, Terra Nova.
The golf course is not being built inside the park; it is being built outside the park on land that has to be acquired. Prime farmland, 100 acres of it, has to be acquired from private individuals on which the golf course, 18 holes of it, is to be placed. That decision was made in 1972 or prior thereto.
The situation in Newfoundland with respect to unemployment has since changed; it has now become more serious. We have discovered that the municipality of Gander has already constructed three holes and six more holes of its golf course are to be completed this summer at a cost of $500,000. The Gander course is 30 miles away from Terra Nova national park.
There are priorities in the east port peninsula which every member from Newfoundland recognizes. We know that in three communities, Burnside, Salvage, and one other, the well water is polluted because sewage is seeping from septic tanks into the well water.
I have not maligned any cabinet minister in the Newfoundland legislature. I have simply stated the facts, namely, that the wife of Mr. Morgan, the minister of transport, has just turned over the Loyal Orange Lodge, which she purchased, to a private club three miles away from the golf course.


Mr. Speaker:: Order. I am sure all hon. members realize that, whether technically any of this comes within the definition of privilege in our House, there is a very grave danger here. When any member either puts forward a question or deals with any other matter which is within the competence of this Chamber we must confine ourselves in every case to matters which are in fact within the competence of this Chamber. If this House has taken decisions-the point raised by the hon. member for Halifax-East Hants-which, as is quite frequently the case, might have implications for co-operative effort with provincial authorities, that is certainly not extraordinary. But surely when we are discussing this matter in this Chamber the aspects we should concern ourselves with
5934

May 25, 1977
Privilege-Mr. Crosbie
are those which occupy the attention of the responsible people in the federal parliament under our administrative jurisdiction. As soon as we begin to introduce, by way of preamble or other side comments, the actions or potential actions of those whose administrative responsibility lies beyond the control of this parliament, we invite this kind of difficulty. 1 think that, regardless of whether it forms an objection within the four corners of the very strict definition of privilege within the precedents of our parliament, we would all be well advised to confine ourselves to discussions which we know are within the competence of the federal parliament.


John R. Rodriguez: I appreciate your comments, Mr. Speaker. May I conclude by saying that if there is any member in this House who can claim he has been maligned, there is the fact that the Newfoundland legislature passed a unanimous resolution condemning me for having raised this whole question in the Standing Committee on Indian Affairs and Northern Development, as well as for daring to raise it in the House of Commons. If the hon. member for St. John's West has any complaint, then he ought to complain that his own province's legislature has maligned one of his own colleagues in the House of Commons.


Mr. Speaker:: Order, please. Again with the admonition I just made, I think all members can see the difficulty into which we get when we attempt to extend comments that we make beyond the jurisdiction and the administrative responsibility of the House.


John Carnell Crosbie: Mr. Speaker, the hon. member for Nickel Belt has put on the record certain things which may or may not be facts. The facts are that the Government of Canada agreed many years ago to put a golf course' in Newfoundland in one of its national parks. Since a golf course could not be put in the Gros Morne national park, it was agreed three years ago it should go to the Terra Nova national park where the people want a golf course as an attraction for tourists.
The hon. member mentioned Mr. Morgan's wife and this kind of thing. I consider it to be a piece of arrant cowardice and contemptible. I want to make that point to the hon. gentleman now. It is not a question of privilege, it is a question of what is fit and proper, and I do not think this kind of imputation sneaked into a question is fit or proper, or anything that I or any other member of the House should have to put with. It is contemptible, Mr. Speaker.


Mr. Speaker:: Order, please. Again I say that there is no motion attached to the potential question of privilege. I really think that this discussion ought to conclude. I am sure all hon. members will realize that as soon as they begin to make comments about the actions of those persons who do not come under the umbrella of administrative responsibility or ministerial responsibility within this House, we are inviting these kinds of difficulties. The matter does not fall within the definition of privilege as raised by the hon. member for St. John's West, to which a contribution has been made by other

members. Since it was raised as a potential question of privilege and does not qualify as one, the matter is now concluded.


John R. Rodriguez: Mr. Speaker, I rise on a question of privilege. My question of privilege deals with the last remarks made by the hon. member for St. John's West. I think they are uncalled for. He accused me of being cowardly in my performance of duties in the House as a member of parliament. I think his behaviour here this afternoon is indeed contemptible and he should withdraw his remarks about me. I suggest, with all humility, that the Chair should rule that the remarks of the hon. member for St. John's West about a member of this House are uncalled for, ungentlemanly, and certainly unconservative. He should be asked to withdraw from this House.


Mr. Nielsen:: His remark was not unparliamentary.


Mr. Speaker:: Order, please. As in any previous circumstances, reading the context and the full text of the remark that has been made by the hon. member for St. John's West, if I find that his latter remark does in fact fall within the category of unparliamentary language, I will indeed, after proper reflection, ask him to withdraw it. I will have to examine the record to see if that is in fact the case.



ROUTINE PROCEEDINGS


Otto Emil Lang: Mr. Speaker, under Standing Order 41(2) I would like to table, in both official languages, copies of details of the Atlantic provinces transportation program.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Ralph E. Goodale (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, I ask that all questions be allowed to stand today.
May 25, 1977


Ralph Goodale: Mr. Speaker, again I ask that all motions for the production of papers be allowed to stand.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Tuesday, May 24, consideration of the motion of Mr. Macdonald (Rosedale) that Bill C-18, to amend the Bretton Woods Agreements Act, be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
William Gordon Ritchie: Mr. Speaker, in rising to speak on Bill C-18, an act to amend the Bretton Woods Agreements Act, let me say that I believe it is salutary at this time to discuss the international financial situation, particularly as the whole thrust of the Bretton Woods Agreement has changed over the years so that now we are called upon to deal primarily with underdeveloped countries demanding loans and financial support, which was certainly not conceived of when the first Bretton Woods Agreement was achieved.
I think it is wise to take a look at what was the purpose of the 1944 Bretton Woods Agreement. It was to keep different currencies of the world in a stable relationship with one another and to provide loans with which the war devastated countries could finance their reconstruction and future development. The representatives at that time drew up plans for a fund with which to stabilize currencies, and for a bank to make loans. The fund was to be an international monetary fund to be made up of deposits of currencies, of gold, and of securities of all member nations. This $9 billion fund was to be divided among the nations in accordance with the size and wealth of the various countries making contributions. The fund was to be used by nations when needed, and a comprehensive set of rules was worked out according to which the fund was to be put to use.
The second proposal of the International Bank for Construction and Development was to set up a $10 billion capital which was to be funded from the purchase of shares by various nations in accordance with their ability. The bank was to lend money to governments and to guarantee private loans to them in order that reconstruction of the devastated countries and the development of the less advanced countries could be facilitated. The purpose of the fund was to keep world currencies in a
Bretton Woods Agreements
stable relationship with one and other and thus to stabilize world trade.
The International Monetary Fund has been of considerable value. It is a currency pool into which member countries may dip when they are short of foreign currencies. Amounts which a needy country can take out are limited to the amount which the country has put into it.
The International Development Bank is somewhat different in that it has become a borrower of last resort. When a government or a private firm is unable to borrow on its own resources, the IDB steps into the breach.
Since 1944 the whole character of the economic problems facing the world has changed. War ravaged Europe and the Far East have been reconstructed. Germany and Japan, the defeated nations, have become extremely strong, even stronger in many ways than the U.S.A. which was the original main contributor to the Bretton Woods Agreement. These two countries are now involved in providing equitable and financial aid to underdeveloped countries and in rectifying the weaknesses of the key currency systems. These developments have changed the direction of the Bretton Woods Agreement. The introduction of the Special Drawing Rights by the IMF was designed to supplement and supply the other components of international resources, such as gold and U.S. dollar liabilities, but in effect the Special Drawing Rights really increase the liquidity of the entire international monetary system. They are no more like owned reserves than borrowed reserves.
The problem with the SDR scheme is to determine the amount of SDRs to be created. The proposal is that the IMF play an important role in resolving these conflicts through the creation of further allotments of SDRs. It is to do this through the managing director of the IMF after consultation with members who would recommend the amount of SDRs to be created.
The United States and the bloc of Common Market countries will have effective veto power because 85 per cent of the affirmative vote by the board of governors of the IMF is required to ratify the managing director's recommendation. It is to be hoped that this new departure will allow the IMF to continue to play a stabilizing role in the evolution of the fund. Some of the advantages of the fund, it has been argued, are that it has enabled an international monetary system to evolve in a number of different ways, including the deliberate creation of SDRs and increased co-operation amongst central banks. However, the fund seems to have been much less successful in dealing with the exchange rate problems and techniques of adjustment.
The World Bank has introduced two agencies, the IDA and the International Financial Corporation. The IDA was formed in 1960 to provide very soft loans to the poorest of the less developed countries. This was to reduce the strain of payment, and loans were on a 50 year basis. However, the funds were certainly small and did not cover the small loans needs of underdeveloped countries. The International Financial Corporation was to provide venture capital to the private sector of
80016-35'/2

May 25, 1977
Bretton Woods Agreements
the economy, and private companies were to assume control as soon as possible.
The international monetary system did not evolve as was foreseen by the architects of the Bretton Woods Agreement. Perhaps keeping in mind the disasters of the thirties, they considered that gains from the international trade integration would be far greater than from those of international financial integration, and therefore allowed controls on capital flows as opposed to merchandise flows, a situation which, incidentally, we are approaching now with our demands for trade controls. This increase in international trade has created a demand for payment which has largely been met by the American dollar. An extensive international credit system has evolved so that the American dollar has emerged as the vehicle currency of the world. As might be expected, this dominance of the American dollar has not met with uniform acceptance. Many countries have objected to this extension of the American dollar.
In any case, in the foreseeable future the American dollar will be extremely dominant. It will have the effect of being a sort of world currency. Some would argue for this; that the United States would have to give up a large part of its domestic power; and that American monetary policy would have to be in tune to international needs rather than to American needs.
This brings up the role of the United States in the world, that of the other developed countries of the west and their relationship with the Third World. The debate is now proceeding. Over the past 20 years the western world has given in increasingly to the idea that, at all costs, Third World needs must be supplied. Some have the idea that the standard of living in black Africa is low because the standard of living in the western world is high. It has always interested me that, in our discussions of our obligations to underdeveloped countries, while the western world must give money, services and goods, the communist world is not called on to give anything, and indeed, it usually gives soldiers and guns to foment revolution.
President Jimmy Carter was quoted in yesterday's Globe and Mail as saying the following:
Our policy must reflect our belief that the world can hope for more than simple survival and must help shape an international system that will last longer than secret deals.
We are now free of that inordinate fear of communism.
It is difficult to feel that we do not need to be afraid of communism, particularly when the Russian navy is immense, when our own Admiral Boyle has suggested there could well be a war with the communists by 1980, and when no one has disputed the enormous building up of Soviet military power. This certainly makes one realize that communism is certainly still a force in the world.
President Carter also seemed to feel that there was decreasing importance in the United Nations, the North Atlantic Treaty Organization and the World Bank, which he felt had been part of an international system which had worked well

for a quarter of a century. However, I thought he added other significantly desirable policy solutions. President Carter also said:
That system could not last forever unchanged. Historical trends have weakened its foundation. The unifying threat of conflict with the Soviet Union has become less intensive, even though the competition has become more extensive.
President Carter went on to say:
It is no longer possible to separate the issues of war and peace from those of justice and human rights.
We can no longer have a policy solely for the industrial nations as the foundation of global stability, but we must respond to the new reality of a politically awakening world .. .
Now, the policy must close the gap between rich and poor nations and encourage all countries to rise above narrow national interest and work to resolve the formidable problems facing the world.
The speech of the President of the United States seems to be an attempt to seek further compromises with the world, to reaffirm U.S. commitments to human rights and, in effect, to qualify support for Israel after the recent election of the right wing Likud coalition, whose leader, Mr. Begin, has taken a harder line with the Arab world.
President Carter seems also to have written off southern Africa, so it may come under the domination of the left wing world. We can, however, applaud this statement by President Carter:
We know that a peaceful world cannot exist one third rich and two thirds hungry.
However, it is doubtful that a peaceful world will come about easily.
Because most of the debate on the role of Third World countries will take place in the United States, it seems important that we know what is happening in the United States. The oil embargo of March, 1974, rudely brought home to the Americans the power of the Third World, and the public debate on the new international economic order takes place when the U.S. public is more aware of the Third World than it ever was previously.
As usual, in a debate such as this there are two broad positions. One tends to accommodate the Third World, and the other tends towards resistance. Soft liners argue for accommodation on the grounds of both expediency and justice, whereas hardliners contest the argument on the same grounds. Softlin-ers, looking ahead, perceive an increasingly interdependent world in which there must be a new order which takes cognizance of the interests of all nations, including the poor ones. However, many question the optimistic consequences of the softliners. In the minds of many, interdependence is likely to diminish conflicts. The opposite is more probable. An example might even be found in our own country. The modern world has brought about more interdependence, but we have become more disunited. Interdependence in itself is not conducive to order. Rather, power, political and military, has been the foundation of order both within and between nations.
Softliners promote the view that the interdependent nations of the west are very vulnerable to disruptions by less developed nations, and therefore it is in the interests of the interdepend-
May 25, 1977

ent nations to adopt a policy of accommodation. The hardliners would argue that power is as important as it has ever been, and certainly the Russian and Cuban expansions in Africa have been based on the use of power. In recent years the western nations have been unwilling to employ their power, which makes interdependence so vulnerable.
Furthermore, there are two different viewpoints on egalitarianism in the world. Third World countries, nearly all dictatorships, are interested in greater equality amongst states. The western elitists, enamoured of the new egalitarianism, are thinking of the equality of individuals. In other words, the moral appeal of the new international economic order is based on a confusion between domestic and international realities. 1 suggest there is a profound difference between equality between states and equality between individuals.
There is no real evidence that giving in to Third World demands will have the effect of toning the Third World down. Indeed, policies of accommodation are likely to whet appetites. Nor does it seem to be true that either greater equality or greater order among nations would be the likely outcome even if the entire world became a system of socialist states.
There are probably two credible views of the way ahead. The world could be a much more disorderly place or, more likely, a new power similar to the Roman Empire, the Great Britain of Victorian times or the United States of the last 25 years could emerge. The Soviet Union appears to be a likely candidate for that role.
I do not believe we should give some kind of reparation to the Third World because of past or present exploitation. Certainly western imperialism has bestowed a period of economic and social benefits on the Third World.
To me there are other aspects of this problem which those who want to give large amounts of aid to the Third World have not adequately considered. The fundamental problem of most Third World countries has not been that they have not been able to increase their output of goods and services but that the burgeoning birth rate has meant the increase in goods and services has been eaten up, and so the individual is no better off than before. While control of the birth rate seems possible some way ahead, it shows little sign of making much of a dent in the immediate future.
The transfer of vast amounts of aid from the western world may well prop up the nation states such as the one headed by Idi Amin, but it does not do much to aid the individual citizen. In the future will we remain-"we" being Canadians as well as Americans-unmoved by mass starvation shown on our evening television news? Can we find a middle road that will not be hard-hearted but will be morally sensitive without being sentimental?
I am glad to have had this opportunity to say a few things on the Bretton Woods Agreement and the way ahead, dealing particularly with the Third World which I think is very important to Canadians as a whole.
Bretton Woods Agreements


Mr. Bill Kempling (Halton-Wentworth):: Mr. Speaker, I should like to make a few short remarks on this bill. What disturbs me most is that it is being put forth and its quick passage sought by the same people who have given us record inflation, record unemployment, record trade deficits, record budget deficits, record bank interest rates, record mortgage rates, record high energy prices, the highest level of foreign borrowing of any western nation, low productivity, the highest cost of government in our history, the worst track record in recent history, the Sky Shops affair, dredging scandals-this bill is put forward by a government that has no discernible energy policy, no discernible foreign policy, and no discernible industrial strategy.
This same government is negotiating in secret at the GATT conference. This bill is put forward by a government that has no known targets that we can see regarding the money supply, and no national objectives for industrial growth other than the reference by the President of the Privy Council (Mr. Mac-Eachen) in this House recently when he said he hoped some of the growth in the United States economy would splash over the border and spur on our economy. I think that is a deplorable record for any government.
In presenting this bill the Minister of Finance (Mr. Macdonald) said, as reported at page 5888 of Hansard:
According to Article I of its articles of agreement, the fund is charged with facilitating the expansion and growth of world trade and payments as a means of raising world standards of living and of fostering economic development.
I think it is obvious to everyone that the government is in violation of Article I of the International Monetary Fund articles on its own domestic policy. How can we sit on international boards and committees and talk about the expansion of world trade while our share of trade is shrinking? How can we be perceived as a credible nation when there is so much disorder within the Canadian economy? How can the government be perceived to be serious about expanded world trade when it is negotiating with GATT in secret? How can our industries expand when they simply do not know what is going on at the GATT conference in Geneva? How can we continue to assist the Third World countries when inflation in this country is continuing to sap our vitality and growth?
If you look at the growth of the money supply in Canada over the past 15 years there is one real lesson: with moderate monetary growth there was no inflation in Canada, with the expansion of monetary growth there was a relatively mild inflation, when the growth rate fell inflation fell, and when the monetary growth rate reached the sky, of course we had double-digit inflation.
The Bank of Canada Act in Section 14.(2) reads as follows:
(2) If, notwithstanding the consultations provided for in subsection (1), there should emerge a difference of opinion between the Minister and .the Bank concerning the monetary policy to be followed, the Minister may, after consultation with the Governor and with the approval of the Governor in Council, give to the Governor a written directive concerning monetary policy, in specific terms and applicable for a specified period, and the Bank shall comply with such directive.
What I am saying is that we cannot slough off this matter of growth of money supply on the Governor of the Bank of

May 25, 1977
Bretton Woods Agreements
Canada; it falls on the incumbent minister of finance and the cabinet.
Speaking in Halifax in 1975 the Governor of the Bank of Canada said:
If the ultimate goal-the restoration of a completely stable price level, that is zero rate of inflation-is to be achieved, this will eventually require the maintenance of an average rate of growth of the money supply no higher than the long-term average rate of growth of the production of goods and services in Canada-that is a rate of about 5 per cent a year.
Bill C-18 merely broadens the base. It is similar to a businessman who finds himself at the limit of his line of credit while running his business at a loss. Instead of putting his house in order and effecting a turn-around, to a break even and a profit position, he merely gets a further extension in his line of credit and pushes the inevitable consequences into the future.
Had the minister come to this House, as he could have, at the time of his budget and announced a set of economic goals, a target date for a balanced budget, and a disciplined step-bystep monetary policy, then we could have looked at Bill C-18 in a different context.
It is well known that we have a record balance of payments deficit. Balance of payments deficits may be removed by internal economic and industrial policies, or financed by borrowings. The government has chosen the latter route and has mortgaged the country so far into the future that it is frightening.
Deficit financing by borrowings is not a practicable way to stabilize an economy over a long period of time. In the last nine years we have had one surplus and eight deficit budgets. Surely it is evident to the minister and his officials that they are on the wrong track. Through their taxation policies they have taken away the ability of the people of this country to accumulate wealth that is expressed eventually in investment in industrial growth. Lacking industrial growth we are now on a course toward lower tariffs that will further distort our balance of payments deficit.
The realities of our financial problem are evidenced in the flight of investment money from Canada. The outflow in 1976 exceeds the inflow of funds by $1 billion. Our financial plight is continually clouded by over-playing internal social policies. You simply cannot pursue gradual monetary goals when overall confidence in the economy is lacking. When you tighten the money supply the difference can be taken up by the velocity of the money already in circulation. This will only occur when there is confidence in the economy.
We are not really happy with this bill, Mr. Speaker. We are not happy with the government and its inability to deal with the economy of Canada. If we continue on our present course, Canada will be numbered among the Third World countries and be a net recipient of aid from others. We do not have to accept inflation. If we want to help Third World countries, we should do it by encouraging them to be self-reliant. If we are to do that, we must become more self-reliant in this country.

The tasks confronting all governments of the western world surely are these: assuring stable growth, maintaining full employment, avoiding inflation, keeping the balance of payments in equilibrium, and maintaining the integrity of national currency. Those are some main objectives. The government has failed miserably to meet these vital objectives, and the evidence of its failure is apparent.
When this bill is considered in committee we shall question the minister and the officials. That the economy of Canada is being handled so badly is tragic. The minister has had numerous opportunities to introduce fiscal and monetary policies which would improve our position in the world. Today we face the prospect of a Canadian dollar dropping in value. I hope it will not happen, but if the views of many pessimists in the money markets prevail, the Canadian dollar will drop a considerable amount in the next few months. I hope it will not happen, but the signs that it will are there to be seen. I do not think the agreements we are debating will do much to stop that trend. We are part of the western world, are considered a developed country, and must support agreements of this kind. If we are to play a significant role in the world economy, the government must accept the challenge confronting it and act with urgency.


The Acting Speaker (Mr. Turner);: Order, please. The Chair recognizes the Minister of Finance (Mr. Macdonald). I must warn hon. members that if he speaks now he will close the second reading debate.


Some hon. Members:: Hear, hear!


Donald Stovel Macdonald: Mr. Speaker, let me say two things in response to the hon. member who has just resumed his seat. First I deal with the GATT negotiations and his statement that they are being carried on in secret. I would have to regard that observation as being either ignorant or stupid. If he is saying that we should lay out in advance of negotiations our negotiating position so that the people with whom we are negotiating can look at our hand, or that we should act as a card player would if he were to lay out his hand for other card players to see, I can only say this: anybody who has ever been involved in negotiations would recognize that as being a pretty stupid suggestion. If he is saying, on the other hand, that the government has failed to inform and consult with Canadians on the question of the GATT negotiations-


Mr. Stevens:: He is correct.


Donald Stovel Macdonald: -then, that is just plain ignorance.


Sinclair McKnight Stevens: Not at all. He is correct.


Donald Stovel Macdonald: That is ignorance, the same kind of ignorance the hon. member for York-Simcoe (Mr. Stevens) demonstrated in his speech. The fact of the matter is, the Canadian tariffs and trade committee for the last two
May 25, 1977

years has been in close consultation with the various Canadian firms interested in multilateral trade negotiations.


Sinclair McKnight Stevens: Tell that to the businessmen. They sure don't think so.


William James Kempling: Mr. Speaker, I rise on a point of order. Perhaps the minister could explain to the House and to numerous industries of this country why representatives of industry are writing to their members of parliament, asking what is going on at the GATT negotiations because they, themselves, cannot find out. Can he explain why Americans and other countries act on legislation-


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


Donald Stovel Macdonald: Surely that is not a point of order.


The Acting Speaker (Mr. Turner):: Order, please. 1 suggest to the hon. member for Halton-Wentworth (Mr. Kempling) that his remarks are not a point of order but part of the debate.


Donald Stovel Macdonald: Mr. Speaker, I point out to the hon. gentleman that for two years the Canadian tariffs and trade committee has been in close contact with Canadian industry, just for that particular purpose. I regret that he is not well enough informed to tell his correspondents that they should be in touch with that committee, if they have not already got in touch with it.
The hon. gentleman made another interesting comment in saying that he disagrees with prespnt monetary policy. The Governor of the Bank of Canada has set some guidelines for the increase of the money supply.


Sinclair McKnight Stevens: 


Of M 1.
Donald Stovel Macdonald: The increase of the money supply has been below those guidelines. If the hon. member is advocating higher interest rates for Canada and a more regressive monetary policy, he ought to have had the courage to get up and say so instead of criticizing the government.
I turn to the hon. member for York-Simcoe. He rose in this House and repeated something he has said many times in the House and in committee. He thinks that M 2 rather than M 1, rather than demand deposits, the policy which the Bank of Canada is following, is the appropriate method by which to measure the money supply. I give hon. members this choice: it is between Mr. Bouey and the hon. member for York-Simcoe. From which of those two men would you take advice in this regard? Would you take it from the Governor of the Bank of Canada, or the former chairman of the Bank of Western Canada?


Sinclair McKnight Stevens: You are wrong again. Why don't you get your facts right?
Bretton Woods Agreements


Mr. Paproski:: What a performance. John Turner couldn't have done it better. We are going to call you baby face Macdonald.


Some hon. Members:: Oh, oh!


Donald Stovel Macdonald: I deal with some of the other remarks made by the hon. member for York-Simcoe. In making his ten points he alleged that Canadian policy makers, in relation to the valuation of the Canadian dollar, had shown no independent mind as to what course should be followed.
I cannot think of a more badly informed statement.


Sinclair McKnight Stevens: Try Donald, try.


Donald Stovel Macdonald: Canada was the pioneer in establishing a floating rate. Indeed, for the better part of the life of the International Monetary Fund Canada has been taking the lead in maintaining a floating rate. The interesting thing about the amendment contained in this particular proposal is that the lead established by Canada has now become the orthodoxy of the International Monetary Fund. If that is not an independent, leading policy I do not know one that is.


Sinclair McKnight Stevens: Stick to the truth, Donald.


Donald Stovel Macdonald: The hon. member for York-Simcoe said we are a net exporter of energy and therefore there should be no problem with overseas energy costs.


Sinclair McKnight Stevens: That is not what we said.


Donald Stovel Macdonald: I suggest that is exactly what the hon. member said. Only, he forgets that the Conservative party, of which he presumably was a supporter outside this House, by specific design made half this country depend on overseas petroleum for energy supplies. He knows that. The party he represents knows it. We have done our best to reduce that dependency, for example by building the Montreal pipeline. Parliamentary restraint confines me to describe as "disingenuous" the hon. gentleman's comment that we have no problem with regard to the supply of energy. As a result of the former Conservative government's energy policy, eastern Canada is very much dependent on foreign imports, and foreign imports have to be paid for at going world prices. That has an inflationary effect.


Sinclair McKnight Stevens: Show me any passage in Hansard which indicates I said what you say.


Donald Stovel Macdonald: It would be difficult to improve on the comments made by the hon. member for Waterloo-Cambridge (Mr. Saltsman) with regard to the adherence of hon. members opposite to gold.


Sinclair McKnight Stevens: You are both socialists.


Donald Stovel Macdonald: The hon. member for York-Simcoe said he wants more discipline. He wants people of this country to be subjected to more discipline. He quoted all kinds of statistics and figures attributed, I think, to a Mr. J. Antho-

May 25, 1977
Bretton Woods Agreements
ny Boeckh. The hon. member contended that we ought to run this country in accordance with the kinds of statistics and tables economists of that kind have prepared. The only trouble is, economists of that kind and the hon. member for York-Simcoe leave out an important element, the human element. The hon. member is interested in tables and statistics. We are interested in mankind, in Canadian people.


Sinclair McKnight Stevens: With one million Canadians out of work, boy oh boy, where is your heart?


Donald Stovel Macdonald: If the hon. member for York-Simcoe had his way, we would have many more out of work than we have at present.


Sinclair McKnight Stevens: No, we would put people back to work. With one million people out of work, you are a great humanitarian.


Donald Stovel Macdonald: Mr. Speaker, most of the ten points the hon. member for York-Simcoe made were false, and many of them were silly. I will devote no further time to them.


William James Kempling: Tell us about our high unemployment.


Donald Stovel Macdonald: There is the voice of ignorance and stupidity over there, again.
I should like to direct attention to the constructive remarks made by the hon. member for Edmonton-Strathcona (Mr. Roche). He talked on the question of transferring funds to the developing world and the problems of liquidity which less developed countries are encountering as a result of the worldwide increase in energy prices. As I said yesterday, in many cases it is as a result of the drop in export prices of primary exports from these countries. The hon. member asked me to make some comment on the possibility of linking the further creation of Special Drawing Rights with special discriminatory advantages in favour of the developing countries. Probably we would have to take some disagreement with that as an approach.
Contrary to what the hon. member says, the IMF is not truly a central bank, although it is true that there are some similarities in their functions. It is also true to say that the SDR is a form of international money. We have supported the increase of the SDR. It is gradually taking the position as the central element in the international monetary system. However, we think that proposals to link future SDR allocations to direct income redistribution to LDCs would be counter-productive. The goal of making SDRs the central monetary asset would be undermined and the LDCs would likely not receive any net increase in resources from the developed world.
The hon. member also talked of the role of the World Bank and of the IMF. I should emphasize again the distinction in function between these two organizations. The IMF has the responsibility basically for the short-term balance of payments problems of members, both developed and developing countries. The World Bank has been responsible primarily for financing developing countries and development in the de-

veloping world. In this regard, through its two subsidiaries, the International Development Association and the International Finance Corporation, the World Bank has already extended in the case of IDA grant assistance to the developing world, and in the case of IFC assistance to equity investment in the same area.
One of the difficulties we have recently talked about in international forums has been the immediate balance of payments problem. In this regard the managing director of the International Monetary Fund, Mr. Witteveen, has come up with some proposals with regard to helping to meet the short-term balance of payment problems of many other countries. His efforts with regard to establishing the so-called Witteveen facility have been very progressive efforts.
It is very useful that the OPEC countries-Saudi Arabia, Kuwait, the United Arab Emirates-have offered to come forward along with developed countries for the purpose of establishing this additional fund. However, I do not think either the countries involved or this House should lose sight of the fact that the facility is at best a temporary financing solution and that both the OPEC countries and the developed world must continue to assist on an increasing scale the developing countries through official development assistance.
Over the long run, funds drawn out of the Witteveen facility will have to be paid back. They can only be paid back if official development assistance continues to flow into those countries, making it possible for them to meet these other obligations.
There were a number of points raised by other members. They could more effectively be dealt with in detail before the committee. I would say again that with the officials we would be quite prepared to discuss in detail both the operation of the proposed amendments to the International Monetary Fund and take the occasion at the same time to talk about amendments to the Currency and Exchange Fund Act, the Canadian and domestic legislation, and also to discuss forthcoming policy with regard to the continuing financing of balance of payments problem, both in the developed and developing world.


The Acting Speaker (Mr. Turner):: Is the House ready for the question?


Some hon. Members:: Question.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.

Otto Emil Lang: that Bill C-46, to amend the Aeronautics Act and the National Trans-
May 25, 1977

portation Act, be read the second time and referred to the Standing Committee on Transport and Communications.
He said: Mr. Speaker, this is a short but important bill. It raises several fairly narrow questions. I will be quite brief in dealing with it.
The purpose of the bill is to deal with the issue that arose after the Supreme Court decision in connection with some issues before it arising out of the purchase by the Alberta government of Pacific Western Airlines. The Supreme Court in particular dealt with the issue of the Crown in right of the province and its obligations in relation to the general regulatory framework over which the Canadian Transport Commissi-son has jurisdiction.
The finding that Her Majesty in the right of a province was not properly before or bound by the regulatory framework, raised for us immediately the question of changing the law in that regard. It seems a fairly obvious proposition that it would defeat the broad overview which the Canadian Transport Commission and similar administrative agencies must have over a transportation function if important aspects of that function in interprovincial and international transportation particularly were not within the ambit of regulations.
The bill before us changes the situation. It makes it clear that the Aeronautics Act is indeed binding on Her Majesty in right of Canada or a province or an agent of either one of them. That is the simplest legal change being made.
In addition, there are changes being made which provide for certain procedures to be followed in the event that such interests or involvements are in fact undertaken by provinces or their agents. It is implicit in the policy in the bill that it may be generally unwise to have a provincial government in ownership of a body controlling transportation which is federally regulated, particularly if that transportation is interprovincial or international in its nature.
The problems which arise are essentially two. The first is the problem for the administrative tribunal if it is dealing with an applicant which is essentially a provincial government. This arises from the fact that while a province may hereby be made a person, it really will not be a person like other persons which may be involved in transportation. Indeed, the question arises of whether a controversy may arise or rage about an administrative tribunal in a way which would endanger its over-all jurisdiction and responsibilities.
Second, there is the problem that in interprovincial services, and indeed in international ones, certain issues may arise where the provincial interest may be in conflict with the provision of service to other provinces also being provided with service by the entity in question. There the question of fairness may be very difficult to assess. It may therefore be better to leave the position where generally a province is not in a position of ownership. I use the word generally because of the fact that certain circumstances may arise where a particular operation does not give rise to these considerations.
Aeronautics Act


Sinclair McKnight Stevens: Mr. Speaker, I do not see a quorum in the House. I call for dissolution or adjournment.


Stanley Howard Knowles: You have to count, Mr. Speaker.


J. Michael Forrestall: I am afraid we must have some ruling from you, Mr. Speaker, before we permit the minister to carry on. I must say I wish our learned friend far to the left of me would rise on this particular point. We cannot allow an observation which somebody, sitting in his seat, made to you some moments ago to interfere with a decision which should have been taken by the Chair at the time.


The Acting Speaker (Mr. Turner):: Order. In accordance with Standing Order 2(3) the presence of 20 members of the House, including Mr. Speaker, is necessary to constitute a meeting of the House for the exercise of its powers. Is the hon. member requesting a count?


Stanley Howard Knowles: Yes.


J. Michael Forrestall: Mr. Speaker, the time at which the intervention was made by the hon. gentleman was the time at which the count should have been taken, not some time later. I raise this as a serious point of order and reserve the right to deal with it at a point later in time.


The Acting Speaker (Mr. Turner):: I will reserve judgment. The hon. member for York-Simcoe (Mr. Stevens) on a point of order.


Sinclair McKnight Stevens: At the time I observed there was no quorum, three of us had counted the number of members present. It was 18, and I would request Your Honour to ask those who were not in the Chamber at the time I raised the point of order to retire. A count should then be taken.


Mr. Gilbert:: A terrible waste of time!


Otto Emil Lang: I would observe, in passing, that hon. members are frequently behind the curtains and moving around and I am a little surprised that the hon. member for York-Simcoe, having received a strong verbal dressing down, well deserved, from the Minister of Finance (Mr. Macdonald), should have shown a childish reaction by trying to disrupt the proceedings of the House. But that is a matter which his constituents in Toronto ought, in due course, to judge.


Mr. Abbott:: Mr. Speaker, on a point of order, I think it is regrettable that the hon. member for York-Simcoe (Mr. Stevens) should raise a point of order of the kind he did at a time when there are fewer than eight members of his own party in the House.


Some hon. Members:: Hear, hear!


Otto Emil Lang: There may be situations in which provincial ownership might make some sense, and we particularly wanted to leave the possibility open for that to happen in relation to
5942

May 25, 1977
Aeronautics Act
intraprovincial transportation facilities where the facility is essentially or totally within the province in question.
I should say that after the first reading of the bill I had an opportunity of discussing the subject with a number of hon. members, particularly with the hon. member for Dartmouth-Halifax East (Mr. Forrestall). Some submissions which I have received from the air industry are correct, and one change may be made during the committee stage. I wish to give members now an early indication that I wish to see one matter placed before the committee, that is, where loans are involved it should be possible to obtain certainty with approval of the governor in council that there will be no difficulty in relation to the licensing in issue. At the present time the loan would have to be made and then the licence might be forfeited and that would clearly present a problem. I will certainly be glad to see that situation corrected.
Hon. members will note that the bill is not made retroactive; it is not made to apply to transactions which have taken place before this date, and particularly it is not made to apply to the purchase by the Alberta government of Pacific Western Airlines. Arising out of discussions with Alberta, it seems to me it might very well be possible to reach an arrangement whereby that situation is progressively corrected. Certainly the Alberta government has no philosophic hang-up about seeing an airline in the private sector and this may be the better way of treating that particular airline. In the meantime it was my view that Pacific Western ought to be treated as normally as possible and not be impeded in its orderly operation and development by the difference of view as to the wisdom or merits of its ownership. That is the purpose of the bill. I hope to discuss further aspects of it with hon. members in committee, and I commend it now for second reading and reference to the committee.


J. Michael Forrestall: Mr. Speaker, I shall not be too long, particularly since the minister has now indicated clearly with respect to this bill, which does correct certain oversights which are of some concern to all of us in this Chamber with respect to the rights of the provinces to act outside of or independent of certain regulations set down by agencies which are in fact integral parts of the federal government structure and which are designed to maintain some order and some discipline not only in the air industry but in other industries as well, that we can all anticipate other amendments similar to this with respect to other modes of transport and other areas of activity which fall within the ambit of the federal regulatory authority. In fact the government has moved in the right direction today to correct an oversight.
All of which is to say that I do not think there was in the minds of any of us any intent to be critical or to suggest that the province of Alberta in moving into this very vital area of transport had intended anything untoward with respect to the regulatory agencies.
If I understand correctly, the minister intends at a later stage to introduce an amendment which would permit extension of loans in such a way as to protect loans that might have

been made prior to the awarding of a licence which could have been cancelled under existing regulatory authority. If that is the intent of the amendment then, Mr. Speaker, with just one or two more comments we are quite prepared to let this bill go to committee for perusal. I trust the standing committee will give this bill fairly rapid consideration.
Any carrier must be subject to an over-all regulatory authority. Good laws should be applied to the interprovincial and international movement of goods and passengers. This is necessary for the sake of the industry as a whole and the proper and good order of the development of the movement of passengers and goods interprovincially and internationally. It must be subject to some over-all national regulatory authority, as well as being subject to agreements entered into by Canada with other nations with respect to the passage of goods and passengers from one country to another.
The minister has tended to over-complicate the situation a little bit. On the other hand the intent of the bill is clear. It is a good one and one we are prepared to let pass. As we read the bill and understand it, we hope there is a capacity for provincial governments to act singularly or in concert with adjacent provinces. I am referring to movement in a loan, debt or equity situation to assist a regional air carrier or a third level air carrier, a feeder air carrier, should they be faced with hard times. The uppermost question in my mind now is the question of the degree to which the federal government itself is an appropriate and proper vehicle, as opposed to provincial authorities, to move in the direction of assistance to Atlantic regional air carriers; to move into third level carrier service; and to strengthen and sustain its position as a regional air carrier in the country, with some stature and importance.
I hope the minister's statement embraced the principle of the right of the federal authority and the responsibility of the federal authority to move, before it becomes necessary for a collection of provincial authorities to move toward lending monetary support and assistance to a regional air carrier. I trust this bill does not interfere with that principle. At this point in time we do not see it, although it might be hidden, and we look forward to more in depth examination of it in committee. With those few comments, we are prepared to let the matter go through now.


Mr. David Orlikow (Winnipeg North):: Mr. Speaker, on April 4, 1977, the minister issued a press release in connection with this bill from which I would like to quote as follows:
Transport Minister Otto Lang today introduced an amendment to the Aeronautics Act that would prohibit the purchase of an airline by a provincial government without federal permission.
This new amendment is in addition to Bill C-40, introduced last month, containing amendments to protect federal airports and airport sites from urban development encroaching on their boundaries.
The press release continues as follows:
Mr. Lang said the amendment, introduced today, "makes clear this government's intent to ensure that the purchase, scheduling and operation of air carriers in this country remain within federal jurisdiction."
May 25, 1977

Mr. Lang originally proposed such legislation following a decision by the Supreme Court of Canada to uphold the purchase of Pacific Western Airlines by the Alberta government.
The new amendment will prohibit the transfer of shares or the issuing of a licence to an international or interprovincial air carrier without approval of the federal government.
The amendment also gives the Canadian Transport Commission the authority to suspend or cancel the licence of any air carrier allowing the transfer of its shares or the acquisition of its debt by a province.
In introducing the bill today, the minister talked about difficulties regulatory agencies would have in dealing with an airline owned by a provincial government at arm's length, as it deals with the private carriers. We have a number of regulatory agencies that deal with issues which are of concern to provincial governments and on which provincial governments make representations. There is no hesitation on the part of these regulatory agencies to hear from provincial governments. Obviously they do not feel very threatened by hearing from them. Usually they do not listen to the provincial governments. This is a poor excuse for limiting the right of a provincial government to buy into or take over a privately owned airline if the provincial government believes it is in the interest of the people of its province to have such public ownership.
Had the minister had this power when the Conservative government of Alberta moved to take over Pacific Western Airlines, this minister and this federal government would have prevented the Alberta government from taking over PWA.
I would like to give two illustrations of government regulatory agencies which have heard from provincial governments on issues of importance to the people of those provinces. Those agencies have not felt intimidated, threatened or anything else by those representations. The CTC, until recently the CRTC, has to rule on applications for rate increases made by Bell Canada for telephones in Ontario or Quebec, and it has to rule on applications for rate increases in British Columbia made by B.C. Telephone. They have had representations made to them on behalf of the citizens of their provinces by some of the provincial governments, in which they have objected to the size of the rate increase asked for, or have objected to any rate increase. After the CTC has heard from those provincial governments, it has made decisions based on their independent findings. Similarly the CTC has repeatedly dealt with applications for freight rate increases by the railways, increases to which the provincial governments of Manitoba, Saskatchewan and Alberta have objected. There has been no difficulty on the part of CTC in studying the questions and making decisions. Usually it permits increases far greater than the provincial governments have agreed to, and yet it has not felt threatened.
It is a completely spurious argument on the part of the minister that the federal government needs to have the authority to stop provincial governments from doing things which they feel are in the best interests of their people. A provincial government which owns an airline or part of an airline would still require CTC approval for changes in rates and changes in routes. There is no reason why the CTC, the regulatory agency, could not deal with an application made by an airline
Aeronautics Act
owned by a provincial government in the same way as it deals with applications made by airlines owned by private industry.
We have had no explanation from the minister or any other minister of what policies are being followed. What are the principles upon which the government bases its desire to prohibit provincial governments from getting into the airline business?
I know the minister was amazed and shocked, as I am sure were Conservative members, by the action of the Alberta government in buying all the shares of Pacific Western Airlines. I can just imagine what would have happened if that purchase had been made by the former NDP government of British Columbia. The government of Alberta apparently decided it was in the interests of the people of Alberta to have control of the service which PWA was providing, that the province was not going to be bound, I presume, purely by whether or not a given route made profit or showed a loss. The province wanted to provide the best possible service it could to the people of Alberta. If the minister had any logical objections to that purchase by the Alberta government of Pacific Western Airlines, he has certainly never made them known in this House or, to my knowledge, explained them publicly.
There are a number of other regional airlines in addition to PWA. For example, Transair operated in Manitoba, Ontario and the Northwest Territories. It was a privately owned airline which got into difficulties, 1 suppose caused by the cost of fuel mainly, which has increased so substantially that the airline found it could no longer make a profit. From what we read in the newspapers, apparently a proposal was put forward that PWA, now owned by the Alberta government, should buy Transair. I do not think the Minister of Transport discussed the matter with the premier of the province of Manitoba, in whose province the overhaul base for Transair has been located for many years.
The Leader-Post for May 6, 1977, carries a news story which in part reads as follows:
The CBC says Pacific Western Airlines, owned by the Alberta government, is expected to announce shortly that it will acquire Transair Ltd.
A deal has been made, and I think only a few details remain to be ironed out before it is concluded. The news story continues:
The report says the acquisition of the Winnipeg based regional airline will have the blessing of the federal government.
I wonder why it has the blessing of the federal government when the federal government was opposed to the purchase by the Alberta government of Pacific Western Airlines.
The report says Pacific Western will take over Transair for about $5 millions. .. Transair has lost about $6.5 million in its last two fiscal years.
CBC says it is understood that the federal goverment approached PWA to consider takeover of PWA. The government tried to prevent the Alberta government from buying PWA in the first place.
The report continues:
One of the most important aspects of the acquisition is the routes PWA would pick up. It could serve the whole of western Canada from Winnipeg to Victoria.
80016-36(4

May 25, 1977
Aeronautics Act
The report says that as part of the deal, Transair will lose its Winnipeg to Toronto run, which will be assumed by Air Canada. But Transair will pick up additional routes in western Canada, giving the airline inter-city service between Winnipeg, Regina, Saskatoon, Calgary and Edmonton.
The report says Air Canada will give the takeover its blessing as will the government of Saskatchewan. Manitoba is expected to follow suit, as long as it is guaranteed that maintenance facilities will remain in Winnipeg.
I understand that the government of Saskatchewan is, to say the least, not enthused by this deal, and that the government of Manitoba is not happy with the deal either. In any case, I see no reason for giving this government, parlicularly this minister, this kind of power. The minister has moved to take power-which he does not need-to do things which he has never explained, to take power to do things regarding which he has never enunciated the basic principles, to take power which, in our view, he wants purely for political reasons. We certainly cannot agree to that.
As we understand it, Mr. Speaker, this bill amends several sections of the Aeronautics Act. Basically it is aimed at prohibiting the purchase of an extrapovincial-interprovincial or international-airline without federal permission.
The Aeronautics Act is divided into three parts. Part I deals with the duties of the minister and regulations that the minister may prescribe regarding safety and inspection. Part II of the act, sections 9 to 19, deals with the Canadian Transport Commission and its role in civil aviation. The main role of the Canadian Transport Commission is licensing air routes and supervisions of rates. Part III deals with the hiring of personnel to administer the act and Department of Transport documents. The relationship between the ministry and the CTC is basically that the CTC grants a licence to a carrier to operate an air service and supervises the rates, and the ministry takes steps to ensure that the aircraft is operated safely.
This bill, along with Bill C-40, prohibits the transfer of the shares of an extraprovincial air carrier to a province without the approval of the governor in council. The new subsection 16(2) would prohibit the issuance of a licence to an extraprovincial air carrier in which a province is in the process of acquiring a debt or equity interest without the approval of the governor in council, which means-without the approval of the minister. This subsection would apply only to applications for new licences; it does not affect existing licensing. In other words, the minister is not prepared to take on the government of Alberta for its purchase of Pacific Western Airlines.
This bill adds a new subsection 16(8.1) which directs the commission to suspend an existing licence of a provincial air carrier where the carrier allows a transfer of shares without the approval of the governor in council, or where the carrier allows a province to acquire a debt interest.
The complementary bill, Bill C-40, also has an amendment to section 16 of the Aeronautics Act, which is the section at which Bill C-46 is aimed. Bill C-40 provides an amendment to 16(3) and 16(8) which would enable the issuance of licences for non-scheduled air services upon proof of public interest, rather than proof of public convenience and necessity as now required.
(Mr. Orlikow.)
This provision may be detrimental, depending upon the definition given to "public interest". Under the old rule of public convenience and necessity, an applicant must prove that his service would add something. Under the public interest rule, if the public interest is to be defined as section 3 of the National Transportation Act, then the public interest is defined in terms of competition and the economic well-being of Canada. However, if the public interest is to be defined as section 3 of the amended National Transportation Act after Bill C-33 is passed, then the public interest is defined in terms of competition and commercial viability of the carriers.
Since the tabling of the Hall report we have heard the minister say several times how pleased he was with the main provisions of the report and that he was going to move to implement them. If the Hall report made one thing clear, it was that commercial viability is not a good way of judging what is needed in terms of transportation.
Let me quote from an article by Nicholas Hills which appeared in the Montreal Gazette on May 18 of this year, dealing with the Hall report. It reads:
Hall has gone almost all the way to meeting the arguments of the western premiers that the railways and Ottawa are the barriers to a new economic future, based on fairer tariff, tax and freight rate policies .. .
He has said, like the western premiers in every political strife, that the raw materials should be processed here, and not in central Canada.
He has inferred, again like the western premiers, that the railways engage in duplicity-for having settled the west originally they now want to settle its future, again to their advantage.
In another article on May 18, which I will not quote but the headline of which reads: "Hall Flies in Face of Lang Philosophy", Nick Hills makes precisely the point. The minister wants this authority because he does not want the provinces to go into the airline business because they may not be interested in just commercial viability and just in making profit. They may be interested in giving service to the people of their provinces. That, of course, is anathema to the Minister of Transport. He continues, despite all the nice things he says about the Hall report, with his basic philosophy that all that counts is making a profit. We oppose that.
We think that if a province wants to go into the airline business to provide a better service for its people, it should have that right, and it should not have to come cap in hand to the minister or to the government to ask for permission to do it. That does not mean that the other provisions in the Aeronautics Act and the other acts which apply to the present or future private operators of airlines will not continue, that the provinces will not have to meet the standards with regard to the safety of the service and everything else, but we see no reason why this government should prohibit any provincial government, regardless of political stripe, which wants to go into the business, from doing so. There is more than Pacific Western Airlines involved in this question.
There are a number of regional carriers. There is Eastern Airlines which provides service in the Atlantic provinces, there is Quebec Air which provides service in Quebec, and there are
May 25, 1977

some regional carriers in Ontario. Given the increased cost of fuel and of parts, it may be that one or the other of these regional carriers would decide that they can no longer make a profit, in spite of subsidies on profitable routes which the federal government is sometimes persuaded to provide. It may be that they may want to go out of business and that one of the provincial governments will say, "This service is so important to Nova Scotia, Newfoundland or northern Quebec that we will take over this airline and we will run it, not to make a profit but to provide service". What this bill would say is that they could not do it without satisfying the federal government of the day, the Department of Transport or the Minister of Transport, that they have a valid reason for doing it.
We see no reason why the federal government needs that authority; we see no reason for putting these restrictions on any provincial government, and we will oppose this bill.


The Acting Speaker (Mr. Turner):: Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


Some hon. Members:: On division.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the Standing Committee on Transport and Communications.

Otto Emil 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.
He said: Mr. Speaker, it is 40 years since parliament gave authority, in the Trans-Canada Air Lines Act of 1937, for the establishment of our national airline. We may all, I think, take satisfaction and indeed pride in the work done by our predecessors in the House and by the directors and officers of the company itself in providing for and developing one of the world's great airlines.
In the early years of its development, Trans-Canada Air Lines mainly carried mails while it expanded its fleet, trained its staff, and provided advice on the airfields and aids to navigation which were required for the introduction of passenger services across the continent.
By 1939, TCA had expanded to the point where it employed 500 people and in that year carried 21,000 passengers on domestic services. Its fleet was comprised mainly of Lockheed 14H aircraft which could accommodate 11 passengers and 2,700 pounds of cargo, and could cruise at 200 miles per hour over typical stage lengths of 350 miles.
By way of contrast, after four decades of operation in peace and war, Air Canada by the end of 1975 had over 20,000 employees. In that year it carried 10.4 million revenue passen-
Air Canada
gers, roughly one quarter of whom travelled on international routes. The corporation's fleet consisted of 120 aircraft, ranging from 365-seat Boeing 747s to 95 seat DC-9s.
The employment of jet aircraft, starting in the early 1960's, permitted very rapid rates of growth in the airline's productivity. Cruising speeds rose to the region of 550 miles per hour over stage lengths of up to 4,000 miles.
This increase in the speed of air transportation, combined with the increases in productivity which allowed airlines to hold back on price increases and even to make price reductions while paying increasingly higher wages and salaries to their employees, brought about dramatic changes in travelling patterns. Travel for pleasure or personal reasons has gradually replaced business travel as the main source of business in many markets. This in turn has led airlines to become involved in many new types of associated activities such as hotels, vacation package tours, and computerized teleprocessing systems.
Despite this rapid pace of change in the air transport industry, the original Trans-Canada Air Lines Act was changed only slightly over the years, the key amendments being in 1945 and 1953, and in 1964, when the name of the corporation was changed to Air Canada. The change of name was symbolic of the wider horizons in which the airline had come to operate, not only in the national but increasingly in an international sphere.
The act incorporating the company, enacted when a transcontinental flight was itself a major undertaking, has become less and less appropriate to the evolving needs of the day. Therefore we have thoroughly revised the old Air Canada Act to enable the corporation to respond quickly and effectively to the challenges of the future.
Underlying Bill C-17 is the fact that Air Canada is no longer a fledgling airline and no longer needs the special protective measures which are incorporated in the present act and in the Aeronautics Act. The corporation, nevertheless, faces new challenges and must be able to adjust to changing conditions. The bill seeks to put Air Canada on a footing similar to that of the airlines with which it competes.
First, there is the matter of ownership. In 1937 it seemed appropriate that organizations with experience in transportation should be asked to organize a trans-Canada airline, and after exploration of various possibilities the Canadian National Railway became the sole shareholder. It provided not only the share capital but also the first president of the airline and the administrative services required to support him in running the operation. As it has grown over the year, Air Canada has become less and less dependent upon the direct support of the Canadian National Railway. Therefore the bill provides for the cancellation of the shares now held by the CNR. All Air Canada shares will be held directly by the government.
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

May 25, 1977
Air Canada
provides for the appointment of Air Canada's auditors by the governor in council, and generally brings the provisions associated with an outside audit into line with other recently created Crown corporations.
The bill contains no reference to the Air Canada contract nor to the airmail contract except inferentially. The 1937 act described the trans-Canada contract in some detail, provided for a conterminous mail contract, and stipulated how the airmail rates in each year should be adjusted according to whether the corporation recorded a surplus or a deficit during the preceding year. That latter practice was discontinued following the revision of the act in 1945.
In 1953 the section describing Trans-Canada Airlines' contract was shortened. To be specific, references to a schedule of services to be maintained by the corporation under the contract and to the payment of a subsidy equal to any deficit at the end of the year were deleted. The present Air Canada Act also contains clauses dealing with what is now called the Air Canada contract and the Air Canada mail contract. Provisions for payment of subsidies are included in the act only with regard to contracts containing terms ordered by the governor in council into which the minister may enter with subsidiaries of Air Canada.
It is my view that there is a better way to arrange these particular relationships between the government and Air Canada. Accordingly, the Air Canada contract and the airmail contract would be cancelled, and no provision for the payment of subsidies to Air Canada directly, or to any of its subsidiaries, is contained in the bill. Instead, Air Canada would be required to comply with directions from the governor in council. We will in the later stages, following discussions we have had within the government, introduce an amendment which will qualify the text as it now appears so that the directions which may be given by the governor in council will be directions of a general nature.
This is designed, as I will mention later, to emphasize the fact that it is not the intention nor the purpose of the government to give directions in relation to the day-to-day operations of the airline. It is our view that the airline ought to make those judgments on its operations as a part of its own management decisions and that we ought not to interfere with that.
In the bill we are providing compensation to the corporation if compliance with the directions given to it results in losses to Air Canada. This is in line with the 1975 transportation policy statement that where the government requires certain services to be performed at a certain cost, that cost ought to be known, and it ought generally to be borne by the treasury rather than be passed on to the users of the transportation service.
The discontinuance of the Air Canada contract has another consequence which should receive our collective attention. Under the Aeronautics Act the CTC is now compelled to issue licences to Air Canada for services provided pursuant to the Air Canada contract.
It is now proposed that Air Canada should apply to the CTC for new licences in the same way as other carriers do.

This change is in line with the emphasis that the government and, indeed, the board and senior management of the corporation place on the need for Air Canada to compete on a similar footing with other airlines.
I remarked earlier that changed circumstances have -created new needs as well as removed the necessity for old safeguards. The present act contains a list of the business and powers of the corporation which, although long, is not sufficiently comprehensive in terms of the new activities which have now become associated with air transport. Whereas the provisions of the present act are quite specific and narrow, we have taken a much broader approach. This bill provides more flexibility for businesses and activities in areas associated with the operations of major airlines while retaining control by the government over Air Canada as a Crown corporation against entry into areas not related to the airline business. There always remains a risk in any enumeration of powers, no matter how broadly drafted, that some future legitimate activity is not provided for in it. To ensure that Air Canada does not become the prisoner of that kind of situation, the governor in council would be given power to authorize the corporation to engage in activities which are not specifically provided for in the bill.
Under the present act Air Canada's authorized equity capital has an upper limit of $25 million. The actual issued capital is $5 million, whereas the corporation's current balance sheet lists total assets in excess of $1 billion. The present arrangement forces Air Canada to obtain most of the financing it requires in the form of long-term debt. This, in turn, has three undesirable effects. First, it makes it difficult to compare Air Canada's performance with that of major airlines which have debt equity ratios over a wide range, but none so extreme and debt-laden as 97 to 3, which is currently the case with Air Canada.
Second, since nearly all of Air Canada's financing is in the form of debt which carries a charge against current operations in the form of interest payments, Air Canada can swing very quickly between a profit and a loss on the basis of very slight changes in the market or in operating conditions.
Third, lenders in the long-term debt market apply certain tests before supplying funds, and one of these tests involves a satisfactory debt equity ratio.
Under present circumstances Air Canada stands little chance of being able to borrow in the market without government guarantees. Since the intention of Bill C-17 is to pave the way for a more commercially oriented corporation, Air Canada must have a more normal debt equity ratio to pass the test applied in the money market.
Therefore Bill C-17 makes the following provisions: The authorized capital of the corporation would be $750 million. There may be available to Air Canada up to $750 million in direct government loans or government guaranteed loans obtained in the open market. In addition, over and above the $1.5 billion just mentioned, the corporation would have the power to borrow money in the market on its own credit. For long-term debt-that is to say, debt which exceeds 18 months in term-prior approval from the Minister of Finance would
May 25, 1977

be required, but short-term borrowing, to accommodate cyclical short-term cash needs, would not require that approval. The existing debt can be rearranged by converting some of the existing government debt to equity, some of the existing CNR debt to equity, or a combination of these, but the bill puts a limit on these conversions of $600 million. If the corporation's debt to CNR were converted to equity capital, CNR's own debt to the government would be correspondingly reduced in an offset against the reduction which was made in that manner.
These provisions do not establish a specific debt-equity ratio that would be maintained indefinitely. Instead, they provide a framework within which a healthy debt-equity ratio can be maintained by the performance of the airline or by provision of new capital on the analogy of private companies seeking new equity or debt. The mechanisms for infusions of up to $750 million each for equity capital and government debt were based on that premise. The statutory appropriations are balanced by the dollar ceilings which may not be exceeded.
To arrive at the $750 million figure, estimates were made of Air Canada's probable capital requirements over the next five years and these data were combined with existing long-term debt and equity and a safety factor was then applied.
I would like to add that Air Canada would be allowed to borrow on its own credit without limit. If Air Canada is successful commercially, and I believe it will be, the corporation should be in a position to borrow on the open market within a very short period of time.
Here I wish to add a note of emphasis. It is the intention both of myself and of the board and senior management of Air Canada that its performance will be equal to or better than the performances of the world's top airlines. That means that it must be competitive in every way. It is possible, for example, for an airline virtually to assure on-time departures of all its flights if it is prepared to pay the cost of over-capacity in its fleet. Equally it is possible for an airline to return profits by combining under-capacity with a monopoly. It will be the responsibility of the board of Air Canada, to me as minister, to parliament and to the people of Canada, to achieve the maximum possible efficiency in all aspects of the airline's operation, and not to favour one aspect at the expense of the others. One measure of their success will be the financial results of the company, and it is the intention of the government that Air Canada will conduct its operations in contemplation of profit.
I have of course referred earlier to the power reserved to the governor in council to give directives to the corporation, and for compensation, subject to appropriation by parliament, to be paid for losses incurred in giving effect to such directives. This gives the government power to ensure that any tendency to concentrate on profit at the expense of necessary but loss-creating services can be countered. But it will also ensure that such services are clearly identified and the social benefits achieved will be at the cost of the treasury and not of Air Canada.
Air Canada
As I said earlier that is consistent with the principle we have been applying in other areas to railways as well as to Air Canada. We ought to know specifically what it costs if a particular social obligation or other obligation is imposed upon an entity like this and we ought to identify and pay that cost so that the airline or railway in question is not left in the position of either being short of cash to perform its necessary functions or of having to charge more for other services it provides in order to make up the loss on the services to be performed.
The inquiry conducted by the Hon. W. Z. Estey in 1975 resulted in a number of recommendations for changes in the present Air Canada Act. Some of these recommendations have been taken into account, as I have indicated previously, and are in the bill. The bill also addresses the matter of capacities and activities of the corporation and provides for direct government ownership and government directives to which I referred.
In addition, the bill reflects a careful consideration of recommendations contained in the Estey report, such as the expansion of the board of directors to 15 members and their appointment by the governor in council. Here I may say that it will not be our intention to move to fill all these positions immediately but to do so progressively over a period of time. Further recommendations of the Estey report were that the chairman and president be appointed by the government after consultations with the board; bylaws passed by the board to be subject to government approval; and power to the board to delegate duties to an executive committee which must be established.
In addition, the bill contains an innovation which would allow Air Canada to create subsidiaries, subject to the approval of the governor in council. Under the present act, it is the governor in council who, upon petition by Air Canada, can create companies whose shares are subsequently acquired by Air Canada.
Finally I should say a few words about the legal framework of the bill.
Basically, Air Canada would continue as in the past to be a "special act" corporation, but certain provisions of the Canada Business Corporations Act would be incorporated in the special act.
For example, the bill has adopted the "natural person" concept which says that Air Canada can do all things that a "natural person" can do, but with the qualification that this "natural person" power is confined to activities listed in the bill.
Due to the fact that Air Canada's permitted activities are set out, and that its "natural person" power is restricted to these permitted activities, the doctrine of ultra vires would continue to apply to Air Canada. In order to protect third parties from finding themselves in a position in which Air Canada has acted beyond its capacities, thus rendering a transaction null and void, the bill expressly provides that such ultra vires acts by the corporation may not be used against third parties which have acted in good faith.

May 25, 1977
Air Canada
The bill also contains a number of "housekeeping" clauses. Generally speaking, they describe the relationship between this bill and other statutes.
I have had discussions with Air Canada and others since first reading of the bill and I shall, in the standing committee, propose certain amendments to the bill. Some are intended to ease and facilitate the workings of the corporation, some are intended to be clarification if there is any possibility of doubt about the meaning of a clause, but in its essence the bill remains the same as it is now at second reading.
In committee some substantial amendments will attempt to give the assurance of greater commercial flexibility to Air Canada in order not to impede it in its operations and its competitiveness with other airlines. Changes will be suggested to bring some greater correspondence between the special act and the terms of the Canada Business Corporations Act. In some cases it is a matter of removing doubt about the meaning of a clause in the special act as drafted.
More important, as I indicated earlier there will be the intention to narrow the directive power which is set out in the bill so that it is limited to directions of a general nature. Again I emphasize that is designed to underline the fact that Air Canada should be run essentially by its management and its board of directors who are accountable to the shareholders and to the minister for the people of Canada in the same way as the management of other corporations is, but not subjected to day-to-day interference in those operations. It is not the intention of the government to get into the day-to-day management but rather to leave that to the best management possible for Air Canada.
We also propose to clarify the legal status of Air Canada. While not really believing there is much doubt about it as the special act is written, to resolve any possible doubt we will be prepared to have an amendment put before the committee which will make it clear that Air Canada is not in law or in fact an agent of Her Majesty. That will perhaps serve to further emphasize the nature of the airline as we see it and our objective that it continue to be a first-class world level airline; that it be competitive; that it apply good business principles and that it serve the people of Canada by operating effectively and efficiently and, one hopes, with constantly improved attitudes by all who serve and work in it.
I should like to add some comments on that very point, Mr. Speaker. Air Canada, like any other company, will so often provide good service or better service depending on the total attitude of those who work in it. I pay tribute to the men and women who work in the company, to top management and to all other levels, and express the hope that with the new attitude being shown to Air Canada and its future, and the new approach of its present management, to whom I pay special tribute, there will be constant improvement in the morale and attitude of those who work within the corporation.
While one hopes, as a member of the government or of the travelling public, for efficient service from any air transport
[Mr. Lang.)
company, one may be permitted to have special reasons for wanting it in the case of Air Canada, the shareholders of which are all the people of Canada. I look forward to full discussion on the details of this bill in committee and commend this bill to hon. members and its reference to the Standing Committee on Transport and Communications.


J. Michael Forrestall: Mr. Speaker, if I had known this bill was to be discussed so soon, I suggest I would be in a position to make more co-ordinated and lucid comments on it.
More than 12 years ago members spoke in this Chamber on the necessity of separating Air Canada from Canadian National Railways. This bill does that and it is an historic, significant occasion in this the 40th year of Air Canada operations. The airline has finally come of age. It has groaned and moaned for 40 years. In the next 40 years I hope Air Canada will get up off its knees, walk, run, and ultimately fly. Let it provide a service of which Canadians will be proud, and which will bring us prestige as international operators of air carrier service. Of course when I speak of Air Canada service I speak of the total package of services which must be associated with air service.
The bill gives Air Canada the right to enter into activities not directly related to flying, activities such as catering to the tourist trade. I hope we can not only be proud of Air Canada service, but that its service will grow constantly better. The people of Canada still own the airline, and I prophesy they will own it in years to come.
The airline's debt ratio at 97 to three is poor. We are about to reduce that ratio; that is a good and necessary step. If the airline is to enter the market place for financing, its debt ratio should be in the order of 60 to 40, or 50-50. I suspect, from the way the airline has operated in the last ten or 15 years, that the government will come to this House from time to time to suggest methods for injecting more equity capital into Air Canada, in order to sustain its debt-equity ratio. That ratio must be adequate if the airline is to enter the market place to secure the finances for its operating needs. I hope it will not happen, and I do not intend to begin my remarks in a negative manner.
This House and the standing committee will need to consider in depth some of the proposals contained in the bill. Perhaps I might mention some of the ways Air Canada is to be reorganized under Bill C-17. Basically, the bill would separate Air Canada from its parent, Canadian National. It contains four fundamental proposals. First, it would authorize Air Canada to engage in a wider range of activities. Second, it would separate Air Canada from the CNR; the airline would be an entity unto itself. I remind the House that, to the best of my knowledge, it has been the policy of my party for at least 15 years to separate Air Canada from the CNR. We first heard this might happen when the present Secretary of State for External Affairs (Mr. Jamieson) was minister of transport. We heard nothing after that one-line comment made years ago in a budget debate.
May 25, 1977

Third, the bill would authorize Air Canada to increase its capital stock. This we consider to be necessary. Fourth, it would authorize Air Canada to seek debt financing in the market place. All these points relate to the question of management, on which the minister touched, and to the necessity of improving Air Canada's debt-equity ratio in order that it may go to the market place for its operation funds. Each of those points is worth exploring in detail.
First, let us consider the question of 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; and computer and tele-processing systems and technical, advisory and consulting services.
Perhaps in committee we shall discover how far those powers extend. Hon. members no doubt are aware of the events which preceded Judge Estey's examination of Air Canada activities, and know how close Air Canada came to breaking this country's law, and know how some officials in the not too distant past stopped Air Canada breaking the law.
As well, the new act permits the company to establish or invest in subsidiary companies, provided authorization of the governor in council, which means the federal cabinet or the minister, is first obtained. These changes will enable the company to offer a greater range 6f services and to engage in other activities which may be deemed finanially beneficial. This provision would put right that which Air Canada officials were doing which was wrong. I do not mind doing that. I am confident that most members of this House believe as I do. If Air Canada is to operate successfully, it must operate in areas broader than the simple carriage of passengers and goods. It must engage in other activities. There is general agreement on this side of the Chamber with regard to that.
We will want to look very closely at Judge Estey's suggestions with regard to this expanded authority. That will be done here in the Chamber and in greater detail in committee.
With regard to ownership of the capital stock transfer envisaged by this bill, up until this time all of this stock has been held by CNR, a Crown corporation. What is envisaged here is the establishment of a Crown corporation, albeit subject to the business act, business practices act and so on. Nevertheless, we are establishing another Crown corporation.
This House could well spend a day of its time in the not too distant future looking at the role of Crown corporations and the use to which the government puts the concept of Crown corporations with regard to transportation in Canada. There is VIA rail, if it ever gets any money and gets off the ground.
Air Canada
CN is in an unhealthy position as a result of Air Canada. I do not mind it being a bit of a whipping boy. These things are relatively important as CN, the principal shareholder of Air Canada, has been saddled with enormous debt ever since the birth of Air Canada.
We established VIA as a Crown corporation. We are looking at Canadian National Marine Transportation as a Crown corporation. Now we are looking at Air Canada as a separate Crown corporation with what might be considered as extraordinary authority and power.
The minister undertook this afternoon to deal with the authority implicit in this bill, in the VIA arrangements, in the arrangements for Canadian National Marine Corporation and, indeed, extended to communications.
In the new Communications Act there is implicit clear authority for daily intervention on the part of the minister to ensure that policy and policy guidelines are being followed, not by the boards of directors of these corporations, but by the day-to-day executive of these corporations.
We on this side of the Chamber have argued for many years that there has to be greater political control in the sense of ensuring that the will of Canadians with respect to these tools of all Canadians is the will of the government and parliament, and is being followed. Never did we suggest that that authority go so far as to permit the minister to intervene on a day-to-day basis with the nuts and bolts operation of any of these Crown corporations engaged in transportation matters. That is one matter that will be looked at very closely.
I come back to the ownership and position of Air Canada, that position being one of a wholly owned subsidiary of Canadian National. CN, exercising its proper right and authority, appointed five shareholders to the Air Canada board of directors while the governor in council appointed four.
The proposed act stipulates that shares of Air Canada shall be held by the Minister of Transport in trust for Her Majesty in right of Canada and that the shares are not transferable. It further provides that the corporation shall be under the management of a board of directors comprised of a chairman and president and not more than 13 other directors. What a pork barrel that will be. All of them will be appointed by the governor in council.
As long as the Minister of Transport holds in right of the Crown all of the shares of Air Canada and maintains the right to appoint the chairman and board of directors by order in council, anything to the contrary will be opposed by us if there is an exercise capable of demonstrating an authority to intervene at other than the directors level.
If the minister and the government want statutory authority to intervene and interfere, it is and will remain our position, until we see and are satisfied with the amendments promised a few moments ago by the minister to clarify this, that that is where there shall be ministerial intervention with respect to "policy guidelines". That is where the minister should do it, not at the day to day working level of Air Canada. These are areas we have to look at closely.

May 25, 1977
Air Canada
We have to look at the authorized share capital. There is a concern in the industry. Indeed Air Canada is concerned with regard to the minimum authorized share capital presently held by it. I think it amounts to S25 million. This amount, together with the accumulated net profits of the corporation, labelled retained earnings, an interesting chartered accountant's view of a damnably high debt the taxpayer has to pay, represents the shareholder's equity. On December 31, 1975, the balance sheet totalled $31.4 million.
I repeat to the minister that we had hoped that the standing committee would have an opportunity to examine the annual report of Air Canada before dealing with Bill C-17. The failure of the government to refer the annual report of Air Canada in each of the last three years is reprehensible. Indeed it could be argued that CN by its association acted illegally for several years. It was not until quite recently that we bothered to obey the law by approving certain of the annual acts that came before us with respect to this.
The same balance sheet shows that the company had long term debt of $1,011.4 million. That is already out of date. There is no question about it. These figures are mentioned because it is in this way that you get the relationship between the $1,011.4 million and the $31.4 million shareholders' equity, comprised of some loans and retained earnings. This puts Air Canada in the desperate situation of a debt ratio of 97 to 3. This means that 97 per cent had to come from borrowing while only 3 per cent represents the shareholders' original investment, plus accumulated net profits.
Someone like myself from the Atlantic provinces who watches this government cannot forget that we have massive debt in rail passenger service in the Atlantic provinces. My God, a desperate debt! If we ran rail passenger trains at the current rate of debt we would never get anywhere with this kind of debt. Yet they are going to write this off. They are going to take our trains away from us; we are going to get buses. We are going to ride from Saint John to Montreal on a bus so we can catch the transcontinental train. I wonder what Joe Howe would say about that if he were here today.
Bill C-17 authorizes Air Canada to issue common shares up to the amount of $750 million, if I read it correctly. It provides for the conversion of part of the existing debt to common shares which, of course, can only be sold to the government. If I understood the minister correcty, $750 million, in that sense, is the upper limit. This may not necessarily be issued with the passage of the bill before us, but in combination with the use of other methods of accepting other debt instruments of Air Canada it will at some point in time virtually absorb the debt of $1 billion or more that is there. I hope I understand this correctly because it is important that I should tell the minister that this is the position in which we are in general agreement. Indeed we cannot see any other way of approaching this problem caused by the existing and mounting debt of Air Canada.

Over the years Air Canada's need for capital has virtually been met in entirety by borrowing from the government. The proposed act would provide Air Canada with a much greater flexibility in raising funds. We welcome this. In addition to the substantial increase in common shares which can be issued to the government, the company is permitted to borrow from the government. But most important is the freedom to borrow from the long term capital account provided approval has been obtained from the minister of finance. I assume this approval has to be transmitted to Air Canada through the Ministry of Transport. We suggest that this is a form of monitoring which should continue to take place. I suppose that is the only truly logical way for this to happen. We assume it will take place by way of a single resolution before the House which would either be approved or rejected-in the latter case the department would have to find some other way in which to operate.
There is no limit to the amount of borrowing into which Air Canada can enter. We have some concern about the method to be employed by the government, and particularly by the minister, in exercising control over this very broad authority. This is the second area of major concern to those of us on this side. Again, we shall be dealing with it in some depth as the debate continues. Unless the minister is optimistic enough to think that this bill is going through this afternoon, or tomorrow, or Friday, or Monday, I caution him that there are a lot of my hon. friends over here who are concerned to deal with this measure in some depth.
Air Canada is this year celebrating its fortieth anniversary. Yet since 1937 there have been no fundamental amendments to the Air Canada Act. The minister has dealt with Judge Estey's report and has given us some indication of his intention to move with respect to certain of his recommendations which are referred to in the bill itself. Also, he has indicated that there are others which are not dealt with in the bill, and we shall be seeking clarification of the position taken by the minister toward them.
A number of the recommendations in the Estey Report continue to cause us considerable concern, especially those relating to Air Canada's management structure. For example there is the recommendation which states that the position of the board of directors as the ultimate authority should be improved by enlarging the board and forming an executive committee of the board. It is further stated that the independence and stature of the members of the board should be assured by giving statutory tenure and ensuring standards of appointments. In this connection it occurs to us-and I am referring to the last sentence-that it is incumbent upon us to make sure that attention is directed to this area and that an amendment is made accordingly. I say this because it seems to me that standards of qualifications of directors are just as important, when it comes to directors, as the maintenance of the government's right to appoint, arising from the fact that it is the principal shareholder.
Apart from statutory tenure and standards of appointment, we want qualification for appointments to be spelt out clearly. This is not the case at the present time. We want to know, and
May 25, 1977

I believe the travelling public and those engaged in the transportation industry want to know what the standards of qualifications for appointments are. They should be spelt out very clearly, in the bill. Further in his report, Judge Estey stated:
The independence of the board in its role as the ultimate interna] element of corporate control should be implanted securely and obviously in the statute.
I come back to what I was saying earlier about implicit authority in Bill C-17 and other bills which have been and which will be before us, giving power to the minister and to other ministers to intervene directly in the day to day operations of Crown corporations. This is somewhat repugnant to us on this side. On the other hand, we shall support and encourage his position with respect to his ministerial right to intervene at the board level. The minister has already indicated he is prepared to go further in this regard by way of certain clarifications.
I quote again from Estey. Indeed, Glassco in earlier reports touched on this aspect.
Finally, the method of appointing directors should be examined. The operation of the Corporation has now attained such proportions as to be a top-ranking national asset. Thus the board performs a fiduciary role of such importance that consideration should be given to its enlargement and to some prescribed standards of qualification or experience, prohibited interests, tenure, etc. etc. to ensure in the future a high level of board competence and independence. There seems no longer to be the original need to have a majority of the directors of Air Canada chosen from the membership of the CNR Board. Certainly the office of the president should be placed on an articulated basis or abolished. If retained he should be a member of the board.
Estey in no way meant to insult the board of directors. Those who have read that particular statement, I am sure, have also read his clarification. The point he is making, with respect to clarification and qualification of the role of the chairman of the board, is that the qualifications for appointment, reappointment and tenure should be clearly known, articulated, and spelled out so that all Canadians would have the trust and faith they richly deserve in this new corporation in order for it to operate in the manner the minister has described. Without it we could have some doubts as to whether it would survive.
Judge Estey's recommendations in this respect are fairly important. I would like to cite the following, which will be the last one, although I would like to go on for another hour or two:
The Air Canada Act should provide a channel for the government or the responsible minister to issue to the board of directors of the corporation policy directives where the national interest from time to time requires.
That indicates to me Judge Estey was saying there is an institutional responsibility, a parliamentary responsibility, a ministerial responsibility, and a government responsibility. If we interpret this recommendation and its translation into the act correctly, then I think we understand something which will be welcomed by all members in this Chamber. I am referring to the vehicle to pose questions to the minister, which he may not answer simply by saying, "I will bring your representation to the attention of the appropriate Air Canada board or
Air Canada
authority". That was never enough for this institution and will never be enough for this institution in the foreseeable future.
We require the right to examine the minister with respect to the degree to which he maintains a capacity to ensure that the board of directors is on top of his guidelines and policies and that they are in fact being implemented by the day to day corporate and executive management. It is through the board the minister must get his assurance, and it is through the board, with the ultimate passage of this particular bill, this Chamber will have the right to seek information, to make inquiries, to understand and to question without the minister being able to say "I cannot do anything with respect to it because it is out of my hands and I cannot touch it". When the minister becomes the holder of those shares and has the authority and governor in council approval to appoint directors, then let him tell me why it is we eat fried chicken every Friday from here to Halifax-cold, stale, sometimes fried chicken. Then let him stand up and tell me why we do not have the seats we richly deserve in the Atlantic provinces. Do not let him tell me then that he cannot tell me because he has no right to interfere. This is the type of interference we welcome and want. He knows the outlet of expression and the difficulties which arise when a minister does not feel obliged to respond to questions with respect to the carrier.
I am sorry this bill came up for debate today. I think the minister is going to get a little light-headed and start feeling big because various things are happening in his favour today. He gave $125 million to the Atlantic provinces. I publicly thank him for that. The sum of $100 million will go a way on highways for us. Perhaps Ponderosa Drive will be paved so that I can drive home over a paved road rather than a muddy one. We also welcome the $25 million which is ear-marked for bus and air support. I hope that $25 million will largely go into air, because this is an area where Air Canada has not been good to regional air carriers. I am not only referring to EPA, but other air carriers with respect to scheduling, paralleling of service, and the related problems this has caused particularly in the last 12 to 18 months.
We hope the minister's bill will get the fullest possible scrutiny. We hope he will respond frankly to us on the question of joint auditorship. We hope he will find the vehicle to name the Auditor General as a joint auditor, not only for this bill but for other Crown corporations dealing with transportation. The result of this would be that members of parliament would have a legitimate vehicle by which to examine the activities of Crown corporations such as Air Canada, Via Rail, Canadian National, Marine Transport and so on.
I will conclude by reminding the minister that the role of Crown corporations in transport relates to the realities of the day and the realities of the need to move our people comfortably and as economically as possible, and to move our goods and freight from one part of the country to another. It must operate in areas where the private sector cannot function as a tool of the economic stability of a region or as a tool of the economic development and growth of a region by way of having to maintain, because of federal regulatory authorities,

May 25, 1977
Air Canada
routes which are unprofitable. Unprofitable routings must be the responsibility of the people of Canada.
There is a will, not only in this Chamber but among the taxpayers of Canada, to ensure that best possible transportation modes are maintained and developed as need demonstrates. Where it is unprofitable and where there is a clear need for an economic stabilizing capacity or an economic development capacity, it can only be done by Crown corporations in my judgment. To that end I wish the minister well with his bill. There are three years of history waiting to be touched upon. I suggest the minister dust off his pants, sit down and listen. We will be here in July or August discussing this piece of legislation. I think it is worth it. When we are finished, I hope the minister has a good piece of legislation, and I hope Air Canada has a piece of legislation by which it can achieve the desired ends the minister mentioned in his concluding remarks.
To that end, the members of the opposition will lend the support they can. We hold out no promises of swift passage but rather, to the degree to which the minister is prepared to amend the shortcomings in the bill, to bring forward amendments that will overcome our difficulties with respect to it-to the degree he is able to do that and is prepared to do that, we will be prepared to support him in the passage of this legislation, and I look forward to speaking on it again at a later date.


David Orlikow: Mr. Speaker, members of the New Democratic Party, and CCF members who preceded the NDP, always supported Air Canada and always supported the concept of a publicly owned and operated transcontinental air carrier.
If all that this bill did, Mr. Speaker, was to split Air Canada off from the CNR and permit it to operate independently and more efficiently, we would have no objection to the bill. The bill itself is rather simple, providing for the setting up of Air Canada as a separate Crown corporation split away from CNR, which presently owns all the outstanding shares, and for some rearrangement of financial matters made necessary by this split. In addition, clause 8 makes the corporation directly liable to "comply with directions given to it in writing by the governor in council".
The other important change in this legislation is the modification of the system under the old Air Canada Act whereby the government contracted with Air Canada for the provision of services such as access to remote areas, passenger and freight services on sparsely populated runs, and so on. Clause 9 of the bill authorizes the government to modify this payment arrangement with Air Canada so that the former contract arrangement is replaced by government order, accompanied by a subsidy to cover the amount of loss incurred in carrying out the order.
We are opposed to this bill not because of what is in the bill or because of anything the minister said in his introduction today; we oppose it because of certain sections of the throne speech of last October and statements made by the minister
outside the House regarding what he sees as the future of Air Canada. Let me quote one passage 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.
In January of this year the minister sent a letter to the chairman of the CNR indicating his intention to see this policy implemented. To this end he said he would like to see the CNR broken up into identifiable profit centres which could be auctioned off as units to the private sector. This very cogent critique of the situation was referred to in a column by Geoffrey Stevens which appeared in the Globe and Mail for January 20, 1977, and I should like to quote a few parts of his article. Mr. Stevens wrote this:
In the first eight years after the National Transportation Act came into force (in 1967), these subsidies totalled $646 million (compared to $334 million for the rival CPR).
He goes on to say that the CNR seems to have turned the corner so far as operating expenses are concerned and is in a position where it will shortly be making a small profit. He then asks a very simple question, one I think the minister should answer on some occasion, perhaps in closing this debate. Mr. Stevens asks:
If CN is going to start making money, why should private investors and stock market speculators reap the benefit? Why shouldn't the general public get something back for carrying the freight all these years? There's no law that says the taxpayer may only own enterprises that lose money.
I think Mr. Geoffrey Stevens makes a very pertinent comment. The splitting off of Air Canada from the CNR is the first evidence of this splitting off of these profit centres. The minister has admitted in interviews with the press that its purpose is the eventual privatization of Air Canada. To this end, the replacement of the old contract for a services relationship between the airline and the government has been replaced by a system of direct subsidization of unprofitable services, with the intention of putting Air Canada in the position of showing an accounting profit in order to make it more attractive to the private sector as a purchase.
The Minister of Transport has suggested that this relationship is the first step to the opening up of all of the former contracts for services routes to competitive bidding between Air Canada, CP and other airlines, which would have the effect of putting Air Canada on a completely commercial basis identical to that of CP, and increase the possibility of its being sold off as a unit to the private sector.
According to a CBC report on October 29, the minister said that he saw Air Canada eventually becoming a private corporation. He said that routes that now have to be operated by Air Canada whether it makes a profit or not, will not have to be operated by Air Canada whether it makes a profit or not, but will be open to competitive bidding and that the successful applicant will get the routes and the subsidy that goes with them. The minister said the reason behind the move was that he wanted Air Canada to be as profitable as possible so that it will be in a position where private ownership of the airline might be possible.

May 25, 1977

Simply put, what the minister wants is the money making routes identified and separated so that private investors would be willing to take over Air Canada-that is, the profitable part. This would mean that ultimately we would have a private airline operating the profitable sectors, such as transcontinental routes of which 75 per cent are now operated by Air Canada, and private carriers would operate losing routes with government subsidies. I come back to the question Geoffrey Stevens asked: where is it written that governments can only operate losing routes and should leave to the private investor, those who can afford to put money into making money, the profitable routes?
In an article on October 16 the Financial Post gave some indication of how the new legislation could affect this changeover. While the article was written before the first reading of the bill, it appears to have predicted the legislation as it is. According to the Financial Post of that date, a relatively small section of the bill sets out new operating rules for the airlines. Any additional operating instruction, such as new activities in air routes, would have to be spelled out by the Minister of Transport.
We have tried to check Bill C-17, Mr. Speaker, and it seems to us that what the Financial Post was referring to was the powers granted under clauses 8 and 9 of the bill. Clause 8 provides that Air Canada shall comply with directions given to it in writing by the governor in council. Clause 9 provides:
(1) The Governor in Council may
(a)	direct the method of calculation of any losses incurred by the corporation as a result of compliance with section 8;
(b)	direct that an audit be made of losses calculated pursuant to paragraph (a), and
(c)	determine the manner of payment of compensation to the corporation for losses verified pursuant to paragraph (b).
It seems to us that by this method money losing services will be identified and compensated for, and this would then fulfil the minister's objective of making Air Canada attractive to private investors. If that is true, Mr. Speaker, then we certainly cannot support the bill.
The minister keeps on talking about commercial viability and profitability. In the debate we had earlier on another bill I referred to how contrary that is to the basic principles enunciated by Mr. Justice Hall in the report which was tabled some days ago and with which the minister supposedly agrees.
The whole idea of commercial viability and profitability was attacked by the former minister of transport, Mr. Marchand. In June of 1975 he made a statement, and I should like to quote a few sentences from that statement to show how much the then minister was in opposition, at least according to the statement he made, to this whole concept, which this minister has enunciated since taking over this portfolio. Let me quote from that statement by the then minister of transport, Mr. Marchand, who said:
If you look at the size of this country and the distribution of its population you will see that you cannot have a transportation network which is economic everywhere; you cannot have an economic system of transportation to service the
Air Canada
north, for example, or to service those regions of the country where the population is very thin. You cannot have an economic system for regions which are remote from the centre.
Then he went on to say as follows:
In central Canada, for example, many transportation services and facilities are highly developed and competitive, with shippers having a choice as to rail, truck, ship or plane. In some parts of Canada, however, while the facilities and services may be well developed, there is a lack of competition ... Still other parts of the country, such as the north, are undeveloped in terms of transportation facilities and services and it is unlikely, in many cases, that there will be much competition because of the nature of the products or the geography over which they move.
Transportation policy must therefore recognize the fact that there is a wide range of facilities and services, operating under different degrees of maturity and competition. It must enable each to be treated in an appropriate manner, and not, as is now the case, as exceptions to a policy which relies principally on competition.
Having made that statement on behalf of the government in June of 1975, we have the Minister of Transport doing everything he can to destroy the whole concept on which the former minister based his statement of June, 1975. This minister is again talking about commercial viability, and instead of a transportation policy which would take into consideration all the modes of transportation which are available in Canada, that is air, rail, bus, ships, and the private motor car, and evolving a policy under which each would be used to the maximum efficiency and at the least cost, we have the minister bringing in a bill to do with the railway, a bill to do with ships, a bill to do with airlines, each one separate, each one devised apparently without thought of what the effects of the proposals would be on the other modes of transportation.
The announcement of transportation policy in June, 1975, included a statement on the responsibility of government to attend to the provision of an efficient total transportation system involving all modes of transport. The Minister of Transport is using a fragmentary approach to transport instead. How can we look at an over-all policy with bits and pieces? By studying the various modes in isolation?
The minister uses the word rationalization a lot. How can we be rational by making cutbacks here and there without eliminating the inefficiencies and waste in the over-all system? For example, this summer there were 56 daily departures of public transport between Montreal and Ottawa, 14 of them commercial aircraft. What about the waste and duplication of having two major airports in Montreal? We have not had a rational discussion about that.
It is not rational to consider operating costs without regard to infrastructure investment. The actual investment in each mode is just as important as subsidization of costs. The implications of transport investment upon employment and energy conservation must also be considered and have never been considered by the government.
Our present transport system does not serve us very well. It is a patchwork of competing modes rather than an integrated complementary system. The result is that we have an unbalanced transport system with congested roads, high energy requirements, and lack of integration between modes.

May 25, 1977
Air Canada
Support for civil aviation infrastructure has grown from $120 million per year in 1954 to $354 million in 1973. Only 25 per cent of infrastructure costs of air travel are covered by charges to the air traveller. The average Canadian does not receive a fair share of this investment benefit. In 1973, 70 per cent of those using air service over long distances had incomes over $10,000, and of these some 65 per cent had incomes in excess of $15,000. The CTC inter-city transport study 1970 found that over 60 per cent of all air trips are made by the segment of society whose income exceeded $13,000 per year. Conversely, the same study found 64 per cent of rail and 73 per cent of bus trips are made by people whose income is less than $11,000 per year.
Yet, federal rail policies have not encouraged growth of rail usage. The hon. member for Dartmouth-Halifax East (Mr. Forrestall) when he spoke earlier talked about the proposal of this government virtually to wipe out rail transportation between St. John's, Newfoundland, and Montreal. Railways are the only mode which attempts to finance all infrastructure out of operating revenue. The type of financing improvement
needed to expand and improve the service has not been provided.
Bus travel has stagnated. No operating subsidies are paid to bus operators. Over 80 per cent of inter-city movement has been by automobile. Road costs have increased from $1 billion in 1955 to $3 billion in 1973. The net loss after revenues was $1.15 billion for roads in Canada in 1973, according to an interim report on inter-city passenger movement in Canada by Transport Canada.
The real costs of transportation must also include costs of accidents, pollution, land use, travel time, and energy usage. Those transport systems such as rail and bus which are most efficient in the use of fuel should receive priority in transport planning. Transport consumes about 25 per cent of all energy in Canada. The minister is quick to tell us that we cannot afford to subsidize rail service and that we must cut back on rail service. Yet the minister continues to increase the subsidies that are given for air travel-


The Acting Speaker (Mr. Turner):: Order, please. It being 6 p.m. this House stands adjourned until 2 p.m. tomorrow.
At 6 p.m. the House adjourned, without question put, pursuant to Standing Order.

Thursday, May 26, 1977