1977-11-24

ROUTINE PROCEEDINGS


Mr. John Wise (Elgin):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Given the fact that the latest statistics clearly illustrate that Canadian farm income continues to decline, farm input costs continue to increase dramatically for the second consecutive year, and in addition farm borrowings have doubled to an all time high of $8 billion, while industry analysts forecast negative profit margins and reductions in future export sales, all of this, Mr. Speaker, in the complete absence of any corrective measures or legislation now before parliament, I move, seconded by the hon. member for North-umberland-Durham (Mr. Lawrence):
That this House unanimously endorse the statement made recently by Liberal Senator Hazen Argue to the effect that the present cabinet gives a low priority to the agricultural industry.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


RESOURCES
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I rise on matter of urgent and pressing necessity. In view of the court decision by the Supreme Court of Canada regarding the constitutionality of the Saskatchewan legislation dealing with taxation on oil producers, and in view of the necessity that all provinces, including Saskatchewan, receive revenues for the resources owned by the people of those provinces, I move,
seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House urges the Government of Canada to co-operate fully with the government of Saskatchewan to develop means to ensure that the windfall profits obtained by the multinational oil companies as a result of the energy crisis remain with the people of that province and that the government of Canada take immediate steps, in co-operation with all provinces, to guarantee the constitutional right of the provinces to control their resources.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


AGRICULTURE
Mr. Ken Hurlburt (Lethbridge):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In light of the fact that the Minister of Agriculture (Mr. Whelan) is allowing offshore beef into this country that does not comply with Canadian grading standards, I move, seconded by the hon. member for Moose Jaw (Mr. Neil):
That this House direct the Minister of Agriculture to take immediate action to end this practice which is killing both the Canadian producer and consumer.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

[ Translation]


LABOUR CONDITIONS
Mr. Lionel Beaudoin (Richmond):: Mr. Speaker, under the provisions of Standing Order 43, I ask for the unanimous consent of the House to introduce a motion dealing with an important matter of pressing necessity.

November 24, 1977
RCMP Activities
Considering the present depression and since workers have no control over the operation of the economy, I move, seconded by the hon. member for Bellechasse (Mr. Lambert):
That the House immediately enjoin the government to introduce a bill granting workers the option to purchase shares in the business and exchange them later on for a retirement fund, and that those shares entitle them to take part in the management of the business.


Mr. Speaker:: Order. The House has heard the motion of the hon. member. Under the provisions of Standing Order 43, this motion requires the unanimous consent of the House. Is there such consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


AGRICULTURE
Mr. Jack Murta (Lisgar):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity, that being the complete secrecy surrounding the present General Agreement on Tariffs and Trade negotiations in so far as agriculture is concerned. 1 move, seconded by the hon. member for Dauphin (Mr. Ritchie):
That the Minister of Agriculture (Mr. Whelan) along with his pertinent officials appear before the Standing Committee on Agriculture as early as next week to outline the government's thinking on this most important aspect of our international trade.


Mr. Speaker:: Presentation of such a motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


JUSTICE AND LEGAL AFFAIRS
Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, 1 rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In light of the fact that the Minister of Supply and Services (Mr. Goyer) and the Minister of Consumer and Corporate Affairs (Mr. Allmand), both former solicitors general, have knowledge on the question of ministerial responsibility on matters of security and irregularities pertaining to the same, it is hereby moved:
That the present Solicitor General (Mr. Fox) endeavour to obtain the consent of both the Minister of Supply and Services and the Minister of Consumer and Corporate Affairs to appear before the Standing Committee on Justice and Legal Affairs for the purpose of giving evidence in reference to the same and

that he seek their consent to be questioned by the members of the said committee because of the serious cover-up.


Mr. Speaker:: According to Standing Order 43, such a motion can be presented to the House for discussion at this time only with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE CANADIAN ECONOMY
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, the Oil, Chemical and Atomic Workers Union in Saskatchewan find themselves limited by the anti-inflation rules to four per cent in wages and benefits for 1978, 6 per cent below the current inflation rate in the province. I move, seconded by the hon. member for Oshawa-Whitby (Mr. Broadbent):
That this House condemn the government's economic policy which has resulted in high levels of inflation and unemployment, and demand that the government permit wage and salary increases to at least the level of inflation.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


SUGGESTION RUSSIAN BUYERS BE INVITED HERE AND ATTEMPT MADE TO MAKE SALE-MOTION UNDER S.O. 43
Mr. Frank Hamilton (Swift Current-Maple Creek):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Considering net farm income of western grain farmers has fallen 50 per cent in the last two years and that most of their grain is now committed for export at prices well below the cost of production, I move, seconded by the hon. member for Lethbridge (Mr. Hurlburt):
That this House instruct the minister responsible for the Canadian Wheat Board to invite the Russian grain buying mission presently in the United States to come to Canada immediately with a view to selling wheat at the world price, which is now $1 a bushel above sales made so far this year, so that western grain producers can see some hope of getting back their cost of production.


Mr. Speaker:: Order. Presentation of such a motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.
November 24, 1977



CANADA DEVELOPMENT CORPORATION


Mr. Hal Herbert (Vaudreuil):: Mr. Speaker, under Standing Order 43, on a matter of urgent and pressing necessity, I propose, seconded by the hon. member for Lachine-Lakeshore (Mr. Blaker):
That the government intervene immediately to halt the offer of the Canada Development Corporation to purchase the Quebec based food product manufacturer Culinar Inc. and that the government insist that the corporation's objective to widen the investment opportunities open to Canadians be attained by offers to purchase foreign controlled companies which operate in Canada.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



PROPOSED STUDY TO DETERMINE WHETHER INLAND TERMINALS COULD BE USED FOR STORAGE PROGRAM-MOTION UNDER S.O. 43

Mr. Doug Neil (Moose Jaw):: Mr. Speaker, pursuant to the provisions of Standing Order 43, I rise to propose a motion on a matter of urgent and pressing necessity.
In view of recent statements of the minister in charge of the Canadian Wheat board arising out of negotiations for an international wheat agreement which he has indicated may provide for reserve stocks of grain to be held by producing countries, I move, seconded by the hon. member for Swift Current-Maple Creek (Mr. Hamilton):
That the Minister of Agriculture instruct his officials to carry out a study to determine whether or not the facilities of government inland terminals might be utilized in such a storage program.


Mr. Speaker:: Such a motion requires unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.



ROYAL CANADIAN MOUNTED POLICE


Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, I rise under the provisions of the same Standing Order No. 43. In view of the report in today's Globe and Mail that a former senior officer of the RCMP has received a medical certificate that he has suffered loss of memory prior to his proposed
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testimony before both the Keable and McDonald inquiries, and in view of the real possibility that this disease may become contagious, I would move, seconded by the hon. member for Broadview (Mr. Gilbert):
That this House direct the Minister of National Health and Welfare to have the department immediately develop a suitable vaccine with sufficient supply to cover senior officials of at least two departments, two former solicitors general, the present Solicitor General and the Prime Minister so that this House will have some assurance that this disease may be brought under control.


Some hon. Members:: Hear, hear!



GOVERNMENT ADMINISTRATION


Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, that is a difficult motion to follow. My motion relates to the assertion this week by Michael Pitfield, the secretary to the cabinet, that the government has not done enough to train its officials to deal with a lot of ethical decisions. In view of the fact that past weeks have revealed that the inability of officials to deal with ethical decisions ought not to be isolated from their ministerial masters, I move, seconded by the hon. member for Northumberland-Durham (Mr. Lawrence):
That this House endorses the principle laid down by the Clerk of the Privy Council, namely that "questions of ethics and values are not abstract exercises ... but harshly practical issues of... responsibility and accountability", and requests that this motion be read at the next meeting of Cabinet.


Mr. Speaker:: Such a motion can only be presented with unanimous consent? Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Mr. Ray Hnatyshyn (Saskatoon-Biggar):: Mr. Speaker, in the absence of the Prime Minister and the Minister of State for Federal-Provincial Relations I would direct my question to the Minister of Justice. It relates to the CIGOL decision handed down which has some momentous implications, particularly for the people of the province of Saskatchewan. In view of the intervention of the federal government on behalf of the oil companies in that case I should like to ask whether the government can give us the assurance now that it will in future not intervene or initiate action to expand upon the decision which has been handed down in relation to the natural

November 24, 1977
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resource ownership within provinces? Can he give us that assurance, that he will not try to expand the decision given by the Supreme Court?


Hon. Ron Basford (Minister of Justice):: Mr. Speaker, the intervention by the Attorney General of Canada was not on behalf of the oil companies, it was made in an effort to give the court the benefit of the views of the Attorney General of Canada on the constitution. I am not prepared to give any undertaking as to what position we will take about some hypothetical case in the future.


FEDERAL-PROVINCIAL RELATIONS MEETING OF RESOURCE MINISTERS-DISCUSSION OF OWNERSHIP AND TAXATION OF RESOURCES
Ramon John Hnatyshyn: Mr. Speaker, the minister will understand that this particular decision has far reaching implications as far as the ownership of mineral resources within provinces is concerned, and he will understand, therefore, its importance.
In the absence of the Prime Minister I should like to ask the Acting Prime Minister whether he will give us the assurance that at the forthcoming ministerial meeting of ministers of natural resources for the provinces and the Minister of Energy, Mines and Resources, there will be an item on the agenda which will define and give more clear definition in respect of the ownership of mineral resources as far as the provinces are concerned, and will try to define the integrity of provincial taxation in regard to these resources? Will he give us the assurance that this item will be discussed and there will be an attempt to arrive at an agreement?


Hon. Allan J. MacEachen (Deputy Prime Minister):: Mr. Speaker, I can assure the hon. member that the decision of the Supreme Court is now under consideration by the government. We have not yet reached any conclusions about the far reaching implications, as the hon. member mentioned, which stem from this decision.
With respect to consultation with the provinces, undoubtedly such opportunity will take place when the Prime Minister meets the premier of Saskatchewan early in December. I can assure the hon. member that the matter will not disappear, but it will be a matter of important consideration.


ACTION TO SAVE PEOPLE OF SASKATCHEWAN FROM EFFECT OF CIGOL DECISION
Ramon John Hnatyshyn: Mr. Speaker, in view of the fact that the financial burden on the people of Saskatchewan, caused by the gaffes and policies of the federal government and the provincial NDP government-


Some hon. Members:: Oh, oh!
{Mr. Hnatyshyn.]


Ramon John Hnatyshyn: -will mean a cost of approximately $500 per person in Saskatchewan, $2,000 per family, and the repayment potential is over half the annual budget of the province, will the Acting Prime Minister tell this House whether the government has any intention of taking any action to save the people of Saskatchewan from this position of turning the province into a have not province once again?


Allan Joseph MacEachen: Mr. Speaker, without accepting any of the unwarranted allegations in the hon. member's question, I have already stated that the implications of this decision will be considered by the government. It is much too early for me to make any judgment on the specific points which the hon. member has made, because they have not been considered in depth as yet.


Ramon John Hnatyshyn: In other words, you are doing nothing.


FINANCE
Hon. Alvin Hamilton (Qu'Appelle-Moose Mountain):: Mr. Speaker, my question is for the Minister of Finance. In view of the Supreme Court's decision yesterday, the federal tax coffers will benefit to the extent of approximately half of the $580 million which the court has ordered to be returned to the oil companies. When the government is considering the implications of this decision, will it consider as an act of grace that the half of the $580 million the federal government will receive, which it did not expect, will be returned to the people of Saskatchewan.


Hon. Jean Chretien (Minister of Finance):: Mr. Speaker, I am taking notice of the question of the hon. member.


PROPOSED GUARANTEE PROVINCES HAVE RIGHT TO IMPOSE TAXES ON RESOURCES
Francis Alvin George Hamilton: Mr. Speaker, I should like to direct my next question to the Acting Prime Minister, and it is along the same line as the question posed by the hon. member for Saskatoon-Biggar. In view of the difficulties we now find ourselves in, not only in Saskatchewan, but all across the country, in the government's consideration would it consider emergency legislation by this parliament to guarantee to all provinces in the future that they will have first right under the constitution to impose direct taxes on all of their resources?


Allan Joseph MacEachen: Mr. Speaker, the representations made by the hon. member will be considered in our over-all review of this particular subject matter which arose yesterday and which has not yet been given the serious consideration by the government that it deserves.
November 24, 1977


MANPOWER
John Edward Broadbent: Mr. Speaker, my question is for the Minister of Employment and Immigration. Will the minister confirm that a recent policy document on manpower retraining programs has been approved by the cabinet? Specifically, will he confirm this policy will reduce manpower training facilities from the present regional allocations, which will mean in effect that the Atlantic provinces will lose approximately $292 million over the next ten years?


Hon. Bud Cullen (Minister of Employment and Immigration):: No, Mr. Speaker, I will not confirm such an allegation because it is not true.


John Edward Broadbent: I somehow expected the minister might say that. I have here a copy of the document which I will be glad to send to the minister later. It is entitled, "Canada Manpower Training Program-Policy Review, September, 1977".
My second question to the minister is the following. Since the implementation of this policy document will result in the rate of increase in manpower retraining programs in Atlantic Canada being lower than elsewhere in Canada, although unemployment levels in Atlantic Canada are forecast to be much higher, can he tell the House why the government is doing this instead of spending money the way the ministers from the Atlantic provinces have recently requested to create more jobs in that part of the country?


Jack Sydney George (Bud) Cullen: When I denied the fact, I denied that the conclusion reached by the leader of the NDP was in fact correct. 1 also deny that the conclusion reached in the supplementary part of his question is correct. The funds in fact are available for retraining-they are not going to be reduced- and over the opposition of the NDP we have also made a provision for the developmental use of unemployment insurance funds so that we can give not less but more money to those particular provinces.


REQUEST FOR MORE FUNDS FOR LONG RANGE JOB CREATION PROGRAMS FOR ATLANTIC PROVINCES
John Edward Broadbent: When people have had a chance to look at the document and understand the basis of the fundamental change that the minister is making in the allocation of Manpower funds, they will see that what I have said is correct and that what the minister has said is incorrect. But that remains to be seen by those who look at the document.
Since the forecast made by the Atlantic Provinces Economic Council and the forecast made recently by the four ministers representing all the four Atlantic governments, suggests that unemployment will grow in Atlantic Canada compared to the rest of the country, when will the government make a decision
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to allocate more funds for long range job creation instead of the make-work projects to which the minister has committed himself?


Jack Sydney George (Bud) Cullen: We are moving precisely in that direction and that is why I have indicated that developmental use of UI funds and other uses of Canada Works funding will be directed precisely in that direction. I am surprised it has taken the hon. member this long to find out even though he has been in receipt apparently of goods or property stolen from my department.


Some hon. Members:: Oh, oh!


An hon. Member:: That is an allegation.


BILINGUALISM
Léonel Beaudoin: Mr. Speaker, I would like to ask a question of the Secretary of State.
In yesterday's issue of Le Droit of Ottawa there was an article which outlines the results of an education assistance program set up by the federal government in 1974. According to that report, an Anglo-Quebecker is worth twice as much as a Francophone outside Quebec. The paper goes on to say that for financial year 1976-1977, grants directed to Anglo-Quebeckers amounted to a total of $90 million-$113 per capita. These funds were supposed to be universal and unconditional. But Francophones outside Quebec for that same year received just about $52 million under the condition that their provincial governments agree to set up French schools. This being the case, would the Secretary of State explain such a difference between grants which seem to be a clear case of discrimination?


Hon. John Roberts (Secretary of State):: Mr. Speaker, this is a financial assistance program for provinces to support education for minority groups and teaching of the second language. Figures quoted in Le Droit are inaccurate since they confuse two different things, that is assistance to secondary education in the second language and assistance to education for minority groups as if the whole was directed as assistance to education for minority groups. So those figures are inaccurate and the same thing goes for funds granted to provinces other than Quebec to support education in the French language and, in the province of Quebec to support education in the English language.


INQUIRY AS TO USE OF FUNDS DESIGNED TO FAVOUR STUDY OF SECOND LANGUAGE-GOVERNMENT POSITION
Léonel Beaudoin: Mr. Speaker, I appreciate the Secretary of State's answer to my question, but could he explain why the Association of Acadians of Nova Scotia
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November 24, 1977
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made representations to the Pepin-Robarts Commission when they were in Halifax, about two months ago, because the federal government moneys were going to Anglophones who wanted to learn French while the Francophones of that province hardly benefited from them? Moreover could the Secretary of State tell us whether the federal government insists that the money be spent for the designated groups?


John (Moody) Roberts: Mr. Speaker, 1 have often explained that those provincial allowances are based on formulaes. There is no provision indicating that the money must be spent for such and such a purpose. Therefore it is one of the reasons for which the federal government is very concerned about the program administration. Since January last, we have entered into negotiations with the provinces to determine more specifically what are the objectives and the criteria of valuation to ensure that funds will really be used to reach the main purposes of the program.


Léonel Beaudoin: Mr. Speaker, in view of the federal government's concern about the attitude majorities are assuming towards minorities in a number of provinces, as well as the funds this government is spending, will the Secretary of State make a statement in the House shortly or will he make sure that these funds are properly spent and that the financial assistance to these minorities is not a source of greater frustration?


John (Moody) Roberts: Mr. Speaker, I think I have already replied to the question asked by the hon. member: We have already started negotiating a new agreement with the provinces which should be concluded in the spring of 1979. We should certainly adopt accounting procedures to make sure that the funds are really expended for the purposes designated by Parliament.


AGRICULTURE
John Wise: Mr. Speaker, my question is directed to the Minister of Agriculture and is further to my motion proposed earlier today under Standing Order 43 which clearly reflects the complete incompetence of the minister. The facts are and the records show clearly that the minister has taken the industry in two directions at the same time, namely, inward and downward. I would like to ask the minister when we can expect to see some productive leadership from him and when the industry can expect to see at least some indication of a reversal in the trends which have occurred under his tenure of office.


Hon. E. F. Whelan (Minister of Agriculture):: Mr. Speaker, the hon. member speaks of trends during my tenure of office. I wonder if he is talking about the dairy industry, the poultry

industry or the horticultural industry. What part of the agriculture industry is he talking about?


Some hon. Members:: Oh, oh!


Eugene Whelan: The main reduction has been in cereal grains, where we are dealing with world markets. With regard to other products the hon. member's remarks are just not factual. There has been no downward trend. We are using probably the most advanced pricing formulas in the world with the Canadian Egg Marketing Agency, and if input costs would go down-the farmers agreed to that formula themselves-farmers would not have to have more money with which to operate. They could make a decent living, and that is what they are doing.


Some hon. Members:: Hear, hear!


John Wise: Mr. Speaker, I can understand the minister's desire to avoid any reference to his record of performance. The facts are much different, and in the interest of the industry I wish the minister would pay some attention to them. It is absolutely shameful-


Mr. Speaker:: Order, please. If the hon. member has a supplementary question, would he put it forthwith.


DATE OF INTRODUCTION OF MEAT IMPORT LAW
John Wise: In view of the situation that exists-and we have no legislation before the House at the present time-when can we expect a long awaited meat import law? When can we expect measures to expand and strengthen the agricultural industry?


Eugene Whelan: Mr. Speaker, the hon. member and other members of his party are great at pointing out some of the programs of other countries. Our agricultural programs surpass any programs for guaranteeing stability, et cetera.


Some hon. Members:: Hear, hear!


Eugene Whelan: The former Secretary of Agriculture of the United States withdrew the program the Americans had while we were implanting ours, so we do have good programs at the present time. Our programs surpass those of any other country in the world. I have no intention of bringing in loads of paper showing that we are going to do things for farmers in the form of legislation, but we will be bringing in a bill. We have talked about that. I understand that the opposition concurs that we should deal with it speedily when it is presented to this House, and I hope that will be shortly.


John Wise: Mr. Speaker, I am sure the industry is very impressed by the minister's modesty. I would like to refer the minister to his own remarks which were made in a recent speech in Rome. The minister said that slogans and speeches are sterile without action.
November 24, 1977


Some hon. Members:: 
John Wise: Has it ever occurred to the minister that if he had a purpose to serve perhaps he has fulfilled that purpose, at least in the number of days in office, and that in the interests of the-


Mr. Speaker:: Order, please. If the hon. member has a question to put to the minister it will have to be less argumentative than that.


John Wise: Has the minister ever considered gracefully relinquishing his portfolio as Minister of Agriculture?


Eugene Whelan: Mr. Speaker, anything I do is graceful, that is for sure.


REQUEST FOR ASSURANCE INDUSTRY NOT SACRIFICED DURING GATT NEGOTIATIONS
Jack Burnett Murta: Mr. Speaker, I should like to direct a question to the Minister of Agriculture as well. Since in terms of trade, one of the fears of the agricultural community is the GATT negotiations going on at the present time in Geneva and also the possibility that agriculture could be, or may be, traded away for concessions in some other sectors of the economy, is the minister prepared to state unequivocally that agriculture will be dealt with as a separate entity and there will not be any tradeoffs between agriculture and other sectors of the economy?


Eugene Whelan: Mr. Speaker, I am sure the hon. member is aware that agricultural trade in Canada is more free than in any other country in the world. People from the United States have been making statements around here about free trade, but if they were just as free in trade as we are in agricultural products, we would ask no more because that is a country we trade with most. We are making that kind of representation. I do not intend to sell agriculture down the river.


HORTICULTURAL INDUSTRY-ADOPTION OF TARIFF BOARD POSITION DURING GATT NEGOTIATIONS
Jack Burnett Murta: Mr. Speaker, unless certain realistic trade measures are adopted, sectors of the horticultural industry in this country will be in danger of collapsing in the very near future if meaningful negotiations do not take place at Geneva. Perhaps the Minister of Agriculture or the Minister of Finance could tell the House whether Canada's negotiating team is putting its full support behind the recommendations of the tariff board in terms of the horticultural industry?


Eugene Whelan: Mr. Speaker, the tariff board report is and has been condoned by the horticulture industry. They have said they accept the report and practically every suggestion it makes. I agree with that. We do not intend to sell that report short either. As far as we
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are concerned it is something we have waited for a long time. It was over three years in the making. It is what we want and if we need the backing of the provinces, etc., I understand we have most of that backing that is necessary for us to proceed in making recommendations to the government. We will be meeting with them to discuss it in further detail. We already have some briefs and if members have some recommendations other than those submitted by the tariff board, I would appreciate receiving them.


SUGGESTION RUSSIAN BUYERS BE INVITED HERE IN ATTEMPT TO MAKE SALES
Frank Fletcher Hamilton: Mr. Speaker, my question is for the minister responsible for the Canadian Wheat Board. In view of the burgeoning demand in the world for grain will the minister invite the Russian grain mission presently in the United States to come to Canada with a view to negotiating some sales at prevailing world prices?


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, the relationship between the Russians and the Canadian Wheat Board is absolutely first rate. Almost invariably there is a First contact between them before the Russians make contact anywhere else. As a result of that, sales have already been completed for just under four million tons of wheat to the Soviet Union in the current year.


Frank Fletcher Hamilton: Mr. Speaker, I appreciate the minister's answer but in order to recoup some of the below-cost-of-production sales we have already made, I would again ask the minister to invite this mission to Canada with a view to selling some grain at prevailing world prices which, as the minister knows, are now $1 above sales already made.


Otto Emil Lang: Mr. Speaker, I assure the hon. member that the contact between the Soviet Union and the Wheat Board is constant. At every opportunity additional sales are made and one was made not very long ago as part of that nearly four million tons to which I referred. I think, unlike some other spokesmen for his party, the hon. member will join me in congratulating the Wheat Board on their ongoing, aggressive effort.


Some hon. Members:: Hear, hear!


AGRICULTURE
Mr. R. E. McKinley (Huron-Middlesex):: Mr. Speaker, may I put a question to the Minister of Agriculture. I am sure we
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November 24, 1977
Oral Questions
all remember that a few years ago the government allowed the sugar beet industry in southwestern Ontario to lapse and remember also this minister's attempt to revive it, which failed miserably. Shortly after that the price of sugar rose to $ 1 per pound. Now, we face the closure of another sugar beet factory in the riding of the hon. member for Lethbridge. I wonder if the minister can assure the House that the price of sugar will not rise to $1 per pound after that closure. This seems to be what happens when he fails to protect our primary producers.


Eugene Whelan: Mr. Speaker, I am sure the hon. member is not trying to intimate that I was Minister of Agriculture when the sugar beet industry was closed in southwestern Ontario. I am sure he would not want to leave off the record that the province of Ontario saw fit to do the same thing, and did not take any part in it either at that time. I am sure he is also aware of the government that was in office at that time. I want to assure him that I will show him the reports that we have on the sugar beet plant at Taber and what they intend to do. They do not intend to curtail production but to run a more efficient operation and concentrate that operation in one of the more modern refineries. That is the report from the organization there. I must say that if sugar beet farmers in Alberta are discontinuing production it is not because they are getting a lower price than sugar beet farmers across the border in the United States because with our stabilization program they will be getting approximately $8 per ton more.


Robert Elgin McKinley: Mr. Speaker, I think that excited the minister a little. If he believes what he is saying it seems to me that he has been more brainwashed by the sugar companies than I thought was ever possible.


REQUEST FOR ACTION TO CURTAIL SUGAR IMPORTS
Kenneth Earl Hurlburt: Mr. Speaker, I have a supplementary question for the Minister of Agriculture. In light of the fact that we only produce 11 per cent of domestic requirements of sugar, in light of the fact that beef importers have been asking for a meat import law for three years and that this is all it would take to save the sugar industry, would the minister assure the House that this situation will receive immediate attention?


Eugene Whelan: Mr. Speaker, the hon. member knows full well that we never produced our total requirement of sugar in Canada and, in fact, produced only about 15 per cent of our total needs from sugar beet. I am sure he also knows that we can produce sugar today from maize or corn. Corn sweetener plants are producing a tremendous amount of sugar in the United States. We have had meetings with companies to consider doing that kind of thing.
I am sure the hon. member for Huron is also aware of that, as are members of the government of Ontario, who are strong proponents of that kind of plan.


ENVIRONMENTAL AFFAIRS
Mr. Eymard Corbin (Madawaska-Victoria):: Mr. Speaker, my question is for the soft spoken Minister of State (Environment). Beyond and above what has been announced in past months can the minister tell the House whether we can look forward to an even more aggressive federal policy next spring to wage total warfare against the spruce budworm by the use of environmentally acceptable methods and improved coordination of efforts between the various domestic and United States jurisdictions in order to destroy those prolific little monsters that have been chewing away at 130 million acres of eastern forest, causing irreparable economic loss?


Hon. Len Marchand (Minister of State (Environment)):: Mr. Speaker, I shall be issuing a press release in a few days relating to this particular subject. Essentially it will point out our continued support for spraying on a very limited and very strictly controlled basis. This is one of the most serious problems we have in the forest industry in this country. We are now concentrating a lot of our time and money on research in co-operation with the United States on a synthetic sex attract-ant which attracts-


Miss Begin:: What is it, Len?


Len Marchand: It is a synthetic attractant which affects the males so that they cannot find the females. Thus, the females would lay infertile eggs.


Mr. Speaker:: With that kind of sneak preview I am sure the House can hardly wait for the minister's press release.


Some hon. Members:: Oh, oh!


MANPOWER
Mr. Andy Hogan (Cape Breton-East Richmond):: Mr. Speaker, as a celibate I find it hard to compete against the answer which has just been given by the minister. But since the Minister of Regional Economic Expansion is not in his place today I wish to address a serious question to the Minister of Employment and Immigration. The recent special study by the Atlantic Provinces Economic Council has confirmed the belief long held by many of us that long term unemployment in the Atlantic region is much higher than is indicated by the monthly figures of Statistics Canada. The study describes its findings as startling. Would the minister tell us what his department in co-operation with the Department of Regional Economic Expansion, intends to do about this deepening crisis of unemployment in the Atlantic region?
November 24, 1977


Jack Sydney George (Bud) Cullen: I met with the four ministers from the Atlantic region to discuss, among other things, this very problem-long term employment and the possibility of improving the prospect through programs aimed-I hardly dare mention the word-at cleaning up of the spruce budworm and the Gull Island development, projects which might give an impetus to long term employment in the region.


RESOURCES
Andrew Hogan: Since the minister did not mention the coal industry in Cape Breton I would direct my supplementary to the Minister of Energy, Mines and Resources. For more than a year and a half, now, the energy development branch of the hon. gentleman's department has had in its possession a special consultants' study which suggests that by opening a new coal mine the Cape Breton Development Corporation could provide between one and a half and two million tons of coal for heavy industries in southern Quebec. The study shows that this Cape Breton coal could displace between six million and eight million barrels of heavy oil now imported at an annual cost of some $800 million. Would the minister not agree that it is to the advantage of Canada, of Quebec and of the unemployed in Cape Breton to replace a portion of the oil we presently import with Cape Breton coal and to do so as quickly as possible?


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources):: Yes, Mr. Speaker, I certainly agree with that objective. It is the objective of the government of Canada. I am impressed by the figures, as is the hon. member, and I will take the opportunity next week when I meet with the energy ministers of all provinces, including the provinces of Nova Scotia and Quebec, to bring those figures to their attention.


MANPOWER
Mr. Jack Marshall (Humber-St. George's-St. Barbe):: Mr. Speaker, my question is for the Minister of Employment and Immigration who is aware of the drastic effects of the closure of the Labrador linerboard mill in Newfoundland. Little or nothing has been done to find alternative employment for those who have been laid off. The minister told us a couple of months ago that his officials were dealing with the matter. Have they done so? What progress has been made? Has there been any consultation with the Province of Newfoundland with regard to the rehabilitation of the industry or finding alternative employment for those laid off?
Oral Questions


Jack Sydney George (Bud) Cullen: As the hon. member knows, our officials were on the spot. We indicated that all the resources of the department were available to those affected, both the mobility grant and the retraining program, if that should prove beneficial. In addition, we indicated that the emergency response of the Canada Works program might be available-it is premature to talk about that yet because the company did agree to pay a certain salary up to a certain point so there has been no interruption of earnings. But should such a situation arise before individuals are able to find new employment we shall, in all probability, be able to take advantage of the emergency response feature of the Canada Works program as further assistance.


FISHERIES
Mr. Lloyd R. Crouse (South Shore):: 
NATIONAL HARBOURS BOARD
Mr. Robert McCleave (Halifax-East Hants):: Mr. Speaker, my question is addressed to the M mister of Transport. It arises out of the fact that the morale of an existing legal organization called the National Harbours Board of Canada has been absolutely devastated by operations within the minister's department in the course of which officials are acting as

November 24, 1977
Oral Questions
though Bill C-6, the ports bill, was an act of this parliament rather than a presentation to it. I always thought that no one could anticipate that a law would be passed-that nothing could be done until all of us gave it our blessing. I ask the minister whether he will call a halt to an operation which is having a very serious effect on morale of those employed by the National Harbours Board.


Otto Emil Lang: Inevitably, a proposal for changing a structure as important as the National Harbours Board and replacing it by a ports commission causes difficulties for those who are engaged in the ongoing operation. We are not, of course, prejudging the will of parliament or acting on the basis of the new rules which are comtemplated, but we are trying to prepare the way to ensure that the transition, when it takes place, is made as easy as possible.
Under the existing statutory authority we are carrying out preplanning wherever possible and indicating to people employed by the National Harbours Board the employment opportunities available to them in the proposed ports commission. If we are to make progress toward the establishment of the new commission we need this kind of preplanning and we are trying to do it with the least possible effect on the morale of employees.


Robert Jardine McCleave: Since these people are being asked, in effect, to compete against themselves for their own jobs, I propose to develop this subject further during the adjournment debate.



INDUSTRY


Mr. Rosaire Gendron (Riviere-du-Loup-Temiscouata):: Mr. Speaker, my question is for the Minister of Energy, Mines and Resources. According to one of the partners in the Arctic gas consortium, two methane tankers costing S360 million are to be bought abroad. Does the minister intend to use his good offices, through inciting measures, financial or otherwise, and in cooperation with other departments concerned, to ensure that those tankers will be built in our Canadian shipyards which need it so much?


Alastair William Gillespie: Mr. Speaker, a number of important, and I think very imaginative, proposals are coming forward regarding the use of ice-strengthened tankers or the use of Arctic marine locomotives, that kind of equipment. If the promoters of these particular projects are to receive federal government assistance, including such assistance as shipbuilding subsidies, those vessels, of course, will have to be built in Canadian yards.



EXTERNAL AFFAIRS


Mr. Douglas Roche (Edmonton-Strathcona):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. The statement by the government of France that it would not participate in a Francophone commonwealth that excludes Quebec raises the validity of a Francophone commonwealth in the first place. Is it the policy of the Canadian government that such a Francophone commonwealth is needed and will be proceeded with and, if so, on what grounds; and have consultations taken place with the government of France on this subject?


Hon. Donald C. Jamieson (Secretary of State for External Affairs):: Mr. Speaker, the concept of a summit of Francophone heads of government, as the hon. gentleman knows, is not a new one; it was advanced I think originally by the Canadian Prime Minister some years ago. It has, of course, also been discussed in various capitals and with visitors to Canada by a number of us in recent times.
In so far as the French government's statement is concerned, I think the proposal for a heads of government meeting, which is the basis on which this matter has always been advanced, would mean precisely what it says, namely that it would be heads of government, heads of state, who would meet. Therefore, the issue of provincial participation in that context does not arise.



PROPOSED ANNUAL MEETINGS BETWEEN FRANCE AND QUEBEC-GOVERNMENT POSITION

Douglas Roche: A supplementary question, Mr. Speaker. The Minister of Supply and Services said this week that France is interfering in Canadian internal affairs with respect to Quebec participation in such a commonwealth. Has the Secretary of State for External Affairs yet consulted with the French government concerning the communique issued at the conclusion of the visit of Premier Levesque to France a few weeks ago, which called for substantive annual meetings between Quebec and France; and, if so, will such meetings involve a review of the relationship between Canada and France?


Donald Campbell Jamieson: With respect, Mr. Speaker, the question is hypothetical. In so far as no such meetings are planned, to the best of my knowledge, in terms of any agenda or anything of that nature, I answered at the time the visit of Premier Levesque took place that Canada had no objection to a meeting between, let us say in this case, the Prime Minister of France and the Premier of Quebec provided such meeting was held within the standard framework of such encounters. In other words, we certainly do not want to inhibit any exchange of views between premiers and prime ministers or any others. Since that time we have made inquiries of the government of France as to the framework within which they would contemplate such
November 24, 1977

exchanges taking place, but to date no formal answer from France has been received.



PUBLIC SERVICE EMPLOYMENT ACT


Mr. Walter Baker (Grenville-Carleton):: Mr. Speaker, I have a question 1 should like to put to the President of the Treasury Board respecting amendments to the Public Service Employment Act. In view of a letter from the chairman of the Public Service Commission over one year ago indicating that amendments would be forthcoming, and in view of the importance but lack of clarity of section 32 of that statute dealing with the right of public servants to engage in political activities, would the minister tell me, firstly, whether it is the intention of the government to make any changes to that section? If he could tell me what they were today I would be delighted, but if he would be affirmative in this respect, that would be sufficient. Secondly, could he also tell me if he knows when the amendments to this statute might be brought in, since they were promised over a year ago?


Hon. Robert K. Andras (President of the Treasury Board):: Mr. Speaker, the hon. member is quite correct; there have been considerable discussions on that particular area of the act and the more detailed amendments to the act itself. I cannot give him a specific answer as to what the changes might or might not be at this stage because we have not finalized those discussions. Nor can I give him the precise date when any amendments might be introduced to the House, except to say we hope to do so in the not too distant future.



EXTERNAL AFFAIRS


Mr. Allan Lawrence (Northumberland-Durham):: Mr. Speaker, my question is for the Secretary of State for External Affairs. Now that the Prime Minister of Italy has graciously indicated that he will look further into the $2.5 million pay-off by AECL through an Italian firm, I wonder whether the Secretary of State for External Affairs would take the initiative in this matter by volunteering to the government of Italy all of the information on this matter which is in the hands of the government of Canada?


Donald Campbell Jamieson: As a preliminary, Mr. Speaker, may I say I agree that the Prime Minister of Italy was very gracious. It is too bad the hon. member did not learn a few lessons from him.


Some hon. Members:: Hear, hear!
Oral Questions


Donald Campbell Jamieson: I am not sure if there is anything further that we could make available to the government of Italy but I will look into that. If the hon. member has some suggestions as to other documentation we might supply I would be glad to hear from him, and to act on the recommendation of the public accounts committee, as I think I have up to now.


Allan Frederick Lawrence: Mr. Speaker, my supplementary question in relation to that very gracious reply of the minister is simply to suggest to him that since I gather the RCMP investigation into this matter has also hit a brick wall, perhaps the minister would take it upon himself to find out if that information could be turned over to the government of Italy; and, by the way, perhaps it could also be turned over to the public accounts committee.


Donald Campbell Jamieson: I will be glad to look into that, Mr. Speaker.



AGRICULTURE


Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, I have some supplementary questions for the Minister of Agriculture arising out of his failure to respond to some questions asked by some of my colleagues earlier. I should make it clear that the questions are capable of a yes or no answer. We will have to see whether the minister is. I should like to ask the minister whether the tariff board recommendations on horticulture will be reflected in Canada's negotiations at GATT: yes or no?


Eugene Whelan: Yes.


Charles Joseph Clark: A supplementary question, Mr. Speaker. We all recognize that brevity is as difficult for the minister as a direct answer. Let me try him with another question which is also capable of a yes or no answer. Will the minister now give the House of Commons a guarantee that Canadian agricultural interests will not be further traded off in the current round of GATT negotiations: yes or no?


Eugene Whelan: Mr. Speaker, anyone who knows this Minister of Agriculture knows that he does not intend to trade off anything unless he gets proper compensation.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: A final supplementary question, Mr. Speaker. With respect to the minister, would he answer my question yes or no. Would he give the House a guarantee that Canadian agricultural interests will not be further traded off in the current round of GATT negotiations: yes or no?

November 24, 1977
Business of the House TRANSPORT



EFFECT OF FREIGHT RATES ON RAPESEED CRUSHING PLANTS- GOVERNMENT ACTION

Mr. Les Benjamin (Regina-Lake Centre):: Mr. Speaker, I have a question I should like to direct to the Minister of Transport. In spite of the funds which he made available to the rapeseed crushing industry, the industry is losing substantial sums of money, mainly due to inequities and anomalies of the freight rates system and competition with foreign imported vegetable oils in the central Canadian market. Would the minister advise whether he is taking any immediate action to correct the very serious situation of those plants?


Otto Emil Lang: Mr. Speaker, we are constantly in touch with the rapeseed crushers in Canada. I think they very much appreciate the millions of dollars that we have been paying to make sure that they will not have to pay freight rates above the levels which were in effect at the time of the freeze in 1973. I think the statement of the hon. member regarding their all losing money is itself an error.


Leslie Gordon Benjamin: Mr. Speaker, perhaps the minister does not know that the processing plants at Saskatoon and Lloydmin-ster are reporting substantial losses, at least as of yesterday. Since the Hall Commission has made a thorough investigation of the problems and the opportunities facing western rapeseed crushers, and followed that with several specific recommendations including one concerning the matter of statutory grain rates applying to rapeseed and rapeseed products, will the minister now assure the House that he will in fact implement the recommendations of the Hall Royal Commission regarding rapeseed and rapeseed products?


Otto Emil Lang: Mr. Speaker, I believe the hon. member knows that we are acting very vigorously to work toward the objectives and to implement the recommendations of the Hall Commission. We have as a very first initiative, within months after that commission report, obtained $100 million of new money for the branch line rehabilitation program. We have added additional money to the rapeseed rate program, and this is very concrete evidence, at this time of fiscal restraint, of this government's attitude in favour of our grain farmers in the west, which they out there understand.



BUSINESS OF THE HOUSE


Walter David Baker: Mr. Speaker, I should like to ask the regular business question of the government House leader. What are his intentions, from the point of view of government business, for the balance of this week and next week? Does he intend to answer today, or make some comment, in respect of the question of privilege I raised dealing

with the judgment of Mr. Justice Evans? Could he, specifically, enlighten the House further regarding when the proposed legislation amending the Public Service Employment Act will be forthcoming? Finally, I would ask whether he would designate next Tuesday as an allotted day?


Allan Joseph MacEachen: Mr. Speaker, in reply to the hon. member, it is possible for me to designate next Tuesday and, if agreeable, Friday as designated days for the opposition. It is not possible for me to say when the Public Service Employment Act amendments will be brought forward. The business for the next period will be, of course, the continuation of the bill respecting the Income Tax Act for second reading and committee stage.
I would re-establish the list of itemsmentioned last Thursday by my parliamentary secretary, except to say that it would be my wish, if possible, to call second reading and reference to the standing committee of Bill C-8, if that is agreeable, earlier than the other items.
In reply to the question of privilege mentioned by the hon. member, it is possible for me to make that response today, if that is the wish of the House. I had thought that because the income tax bill is under a time allocation, it might be the desire to wait until that was over. I could do that on Monday, if that was equally agreeable, or today.


Walter David Baker: Mr. Speaker, I think my friend put a queson to me. First, so I understand what he said about Friday as being an opposition day, let me make it clear that he intended that to be a week from tomorrow for the second designated day. On the matter involving the question of privilege, it is rather important and I think the House would be grateful if the hon. gentleman would make his submission or statement today in respect of that matter.


Some hon. Members:: Hear, hear!


Mr. Knowles (Winnipeg North Centre):: Mr. Speaker, may I put a question of House business to the government House leader? As he knows, when he was away we on this side missed him and things on his side got a little out of hand. One item that went awry had to do with Heritage Day. As the minister knows, during the last session there was a government bill which would have provided for Heritage Day as well as for certain other holiday changes. We were led to believe, in response to many questions of mine, that this matter would be dealt with in time for Heritage Day to be celebrated in February, 1978. In view of an unfortunate statement that one of his colleagues made-namely, that the idea had been dropped-may I ask the minister whether reconsideration is being given to the establishment of Heritage Day in English, French and Gaelic?


Allan Joseph MacEachen: Mr. Speaker, the answer to the first two parts is "no."
November 24, 1977



PRIVILEGE


Lloyd Roseville Crouse: Mr. Speaker, I rise on a question of privilege relating to a reply to me by the Minister of Fisheries who is planning to go to Nova Scotia tomorrow, as he stated, to discuss problems relating to our fishing industry. Yet, prior to his trip to Nova Scotia, the press has indicated that already his department plans to cut the haddock quota in southwestern Nova Scotia by 2,500 metric tons.
I submit to you, sir, that my question related to that statement, and I would simply like to ask the Secretary of State for External Affairs, as this is a matter which will vitally affect the income of many of our Atlantic province fishermen, especially those in Nova Scotia-and this comes under the purview of the minister in that his department is at the present time negotiating with the United States in respect of the ownership of the area where these fish are to be caught

whether he would look into this matter to see if some way could be achieved of obtaining joint sharing of the fisheries resources in that area so that cuts of this type, which have a disastrous economic effect upon our people, are not necessary? Would the minister look into that aspect of the entire fisheries problem?


Mr. Speaker:: Order, please. Of course, it would be improper to permit any further discussion of that point. The hon. member for South Shore raises, by way of a question of privilege, the fact that he was entitled to ask only one question today. I think I should say, in respect of all members at this time, that they will have observed over the last few days that I have been admonishing members of the House to avoid lengthy preambles and lengthy answers in order to try to remedy the situation which developed in the early part of this session; that is, we have not been getting a very widespread sharing of the question period by hon. members. I have taken, in conjunction with that, a rather sterner line in respect of questions and supplementaries. In fact, over the last couple of days I have found it more normal to keep hon. members to one supplementary, and only on occasion-when it seemed fully warranted-to allow an extra supplementary. This seems to have achieved a greater sharing of the question period.
I would today, in fact, suggest to the hon. member that if his point really concerns the quotas he is talking about, involving the Secretary of State for External Affairs, it might be easier, or more direct, if instead of the preamble by way of talking about the Minister of Fisheries trip to the east coast, the hon. member had put it directly to the Secretary of State for External Affairs on that point. Then perhaps a supplementary question would have been warranted.
I think we have all had the tendency of feeling that perhaps a long build-up was necessary to a question to make it effective. I suggest that all hon. members might be wise to consider that we would do better in sharing the question period if we all tried to come to the point more quickly. I propose to do my part in that respect by continuing what I have done in the last few days, which is to take a harder line in regard to
Nuclear Control
both questions and answers. I have been discouraging both lengthy preambles and long answers in the hope that exactly what has been achieved over the last couple of days would be achieved, and instead of having something in the region of a dozen members we have been hearing from, it would be closer to 20, which make for a more satisfactory question period.



ROUTINE PROCEEDINGS


Donald Campbell Jamieson: Mr. Speaker, I should like to table a document.


Mr. Nowlan:: In what capacity is the minister speaking-as the Secretary of State, or as the minister for external aid?


Some hon. Members:: Order.


Donald Campbell Jamieson: Mr. Speaker, I am speaking as Secretary of State for External Affairs. I wonder what capacity the hon. member is in today-if not incapacitated!


Some hon. Members:: Oh, oh!


Donald Campbell Jamieson: Mr. Speaker, with the consent of the House-


An hon. Member:: What about the $6 million in aid?


Donald Campbell Jamieson: With the consent of the House, and with the request that the hon. member shut his $6 million mouth, I would ask-


Some hon. Members:: Oh, oh!


An hon. Member:: What about your $6 million ego?


Mr. Speaker:: Order, please. I did not think the tabling of documents was so complicated.


Donald Campbell Jamieson: Mr. Speaker, in view of the hon. member's mood today, he would make an argument on the Ten Commandments? With the consent of the House, I should like to table documents concerning the Italo-Canadian Social Security Agreements.


NUCLEAR CONTROL AND ADMINISTRATION ACT
Alastair William Gillespie: for leave to introduce Bill C-14, to provide for the regulation, control and supervision of the development,
1208

November 24, 1977
Privilege-Mr. Walter Baker
production, use and application of nuclear energy and matters related thereto.


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

[ Translation]

Mr. Yvon Pinard (Parliamentary Secretary to President of the Privy Council):: I ask, Mr. Speaker, that all questions be allowed to stand.


Mr. Speaker:: Does the House agree?


Some hon. Members:: Agreed.


PRIVILEGE
Allan Joseph MacEachen: Mr. Speaker, I rise in response to the commitment made by my colleague, the hon. Minister of Justice, that I might make some comments on the question of privilege raised by the hon. member for Grenville-Carleton. I should like to read the motion the hon. member said he would be prepared to move should a prima facie breach of privilege be found. The proposed motion reads as follows:
That the portions of the judgment of Chief Justice Evans of the Supreme Court of Ontario, given November 9, 1977, which appeared to restrict the rights of members of parliament to full and accurate reporting in the press, be referred to the Standing Committee on Privileges and Elections.
Many important points were made in the discussion on this question, but the hon. member for Grenville-Carleton has done the House a service by focusing what in his view is the essence of the question of privilege, namely, what may appear to restrict the rights of members of parliament to full and accurate reporting in the press.
I have read the judgment, and while I agree with the hon. member that concerns which have been raised are valid and ought to be kept to the forefront at all times, I can find nothing that suggests to me even a prima facie case for a breach of privilege. Chief Justice Evans seems to make it clear early in his judgment that no one, in fact, has been charged with any breach of any regulation. Therefore, it is merely an academic exercise to contemplate whether at some time in the future there may or may not be a breach of privilege. A prima facie case of privilege must exist, in reality, in a concrete instance and not in some potential event which may occur in the future. No one has alleged any specific instance in which the privileges of the House, or those of any member of the House, have been abridged or violated.

With regard to the matters then before Chief Justice Evans, he states the following:
The role of the court is not to grant absolution before sinning nor to deal with academic issues.
If the court is unable to absolve before the committing of sin, and has no opportunity to deal with academic issues, certainly it is not for the House of Commons to deal with a matter that has not yet arisen. I should like to quote from page 42 of the judgment, where we find a paragraph that seems to capsulize the cause of concern of some hon. members. It reads as follows:
Following the authorities set out above, I have come to the conclusion that a member of parliament may utilize information proscribed by regulation 76-644 in parliament and may release that information to the media. However, I hold that the privileges of the member cannot be extended to protect the media if they choose to release the information to the public. Nor do I consider that the "real" and "essential" functions of a member include a duty or right to release information to constituents. The cases indicate that the privilege is Finite and I would not be justified in extending the privilege to cover information released to constituents.
Perhaps we ought to consider what this paragraph means in light of our understanding of parliamentary privilege. Every authority-Erskine, May, Beauchesne and Bourinot-points out that privilege, as it applies to individual members, is ancillary to their role as a member of the house and not as individual persons. We, as individuals, have no privileges. We have these privileges because we are members of the House of Commons, and these privileges are ancillary to the roles we hold as members of the House of Commons. In other words, a breach of privilege occurs only when a member is impeded in the performance of his duty, not as a citizen or a politician but as a constituent part of the House. It is not the member who holds the privilege; it is the House. As a functional part of the House, the member enjoys certain rights and immunities. In his judgment, Chief Justice Evans recognizes this explicitly.
Part of the privileges of the House includes the requirement that any published report of its proceedings be faithful, balanced and accurate. In order to assist the media in meeting this standard, parliament long ago enacted sections 7, 8 and 9 of the Senate and House of Commons Act which extend to the media immunities enjoyed by members in the execution of their duties in parliament.
I draw to the attention of the hon. member for Grenville-Carleton and to the House that the possible danger of restricting the rights of members of parliament to full and accurate reporting in the media is already safeguarded by sections 7, 8 and 9 of the Senate and House of Commons Act, because these sections extend to the media the immunities which members enjoy in the execution of their duties in parliament.
Personally, I fail to see how-even in the realm of possibility-the transmission of what members say or, as the hon. member puts it, their right to full and accurate reporting in the press, could be abridged in any way in light of the provisions of the Senate and House of Commons Act, sections 7, 8 and 9. Of course, these immunities which the media enjoy have been supported by the courts and by parliament in the past. Certainly, in the case before us no reporter, no publisher and no
November 24, 1977

broadcaster has been charged with any offence. No member of parliament has been able to say he certainly has been impeded in having himself fully and accurately reported in the press, which is the essence of the hon. member's question of privilege.


Mr. Stevens:: That is not true.


Allan Joseph MacEachen: While each House of parliament reserves for itself the right to adjudicate questions of privilege, the courts also regard parliamentary privilege as part of the law of the land. I should like to quote from Erskine May's nineteenth edition, page 201, which reads as follows:
On the other hand, the courts regard the privileges of parliament as part of the law of the land, of which they are bound to take judicial notice. They consider it their duty to decide any question of privilege arising directly or indirectly in a case which falls within their jurisdiction, and to decide it according to their own interpretation of the law.
The decisions of the courts are not accepted as binding by the House on matters of privilege, nor the decisions of the House by the courts.
This statement supports the age-old dichotomy that there are, at any given point in time, two doctrines of privilege, one held by the court and the other held by either House. Erskine May goes on to say:
In practice, however, there is a wide field of agreement on the nature and principles of privilege in spite of the apparent deadlock on the question of jurisdiction.
(1)	It seems to be recognized that, for the purpose of adjudicating on questions of privilege, neither House is by itself entitled to claim the supremacy over the ordinary courts of justice which was enjoyed by the undivided high court of parliament.
I believe it is important to establish, if I may enter my own comment within the quotation, that a House undivided or parliament undivided is unable to claim supremacy in the field of privilege, according to Erskine May. I believe that what I am saying is relevant to what I may say later on. Erskine May goes on to say:
The supremacy of parliament, consisting of the sovereign and the two Houses, is a legislative supremacy which has nothing to do with the privilege jurisdiction of either House acting singly.
(2)	It is admitted by both Houses that, since neither House can by itself add to the law, neither House can by its own declaration create a new privilege. This implies that privilege is objective and its extent ascertainable, and reinforces the doctrine that it is known by the courts.
I make the point, and draw upon Erskine May, to establish the fact that there can be a distinction between the privilege as seen by a court and privilege as seen by parliament in what I have described as an age-old dichotomy. But coming to this particular case, 1 argue that it is not the obligation of Mr. Speaker, nor is it the obligation of the House of Commons, to deal with academic or abstract issues-


Sinclair McKnight Stevens: It is not academic, nor is it abstract.


Allan Joseph MacEachen: -because in this case there is no evidence-


Sinclair McKnight Stevens: You just were not here.
Privilege-Mr. Walter Baker


Allan Joseph MacEachen: -that the privilege of any member of parliament has been abridged-


Sinclair McKnight Stevens: Mine was.


Allan Joseph MacEachen: Nor have charges or lawsuits of any kind occurred and, in my judgment, there is no prime facia case-


Sinclair McKnight Stevens: What a cover-up.


Allan Joseph MacEachen: -that the privileges of any hon. member have been abridged.


Sinclair McKnight Stevens: Mine have.


Allan Joseph MacEachen: The hon. member may have had his activities abridged, but I do not believe he has in any way been impeded in his performance as a member of the House of Commons.


Sinclair McKnight Stevens: That is your opinion.


Allan Joseph MacEachen: That is my opinion, and I have seen no evidence that any member has been impeded in the performance of his duties. But I should remind the hon. member that we have a specific motion before us. The House is asked to deal with the motion in which the hon. member says to us that there is a possibility that a restriction can occur on the accurate reporting of what a member of parliament says. That is what is in the motion that we are asked to deal with, the portions of the judgment of Chief Justice Evans of the Supreme Court of Ontario given in November of 1977 which appear to restrict the rights of members of parliament to full and accurate reporting in the press. That is the essence of the case put forward in the motion. I am not dealing with all the words that may have been said; I am dealing with the motion which says that there is an appearance that the right of members of parliament to full and accurate reporting in the press is restricted. Has anything of that nature occurred?


Sinclair McKnight Stevens: Yes.


Allan Joseph MacEachen: I say to the hon. member that he should look-


Sinclair McKnight Stevens: Refer it to the committee, and we will tell you.


Allan Joseph MacEachen: -at the relevant sections of the Senate and House of Commons Act which extend to the media the immunities that are enjoyed by members of parliament, provided the accounts are faithful, accurate and objective, so that the privilege which I enjoy of speaking in the House of Commons is extended to the media through the provisions of the Senate and House of Commons Act.


Sinclair McKnight Stevens: Mr. Justice Evans says you are wrong.


Allan Joseph MacEachen: I am not dealing with what Mr. Justice Evans has put forward; I am dealing with the motion which has been suggested as a basis for the question of privilege, because this is the particular motion that the hon. member has
80027-8 'h

November 24, 1977
Privilege-Mr. Walter Baker
indicated to us he would move if a prime facia case of privilege was found.
If the motion were adopted, presumably the committee would be obliged to investigate what restrictions have occurred on the rights of members of parliament to full and accurate reporting in the press. That is what the committee would have to do. We have to establish that there is some basis to believe that a breach of privilege has occurred, namely, that in some way members have been denied full and accurate reporting in the press of what they have said in the House of Commons. That is the simple case as put in the motion-and I say there is no evidence whatsoever to support that any breach has occurred. I suggest that it is not the obligation of Mr. Speaker to deal with academic issues or with matters in the abstract which may occur as a result of some future development-


Sinclair McKnight Stevens: That is the argument that got us into the present box.


Allan Joseph MacEachen: -any more than it is the obligation of Mr. Chief Justice Evans to deal with matters in the abstract or academic issues.
So, basically, my argument is that we have no evidence of any breach of privilege in terms of the motion which the hon. member would put before the House for a vote if Mr. Speaker found a prime facia case of privilege-and I do not believe any evidence has been adduced to prove that any breach of privilege has occurred, because no member has been able to say that what I have said in the House has been prevented from being reported in the media.


Stanley Howard Knowles: Mr. Speaker, may I ask the minister a question before he sits down?


Mr. Speaker:: Yes. I think we established clearly in the past that we can allow members only one opportunity to participate in these arguments, but I understand the hon. member for Winnipeg North Centre is not seeking an opportunity to participate, but simply wishes a clarification. He has the floor.


Stanley Howard Knowles: Quite frankly, Mr. Speaker, my purpose in rising is to seek clarification. Is the President of the Privy Council telling us that unless, or until, someone is interfered with we are to take it for granted that the privileges of this House stand-our privileges to discuss matters and to have our proceeding reported-and that we are therefore to ignore the obiter dictum of the Chief Justice?


Allan Joseph MacEachen: Mr. Speaker, I am saying that in the past it has been the custom to demonstrate that a breach of some member's privilege has taken place, or that there is a prima facie case of that breach, and I do not find that in this case that has taken place. I am arguing within the terms of the motion which the hon. member for Grenville-Carleton would move if a prima facie case of privilege were found, and I believe it is logical to infer that this is the basis for a prima facie case of privilege and this is what we would be investigat-

ing. I go on to say that the possibility of a restriction of the rights of members to full and accurate reporting in the media is protected already by the Senate and House of Commons Act.


Stanley Howard Knowles: Notwithstanding the Chief Justice?


Allan Joseph MacEachen: Well, it is the law.


Stanley Howard Knowles: Hear, hear!


Allan Joseph MacEachen: That is my argument.


Sinclair McKnight Stevens: Mr. Speaker, I wonder if I could also put a question to the President of the Privy Council following upon my colleague's question. We seem to have two laws to deal with. Does the government intend to appeal any portion of the judgment of Chief Justice Evans? Does the government intend to appeal any portion, or all of what his Lordship has held?


Allan Joseph MacEachen: Mr. Speaker, I certainly do not want to be unco-operative with the hon. member. His question is a matter for the Minister of Justice. I have argued the question of privilege, and I have not discussed with the Minister of Justice whether he intends to take an appeal. I might add, if I may, that there is a possibility of an appeal. Presumably, the time for the expiration of launching an appeal has not yet come.


Sinclair McKnight Stevens: Tomorrow is the last day.


Allan Joseph MacEachen: If an appeal were launched, and if it were successful, we would indeed be dealing with an academic matter. It is a technical point, but an important point for a learned gentleman of the law such as Mr. Speaker.


Mr. McGrath:: Mr. Speaker, very briefly, I submit that what concerns the House is the law as we know it and of course, as the minister has stated, it is the Senate and House of Commons Act which protects the privileges and rights of this House. What is at issue here is the interpretation of that law by a judge of the Supreme Court of Ontario.


Walter David Baker: Which is also part of the law.


James Aloysius McGrath: -which is also, as the hon. member for Grenville-Carleton interjects, part of the law. That is the issue here. I want to read, for the record again, that part of the judgment which says this:
Nor do I consider that the "real" and "essential" functions of a member include a duty or right to release information to constituents. The cases indicate that the privilege is finite and would not be justified in extending the privilege to cover information released to constituents.
In previous rulings Your Honour has indicated, and rightly so, what is in fact a cherished and sacred tradition of this House, and that is the right of the press gallery to report to our constituents what goes on here. By the same token, a very important right of a member of this House is his right to deal with his constituents unencumbered and unrestricted. I submit that is what is at issue, and that is the substance of the motion
November 24, 1977

1211 moved by the hon. member for Grenville-Carleton which 1 think should be read again for the record:
That the portions of the judgment of Chief Justice Evans of the Supreme Court of Ontario, given November 9, 1977, which appear to restrict the rights of members of parliament to full and accurate reporting in the press, be referred to the Standing Committee on Privileges and Elections.
I submit that it is the duty of a committee of this House to determine whether the rights of members of parliament have, in fact, been restricted by an interpretation of the law by Chief Justice Evans, and I submit that Your Honour should accept the motion and refer this matter to a committee of the House.


Mr. Andrew Brewin (Greenwood):: Mr. Speaker, what I want to say has perhaps been said elaborately already by the President of the Privy Council. What I want to say is that 1 think judges have the right to make nonsensical obiter dictum-and this is precisely what this judge has done. I think what he says is clearly without any foundation: I think it is clearly wrong, and I propose that we disregard it entirely.


Allan Joseph MacEachen: That is my argument.


Mr. Speaker:: Order, please. I did give a preliminary indication of my-


Sinclair McKnight Stevens: On a point of order, Mr. Speaker-


Mr. Speaker:: Order, please. I will see the hon. member in a moment. I did give a preliminary indication of my reaction to the arguments which have been put forward in a very preliminary way to the relationship between this House and our power or right to determine the definition of our privileges in the given circumstances as opposed to that of the court. However, that was done only by way of a preliminary indication. I did indicate that after all the arguments were in, because of the importance of the matter and because I am sure that the House would want some clear and definitive statement as to where we stand in this matter, that I would reserve on the matter in an attempt to give my decisions on it on Monday.


Sinclair McKnight Stevens: Mr. Speaker, my point of order is prompted by the comment made by the hon. member for Greenwood. I think it is grossly unfair for members of this House now to be reflecting on the judgment of the Chief Justice, bearing in mind that six members of this House went before the Chief Justice-because we felt we had no alternative because of certain rulings in this House-concerning our anxiety about the question we are now debating.


An hon. Member:: You are reflecting on the Chair.


Sinclair McKnight Stevens: I recall, for hon. members that the Prime Minister invited us to litigate this matter, which we did. We were faced with the type of reasoning the government House leader has indicated today, that it is all in the abstract, and we felt we had no alternative but to get a court adjudication as to what in fact are our privileges.
Frankly, I do not like the concept of trying something and, if it is found to be against the law, you are charged and you are on your own. Surely, the only prudent thing to do is to
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establish-and that is what Chief Justice Evans tried to do- what exactly are the privileges and rights of members of this House. To reflect now on that judgment is, I think, grossly unfair.


Mr. Speaker:: Whether that may be or not, it certainly is not disorder for a member to comment on that judgment which has been brought into discussion. The Chief Justice is not a member of the House of Commons. No comment I know of could bring about disorder, unless perhaps it were to come from a minister outside the House. However, that is not the case here.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Speaker:: Before proceeding with orders of the day I would inform the House, pursuant to Standing Order 40, that the questions to be raised on the adjournment motion at 6 p.m. are as follows: the hon. member for Fort William (Mr. McRae)-Transport-St. Lawrence Seaway-Possibility of public hearings on proposal to increase tolls; the hon. member for York-Simcoe (Mr. Stevens)-Energy-Uranium-Reason government acquiesced in cartel arrangements; the hon. member for Cape Breton-East Richmond (Mr. Hogan)- Energy-Oil-Suggested shortage by mid-1980s-Request for increased coal production in Nova Scotia.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Tuesday, November 22, consideration of the motion of Mr. Chretien that Bill C-ll, to amend the statute law relating to income tax and to provide other authority for the raising of funds, be read the second time and referred to committee of the whole.
Mr. J. R. Holmes (Lambton-Kent):: Mr. Speaker, I want to make a few observations in this debate. The economic ills which have plagued Canada for a decade and have dissipated the faith of Canadians in their hope for a secure future have been sadly ignored, misunderstood and miscalculated by the Minister of Finance (Mr. Chretien) in presenting his minibudget and the tax proposals presently before the House.

November 24, 1977
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At a time when Canada desperately needs a strong and steady hand to guide our monetary and fiscal policies, and when we need a Minister of Finance with imagination and courage to restore confidence in Canada's future and to heal the malignancy destroying our economy, we are presented with a mini-budget and tax proposals that offer nothing but deficit, debt and despair. The Minister of Finance, in defending his position, adopted a well-known excuse, "I had no choice"-a phrase I must remind the House, which is commonly associated with individuals who know they have erred, who attempt to hide the truth and who offer no solutions.
Does no choice mean that workers in Sudbury, Ontario, or Thompson, Manitoba will have to drift aimlessly in a sea of economic uncertainty? Does it mean Ottawa will have to continue to borrow $23 of every $100 it spends? Does it mean the nearly one million unemployed, and in particular the youth of our country, have no hope for the future? Does it mean there is no hope for the declining dollar? Is the inference that we must sit idly by while it continues to deteriorate? Does it mean we are committed to a deficit of better than $8 billion this year, and similar deficits in the future? Does no choice imply the farmers in my area can expect to receive $1.50 a bushel for corn next year, or those on fixed incomes should prepare themselves for a further decrease in their standard of living because the Minister of Finance has conceded he cannot control inflation?
When the Minister of Finance indicated he had no choice, was he in fact stating government policy, namely, the government had erred, the government had attempted to conceal the truth from Canadians and had no solutions? Perhaps the gravity of the situation can best be summarized by quoting from an editorial appearing in the Toronto Star on November 9, 1977, which stated:
Some strong medicine for Canada: Our economy is in grave trouble, one that finance minister Jean Chretien's mini-budget of last month doesn't even begin to
deal with__It's not enough for Chretien to call for confidence and rail that
"the present wave of pessimism seems to have gone too far," as he did in his mini-budget last month. He can't talk the country back to prosperity; words won't create jobs.
The problem for Canada, and the reason the country is in such an economic mess today, is that the country has lacked strong economic leadership in Ottawa for more than a decade. Economic policies have been based on wishful thinking, subordinated to the exigencies of election campaigns or, as in the case of an industrial strategy, simply allowed to flounder in the bowels of the bureaucracy.
Editorials on our economy are not confined within our geographical boundaries. Indeed, an article which appearing in the Wall Street Journal of October 3, 1977, entitled "The Canadian Dollar," stated in part:
Canada isn't doing so well. It's economy has been tangled up by a government effort to apply compulsory wage and price controls for nearly two years. The experiment has been marked by strikes and a flagging growth in production. Foreign direct investment has dried up and inflation which those price and wage controls was supposed to cure, is currently at a higher level than in the United States.
It went on to say:
While the nation's troubles are frequently attributed to the rise of the Quebec separatists, it would be more accurate to say that the rise of the Quebec separatists is closely related to the country's economic mismanagement.
The article created considerable excitement in Canada and uneasiness in Ottawa. However, the United States, the international community-and, unfortunately, many Canadians- have been slow in recognizing what many of us in Canada have known for several years. We have too much debt, too much unemployment, too much government spending, too much inflation, too little productivity, too little investment capital, too much talk, and too little action. When the Wall Street Journal editorialized that "it would be more accurate to say the rise of the Quebec separatists is closely related to the country's economic management," it was expressing a well-established truism, namely, that a weak economy stimulates division.
The breadwinners in Newfoundland, the maritimes, Quebec, Ontario, the prairies, British Columbia and the north are equally concerned about their present and future security, and the program introduced by the Minister of Finance does not create jobs, does not place food on the table and does not pay for the utilities and rent.
On March 16 this year, the Prime Minister (Mr. Trudeau) stated "Canadians are living beyond their means." Few in Canada can match the government's experience and record. In all but one of the last ten years, the federal government has run up a deficit on its accounts.
Federal debt obligations have nearly doubled, with a 99.7 per cent increase between 1966 and 1976, rising to a level of $42.2 billion, or approximately $1,800 for every man, woman and child in Canada. Since 1973 alone, federal securities outstanding have grown by 42 per cent. This excessive spending and living beyond our means has had two unfortunate effects. First, the burden of interest payments from this debt has created a large demand upon federal expenditures and, second, a significant proportion of this debt has been "monetized" by the Bank of Canada, thus increasing the supply of money-a major contributor to the cause of inflation.
Although federal debt outstanding has nearly doubled in the last ten years, the cost of servicing that debt has nearly quadrupled over the same period. Between 1966 and 1977 public debt charges have increased from $1.2 billion to $4.7 billion. Based on estimates of spending, public debt charges will total $5.4 billion in 1978, accounting for more than 13 per cent of federal budgetary expenditures. If Canadians are to live within their means, the example must be established by the federal government.
Canada's growing inability to compete with foreign countries and, in particular, our largest export market, the United States, has virtually produced a trade disaster. Our inability to price exports competitively has immediate consequences for our balance of payments. For example, the trade deficit in manufactured goods rose from less than $4 billion to more than $10 billion in the First half of the decade. The more serious consequences are the effects on Canadian living stand-

November 24, 1977

ards, jobs, and political independence. Some of the effects are obvious now, such as reduced surplus of merchandise trade, a weak and unstable dollar. Other effects that are just becoming apparent are unwillingness of Canadian exporters to expand production capacity and the movement of whole plants from Canada to the United States.
In recent years, Canada has been progressively shifting from a goods-producing economy to a society dominated by services. Although it would be incorrect to indicate all services do not create wealth, we cannot ignore the inescapable fact that innumerable programs depend on the tax dollars of the productive segment of society, or perhaps it would be more accurate to say those sectors which produce real wealth. Less than 3'/2 million of the 10 million Canadians who have jobs are employed in Canada's goods-producing sectors. Two million are employed in the manufacturing sector which is a smaller proportion of the work force than any of our major trading partners. There are 650,000 in construction, and about 800,000 in the primary resources industries. Canada's service sector now employs more than 6'/2 million Canadians. Of this number, approximately 2'h million work in government services, which is a higher proportion of the work force in government services than in Great Britain.
Let me emphasize that the growth in the service sector is a trend among industrialized countries which is accepted by the vast majority of people. I have no doubt those present in this chamber are sympathetic to programs which, for example, assist our senior citizens or those less fortunate individuals who are unable to provide for their own needs. The central issue, and the question that must be asked, is whether Canada can afford the innumerable services that are offered or contemplated. The evidence is quite clear-that Canada has and is attempting to support a higher level of services with a lower level of goods-producing activity than any of the major industrialized countries.
Not infrequently Sweden is used as the yardstick for comparative purposes when one is discussing social and economic problems, and one cannot escape the harsh reality that Sweden has a larger manufacturing sector and a smaller service sector than Canada. The effects of this imbalance are obvious. Canada has become less competitive. This imbalance has affected productivity, it has impaired our ability to provide capital for the creation of jobs in the private sector and, as I indicated earlier, it has affected our balance of trade, resulting in the largest trade deficit in our history. It has affected the confidence of Canadians with respect to future economic growth, as well as impairing our ability to control inflation.
Canada's emphasis on services of all kinds has meant not only that services have been absorbing a disproportionate share of investment capital that could be used more efficiently for productivity improvements, but the smaller, hard-pressed goods-producing sectors are not creating the wealth upon which present services can be maintained or upon which an expanded services sector must be based. The existing stagna-
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tion in the Canadian economy has prompted certain groups and individuals, depending on their perception or bias, to emphasize a particular symptom.
Excessive wage rates, decreased productivity, too many services, excessive government spending, corporate rip-offs, lack of business initiative, and a host of other factors have been espoused as the causes creating the present situation. However, it is apparent that Canada can no longer price its goods competitively for the international market and, in particular, for the United States. The anti-inflation program has not restored a competitive position. The federal government, by following an economic policy which can best be described as "good economics are bad politics, and good politics make poor economics", has no other strategy. Obviously, inflation must be brought under control, at least to a rate which is in line with our major competitors.
Mr. Speaker, if Canada is ever to become more than an exporter of raw resources, the manufacturers and processors must be able to price their goods to meet the requirements of our major trading partners. On February 20 of this year, Milton Friedman stated: "There is only one place inflation is made in Canada, and that's in Ottawa."


An hon. Member:: Who is he?


John Robert Holmes: Although Mr. Friedman's remarks refer to his beliefs about the relationship-


An hon. Member:: Who is he?


John Robert Holmes: I will answer the hon. member's question when I have finished. Although Mr. Friedman's remarks refer to his beliefs about the relationship between money and inflation, the statement is also appropriate for describing the lack of concern shown by the whole government sector over cost inflation within its own expenditures. When one indicates that a particular group within the economy is bearing the burden of inflation-the suggestion refers to a group which is either unwilling or unable to raise its own income to compensate for price increases of goods and services-then sir, if income does not grow as rapidly as prices, the amount purchased must decrease and in times of rapid and continuous price increases those living on fixed incomes bear the greatest burden of inflation. For example, someone who retired in 1970 with a fixed pension of, say, $6,000 would find in 1976 that that amount of money would purchase a 1970 equivalent of $3,917 in goods and services. If the $6,000, had been the sole source of income, that person's standard of living would have dropped by 35 per cent.
Many Canadians have suffered as a result of inflation and, at times, price increases have been resisted by consumers. For instance, a reduction in coffee consumption, the weak housing market in many cities, and the reduced sales of automobiles in 1975 all indicate that Canadians can be resistant to burdensome price increases. Superficially, government resembles Canadians in that they, too, are faced with higher costs. However, unlike Canadians, there is much less incentive for government to resist price increases, and its income is always

November 24, 1977
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growing more rapidly. There is even less incentive for government, as the prospect of the need to borrow is not seen to deter spending. During the period between the third quarter of 1970 and the third quarter of 1976, government spending increased by 148 per cent. Although several reasons are advanced for increased government spending, one obvious explanation is the propensity for a public service to proliferate, once established, and the difficulty to terminate such a service.
One example may serve as an illustration. During examination of the estimates of Indian Affairs and Northern Development, we calculated that between $50 million to $75 million had been mismanaged by the Department of Indian Affairs and Northern Development in its handling of one program, namely, the Indian economic development fund. No one questioned the merits of the program and the necessity to develop an economic base in the Indian community which would promote greater self-sufficiency and less dependence on welfare programs. However, sir, the government's insistence to embark on grandiose projects has left in its wake many multi-million dollar projects which have gone bankrupt and the public perception that the Indian community has failed.
At least one reserve, the Millbrook band in Nova Scotia, has called for a public inquiry into the Abenaki Inn to clear their name. I have asked the Auditor General, under the new powers of the auditor general's act, to investigate the entire program and report his findings to the House of Commons. Mr. Speaker, this program is not an isolated finding, and I am convinced that if the various departments were forced to question and examine more carefully existing and future programs, millions of dollars would be saved or would be utilized far more effectively.
In the time remaining, I would like to briefly touch on two specfic issues. First of all, it will not surprise the minister or the government to learn that I have received considerable correspondence relating to the federal government's proposed changes for the taxation of life insurance. I have no doubt the minister's decision to withdraw the budget proposal which would have taxed a portion of life insurance proceeds payable at death was the direct result of the combined concern and effort of millions of policyholders across Canada. I know many of my constituents shared concern and voiced their objections to that particular part of the bill.
I was initially tempted to congratulate the minister for his announcement during the speech from the throne. However, at the risk of sounding ungrateful, I hesitated to do so for two reasons. First, I am persuaded to conclude that the minister's announcement was one of political expediency and he has yet to convince me, or the vast majority of policyholders in Canada, that the basic policy of this government, namely, the confiscation of the rights of a life insurance policyholder, has been altered.
There can be no doubt that the federal government, in deciding to tax policyholders to satisfy their insatiable needs and their appetite for additional monies, knew perfectly well they were confiscating the long-established rights of the individual policyholders. I would ask: Would the minister have

withdrawn the budget proposal which would have taxed a portion of life insurance proceeds payable at death if public concern had not been voiced? I suggest the answer would have been "no". I ask again, sir, have the minister and the government altered their basic policy regarding the rights of the individual policyholder? Again, the answer is "no".
I would say to the minister, in all sincerity, that until such time as he rescinds the proposal to tax the policyholder at the time of taking out a policy loan, as well as rescinding his proposal to disallow the deduction of policy loan interest as an expense, he is infringing upon the rights of policyholders. As I indicated previously, the basic issue is that of the rights of individual policyholders who number approximately 12 million throughout Canada. If the minister recognizes those rights, his course of action is clear and the proposals will be rescinded. If the minister does not recognize this fundamental right and insists on retaining the proposals in the legislation, then he must be accountable, not only to my party but to the 12 million policyholders in Canada.
Finally, I wish to make a brief comment on the proposed $100 million for job creation. Even the most optimistic proponents of the plan recognize this will have a minuscule effect on the nation's unemployment rate, which is expected to top 10 per cent this winter.
It is not my intention to take issue with present government job-creation policy at this time which, on balance, has led to an ever-increasing demand for government supported social services and has done little to create permanent jobs. Rather I want briefly to refer to changes that should be promoted by Canada Manpower which would contribute immeasurably to increasing job opportunities.
During October of this year, James G. O'Neill, Jeannette Jackson, Cindy Merritt and Cheryl Stonefish, presented their findings on the status of skilled trades in Kent county, Ontario. The document was an in-depth study of skilled trades in Kent county, and despite a present unemployment rate which is fairly high they found there is an immediate need for over 300 skilled tradesmen and a projected need of approximately 2,700 for present and future vacancies. The implications of this are profound. Although a number of groups were mentioned as contributing to the problem, Canada Manpower was singled out. I quote from page 95 of that document, where it is stated:
The majority of respondents believe that Canada Manpower is a bureaucratic institution which is not in tune with small business and industry. Its effectiveness as a recruitment centre is diminishing and the agency is not promoting its programs or fulfilling its expectations. The numbers of young people looking for positions are not directed into apprenticeship programs which are available. Rather, it is the responsibility of the applicant to find his own position and then enrol in an apprenticeship. If Canada Manpower is to provide its anticipated function, it must become more responsive to the needs of its applicants and it must be aware of apprenticeship openings and make this information available. The services of Canada Manpower is supposed to be counselling and perhaps this aspect should be stressed. Too often an applicant must search out his own jobs and many applicants are unaware of available apprenticeships.
The point I wish to make is that the government should be giving top priority to imaginative, constructive studies such as
November 24, 1977

proposed by the authors I have mentioned, and sponsored, incidentally, by Mr. Ronald F. Moon, president of Local 127, UAW. I have no doubt that a commitment to such a project would produce permanent jobs for a far more appreciable portion of the labour force in my area.


Mr. Paul E. McRae (Fort William):: Mr. Speaker, my remarks today will concern the whole topic of employment and unemployment, but first I should like to review three main points of a thesis I put forward in the debate on the speech from the throne which relate to unemployment but are more general in nature. I should like to place them in the context of the theme we are discussing today.
The points I made were these: There has been a quantum jump in the problems which governments throughout the world have been called upon to face in recent years. The inflation figure, at 1.5 per cent in the OECD countries over the last 100 years, has now risen to basically 5 per cent. Unemployment generally has become more acute. I referred to Sweden, where the rate would run at about 6 per cent if it were recorded in the same way as ours. Similar unemployment rates are faced by Japan and a number of other countries.
The second point I made was that economic and fiscal techniques usually employed Keynesian theories, and so on- are proving unsuccessful. Third, there is the new notion of shortages, particularly of energy shortages. I concluded we were probably at the end of an era dominated by the idea of growth, and that new ideas must be introduced. I did not say then, and I do not say now, that growth will not be a major concern in the economic sphere. But it will not be the only one. We shall have to take a fresh look at all the things we are doing. It is within this context, I believe that we must look at the whole issue of employment and unemployment.
A couple of weeks ago, on November 9 or 10, we are given the employment and unemployment figures for this country taken as of the week ending October 15. We saw, of course, that the adjusted rate of unemployment was 8.3 per cent and that the unadjusted rate was 7.3 per cent. One of the things we did not hear very much about was the fact that as of the end of that week there were 257,000 more Canadians working than had been working in the same week a year earlier. Little was said about the fact that in the month of August 10,260,000 Canadians were working-the largest work force in the history of this country.
A great deal of gloom has been cast on this whole employment question. Recognition is not being given to the fact that we are creating jobs in this country faster than in any of the OECD countries. The rate of job creation between October, 1976, and October, 1977, was 2.3 per cent, representing a significant achievement. The problem remains, of course, that in the same month 780,000 Canadians were shown as unemployed. Some would argue that the real figure is higher. It may be higher, or it may be lower, depending on how the question is phrased.
Two techniques have traditionally been used to deal with unemployment. The first is to offer increased incentives to
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business in an effort to encourage the creation of new jobs. This has been the method favoured by fairly right-wing Conservatives in the past. I do not label any of the parties in this House as such, because there are such wide swings in all our parties. Another method which is used-and it follows Keynesian theories closely-is to put more money into circulation by lowering income tax, or by other fiscal and monetary means, as a way of increasing demand. This has been, perhaps, the more progressive way of doing things and it is one which has worked, more or less, since the depression of the thirties.
In the budget introduced in the spring of this year, the government employed both methods. It laid out about $1.2 billion on incentives to business, and it laid out some money- not a very large amount-on the demand side. But in addition to the money laid out in the budget on the demand side, there was the income tax indexing provision which also has the effect of stimulating demand. In addition, there was the increase in old age pensions, and so on, bringing the total put into the demand side, as of January 1, to an amount in the neighbourhood of $2.2 billion. I am also including the effect of such programs as Canada Works. That sum is very close to the amount which the New Democratic Party feels should be spent on the demand side.
In the mini-budget which the Minister of Finance (Mr. Chretien) produced a month ago, there was provision of a further $800 million or $900 million, and if we consider the indexing which will occur as of January 1, 1978, we arrive at a figure of $1.5 billion. So, in slightly over 12 months a sum of between $4 billion and $4.5 billion has been put into the demand side. I do not know how anyone can sit on the opposite side and say we have not tried to do something on the demand side. Do not forget that this is in addition to $1.2 billion which we put on the business incentives side, yet we have unemployment figures of 8.3 per cent adjusted and 7.3 per cent unadjusted. These figures will likely get worse through the winter months.
Mind you, there are very strong reasons why we have such high unemployment. In addition, the economy has some sluggish qualities in it. One is the fact that this year we will have something in the order of 300,000 more people coming into the work force, which is about five times the number coming into the work force in the fifties. The work force is growing at a much faster rate than any other country, and this presents us with some problems.
I should like to look at the demand techniques because I am concerned about them. As I say, we will probably put something in the order of $4 billion to $4'/2 billion into demand techniques by January 2, 1978. However, I would like to indicate that I do not think these techniques are working, and I do not think the solutions proposed by the opposition, particularly by the NDP, will be effective in any really significant way. I do not think that an extra $214 billion, as suggested by the NDP will create anything in the order of 300,000 jobs. I

November 24, 1977
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just do not think this is a possibility, and I disagree with it entirely.
One reason I think it will not work is that the level of saving in this country has become very significant. We have had an unusual situation occurring over the last five years, where Canada leads the "Big Seven"-the summit group of members of the OECD countries, the United States, Great Britain, France, West Germany, Japan, Italy and Canada-with the largest increase in personal consumption expenditure of any of these nations namely, 6.5 per cent on average. At the same time, we have had the second largest increase in the household savings ration; the savings ratio has increased in only one other country, a very strange phenomenon.
The OECD group says the reason for this phenomenon is that we have created so many more jobs in this particular period, and therefore there is more income around to be distributed. I am concerned with the savings ratio itself, and I should like to give the House the definition of "personal savings" because I think it is important in terms of creating demand. According to Statistics Canada, personal savings are considered to be the residual amount after deducting personal expenditures on consumer goods and services and after deducting direct personal tax payments and other current transfers from total income.
It is interesting to note that in 1970 personal savings represented 5.3 per cent of personal disposable income in Canada. By 1976 that had grown to 9.5 per cent, close to double. As a matter of fact, in 1975 it did double-savings in 1976 were a little less. This presents a very serious problem when one seeks to use the demand method for increasing economic activity and creating jobs. The problem is that if you reduce personal income tax or other taxes, such as sales tax, one might be creating additional savings which, again, would be removed from the demand side, and we would not get the kind of results we expect.
There are other techniques which might be used to create employment. Certainly, direct work employment projects are being used by the government and there might very well be more of these projects. But I am not sure whether we can expect very much from these other areas. I hear a great deal particularly from all three opposition parties about industrial strategies, and I know there is a great deal of concern in the government about the whole notion of industrial strategy. But I do have some worry about this particular notion, especially since I see what is happening to Sweden, a country which has done a great deal in terms of industrial strategy. Sweden is one of those countries which has put its eggs into a few baskets, one of them being high quality steel and the bottom has more or less dropped out of the steel market. Thus, Sweden finds itself in great difficulty. I am not so sure at this particular point that the industrial strategy notion is going to be as effective as perhaps we hoped it might be. I do not say that we should not be considering it or that we should not look at other techniques alongside a new industrial strategy; but I do say that we should look at it with a great deal of care.

I should like to talk about what I think will be one of the concerns for the future in terms of employment, given the fact that we will have continuing growth in the work force and that this country and most other countries are experiencing the same kind of problem. I think there will be much more interest in the future in the notion of work-sharing. What do I mean, Mr. Speaker, by work-sharing? I mean the simple technique of trying to adjust the number of jobs which are available, the useful work that needs to be done in this country, to the number of people available to do it. There seems to be a degree of equity in this kind of notion, in the sense that one group is not expected to do all the work, while the other group is never plugged-in to the job market but shares some of the benefits. In this way we have a degree of equity, and I think this is something we should look at very carefully.
I had an experience which I should like to relate to hon. members of the House in connection with work-sharing which I think illustrates the problem we are facing. As a former high school principal of a fairly medium-sized school of 1,200 students and 70 or 80 teachers during the early 1970's I had an experience which I think is worth relating. During the 1960s and up to about 1970 there was massive growth in the school systems of this country as a result of the great influx of young people coming into the schools. There was a great deal of upward mobility on the part of teachers because new schools were being opened. There were jobs for principals, vice-principals, department heads, and so on, and this led to a great dependence on upward mobility as a means of getting ahead, as a means of creating incentives.
Then all of a sudden, Mr. Speaker, within the space of about one year, all of this growth stopped. The number of young people coming into the schools was reduced considerably and the demand for teachers fell right off. We were left with a very frustrating situation, a situation of no growth which few other parts of society were experiencing-and, as I say, a great many frustrations flowed from this. I think one of the causes of a lot of stress in the academic field to the dissatisfaction of teachers in the last four or five years, certainly in high schools and elementary schools, stems from this lack of growth, this lack of upward mobility on the part of teachers. I lived through a year or so of this, and I was very concerned about the possible effect in this particular scene. Therefore, we looked at several ways in which we might ameliorate this situation. There are many techniques that could be used, and we tried a couple. There were some which we advocated but we were not very successful in the achieved results.
One technique involved early retirement. It seemed a reasonable proposition that at a certain point those who wanted to retire early should be allowed to do so, and some incentive could be added to encourage this kind of thing. The second technique was phased retirement, and in terms of the school system phased retirement refers to a person perhaps teaching half a day or assuming half a teaching load for three periods instead of six periods a day. There would be some kind of pairing with another person doing the same kind of thing.

The third technique had to do with pairing itself. In this case, you might possibly have two people on the staff who only wanted to work part-time. It might involve a married woman who wanted to be at home more and in this way she was able to pair with some other person doing the same kind of thing. It is very interesting to note that where this pairing has been done-and there are some statistics on this-the school, or wherever it was done, benefited considerably in that it received more than 50 per cent of the work from each of the individuals forming the pair. Therefore, this worked very successfully.
Another form of work-sharing is, of course, straight leave of absence. Another form, and one that interested me a great deal, was the notion of sabbatical leave. A teacher could go on a sabbatical leave. His salary would be reduced. If he was at the top of his salary range and his salary was reduced to two-thirds, it would be very easy to hire a new teacher at the bottom level of the salary range to replace him for the remainder of that year. These were some of the techniques we looked at in respect of schools.
When I first came to parliament these ideas were fresh in my mind. While we have had no discussions about work-sharing until the last month or two, I have always been concerned and interested in the possibilities of using these techniques. Having done a little research on the subject, I find there is a great deal being done in terms of work-sharing in Europe at the present time, particularly in West Germany as well as in countries such as Japan. Instead of laying people off in a given industry because of economic fluctuations, attempts are made to share the work with employees working a six-hour day, or whatever is involved in the amount of sharing required. I found, also, that there is a considerable amount of work-sharing in parts of the United States, particularly in California. In all these areas there has been a considerable amount of success. One of the points I mentioned earlier is that people working shorter days are not less productive, but probably are more productive. You have work-sharing in the form of pairing with increased productivity on the part of the two people involved.
I am very interested in the efforts the federal government is making at the present time in this connection, particularly in the project at Bathurst, New Brunswick, involving the notion of work-sharing using the unemployment insurance fund. This is something well worth looking at. When considering the scene at Sudbury and the lay-offs at INCO and Falconbridge, I can fully understand the views of the labour movement rejecting, at least in the beginning, the whole notion of worksharing, because it is in their own interests and in the interests of the community that the number of people involved in work-sharing be reduced considerably. It is possible to create other kinds of jobs and move people to other places like Elliot Lake or to the Syncrude project. This should be done in the first instance, of course.
However, at some point I believe there will be people laid off at Sudbury. I hope these lay-offs do not occur in carte blanche fashion or just in respect of new employees but, rather, that there is an element of work-sharing. If the situation is handled
Income Tax
this way, it would be a good step forward. We could use the unemployment insurance fund to compensate a whole group of employees whose work is reduced, rather than having some employees laid off completely and drawing unemployment insurance.
One of the advantages of work-sharing is that there is leisure time available. A miner who works only four days a week would have much more leisure time. This probably would be of great value to many people. In terms of the INCO situation, I would like to see the government at some later point, not right now, make an inquiry among those employees and, for that matter, employees all across the country, to determine how many would voluntarily choose some form of work sharing with a reduced work week or a reduced hourly day. I am sure we would find, as a result of a canvass that many people would accept this on a voluntary basis, thus creating many job openings in the country. I am sure that many people working five days a week or 40 hours a week would voluntarily accept a shorter work week or a shorter work day. In this way, we would have a number of jobs filled by other people.
This is a slight divergence, but I must say I am disturbed at the statements about the INCO situation in relation to EDC funds being used to create sales of mining equipment to update mines in other parts of the world. This is of my concern because I am sure that in my community of Thunder Bay the same attitude would not obtain. In the last two or three years, to my knowledge, we have had two very sizeable orders placed with Canada Car, both funded by EDC: one was for Poland and involved tree farmers for the woods industry in that country, and one involved Mexico and the purchase of rail cars. Each of these orders could in some way eventually create competition for Canadian industries, I suppose, but we will also find that as these countries become more industrialized, they will be in a position to purchase more of the sophisticated technology we are to produce. I think it is a great mistake to criticize this kind of thing. Somebody else would have done it, of course, but these particular orders which amounted to somewhere in the neighbourhood of $100 million have had a significant effect on our community.
The government should seriously consider this whole notion of work-sharing. It should undertake a study to determine how many people across the country would voluntarily accept this concept. Work-sharing should not be introduced on a compulsory basis, even at places like Sudbury where lay-offs are a fact, but should always be voluntary. The government would then know how many people would be willing to forgo some work time and some wages, because we are speaking basically in terms of the same hourly wage, but shorter hours or a shorter week, in favour of more leisure time in which to do the other things they would like.
There are many employees in various industries in this country, some of whom are blue-collar workers, who have a fair degree of savings. Perhaps some of these workers would

November 24, 1977
Income Tax
welcome this leisure time in order to do something else with that time. Many people have things going on the side. Many people have small farms, and so on: they would welcome the same kind of leisure time. Many Canadians are working 40 hours a week, punching the clock, and so on, in our industries. Some of them are very valuable people to their communities. We should adopt the idea which I refer to as the guaranteed annual role. That would enable people, who have something to contribute to their communities, to find the time to do so. These are some of the things which can happen if we had a voluntary survey.
There seems to be a concern, because we are sharing the work, that we are not doing anything to increase demand. I am not sure that is true. If a person was on a four-day voluntary week, his savings would be somewhat less, and therefore probably he would spend a higher portion of his income than otherwise. Actually, that may generate more demand even though we are not creating more jobs.
In terms of work-sharing and the people who may look at it favourably, there is another area I should like to deal with. A Swedish economist and social scientist developed a thesis in a texbook known as "The Harried Leisure Class". The thesis was that those who are fairly affluent, earning $20,000 or more a year, are working more hours than those who are not so affluent, and their leisure time is reduced by their work time. I suppose most hon. members would fit into that category. Because of this affluence, they have a fair amount of money to spend. Therefore, their consumption time is fairly long: they spend a great deal of time in stores buying things, having things fixed, and so on. As people become more affluent and more busy, they have less leisure time. Leisure time is the time when people are not sleeping, consuming or working. When Canadians see themselves in a fairly affluent state, spending a great deal of time buying goods they may not need, they may look at leisure time as something which is much more valuable. Most hon. members would see leisure time as something which is valuable. This is another area where volunteers may be found for reduced days and reduced hours.
In conclusion, Canadians would do very well to look partially at one solution for some of our economic and unemployment problems, that is, work sharing. By that, I mean matching up the number of jobs available in this country with the number of people available for them. I am referring to useful jobs. Creating unuseful jobs does not work to the betterment of Canadians. If these things are looked at, I am sure one of the techniques of the future will most certainly be work sharing.


Francis Andrew Brewin: Mr. Speaker, I am anxious to take part in this debate even in its dying moments. One might say that because Bill C-ll reveals the major weaknesses of the government's economic policies. My constituents, as well as others, are entitled to know what I think about these matters. Basically, this is a bill which gives incentives to private industry in the hope that it will provide jobs. It has failed in this effort. To me and to many hundred thousand Canadians the present rate of unemployment is by far the most serious weakness in our economy. Improving the
[Mr. McRae.)
unemployment picture should be the first priority in all our policies.
It is one thing to quote statistics, which I propose to do, but it is quite another to grasp the actual meaning in the lives of people of large-scale unemployment. There is a serious danger that we will become insensitive to the facts underlying national statistics and will be unwilling to adopt an economic strategy which will end the mismanagement of the economy and make a serious impact on the matter of unemployment.
The most recently issued statistics indicate that the rate of unemployment across Canada is approximately 8 per cent. If adequate attention is paid to those unemployed but not on the lists, it is estimated the amount would be approximately 10 per cent, or over a million Canadians. This is the worst rate of unemployment since 1940, but it fails to indicate that in various parts of the country-and I am thinking of the Atlantic provinces in particular-there are serious depression levels of unemployment being inflicted on workers.
Behind these statistics is a picture of individual human suffering and pain. The hopes and lives of families, older workers and women workers, are shattered by unemployment. Of the unemployed, 421,000 were men and 414,000 were women. Of the total, 418,000 were workers under 25, and 128,000 were workers between 45 and 64. I hate to think what is happening to the younger people under 25 when nearly half a million of them are unemployed. The average duration of unemployment is said to be 14.5 weeks. There were 667,000 families hit by unemployment. Many of the Canadians who experienced unemployment were family men.
The myth frequently repeated about unemployment is that a lot of it is voluntary. The facts of life and the statistics show the contrary. During the second quarter of this year there were only 43,200 full-time vacant jobs in Canada, according to Statistics Canada. Therefore, for every 100 persons unemployed there were only five vacant jobs. This means if every job had been filled, 870,800 workers would still be out of work, or 77.6 per cent of the work force would still be jobless.
Another myth which is frequently accepted by the people is that when there is unemployment only the out of work are hurt. This is not true. Real economic losses occur for everyone from massive unemployment, affecting the standard of living of all Canadians. Estimates of some of these costs in 1976 show that every 1 per cent of 104,000 unemployed results in a loss of income and output of $2.1 billion, amounting to $20,000 for each unemployed worker. Every 1 per cent reduction in unemployment would have reduced unemployment insurance payments by about $5 million. The government itself lost about $412 billion in tax revenues because of lost income due to unemployment.
The Conference Board of Ottawa, which is a prestigious institution independent of the government, recently reported that Canadians lost $12 billion in income and output last year due to unemployment, amounting to $520 for every man, woman and child in the country. There are many other impor-
November 24, 1977

tant costs of unemployment, such as reduced job security and the pressure to accept lower wages. Another myth frequently repeated is that Canada is pricing itself out of the world market. The truth of the matter is that we are selling more end products or manufactured goods than before. The rate has been increasing. What has been happening is that we are spending more on services such as interest, dividend payments and tourism. It does not make sense to say we are pricing ourselves out of world markets when in fact the volume in end product exports has grown steadily.
We are told that Canada-U.S. wage settlements indicate that our wage settlements are higher than in the U.S.A. These statistics are highly unreliable. United States figures are based on settlements in firms of 20 or more employees, and Canadian settlements on firms of 500 or more employees. Larger firms pay higher wages. It is quite wrong, and contrary to the facts, to blame the workers and say they do not work hard enough. This is simply an irresponsible effort to lay further blame on the workers for our economic problems. No one can dispute that we do have serious economic problems, but the fact remains that the top 20 per cent of Canadians receive 42.5 per cent of total income, and the bottom 20 per cent receive only 4 per cent of total income.
Let us get our priorities straight. The provision of jobs should be our first priority. Unfortunately, experience has shown the government's policy as revealed in the earlier budget and the present mini-budget failed to do this. The emphasis of these budgetary measures is to give incentives to industry, but it is certainly not the fact that these incentives necessarily produce jobs.
Others in this debate will have discussed the situation in the mining industry in northern Ontario in such places as Sudbury and Noranda. I wish to deal with a different sort of industry, but nevertheless an illustration of the same thing. 1 would like to refer to the situation in Northern Telecom Limited. This company is a subsidiary of Bell Telephone and, in effect, is a multinational corporation. The result of the reduction in income tax brought about by the former minister of finance was to produce an effective reduction for this company, in income tax, from 42.8 per cent to 40.6 per cent for the first half of 1977. One would have imagined that if the government's theory had anything to it, these tax concessions to corporations would have resulted in more employment-but the opposite is the truth.
Various unions throughout the country have been notified that Canadian employment by Northern Telecom will be dropped by approximately 2,000 people in the 18 months ending at the end of 1977. More lay-offs are promised after that. For example, a number of employees in the western region installation department will be reduced by about 400 in the last six months of 1977. Early in 1975 there were approximately 2,400 hourly-rated employees in the switching manufacturing plant in Bramalea. By the end of September, 1977, there will be less than 1,200, or half as many.
Income Tax
Other cutbacks have taken place in Montreal. There are quite a number of unions involved: the United Automobile Workers, with a total man-shift of about 3,450; the United Electrical Workers, with 1,200 members in Bramalea; the Communications Workers of Canada, with 1,811 members; the Canadian Union of Communications Workers, with 4,970 members; and the Canadian Office Employees Union, who represent 1,800 office workers in Montreal. All these people are threatened with being laid off.
Northern Telecom, which was formerly Northern Electric, has announced its intention to expand into larger foreign markets and to expand its research development capacity by spreading its operations into the United States. I do not have the details to show the obvious connection of the lay-offs in Canada to the expansion into southern parts of the United States, but it is very clear. Wages in the southern United States are lower, and unions are virtually non-existent.
One cannot say that this company has been unprofitable. In 1972, Northern had sales of $534 million, while in 1976 the figure was $1,112 million. Profits also expanded from $20.1 million to $77.1 million in the same period. Northern has not been without government assistance, although it is not easy to figure out exactly what that assistance was. Since 1970 Northern has had duty remissions of over $1 million. It had deferred taxes in 1976 of $41,321,000, up from $18,814,000 in 1970. It has prospered under a lucrative grants system. The industrial Research and Development Incentives Act prohibits disclosure of disbursements under section 13 of the act. 1 have not the slightest doubt that this company has benefited from this act. There is no doubt that the Export Development Corporation has been providing loan assistance and guarantees totalling $58 million to the company from 1968 to 1973.
In August of this year the corporation announced a $144.5 million loan to Northern to support the manufacture of telephone equipment for a new system in Turkey. So what, in effect, we are doing is subsidizing a large multinational corporation from government funds in various forms which then uses the money to shift employment out of Canada rather than to increase employment in Canada.


Mr. Milne:: Mr. Speaker, I rise on a point of order. It is not my practice to interrupt speeches of my friends opposite, but I cannot help doing so at this time. I would be ready to defer until the end of the speech-or if the hon. member would accept a question at this time, perhaps I would be allowed to ask it now.


Francis Andrew Brewin: I am very close to the end of my speech, so I think it would be better if the hon. member would defer his question. I was talking about the loan and saying that what is happening is that we are subsidizing corporations which are then spreading employment to other parts of the world for their own profit, which is reasonable from their point of view, instead of maintaining employment in Canada.

November 24, 1977
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I think what is definitely needed is an increase in consumer demand. This could be done by reducing taxes for those earning under $15,000 a year by a one-month moratorium on personal income tax, a further personal income tax reduction and an increase in old age security of $50 a month. With this increased demand existing, savings would be transformed into productive investment.
The government itself must get busy on a job-creation program and a more equitable distribution of income. This is a short-term program of immediate steps. There are no easy solutions for the future well-being and prosperity of Canadians, but there is a necessity for planning in the economy and for the development of a national industrial strategy. We must recognize the right to employment at a living wage as the cornerstone of a productive and equitable society.
Our tax system must be directed at preventing inflation by taxing those who benefit from it. We are not proposing the nationalization of all industries. The private sector will remain, but there is a need for the public sector to act as a balance-wheel to ensure that we use our human and financial resources in a policy of full employment. There are many urgent needs such as housing, better research, day-care centres and recreational facilities. We can afford to have these if we are prepared to plan to use what we have intelligently, and particularly if we are not afraid to rely, at least in part, on the public sector and not solely on the private sector which has demonstrated its inability to maintain an economy of full employment.


William Ross Milne: Mr. Speaker, as the member of parliament for the Bramalea area, where I believe the largest Northern Telecom plant in Canada is located, I cannot sit here and let the hon. member's remarks go unchallenged. I would like to ask him whether he has read the material which was submitted to his colleague, the hon. member for Sault Ste. Marie (Mr. Symes) and, if he has, if he does not believe these measures have been very important in keeping this company in business so it can deal internationally rather than forcing it completely out of international business?


Francis Andrew Brewin: I have read that material and I seem to have made a deduction which is different from that made by the hon. parliamentary secretary. I have made the deduction that the result of all these various subsidies has been to assist the company in transferring its activities outside Canada rather than increasing its facilities in Canada. I am not saying that the subsidies did no good or perhaps did not help to maintain some employment in Canada, but I judge that their main purpose has failed.
Most of what I have said today has been based on information supplied to me by the workers in these various companies.
I think I also read a communication from Northern Telecom itself. I have spoken to the hon. member for Sault Ste. Marie (Mr. Symes) and I think what I have said represents my deductions from that material.


Mr. Jim Balfour (Regina East):: Mr. Speaker, what we are discussing today, and what we have been discussing for the past two weeks and more, purports to be simply a bill containing some amendments to the Income Tax Act. In fact, of course, it is nothing other than a mini-budget in disguised form. Why the masquerade, one might ask? The reasons are the same as those for calling the speech of the Minister of Finance (Mr. Chretien) in October an economic and fiscal statement. It, too, outlined a mini-budget, but the government does not admit it. That is because the government of Canada is reluctant to admit that once again it has been forced to patch up a previous budget which has proved to be inadequate and ill-conceived. In the not too distant future no doubt there will be more piecemeal measures brought in, in order to plug the holes and to correct the inadequacies in the provisions now before us.
If the government is downplaying the fact that this bill is actually budgetary in nature, it is surely because it is ashamed and embarrassed by the unco-ordinated, band-aid approach it has taken to Canada's economic problems-and I can hardly blame it.
Let us take, for example, the proposals regarding the tax treatment of life insurance policies. In the previous budget in March the government proposed to tax, among other things, the cash surrender value of a life insurance policy in excess of the premiums paid at the time of the owner's death. With a grim sense of logic, these proceeds payable at death which exceeded the amount paid into the policy at that point would be considered some sort of taxable gain to the bereaved spouse or children. However, in the face of massive protests, not only by the opposition but also by the public, the government next suggested a modification to this taxation scheme. Now it is proposed that a threshold of $10,000 be placed on the amount of the death benefits to be taxed.
Beside the fact that this in no way affected the unacceptable principle on which this particular tax was founded, it did little to mitigate the hardships it caused, for with the inflation with which we are living today, thanks in large part to the policies of this government over the last many years, this threshold will soon provide little protection. In any event, a threshold does not eliminate the fact that the tax was directed at money which was intended to be an emergency sum or an indemnity against the financial consequences of the premature death of the head of a family.
Now it appears that the government has finally bowed to pressure and proposes to drop this measure. It has taken eight months of outcry by the people of Canada, but it has been done. Yet I have to wonder if this provision was not intended to be withdrawn all along. By introducing an obviously unacceptable proposal such as this, was the government hoping that it would be the focus for protest and that it could then be withdrawn stage by stage as an apparent indication of the government's implied willingness to listen and to compromise? At the same time, however, its purpose would be fulfilled if it could draw attention from related tax proposals which are
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equally regressive, thus acting as a kind of legislative lightning-rod.
I wonder if I could call it five o'clock.


The Acting Speaker (Mr. Ethier):: Order! It being five o'clock, the House will now proceed to private members' business as listed on today's order paper. As there are no notices of motions (papers) listed, the House will proceed to private bills and resume debate on Bill C-1001.


PRIVATE BILLS
[Stage Direction]
The House resumed, from Thursday, November 17, consideration of the motion of Mr. O'Connell that Bill C-1001, respecting Bell Canada, be read the second time and referred to the Standing Committee on Transport and Communications, and the amendment thereto of Mr. Leggatt.
Mr. John Gilbert (Broadview):: Mr. Speaker, Bill C-1001 is legislation respecting Bell Canada introduced by the hon. member for Scarborough East (Mr. O'Connell). I think all of us should appreciate the hon. member because he was one of the whiz-kids, with Walter Gordon, back in the late sixties when Mr. Gordon ran into difficulties with his budget. Then the hon. member became an elected member in 1968, and from 1968 to 1972 he served as a member of the cabinet, in a very distinguished way, as minister of labour. In 1972 he was defeated.
From October, 1972, until 1974 he served as special adviser to the Prime Minister (Mr. Trudeau), and was re-elected in 1974. The hon. member is an economist of note. He has made a contribution to Canada in that field. Therefore, we must look closely at Bill C-1001 to see what the hon. member is attempting to do on behalf of Bell Canada. He is attempting to take a private monopoly telephone company outside the control and supervision of parliament concerning changes in the company's objectives and powers. The intention is to make changes by letters patent which would be consistent with the terms of the Canada Corporations Act, the Canada Business Corporations Act and the Telesat Canada Act.
It means, therefore, that any public scrutiny regarding Bell Canada's capital formation, borrowing powers, lending powers, investment powers and ancillary powers will be outside the purview of parliament, and any effects of Bell's telephone restructure will be after the fact and not before the fact. This indicates the importance of Bill C-1001.
Clause 2(14) is the key clause in the bill. It provides, under proposed section 5.3, that Bell will in future be able to alter its objects, powers and capital stock by letters patent. This means that the company will apply to the Minister of Consumer and
Bell Canada
Corporate Affairs for letters patent. If the minister rejects the application it is not appealable. However, if approved, the letters patent are tabled in the House of Commons, and 30 days thereafter they take effect. Members may petition the House objecting to the letters patent and procure a debate. Upon termination of the debate, there is no vote and the minister is not bound to any action on the matter. This is analogous to the Anti-Inflation Board provision whereby a member of parliament may, by petition, bring legislation before the House, have debate and then at the end of the debate no vote is taken. This provision drastically alters the ability of parliament to scrutinize Bell Canada, giving it a free hand to alter its powers and objects.
Under the same clause 2(14) the bill provides inclusion under section 16 of the Canada Corporations Act. This clause allows Bell, ancillary and incidental to its objects set out in letters patent, to exercise any or all of a list of powers, including investment in any business venture, and complete market freedom. This is a regressive step which will provide Bell an incentive to neglect basic telephone service.
Included in the bill is a provision to increase the capitalization from $1.75 billion to $5 million. We, in this House, have experience with banks, insurance companies, oil companies and finance companies and changes in their names, their objects, powers, and so on. The result has been legislation to remove changes in these fields from public scrutiny, and now we have little or no control over the financial and insurance institutions in Canada.
This brings into focus a very important philosophical question-that of public ownership versus private ownership of a public monopoly corporation. Bell Canada is not just another corporation, because only 7 cents of every revenue dollar from the competitive market is obtained from such activities as data transmission services which provide such a vital public service as telephone communication. In other words, out of every $1 earned, 93 cents is obtained from the public monopoly of telephone communication services, and a mere 7 cents from other investments.
We have to look at the philosophy of private and public monopolies, and in that discussion we have to bring into focus and under scrutiny the multinational corporations. Within the last 30 years we have had the public phenomenon of the multinational corporation in different sectors of the Canadian economy. I do not think it is necessary to go into detail about how private monopolies control the resources of Canada and, by doing so, control the production output and the price of services.
The income tax bill presently being debated by the House is ample proof of the benefits obtained from the government by these private monopolies. Need I mention the oil companies, the nickel companies, the aluminium companies who have control over our major resources and whose major thrust is to obtain the greatest profit for their shareholders? I imagine the hon. member for Scarborough West (Mr. Martin) and the hon. member for Scarborough East who sponsored the bill will ask what is wrong with the large corporations concentrating on

November 24, 1977
Bell Canada
profit for shareholders. If this were a private company operating in an ordinary way in a competitive market, that principle might be acceptable. This is a private monopoly of a public enterprise-namely, the telephone system in the provinces of Ontario, Quebec and others whose sole concern is to obtain the greatest profit for its shareholders.
We in the New Democratic Party have joined issue with the philosophy of this bill and with members of the Liberal party and the Conservative party to determine whether a corporation that has a monopoly on telephone communications services should have the powers it is attempting to obtain. We feel that the profits they make should not merely be shared with the shareholders, but with the users and should be for the benefit of the general public. That is the very sharp difference between a private monopoly of a public enterprise and a public monopoly of a private enterprise.
We have heard different views expressed on this bill, but members of my party have been unanimous in saying that in a public monopoly of a public enterprise, the greatest benefits should obtain to users and the general public. The public monopoly is not new to members of this House. This is what public enterprise should be all about.
Mr. Speaker, I am interested in ownership, service, rates and the efficiency of a public enterprise. We have in Bell Canada a private company which has complete monopoly of the telephone communications system in the province of Ontario. They operate on the myth that the main shareholders of Bell Canada consist of widows and orphans. Mr. Speaker, I think it is only fair that I bring to your attention just who does own the main shares of Bell Canada, because it is very important that the public know who they are. I wish I could present the tables which I have in front of me with regard to the capital structure of Bell Canada. They show Bell Canada has capital debts in the form of mortgages and bonds, and they have capital stock in the form of common stock and preferred shares-conversion A they are called-preferred shares, conversion C, preferred shares D and E, and so forth. This makes us all appreciate the complexity of corporate law in these operations.
Mr. Speaker, let me read the information on the main shareholders. This information was obtained from the best source possible, namely, the Financial Post survey of funds, 1976. It would take me a great deal of time to list them all, but I will give you a few examples of who, in the main, holds shares in Bell Canada. Principally, they are the insurance companies, the finance companies, the large corporations, Canada Trust RSP, 62,000 common shares, Eaton Commonwealth 50,000 common shares, Confederated Life (Canadian) 63,400 common shares, Great West Life 20,000 common shares, Investors Growth 169,087 common shares, and 320,000 preferred E shares. Then we have Investors Mutual, with 144,225 common shares, Manulife Diversified, 101,200 common shares. In the words of my colleague from Sault Ste. Marie (Mr. Symes), "What orphans and widows own the
[Mr. Gilbert.)
shares of Bell Canada"? With regard to the bonds, they are in the names of the National Insurance Company, United Corporations, Provident Mutual Fund, and so forth.
Without doubt, the main ownership of these companies does not lie with widows and orphans; it lies with the large corporations throughout Canada. You have probably heard, Mr. Speaker, the clever advertising Bell Canada has on television. I wish I could sing it. It goes someing like this, "If your're feeling lonely, if you're feeling blue, just pick up the phone and call long distance." When I read the list of ownership of Bell Canada shares and bonds, I felt a little bit lonely and a little bit blue, because 1 realize that the ownership is not with the widows and the orphans, but with the large corporations.


An hon. Member:: Who did you telephone?


John Gilbert: Mr. Speaker, I could not telephone anyone. This is the unfortunate part, because if you cannot telephone someone you have a duty to get up in the House to speak and tell the Canadian public that you have concern with regard to the widows and the orphans and you want to make sure that they are taken care of. I do not like to have that myth perpetrated by Bell Canada with respect to its ownership being in the hands of widows and orphans.
I have read the speeches of my colleagues with regard to the service and, more especially, the non-urban service. When I read the speeches of the members for Sault Ste. Marie and Nickel Belt, I realized people in the non-urban areas suffered greatly with regard to telephone service. Within 25 miles of Sault Ste. Marie, people cannot get service. Within a short distance of the Nickel Belt area, people, if they desire service, have to pay tremendous rates and tremendous service charges even to have the telephone installed. Therefore, Mr. Speaker, the main thrust of any public corporation should be that the profits are used for the benefit of the users and for the service of the community at large.
We have heard a great deal with regard to rates. I think it would be fair to say that the rates in Ontario, under a private corporation such as Bell Canada, are higher than Saskatchewan, Manitoba and British Columbia. The evidence by my colleagues has shown that the rates to private users have been much lower. So, too, have the commercial rates. I thought the member from Winnipeg South Centre (Mr. McKenzie), had a point with respect to the difficulties corporations have concerning services in the large urban centres and the amounts of money that is required. That leads me to the simple proposition, if that is the case, that all the profits-or most of the profits-which are obtained should be put into the service of these people rather than into the pockets of the shareholders of these large corporations. If time permits, I would like to place on record a statement that a competitor of Bell Canada is accused of overcharging in the United States. It is an article by UPI, dated March 28 which says:
Bell Telephone may be overcharging home and business telephone users in the U.S. more than $2.2 billion yearly to finance a war on competition, a Bell competitor said Sunday.
November 24, 1977

Edwin Spievack, general counsel for the North American Telephone Association, which represents 400 independent telephone equipment manufacturers, said the overcharge averages about $20 a year for every main telephone subscriber in the nation.
I wish I had time to develop more of this, Mr. Speaker, but you can see why we, in the New Democratic Party, are opposed to this bill.


Some hon. Members:: Hear, hear!


Mr. C. A. Gauthier (Roberval):: Mr. Speaker, I wish to take this opportunity to say a few words about Bill C-1001. According to the mover of the bill, the hon. member for Scarborough East (Mr. O'Connell), Bill C-1001 has four objects. First, to increase the present limit of the authorized capital stock from $1,750,000 to $5 million; second, to give more financial flexibility to Bell Canada so that it may adjust itself to the changes which can occur in the economy and on the capital market; third, to modernize the administrative powers of the company; the purpose of this bill is to elucidate and broaden its real and ancillary powers; fourth, to give the company the authority to alter from now on by letters patent the company's objects, powers and capital stock.
The charter of Bell Canada was granted under a legislation of Parliament. Any change to that charter must be approved by the people's representatives, that is Parliament. This bill would practically remove any control of Parliament over that company. The letters patent process theoretically gives a power of decision to Parliament, but it really removes that power. The application of clause 16 of the Canada Corporations Act, as requested in clause 5(b) of Bill C-1001, would finally enable Bell Canada to launch all kinds of commercial ventures unrelated to communications, because we must remember that we have always been under the impression that Bell Canada was first and foremost a communication corporation, but Bill C-1001 would enable it to enter into all kinds of other fields, to establish other subsidiaries, in addition to those it has already set up.
Bell Canada is a private enterprise providing an essential service to Canadians because it is a monopoly. Parliament should not surrender its right to control the decisions made by this company. If this government allows and even promotes monopolies, it should at least retain the necessary powers to keep a very strict control over them. When we look at the profits they make, we are always astonished to find that the board regulating prices and incomes has not reduced by even one cent the super revenues of all these monopolies in Canada. All this board has done, as we have said in this House, is to control worker's wages, but never these large monopolies' profits.
The net revenues of Bell Canada for the first semester of 1977 over those of 1976 went down from $149 million to $129 million, that is 18 per cent. But this reduction stems from fewer long distance telephone calls due to the very high rates.
Bell Canada
Furthermore, the last rate increases came into force only at the end of the first semester. Therefore revenues for the second semester should be higher due to the new rates.
As it is impossible to obtain figures concerning the profits of the subsidiaries, the true financial situation of these companies remain unknown. The umbrella under which they are hiding distorts realities, so that we can never-neither can the smartest accountant-state for sure what benefits Bell Canada made in any given year, especially because of its relationship with its subsidiaries. The rates of increase are reported to have been 7.8, 18.8, 12.2, 13.3 and 16.6 per cent in 1975, 1974, 1973 and 1972 respectively. But it is when we turn our attention to its subsidiaries that we are in for a big surprise, Mr. Speaker. The rate of increase in net benefits of Northern Telecom Ltd. was 5 per cent in 1976, but it reached 32 per cent in 1975, 62 per cent in 1974 and 60 per cent in 1973. Of course, the profits of the Northern Telecom Co. Ltd. will remain unknown because it is a subsidiary which is 69 per cent owned by Bell Canada.
Here are further statistical data and information, Mr. Speaker. Before 1971, Bell Canada was publishing its own directories. This activity was highly profitable, because of the publicity in the yellow pages. In 1971, Bell Canada created a new subsidiary, Tele Direct Ltd., in which it invested some $9 million to look after the publication of telephone directories. In 1976, this subsidiary's income reached $91 million. That is not too bad.
For an investment of $9 million, nice revenues of $91 million-an investment return of about 75 per cent. Maintenance, traffic and amortizing expenses go up 8 per cent a year. But other expenses have gone up 70 per cent during the last five years. What are those expenses, Mr. Speaker? Now that is an interesting question. Those expenses relate to senior management, legal advisers, public relations, consultant office, rent, various taxes and so on.
For instance, former board chairman Robert Scrivener was paid $201,000 in 1976. When he left Bell Canada to join Northern TTelecom, a subsidiary of Bell, he was given a lump sum of $575,000 and he will draw a pension of $81,000 a year. That is more than the Prime Minister of Canada earns, Mr. Speaker.
This does not take into account the fact that Mr. Scrivener will earn $175,000 with Northern Telecom Limited, Mr. Speaker. I think that instead of appointing some of its friends to the Senate, the Liberal party should send them to this company. It pays more money. Moreover, Mr. Scrivener will receive a pension. A salary of $175,000 is not enough, he will receive a pension. As for the former chairman of Northern Telecom, the American John C. Lobb, he is assured of a pension of $147,000 for ten years. He will also receive $30,000 a year as adviser to the company.
In an interview given to the Ottawa Citizen on October 12, the chairman of Bell Northern Research, another Bell subsidiary, for there are many of them, said that his company was preparing to expand outside Canada rather than over here.

November 24, 1977
Bell Canada
Mr. Speaker, this is the danger that I mentioned at the beginning, the danger that results from the change provided in this bill. Bell Canada, not satisfied with its income and after having made the largest profits in Canada, will take this money to do business in another country. We say that capital is leaving the country, but we are contributing to this with the bill that will be passed today. We are helping Bell Canada to invest in other countries.
In the United States, the Federal Communications Commission has forced American Telephone & Telegraph to stop the multiplication and incestuous union of its subsidiaries. In addition, AT&T will have to submit each year a detailed financial statement for each service it provides. This will provide information on the cost of services and on the returns of the company. The company will no longer be able to make across the board rate increases and will have to restrict increases to the areas where costs make this necessary, which is very vague, Mr. Speaker, and leaves the door wide open to the company. If its returns are too large for one service, it will even have to reduce the rates for this service.
Bell Northern Research has virtually forced into bankruptcy all Canadian manufacturers of coaxial cables, the type of cables which are used in cable TV distribution. Bell no longer manufactures this type of cable and Canadian users have to import them from the United States because Bell Northern got rid of all Canadian competitors. And now Northern Telecom is laying off 1,000 Canadian workers. The increased powers Bell is asking for would give it the power to invest in nearly every field and every country. We can rightfully wonder whether Canadian users, through their phone bills, would not be financing investments which finally would be of no use to them.


Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, Bill C-1001, which is being sponsored by the hon. member for Scarborough East (Mr. O'Connell), in my opinion is unacceptable on a number of grounds. My main objection to this bill lies in the fact that it will enable Bell Canada to be removed from the scrutiny of this parliament for many years to come. By asking this parliament to agree to increase their capitalization from $1% billion to $5 billion, it means that in all likelihood there is not a single member of this parliament who will ever see that bill come back for review.
One of the reasons for making provisions in these private bills with respect to capitalization was to ensure that when a company wanted to enlarge its capitalization it would be required to come back to parliament, and members of this House would be able to scrutinize whether or not that particular company operated in the public interest. However, if this House agrees to increase the capitalization from $1 % billion to $5 billion, Bell Canada will go scot free for many, many years to come.
Someone may ask why should there be periodic scrutiny of the operations of Bell Canada. Mr. Speaker, I think it is

abundantly clear we have to make a distinction between a	I
company incorporated under the Canada Corporations Act	I
which is in competition with other companies doing similar	I
business in a similar area, and a company which is by its very	I
nature monopolistic. If someone wanted to build a refinery, or	I
a shoe factory, or a pulp mill, the public interest is protected to	I
some extent by the fact that there is competition. Now, even	I
competition does not always safeguard the public interest	I
because we have had companies entering into arrangements	I
for restraint of trade.	I
It is rather significant, in spite of anti-trust legislation in the	I
United States and the Combines Investigation Act in Canada,	I
we have still seen companies growing in size to the point where	I
they virtually control the market, or two or three companies	I
control the entire market in a country. However, where there	I
is no competition at all then the public is completely at the	I
mercy of that monopoly.	I
There are enterprises in which it is impossible to have	I
competition. The generation of electric power, the transmission	I
and distribution of natural gas, and telephones are all good	I
examples. You cannot have two power utilities distributing	I
power in the same town where you can buy from blue com-	I
pany, or red company, or yellow company. When a company is	I
given a franchise to put in pipelines or distribute natural gas it	I
automatically becomes a monopoly. And when a company is	I
allowed the privilege of providing telephone service it is not	I
possible to have competition so that you have two or three	I
different companies from whom you can purchase telephone	I
service. Bell Canada, by virtue of being a monopoly, ought to I be subject to the scrutiny of parliament in the interests of the	I
consumers. I do not see why members should be alarmed at	I
the members of the New Democratic Party taking that posi-	I
tion. In the province of Ontario at the turn of the century,	I
Ontario Hydro, under the leadership of Sir Adam Beck, was	I
set up, and it has provided probably the best electrical service	I
at the lowest conceivable prices-certainly in Canada and	H
probably on this continent.	I


Walter David Baker: That is not what Stephen I Lewis says. You better straighten him out.	I


Thomas Clement (Tommy) Douglas: The	I
TVA Tennessee Valley Authority-in the United States,	I
set up under President Roosevelt, has provided the American	I
people with cheap, accessible electric power. It has been of	I
tremendous value to the people of America.	I
In the province of British Columbia governments there, which do fight elections against public ownership of electric utilities, took them over and operated them under public ownership. The government took over the ferry service, and the ferry service is operated by the government of British Columbia. This is not because the governments, which happened to be Social Credit governments, were wedded to socialism, but because they recognized that, in fairness to the consumer, services such as the generation and distribution of
November 24, 1977

electric power, and ferry services, absolutely essential to the people who live on the coastal islands of British Columbia, had to be operated under public ownership in order to protect consumers. That is the danger of leaving a natural monopoly in the hands of a group of individuals who naturally seek to maximize their profit at the expense of consumers. There is no doubt that the consumer is victimized where there is no adequate public protection.
I know it will be argued that in the case of the telephone companies they must apply to the CRTC for increases in their rates. The fact of the matter is that such an application, originally to the CTC and later to the CRTC, has become a farce. These companies are able to hide a good bit of their profits. Bell Telephone, for instance, owns Northern Electric from which it buys its supplies. It can quite well afford to pay inflated prices for its supplies to its own subsidiary, which keeps the profits of the parent company down, and simply transfers them to the subsidiary, Northern Electric.
There are scores of ways by which it is possible for a monopoly such as Bell Telephone to come before a government board and demonstrate that their profit margin is not excessive and that, therefore, they are entitled to a further increase in rates. In fact they have obtained an increase in rates year after year after year.
The fact of the matter is that the services which they have provided in many cases have not warranted the kind of increases they have obtained. I have a letter on my desk right now from a man who complains that while the rates of the telephone company were increased on the grounds that it needed greater capitalization in order to improve the service, in his case, my correspondent claims, the service has not improved at all but has steadily deteriorated. He has sent me copies of the letters he has written to the telephone company complaining about the fact that his service has deteriorated in spite of increasing rates, and in spite of alleged increases in capitalization.
The consumer is being ripped off by virtue of the fact that he has no protection whatsoever against a natural monopoly. If the consumer could purchase goods or services on a competitive basis he could go to another firm, but you cannot go to another telephone company, you cannot go to another power company, and you cannot go to another gas distribution company. They are monopolies.
It is abundantly clear that the monopoly, in this case Bell Telephone Company, has taken advantage of its preferred position. One has only to look at a comparison of rates between the privately owned telephone companies and the rates charged by the publicly owned telephone companies in the three prairie provinces, Manitoba, Saskatchewan, and Alberta.
When we last discussed this the hon. member for Winnipeg South Centre (Mr. McKenzie) sought to make a case for these higher rates by Bell Telephone Company over the private telephone company rates on the ground that they were serving large cities such as Toronto and Montreal. His argument was that serving a city cost a great deal more money because a
Bell Canada
company has to put in switching operations with many people to service and, consequently, the rates ought to be higher in a large city. He suggested it was unfair to make the kind of comparison my colleagues have been making of rates charged by private telephone companies and those charged by public telephone companies.
Let me say to the hon. member for Winnipeg South Centre that I had close association for some 17 years with the workings of the Saskatchewan Telephone Company, and I know that company was always much more pleased to get an increase in business in the cities than in the small towns and rural areas because it was much less costly to put in additional lines in the city than it was to take telephone lines out into the rural communities and to put up switch boards to serve only a few hundred customers. This is much more expensive than to put in switch boards to serve a more concentrated urban centre.
Even if we accept the argument of the hon. member, and this much of his argument is true, the people in large cities should pay higher rates than the people in small rural areas for the obvious reason that if you live in a city where there are a million telephones, there are a great many more people whom you can telephone from your own house than if you live in a community where there are only 500 telephones. In other words, you are getting a much greater service.


An hon. Member:: How many of us would call 500 people?


Thomas Clement (Tommy) Douglas: Perhaps people would not make phone calls to 500 different locations in a large city, but the people in the city can make phone calls which would be long distance calls if they lived in a small community, and the hon. member should recognize that fact. That is elementary, even to one with the normal Liberal intellectual capacity.
Even if we accept the argument of the hon. member for Winnipeg South Centre, that it costs more to provide services in a large city, let us take a look to see what happens in comparable areas. For instance, in the city of Calgary, where the public telephone system operates, there are 200,650 telephones. The residential rate is $5.70 and the business rate is $14.70. Let us consider the city of Quebec, which is not very much larger, there being 245,806 telephones, and the rate is $6.55 for residential and $18.70 for a business phone. That is a difference of $4 a month or $48 a year more in Quebec than in Calgary. Let us consider the city of Winnipeg which has about the same number of phones as Quebec City, namely, 237,500. The residential rate there is $4.90, with the business rate being $11.65.
If you consider London, Ontario, which has only 119,483 telephones, by the logic of the hon. member for Winnipeg South Centre the service ought to cost much less than service to the people in the city of Calgary. However, we find that in London, Ontario, the residential rate is $6.20, which is 50 cents a month more or $6 a year more than in the larger city of Calgary. The business telephone rate is $17 or $2.30 a month more than the business telephone rate in the city of

November 24, 1977
Bell Canada
Calgary. A businessman in the city of London is paying $27.60 more each year, despite the fact the number of telephones there is a little more than half the number of telephones in the city of Calgary.
How can my friend argue that the reason the private telephone companies have to charge higher rates is because they serve larger centres of population? Even in London, Ontario, where the number of people served is only a little better than half what it is in Calgary, the people in Calgary are getting much lower rates for their residential and business telephones.
I should like to refer to two communities which are almost comparable. The city of Regina has 72,400 telephones, and the residential rate is $5 and the business rate is $11.85. The city of Moncton has 52,200 telephones or 20,000 less telephones. Its residential rate is $7.65 or $2.65 more per month. The rate for a business telephone in Moncton is $22.30 or almost twice what the people in Regina pay, even though there are 20,000 more telephones there.
The city of Edmonton has 207,700 telephones. The residential telephone rate is $5.80, and the business telephone rate is $17. The city of Victoria, which is smaller, has 192,796 telephones. The residential rate there is $6.65, and the business rate is $17.15. By the logic of the hon. member for Winnipeg South Centre, subscribers in Victoria should be paying less, but they are paying more.
In Halifax with 96,249 telephones, the residential rate is $8.95 or $3.15 more than in Edmonton which has twice the population. The business telephone rate is $26, which is $9 more than in Edmonton.
Saint John, New Brunswick has 47,007 telephones. Their residential rate is $7.65, and their business rate is $22.30, which is $5 more than what is charged in the city of Edmonton where there are 2Vi times as many telephones. Certainly that defeats the logic of the argument that the reason the private telephone companies are charging high rates is because they are serving larger centres. By any standard of comparison it is perfectly clear that the people served by these private companies are being ripped off. Not only are they paying more for their telephone service, they are getting a lower quality of service from these private companies.
I sum up by saying that the only way this parliament can protect the telephone users is by defeating this legislation, or so changing it that these companies will be required to come back periodically to parliament in order for parliament to have an opportunity to scrutinize their operations and ensure that Canadian consumers are protected.
I have other objections to some of the clauses in the bill, but perhaps I will have a chance to discuss them at a later date.


Some hon. Members:: Hear, hear!


Leslie Gordon Benjamin: Mr. Speaker, in view of the fact that it is two or three minutes before six

o'clock, in a preliminary way I want to say I am happy to join my colleagues in opposition to this bill. This is not the first time we have been faced with this legislation, so our unanimous opposition to it is of no surprise to other members of the House. We do not feel lonely, because there are tens of thousands of Bell Canada subscribers across Canada who are cheering us on, and are happy that once in a blue moon their cause is put before the public and in parliament. The consumers' side must be heard, rather than just hearing about poor Mother Bell who needs another $3*/2 million for capitalization.
The bill goes beyond the stated objective. It is an attempt to exempt Bell Canada from regulation. The telephone service, light, power and natural gas are just too essential to be left to the whims and the tender mercies of private corporations responsible to no one but their shareholders. The objective of these private corporations is to maximize the profits and returns to the shareholders. That is their primary objective. The top priority of private corporations is to make money and not to provide a service. With that lack of social conscience or moral treatment of the communities those companies serve, no one can blame their subscribers for protesting this kind of legislation.
Treating telephone service as a public utility is not only logical, it should be obvious to anyone. Because it is a public utility that is privately owned, minimum regulations apply to Bell Canada's rates of return, assets, and the price it can charge for its services. I would go further with respect to its accountability to the public and its customers by saying that there should be a full scrutiny of the methods of operation used by Bell Canada, their labour management relations, the way they spend their money, and how generous they are to the board of directors.


Mr. Deputy Speaker:: Order, please. I regret to interrupt the hon. member but the time allotted for the consideration of private members' business has now expired.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Paul Edmund McRae: Mr. Speaker, I am concerned about the minister's answer to a question I asked last week in the House concerning the gross increase in Seaway tolls.
Canadian users have not been given the opportunity of public hearings that American users have been given to discuss
November 24, 1977

these increases. This is particularly galling to Canadian users since they represent 70 per cent of the tonnage and pay about 63 per cent of the tolls. These Canadian users who are concerned, such as people in the grain industry, ship owners, unions dealing with grain handling, seamen, farmers, various business groups, chambers of commerce, and so on, are very concerned.
Certainly ship owners are not concerned for themselves particularly because they know they will be able to absorb the extra cost, but they are concerned about the loss in business which they believe could very well occur, and also the loss of jobs. Basically they are concerned with the size of the increase-the cost will be approximately doubled-and with the suddenness of the increase. They believe this could create some very bad psychological effects. For instance, it could create a diversion of ore from Sept-Isles to Philadelphia or Baltimore. This would mean that the cost of moving grain would be considerably higher since grain from western ports moves east and the ore traditionally moves back. We could have an increase in cost for the movement of grain, if ships came back empty, of 4 cents or 5 cents a bushel.
They are also concerned about the diversion of grain to the Pacific coast. They are concerned, too, about unit trains which, given the increased tolls, might by-pass Thunder Bay and move grain to east coast ports. They are also concerned about loss of sales.
The Seaway Authority says the increase will cost only an extra cent a bushel, but when grain is sold in quarter cent quotes per bushel and quotes are made at $2.9514, 1 cent is a large sum and, if a ship comes back empty, 4 cents or 5 cents is a sum which could result in serious losses.
The Seaway stands to gain something in the order of $22 million. The users, people working on the Seaway, are concerned they could lose $70 million to $100 million with an attendant loss of jobs.
One of the things that concerns me is whether or not the Authority actually needs the amount of money it says it needs. The deficit this year was $6.5 million, with depreciation added of $1.2 million, and with the new policy of the 1 per cent tax on the $625 million debt on the Seaway, the total amount would come to $14 million. If you add 7 per cent or 8 per cent for inflation, you are talking in terms of about $15 million. The Seaway authority is talking in terms of picking up between $20 million and $22 million.
If the minister were to take another look at this and allow for some public hearings, either through the Standing Committee on Transport and Communications or through some independent body, and think in terms of these increases over three to five years, spreading them over a longer period of time and not creating the psychological situation which may cause this diversion, the users, my constituents, and people who live along the Seaway would be a great deal happier.
I am opposed to this move because I am afraid we will lose considerable business, but I am also opposed to it on other
Adjournment Debate
grounds, namely, that this is a move in the direction of the user-pay concept. I think the user-pay policy is not a policy which will satisfy the needs of Canadians. It is a policy which tends to favour the inner core of the country, the Golden Horseshoe, but it certainly does nothing for people in the Atlantic provinces, northern Ontario, or in the west. The user-pay principle is one about which I am very concerned. I think it will bring disunity to the country. For these reasons I oppose both the size and the suddenness of these increases, and I hope the minister will reconsider his stand on this matter and allow open hearings to take place.


Mr. Charles Lapointe (Parliamentary Secretary to Minister of Transport):: Mr. Speaker, the remarks the hon. member for Fort William (Mr. McRae) just made can easily be understood, and the member was of course making himself the spokesman for the St. Lawrence Seaway users who of course are not happy to face a toll increase. It is quite normal for any user of a service not to be fully happy when an increase is announced. However, Mr. Speaker, the Minister of Transport (Mr. Lang) does not intend to refer the question of higher tolls for transit in the St. Lawrence Seaway to the House Standing Committee on Transport nor to any other body.
The Seaway authorities have stated for several years the need for a toll increase to stop the accumulating and ever increasing yearly deficits in spite of the fact that tonnage is going up as well. I was nevertheless surprised to hear the hon. member say that this is a sudden increase. If my records are correct, I believe the succeeding governments have asked for and talked about an increase in the seaway tolls since 1964. The Minister of Transport himself has repeatedly and publicly announced that he intended to recommend higher tolls on the St. Lawrence Seaway. All people directly concerned have closely followed the negotiations that have taken place between our government and that of the United States. Those people, on both sides of the border, have had the full opportunity to express their opinions and justify their objections and they have not missed the occasion to do so that the negotiations between the two countries provided them with. Public audiences would not have been more advantageous to them than the meetings they have had with the authorities of the St. Lawrence Seaway, the Marine Administration of the department or the minister himself.
As I was saying at the beginning of my reply, it is no surprise that the users of the seaway object to an increase in their transportation costs since people never welcome an increase in their costs. The fact remains that current tolls have not changed since 1959 and that the increases which the governments of the two countries associated in the St. Lawrence Seaway now propose will not even bring the tolls back to the level that had been deemed acceptable in 1959. I think this partially answers the objection that the rate of increase is too high. These tolls have not changed for nearly twenty years now and it seems reasonable to me that they be readjusted, given

November 24, 1977
Adjournment Debate
the increase that all other sectors of the economy have experienced.


ENERGY-URANIUM-REASON GOVERNMENT AQUIESCED IN CARTEL ARRANGEMENT
Sinclair McKnight Stevens: Mr. Speaker, the matter which brings me into the adjournment debate this evening is the international uranium cartel, and particularly the effect this possibly illegal cartel will have on prices Canadians will pay in the future for electricity.
On Monday last I asked the Minister of Energy, Mines and Resources (Mr. Gillespie) about a contract a cartel member, Gulf Minerals Canada Limited, signed with Ontario Hydro in 1974, apparently with the blessing of the federal government. Gulfs own records on this deal now reveal for the first time that Gulf charged the consumers of Ontario, prices which were in line-in fact, dead on-with cartel prices set by the Club of Five in Paris. These records of Gulf boast of the profit Gulf will make on the deal, some $50 million at least, on a contract valued by Gulf at $98 million.
These records point proudly to the fact that by virtue of its membership in the cartel, which was sponsored by the Canadian government, Gulf was charging Ontario Hydro prices far in excess of the going world market price. 1 would like to quote from a Gulf memo dated March 8, 1974, referring specifically to the Hydro contract to which I have just made reference. The memo states, and I quote:
The above prices are considerably higher than either the current world market price or the latest prices established by the Department of Energy, Mines and Resources as being the minimum for export of Canadian uranium.
What is worse, Mr. Speaker, the government appears to have known of and even approved this contract which we now know to be based on prices rigged in Paris by the cartel. Again referring specifically to the Hydro contract the above cited memo says:
The EMR staff does however recognize that Canadian utilities must be prepared to pay the same prices that we could achieve from export sales.
In 1974, Mr. Speaker, export prices were one and the same as cartel prices.
Another document, dated February 26, 1976, raises even more serious questions. This memo hints darkly that the government even went so far as to offer Gulf "protection from government action," meaning, I suspect, protection from legal action. It says:
At the time the (Hydro) proposal was made $12.50 plus 90 per cent escalation plus protection from government action was at the top of the market.
When I asked the minister why his department-contrary to repeated public statements-allowed a cartel member to charge cartel prices in Canada, the minister hedged the question, suggesting I was an "agent for a foreign corporation."
Frankly, the real question is, who is the minister acting for in this matter? Is he acting on behalf of Canadian consumers

who are going to be using electricity, or is he acting for certain rather secret interests, certain foreign corporations such as Gulf U.S. or Rio Algom. Incidentally, the Gulf operation is estimated by them to yield between $3 million and $3'/2 million per year after tax profits for as long as the deal continues.
The real question in my mind is whether the minister is more concerned with Ontario users of electricity or with saving members of his government from embarrassment.
Frankly, his answers look pretty fishy. When I asked the minister if he has reviewed the Hydro contract he said in effect, "Why should I? Ontario Hydro hasn't complained!" Mr. Speaker, that is just not true. I should like to read into the record a few comments Hydro made at the time the cartel was forcing Canadians, including Hydro, to pay rigged prices for uranium.
Minutes of a meeting of the Ontario Hydro finance committee on July 15, 1974, report:
Uranium suppliers have clearly indicated that uranium prices will be equated to the so-called "World Price" calculated at or near to the year of delivery.
"World price" was the term the cartel used to describe cartel prices in 1974. The report concludes that, under present circumstances, Hydro does not have a strong bargaining position and may have to pay world market prices even though they will lead to significantly high uranium costs.
I am sorry the minister is not with us tonight, Mr. Speaker. I hope he will stop stonewalling this whole cartel misadventure, particularly this contract with Hydro. I hope he will tell us why the government permitted the people of Ontario to be ripped off by a cartel member.
I think it is time the government started to answer a few questions on this entire affair. Certain blind or frozen trusts that have been reported at the time the cartel was established have to be opened up and explained. Do these blind trusts include members or former members of the Government of Canada, for example? These are questions that have to be asked. To use the Prime Minister's (Mr. Trudeau) expression, "It looks fishy." I think it is time questions were answered instead of being stonewalled as we were last Monday by the Minister of Energy, Mines and Resources.


Mr. J. Gilles Lamontagne (Parliamentary Secretary to Minister of Energy, Mines and Resources):: Mr. Speaker, I am pleased to repeat, for the benefit of the hon. member for York-Simcoe (Mr. Stevens), the details concerning the marketing of uranium. From August 17, 1972 to March 6, 1974, the Minister of Energy, Mines and Resources (Mr. Gillespie) issued five directives on price fixing to the Chairman of the Atomic Energy Control Board. Another one issued on March 27, 1975 invalidated all former directives. All relevant details are given in a press release dated October 14, 1977.

It had become clear by early 1974 that there had been a dramatic turn-around in the uranium market from a buyer's
November 24, 1977

market to a seller's one. After many years of relative inactivity, Canadian uranium marketing personnel found themselves with far more inquiries than could be accommodated. Hence, during the first six months of 1974, the Canadian uranium industry contracted for sale into the export market, for future years, a total of 45,000 tons of uranium oxide, some ten times the then Canadian annual production rate.
The government, recognizing that the market had switched so positively, moved to ensure that domestic uranium consumers would not be caught in the position of not having enough future uranium supplies from domestic sources to satisfy their own nuclear power programs. This was a very real risk in mid 1974. As a result, on September 5, 1974, the government announced a uranium export policy which protects domestic utilities with long term assured supplies through the creation of a system to establish domestic reserve allocations. It is not surprising, therefore, that by March, 1975, the Minister of Energy, Mines and Resources felt that it was no longer necessary to specify a minimum price for uranium sales in order to protect against what had pertained in earlier years, namely, that uranium mines were being high-graded and sales were sometimes made at prices below operating costs in order to prevent mine shutdowns.
In the last pricing direction issued on March 6, 1974, the minimum price specified for sale of uranium from Canada was $8.20 per pound, for delivery in 1974; $9.05 in 1975; $10.00 in 1976; $11.05 in 1977, and $12.20 in 1978. For deliveries during the period 1979 through 1985 or, as an alternative to the minimum fixed price schedule just mentioned, escalated prices on a base price of $9.70 per pound could be offered. The escalation formula was to operate from 1974 at the stipulated base price, irrespective of the first delivery year in the contract. At least 80 per cent of the price was to be subject to escalation, and the labour and materials cost components of the escalation formula were to be at least 30 per cent each.
In the direction of March 6, 1974, as in all previous pricing directions, it was made clear that the Canadian market was to be excluded.


Sinclair McKnight Stevens: It was not, and you know it.


Mr. Lamontagne:: Canadian producers were also very much aware of this exclusion. Consequently, the federal government was not informed of the negotiations, if any, which were occurring between Canadian producers and domestic utilities. Even the Atomic Energy Control Board did not call for copies of domestic contracts until after the export policy of September 5, 1974, was issued. The purpose of calling for contracts then, by the way, was to ensure that domestic uranium producers were not offering uranium into the export market under more favourable conditions than they were into the domestic one. Given this background, it is not surprising that officials did not hear of the Gulf Minerals Canada Limited-Ontario Hydro contract until 1976 after the contract had been signed.
Adjournment Debate


Mr. Deputy Speaker:: Order, please. I regret to have to interrupt the hon. parliamentary secretary but the time allocated to him is over; he even spoke beyond his time.

ENERGY-OIL-SUGGESTED SHORTAGE BY MID-1980's-REQUEST FOR INCREASED COAL PRODUCTION IN NOVA SCOTIA


Andrew Hogan: Mr. Speaker, the Minister of Energy, Mines and Resources (Mr. Gillespie) has been repeating for the last few months that Canada faces the threat of a serious energy crisis in the mid 1980's. The minister recently, in early November, told a Toronto audience that even if people do not see it, it is like the iceberg that sank the Titanic. Again, in response to my question in the House today, he repeated his serious concern that Canada ceased to be self-sufficient in oil last year.
The minister has committed Canada to a target of imports of no more than 800,000 barrels a day by 1985, which would still cost over $4 billion a year. Paying for this imported oil is only one part of the problem, although an extremely difficult one. In addition, it is going to become increasingly difficult to ensure that there is enough oil to buy at any price, although experts disagree on timing. The Massachusetts Institute of Technology study, the Central Intelligence Agency study of supply and demand for world oil, the Organization for Economic Cooperation and Development, as well as the leaders of the organization of petroleum exporting countries-which control most of the oil-all have warned that sometime in the 1980's there will not be enough oil in the world to go around, even if we use rigorous conservation practices.
The head of Petroleos de Venezuela recently said in Toronto:
... in ten years the surplus oil production capacity of the Organization of Petroleum Exporting Countries (OPEC) will gradually disappear as demand rises and additional supplies of oil from outside the OPEC area are not forthcoming in significant quantities ... When this happens, international crude oil prices will again rise steeply, perhaps to as much as $20 a barrel in 1976 dollars.
The Cape Breton oil industry is now at a point at which it can make a contribution to the balance of payments problem of our country if the federal government will quickly start two new deep mines, as well as using some of the coal that can be stripped in that area for Nova Scotia's own power needs, such as at the new generating plant being built at Lingan, outside New Waterford, Nova Scotia.
Over and above what we can supply for ourselves in Nova Scotia, there is a market which was formerly held by the Cape Breton coal industry when it was under private ownership but which was lost during the era of cheap, imported oil, which has now come to an end. I refer to the heavy industries in the southern part of Quebec, such as cement, pulp and paper, iron and titanium, and many others which are now using the very expensive imported heavy oil. For example, last year in 1976

November 24, 1977
Adjournment Debate
there were 41.3 million barrels of heavy oil imported into Quebec at 35 imperial gallons per barrel. The forest products industries use 24 per cent of this volume; cement and smaller industries use another 20 per cent; mining, smelting, and quarries use 12 per cent, and marine industries use 13 per cent.
The best targets for Cape Breton coal to substitute for some of the industrial users of heavy imported oil are the major pulp and paper and cement plants, etc. which are situated on or near St. Lawrence ports and can be readily reached by water shipment from Sydney Harbour. Practically all these industries used coal until the late 1950's and their steam plants or cement kilns can again use coal after reconversion to coal firing apparatus. Now it takes about four barrels of this heavy oil imported into Quebec to be equal in British thermal units of heat value to one ton of coal, so one can easily see that Government of Canada could, for an investment in a new coal mine in Cape Breton, help immensely these industries in Quebec to survive competitively and, as I mentioned before, this would in turn help Canada's balance of payments.
There is one major fly in the ointment, so to speak. The industries I have mentioned would have to reconvert their steam boiler plants, or cement kilns, from oil to coal firing at substantial capital cost. This involves not only the boilers but also the reconversion of their coal storage grounds. Given the concern in our day for pollution control, modern devices to reduce fly ash and noxious gases from their stacks would be needed.
It would appear to be economically beneficial for the Government of Canada and or Quebec to allow such companies a form of tax forgiveness or fast write-off for their coal conversion costs. On the Cape Breton side, from Devco's point of view, the corporation would have to reconstruct the customer contacts the former private owners of the Cape Breton coal mines had with these industries in Quebec and re-establish a coal flow marketing system in the St. Lawrence trade. None of this can be done overnight, but it is imperative that these problems be tackled as soon as possible.
It is obvious that the future supply of energy is a serious corporate concern to all these Quebec industries. Currently they depend almost entirely, as I said before, on imported oil. These industries, to repeat, are concerned not only with the sharply rising price of oil but also and, more significantly, with the future uncertainty of the supply itself. This is particularly true with respect to the additional supplies of oil required for normal industrial expansion. The uncertainty, unless corrected, will place a marked restriction on normal industrial growth in the province of Quebec.
There is a market opportunity for three to four million tons of thermal coal on the St. Lawrence waterway of Quebec province. The question is, can and will Cape Breton be prepared to supply that important profitable market? It is my opinion that the Cape Breton coal fields can, with expansion, provide at least a million tons of coal per year, and perhaps two million tons, which would be over and above Nova Scotia's own needs. What is required is a genuine co-operative effort by the federal government, Quebec industry, and Devco to estab-

lish a market development strategy conducted in orderly coordination with a mine expansion program in the Sydney coal fields. It is obvious that time is pressing, both for Cape Breton and Quebec, and serious planning must not suffer from procrastination from any quarter.


J. Gilles Lamontagne: Mr. Speaker, I wish to thank the hon. member for Cape Breton-East Richmond (Mr. Hogan) for his relevant question as it allows me to review some activities of the Department of Energy, Mines and Resources. Those activities are undertaken in co-operation with Nova Scotia, the Department of Regional Economic Expansion, Devco, the Treasury Board and they are aimed at reducing Canadian dependence on imported oil, particularly in the Maritimes.

These co-operative activities embrace all aspects of coal development and utilization.
As far as exploration is concerned, the Department of Energy, Mines and Resources is providing technical advice to DREE for the coal drilling program currently being conducted both onshore and offshore in Nova Scotia. The cumulative expenditure on this program amounts to about $8 million, of which 80 per cent, or $6.4 million, is contributed by DREE.
As far as mining is concerned, the Cape Breton Development Corporation, as a federal Crown corporation, has been completely modernized and now operates two new mines, one rehabilitated mine, and a new preparation plant. In addition to the capital requirements, Treasury Board approved a substantial grant of $28 million last year to cover the deficit in operations.
As for utilization, under the Canada-Nova Scotia agreement on oil substitution and conservation, which is administered federally by the Department of Energy, Mines and Resources, $9 million has been made available directly, and a further $15 million will be available through loans for, among other things, accelerating the construction of new coal-fired power plants and experiments in combustion of coal-oil slurries in existing oil fired plants.

However, the new mines can be established only when the results of the exploration have been evaluated, the economic effects of foreign oil substitution by national coal have been measured and experimental combustion has been made.
I hope that with this additional information all hon. members and all those who are listening to us will appreciate the efforts and the constructive and co-operative approach implemented by the Department of Energy, Mines and Resources to reduce the dependency of Cape Breton, Nova Scotia and the Maritimes as concerns imported oil. And this is the objective at which we continually aim in the interest of every Canadian.
November 24, 1977


Mr. Deputy Speaker:: The motion to adjourn the House is now deemed to have been withdrawn.
Motion withdrawn.


Mr. Deputy Speaker:: I do now leave the chair until eight o'clock tonight.
At 6.30 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.


[Stage Direction]
The House resumed consideration of the motion of Mr. Chretien that Bill C-ll, to amend the statute law relating to income tax and to provide other authority for the raising of funds, be read the second time and referred to committee of the whole.
James Balfour: Mr. Speaker, before the dinner hour 1 was addressing a few remarks to the provisions of the bill before us as they relate to the treatment of insurance policies. Now I should like to examine the other proposals relating to insurance policies, one of which concerns loans taken by policyholders against their life insurance policies.
The Department of Revenue proposes to have the amount of the loan that exceeds the value of premiums paid, to be added to the borrower's income. In other words, the gain portion of the loan is to be treated as an advance or disposition, and is to be taxed as such. This suggestion attacks the concept of paid up insurance constituting tangible property. While money borrowed on the security of real estate is not taxable, these measures insist that borrowing on the security of the paid up portion of an insurance policy does not warrant similar consideration. This is clearly unjust. A policy loan should be regarded as just that, because the loan is ultimately repayable out of the insurance proceeds, if it has not been repaid earlier.
In introducing this measure the government is effectively eliminating a ready source of low interest loans, easily accessible to finance such projects as sending a child to college, paying uninsured medical expenses, or effecting household improvements.
Traditionally and historically, policy loan provisions have constituted well established and valuable features of life insurance programs in Canada. Changing the rules in mid-stream, as the minister proposes, will further erode the incentive to
Income Tax
save and provide for one's own future, which at one time was a significant feature of the Canadian style of family life.
Many, if not all, current policy owners bought their policies in the expectation that in times of financial need or emergency they could borrow against their policies without being taxed. To change this provision is to undermine a basic feature of life insurance policies. In so far as this provision was simply intended to plug a possible loophole for avoiding the now defunct proposal for a tax at death, it is clearly pointless.
A third proposed measure regarding life insurance policy owners would disallow the deduction of interest on policy loans designed to be utilized in such a way as to increase the policy owner's income. An example of this might be a small businessman borrowing against his policy to improve his business. This proposal will serve only to further hamper access by small business to low cost financing, and place a further burden on the private sector of our economy. It should be recognized that life insurance policies are often the best, if not the only, source of ready cash for small business operators, since money can be obtained quickly at modest rates with no questions asked and no further collateral demanded.
In addition to the foregoing, the proposed measures regarding life insurance would have the effect of greatly increasing the administrative burden for insurers by the additional record keeping and reporting for ordinary policy loans, automatic premium loans, and payments of interest, thereby adding to the cost of insurance to the public. However, we should not be so surprised that the major effect of government tax amendments seems to be to raise prices, for the primary objective of these amendments appears to make the law, as it relates to income tax, even more tortuous and convoluted than it is already.
This bill that we are discussing today is nearly an inch thick, and all of 200 pages long. This is in addition to the 424 pages of the 1970 revised version of the Income Tax Act, and the hundreds of pages of amending acts between that date and this. Many of the amendments and obfuscations of income tax laws are the offspring of the "equity in taxation" hobbyhorse that is being ridden by senior advisers down the corridors of the Department of Finance. No one would claim the major inequities that existed in the tax system of days gone by should not have been eliminated, but we are at the point now where small and almost meaningless discrepancies in fairness are being operated upon to the over-all detriment of the system.
Let us consider one of the changes proposed in the bill-the provision to tax interest free loans to employees and shareholders. It is a purely equity based amendment. However, the consequence will be untold man-hours poured into revising compensation packages and looking for ways to circumvent the application of the rule, hours that undoubtedly could be put to more productive use.
This amendment will raise no revenue; will hurt, not help the economy; and will be nothing but trouble and aggravation to those who will have to enforce it. It is an amendment which will create enormous problems in order to clear up a minor source of inequity. On the corporate tax side it is well known
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November 24, 1977
Income Tax
that if the tax rates on dividends and capital gains were at the same level, the tax provisions relating to these could be simplified enormously. With this is mind, the tax gap between dividends and capital gains has been narrowed by increasing the dividend tax credit. This is fine as far as it goes, but it stops short of situations where there is non-arm's length dealing.
For example, in these cases where corporate control is being transferred among family members, or an estate plan is being set up, very complex rules have been introduced to ensure that no untoward tax benefit accrues. Again we find the concern about equity and fairness. However, all this does is create a situation where grossly inordinate amounts of time and effort, not to mention money, are spent to cope with the tax ramifications of every private corporate change, and the revenue in question is minute.
In short, major simplification is being held up on the corporate side because of relatively minor equity problems. The cost of refusing to simplify the corporate tax provisions, not to mention partnership, trust resource or insurance provisions, is simply staggering. All of this is not to suggest that fairness and equity in our tax system should be abandoned or ignored. On the contrary, the reform of Canada's tax laws to make them more equitable is an important task. A sense of proportion is required, and a realization that the cost to achieve perfect equity may very well far exceed the minor benefit derived. In these troubled times, the removal of minor inequities should not be the primary end toward which the tax amendments should point. Rather, our major objective must be the stimulation of the economy. The introduction of effective incentives for the expansion of the economy has to take precedence over all else.
The Minister of Finance (Mr. Chretien) has, to some degree, recognized the need for incentives. Perhaps he has not recognized the need for effective incentives. Nowhere is this more clear than in the case of the $100 tax cut for low and middle income earners, of which we have heard so much in this House. The minister has told us that the cut will be concentrated in January and February, that a married taxpayer with two children could receive maximum benefits at income levels of up to about $16,000, and that a total of $700 million in revenue is expected to be returned.
This rebate appears generous in its gross amount. However, to the individual taxpayer it will represent very little. A taxpayer with three dependants is going to derive very little benefit from the cut which averages out to $1.92 per week for the year. It will also do little to offset the gap between the rate recommended by the Anti-Inflation Board for wage increases and the projected rate of inflation for this year. The tax cut is supposed to spur consumer spending and confidence in the economy, but its inevitable failure will serve only to undermine whatever confidence is left. Even the Economic Council of Canada, normally a rather mild mannered and optimistic body, concurs with this diagnosis.
The measures outlined in the minister's speech were described by the Economic Council as being so inadequate as to "barely prevent the currently high unemployment from increasing further". It went on to say that incentives proposed by the minister "will not be sufficient to bring about the reductions in either youth or adult unemployment that are needed".
The response of the Minister of Finance to this critical report which proposed a variety of alternative solutions to Canada's economic woes, was to label it irresponsible. Before accepting this assertion regarding the Economic Council's forecasts, it might be instructive to examine the government's record in this department.
In the budget of May, 1976, the then finance minister forecast a decline in unemployment. It rose, instead. The government anticipated a fiscal 1977 cash requirement, excluding foreign exchange, of $4.5 billion. In fact 1977 cash requirements were $5.4 billion, in excess of the forecast by 20 per cent.
According to that budget there would be a significant decline in the 1978 cash requirements from the level first forecast for 1977. Latest estimates reveal 1977 cash requirements nearly double those originally projected for 1977.
Only last March the government forecast 4 per cent real growth, 6 per cent inflation, and a $6.4 billion cash requirement. Where are they now? Today we are confronted with real growth of 2 per cent, inflation pushing 9 per cent, and an $8.5 billion cash requirement. The Minister of Finance should re-identify the target of his allegations of irresponsibility in forecasting.
The plain truth is that there is simply not enough incentive being introduced to stimulate the private sector. It is this sector upon which we must depend for the creation of the jobs our unemployed so urgently need.
Some obvious indicators of the plight in which the private sector finds itself lie in Canada's balance of international payments. The biggest single item in the balance is merchandise trade. Although we have recovered from a deficit in 1975 and appear to be on our way to a healthy surplus for 1977, a closer examination of the figures will show that all is not well.
Most of Canada's exports are natural resources shipped in raw or semi-processed form, while imports are generally made up of manufactured goods. In 1976, raw and semi-processed goods composed 66 per cent of exports, worth $25 billion, while manufactured products composed 61 per cent of imports for a value of $23 billion.
The problem lies in the fact that these raw exports have a very low labour input, whereas the manufactured imports have a high labour component. In other words, our exports create very few jobs in Canada relative to the number of foreign jobs created by our imports.
In the years from 1970 to 1976 our trade deficit in manufactured goods alone grew from $2.5 billion to over $10 billion,

November 24, 1977

and is currently projected to exceed $11 billion. Clearly the manufacturing sector is one to which the present bill might more effectively turn its attention.
Not only positive measures, in the form of incentives, are needed. The elimination of negative factors, whether in place or proposed in this bill, has to be examined. There is lack of co-ordination between the federal government and the governments of the provinces on matters concerning taxation.
A prime example of the disorganization that abounds is in the taxation of mining companies. In British Columbia and Saskatchewan, for example, the lack of co-operation and consultation between the two levels of government has led to a situation where the combination of provincial royalty payments, and the federal elimination of the income tax deduction for such payments, has effectively created a tax rate of more than 100 per cent of revenue. How can the government seriously talk about turning the economy around and attracting investment when it cannot even co-ordinate its taxes and those of the provinces to avoid placing companies in such an outrageous position? What confidence should a prospective investor have in such an administration? How the government can purport to be attracting investment on the one hand, while terrorizing business on the other, I do not know.
A further example of the double-edge sword of government programs can be seen in the Canadian home insulation program. Even ignoring the tremendous inroads that the federal conditions for the implementation of this program have made on the jurisdiction of the provinces, there are aspects which cry out for examination and change. The aspect that concerns us most with respect to this measure is that the grant will be added to the income of the spouse with the highest income. This makes a mockery of the entire program.
An insulation grant will only cover two thirds of the cost of materials involved, nothing is paid towards the actual installation. An applicant receiving the maximum grant of $350 would have to spend a minimum of $525 on materials. If added on to that were say $175 for installation, the minimum cost would be $750, against which the grant would be applied. But a homeowner with sufficient funds to be able to afford part of the cost of the insulating will find that the grant, when added to his taxable income, could easily be taxed at a rate of 40 per cent or more. He would then be left with a net grant of perhaps $200, which would cover barely one quarter of the total cost. In addition, the government has overlooked the fact that, in many cases, the insulating it has promoted will result in increased local taxes for the homeowner far in excess of his anticipated savings in energy costs. All this hardly represents an effective incentive program to encourage insulation.
The same label can be placed on this entire package of government proposals that we are discussing here today: ineffective. There are several reason why. First is the fact that not enough incentive is being given to stimulate the economy effectively. Those measures that are included are so weak as to be of doubtful use; our economy is not in so healthy a position that half hearted measures will improve it.
Income Tax
Connected with the lack of incentives is the continued and needless complexity of the income tax laws. Unconscionable amounts of time are spent by businessmen and their advisers trying to understand the provisions and then to apply them to their particular situations. This is bad enough for large companies which can afford to keep tax specialists on staff, but it is absolutely intolerable for small businessmen for whom this represents a major expense. Indeed, Mr. Speaker, I wonder how many in this Chamber prepare their own income tax returns.
The government must make a commitment to streamline and simplify our tax laws and regulations. The major problem with this legislation, however, lies not so much in its content as in its style, for it is nothing more than another piece in the patchwork quilt that is the government's approach to the economy. We have here simply a few more palliative measures, designed to fix up the failures of the past, and destined to be replaced by the failures of the future.
The government is blindly slapping a few more band aids on the flagging economy in the hope that one of them might cover a wound. But the problem is far more complex than that, and so is the solution. Until the government realizes this, and takes a far-sighted and comprehensive approach to economic planning, we will continue to suffer the despair of unfulfilled potential that has been our lot for so many years.


Mr. Dean Whiteway (Selkirk):: Mr. Speaker, I appreciate the opportunity to join this debate on Bill C-ll but I will not get into the specifics of the bill. I intend to raise several very pointed questions when the bill goes to committee of the whole, at which time the minister, who is not present tonight, will be in his place. My remarks tonight are of a general nature and are more directed to what is not in the bill than to what is there.
Before I really begin I must say I am somewhat bothered that by reason of courtesy to my colleagues I am unable to take the full time which would normally be allotted to me, because the government has decided to bring in closure. That restricts the right of the opposition to scrutinize this legislation. This Bill has some critically important aspects to it, and the omissions in some cases are also very critical.
Yesterday the government charged that we were obstructing parliament and holding up the bill-the word "filibustering" was not used-when in fact up until the time of the closure motion only about 28 hours had been spent debating this legislation. If that amount of time was divided by the number of members in this House, a grand total of six minutes and 18 seconds would have been allowed for each hon. member to contribute to what is a critical tax proposal.


Sinclair McKnight Stevens: Shame!


Dean Waldon Whiteway: The minister does not want to call it a budget, but if it is not a budget, it should be. The hon. member
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November 24, 1977
Income Tax
for York-Simcoe (Mr. Stevens) has been calling on the government to bring in a budget before Christmas.
1 reject the notion of the government that restricting my right to speak on this legislation is proper. I feel almost professorial at this point because I want to lecture-if I can use that word-the government about the nature of parliamentary democracy. I do not deny for a moment the right of the government, which has a clear majority, to set fiscal and monetary policies. The Minister of Finance (Mr. Chretien) has just walked in, and I will say very clearly to him that it is his prerogative, responsibility, and indeed his duty to set fiscal and monetary policies and to bring in a budget. It is his duty to set the rate of taxation and to get the economy in order.
It is the prerogative of the government to set foreign policy. It is the right of the government, which has a majority, in a parliamentary system to rule and govern absolutely. I do not debate that point, but what I do reject is any move by any government to deny my rights, privileges, responsibilities, and duties to all the citizens of Canada and in particular, of course, to the people of Selkirk. It is my responsibility to scrutinize, to oppose, and to offer alternatives, and the alternatives we have offered this government are endless.
The hon. member for York-Simcoe and my leader have been very specific point by point, particularly in the area of fiscal and monetary policies and in suggesting a new budget. If it is true-and I believe it is-that the government has the absolute right to govern, surely the opposition has the absolute right to oppose, to scrutinize, and to take our time, if that is what we deem responsible, to try to persuade the government with reasonable arguments based on sound judgment, however reluctant it is to do anything meaningful, that it ought to take a course of action which will mean something to the country. I do not take it at all lightly that I am forced to curtail my remarks because the government has brought in closure.


Mr. Lumley:: Mr. Speaker, I rise on a point of order. I would like to remind the hon. member that the debate on C-75 ended yesterday. We are back on the second reading debate of Bill C-ll.


Stanley Howard Knowles: Standing Order 75C.


Edward C. Lumley: Sorry.


Dean Waldon Whiteway: Mr. Speaker, the parliamentary secretary has once again demonstrated his astuteness. I am glad he raises the fact that we are debating Bill C-ll. If he had his way, he would have muted the opposition and would not have allowed us even five hours. The government is so generous it gives us five hours, and hon. members opposite take half of it!


Mr. Daudlin:: Give us five minutes of something original.


Dean Waldon Whiteway: The hon. member wants something original. I can tell him there is nothing original on his side of the House because we are getting more of what we have had in past years, deficits. I must correct myself because there is some-

thing new this year. The deficit is larger than it was last year. We are facing a $9 billion deficit. Perhaps some of my hon. colleagues opposite do not really understand what $9 billion can buy. So that they might understand-because they spend money as if it were water, and they obviously do not understand the consequences of a $9 billion deficit-I will tell them how much $9 billion is.
Let us take a 1978 Dodge Aspen sports sedan with a standard shift, and no options. That car sells for about $4,700. It is about 197 inches long, which is about 16.3 feet. Let us line Dodge Aspens up bumper to bumper along the Trans-Canada Highway beginning at Victoria. The line would stretch all the way across British Columbia, Alberta, Saskatchewan, that great keystone province of Manitoba which has a Tory government, all across Ontario, winding its way down around the Great Lakes, all through that great la belle province, which will remain in Confederation because a Canada without Quebec is no Canada at all, down through the maritimes to New Brunswick and Nova Scotia-we could not get to Prince Edward Island on the Trans-Canada which, incidentally, is something else the government has balked on-then over to the capital of Newfoundland, St. John's, to a location in front of Joey's oratory. The total distance I have here is 4,860 miles. That is as of September 3, 1962. If we lined all those cars up bumper to bumper, an amount equal to our deficit would pay for every single car, and there would be $1.5828408 billion and a few pennies left over. That is what our deficit means, and yet this budget is the same as usual. That is obviously of no concern to the government.
Hon. members opposite smile with contentment about this mini-budget, economic statement, or whatever the minister chooses to call it. A million Canadians are unemployed, and hon. members opposite dare to ask me to be original. With unanimous consent I would yield the floor so that the hon. member for York-Simcoe, for the benefit of hon. members opposite who may not have heard him the first time, might again shed some light on what ought to be done and must be done to get the country working again.
This bill, this budget or this economic statement-whatever it is-says nothing about housing. My colleague, the hon. member for Red Deer (Mr. Towers), smiles, but I know it is a smile of great disappointment because this matter almost passes the point of seriousness. There is not a word in this bill about housing. There is not a penny for housing. I think it is important that I read what the deputy minister under the Minister of State for Urban Affairs (Mr. Ouellet) has said about housing, while this bill or whatever it is is absolutely silent with reference to housing. In a speech made in Calgary in September, 1976, Mr. Teron said:
When 280,000 families in Canada pay more than 50 per cent of their family income for housing and 500,000 families in Canada pay more than 35 per cent, and 820,000 families pay more than 25 per cent, and when 2/3 of those Canadians in need of housing cannot afford to buy or rent a home without a government subsidy, we have a problem of fundamental proportions. We must take decisive action now or face unparalleled problems later.
November 24, 1977

One year and two months later there is no sign that the government has heeded the deputy minister of urban affairs.
I hope the Minister of Finance and hon. members opposite will not consider my remarks to be partisan or critical, which is the normal role of a member of the opposition, when as a member concerned about housing I plead with them to consider some of the concrete and constructive proposals put forward by the leader of my party, by the hon. member for York-Simcoe, and by other members of this party. We are not looking for glory or praise for the Conservative party, but are here because of an interest and a love for this country. Our suggestions are put forward in a spirit of co-operation.
There is nothing in this mini-budget to solve the critical problems Mr. Teron has referred to, nor is there anything to answer the problem of energy conservation as it applies to urban transportation. I have said in this Chamber before, and I think it is worth saying again, that at the moment three quarters of our population live in urban centres, and in another ten or 12 years 90 per cent will live in cities. Half of the energy consumed in this country is spent on intracity transportation. The larger cities like Toronto, Vancouver, and Montreal have modern energy saving mass transit systems that are efficient and energy saving. The Minister of Finance and this government, however, have reneged on a 1974 election promise of hundreds of millions of dollars for mass transportation within our urban centres.
To state the obvious, we must begin to do things, and right now. Of course hon. members opposite will ask the usual question-where are we going to get the money? They blame the Tories for asking them to spend money all the time, and claim we have more programs than can possibly be financed.
We reiterate almost to exhaustion the solution we have proposed. It is not what you spend, it is how you spend. Time and time again we have asked the government to get its priorities in order. We only have to go up to the sixth floor of this building and gaze across that great river to the great province of Quebec, the great city of Hull. Spread almost as far as the eye can see are those fortresses that house civil servants.
Let it not be said that we on this side criticize civil servants. We could point to almost any civil servant and say he works hard and conscientiously. The question is not whether he works hard, it is whether the work is necessary. As the Auditor General pointed out, the government cannot control its spending. We have asked over and over again that it set priorities, and certainly the most obvious areas of capital expenditure are office buildings and accommodation.
If time permitted, Mr. Speaker, I could give a list as long as an arm and a leg of ways the government could save money so that problems of energy conservation and urban transportation could be solved. Not only that, we could export the technology and finance our own urban transit systems through selling our knowledge abroad. We have the brain power and the technology; the only thing lacking is the initiative on the part of the government. I do not believe the government has that much vision, however. I believe its members are stale, worn out,
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tired. They offer the -same old non-solutions to problems like one million people unemployed and deficits going up to $9 billion. The Canadian dollar was worth 90 cents yesterday, and for all I know it may only be worth 88 cents today.
We on this side plead with the government, even at this 11th hour, to show some sign of repentance by bringing in a budget. We would be overjoyed if that were done before Christmas and would co-operate so that this House might address the problems besetting the country.
At committee stage, Mr. Speaker, I shall be asking specific questions on specific parts of this bill. This party will do all it can in a responsible way to make Bill C-ll address, to some small degree, the problems of Canada. For the sake of the country we in the opposition can do no less.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: Mr. Speaker, in joining in this debate on Bill C-ll I should like to be rather positive tonight. This government needs some sincere suggestions from all sides to ensure that in the short time left at its disposal as a government it can start solving some of the problems facing us.


Joseph Jacques Jean Chrétien: We need your help.


Sinclair McKnight Stevens: As the Minister of Finance (Mr. Chretien) says, he needs our help, and I can assure him that he will have it tonight.
Many of my colleagues have pointed out deficiencies or aspects of Bill C-ll that should be clarified. Many of those points will be dealt with in committee of the whole when it starts later tonight or tomorrow. Mr. Speaker, I think in the dialogue that will then ensue on such things as the proposal to tax the insulation and a grant that was given by this government, as well as such things as the proposal to tax the insurance cash surrender values to some extent, which is proposed in this bill, the whole reference that is made in the bill to the turnover, roll-over provisions with regard to small businesses and farms are now in the hands of say, a father who wishes to turn the property over to his children, all of these matters raised by my colleagues hopefully will be dealt with fully during the committee of the whole session. There are other items, the $100 tax credit which many have referred to. We feel that while the concept was, I suppose, stolen from us, it is a good concept. There are certain clarifications that are very badly needed.
One thing I would like to emphasize, Mr. Speaker, and I hope this time when we get to the committee of the whole, the Minister of Finance will be able to give us some insight of this, I feel there are a lot of questions to be asked, and hopefully answered, with respect to the $9 billion borrowing limit extension which the minister has included in this bill. $9 billion is a lot of money. It is a lot of money when you consider that it is almost as much as the total federal spending budget at the time when this Trudeau government took power ten years ago.

November 24, 1977
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I said this evening I would like to be positive, and I mean that. What I hope to do tonight, in addition to dealing with Bill C-ll, is to make certain suggestions to the House, to the government and to the Minister of Finance as to how we could handle more effectively this whole budgetary process, which this House has to grapple with periodically, and specifically this legislation before us tonight. In doing that, I think it will be helpful if we basically accept, that in any budget, there are two sides to it. There is a policy side, which is by far the most important, and there is also what might be regarded as an administrative or a structural side. It is this technical side we are dealing with tonight. Generally, because budgets have those two aspects to them, and realizing of necessity, they are relatively complicated documents, I feel there should be certain tactics or approaches taken in order to facilitate, not only our dialogue and discussion of the matter before us, but hopefully to facilitate better understanding by the Canadian public as to what this process is all about.
If I may, Mr. Speaker, I would like to deal with four or five suggestions with respect to that question of structural change. How can we get a more effective approach in dealing with a bill touching on income tax, for instance, Bill C-ll?
My suggestion would be that green papers should be used more widely by the government because I believe green papers are well received. For example, we had green papers on sales tax, on the charity areas, and they contributed to a meaningful debate and discussion with respect to the points raised in those green papers. I would hope, therefore, that the government would bring in more green papers with respect to matters they feel are suitable to that kind of discussion. The next point I would like to raise tonight is that I believe the time has come for less secrecy surrounding this whole question of budgetmaking and the type of debate taking place here. Let me just give you one example. It is widely known, although somehow it is kept secret, that the Department of Finance calls on various consulting firms for advice. For reasons not clear to me, the names of those consultants are not disclosed, we are not advised as to their terms of reference, and I think we should be. I cannot see anything wrong with the Department of Finance making it very clear that they have called on a certain accountant firm, a certain law firm, or have called on certain tax professionals for advice as to what they should do. I suggest we should have a little less secrecy. Let us open up and let us know who the government is relying on for that type of consultative information or advice.
When the minister says tonight he needs our help, I think he needs the help of others, and I would like to see the Minister of Finance surround himself with an advisory group of people well vested in tax matters so that the minister can get some fresh advice. I say that because there is a growing suspicion that the advice the minister is getting is warmed over, old advice, which is something the officials around him are attracted to, but you don't have that spark of ingenuity or freshness that might be conveyed in the policy thinking sessions a new independent advisory group drawn preferably from

the private sector might bring into the general policy-making decision apparatus.
I would like to see draft legislation made available to the House, not only for our consideration but so that the general public can have a look at what the public has in mind. Sometimes I feel that we tend to get locked in here, the government will introduce a bill, it will go through first reading-which is only a formality-it comes to second reading and they suddenly feel they are locked into a position that if they alter or back away from, this is a loss of face. It then results in that impossible situation where we make a comment, or the public makes a comment with respect to changes and the government feels they cannot even meet those changes without appearing to be backing down from a position they got themselves into by introducing the bill in the first place. Why is it we cannot have draft legislation on the routine type of legislation, which is what Bill C-ll is mainly made up of? Let us take a look at it. Let us find out, without people taking definitive positions, what the general public might feel about draft legislation, and also have a free interchange within the House, both opposition and government members concerning their views on a draft put before us.
Tomorrow when we get to committee of the whole stage with Bill C-ll, I think we will be uncomfortably surprised as to how little will be told as to why changes now proposed in Bill C-ll are needed. Why should that be so? For every change that is proposed in any bill, not only fiscal bills such as we have before us, why can't we have every change in legislation be given an in depth honest answer as to why the change is needed?
On a money matter, for instance, the first clause in Bill C-ll deals with capital gains. I think we should have an explanation from the minister on that. Why does he feel the $1,000 write-off or chargeable amount with regard to capital gains losses should be raised to $2,000? I think we should rightly expect the minister to tell us what revenues are involved, how many transactions are involved, why are all losses with respect to capital gains not in a position that they can be written off against capital gains. That type of thing I believe will be very meaningful, and I hope when I mention this item tonight, the minister will cooperate during the committee of the whole stage to give the answers which have rarely been given before as to why the changes are really needed. Let me touch on a bigger question, the concern of any minister of finance, the policy side of the budget.
We have touched on the structural aspect. Let us turn to the policy side of the budget. In this connection I think it would be extremely helpful if there were more references to the Standing Committee on Finance, Trade and Economic Affairs concerning the economic condition of the country. This has often been discussed. Other Ministers of Finance have hinted that they might make such general references, but for reasons known only to themselves they draw back at the last moment when it comes to giving the committee a firm reference to
November 24, 1977

enable it to consider, for example, what are the real alternatives for Canada today faced with inflation, lack of real growth, and mounting trade deficits. What, for instance, in such circumstances are the effects of tax cuts or reductions in sales taxes? Let us have more references to our standing committee so that we can consider policy matters under the heading of the economic climate in Canada.
I have touched on the policy questions which arise from every budget. Here is an example of the need for separation. Let there be two distinct parts of every budget with a clear distinction between the policy side and what one might refer to as the structural side.
Most of us eventually feel sorry for the poor Minister of National Revenue (Mr. Guay) over there.


Mr. Parent:: He is a happy fellow.


Sinclair McKnight Stevens: I should like to make him a little happier, then, by giving him a bit more to do. I am suggesting that more bills of a structural nature be introduced by the Minister of National Revenue. Why, for example, should he not bring in the various bills whose administration he has to supervise? This is a suggestion which might be considered in future as a step ahead in trying to get through the rather extensive procedure we now follow as far as budgets are concerned.
Another suggestion. It may be that to iron out hundreds, if not thousands of misunderstandings which arise with respect to the tax process and the position of the government with regard to income tax, some type of board ought to be established which could deal with this task in a prompt and effective way. I do not mean a board in the sense of an adjudication board, but a board which could address itself to difficulties and inequities which are inherent in our taxation system, and advise whether they should be altered in the next budget. This would, if you like, constitute a screening process to ensure a more effective, a more efficiency-oriented income tax approach.
These are only a few suggestions having to do with the process in which we are engaged tonight. I should like to turn now in a more general way to the whole question of the economic position in which the country finds itself. I should like to touch upon the incomparable incompetence of the government in dealing with economic matters. Many times I have heard the President of the Treasury Board (Mr. Andras) and the Minister of Finance speaking about restraint and suggesting that somehow or other they know how to cut down federal spending. Mr. Speaker, I feel this is just like asking a rabbit to carry lettuce. Neither of those two gentlemen knows how to restrain public expenditure.


Robert Knight Andras: Tell us what to cut.


Sinclair McKnight Stevens: The President of the Treasury Board says. "Tell us what to cut." I hope he will remain in his place, because he will get an earful as I speak. In the past decade Canada's economic performance has deteriorated, with Ottawa giving little priority to measures which might arrest
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the trend. On balance, the measures taken by the government have aggravated rather than relieved the situation. Meanwhile, grizzly economic figures pile up.
Unemployment, running at more than 8 per cent-twice the level forecast by the Economic Council for this period-will likely result in more than one million jobless this winter. Inflation roars on at nearly 9 per cent, well above the government's target and three times the level anticipated by the Economic Council. Trade in the last quarter fell to a projected annual deficit of $6.5 billion, the highest in history, at a time when the administration actually anticipated a decrease. The government's budgetary deficits average over $5 billion a year. Next year it will be something like $11 billion. In the aggregate, government deficits in the past ten years have totalled more than the combined deficits of all federal governments in the previous 100 years.
The Canadian travel deficit reached over $400 million in the last quarter, a tenfold increase compared to four years ago, and it is anticipated this deficit will approach $2 billion for the year. Our dollar in relation to the United States dollar has slipped 13 cents since last November to its present 90 cents. Our foreign exchange reserves have slumped to their lowest level since 1971, and now represent only l'/2 months of our imports. In this connection it is most disappointing to find in the Conference Board Report issued today that the effect of our 13-cent devaluation has simply been to restore the cost of inflation since 1975. I should like to quote exactly what the Conference Board said on this point:
The effect of the recent devaluation has been, therefore, to offset the increase in relative labour earnings which has occurred since 1975.
In short, here we have a government which, through the Minister of Industry, Trade and Commerce (Mr. Horner), and to a lesser extent through certain other ministers, has tried to tell the Canadian people that the 90-cent dollar is something good. Well, the Conference Board tells us that the effect of devaluation has simply been to offset the rise in wages which has occurred on account of inflation in this country since the control program began.
Productivity among our workers continues to lag compared to productivity in other countries, making us relatively noncompetitive internationally. Here again I should like to refer hon. members to the Conference Board study which came out today. It shows that in 83 industries reviewed by the Board, wages in Canada have been higher than comparable wages in the United States, yet productivity on the average has been only about 90 per cent of that of their United States counterparts. Investor confidence is at a low with stock exchange values crumbling year by year in real terms.
This economic morass is illustrated by our low real growth, that is, growth without inflation. For the past three years how many of us realize-certainly I do not believe the government realizes-that such annual real growth has been stalled on a per capita basis at one half of one per cent. In the past reported year the United States real growth on the other hand

November 24, 1977
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has been 4.6 per cent, nine times the actual real growth in the same one-year period in Canada.
I said at the beginning I intended to be positive, and I will be positive tonight. Those are the bald facts. That is the situation into which this government has put us. Now I would like to make some suggestions of a policy nature that I hope the government will accept in order to get us out of the problems we face. In making these points, Mr. Speaker, 1 would like to divide them into short term policies, middle term policies, and longer term policies. But first I would suggest that to restore public confidence in our economic momentum in Canada we need leadership in Ottawa which is willing to implement the three types of plans that I have indicated; that is, short term, middle term, and longer term plans. In short, an industrial strategy for the nation must be evolved.
With respect to short term policies we have said for some time that, faced with today's unemployment and sluggish economic growth, there should be substantial personal income tax cuts, with the greatest benefit being given to those earning less than $8,000 per year and with lesser benefits being extended to those earning between $8,000 and $16,000. The lower the income, the greater should be the benefit. The government in Bill C-ll has met the suggestion at least in part, but unfortunately it proposes that the $100 tax credit will be felt in 1978, not now.
Ministers have represented that the tax credit will be shared by Canadians in January or February, but there is no place in this bill that that is said to be the case. They plan to do that through new directives in an administrative way. I emphasize it is going to be an administrative matter, and we will be suggesting why it should not be left in that position. The burden of financing public expenditures has fallen increasingly on personal income taxpayers. This tax has essentially affected low and middle income taxpayers who receive the bulk of income in Canada.
How many of us realize that in 1975, the latest year for which data is available, over 60 per cent of the total income taxes paid in this country was paid by persons earning under $20,000 per year? I have said repeatedly, certainly for the last 18 months, the federal government should reduce the load that it is taking from the personal income taxpayers. Again, we believe the federal government should reduce its manufacturer sales tax as soon as possible. This would bring about a reduction in the consumer price index and would boost consumer and business confidence. It would also increase consumer purchasing power.
Although unemployment is national in scope, its greatest burden is borne by the five eastern provinces, and by young people entering the labour force. Companies willing to create employment in those regions, or for young people, must be given suitable added incentives. For example, tax credits or rebates could be made available to corporations willing to create jobs in regions with high unemployment. This would encourage, I would suggest, those companies to invest needed capital. But that is only half of the job.
In addition there should be unemployment tax credits for firms which qualify for such assistance by hiring additional workers. Such employment assistance ought to be oriented most heavily to our youth and to those securing jobs in high unemployment areas. The minister in his October 20 statement made reference to employment tax credits. He indicated that they would like to put a program in position, but I emphasize, Mr. Speaker, there has been no action. There is no legislation. Frankly, the government is not sure how it will implement that program. Mr. Speaker, we would like to tell it how to implement the program. I can assure you if we were the government in this House tonight, such a program would be on the statute books of Canada.


Mr. Kaplan:: Tell us what you would do.


Sinclair McKnight Stevens: Mr. Speaker, the Chairman of the Standing Committee on Finance, Trade and Economic Affairs has asked that I give him some hints. I can assure him that if he can succeed in getting the Minister of Finance at least to attend the meetings of that committee we will start giving him some hints. So the ball is over to you, Mr. Speaker.
Wage and price controls, in our view, have a limited usefulness. Left in place, they become counter productive and a deterrent to economic expansion. Therefore the government should commence phasing out its present wage and price control program right now. An ongoing monitoring agency may be needed for a limited time, but it is the market place that should be left as much as possible to settle wage and price levels. Given fiscal and monetary restraint by government, the market place in the past has controlled inflation, and it can do so in the future.
Surely it is relevant to note that in the past three months the inflation level in the United States has been an average 3.8 per cent a year. Compare that to the level in Canada, over 8 per cent-twice the level that has been experienced in the last three months in the United States. That is not just a three month phenomenon. The fact is that since controls were put in place in Canada we have consistently had higher inflation levels than they have had in the United States where they have no controls. That is something the government loves to gloss over in its fascination with the controls program in Canada that has contributed to tens of thousands of Canadians being out of work on account of the counter productive nature of controls in undermining business confidence in the country. But, Mr. Speaker, I have touched on just a few of what I regard as short term policies.
Perhaps the more important policies are the medium term, longer term policies in which this government is so lacking. Let me touch on some medium term policies I would like them to consider. Governments, in particular the federal government, have increased their share of the economy in the past decade so that they now handle about 43 per cent of our total gross national product. This, I would suggest, has placed an unfair burden on our personal income taxpayers and has contributed to inflation, lower productivity, and in fact has ruined many small businessmen. For these reasons we believe it is impera-

November 24, 1977

tive that government should reduce its gross national product take to a more manageable level.
In conjunction with other levels of government, a five-year target for reduced government spending in relation to our gross national product must be set and reached. The government likes to assure us that it is trying to control its spending so that it will not rise more quickly than the GNP. In short, it is saying that it will maintain its share of government spending at its present relative relationship to the GNP. Frankly, that is not good enough. What is the magic in all governments taking 43 per cent of the GNP? Clearly it has contributed to some of our problems. Governments must start retrenching to return to a lower share of the gross national product.
Zero budgeting is a concept which must be introduced to public administration. It would ensure that programs would have to be periodically reviewed and justified. The present assumption that once a program begins it continues indefinitely, which all socialists seem to assume, must be changed.
In addition, working with labour, business and consumer groups, the government should establish targets for future real growth, inflation, and employment levels within the country. With such guidelines, decision makers within the economy will be able to proceed with greater confidence in the future. As targets are reached, confidence will grow. If targets are not reached, reappraisals to determine the reasons will be beneficial.
We have not heard from the Minister of Finance in this respect. I think his predecessor shocked most members of this House, when asked why would he not set such targets for Canada, he said that it was because they might cause a lack of confidence in the government. That is one of the reasons for governments establishing targets. One wants to have a bench mark to judge them by in order to see if a reasonable target has been met; if not, why not; and if the government cannot do it, we will get another one.
Canada is the most over governed country in the world. Not only do we have four levels of government in most areas, but we find these levels duplicate activities and on occasion stalemate, or at least frustrate each other's actions. At the federal level we must question if it is necessary to have 25 different departments which are duplicated in the main at the provincial level. Is it really necessary to have a federal Department of the Environment concerned about pollution, or could it not be assumed that if each provincial environmental department enforced anti-pollution legislation there would be no dirty federal air in Canada?
Is it necessary for federal authorities to add to our already high housing prices through their needless regulations and requirements? There may be a role for the federal authority to play as banker in connection with housing, but the actual development and construction of such housing should be a provincial matter.
Traditionally, small businessmen have been Canada's main employers, yet today they are under heavier pressure than any
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other business group. Tax concessions help, but other steps are needed. Many smaller businessmen never reach a taxable earnings level before they are snuffed out. It is here that aid is needed. Less regulation by government would be a tonic for such entrepreneurs. Dealing with regulations is an added cost for big business, and it kills the small fellow.
At this point I should like to remind the Minister of Finance that at page 8 of "The Way Ahead" the government outlined eight crucial steps it was going to take during the anti-inflation program, which it indicated would help relieve the various problems I am touching upon tonight. Not one of the eight has been executed to date. I hope the Minister of Finance will be able to tell us why the government failed with respect to what it set out to do.
Consideration should be given to assisting smaller firms in the formation of consortia which would enable them to compete better with larger firms. Grouping smaller concerns by specialty would preserve the individual identity of each, while allowing the consortia to bid for large orders both domestically and internationally. An increase in subcontracting by large concerns to smaller businessmen would revitalize our economy. Government, which is the largest purchaser of goods, must ensure that small businessmen get a fair share of the orders.
Federal and provincial minimum wage laws have contributed to our lack of competitiveness in that Canadian minimum wages are now 20 per cent to 30 per cent higher than in the United States. Not only have they contributed on our cost side, but also they have contributed to our unemployment where many people who might hire, if it were not for the minimum wage structure, now simply do not hire. Is it better to have a person out of work on unemployment insurance, or at least working for a wage, as opposed to the present situation?
The federal minimum wage of $2.85 an hour compares to the United States minimum wage of $2.30. The American Congress recently boosted their minimum wage to $2.65 an hour effective next January, to $2.85 a year later, and to $3.05 in 1980. It would be wise for federal and provincial authorities to freeze any further increases in our minimum wages until the Americans at least catch up. In certain fields such as the tourist industry it may be necessary to make further minimum wage exemptions in order for them to regain some competitiveness. As minimum wage laws are a major cause of youth unemployment we should consider a short run subsidy, such as a six months' subsidy to youths just entering the private sector labour market who otherwise would be unemployed, if full minimum wages had to be paid.
One must consider the leverage one receives if a person's wage is subsidized. At $3 per hour, if the government were to subsidize that wage for $1 up to six months, and assuming the person works 40 hours a week-that is $120-of that amount approximately $30 comes back in taxes, and the net subsidy paid out of the federal treasury would be $10 per worker. On the other hand if he is put on unemployment insurance and if he receives $120 comparable to the $120 wage I am referring to, the government gets approximately $30 in income taxes. Thus, the total net cost to the federal treasury is $90. In short,
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November 24, 1977
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it costs the treasury $90 to keep one person on unemployment insurance, compared to the $10 it would cost if that person were subsidized for working for a private employer in the way I am suggesting.


Mr. Deputy Speaker:: I regret to interrupt the hon. member, but his allotted time has expired. He may continue if he receives unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Leslie Gordon Benjamin: No.


Mr. Paproski:: Benjamin said no.


Mr. Deputy Speaker:: The hon. member for York-Simcoe (Mr. Stevens).


Sinclair McKnight Stevens: Mr. Speaker, I will be brief. I want to touch on some of the longer term policies I would like the government to consider.


Leslie Gordon Benjamin: Mr. Speaker, I said no.


Mr. Deputy Speaker:: I am sorry, but I did not hear the hon. member. Now I hear him, so there is no unanimous consent.


Steve Eugene Paproski: But the hon. member has carried on.


Sinclair McKnight Stevens: Mr. Speaker, I have carried on.


Steve Eugene Paproski: Mr. Speaker, I rise on a point of order. The hon. member for York-Simcoe carried on after Your Honour had not heard a no. I believe the hon. member should be allowed to continue for a few minutes. From wherever the hon. member for Regina-Lake Centre (Mr. Benjamin) was- behind the curtain or some place-he yelled no. 1 think there was no proper "no" at that time.


Some hon. Members:: Oh, oh!


Steve Eugene Paproski: Therefore the hon. member for York-Simcoe should still continue and have the floor.


Robert Phillip Kaplan: Mr. Speaker, I also want to submit, since the hon. member had continued and the Chair had not heard any objection, that he ought to be allowed to continue.


Mr. Deputy Speaker:: Order, please. I do not think we should play games. I did not hear anything. I gave the floor to the hon. member for York-Simcoe, and then the hon. member for Regina-Lake Centre (Mr. Benjamin) stood up and said no, which is his right. Unless the hon. member withdraws his "no", he has not given his consent, and I do not think the hon. member can pursue it.


Leslie Gordon Benjamin: Mr. Speaker, I rise on a point of order. If Your Honour did not hear my "no", I fully accept that. Is there any rule of this House which would enable us not to listen to any more of this nonsense that we are hearing from the hon. member? However, if he wants to go on a few more minutes, he can.


Sinclair McKnight Stevens: Mr. Speaker, I thank hon. members for their courtesy in allowing me to continue my remarks, but as I was saying I feel that I would like to make some long term policy suggestions to the government.
World technology is changing at a rapid rate. Canada has failed to keep abreast of these changes, and this has contributed to our $10 billion manufacturing trade deficit, a deficit that might grow to $ 11.5 billion this year.
The deterioration in our net export position in 1976-the deficit on trade in goods and services accounted for 2.7 per cent of the gross national product-is perhaps the most important shift that has taken place in the Canadian economy. We are simply consuming more than we are producing. We are living beyond our means and using borrowed foreign money to cover the difference.
While other nations have concentrated on encouraging and funding new technology breakthroughs, we have tended to fund existing industries which have grown uncompetitive. American government funding of research and development is twice as high as ours in relation to the respective GNPs.
The Japanese strategy is to increase the international sales effort for existing products and to develop new products through government sponsored research. The Japanese government spent $214 million over the past five years to help the computer industry compete with IBM's series 370. Canada has no similar programs, but on the other hand will spend this year two and a half times that amount on the CBC.
We no longer have a full time minister of science and technology in Canada. We should.
We believe there must be a massive effort to assist Canadian business to attain technology breakthroughs in fields in which we have an inherent advantage. These fields include agriculture, the resources of our three seas, our fresh water, and those industries related to our mineral and chemical wealth.
Historically we have been large exporters of pulp and paper products. Plantations in South America and Europe are now producing marketable trees in six to ten years, compared to our 40 or 50 years. Faced with this problem federal complacency is unforgiveable. The government's $100 million financing of overseas pulp and paper plants, which will compete with us, for example in Poland, is madness.
A more imaginative internatioenal sales effort at the federal level is overdue. Properly merchandized, Canadian produce could be sold more effectively. Cheese factories are closing down in this country, but at the same time Canadian Cheddar cheese is being rationed in England because it is in short supply. Can you believe it, Mr. Speaker?
Our export financing, which is in the billions, has become the private preserve of a few intimates of the Liberal party. It must be made available to all exporters, both small and large.
We have lost the balance in Canada between big corporations and those not so big. It must be regained so that the traditional ingenuity, inventiveness, and entrepreneurship of
November 24, 1977

small businessmen can once again contribute to the growth of our productivity.
As the world is reshaped into new market pools we must also seek out partners to enlarge our trade areas. With our natural resources and our proximity to the wealthiest market in the world, we are in an excellent position to gain access to such markets. In the meantime the government must stop allowing important industries to be ravaged by foreign competition. There is no reason why Canada should become the freest of the free trade nations in the world. Through it all we need an industrial strategy to chart once again the course which will restore our economy to its real growth potential with full employment and stable prices.
When we have an opportunity to vote on Bill C-11, we will do so feeling that many of the measures in the bill are good. We are not against the $100 tax credit, but essentially we believe that the government must improve Bill C-ll. We hope that it will improve it during committee of the whole stage and that we will be able to vote with it on third reading. Frankly, as it now stands, we cannot see how we can vote with the government at third reading if Bill C-l 1 remains in its present form.


Some hon. Members:: Question.


Mr. Bob Wenman (Fraser Valley West):: Mr. Speaker, perhaps I would not have spoken tonight if, while walking between the parliament buildings, I had not asked myself in terms of taxation, what is all this for? As I hear the government members speak about restraint and as I watch the government shove the crumbs off the table while crying for restraint, thus demonstrating its tremendous hypocrisy, I feel the need to rise tonight to speak on this Bill C-ll amending the Income Tax Act. 1 ask: taxation for what? Is it taxation to light another massive structure on the other side of the river? There are half empty offices in Ottawa and half empty offices in Hull.


Some hon. Members:: Oh, oh!


Robert Lloyd Wenman: I see that makes hon. members opposite a little concerned. They should be concerned, because if all Canadians could travel to Ottawa today and see the half empty offices in Hull and in Ottawa they too would be concerned and would not believe a word of the government's restraint program. They too would see that this taxation bill, these crumbs they are sweeping to the Canadian people in an attempt to buy them with their own money, is of little interest. It is indeed discouraging. Do we need this further taxation to turn the lights on in these buildings?
One government member talks about conservation, about cutting back on the lighting in these buildings, yet when you look across the river you see the lights in all the government buildings in Hull blazing away. Is that what we need taxation for? I think not. Perhaps we need more taxation for foreign affairs because, after all, the government has not been able to give away all the money it budgeted for foreign affairs. There is no increase in taxes, the hon. member says? I say there is a constant increase in taxes. You have an increase in taxes through inflation.
Income Tax


Some hon. Members:: Oh, oh!


Robert Knight Andras: Better get your facts straight.


Robert Lloyd Wenman: Perhaps you do not need more taxes because you cannot spend all the money you have. You cannot give away the money fast enough. Right now in the Department of External Affairs officials in CIDA are furiously scrambling to try to spend the money quickly, because if they do not spend their full budget they know that next year they will be cut back. CIDA is spending $1 billion.


Robert Phillip Kaplan: Go on to your next point.


Robert Lloyd Wenman: Yet the report comes in that we have budgeted that $1 billion and we can only spend $913 million. The government has given money for every single project. There is not a country in the whole world that has come to us and told us they need foreign aid and was turned away. The government met all the demands, and still has money left over.
The government is giving away capital at a time when Canada needs capital for its development. What will it do with the surpluses in the external aid program? What will it do with that extra money that comes back to revenue? Perhaps it will give it back in some form of tax rebate-I hope so. It is the great give-away program. If it is not going to be given away by CIDA, perhaps it will be given away by establishing another embassy in another underdeveloped nation, and we will be more successful in giving money away next year. However, then again we will probably exercise restraint in the Middle East. We will not establish a new embassy or an expanded embassy in the Middle East where, in Saudi Arabia, they have $23 billion for which they are trying to find a place in the world. That $23 billion could be tapped through technology exchange if the government would care enough just to go to that country and establish and expand relations there. In Iraq there is $7 billion. We could establish a minor embassy, but there is no thrust into real world markets where there is in fact potential for dollars and for Canadian industry and trade.
If we could get into these great markets of the Middle East, we would not require such a large taxation bill. We could perhaps be giving back more money than this token $100 tax deduction which is promised to us. Perhaps we could have more money to put out another green paper.
The government is very effective at putting out green papers. Green papers are another stall tactic while the athletes of Canada starve or live on welfare or unemployment insurance. The athletes of Canada who contributed to Canada in the Olympics live below subsistence, and the government puts out another green paper. To the government the green paper is the answer to everything.
Perhaps some of the tax dollars the government did not give back but could have, and should have, should have gone to a place like Wickaninnish, but the government wants to close down Wickaninnish. That is a revenue producing vehicle. There are only 22 rooms involved, but the government wants
80027-10%

November 24, 1977
Income Tax
to cut this out and instead build some form of interpretative centre which will require more and more civil servants.
The government should cut back the number of civil servants. There would be a tremendous saving. There are 467,268 federal employees. That is far too many. Someone once mentioned to Milton Friedman that many government employees do not work hard at their jobs. He responded by saying, "That's good, they do less harm that way." There has been fantastic growth in the public service which is well reported and documented, and there is no doubt that Canadians are getting fed up with it.
This taxation policy is nothing new. It is a rehash. Why does the government not look at some new ideas? Why not a flat rate tax system where everyone would pay equally?


An hon. Member:: Come on!


Andrew Hogan: Would that help the poor?


John Gilbert: Is that Tory policy?


Robert Lloyd Wenman: There are many basic economic policies which could be developed. Instead of getting more and more involved in the economy the government should adopt a policy which involves it less and less and which would move more and more toward a free economy. The government should interfere only in extreme cases, in order to maintain free enterprise. The government professes to believe in free enterprise, but 43 per cent of the gross national product goes in taxation. The government says it stands for competition, but its competition bill cannot get through the House and cannot establish any credibility in the country.
The government discourages price fixing while at the same time working on the international scene as a major price fixer itself.
A major reduction of taxation would come about with a reduction in the number of government employees. If the number of government employees were reduced, government spending would be reduced.


Leslie Gordon Benjamin: Keep that up and the voters will reduce you.


Robert Lloyd Wenman: In the past the automatic answer was "get rid of useless jobs, abolish them," but today the unemployed and their families have become a tax burden. It becomes more and more impossible to keep them from being charges on the government and to develop more productive capacity in the private sector. One suggestion would be to acknowledge openly the existence of this powerful political force and present a compromise solution, from which all parties would benefit. The aim should be to encourage the thousands now on government payrolls to transfer voluntarily to private industry by making it financially attractive for them to do so. To that end all government employees working on jobs which are found to be unneeded and so designated as permanently abolished should be placed on a leave of absence with a full pay guarantee until the normal time of retirement.
[Mr. Wenman.1
Even if unneeded employees stayed home, the government would net tremendous savings in the cost of working space, supplies, and other expenses. The proposed program also calls for 10 per cent awards of whatever the employees who go into private industry earn there. Thus if an employee making $10,000 at a government job goes into private industry and earns $10,000, the total income would be $11,000, and the government would save $9,000.
The government should develop new economic programs, with new imagination and new policy thrust. Instead of the constant attitude that the government can spend itself out of its problems by hiring more civil servants to create more spending programs, the government should concentrate on developing productive programs in the private sector.
Undoubtedly when the report of the Auditor General comes forward it will discuss the expenditure of $59 million by the Canada Council. Undoubtedly it will express some concern that there is no accountability by this government for the $59 million so spent. That $59 million was handed to the Canada Council, and no accountability is required. The Canada Council took the money and allocated it to many individual applicants. These people make applications, receive money, and no further accountability is required. It is time that all Canada Council money was treated like other government funds and a measure of accountability established. When a Canada Council grant or contribution is provided, a legal contract should be established, the budget submitted met, and the project as submitted finished, or the person receiving the money should be held liable for it and the money should be returned.
The list of Canada Council grants would cause concern for any Canadian, and it does. I wonder how many Canadians would accept spending $20,000 for a film record of Pashtoon pastoralists in Afghanistan. I wonder how many Canadians would like to see their hard earned tax dollars going into that kind of project. Looking over this list I wonder how Canada will benefit by an annotated edition of the complete letters of Benjamin Disraeli for $113,000. I wonder how many Canadians will benefit from a critical edition of the correspondance of Emile Zola for $30,000. I wonder how many backbench Liberals would stand up and defend these Canada Council grants. Who will accept the responsibility for levying taxes for this type of project?
There are many items which could be discussed with regard to waste in government. These are becoming well known to a very disillusioned Canadian public. Of every dollar we earn 43 cents is now being consumed by taxation. I wonder how the constituents of hon. members opposite feel when the average Canadian who goes to work at nine o'clock in the morning has to work until 1.30 in the afternoon just to pay his taxes. Only after that does he begin earning his take-home pay.
I wonder how many people realize that of the $15,000 average salary, $7,000 goes to taxes in one form or another. I wonder how many Canadians realize that the equalization these tax acts claim to represent means no equalization at all
November 24, 1977

but rather an excessive burden on the taxpayers of Ontario, Alberta, and British Columbia. This taxation is not just reflected in grants and formats but is an equalization found throughout the structure of government from bill to bill.
In small craft harbours, boat owners in Vancouver pay $2 per foot for a berth whilst the cost in Quebec and the Maritimes is $1. That is hardly fair. Is it fair that a tax system sets up an equalization format which has western Canadians subsidizing the gasoline that eastern Canadians use in their cars whilst those cars cost westerners $500 or $600 more because of the freight rates?
This bill does not address any of the inequities in our taxation system. It is band aid legislation. Accountants and lawyers will have a heyday with it, yet they have hardly had time to adjust to the last tax bill. It is time the government brought in measures to deal effectively with the taxes it has already collected instead of throwing them away on CIDA programs, Canada Works programs, or Canada Council grants. The people of Canada are getting tired of this lack of accountability.
In the Standing Committee on External Affairs today, Mr. Speaker, some of the abuses in CIDA's spending came under discussion. A report before the committee showed concern for-


Mr. Deputy Speaker:: Order, please. At this point I have to inform the hon. member that in this House he cannot refer to proceedings taking place before a committee unless the Committee's report has been tabled in this House.


Robert Lloyd Wenman: Mr. Speaker, I will just mention that the North-South Study indicated concern that some Canadians are getting noisy about the wasted expenditures on CIDA and Canada Council grants and it fears that funds will be cut off. I should like to associate myself with those Canadians who are concerned about government expenditure and about taxation.


Mr. Deputy Speaker:: Order, please. Is the House ready for the question?


Some hon. Members:: Question.


Mr. Deputy Speaker:: The question is on the motion of the Minister of Finance (Mr. Chretien).
Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: No.
Income Tax


Mr. Deputy Speaker:: 
Mr. Deputy Speaker:: All those in favour of the motion will please say yea.


Some hon. Members:: Yea.


Mr. Deputy Speaker:: All those opposed to the motion will please say nay.


Some hon. Members:: Nay.


Mr. Deputy Speaker:: In my opinion the yeas have it.
And more than five members having risen:


Mr. Deputy Speaker:: I declare the motion carried. [Translation]


[Stage Direction]
Motion agreed to, bill read the second time and the House went into committee thereon, Mr. Laniel in the chair.
Gérald Laniel: Shall clause 1 carry?

On Clause 1.

November 24, 1977
Income Tax


Sinclair McKnight Stevens: Mr. Chairman, before calling it 10.30 I should like to remind hon. members that we on this side of the House indicated some time ago that the government would likely get second reading of Bill C-ll on Thursday. That is exactly what it got. There was obviously no need for closure.
Mr. Chairman, if I may call it 10.30 I have certain items I should like to raise with respect to Clause 1.
Progress reported.


Mr. Deputy Speaker:: It being 10.30 p.m. this House stands adjourned until tomorrow at 11 a.m.
At 10.30 p.m. the House adjourned, without question put, pursuant to special order.

Friday, November 25, 1977