1977-02-07

ROUTINE PROCEEDINGS


Mr. Andy Hogan (Cape Breton-East Richmond):: Mr. Speaker, I rise under a matter of vital importance to this nation. In view of the ongoing debate on the mystery surrounding agents used by Atomic Energy of Canada Limited in selling atomic reactors to other countries, and in view of the fact that the minister responsible for this agency says after all these months he is still in the dark about who gets what as agency fees in those export sales, and because there seems to be a direct contradiction between the statement of the Banca della Swizzera Italiania on the role of its subsidiary, Intercontinental General Trading Establishment, in the sale of the Canadian atomic reactors to Argentina and that of the president of AECL before the Standing Committee on Public Accounts, I move, seconded by the hon. member for Brant (Mr. Blackburn):
That the major officials of the Crown corporations and indeed of all federal Crown corporations, engaged in selling products or services, be required to take an oath of office upon accepting their position that they will not make any payments of taxpayers' funds that the minister responsible to the House cannot account for to parliament.


Mr. Speaker:: Such a motion pursuant to Standing Order 43 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]


AGRICULTURE
Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, pursuant to the provisions of Standing Order 43, I request the unanimous consent of the House to move a motion concerning an extremely important matter.
Considering that present regulations governing slaughterhouses differ depending on which permit they operate under, either Canada Approved or Quebec Approved, and that this may create problems for the management of such business as well as a certain confusion among consumers, I move, seconded by the hon. member for Roberval (Mr. Gauthier):
That this House strongly recommend to the government of Canada calling a federal-provincial conference of agriculture ministers of the federal and provincial governments to agree on standard regulations for the classification of meats and the general operation of slaughterhouses.


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


Some hon. Members:: Yes.


Some hon. Members:: No.


Mr. Speaker:: There is not unanimous consent; therefore the motion cannot be put.


PENSION ACT
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I ask leave under the provisions of Standing Order 43 to present a motion concerning a matter of urgency, to be dealt with by the minister concerned when he returns to the House, as we hope, in a few days. I therefore move, seconded by the hon. member for Timiskaming (Mr. Peters)-


Some hon. Members:: Oh, oh!


An hon. Member:: Stanley, are you lost for words?


Stanley Howard Knowles: I am sorry, Mr. Speaker. I had the motion mixed up with other amendments which are to be moved later this day.
I move, seconded by the hon. member for Timiskaming:
That this House urges the Minister of Veterans Affairs to introduce the necessary amendments to the Pension Act so that the compensation for prisoners of war provided therein will apply to the limited number of Canadian veterans still living who were prisoners of war during World War I, as it does to those who were prisoners of war during World War II.
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February 7, 1977
Oral Questions


Mr. Speaker:: Order, please. Such 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.


CANADIAN BROADCASTING CORPORATION
Mr. Hal Herbert (Vaudreuil):: Mr. Speaker, may I seek permission to move a motion under Standing Order 43? In view of the Prime Minister's (Mr. Trudeau) remark last week, when asked why he did not do something about separatists in Radio-Canada, that it was "one of the most impossible tasks I've ever tackled. What can I do?" I move, seconded by the hon. member for Timmins (Mr. Roy):
That the government immediately reverse its decision to increase the budget of the Canadian Broadcasting Corporation next year by $50 million, to a total of $466 million, limit the increase to 7 per cent or $30 million, use part of the funds thereby released to return to medical and scientific research the funds that were withheld last year for reasons of restraint, and use the balance of these released moneys for other desirable programs such as widows' pensions for veterans whose disability pensions are 48 per cent or less.


Mr. Speaker:: Order, please. Pursuant to Standing Order 43, such 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.


Mr. Paproski:: We didn't hear anyone say no. Gus MacFar-lane, did you say no?


Mr. MacFarlane:: Yes.



ORAL QUESTION PERIOD


Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, my question is for the Minister of Finance. As the Minister of Finance has managed to maintain simultaneously both that economic conditions are favourable at the present for an end to controls and that the decontrol process may not begin for another year, would he now try to make some contribution toward clarifying his position? First, can he tell the House whether he will ask the provinces to renew their anti-inflation program agreements when they expire this April; and, if he

will ask for a renewal, can he tell the House for how long a period he will suggest that the contracts ought to be renewed?


Hon. Donald S. Macdonald (Minister of Finance):: Mr. Speaker, I have asked the provinces to continue their participation. In the meantime a group representative of several government of Canada departments will be calling on the provinces for the purpose of discussing the provisions which we set before the meeting last week and seeking their support in particular for a general agreement in which the private sector would participate to restrain inflationary expectations after controls.


Sinclair McKnight Stevens: A supplementary question, Mr. Speaker. In view of the minister's reference to a group to be sent forth, and his statement on the CTV program "Question Period" last weekend that "in the case of provincial governments we'll be proposing to send out contacts at the official level, to pursue in more detail our proposals," may I ask the following question? Will the minister indicate how many contacts will be sent forth, who they will be and what will be the nature of their briefing prior to their going forth to meet, presumably, with their provincial counterparts?


Donald Stovel Macdonald: Mr. Speaker, each of the provinces will be visited by the group representative of the AntiInflation Board, my department and the Department of Labour. The principal reason, of course, will be to speak to the provincial governments as a follow-on to the meeting last week to see what their preferences are with regard to the decontrol and post-control period, the provinces having asked for the opportunity to consider the proposals I put to them last week.


ALLEGED LACK OF PROPOSALS FOR POST-CONTROL PERIOD
Sinclair McKnight Stevens: As more than one provincial treasurer was disappointed in the substantial lack of planning shown at the federal level at the meeting last week with provincial treasurers, and considering that provincial economic policies will require adjustment to a decontrol economy and other fiscal positions, wage negotiation strategies and other decisions relating to the pricing of government services, does the minister concede that it will be exceptionally difficult for the provinces to prepare their economic plans until the minister makes some public proposals which will fill the policy vacuum left by his indecision and vacillation in these important areas?


Donald Stovel Macdonald: Mr. Speaker, we see one side of a tactic. If I had put forward definitive proposals for bringing it to an end, ending all federal control, undoubtedly the hon. member and many of the provincial ministers would have condemned me for having presented the provinces with a fait accompli.


Sinclair McKnight Stevens: That is how you brought in controls.


Donald Stovel Macdonald: I might point out to the hon. member that we brought in controls after the request of the
February 7, 1977

provincial premiers and direct consultation with them about this.


Some hon. Members:: Hear, hear!


Donald Stovel Macdonald: Since controls were introduced after that consultation, it seems to make ample good sense to remove them after consultation with the provinces. We hope that the provinces will pay close attention to the options available so that we may introduce them in the decontrol and post-control periods.


REASON FOR SUGGESTING DECONTROL NOW-POSSIBILITY OF CONTINUING HIGH LEVEL OF UNEMPLOYMENT AND NO GROWTH
Mr. James Gillies (Don Valley):: Mr. Speaker, considering that the minister said on January 24 at the Canadian Club in Toronto that "we need to see further progress in reducing the rate of inflation" before ending controls and then one week later on February 1 said that there now seems to be a green light for decontrol, what has happened in the economic situation which now leads him to believe this is a proper time to go ahead with decontrols?


Donald Stovel Macdonald: Mr. Speaker, unfortunately the hon. member is not quoting fully the speech I made in which I said that the general economic climate would appear to favour decontrol but the ambiguous and difficult thing is that there is not that reduction in expectations necessary. If we can get a commitment on the part of all the major decision makers in the community to restrain expectations after controls come off, indeed we could look to do so at an early date. If we fail to get that then of course controls will have to continue through the end of this year into the next.


James McPhail Gillies: As well as the minister's suggestions on January 24 and February 1, the minister also said, adding to the confusion of the situation, that perhaps controls could last well into 1978, does the minister believe, seeing that he has now said that the situation in economic terms is favourable for decontrol, we will have precisely the same economic conditions in 1978 as we have today?


Donald Stovel Macdonald: Mr. Speaker, one cannot be certain of that, but there would be indications that we would not have as, for example, the United States had in the year 1973-74, that severe pressure of demand that made it so difficult for the Americans to withdraw from the controls. Naturally, the economic situation may change over time. That is all the more reason that, not only the provinces, but the business sector and the union movement should agree on participating with this government in effective decontrol and post-control measures so that we can indeed take advantage of getting controls off as soon as we can.


James McPhail Gillies: Is the Minister of Finance suggesting in his answer that Canadians can look forward, through the balance of this year and into 1978, to continuing high levels of
Oral Questions
unemployment and no economic growth? Are these the implications of the remarks the minister is making at the present time?


Donald Stovel Macdonald: No, Mr. Speaker, and the hon. member knows that is not true.


STATISTICS CANADA
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I have a question for the Minister of Industry, Trade and Commerce. Since Statistics Canada excludes from its determination of monthly unemployment levels all those who have not looked for work since leaving their last job, and since such a method seriously understates the real level of unemployment in Canada, particularly in regions of persistently high unemployment, will the minister undertake to investigate this situation immediately and bring forward a new method of collecting unemployment figures which more accurately reflects reality?


Hon. Jean Chretien (Minister of Industry, Trade and Commerce):: Mr. Speaker, I already considered this matter and communicated with Statistics Canada. Of course, the question of the scientific methods of assessing the unemployment level in Canada is extemely complex and I think we can argue at length on that matter. The hon. member might think that the questions are not put in a satisfactory manner, but a large part of the Canadian public also think that the questions are put so as to reflect a higher unemployment rate than the actual rate. This matter may be debated at length. I took note of the hon. member's recommendations, which I already transmitted to Statistics Canada, but so far they have not told me they intend to change their method.


John Edward Broadbent: Since the inclusion of the 450,000 who left the labour force because they were either fired or laid off during 1976 would have boosted the national average rate of unemployment to 11 per cent as against the official rate of 7.1 per cent, would the minister not do something more than he has just indicated he has done, which, if I understood him correctly, was simply to communicate his interest in this subject to his officials? Would he go beyond this and make a recommendation to his officials to include such people in the official data so that when we get the monthly figures we would know more accurately where we stand with reference to this serious human problem?


Joseph Jacques Jean Chrétien: Mr. Speaker, this is not a very simple proposition. We must look at both sides of the medal. For example, many people refuse jobs which do not meet their requirements.
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February 7, 1977
Oral Questions
I believe this is an extremely complex technical question. The hon. member cannot look at only one side of the medal, he must also consider the other. Although I am not an expert in that field, I think the Statistics Canada has shown in the past a great expertise in this regard. Several countries seek information from our institutions with the hope of getting statistics as good as those Canada now has.


MANPOWER
John Edward Broadbent: Since I have obtained no commitment whatever from the minister to do anything about this situation I will refer my last question to the Minister of Manpower and Immigration. In view of the fact that the inclusion of the 450,000 men and women to whom I have referred would bring the number of Canadians out of work for 1976 to a total of more than one million, and since the regions of persistently high unemployment are those most adversely affected by the present method of presenting data, which distorts the real unemployment figure, 1 ask the minister responsible for a variety of job creation programs which are dependent on the official statistics whether he will undertake an immediate revision of the criteria he now uses when allocating funds for job creation and adopt new criteria by the end of the week?


Hon. Jack Cullen (Minister of Manpower and Immigration):: Here again, we have Broadbent's Bureau of Statistics. There are great distortions in his figures as well. In point of fact, we do know where the high levels of unemployment are and we know that the funds are being directed to those areas with increasing emphasis; there were some changes I thought necessary in the criteria for the Canada Works and the Young Canada Works programs. I welcome input from the hon. member. I have yet to hear from his or from any member of his party as to how things might be improved.


Some hon. Members:: Oh!


Jack Sydney George (Bud) Cullen: They have yet to take up my invitation to discuss the matter with my officials and examine the criteria, but if they have any suggestions I shall be happy to look at them.

[ Translation]


PENITENTIARIES
Joseph Adrien Henri Lambert: Mr. Speaker, I should like to put a question to the Solicitor General.

Over the weekend, information media reported that the government plans to build four federal buildings to be used as penitentiaries in Quebec. Can the minister tell the House whether the construction of those penitentiaries is due to the fact that the number of clients in that field is increasing or to the fact that buildings now used to this end have become so dilapidated as to be non-usable?


Hon. Francis Fox (Solicitor General):: Mr. Speaker, of course we have across Canada a penitentiary building construction program which takes several factors into consideration. One of these is the federal government's wish to finally close down some old institutions and, seeing the hon. member speaks of the province of Quebec, one of the reasons why we wish to build additional facilities is to allow us to close down what is commonly known as the "old pen". As the "old pen" has cells for over 400 prisoners, and as we intend to build new prisons taking into account the most modern concepts of penal science, we intend to build institutions for a maximum of 185 to 200 inmates. Now, the wish to close down the "old pen" at St. Vincent-de-Paul in addition to the need to face the increase in the number of prisoners, which goes up by about 3 per cent each year but which last year in Quebec went up by almost three times the national average, force us to build new penitentiaries in that area.


Joseph Adrien Henri Lambert: Mr. Speaker, may I ask a supplementary question?
Given his positive answer, could the minister tell the House which sites and locations are being considered for the erection of these buildings and also how many inmates each one of these buildings will house?


Francis Fox: Mr. Speaker, we are considering buildings which would house around 185 inmates in medium security penitentiaries and about 196 inmates in maximum security penitentiaries. Concerning the selection of sites where these penitentiaries will be erected in Quebec, we are now considering a whole list of possible locations and I hope to be able to make a final decision in four to six weeks from now.


Joseph Adrien Henri Lambert: Mr. Speaker, I would like to put a further supplementary to the minister.
Considering the affirmative answer of the minister and the fact that the media have already made public the sites selected for these buildings, can he tell the House whether this information was correct or it was only speculation?


Francis Fox: Of course this was speculation, Mr. Speaker, because none of these sites has been definitely completed.


Mr. Speaker:: The hon. member for Yukon on a supplementary.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: Welcome back, Erik.
February 7, 1977


POSSIBILITY OF DELAYING DECISION ON SITES OF NEW INSTITUTIONS PENDING REPORT OF COMMITTEE
Mr. Erik Nielsen (Yukon):: I am never at home any more and I am never in the House any more. Mr. Speaker, my supplementary question is for the Solicitor General. In his reply to the hon. member who preceded me, he said that he would be making decisions in four to six weeks with respect to the locations of several new institutions in the Canadian penal system. Will he inform the House whether it is his intention to delay the making of those decisions until after receiving the report of the sub-committee investigating penitentiaries, which has kept me and a good many other members of the House busy since last October?


Francis Fox: Mr. Speaker, the penitentiaries mentioned by the hon. member are part of a program which was initiated a long time ago by my predecessor, because he had to face an extremely urgent need for cells in several areas in Canada. We intend to proceed with a few of these programs, considering that the decision to do so will not be affected in any way by the report of the committee which deals, of course, with a whole range of other matters.


REGIONAL ECONOMIC EXPANSION
Mr. David MacDonald (Egmont):: Mr. Speaker, my question is for the Minister of Regional Economic Expansion. With reference to the remarks of the premier of Prince Edward Island a few days ago when he indicated that agreement has been reached on the funding for the next year or two of the P.E.I. development plan, I wonder whether or not the minister can give us a Firm date of the actual signing of this next funding agreement for the amount of $30 million, and also whether there will be at the time of the signing a more complete explanation of the nature of the expenditure of funds in the next period, particularly taking into account some of the criticisms that have been made within P.E.I. about public participation and the particular economic needs of this area in terms of high energy costs and probable seasonal unemployment?


Hon. Marcel Lessard (Minister of Regional Economic Expansion):: Mr. Speaker, 1 do expect that the agreement covering the funding for the last three years of phase II of the Prince Edward Island development plan might be signed within the next few weeks. As to the series of questions asked by the hon. member, I would say, Mr. Speaker, that I would have to make a rather lengthy statement to cover all the points he has mentioned. But I could take the first opportunity to do
Oral Questions
so. Should the hon. member wish to meet me personally to pursue the conversation, I am always at his disposal.


David Samuel Horne MacDonald: As I am sure the minister is well aware, on the original signing in 1969 there was a very complete explanation of the plan to the people of Prince Edward Island and the people of Canada generally. In view of the fact that many unanswered questions existed after the signing of the second phase in 1975 at which the minister participated, and in view of the considerable funds yet to be expended both by provincial and federal governments, can the minister assure the House that there will be a detailed accounting of the funds that are to be expended either in the next year or the next three years as well as some specific reference in dollar amounts as to where these funds will be expended in terms of the basic sectors of development in P.E.I.?


Marcel Lessard: Mr. Speaker, I will try to provide the hon. member with as many details as possible with regard to expenses and amounts which will be allocated to various sectors of the economic activity in the island, according to the agreement which has been signed. It is very detailed and I think the hon. member might be satisfied with it.


ROYAL CANADIAN MOUNTED POLICE
Mr. F. Oberle (Prince George-Peace River):: Mr. Speaker, my question is for the Solicitor General. In light of the fact that it is now clearly established that the security services of the RCMP used as the basis for the evidence which they turned over to the Solicitor General in 1971 materials which were stolen from the office of Praxis Institute in Toronto, can the Solicitor General inform the House today whether he had any discussions with the RCMP to determine whether the break-in was investigated at the time or whether an inquiry will commence now to establish who the thieves were and what their motivation was in carrying out this selective burglary?
[ Translation]


Francis Fox: Mr. Speaker, I think the hon. member is fully aware that if it is a criminal offence committed in the province of Ontario-and from what he said it did happen in that province-needless to say the investigation, if there is to be one, must be conducted by the Ontario attorney general, in a well understood federalism.


Frank Oberle: Mr. Speaker, since the section of the security service of the RCMP does not operate under any jurisdiction other than that of the minister's own department, can the minister undertake today to initiate discussions with the

February 7, 1977
Oral Questions
RCMP to at least determine one of two things: after the RCMP had assumed responsibility for the stolen documents, why did they not take the obvious action, namely, to incarcerate the people who were accused of subversive activities within our country, or else inform the Praxis Institute that these materials had been found and return them to the institute?
[ Translation]


Francis Fox: Mr. Speaker, it goes without saying that the hon. member assumes certain facts and that the RCMP practice is not to confirm or deny the existence of sources, no more than the hon. member was reluctant to provide me in the House with the names of people who sent him documents which were illegally leaked out.


MANPOWER
Mr. G. H. Whittaker (Okanagan Boundary):: Mr. Speaker, my question is for the Minister of Manpower and Immigration. In view of the fact that 7 of 10 ridings in British Columbia receiving the bulk of Canada works grants are held by Liberals, would the minister tell the House whether that is by accident or design?


Jack Sydney George (Bud) Cullen: Mr. Speaker, if it had been by design, I would have done a much better job. But I commend to the hon. member one of the better reports on this distribution written by Mr. Ken Pole in the Ottawa Journal. If the hon. member reads the article he will find that it spells out the matter so that the hon. member would be able to understand.


George H. Whittaker: In view of the unemployment rate in the Okanagan-Boundary of 20 per cent, the third highest populated riding in British Columbia, and in view of the fact that this riding is receiving $198,000 in Canada works grants while the riding of Vancouver Centre is receiving $514,000 although it has a much smaller population, can the minister tell the House what the rate of unemployment is in Vancouver Centre?


Jack Sydney George (Bud) Cullen: As I indicated to the hon. member, I am having both his riding and the riding of Cape Breton-The Sydneys checked out because it appeared to me there was an anomaly and I wanted to find out not only what unemployment figures were used bi^t other factors as well.


Some hon. Members:: Oh, oh!


FISHERIES
Mr. James A. McGrath (St. John's East):: Mr. Speaker, my question is directed to the Minister of Fisheries. Can the minister report on the outcome of a meeting he had with a Swiss promoter on behalf of a group of international do-gooders who would interfere with the legitimate seal fishery off Canada's east coast? Can the minister tell the House what steps he intends to take to protect Canadian fishermen from these international do-gooders, and has he warned some of these people that they could in fact be mistaken for harp seals?


Hon. Rom6o LeBlanc (Minister of Fisheries and the Environment):: Mr. Speaker, I might not join the hon. member in his use of colourful adjectives. However, I did try to explain to the gentleman in question and to his groups the scientific data on which this management decision was based. I did not detect in them great interest in that matter. It seemed that the group in question decided that animal killing is forbidden only for seals but not for any other species of animals which are killed for our use as meat or clothing.
As for the matter of offering money for the seals, I said that this was a matter for the fishermen themselves to decide. If they prefer to receive money rather than go to the seal hunt- which is a very dangerous occupation and at which some of them lose their lives-it is a decision for the fishermen themselves. I made it clear that the rules and regulations governing the hunt would not condone interference with honest-to-good-ness efforts to earn a living, which is what the fishermen in Newfoundland and Magdalen Islands are doing. I tried to establish the facts, and I hope that this parliament will accept and the press will report those facts as they are.


Some hon. Members:: Hear, hear!


SEALS-STATUS OF CHARGE OF INTERFERENCE WITH HUNT AGAINST BRIAN DAVIES
James Aloysius McGrath: I thank the minister for his reply. What concerns me is the incomplete litigation of the federal government with regard to the incident at the hunt last year and the impact that that could have on these people who would probably try to repeat the performance this year. Can the minister tell the House what steps the government intends to take to prevent this kind of harassment of a legitimate Canadian industry which is probably one of the most humane in the world?


Fabien Roy: It is possible the hon. member might have been absent when my colleague, the Minister of Justice, indicated that we were appealing the decision of the court in Newfoundland. Obviously, the matter of the Canadian jurisdiction in the 200-mile zone in relation to the fisheries matters has to be reaffirmed. If the law is inadequate, I am sure the House will very quickly change it.
February 7, 1977


ENVIRONMENTAL AFFAIRS
Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, I should like to direct a question to the Minister of the Environment regarding the hazards which are inherent in having supertankers delivering oil to Kitimat in the event of the proposed pipeline being constructed, from Kitimat to Edmonton. In view of the fact that on February 2 at page 2640 of Hansard the Minister of Energy, Mines and Resources is reported to have said that the National Energy Board is concerned only with the landward side of the project and that he could not be sure that the environmental consideration will be taken into account by that body, I wish to ask the minister two questions: the first is when will public hearings be held in the area likely to be affected; and second, can the minister assure the House that the report of the interdepartmental committee looking into the environmental impact of this proposal will be made public prior to the public hearings being held?


Fabien Roy: Mr. Speaker, I believe the hon. member is correct when he distinguishes between the actual pipeline and the seaward or termpols which we would have to put in. These facilities for the navigation of tankers are obviously a subject of discussion between the Department of Transport and my own department. We have indicated that we are in favour of public hearings to make sure that all the facts are on the record. We are now having discussions between departments as to what the parameters of these public hearings would be, and we are also looking for people who could undertake to direct these hearings. I hope we can get them going as quickly as possible.


KITIMAT PIPELINE-REQUEST FOR ASSURANCE ENVIRONMENTAL IMPACT STUDIES MADE PUBLIC BEFORE HEARINGS HELD
Thomas Clement (Tommy) Douglas: Mr. Speaker, my supplementary question is for the Minister of Energy, Mines and Resources. In view of the fact that this matter comes under divided jurisdiction and that not only has there been an application to the National Energy Board but I understand also an application has been made to the Canadian coast-guard services, I want to ask the minister if he is prepared to consult his colleagues, the Minister of Transport and the Minister of the Environment, to ensure that before the National Energy Board makes a decision with respect to the pipeline from Kitimat to Edmonton, the environmental impact study is made public and public hearings are held so that the people who are affected by this project may have an opportunity to make their representations.
Oral Questions


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources):: Mr. Speaker, I would be very pleased to give those kinds of assurances, assurances that the three ministers most concerned and identified by the hon. member do have an opportunity to assess the environmental question. I cannot give an assurance that the National Energy Board will hold up its report because we have perhaps found that the environmental risks have not been fully covered by environmental studies, but I can give the hon. member the kind of undertaking for which I think he is looking, and that is that no decision to proceed with the pipelines will be taken by the cabinet until such time as there has been a proper environmental assessment along with the National Energy Board assessment of the landward risks.


Thomas Clement (Tommy) Douglas: Mr. Speaker, in view of the fact that the National Energy Board Act requires the National Energy Board to look into the matter of the environment, I want to ask the Minister of Energy, Mines and Resources how it is possible for the National Energy Board to make an intelligent decision regarding this pipeline without looking into the marine hazards which are inherent in having 350,000 ton tankers traversing a 60-mile route to Kitimat. Surely the environmental investigation ought to be made before the National Energy Board makes a decision and submits a recommendation to the cabinet.


Alastair William Gillespie: As the Minister of the Environment has already made clear, there are really two different kinds of jurisdiction involved here, the landward side and the seaward side. However, I agree with the hon. member that both have to be considered, and no decision should be taken until both have been fully considered.


PENITENTIARIES
Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, in light of the answer of the Solicitor General to the hon. member for Yukon with reference to the building of penal institutions, I should like to ask the minister a further question. Will he advise the House if the design personnel and architects will be members of the public service, or will these technical people be hired from the private sector?


Francis Fox: Mr. Speaker, a joint committee of my department has been set up to look into the whole matter and, of course if it is necessary to hire people outside, it will be done through my colleague, the Minister of Public Works. I am under the impression that, in some cases, it will be necessary to hire architects or professionals outside the public service.

February 7, 1977
Oral Questions


Eldon Mattison Woolliams: The answer of the Solicitor General to the hon. member for Yukon seemed to imply that the matter is already in hand, and I believe there are people from the private sector already hired and engaged. Will the minister advise whether those jobs have been tendered or whether they are being handed out to friends of the government, and is any consideration being given to hiring those technical people from the locality where the institution will be built? For example, we were talking about an institution in Alberta near Calgary or other places in Alberta.


Francis Fox: Mr. Speaker, the selection of professional people for the construction of government buildings is obviously a matter of policy which goes much beyond the scope of my responsibilities. It is a matter which, for all government works, comes under the exclusive jurisdiction of the Minister of Public Works who alone could answer my colleague's question.


BILINGUALISM
Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, I should like to put a question to the President of the Treasury Board.
Following the tabling of the Bibeau report on bilingualism in the Public Service, can the minister tell us whether the government has completed its study of that report and, if so, what is the reassessment of the validity or merits of that program in the Public Service? Can he tell us whether he has now drawn up some policies regarding a further review of certain positions in the Public Service? Can he or the Secretary of State tell the House whether at the present time a fairly large number of civil servants have been recalled from the language school half-way through the school year?


Hon. Robert K. Andras (President of the Treasury Board):: Mr. Speaker, the full examination of the Bibeau report and other subsequent considerations with regard to policy have not yet been completed. This is being pursued very actively, and I anticipate that the government will be in a position to make a fairly comprehensive statement on the whole range of matters involved therein within the not too distant future.


RECALLING MEMBERS OF PUBLIC SERVICE WHO HAVE NOT COMPLETED COURSE
Marcel Joseph Aimé Lambert: Mr. Speaker, I should like to put a final supplementary question.
Will the minister deny that there are at present guidelines in effect at the language school concerning the reassessment of

the program and the progress made by civil servants? Every week, a good number of civil servants are being recalled before they have completed their course.


Robert Knight Andras: Well, Mr. Speaker, major changes are not taking place at the present time. There may be what I would describe as relatively minor adjustments being made, but to my knowledge no major changes are taking place. However, that is not to deny that the over-all assessment and comprehensive examination of this policy may not bring about some more significant adjustments later.


Marcel Joseph Aimé Lambert: Could you publish the guidelines as soon as possible?


CANADIAN INTERNATIONAL DEVELOPMENT AGENCY
Mr. Douglas Roche (Edmonton-Strathcona):: Mr. Speaker, my question is for the Prime Minister. Given the extension Paul Gerin-Lajoie received last year as president of the Canadian International Development Agency, what was the reason for his replacement last Friday? Second, is consideration still being given to establishing a separate ministry for CIDA to establish a much firmer ministerial and parliamentary control over this billion dollar agency, and when will this announcement be made?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, I do not expect to make any announcements in that regard. I hope members of parliament will feel free to ask the new president of CIDA any question they feel necessary, and I am sure they will receive great co-operation from the new president.


Douglas Roche: Was the criticism of the Auditor General that CIDA has "a serious internal control weakness" a factor in the replacement of the president? What instructions are being given to the new president to tighten CIDA's management operation so that public support for this important agency can be maintained?
[DOT] (M50)


Pierre Elliott Trudeau: To the first question, Mr. Speaker, the answer is emphatically no. To the second question, I have, and the minister has relations with the president of CIDA and we will indicate to him the ways in which we think he should be following government policy.
February 7, 1977


CHEMICAL CONTROL RESEARCH INSTITUTE
Mr. Don Mazankowski (Vegreville):: Mr. Speaker, my question for the Minister of Fisheries and the Environment arises out of the proposed relocation of the Chemical Control Research Institute from Ottawa to Sault Ste. Marie. In view of the fact that considerable concern has been expressed by the governments of Quebec and New Brunswick and also by industry associations over the fact that this move will tend to diffuse the national flavour of this institute, and in view of the fact that the close ties established between CCRI and many government departments and agencies of government in this very important area will be broken, may I ask if consideration is being given to re-examining this move and are the objections that have been voiced by the two governments and the associations being taken into consideration?


Fabien Roy: Mr. Speaker, I will undertake to look at the points made by the hon. member.


EXTERNAL AFFAIRS
Mr. Jack Murta (Lisgar):: Mr. Speaker, my question is for the Prime Minister. Does the Prime Minister intend to place the Garrison irrigation project uppermost or high on his agenda for discussion when he meets with President Carter of the United States later this month?


Pierre Elliott Trudeau: Mr. Speaker, the agenda itself has not been formally determined. The hon. member will remember that last time I met with the president of the United States, President Ford, I believe in December of the year before last, I discussed this subject with him and got certain assurances from him.


GARRISON DIVERSION-SUGGESTION CONSTRUCTION BE HALTED AND LONETREE RESERVOIR PROJECT RECONSIDERED
Jack Burnett Murta: A supplementary question, Mr. Speaker. I should like to ask the Prime Minister what assurances he got from President Ford at that time and if he believes that those assurances will be maintained by President Carter. I should like also to ask if he would urge a halt to the construction of the Garrison project affecting Canada specifically and immediately join in further consideration of what is called the Lonetree reservoir which affects the southern portion of Manitoba?


Pierre Elliott Trudeau: Mr. Speaker, 1 shall make every representation which I believe is in the interest of Canada. I would just remind the hon. member that when I raised the question with President Ford there had not
Oral Questions
yet been a report made to the IJC. The hon. member is aware that that report has come out now and is before the IJC and is favourable to Canada. We are expecting that the IJC will accept the conclusion of the report.


GARRISON DIVERSION-PROPOSED TRUST FUND TO PAY FOR ALTERATIONS-ALTERNATE SOURCE OF WATER FOR PORTAGE LA PRAIRIE
Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker, may I put a supplementary question to the Prime Minister in regard to the Garrison diversion? As the United States government is proceeding with the Garrison diversion project and ignoring the $1,200,000 IJC study and report which calls for $50 million of alterations to stop pollution, and as the United States government is proceeding with work on the Lonetree and Velva canal sections of the project which will create pollution problems in Canada, I would ask the Prime Minister to negotiate with the president to place $50 million in a trust fund to allow for the alterations needed to the project and also that a timetable be established for the work necessary on such projects as the $6 million alternate water supply that will be needed for the city of Portage La Prairie?


Pierre Elliott Trudeau: Mr. Speaker, the hon. member is obviously drawing heavily on the report itself which was commissioned by the IJC and which the IJC is presently studying. The National Joint Commission was set up by both countries precisely to deal with such matters. I am confident that they will deal with them in an equitable way and favourable to the thesis in which hon. members opposite and ourselves believe.


THE CONSTITUTION
Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, as the Prime Minister, in a news report last week, was reported to have stated that he would be happy to live with an 1867 constitution but would be willing to be flexible and give Quebec and other provinces greater powers, would he tell the House what his concept of these greater powers consists of?


Pierre Elliott Trudeau: Some other time, Mr. Speaker.


GREATER USE OF RECYCLED PAPER TO CONSERVE ENERGY
Mr. Bill Clarke (Vancouver Quadra):: Mr. Speaker, I should like to put a question to the Minister of Energy, Mines and Resources. In view of the fact that hundreds of thousands of new Bell telephone directories and government of Canada

February 7, 1977
Oral Questions
telephone directories were delivered in Ottawa recently, thus creating countless extra tons of waste paper because directories are not recyclable, may I ask that steps are being taken to ensure that government departments and industry will use more recycled waste paper with the resulting conservation of forest and energy resources?


Alastair William Gillespie: Mr. Speaker, I hope that other departments, governmental agencies and the private sector are following the lead of my department and using recycled paper for letterhead and using, if I may so describe it, the back of the sheet as well.

[ Translation]


REGIONAL ECONOMIC EXPANSION
Mr. Andre Fortin (Lotbiniere):: Mr. Speaker, I should like to direct a question to the Minister of Regional Economic Expansion.
He is aware of the file concerning the Rouyn-Noranda municipal airport. He met the mayor of Rouyn, as I did, on this particular issue. Is the minister in a position to come to the point about the assessment of this file, and will he be able to announce shortly some good news about the lengthening of the runway?


Marcel Lessard: Mr. Speaker, I did receive representations from the authorities of Rouyn-Noranda. I met them twice, we discussed this project and the need for it, particularly about the airport. I hope to be able in the not too distant future to answer the authorities of that municipality and give them a report on the progress of representations I made on their behalf.


ROYAL CANADIAN MOUNTED POLICE
Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, my question is for the Solicitor General. In answer to a question put by the hon. member for Prince George-Peace River, the minister asked if he could have a name to follow up on some of these things. I wanted to give the minister the name of Peter Worthington, Editor in Chief of the Toronto Sun. This information about the disappearance of files from the Praxis Institute has been with the Solicitor General for just under a week. Can he advise the House why the RCMP held the files for some six years without returning the stolen property to the owner of those files?


Francis Fox: Mr. Speaker, as I indicated earlier today, the RCMP had absolutely nothing to do with the alleged disappearance of files at the Praxis Institute in Toronto, and it never had in hand any indication as to what persons might have been responsible for the fire mentioned by the hon. member.


Stuart Malcolm Leggatt: Mr. Speaker, I am sure the Solicitor General would want to canvass that answer with Mr. Peter Worthington in view of his statement that he turned those files over to the RCMP. My supplementary question is this: following the fire at the Praxis Institute no inquiry was made under provincial fire laws in respect of arson in spite of the fact that arson was suspected. Can the minister advise if he has determined in his investigation whether the RCMP contacted any provincial authority regarding whether an inquiry would be held following that fire?


Francis Fox: Mr. Speaker, obviously I am being asked in this House a question which ought to be brought to the attention of the attorney general of Ontario, namely why there was or was not an investigation following the fire. As for me, I am unable to answer the hon. member's question.


POSSIBILITY OF BANNING YELLOW DYE NO. 5-REQUEST FOR PROGRESS REPORT ON USE OF FOOD COLOURINGS
Mr. Paul Yewchuk (Athabasca):: Mr. Speaker, my question is for the Minister of National Health and Welfare. In view of the fact that three food colours have been banned in the United States for certain uses but not banned in Canada, these being red dye No. 2, red No. 4 and carbon black, can the minister advise whether he plans to take any action on yellow dye No. 5 as new restrictions have been placed on this in the United States by the food drug administration?


Hon. Marc Lalonde (Minister of National Health and Welfare):: Mr. Speaker, many chemicals which are banned in Canada are not banned in the U.S. and vice versa. In the specific case referred to by the hon. member, I shall have to check with my officials to see whether we intend to follow the decisions made in the U.S. or take another course of action.


Paul Yewchuk: A supplementary question, Mr. Speaker. Has the minister any progress report to make to the House on the complete review he announced last October with regard to the Canadian policy on colours in foods, drugs and cosmetic products?

February 7, 1977


Marc Lalonde: Not yet, Mr. Speaker.


MANPOWER
Mr. Cecil Smith (Churchill):: Mr. Speaker, my question is for the Minister of Manpower and Immigration. According to a letter from the minister regarding Canada Works, separate allocations are made for status Indians on reserves. Can the minister describe the difference between unemployed status Indians living on or off the reserve?


Jack Sydney George (Bud) Cullen: Mr. Speaker, with respect, I think the answer is self-evident.


Cecil Morris Smith: A supplementary question, Mr. Speaker. I do not think that was much of an answer, considering that 2,137 status Indians living in remote areas will not qualify for Canada Works.


Mr. Speaker:: Order, please.


INFORMATION
Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, may I direct my question to the Prime Minister? In view of the Prime Minister's recent statement confirming that there are government files on millions of Canadians, and since we have no legislation the intent of which is similar to that of the United States information act, legislation which would provide Canadians with access or the right of access to such files, is it government policy to correct this situation, or should Canadians in this respect be content with having lesser rights than Americans?


Pierre Elliott Trudeau: Mr. Speaker, I for one, as a Canadian, would not admit that we have lesser rights than the Americans. They may have more abuses there and that is why, perhaps, they have to have corrective measures. I do not think the people suspect the RCMP of conducting themselves as the FBI do.


Elmer MacIntosh MacKay: A supplementary question, Mr. Speaker. I thank the Prime Minister for his answer and ask if he would consider introducing methods to improve the situation since, in the past, it has been necessary for Canadians to obtain information about their own country in the United States, under the information act?
Order Paper Questions



ROUTINE PROCEEDINGS


Mr. R. E. McKinley (Huron-Middlesex) moved: for leave to introduce Bill C-394, respecting the Electoral Boundaries Readjustment Act (Huron-Bruce).


An hon. Member:: Explain.


Robert Elgin McKinley: Mr. Speaker, this bill would change the name of my riding from Huron-Middlesex, as under the Electoral Boundaries Readjustment Act, to Huron-Bruce. I hope that arrangements can be made for passing this bill at all stages, along with others, in a private member's hour in the not too distant future.


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

Donald Stovel Macdonald: for leave to introduce Bill C-37, to provide for the making of certain fiscal payments and of established programs financing contributions to provinces, to provide for payments in respect of certain provincial taxes and fees, and to make consequential and related amendments.


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

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Ross Milne (Parliamentary Secretary to Minister of Communications):: Mr. Speaker, the following questions will be answered today: 133, 587, 839, 840, 930, 1050, 1051, 1145, 1161, 1238, 1276, 1326, 1361 and 1398.


Mr. Orlikow: 1.	For the fiscal year 1975-1976, what contracts for professional services were let (a) for studies, surveys and analyses into present or future policies, programs or information analysis, and their efficiency and effectiveness (b) into the

February 7, 1977
Order Paper Questions
examination of the administration or internal operation of the Department of Supply and Services?
2.	How much was committed on each contract and to whom?
3.	What were the comparable figures for the fiscal year 1973-1974?


Hon. Jean-Pierre Goyer (Minister of Supply and Services):: In so far as the Supply and Common Administrations are concerned: 1. (a) Nil; (b) 10 contracts.
2.	(1) H.G. Hunt, $14,000; (2) Pass Management Consultants Ltd., $28,500; (3) Thorne Riddell Associates Ltd., $17,000; (4) Peat Marwick and Partners, $5,000; (5) Stevenson Kellogg Ltd., $22,000; (6) E.A.C. Amy & Sons Ltd., $2,200; (7) Price Waterhouse Associates, $8,000; (8) Pass Management Consultants Ltd., $15,500; (9) Haskins and Sells Associates, $20,000; (10) E.A.C. Amy & Sons Ltd., $1,800; Total: $134,000.
3.	Nil.
In so far as the Services Administration including the Receiver General for Canada is concerned: 1 to 3. The information is provided in answer to Question No. 587, answered this day.


Mr. Orlikow: 1.	For the fiscal year 1975-1976, what contracts for professional services were let (a) for studies, surveys and analyses into present or future policies, programmes or information analysis, and their efficiency and effectiveness (b) into the examination of the administration or internal operation of the Office of the Receiver General?
2.	How much was committed on each contract and to whom?
3.	What were the comparable figures for the fiscal year 1973-1974?


Jean-Pierre Goyer: 1.	(a) Nil; (b) Three contracts.
2.	(1) Peat Marwick and Partners, $8,350; (2) Peat Marwick and Partners, $2,032.30; (3) Barnet Data Systems, $1,281.70; Total: $11,664.
3.	(a) $9,860; (b) $93,200.


Mr. Horner: 1.	For each year from 1970 to 1976 to date, how much money has been spent on the maintenance of water freight service on the Vancouver coast up to Prince Rupert?
2.	Under what legislative authority, subsidy or grant do these amounts of money fall?
3.	Are these amounts or subsidies now discontinued and, if so, for what reason?


Hon. Otto E. Lang (Minister of Transport):: 1. Vancouver N.B.C. Ports, B.C. Subsidy: 1970-71, $503,000; 1971-72, $753,000; 1972-73, $753,000; 1973-74, $753,000; 1974-75, $2,545,159; 1975-76, $3,144,374; 1976-77, $2,186,625 (seven months).
2. Section 22(d) National Transportation Act.

3. The subsidy was discontinued on October 31, 1976 when it was determined that alternative services could be provided with significantly reduced subsidy. The new arrangements provide a separation of passenger and cargo services which should result in greater efficiency. Cargo service is being handled by tug/barge systems which have virtually replaced conventional ships in the British Columbia coastal trade. Responsibility for passenger service along the coast has been accepted by the Provincial Government with limited financial support from the Federal Government.


Mr. Horner: What is the cost of operating and maintaining Mirabel Airport since its opening to date?


Otto Emil Lang: Costs of operating and maintaining Mirabel Airport, as well as revenues received, are as follows: 1. Operating and Maintenance Costs: December 1, 1975 to March 31, 1976: $8,338,000; April 1, 1976 to September 30, 1976: $11,091,000; Total, $19,429,000.
2. Revenues: December 1, 1975 to March 31, 1976: $3,201,000; April 1, 1976 to September 30, 1976: $10,970,000; Total, $14,171,000.


Mr. McGrath: 1.	What are the names of the companies which chartered ships to CNR in Newfoundland in 1976 and were public tenders called in each case?
2.	(a) What were the names of the ships (b) what was the amount and date of the charter in each case?
3.	What was the daily and overtime rate in each case?


Otto Emil Lang: The Management of Canadian National Railways advises as follows: 1. The following companies chartered ships to Canadian National Railways in Newfoundland in 1976 on a time charter basis for movement of freight to coastal points: NFLD. Marine Services Ltd., D. Frampton & Co. Ltd., The Lake Group, Topsail Shipping Co., Fogo Transport Ltd., Dorman Roberts, Puddister Shipping Co., J.B. Foote & Sons, Lake & Lake Ltd., Stena Line AB (Sweden). Tenders were called in each case.
2. (a) and (b) The names of the vessels and the dates of charter are listed below. It is not the practice of the Company to disclose the terms of arrangements with other parties. M.V. Topsail Star, 29/07/76; M.V. Dunure, 06/04/76; M.V. Clyde, 13/03/76; M.V. Nfld. Coast, 26/05/76; M.V. Marine Transport, 25/05/76; M.V. Kloster, 07/06/76, 07/10/76; M.V. Marine Voyager, 25/05/76, 24/11/76; M.V. Ambrose Foote, 01/06/76; M.V. Prince Andrew, 03/06/76; M.V. Harry Lake, 07/06/76; M.V. Glencoe, 29/07/76; M.V.
February 7, 1977

Marine Trader, 29/10/76; M.V. Sarah, 18/11/76; M.V. Stena Nordica, 01 /05/76.
3. The daily and overtime rate of charter are considered privileged information between the owner and Canadian National Railways in that the bids were received in a competitive situation. In order to protect the ship owner's interest, this information is held in confidence.
Order Paper Questions


Mr. Howie: What contracts have been executed for (a) airport building renovation or expansion (b) runway expansion or improvement in the Maritime Provinces since January 1, 1976 and, in each case, what amount is involved?


Hon.   Otto. E. Lang@Minister of Transport: Airport	Runway
building	expansion or	AmountSite	renovation	improvements	Contractor	Date	(000's)Charlo	X	Atlantic Bldg. Contractors Ltd.	6/76	817.3Charlo	X	LeBlanc & Cormier	1/76	3.9Charlottetown	X	Flintkote Co. of Canada Ltd.	8/76	51.7Charlottetown	X	New Haven Plumbing	9/76	2.4Halifax	X	Blundon	4/76	38.0Halifax	X	Carson Construction	8/76	207.0Halifax	X	G & H Steel	4/76	305.8Halifax	X	G & H Steel	6/76	7.1Halifax	X	Altron	6/76	65.2Halifax	X	Ocean Contractors Ltd.	4/76	172.0Halifax	X	Furniture (various)	1/76	70.0Halifax	X	Halifax Furniture Clinic	7/76	2.6Halifax	X	Seaman-Cross Limited	4/76	3.0Halifax	X	Air Canada	1/76	4.2Halifax	X	Standard Paving Maritime Ltd.	6/76	42.5Halifax	X	Blundon	4/76	32.6Halifax	X	Donald J. MacEwen	7/76	9.4Moncton	X	Parsons	6/76	439.0Moncton	X	Edmonds Brothers	10/76	72.0Saint John	X	John Flood & Sons Ltd.	6/76 10/76	13.2Saint John	X	Edmonds Brothers	44.9Saint John	X	Reimburse EPA	4/76	28.5Sydney	X	Municipal Ready Mix Ltd. Total	8/76	14.5 2,446.8


Mr. Bawden: Was an aircraft manufacturer loaned $6,000,000 in 1972 from the Defence Production Revolving Fund and, if so (a) what was the name of the company (b) for what reason was the company not named in the Public Accounts of Canada (c) what was the purpose of the loan (d) what were the terms of repayment (e) what was the interest rate?


Jean-Pierre Goyer: (a) Canadair Limited, (b) It is not general accounting practice to disclose the names of commercial organizations unless such information is pertinent to the disclosure note. However, reference to the loan has been made each year without naming the company viz Defence Production Revolving Fund-Balance Sheet March 31, 1976 Note 4 Public Accounts Volume II, pages 25.12 and 25.13. (c) Working capital loan was provided to Canadair for the purpose of assisting the company to carry out defence contracts, (d) Loan was to be paid two years from the date the loan was made. The original repayment date was June 8, 1974. The repayment date was extended to June 8, 1975 and again to June 8, 1976. A joint submission from D.S.S. and IT & C to the Treasury Board requesting authority
to extend the Loan until September 8, 1977 is in preparation, (e) The cummulative unpaid balance of the Loan will bear interest at the current prime bank lending rates applicable throughout the period.


Mr. Forrestall: 1.	What was the cost of icebreaking services for the (a) St. Lawrence River (b) Gulf of St. Lawrence (c) Arctic, during 1975-76?
2.	In the best estimate of the government, for the years (a) 1974-75 (b) 1975-76, if the total cost of providing icebreaking services in the St. Lawrence River and the estimated cost of icebreaking services undertaken in the Gulf of St. Lawrence to aid winter navigation on the St. Lawrence River from Quebec City upwards, were fully recovered by cargo assessments, what assessments would have to be levied on each ton of cargo moving via the Ports of Quebec, Trois Rivieres, Montreal, Contrecoeur and Sorel assuming that such costs were fully recovered from tonnage assessments on cargo moving via these ports during the period when icebreaking was provided?


Otto Emil Lang: 1. The cost of 1975-76 Icebreaking Services:

February 7, 1977
Order Paper Questions
(a) St. Lawrence River	$5,751,570	
(b) Gulf of St. Lawrence	$6,914,872	
(c) Arctic Operations	$8,252,884	
Icebreaking costs	1974-75	1975-76St. Lawrence River	$5,446,648	$5,751,570In Gulf To Support River Shipping	4,482,430	4,036,632Totals	$9,929,078	$9,788,202
(b) Tons of cargo moved during months of January, February and March
Port	1975	1976Montreal	2,135,349	1,516,731Trois-Rivieres	276,255	192,445Quebec	1,563,345	2,105,099Sorel	166,995	69,676Total Tonnage	4,141,944	3,883,951
Note: Contrecoeur is considered as part of Montreal Port.
(c) Assessment per ton to recover cost of icebreaking services
1975	9929078	= $2.40
	4141944	
1976	9788202	= $2.52
	3883951	
Note: Assessment is based on the assumption that full icebreaking costs supporting winter river operation is recoverable from users of the above named port facilities. If user changes were instituted generally, other areas benefiting from the Coast Guard icebreaking activity would include: 1. Many private facilities along the river. 2. Those ports on the North Shore which are broken out in the spring. 3. The icebreaking carried out in the Montreal area to alleviate possible flooding of low lying areas along the river.


Mr. Allard: For the Fiscal year 1975-76, did the Department of Transport give any grants to (a) Dalhousie-Miguasha Ferries Ltd. (b) Northumberland Ferries Ltd. (Wood Island-Caribou) (c) Grand Manan Ferries Ltd. and, if so, in each case, in what amount?


Otto Emil Lang: The Canadian Transport Commission advises as follows: For the fiscal year 1975-76 the Department of Transport did not give any grants to (a) Dalhousie-Miguasha Ferries Ltd., (b) Northumberland Ferries Ltd., (c) Grand Manan Ferries Ltd. For the fiscal year 1975-76 the Canadian Transport Commission did administer operating subsidies to the three named services as follows: (a)

Dalhousie-Miguasha Ferries Ltd., $5,036; (b) Northumberland Ferries Ltd., $2,503,864; (c) Coastal Transport Limited, (Grand Manan-Mainland), $259,000.


Mr. Herbert: During each of the past ten years, what was the total payment made to purchase railway equipment to facilitate the movement of Canadian grain?


Otto Emil Lang: Railway (Grain) equipment purchases: 1967-68, Nil; 1968-69, Nil; 1969-70, Nil; 1970-71, Nil; 1971-72, Nil; 1972-73, $47,305,989; 1973-74, Nil; 1974-75, Nil; 1975-76, $40,639,100; 197677, $100,400,000 (estimated).


Mr. Friesen: 1.	Has the Malibu Princess, used in the British Columbia coastal trade, been registered, insured and/or bonded by Lloyd's of London and, if so (a) what is the amount of the insurance or bond (b) on what date did the registration, insurance and/or bonding take place (c) for what length of time has the registration, insurance and/or bonding been issued?
2.	What is the length, the beam and the draft of the Malibu Princess?
3.	What are the Department of Transport regulations for the draft of ships assigned to open waters?
4.	Since November 1, 1976, has the Malibu Princess been able to stop at all of the ports on her schedule and, if not (a) how many times has it been unable to complete its schedule (b) what were the reasons for not fully completing each trip?
5.	Since November 1, 1976, has the barge service used for cars and freight been able to stop at all of the ports on the schedule and, if not (a) how many times has it been unable to complete its schedule (b) for what reason was it unable to complete each trip?


Otto Emil Lang: 1. The Malibu Princess is listed in Lloyd's Register of Shipping. This vessel is not classified by Lloyd's. Canada Steamship Inspection classified the vessel as home-trade class III. The placing of Hull and Machinery, and Protection and Indemnity Insurance is an owner/operator responsibility and risks and limits insured are not known to Transport Canada.
2.	Malibu Princess as per registry of shipping: Length, 38.41 metres; Beam, 9.83 metres; Draft, 2.286 metres.
3.	Draft, per se, is not regulated but is directly related to freeboard which is regulated under the General Load Line Rules. The load line position on a vessel is determined by design criteria and intended trading area. The rules for determining same are highly complex. In addition to the General Load Line Rules passenger vessels carrying more than 12 passengers must meet the Subdivision Rules for passenger vessels. These rules generally deal with the relationship of water tight subdivision, draft and freeboard. In the Canadian context voyages are foreign, home-trade, inland waters or minor waters. The Queen Charlottes lie within home-trade class III limits and any vessel wishing to trade in this area must be classified as home-trade class III. The Malibu Prin-
February 7, 1977

cess has been classified as home-trade III by Canada Steamship Inspection.
4.	The Malibu Princess has made all stops on her regular service schedule up to December 12, 1976 when inquiry was made of the operator.
5.	So far as is known, yes, but the Government of Canada has no direct interest in the barge service referred to and, as such, detailed operating knowledge is not available. Inquiries of this nature should be requested directly from the operator.


Mr. Neil: What is the total cost to date of the Snavely Commission on the cost of transporting grain by rail?


Otto Emil Lang: The total cost to October 31, 1976, which is the latest date for which invoices have been received, is $422,094.74.


Mr. Jones: 1.	Are further and additional capital improvements planned for the Moncton Airport and, if so (a) what are they (b) what are the time schedules?
2.	Is Moncton Airport used as an alternate international airport and, if so, what arrangements have been made to provide complete customs facilities?
3.	Are steps being taken to designate the Moncton Airport as an international airport and, if so, what are they?


Hon.   Otto. E. Lang@Minister of Transport: 1. In the
master plan now under development for Moncton Airport, requirements for the following projects have been tentatively identified and desirable scheduling established. Since the Master Plan is not yet completed and approved, no commitment can yet be confirmed. Major renovations to the Air Terminal Building, 1979/80; Design and construct waste water treatment facility, 1979/80; Pave employee parking lot and industrial roads, 1977/78; Renovate Control Tower air conditioning, 1978/79; Acquire land for new Air Terminal Complex, 1979/80; Purchase property off end of runway II, 1977/78; Construct new taxiway, terminal ramp and runway 29 c/w lighting, 1979/80/81; Replace ILS equipment on runway 29, 1979/80; Construct new flight hangar and offices for Transport aircraft, 1979/80.
2.	Although there is an occasional Air Canada diversion from Halifax, Moncton is not an international alternate. Limited Customs facilities are provided to meet general aviation requirements. A study on international charter access to noninternational airports in Canada is currently being conducted. The results of this study pertaining to Moncton Airport are not yet known.
3.	There are no plans to designate Moncton Airport as an international airport.
Order Paper Questions


Mr. Crosbie: 1.	(a) What government authority or agency is responsible for the inspection of passenger elevators located on board passenger ferries operated for Canadian National by the East Coast Marine Services between Newfoundland and Nova Scotia (b) what safety standards are in effect with respect to such passenger elevators?
2.	Are the same safety standards required for passenger ferries owned or registered under Canadian law and those chartered ferry vessels registered in other countries?
3.	Are the safety standards provided by the Canadian Standards Association B44 Safety Code for elevators and lifting devices applicable to both Canadian and foreign vessels involved in passenger ferry service?
4.	Have any representations been received from the Government of Newfoun-land or any agency thereof about the safety features of passenger elevators on board passenger ferries operated between Newfoundland and Nova Scotia and, if so, what is the nature and content of the representations?


Otto Emil Lang: 1. (a) Transport Canada (Coast Guard Ship Safety), being the authority responsible, has arranged that the inspections of these elevators be carried out by provincial (Newfoundland) inspectors who make similar inspections of shore-based elevators in buildings. The Transport marine surveyor is authorized to accept these inspections if he is otherwise satisfied, (b) The safety standards in effect for these inspections are those used normally for building elevators.
2.	The Non-Canadian Ships Safety Order presently provides that chartered passenger ferry vessels registered in other countries are deemed to comply with the requirements of the Canada Shipping Act if they carry Passenger Ship Safety Certificates issued by the country of registry under the conditions of the Safety of Life at Sea Convention (1960). Since the Convention does not make specific provision for elevators, it is now the intention of Transport Canada to propose amendments to the Order to require such vessels to meet the same requirements for passenger elevators as are applied to Canadian vessels. These requirements will also be stated in greater detail by means of proposed new regulations that are now being circulated for comment.
3.	Under the proposed new regulations the C.S.A. Code safety standards would apply both to Canadian ships and to foreign-registered ships operating in the Canadian Coasting Trade. At present they do not apply to the latter.
4.	A letter dated August 23, 1976 was received by Transport Canada from the Hon. E. Maynard, Minister of Manpower and Industrial Relations, Newfoundland. Mr. Maynard points out that the passenger elevators on the chartered, foreign-registered passenger ferry vessels operating in Newfoundland lack certain safety features required by the C.S.A. Code.
[DOT] * *


William Ross Milne: Mr. Speaker, if question No. 810 could be

February 7, 1977
Income Tax Act
made an order for return, this return would be tabled immediately.


Some hon. Members:: Agreed.


Mr. Leggatt: In what locations in Canada is radioactivity in excess of naturally occurring levels (a) known to exist (b) suspected to exist and, for what reasons?
Return tabled.


Mr. Speaker:: Shall the remaining questions be allowed to stand?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Friday, February 4, consideration in committee of Bill C-22, to amend the statute law relating to income tax-Mr. Macdonald (Rosedale)-Mr. Turner in the chair.
The Deputy Chairman:: Order, please. The House again in committee of the whole on Bill C-22, an act to amend the statute law relating to income tax. When the committee rose on Friday, February 4, clause 52 was under consideration. Before recognizing the next hon. member, may I inform the committee that according to our records, and within the terms of the order made pursuant to Standing Order 75C, one hour and twelve minutes remain to conclude the eight hours of debate ordered by the House. Therefore, if necessary I will interrupt the proceedings at 4.20 p.m. and put all questions necessary to dispose of this stage of the bill. Shall clause 52 carry?


Some hon. Members:: Agreed.
Clause 52 agreed to.
Clause 53 agreed to.
On clause 54-Determination of taxable capital gains, etc.


Marcel Joseph Aimé Lambert: Mr. Chairman, I am looking at the clause to make sure nothing slips by-not that the minister would wish to slip anything by. Mr. Chairman, clauses 54 and 55 are all right.
Clause 54 agreed to.
Clauses 55 and 56 agreed to.
On clause 57-Revocation.


Mr. Symes:: Mr. Chairman, clause 57 of the bill deals with the registered home ownership savings plan.


Marcel Joseph Aimé Lambert: And other things.


Reginald Cyril Symes: I want to make some comments about this provision in the Income Tax Act. A few years ago in a budget the government introduced a provision to stimulate home building and assist young couples and lower income people to save in order that they might build a new home. The government hoped to accomplish this end with the registered home ownership savings plan. Under the plan a person would register and be able to contribute $1,000 per year to a maximum of $10,000 in ten years. That $1,000 set aside under the registered home ownership savings plan was to be tax free, as was the interest earned by moneys deposited under the plan. In other words, the moneys diverted into such a plan would never be taxed. When you look at the program and how it has been working, you find that as of 1974, the last year for which I have statistics available, some $65 million of tax savings were allowed through this registered home ownership savings plan.
The concept of helping Canadians to save in order to purchase a house is one with which all members of this House of Commons are in agreement. The government, looking at its record of housing in Canada, has something to be ashamed of in terms of the cost of housing today because of the high interest rates it has tolerated, especially in terms of mortgages that low and middle income people have to pay. The policy of this government in so far as adequately housing Canadians is concerned is something that I deplore, considering how many Canadians today are ill-sheltered.
If, in order to help Canadians build houses, the Minister of State for Urban Affairs were to stand in the House and announce that he would provide a cash grant to Canadians based on terms that the more you earn, the greater your grant, all of us in the opposition would be indignant at the unfairness of such a program. The public at large would have great objection and great difficulty trying to fathom why, the more you made in terms of income, the greater the house buying grant the government would give you.
When we look at this clause of the bill which has to do with the Income Tax Act and how it operates in terms of RHOSPs, we Find that is the very principle with which we are dealing. In other words, the greater your income, the higher you are on the income ladder, the greater the tax benefit will be for you if you subscribe to a registered home ownership savings plan. That is what we in the New Democratic Party so strongly object to, namely, that his plan, like many of the other provisions, benefits wealthy Canadians more than lower and middle income Canadians for whom the plan was supposedly designed to help in the first place.
Looking at the figures from Statistics Canada and how the various income groups have been able to benefit from the registered home ownership savings plan, we find that if a person's income was under $2,000-and this would only apply
February 7, 1977

to people on pensions, disability pensions and so on-their average saving under this plan was $105. If we move up the income-ladder to those earning between $2,000 and $5,000 a year, we see that their saving under this plan would be about $203. For the income group between $5,000 and $10,000, their tax saving would be about $264. Notice that as we go up the income ladder the tax saving increases. For those earning between $10,000 and $15,000 a year, the average saving is about $309. For people earning between $15,000 and $20,000 a year, their average saving is $365. For people earning between $20,000 and $50,000 a year, the saving under this plan would average $462. For those earning over $50,000 a year, the average saving would be $571.
Rather than providing a kind of tax structure through this home ownership savings plan to help those who need help the most to Find decent accommodation through home ownership, the plan works in the reverse direction. I agree there would be some saving to lower and middle income Canadians, but it gives a far greater saving to upper income Canadians whom we assume have greater ability to afford housing than low income Canadians. That is unfair.
Looking at the way the savings are proportioned among the different income groups, I ask the minister what is fair about a home ownership savings plan for the income group between $5,000 and $10,000 a year when only one in 49 taxpayers was able to take advantage of it. For someone earning between $10,000 and $15,000 a year, one in 32 was able to take advantage of the program, and for those earning over $50,000, one in 16 was able to take advantage of it. I refer not only to the amount of money one can save under the plan, as I illustrated by earlier figures-the more you make, the greater it is-but in terms of who is taking advantage of the plan we find, again, it is upper income Canadians, those we would assume to have the means to buy a house, who benefit the most.
These are the people who are taking advantage of the plan in terms of numbers and who are also gaining the greatest benefit in terms of dollars. This plan, like the registered retirement savings plan and the child care deduction provisions which we criticized earlier, provides disproportionate advantages to upper income Canadians. For that reason, we strenuously object to it.
If the government is serious about providing adequate housing for Canadians, there should be a cut-off limit, in terms of income, as to whether you qualify for this plan or, better still, a tax credit formula so that low and middle income Canadians who most need help will be able to get the dollars savings that one would assume a fair income tax system would provide.
On the whole, when we look at this gimmick, this registered home ownership plan as a tool to help Canadians find adequate housing falls far short of the goal. We are, unfortunately, facing a tremendous problem of high unemployment. Officially, the rate run at about 7 per cent, but very likely, because of inadequate statistical methods, this figure does not repre-
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sent the true position which is probably around 11 per cent- 800,000 or one million Canadian are out of work. If the aim is to get these Canadians back to work as well as to provide decent shelter for the hundreds of thousands of Canadians who need it, we should not rely upon these tax gimmicks; there should be a massive investment of public money in a national housing program to stimulate home construction. Not only would this get many unemployed Canadians back to work, but we would begin to provide a housing stock adequate for the needs of many Canadian families who are presently living in slums or near-slums.
Another way in which the government could help solve the housing crisis would be by regulating mortgage interest rates either through the Bank of Canada or through the budgetary process. We in this party have suggested that the government instruct the commercial banks to set aside a certain portion of their capital to provide mortgages, at 6 per cent to low income families deserving of such assistance. If we brought down high mortgage rates we would do more to stimulate home construction than by introducing the kind of gimmick represented by RHOSPs.
It must be disillusioning for Canadians to face the mortgage payments they are required to make today. Over the weekend I was talking to a constituent who had taken out a $40,000 mortgage at 10'/2 per cent. He had received an annual statement from the bank which showed he had reduced his mortgage over the past year by some $400. But his interest payments amounted to around $4,000. When a family is burdened with mortgage payments on that scale, is it any wonder that in so many cases both spouses need to work?
Not only does the RHOSP benefit the wrong group, that is, those in the upper income brackets who have a better chance of coping with housing costs, but it does not begin to come to grips with the housing crisis. I am concerned, also, about the loopholes in this plan. In theory it is supposed to help people save toward the purchase of a house. But the provisions are so loose that money can be paid into the plan and used later to buy furniture. Use can be made of it as a tax dodge, and at the end of ten years there is no need to buy a house at all; the money accumulated, say $10,000 plus interest, can be transferred to an RRSP so as to avoid taxation.
Even in cases where a person already owns a house, the fund can be transferred to a spouse and the spouse will qualify under the plan. There are various provisions which make it possible to transfer these funds into RRSPs, and so on- all in all, a loophole big enough to drive the family car through. In my opinion, the plan is poorly designed in relation to whom it helps and to what degree. I think it really amounts to a tax dodge available to the wealthy rather than a tax break to those who need it most. For this reason I strongly object to the way in which it is designed. We in the New Democratic Party would like to see it restructured as a tax credit and a limitation placed on its use. We want homes for lower and middle income Canadians.


Donald Stovel Macdonald: I am obliged to the hon. member for his contribution. He talked about a family in his

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riding, a family which, I take it, is typical in the sense that it is carrying a $40,000 mortgage and paying $4,000 or $5,000 a year on it. May I point out that this is exactly the kind of household which under RHOSP would be able to put money aside to provide a down payment on property. This measure will, in a substantial way, assist young people in particular who have entered the work force to set aside money to acquire property and make a home for themselves.
I think it is fair to remind the hon. member that this measure does not in any way exhaust the list of those the government has taken in the housing field. He would like to see a massive program of government spending in the housing area. Might I point out to him that this is exactly what was undertaken by the government in 1976 through various programs within the responsibility of my colleague, the Secretary of State for Urban Affairs. In round figures, $1.5 million was channelled by the federal government into programs concentrated mainly on those at the lower end of the income scale so as to make available one form of assistance or another, accounting for 120,000 of the 275,000 units of housing under way during 1976.
Incidentally, the figure of 275,000 units in that year was not only a record; it was well in excess of the target which had been set by my colleague. In that sense we have already witnessed a massive injection of money into the housing sector. I think, for example, of the Dundas-Sherbourne project in my own constituency. Federal funds represented about 95 per cent of the total cost in addition to the shared-cost of rental subsidies with the provincial government, and the result was the availability of accomodation in the downtown area for people in the lowest income groups who, but for this federal assistance, would not have such housing at all. In short, we are seeking to provide a spectrum of housing opportunities, and I think it is fair for me to comment that there has already been an effective and substantial addition to Canada's housing stock as a result of the programs to which I have referred.


Reginald Cyril Symes: Mr. Chairman, the minister started to recite some of the government's housing policies and programs, revelling in the 275,000 new units to be created. He would, of course, be the first to admit that there are some problems with the figures he recited. One of the major problems, which is evident to me from constituents who come to my office in Sault Ste. Marie, is the fact that of the many new houses that are built, most are priced beyond the family incomes of these people. In view of the actual cost of building a house and the cost of interest payments people are faced with today, the dream of owning a house is away beyond the reach of most. Not enough moderately-priced houses are being built.
Private developers, of course, can make a greater profit from the more expensive homes which upper income Canadians can afford, and this is the kind of home construction that is taking place all across Canada. Certainly, many more are built than the moderately-priced homes which the average Canadian would like to be able to afford. The government will probably

counter that argument by stating that there is the assisted home ownership plan, which again is a plan that in theory is very good but which in practice cuts out average income Canadians from any benefit. A ceiling is placed on the price of a house under which AHOP will grant a subsidy. For example, in Sault Ste. Marie there are just not enough moderately-priced houses on the market to qualify for AHOP assistance and provide a home for those with an income requirement to bring them within the program.
So although the government can trot out statistics showing the great work it is doing, the people whom I see from day to day who have problems finding adequate housing tell me a different story. They tell me the housing situation is not as rosy as the minister tries to make out. That is why I say that if this registered home ownership plan is to have any real benefit for those who need it the most, we will have to redesign it so that, in dollar terms and in terms of who can take most advantage of it, it is made available to low and middle income Canadians and not, as is presently the case, to help those in the upper income brackets.


Stuart Malcolm Leggatt: what we are opposed to is what I would describe as consistent Liberal philosophy, that of not only assisting middle and upper income earners but richly rewarding them in terms of the provisions of this particular clause. That is all I have to say on that aspect. I still think that the real effect of these kinds of tax shelters on individual taxpayers has not been properly studied. If it has been properly studied, then in spite of its fundamental unfairness to those on low income, the principle has nevertheless been proceeded with.
I hope that the minister has read a document entitled "The Hidden Welfare System", produced by the national council of welfare, which analysed the personal income tax system. This particular provision came under very careful scrutiny and was heavily criticised in the report. It underlined the example that the hon. member for Sault Ste. Marie so explicitly put before the committee-that of the plan's basic unfairness. It pointed out that the loss to the treasury as a result of these tax shelters is some $6.4 billion a year, and that if you took away those shelters every man, woman and child in Canada could be given $100 a month for the purpose of education, clothing or some basic and fundamental need. Yet the government continues to bring forward a system of reverse taxation.
1 could go into the question of the effect of this system on indexing, which makes it even more iniquitous. As a result of indexing we find that the value of these shelters to those of upper income is even greater. However, that is all 1 have to say on this clause, Mr. Chairman.
Clause 57 agreed to.
Clauses 58 and 59 agreed to.
On clause 60-Definitions.


Mr. Munro (Esquimalt-Saanich):: Mr. Chairman, I shall not speak for any length of time, but I should like some clarification of clause 60 which unfortunately picks up some of the matters already dealt with in clause 43(3) on page 47 of the bill having to do with the definition of "charitable foundations", "charitable organizations", and so on. My question refers specifically to activities which are not necessarily related to the charity in question but are engaged in by a charitable organization or foundation, whichever is the case, in order to finance the further carrying on of their charitable work.
I am thinking, to be specific, of an operation such as a parking lot, the proceeds of which would be recoverable by the charitable foundation or organization to finance that charity's operation. There is another form of activity that a foundation or organization might be involved in, namely, the purchase of a building by way of investment in order to produce revenue which would assist the charitable organization or foundation in carrying on its work. I wonder whether the minister is in a position to say now whether any criteria are being used to determine which business activities would be permitted within the meaning of this bill as being eligible for tax exemption.
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Donald Stovel Macdonald: The hon. member has touched on one of the difficult questions involved in the exercise of reviewing the tax law as it affects charities. The basic purpose, going back to the common law, is that by definition a charity should not carry on a business, that it should engage primarily in the benevolent purposes for which it has been set up. But we all know that over a period of time, specifically for the purpose of augmenting the funds of charitable organizations, related businesses have been engaged in by the charities.
In my own city, the women's committee of the Ontario art gallery has been engaged in such activities, as have other charitable organizations; for example, in the preparing and sale of meals on the premises of the charitable organization as income earners for the particular charity. It is for that reason that subsection (j) has been added to try to define a little more clearly the question of related business.
The example given by the hon. member would not fit within the related business category, that is to say, the operation of a parking lot. Indeed, it is conceivable that it could be run by volunteers for the purpose of augmenting the income of the charitable organization; but that is not primarily what would be regarded as a related business. However, ultimately it is not for me to say: the definition of "related business" is included in the statute and it would be for the courts to interpret it. I should indicate, however, that from the extensive discussions that have been held with charitable organizations as a result of the study paper and the bill which was given first reading late last spring, and of this bill, the conclusion has been drawn that the introduction of the rules would not materially affect the existing operations of most charitable organizations and public foundations. This will be determined by the law. It may well be that there will be some activities which are not compatible with the carrying on of a charity which may fall afoul of this provision.


Donald W. Munro: Mr. Chairman, I am not entirely satisfied. The minister has given some clarification, but the "related business" concept would have to be clarified by the courts. The courts have in front of them the wording of this bill. Presumably they would have, as well, any precedents established by court ruling. But this imposes upon charities a requirement to resort to legal action in order to resolve problems in which perhaps they had been involved for several years on the understanding, in the past, that these activities were recognized as legitimate businesses which would be carried on by those charitable organizations without implicating them in deeper tax commitments.
I notice that the minister spoke of the example of a parking lot operated by volunteers to raise money. Let us suppose that the parking lot happened to be in the same municipal area as a hospital, for example, and it was not volunteers but paid staff who were being employed in this operation; therefore it was a business with employees who are parking lot attendants being paid for their services. Would this further complicate their problem, or did the minister just throw in the word "volunteers" simply as one of the words that might be used with reference to persons running the parking lot?

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Donald Stovel Macdonald: The word "volunteer" is really a synonym for the definition in the latter part of clause 60(1 )(j). I should indicate that it is anticipated that where formerly a business of one kind or another was carried on by an existing charity, Revenue Canada would have no difficulty in defining those practices as being within the definition of a charitable operation. However, if a charity proposes to move into an activity which is competitive with commercial concerns, then at that point there has to be some question as to the appropriateness of its being allowed a charitable exemption.
If the charity, for example, is operating a business at a loss, it may have to make up the losses with its own funds, often out of amounts for which a tax deduction has been given. Businesses may become divorced from charity for practical purposes, their revenues being reinvested rather than going to the charity. The running of a business may become the principal focus of the charity's activity, with its charitable activites relegated to a secondary role. Obviously, between the incidental operation of the kind to which I referred, for example, the gallery or the hospital running a cafeteria, or certain groups selling clothes, and the operation of an active business there is a difficult area to define; but the basic principle is that the activity should be related to those of the charity and it should not become the vehicle for a substantial commercial business.


Donald W. Munro: I have one more question, Mr. Chairman. I should like to be absolutely clear, further to what the minister just said, that if it were a new business or a new enterprise in which the charity might become involved, it would be subject to review, whereas businesses that are primarily and traditionally associated with those charitable foundations would be accepted by the income tax people as legitimate businesses in furtherance of the cause of that charity.


Donald Stovel Macdonald: I am advised that that is the intention of Revenue Canada in this regard.


William Hillary (Bill) Clarke: Mr. Chairman, I am fairly certain that this matter has been brought to the attention of the minister, but for the record I should like to express a concern which has been conveyed to a number of members of the House by universities in particular. I do not think I can put the case any better than has the chief financial officer of one of the universities of one of my colleagues. Reference was made in the letter to the green paper on tax treatment of charities which was published in 1975. 1 would like to quote some passages from that letter. One of them reads as follows:
The legislation expected to follow the green paper was given the further purpose of ensuring that the Income Tax Act did "not inhibit charities from carrying on their work in the most effective manner possible".
In further reference to the green paper, the letter indicates that the green paper says this:
"in the fields of education, medicine, scientific research, culture, religion and athletics to name just a few major areas".

Then quoting directly from the letter:
The paper went on to say that the role of charities in these areas was "to fill in gaps of service and financial support where government should not or cannot play a significant part".
This chief financial officer draws the following conclusion from that references to educational institutes that:
-the paper was concerned not with educational institutions as such but with the independent charities which may provide financial assistance to them.
The feeling of this officer is as follows:
-that the legislation was not intended in the first instance to apply to publicly-supported educational institutions.
I would like to quote further from the letter:
The bill would require that we meet a certain prescribed percentage of income disbursement rules. For purposes of these disbursement rules, specific definitions of income are provided. The essence of the income definitions would seem to be that a registered charity would report as income (for purposes of disbursement rules) donations received from sources able to claim deductions for income tax purposes. Donations which would not produce an income tax benefit for the donor, and restricted donations which were to be held for a period of not less than ten years, would by definition be excluded from the calculation of income. The bill also contains a relieving provision that provides for the aggregation of income and disbursements over a period of several years in order to meet disbursement rules.
I do not intend to read the whole letter, but another part of it reads as follows:
If the bill passes as written, we will have to be able to prepare financial statements reporting income and disbursements as defined in the bill. This may not be perceived by others as an especially onerous requirement, but our accounting systems do not allow us to accumulate charitable donations by category of donor and substantial changes would have to be effected in the systems to provide such a capability. We would, I believe, have to develop and implement a charitable donation receipt classification system which would be unrelated to any of our needs or those of our donors.
As I have said, the writer is the chief financial officer of a well known university in Canada. This person also expressed concern about the problems which could arise from the provision in the bill whereby the minister's approval in writing would have to be obtained to accumulate funds for particular purposes. I quote again from the letter as follows:
More analysis on our part as well as additional information from the minister will be required before we can fully assess the effect of this provision but I think it is fair to say that it would probably involve an enormous increase in paper flow between the minister and educational institutions.
As publicly-supported institutions, universities in Canada have for years met all reasonable accountability requirements for the funds entrusted to them. Requiring universities to develop accounting and reporting systems to meet standards intended to control abuses in non-related areas will not help us to carry on our work in "the most effective manner possible". I feel strongly that the application of the proposed controls should be on a more selective basis and that some exempting provision should be made in the bill, either at the minister's discretion, or, perhaps as a specific exemption for universities and other designated educational institutions as defined in section 110(9)(a)( 1) of the Income Tax Act.
In this connection it may be worth noting that those universities outside Canada which are authorized to issue charitable donation receipts acceptable for Canadian income tax purposes would appear to be exempt from the provisions of clause 60 as they are not registered Canadian charitable organizations. The 1975-76 edition of the Income Tax regulations lists 228 such universities. While I certainly would not advocate the extension of clause 60 to these universities, their exclusion from the proposed legislation does represent different treatment from that proposed for Canadian universities and will be more favourable to their costs of fund-raising activities.
February 7, 1977

Finally, reference is made to the penalty clause which is contained in this bill and the writer concludes the following:
I have not attempted the calculation of this tax as it would relate to (our university) because I cannot conceive of such an application to a Canadian university.
That statement is now on the record. I would like to ask the minister directly what kind of representations he has received in connection with the effect of clause 60, and what changes, if any, are proposed.


Donald Stovel Macdonald: Mr. Chairman, I can confirm that the only representation I have received in this regard is from the hon. member's colleague, the hon. member for Kingston and the Islands, who spoke to me about this on Friday afternoon for the first time and then sent me a letter which included excerpts from the letter the hon. member read into the record and which one can judge by inference was written to the hon. member by somebody at Queen's University.
Although I have not checked with my advisers, I think I would be correct in saying that we did not receive that representation directly from the lady or gentleman of that university, so I cannot be confident at this point whether this question has been discussed previously between the department and the university in question. I go back to the portion of the letter which the hon. member quoted, which reads as follows:
More analysis on our part as well as additional information from the minister will be required before we can fully assess the effect of this provision-
I just indicate that we would be quite prepared to discuss with the representatives of Queen's University or any other university the manner in which they feel the administration of these particular provisions may be onerous to them, and if they would like to do so, I would be pleased to hear from them. I suggest, however, that this is a question of administration. 1 think the initial reaction on the departmental side would be that the difficulties are perhaps overstressed. But I repeat that we would be quite prepared to discuss the application of the law as it may affect the particular group, and to see if amendments might be required in the forthcoming budget.


William Hillary (Bill) Clarke: Just for greater clarification I would like to ask, again, if the minister has received representations from other Canadian universities as to the effect of this clause upon them. At the same time, I would like to ask another question. Is the effect that has been pointed out to the minister what was intended when he made these proposals in the first place?


Donald Stovel Macdonald: I am not familiar with any other representations. I would have to have the records checked to see if at any time in the last two years any university has complained in this regard to my officers or to my department. We anticipated that there would have to be some changes in administration involved with the change in the act. That is not an uncommon circumstance. If, indeed, the writer's fears are justified-and I think we could only find that out after, as he or she has said, analysis-then we would be prepared to consider a change in procedures. At the moment we do not think they would be unduly onerous.
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Marcel Joseph Aimé Lambert: Mr. Chairman, I have just a few comments on this point. I can readily understand why the minister was moving into the area of, shall we say, high cost-either high cost as to collection, or high cost as to administration-types of charities and into the area where individuals set up charitable foundations, that is, colorable charitable foundations in order to gain for themselves some tax-relieved income.
On the other hand, I feel that in an effort to tackle that type of gain he has armed himself with a high-powered rifle to go after a rabbit. I would say that the problems put forward by Queen's University, as evidenced by the exchange of views between the hon. member for Vancouver Quadra and the minister, are valid for other universities. I would think it is difficult to say to institutions, "Let us see how this goes. In order to comply with this you will have to change your whole accounting system, and then we will look at it." There are areas where the accounting has to be a segregation of income. If a gift is given to a qualified charity within certain limits, that is permitted. But it is already permitted under the act, although that income has to be segregated.
As far as related businesses are concerned, my own University of Alberta took over a student union organization known as HUB, a totally segregated student residence; a business complex for student purposes. Is that to be a related business? What about bookstores, student health services and computing centres? A number of universities have computing centres which have spare time so they provide payroll services, etc., to other organizations. Is this a "related business", and what is to be done with regard to its income?
Section 149.1 (2)(a) of the act gives the minister discretionary power to revoke the registration of a charitable organization that carries on an unrelated business. If any one of these unrelated businesses was unclear and the universities were to engage in that type of operation, does it run the risk of the minister deregistering that university or charity? I think it is quite unfair, unless it is clearly spelled out in the act and not left to determination by the courts or review by the minister. A university does not change its accounting practices as the minister or I might change a jacket.
The other thing that concerns me is in section 149.1(14) and (15). Why are two information returns required? These subclauses read as follows:
(14)	Every registered charity, shall, within three months from the end of each taxation year of the charity, file with the minister both an information return and a public information return for the year, each in prescribed form and containing prescribed information, without notice or demand therefor.
(15)	Notwithstanding section 241 -
Section 241 prohibits the publication of information by any official in a tax department if the information is furnished with respect to a tax return. There is no doubt that the information sought under section 141.1(14) and (15) is respecting income tax. An exception to the confidentiality is being asked for in subsection (15) which reads:

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Notwithstanding section 241, the information contained in a public information return referred to in subsection (14) shall be communicated or otherwise made available to the public by the minister in such manner as he deems appropriate.
Now that shall require a full explanation not only with regard to the universities but with regard to all charities. I ask, very sincerely, why this exception is to be made to the confidentiality of income tax returns. I am not 100 per cent sure, but it would seem to me this is likely the only instance under the Income Tax Act where section 241 is weighted with regard to any particular type of taxpayer. As I say, I am subject to correction on that point, but I am not aware that at any time in the past the minister had the right to communicate to any member of the public the contents of the income tax return of any taxpayer. I would suggest that the burden of proof is on the minister to indicate why that should be done in this particular instance.


Donald Stovel Macdonald: The purpose of the requirement is, of course, that the public may know, in a broad category sense, the kind of charitable activity being carried on and the kind of contributions being made. The source of income by broad categories, that is to say, government, corporations, other charities, individuals, etc., the amount expended on charitable activity by broad category-education, research, etc.-gross administrative expenses, including salaries in aggregated form, and basic information of the name, location and function of the charity, is to be in the public information return.
The green discussion paper said that in view of the large tax concessions granted to registered charities, the public is entitled to know with some precision the activities of the charity. The proposal to require disclosure has met a very positive response from most groups, and rules will be incorporated in the legislation. In other words, you have operations being carried out for charitable purposes, ostensibly, being given the benefit of exemption from income tax provisions. In that sense, other taxpayers will have to bear the part of the burden which this activity might otherwise have borne. For this purpose, it seems to me to be reasonable from the public standpoint to have some public disclosure, in the broadest terms, of what the source of funds is and how they are being applied.
Representations have been received to the effect that the public information return should not be so specific as to embarrass the charity or its officers, for example by giving the names of the officers or their home telephone numbers where they could be subject to contact, or the names of the beneficiaries of grants, and an information circular will be issued by Revenue Canada to make this clear. The basic purpose, however, is that when you have an organization being run for the public benefit, the public should be entitled to know, in the broadest categories, as to the purpose, the source of funds, how they are applied and what the administrative expenses are. Hence, the disclosure formula.

With regard to the carrying on of a business, it ought to be remembered that under the existing provisions of the Income Tax Act no business can be carried on by a charity. Therefore, in that sense the proposed amendment is of a relieving category.
The hon. member referred to activities at a university, for example, the provision of student accommodation, food and computer services for the benefit of students. Clearly, in those circumstances those activities would be related services and I would anticipate no difficulty at all. If a university at a certain point develops a computer service, say, to the point where it is engaging in a substantial commercial business, a business substantially more commercial than that of supplying a service to its own students, at that particular point Revenue Canada may indeed have to consider the status of that particular operation. In general, those services which are made available to the student body or for the purposes of the educational operation are clearly related businesses and would be so considered and permitted under the Income Tax Act.


Marcel Joseph Aimé Lambert: Mr. Chairman, I take it that the only authority the minister invoked today was based on the government's own green paper. I am referring to the intentions which it published in the green paper. Am I correct in suggesting that that is the sole, shall we say, criterion or authority on which it bases its conclusions as expressed in the bill?


Donald Stovel Macdonald: Mr. Chairman, I am not sure what the hon. member means by "the only authority." Of course, the question was much canvassed in the green paper.


Marcel Joseph Aimé Lambert: That was the government's green paper.


Donald Stovel Macdonald: The government's green paper, which was much canvassed, as I remarked. The proposal received substantial support from those who responded to that paper. With regard to this point and the point concerning universities generally, the matter has been out in the forum of public discussion for close to two years. I think it is fair to say that there has been substantial agreement on the part of those responsible for operating charitable organizations in Canada with the proposals made. Although the green paper may have been the government's own green paper, it seems to have received substantial support from those most affected by it.


Marcel Joseph Aimé Lambert: Silence is not always golden.


Mr. Peters:: Mr. Chairman, may I raise a question concerning charities which may have gone into business and which generate a substantial part of their moneys with business? Am I to take it that the provision mentioned would affect, say, neighbourhood services and other organizations in related fields, organizations which sell to the public and whose revenue derived from that operation is used for the purposes of charity? Am I correct in assuming that no matter how much
February 7, 1977

of the income is derived from such operation, that operation will still be considered as a charity?


Donald Stovel Macdonald: Exactly, Mr. Chairman. The operation, for example, of the Ottawa Neighbourhood Services, which sells clothing and furniture and, in my own city, of the Crippled Civilians, would be exactly the kind of related business which we have in mind.


William Arnold Peters: Mr. Chairman, is it the government's intention to exempt these organizations from the charities act, or to bring them under it?


Donald Stovel Macdonald: The intention was to make it clear that if a charitable organization carried on this particular line of business, it would not cease to lose its category as a charity so as to lose exemption from income tax.


Charles Robert Turner: Shall clause 60 carry?
Clause 60 agreed to.
On clause 61-Assessment.


Donald Stovel Macdonald: Mr. Chairman, since we are on clause 61, may I make a statement on behalf of my colleague, the Minister of National Revenue? In this context the minister has advised me as follows, and I quote from her letter:
Where my department has determined the amount of a taxpayer's loss, and that amount differs from the loss reported by the taxpayer, our official determination of the loss will be issued when the taxpayer requests it. This will allow the taxpayer to appeal the determination immediately in all cases where he wishes to do so. My department will be publishing information to taxpayers to explain how they may obtain a loss determination.
That is an indication from my colleague, the Minister of National Revenue, as to how subclause 61(1) of Bill C-22 will operate.


Charles Robert Turner: Shall clause 61 carry?
Clause 61 agreed to.
Clause 62 to 64 inclusive, agreed to.
On clause 65-Individual surtax.


Reginald Cyril Symes: Mr. Chairman, I see by the clock that but two or three minutes remain for discussing this important clause: discussion is to cease under the iniquitous closure rule imposed on us by the government. We are dealing here with a clause that has to do with the surtax which people earning over $30,000 a year were paying. This provision was introduced in an attempt to make the tax system fair and to complement the work of the Anti-Inflation Board which limited the maximum increases in earnings of ordinary Canadians to $2,400 a year. In the previous budget, the Minister of Finance admitted that it is difficult to keep track of professional incomes which are affected by dividends and other kinds of profit-sharing plans. He therefore wanted to impose a surtax on taxable income over $8,000 to make sure that professionals and other upper income Canadians bear their fair share of the burden of the government's war on inflation.
Income Tax Act
We find from an examination of Anti-Inflation Board reports that professionals have exceeded the $2,400 maximum, averaging increases of some $4,900 a year. What is more, the present provision in the bill will govern only the surtax for the year 1976: it does not extend it to the year 1977. To that the New Democratic Party seriously objects. If the government were serious about introducing fairness and equity to our income tax system, it would not allow the surtax provision to apply for one year only.
We shall find that, because of the passage of this bill and the elimination of the surtax provision for 1976, a taxpayer whose income is $50,000 will, in 1977, save $402 on his tax bill. Someone earning over $50,000, say someone whose income averages around $80,000, will save $1,654 by virtue of this provision. Someone earning $100,000 will save $2,491, because this surtax will not continue to the tax year 1977. In view of the Prime Minister's statement of October 17, 1975, in which he said that no one will be permitted-


Charles Robert Turner: Order, please. It being 4.20 o'clock p.m., it is my duty to interrupt these proceedings, pursuant to the order made on Monday, January 31, 1977, and put forthwith every question necessary to dispose of the committee of the whole stage of the bill. Shall clause 65 carry?


An hon. Member:: On division.
Clause 65 agreed to.
Clauses 66 to 70 inclusive agreed to.


Charles Robert Turner: Shall the amendment to clause 71 carry?


An hon. Member:: On division.


[Stage Direction]
Amendment agreed to.
Charles Robert Turner: Shall clause 71 as amended carry?


An hon. Member:: On division.
Clause 71 as amended agreed to.


Charles Robert Turner: Shall clause 72 carry?


An hon. Member:: On division.
Clause 72 agreed to.


Charles Robert Turner: Shall clause 73 carry?


An hon. Member:: On division.
Clause 73 agreed to.


Charles Robert Turner: Shall the amendment to clause 74 carry?


An hon. Member:: On division.


[Stage Direction]
Amendment agreed to.
Charles Robert Turner: Shall clause 74 as amended carry?


An hon. Member:: On division.

February 7, 1977
Income Tax Act Clause 74 as amended agreed to.


Charles Robert Turner: Shall clause 75 carry?


An hon. Member:: On division.


[Stage Direction]
Clause agreed to.
Charles Robert Turner: Shall clause 76 carry?


An hon. Member:: On division.


[Stage Direction]
Clause agreed to.
Charles Robert Turner: Shall clause 77 carry?


An hon. Member:: On division.


[Stage Direction]
Clause agreed to.
Charles Robert Turner: Shall clause 78 carry?


An hon. Member:: On division.


[Stage Direction]
Clause agreed to.
Charles Robert Turner: Shall clause 79 carry?


An hon. Member:: On division.


[Stage Direction]
Clause agreed to.
Charles Robert Turner: Shall the amendment to clause 80 carry?


An hon. Member:: On division.


[Stage Direction]
Amendment agreed to.
Charles Robert Turner: Shall clause 80 as amended carry?


An hon. Member:: On division.
Clause 80 as amended agreed to.


Charles Robert Turner: Shall clause 81 carry?


An hon. Member:: On division.


[Stage Direction]
Clause agreed to.
Charles Robert Turner: Shall clause 82 carry?


An hon. Member:: On division.


[Stage Direction]
Clause agreed to.
Charles Robert Turner: Shall clause 83 carry?


An hon. Member:: On division.


[Stage Direction]
Clause agreed to.
Charles Robert Turner: Shall clause 84 carry?


An hon. Member:: On division.


[Stage Direction]
Clause agreed to.
Charles Robert Turner: Shall clause 85 carry?


An hon. Member:: On division.
[The Deputy Chairman.]


[Stage Direction]
Clause agreed to.
Charles Robert Turner: Shall clause 86 carry?


An hon. Member:: On division.


[Stage Direction]
Clause agreed to.
Charles Robert Turner: Shall clause 87 carry?


An hon. Member:: On division.


[Stage Direction]
Clause agreed to.
Charles Robert Turner: Shall schedule I carry?


An hon. Member:: On division.


[Stage Direction]
Schedule agreed to.
Charles Robert Turner: Shall the amendment to schedule II carry?


An hon. Member:: On division.


[Stage Direction]
Amendment agreed to.
Charles Robert Turner: Shall the schedule as amended carry?


An hon. Member:: On division.
Schedule as amended agreed to.


Charles Robert Turner: Shall the title carry?


An hon. Member:: On division.


[Stage Direction]
Title agreed to.
Bill reported as amended.
Donald Stovel Macdonald: that the bill as amended be read the third time and do pass.


Mr. John Rodriguez (Nickel Belt):: Mr. Speaker, it is sometimes very revealing and constructive to have debates such as we have had on Bill C-22. Members have revealed their true thoughts about particular situations or issues. One such situation prevented itself last Thursday. The hon. member for Edmonton West (Mr. Lambert), in the debate on childcare deductions, stated that the working spouse is more of a social phenomenon than an economic necessity. He cited a letter which stated that women should stay at home and look after their children, and that children who go through day care centres are almost social monsters. He seemed critical of families where both husbands and wives work and hence benefit from child care deductions, whereas families where the wives do not work receive no benefit. The hon. member went further, calling for joint income tax returns to be filed by a family group. I received a letter from a constituent, a woman. She made some points which the hon. member for Edmonton West failed to take into consideration. I quote from the letter:
Dear John:
I am concerned about the narrow minded opinions that many of the politicians in the Conservative party have with respect to women's rights.
The working woman is not a social phenomenon.
February 7, 1977

The hon. member stood up last Thursday and said that. All the women on the government benches just sat there and took it. This woman went on in her letter:
For most women a job is a necessity rather than a pastime.
She quoted Sylvia Gelber, a consultant to the federal Department of Labour. This is what Ms. Gelber found:
Adding up the estimated 331,434 women who are the sole support of their families, 925,000 single working women and an estimated 678,035 working wives whose husbands have a median income of $6,454 a year, it is safe to assume that most women work because of economic need.
The letter continues:
On top of that how can anyone assume that the man and not the woman is working for economic necessity. In the case where both the husband and the wife are working, has anyone stopped to ask whether the man is working because he wants to and not because he has to. If these politicians would ask themselves that question they would probably come to the conclusion that society does not question a man's decision to work. But a woman is expected to play the role of housewife and mother and the minute she diverges from that role she is viewed as a social phenomenon, a social anomaly.
This is the typical attitude of the Conservative party. They expect women and other minority groups to behave in a certain manner which is consistent with their stereotypic vision of society.
I am a woman and also a human being. I am not an appendage of my husband and have the right to decide whether I want to work outside the home. Regardless of my husband's salary level, society has no right to impose a certain role on me. The right to decide whether to work in the home or to pursue a career is a matter of individual choice and human rights.
Judy Wasylycia'leis.
I should give the name of the constituent: it is Judy Wasylycia'leis. All I can say to that is "Amen". I wish the Tories would not be so phony on the hustings, representing themselves as the friend of women, the friend of youth, the friend of the unemployed, the friend of labour, the friend of the working class. Then they have the other group, the Bay Street boys. They are their biggest friends and allies. Here is where we see the great allies come together.
When we started the debate on Bill C-22 we tried to point out how regressive this income tax structure is. We watched the Tories defend the legislation. They represent one element in Canadian society-those who have made it. The Tories want to protect the status quo. Bill C-22 is being introduced at a time when study after study is showing that the economic inequality gap in Canada is growing wider. Contrary to Liberal mythology, there is no doubt that the rich are getting richer while the poor are getting poorer. The distribution of wealth in Canada is completely unfair, and we have put together the evidence to support this assertion. The report recently released by the Economic Council is a sad commentary on the existing state of affairs. In 1965 the top one-fifth of the population with an average income of $12,000 a year was getting nine times as much as the average for the bottom fifth's $1,300. Last year, the top group received $29,000, about 11 times as much as the $2,600 in the lowest income group.
Professor Irwin Gillespie of Carleton University did a major study on income distribution in Canada. He is convinced that anyone who believes Canadian society is becoming more egalitarian is living in a dream world. The distribution of
Income Tax A ct
money income did not change significantly between 1951 and 1974: the poorest one-fifth had 4.4 per cent in 1951, and 4 per cent in 1974; the richest one-fifth had 42.8 per cent of money income in 1951, and 42.4 per cent in 1974. According to the Senate Committee on Poverty, 27 per cent of Canadian households were under the poverty line in 1973. A more moderate figure of 23 per cent was reported by the Council on Social Development. This means that about one person in four, in one of the richest countries in the world, can be described as poor.
Another revealing study is by Professor N. H. Chi, also of Carleton University. He documents the statement that the gap between the rich and the poor is growing and that this inequality means dire consequences for the stability of Canadian society. I quote from this study:
It is true that economic progress has brought an increase in real per capita income which doubled in the years between 1951 and 1971. However, during the same period, "progress" brought a remarkable and disturbing increase in the level of inequality of income. Except for the years 1951-57, the gap between rich and poor grew wider in the form of a parabolic curve.
Professor Chi clearly documents the relationship between inequality and social problems in Canada. In the years between 1951 and 1971, the rising level of inequality in the distribution of income coincided with a pattern of growing labour unrest which took the form of strikes and lock-outs. It seems that the frustrations from working hard but not getting ahead can also account for the increasing crime rate. Inequality also results in psychological and emotional stress. It is not surprising, therefore, that Professor Chi should have found that mental illness, alcoholism and suicide rates have risen drastically since 1951 and followed the curve of increasing inequality.
The Liberal government says it is concerned about income distribution. But if it is interested, if it is so concerned, why has nothing been done during the nine years during which the Liberals have been in power? Why has it chosen to introduce Bill C-22 which makes the tax system even more regressive than it is now? It can only mean one thing: the Liberal government wants to hold inequality steady, or maybe increase it. Once more the Trudeau administration is insisting that the income tax system, the most logical and efficient instrument for income redistribution, must not be disturbed. Instead of using the tax system to distribute wealth more equitably, the government is allowing the affluent to shelter their incomes with the encouragement of the Income Tax Act. Just as Leonard Shifrin stated on December 29, 1976, in the Ottawa Citizen:
This government never ceases to amaze me. Every time I become convinced that it has exhausted all possible means of increasing the maldistribution of income in this country, it confounds me with yet another breathtaking initiative.
While mouthing platitudes about equality and income redistribution, the government is attempting to get away with an increasing number of tax breaks for the rich. It is clear the rich do not have to apply for welfare: they get it free from the Liberals. It is also, clear, from reading Bill C-22, that the true Liberal philosophy goes further than: if you work hard, you
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February 7, 1977
Income Tax Act
will get to the top. Rather, it is: If you work hard at finding tax loopholes, you will get to the top.
The government's attitude toward taxation is essentially one of making tax-dodging legal. This favours the erosion of the progressive taxation system which encourages those who have the ability to pay to take steps, legally, to minimize their tax contribution. It is this attitude which is largely responsible for the appearance of articles such as that which was published in the Citizen on December 20, 1976. The author is Paul Dioguardi-I presume he is an economist-who wrote:
As year-end draws closer, it is time once again to consider ways of minimizing or deferring taxes. Happily, this chore has been made a little easier by a tax bulletin put out by Coopers and Lybrand, chartered accountants. It has touched on some of the important points to be considered in year-end tax planning.
I always thought, Mr. Speaker, that the point of this whole income tax exercise was to determine what it cost to run this country and then to set about collecting taxes from the people, according to their ability to pay, so as to cover the cost of those programs and services. But here we see that anyone engaged in a banking or accountancy business of some kind is given advice about the best way of avoiding the payment of taxes on income. If all of us did that, how would we get the money to run the country and pay for the present level of programs and services?
It seems to me there is only one group which can benefit from that kind of tax-dodging: it is not the working poor; it has to be those who take a lot out of the economy. May I quote now from an article which appeared in the Financial Post of December 4 under the heading, "Time running out fast if you want to declare a tax loss this year." This article, by Beatrice Riddell, stated:
Time is fast running out for those who would like to get on with certain tax planning schemes which may reduce or defer 1976 income.
The game of tax-dodging is inherent in the system which creates numerous exemptions and deductions which are beneficial largely to high income earners. The income tax legislation already contains 17 subsidies which cost Canadians approximately $6.4 billion in 1974. The National Council of Welfare calculates that this $6.4 billion could have been used to provide every family in Canada with an extra $100 a month for food and clothing. Instead, it was used to improve the position of the well-off, while the poor whose incomes were below the tax threshold received no benefit at all. Imagine a government expenditure program which gave ten times as much to those with incomes over $25,000 than it did to those with incomes less than $5,000!
A government which is the least bit concerned would have spent this money equally on all sectors. I know that we cannot expect this government to transfer more money to the poor than to the rich, because they are playing a game with the Tories, trying to get the electoral support of people in the upper income brackets. They are trying to prove how much more of a friend to the wealthy they are than the Tories. This is the kind of political game that is being played-a very cynical, hypocritical one.

It has been clearly documented that deductions stand the "ability to pay" principle on its head, and that tax credits in fixed amounts, when justified for social reasons, constitute a more equitable distribution of government expenditures. This government has never accepted that principle. I quote from the report entitled "The hidden welfare system":
When a deduction is offered instead of a credit, it means the government has chosen to do in a hidden fashion what it would never do openly-grant bigger subsidies to those of high incomes than to those with low incomes.
In full knowledge of this-not unknowingly, but in full knowledge-this government has chosen, through Bill C-22, to further increase the number of tax deductions and deferrals, which can only add to the regressivity of the way Canadians pay their income taxes. Amazingly, it has increased deductions for registered pension plans, registered retirement savings plans, child care and disability allowances.


Reginald Cyril Symes: And who benefits?


John R. Rodriguez: The hon. member for Sault Ste. Marie asks, who benefits? We know who benefits. We have been through this bill clause by clause and we have tried to amass the facts and to present the picture of who actually benefits from Bill C-22. Contrary to what the Minister of Finance said last Monday, we in this party who have tried to examine this bill in detail are not ill-advised, as he suggested we are. Even if the minister could prove that deductions through pension plans benefit the middle income taxpayers, he has not shown how such plans will benefit the poor who have no hope of saving money for retirement.
The minister has not proven to us how the poor people are going to benefit by increasing the tax free amounts that are being invested in registered retirement savings plans. He also ignores the fact that the RRSP is not being used primarily as a means of saving for retirement; rather, the RRSP is being used by middle and high income earners as a means of escaping taxes owed. As Mr. Dioguardi stated in his column in the Citizen of January 31 last:
It is high time taxpayers considered pursuing the noble goal of wresting a few dollars from the tax collector's greedy grasp. The most straightforward method to achieve this goal involves the tried and true registered retirement savings plan.
Mr. Speaker, isn't that something? Even the hon. member for Edmonton West has got to admit that is pretty blatant.


Marcel Joseph Aimé Lambert: Your view is that they are designed to be taxed.


John R. Rodriguez: A progressive tax system should be designed so that every man pays his fair share of taxes on what he earns. It should not be designed so that a man can manipulate the tax system and write things off, because poor people cannot take advantage of that. That has not got through his thick skull yet. That is the problem with you Tories. It takes a long time for any idea to sink through your thick skulls. As my mother used to say, you have got to be a numbskull. I just do not understand it, Mr. Speaker. Surely every member of the House can understand that except the hon. member for
February 7, 1977

Edmonton West. We have told them once, if we have told them a thousand times.


Stanley Howard Knowles: He is not alone; there are a few others like him.


John R. Rodriguez: But they always run him up to the front to make a speech to defend the "haves" in this country. Then they get someone from Atlantic Canada to make a speech on behalf of the "have-nots", so they can suck and blow at the same time. They do that consistently in this House. They did it when we were debating the unemployment insurance bill when it was before the House. They have done that all down the line.
Let us look at three examples which show how the RRSP is used as a means of tax-dodging. I would like the hon. member for Edmonton West to tell the House how poor people earning under $10,000 a year can take advantage of these tax dodges. The first way of using an RRSP as a tax dodge is the spousal RRSP, which can be used to split income. The husband who is in a high income range can use the RRSP to divert funds to his wife, who will pay tax at a lower rate when the funds are repatriated.
Secondly, an RRSP can be used effectively to convert part of a taxpayer's home mortgage interest expense into tax deductible interest. These are tax dodges, Mr. Speaker, and surely that is not what an RRSP was set up to be. Surely it was set up so people can save, and then when they retire get an income. Is the purpose of an RRSP that it be used as a tax dodge? If so, it is not fair. There is not a Tory or a Liberal in the House who can stand up and tell me point-blank that it is fair. It is lousy, and they ought to be ashamed of themselves.


Marcel Joseph Aimé Lambert: But that can be done even by a man earning $6,000.


John R. Rodriguez: A lot of guys who are earning $6,000 can go to the bank and borrow $2,000. Bill C-16 has to do with giving low income earners an opportunity to get credit when they need it.


Marcel Joseph Aimé Lambert: There are a lot more honest people earning $6,000 than you would admit.


John R. Rodriguez: Thirdly, an individual who invests in an RRSP can defer the tax on the accumulated earnings of his annuity plan while deducting the interest cost of the money borrowed to invest in the annuity. That is a neat dodge. I suppose that anyone earning less than $10,000 can walk into his friendly bank manager's office and borrow $2,500. But, by golly, his wife cannot go down to the bank and do that because sometimes banks do not recognize that a wife can be a wage earner in her own right, and they may refuse to grant her a loan or they only consider 50 per cent of her salary for loan purposes. That is discriminatory. I do not hear the great defender of the banking system talking about such discriminatory aspects, yet he has the gall to stand in this House and declare that the working woman is a social phenomenon. I think working Tories are a social phenomenon.
Income Tax Act


Mr. Darling:: There are more working Tories than there are working NDP'ers.


John R. Rodriguez: If you want to make a speech, go and sit in your own seat.


Marcel Joseph Aimé Lambert: We are not as sanctimonious as you are.


John R. Rodriguez: I know that. Another example of the regressive nature of this bill is to be found in clause 21 which increases deductions for child care expenses from $500 to $1,000 per child, and the per family maximum from $2,000 to $4,000. The National Council of Welfare has illustrated how the tax saving from this deduction is substantially more beneficial to the wealthy than to the lower income groups. At the $10,000 level, such a $1,000 deduction would be worth $210, while in the $50,000 plus category it is worth $410. Last Monday, the Minister of Finance claimed that the quarter of a million of Canadians who claimed child care allowance stand to benefit from the increase. I am afraid that the minister misses the point completely and this type of deduction maintains constant inequality. The greater the deduction, the greater the inequality. Members on the government benches over there seem to operate on the principle that all persons are equal, except that some are more equal than others.
Not only does this bill deliberately improve the tax position of the middle and upper income earners; it does absolutely nothing to plug the existing loopholes which turn the ability to pay principle upside down. It does nothing to change the fact that in 1974 deletions from the accounts of income tax revenue that could not be collected because the taxpayers were no longer resident in Canada amounted to $850,000 owed by 161 taxpayers. Why are the names of those tax dodgers not published? What effort is the Department of National Revenue making to collect the money that these people owe the people of Canada?
It does nothing to change the fact that in 1974, 252 persons who made over $50,000 paid no tax at all, and 17 of them had incomes of over $200,000. These are the kind of people for whom the frontbench Tories stand up all the time. We saw one standing up for John Doyle-a nice working-class Canadian! That is the kind of defence they put up. When we defend people in the House, I can assure you we do not defend people such as John Doyle, or Bell Canada; we talk about working-class Canadians.
This bill does nothing to change the fact that professionals who want to avoid paying taxes set up dummy companies since small businesses pay taxes at a lower rate compared with marginal rates in the personal income tax system. Bill C-22 does nothing to change the fact that interest costs on money borrowed for the purpose of investing in something that may ultimately earn income for the taxpayer are deductible for the year in which the expense is incurred. We can look at the example which was provided by that Liberal in Manitoba whom everyone knows: they call him Dizzy Asper.
8OOO8-39V2

February 7, 1977
Income Tax Act


Sinclair McKnight Stevens: They are giving him $7 million.


John R. Rodriguez: He has probably been commissioned by the Liberals to do some consulting work. They either make them Loto Canada distributors or send them letters telling them how to make a tax claim 60 days after the taxation year is over. The same people who write the tax laws are the ones who interpret them. I am telling you, they have it made.


Some hon. Members:: Oh, oh!


John R. Rodriguez: If any hon. member wishes to make a speech, I will listen to him. If he does not have the courage to stand up and make a speech, let him go behind the curtains and sip his tea. Here is an example of the way in which Mr. Asper suggests things should be done. He says:
Jones earns $100,000 a year and pays $50,000 in tax.
I will need the hon. member for Edmonton West (Mr. Lambert) to help me with this one. It goes on to read:
He borrows $1 million on January 1 at 10 per cent interest and secures the loan by a stock portfolio of $1 million in cost, which he bought with the bank loan. On December 31 of that year he has incurred an interest cost of $100,000 which he offsets against his $1,000,000 income-
There it is. Voila, says Mr. Asper, no tax! At least we know that the man who borrowed $1 million from Obront paid a fair interest on it: he borrowed $1 million and paid $ 1V2 million in interest. That is the kind of interest I am prepared to accept.
Finally, this bill does nothing to stop income-splitting or loans made by a husband to a spouse, or a father to his children, on an interest-free basis. The consequences of this are best revealed by another piece of advice from Mr. Asper which appeared in the Globe and Mail. This guy Asper is a fount of information on tax-dodging.


Stuart Malcolm Leggatt: He is a Liberal.


John R. Rodriguez: His buddy wrote it. He was probably consulted. Here is his suggestion:
The father who is in the 60 per cent tax bracket and has a wife and three children (it gets even more exciting when there are grandchildren) can lend his brood $400,000, interest-free, which they invest in 10 per cent preferred shares. Assuming they have no other income, the $40,000 they collectively receive in dividends will bear no tax because of the Canadian dividend tax credit system.
The only little touch in that is that you must have $400,000 to lend. You can walk to a bank and get a $400,000 credit. I am sure that the miners in Nickel Belt and the steelworkers in Sault Ste. Marie can walk to the Imperial Bank or to the Royal Bank of Canada and say, "Boys, I want to borrow 400,000 bucks"! This is the way in which the experts and the Liberals view the tax system. This is not a method of paying one's fair share to support the country and to support the programs of the country. They use the tax system to dodge taxes.
May I call it, five o'clock, Mr. Speaker?



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Turner):: It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised at the time of adjournment are as follows: the hon. member for York-Sunbury (Mr. Howie)-Energy-Participation in maritime energy pool and construction of generating plants; the hon. member for Winnipeg South Centre (Mr. McKenzie)-Energy-Government measures to increase exploration in frontier areas.
Order, please. It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, notices of motions and public bills.


PRIVATE MEMBERS' MOTIONS
The Acting Speaker (Mr. Turner):: Notice of motion no. 4, in the name of the hon. member for Ottawa-Vanier (Mr. Gauthier).


Some hon. Members:: Stand.


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


Some hon. Members:: Stand.


The Acting Speaker (Mr. Turner):: The motion stands at the request of the government.


Mr. Douglas (Bruce-Grey):: Mr. Speaker, I believe there is agreement among the House leaders to continue with motion No. 20, in the name of the hon. member for Bellechasse (Mr. Lambert).
February 7, 1977


SOCIAL SECURITY
Joseph Adrien Henri Lambert: That, in the opinion of this house, the government should consider the advisability of introducing legislation to establish a guaranteed annual income plan, which should be designed to encourage any able-bodied person to work, in order to correct the social injustices resulting from existing legislation.
He said: Mr. Speaker, my motion No. 20 was allowed to stand last Monday at the request of the government on account of a storm in my riding. The same thing is happening today to a representative from Nova Scotia. Therefore, it is through an arrangement made by two parliamentarians that the motion standing in my name is called at this time.
I do not have to go over the motion just read by the Speaker because every member in this House knows about it. However, for the benefit of Canadian citizens as a whole, I must say first of all that I myself could have introduced such a piece of legislation to this effect. But, because of current procedures in the House of Commons, an hon. member is not allowed to introduce a bill involving expenditures of taxpayers' money. That privilege is now granted the ministers of the Crown alone, though they must be, first and foremost, members of the House of Commons. That is why an hon. member who is not a minister, regardless of whether he belongs to the majority party or even the Liberal party, now in power, does not have the privilege of introducing a bill involving the expenditure of money. That rule is a very old British tradition. However, it should be changed to meet the needs of Canadian aspirations in 1977.
To my mind, true democracy should differ from what we have known to date. As parliament is the general assembly of all the representatives of the Canadian people, I cannot see why that assembly should not be, in fact, the supreme authority in the land. The supreme will of the people could then be executed by the executive council known as the council or the cabinet of ministers presided over by the Prime Minister, and as such, designated by the representatives of the party in the majority.
Mr. Speaker, to be efficient and beneficial to all Canadian citizens, the economic system of a country such as ours should be able to ensure each and everyone a decent subsistence. For that, it must be constituted properly and only on that condition will it achieve its end, namely enable each and everyone to meet his needs. To achieve that end, the Social Credit Party of Canada has suggested one means: the distribution, periodically, of a monthly dividend to all Canadians; in other words, giving each citizen in the country the benefit of a discount equal to the GNP surplus after the deduction of public expenditures for the various public services given to the citizens by the state.
Private Members' Motions
The surplus should be refunded to the public either as a rebate such as in a co-operative or as dividends in a capital stock company or as guaranteed annual income to each citizen. It does not matter, the words or names are not important, but the results obtained and enjoyed by each Canadian are, whatever may be his age, status, social position.
When Mr. Douglas, the author of the social credit philosophy submitted that formula, the economists were laughing at him since they considered his policy utopian, that is an ideology which is logical but impracticable in the orthodox financial conditions under which we are living.
Now, since 1935 while that man was suggesting that citizens of a community such as Canada should enjoy social benefits as a cultural heritage, namely old age security pension, family allowances, national dividend, compensated discount, we have accomplished much progress and members of parliament and society itself are more than ever supporting the principle.
I remember reading over and over again the encyclics of Popes Leo XIII and Pius XI on the social and economic problems of the years 1891 to 1931 and which contained direct recommendations to governments for implementing policies devised to help workers and small farmers and earners, such as family allowances and a guaranteed family income.
I also remember this favorite phrase of our labour leaders: equal pay for equal work, but to everyone according to his needs. That created astonishment at first, but as time elapsed, the idea made its way, so that it was finally accepted that women were entitled to equal pay and to a decent family income. That is why the legislation authorizing the payment of family allowances was finally passed by the Canadian parliament.
May I remind you, Mr. Speaker, that from 1930 to 1945, I was, among many others, an advocate of the family allowances policy. With astonishing impudence, egotistical and blind opponents despised us as Utopians because we believed that each family was entitled to an income proportionate to its needs and that the state had to pay family allowances to families according to the number of children and the economic wealth of the country. We were then charged with being communists. Yet God knows we are not champions of Karl Marx's doctrine, but supporters of free enterprise. That does not mean we are in favour of the capitalist philosophy, which would allow the powerful under the present capitalist system to realize excessive profits by every means, even by exploiting the poor because they are defenceless.
We believe a responsible government's role is to monitor the development of economic activities and prevent the powerful from taking unfair advantage of the underprivileged as it is unfortunately too often the case today. It is not the capitalist system which is bad per se, but rather the excesses of capitalism. That is why we must open our eyes to the truth, however hard and bitter it may be. The capitalist system will be reformed by men of order, or it will be destroyed by the others.

February 7, 1977
Private Members' Motions
In my opinion, it will not remain as it is under its present form, which is not totally bad, but its operation will. We have all if not chosen at least accepted to live within a society because we saw that it was more advantageous to live so and that under this formula we could meet our needs more efficiently. Nevertheless, this society life offers in itself many advantages, which I do not have time to list, but anyone can discover them by thinking a little.
However, despite all the advantages it offers, this life within a society also means that each citizen incurs obligations which he must accept and meet: there could be no rights without obligations. This is, in my opinion, the true democracy. This being said, it does not mean that the state does not have duties towards the community. Its duty is to administer the community wealth to the advantage of everybody and make sure that human capital and money capital get their share from this association but that the latter does not exploit human capital and work capital, as it is unfortunately the case too often.
Second, taking into consideration the performance and the effectiveness of the combined efforts of human capital with money capital, the state must from year to year make a compilation and then ensure that human capital and money capital get their share without injustice for the other form of capital that is human capital. The share accruing to human capital will be distributed in the form of guaranteed annual income and salaries while the share accruing to money capital will be distributed during the fiscal year in the form of profits and dividends at the end of the business fiscal year.
Now, if you examine the rather constant increase in gross national output you find that human capital did not get its share regularly, hence the blatant social injustices which gnaw at society. That is why there is an immediate need to introduce an annual guaranteed income plan which first would provide people 60 years of age or over as well as widows and handicapped people with an income allowing everyone of those people to meet their needs and then those of the Canadian society as a whole.
As of April 1, 1976, Canada spent nearly $4 billion to provide some form of annual income to people 60 years of age or over. In addition, at the same date, Canada spent $1,957 million on family allowances for 7,900,000 children between the ages of 0 to 18. So we still have to make all other people between the ages of 18 and 59 eligible for a guaranteed annual income, as follows: 3 million people between the ages of 19 to 25; 4,700,000 people between the ages of 26 to 40; 2,547,000 people between the ages of 41 to 50; as well as 1,960,000 people between the ages of 51 to 59. There are 6,154,700 males, and 6,095,200 females, for a total of 12,249,900 people-a little more than half the population of this country.
We must therefore conclude that this group is responsible for the major part of economic activities and that the same goes for income tax, which is the main source of revenue for the state. This group of citizens is entitled to its share, and the state must recognize this by establishing a guaranteed annual income plan such as we have been promoting for many years

under the honest and thoughtful direction of our lamented leader who was also a great Canadian, Real Caouette, whose premature death I and many other Canadians deplore. Mr. Speaker, this political leader spent a large portion of his life promoting an economic and monetary reform based on the philosophy of Major Douglas aimed at establishing an economic system which would be fairer to all Canadians, whatever their language and religion. Of course, people who have wanted to preserve a status quo to make a profit have ridiculed the theories of Mr. Douglas, even though they were accepted by many serious people, like Mr. Aberhart, Alberta premier for many years, Mr. Bennett, from British Columbia, Mr. Goldsborough, from the House of Representatives of the United States, and Mr. Real Caouette and his colleagues in the Canadian parliament.
Mr. Real Caouette very often stated in this parliament his views about including in our statutes this formula of a guaranteed annual income so as to provide everyone with a sufficient income. I am certain that this formula will one day be included in the statutes of Canada, but the longer this is postponed, the more serious our problems will become and the greater the inequities of the system will be.
It is time to act. To make a choice is evidence of maturity, like the right hon. Prime Minister (Mr. Trudeau) said in Quebec City on January 28, 1977. This is what Mr. Real Caouette did, this is what thousands of Canadians have done, this is what my colleagues and I have done when we chose a socially distributed credit system instead of the credit-debt system that we have been using since the beginning of our Confederation, on July 1, 1867, and which no longer meets the needs of today.
At that time, the debt of Canada was $79 million, but it is now $64 billion. This choice of the credit debt system is impoverishing us and forcing us to pay $15 million a day in interest when we could do something else without printing dollar bills, like the Prime Minister said, but by taking into account the efficiency and production of all Canadians, like Social Crediters suggest, and by making the accounting mechanism of the Bank of Canada follow. We, of the Social Credit Party of Canada, propose a change in our financial system. Why? Because we sincerely believe that the present system no longer meets our needs.
In a democracy, it is normal to want to change the tools which no longer correspond to today's realities. We are conscious of these realities and this is why we insist on asking for a change in the financial system so as to establish in the near future a guaranteed annual income system, based on the collective performance rather than the debts of Canadians.
A few years ago, many people in important positions and otherwise mocked the economic and monetary reform suggestions of Mr. Real Caouette and the Social Party of Canada, but today, all honest and serious politicians realize that the guaranteed annual income formula is very valuable and should be implemented if we really want to control misery and settle the two problems of inflation and unemployment. Very knowledgeable people, Mr. Speaker, consider a guaranteed annual
February 7, 1977

income program as the first step towards a kind of family income, an equitable redistribution of the national wealth in this country.
It is important that we pass as soon as possible a bill designed to fill the gap between the lower and upper income brackets in this country. I believe it is most urgent and pressing that the level of guaranteed income be high enough to ensure a decent life and a full involvement in Canadian society. Sharing of the national wealth of Canada is ill-organized at present and maintains many of our fellow citizens in misery. This situation should be of serious concern to all those who take some interest in the future of our country.
The guaranteed annual income constitutes an income supplement which benefits poor workers, small farmers, small fishermen, non-organized as well as union workers, employees on a temporary or seasonal job, and even more like widows who have not yet reached the age of 60. A guaranteed annual income system on a national basis is workable. Canada is in a position to do it both on the economic and financial point of view. Surely we should bring about a reform to give back to the government of Canada absolute control over its money and in particular over the coining of its credit. It is in prospect-


The Acting Speaker (Mr. Turner):: Order, please. I regret to inform the hon. member that his allotted time has expired. He may continue with the unanimous consent of the House. Does the hon. member have unanimous consent to continue?


Some hon. Members:: Agreed.


Joseph Adrien Henri Lambert: Thank you, dear colleagues. You may feel sure I will not abuse this. I make it a habit of being true to my word.


An hon. Member:: Quite right!


Joseph Adrien Henri Lambert: It is with a view to getting results that I put forward Bill C-206, under which the Bank of Canada would be given extra powers to finance the Canadian and provincial governments without the need to borrow abroad.
Canadians are now supporting a tremendous tax burden in respect of interests on our national debt, and as I indicated Friday last we do not even know who that goes to. Let us put an end to the era of public ignorance in that area, they deserve to be better informed. Let us work together to break open the financial mystique, that profitable myth which is a boon to financiers at the cost of much hardship to and grumbling from the public.
In conclusion, Mr. Speaker, I urge every member in this House to take this pioneering and courageous step. Let us invite the government to introduce legislation for a guaranteed annual income. Such an enlightened proposal would be a guarantee of social peace and prosperity in Canada. I am more
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convinced than ever that if implemented such a guaranteed annual income would help motivate many workers to contribute more fully through their work to an increased Canadian productivity. Such a work incentive would be far better than the current system that discourages too many people from working.
Thank you, Mr. Speaker, and through you I thank my colleagues once more for this opportunity to complete my remarks on the motion I had the privilege to put forward today.


William Ross Milne: Mr. Speaker, I am pleased to participate in the debate on the motion of the hon. member for Bellechasse (Mr. Lambert) concerning a guaranteed annual income plan. I am sure hon. members on all sides of the House highly esteem the hon. member for the sincerity with which he has brought forward his motion and spoken today. Since I have been a member of this House I have heard the hon. member more than once raise this issue and speak in support of it forcefully and strongly. I think most members of the House, myself included, support the hon. member to some degree when he says that a guaranteed annual income is important; but it is important to make sure that it will provide an incentive to work, not a disincentive to work. That concept, I think, will find general support on both sides of the House.
As the hon. member said, the government recognizes the importance of this general area and has committed itself to a course of action which essentially bears on the matters the hon. member raised in his motion. As hon. members know, early in 1973 the government initiated action for meeting objectives set out in the motion raised this afternoon. At that time, the Minister of National Health and Welfare (Mr. Lalonde) tabled in this House a working paper on social security in Canada and, as well, chaired a joint federal-provincial social security review. During the course of that review many major initiatives were taken which have contributed greatly to the attainment of the type of income security system which presumably is the fundamental objective for Canadians of the motion of the hon. member for Bellechasse.
During the course of the review, a wide range of improvement to the over-all income security system for Canadians was put into effect. In addition, the social security system also saw the emergence of a system of income support and supplementation which would replace Canada's'current welfare system. The Minister of National Health and Welfare advanced these proposals, which constituted a form of guaranteed annual income system, to his provincial colleagues one year ago-last February.
The reform of Canada's welfare system, a reform which would be effected by the implementation of these proposals, conforms precisely to the objective as set forth in the motion of the hon. member who spoke so well this afternoon. In his motion, the hon. member for Bellechasse called our attention to the necessity of ensuring that any guaranteed income system provides strong incentives for productivity and self-reli-

February 7, 1977
Private Members' Motions
ance of those who can work. That same concern was voiced as a matter of top priority throughout the course of the social security review. Indeed, the first proposal of the working paper on social security stated:
-the income security system should remove any disincentives which may exist to discourage people who are on social assistance from taking advantage of the training and employment opportunities available to them, and thus from becoming wholly self-dependent. It should also take care to eliminate any incentive which may now exist for people to shift from employment to social assistance, by reason of the higher benefits which might thus be obtained.
I subscribe strongly to the views I have just quoted. If the hon. member will read my speech delivered in the throne speech debate, he will note that I spoke at length about productivity and the need to make sure that our social security system in Canada helps people to enter and remain in the work force and be useful citizens, and that it should not encourage them to go on welfare or leave the work force since any such encouragement in the long run would not be of service to our people.
The hon. member raised certain of the concerns which were raised in the social security review. It is true that our current welfare system provides some Canadians with disincentives to work which are very real. As a member of parliament, I have talked to many people who have voiced such concerns. Although it is true that there are disincentives in the system, 1 would argue that they are not as widespread as many people seem to think. On the other hand, we would be wrong to contend that there are no disincentives in the system. For many persons currently on provincial social assistance there are powerful financial disincentives associated with return to employment. In some instances, for every dollar they earn they lose a dollar of social assistance; that is, they face a marginal tax rate of 100 per cent on their earnings.
If other Canadians were to face the same tax rate, they would not remain silent. I am sure that the effectiveness of this disincentive needs no further elaboration. Indeed, when compulsory deductions and work-related expenses are taken into account the recipient may face the unappealing prospect of exchanging $1 of social assistance for 80 cents or 90 cents of take-home pay. In some cases, accepting even part-time employment can lead to total loss of benefits. In addition, return to employment can mean the loss of a whole array of benefits in kind, such as dental care and subsidized housing. From a financial point of view at least there is real substance to the complaint that some people are better off on welfare than they are working. I am sure all members of the House will agree that this is wrong.
These financial disincentives are often reinforced by failure at the administrative level to assist the recipients to translate into reality the desire to return to employment. There is no question that the vast majority of people on welfare have special problems in terms of finding and keeping jobs. Often many of them are marginally attached to the work force. Quite often these people have had serious industrial accidents. Perhaps they have low qualifications for jobs that have an increased technology factor. Often the resources made available for equipping these people to overcome these problems are

virtually non-existent. I wish to depart for a moment to speak about one of the major concerns I have in this area.
I understand all provinces have some form of workmen's compensation. This is an area that should be studied. Many of my constituents who have been injured have come to seek my assistance. They have had a period of time on workmen's compensation benefits. They have received some therapy in an attempt to restore them to the work force. However, often the part of a person that is most seriously damaged is the emotional system. A person whose hand has been crippled may still have some use of it, but he cannot do his job as well as he could previously. It therefore becomes difficult to be at ease in his former work situation.
Many of these people become unemployed and subsequently look for other work. Because of some degree of disability they may find it very difficult to find an attachment to the work force. Ultimately they end up on social security, welfare, if you want to use that term, municipally administered. That is how they sustain themselves and quite often their families. What we need is an intermediate step that would assist these people to move back into the work force.
People coming off workmen's compensation benefits who cannot attach themselves to the work force are often faced with a situation that seems to be more prevalent than many of us would like to admit. They may have worked for an employer who has very little patience with people who have physical disabilities caused by an injury in their own plants and so they are subsequently laid off. I really have difficulty understanding the consciences of employers who do that. It happens more often than any of us would care to admit.
I feel very strongly about these people. Even though they were once productive, loyal employees, they end up in a welfare situation. Once they have this emotional problem, it is very difficult to get them back into the work force. It should be pointed out that many of them would actually lose money by returning to work because they cannot get back their old jobs, or one that pays at a level high enough to make it worth their while. We set up a whole syndrome for people to become dependent on these benefits. The situation talked about in the review of gradually working back into the work force and being allowed to keep many of the benefits would be very desirable.
I had not intended to digress in this manner, but in the past two or three weeks I have had a number of representations from constituents who have had industrial accidents. They are deemed to be physically well by those who are trying to rehabilitate them. However, because of emotional damage they have great difficulty returning to work and coping with the noise, emotion, and stress put on them by work with which they were originally quite able to cope. Often this results in a conflict between that type of person and his employer, and his employment is terminated. Such a person finds himself in the position of having somewhat of a physical disability and a very large emotional disability as the result of not having a job. It is
February 7, 1977

soul destroying to watch these people lose their self-esteem and respect.
In terms of the motion put forward by the hon. member and the review of the social assistance program, we want to ensure that we have some means of helping these people who are affected by the types of problems about which I have been talking. There are hundreds of thousands of Canadians who are clinging to their independence despite the fact that, in financial terms at least, they would be better off on welfare. These are the working poor. They want to work, work hard, but are rewarded very little for doing so.
Many of the people I was talking about a moment ago have some form of disability, either physical or emotional, as a result of an industrial accident. Only a small proportion of them have any contact with the world of welfare. Most of them do not. That is a testimony to the value Canadians put on self-reliance and the work ethic.
We often hear that no one wants to work any more. Quite a lot is made of that when criticism is made of social programs we have to help people. I take issue with that.
I represent a constituency that probably has one of the highest average incomes in all of Canada. However, there are thousands of people in my constituency, and I am sure in the constituencies of almost every member, who are not at the high end of the income scale. These people want very much to work. However, because of their qualifications and how life unfolded for them, they do not receive a very high financial return for their endeavours. In fact many of them, with technology changing in the work force as much as it is, find themselves in a very difficult position. Rather than forcing these people out of the work force, there ought to be some kind of assistance for them. Programs must be organized to help these people supplement their income. It must be done in a way that ensures these people stay in the work force in the meantime.
A good many of these people have families, perhaps families that are larger in number than those of higher income people. Most of them have paying jobs year round, but their income is inadequate relative to their responsibilities. Other members of the family, other than the principal wage earner, have to go into the work force just to make sure the family unit can survive. I note that a typical family of four in this group would earn between $4,000 and $8,000 a year.
Removing the inequities that exist between these people and those currently on welfare is essential. We must reinforce their self-reliance and provide incentives that reward them rather than create disincentives further inducing them to withdraw from the labour force.
The hon. member's motion implies there are other problems which plague Canada's welfare system. There exists currently a bewildering array of federal, provincial, and municipal programs with related objectives in the area of income maintenance. Not only do the provisions in terms of benefits, conditions of eligibility and so on vary widely, but there is no consistency from one program to the next even on such basic
Private Members' Motions
terms of reference as the definition of income and the definition of a family unit.
Anyone who doubts that statement need only spend sometime in a constituency office trying to help those who come for advice and for whatever assistance their MP can give. They are really bewildered as to who is responsible for which program. Many people are of the opinion that a municipal welfare program is a program of the federal government and administered by it.
Even with regard to old age security, in terms of understanding the old age pension and the guaranteed income supplement and, in the province of Ontario, the Gains program, there is very great difficulty. This has to be sincerely studied. The federal proposals for income support and supplementation came to grips squarely with these problems. Unlike the current system, the proposals would ensure that the total financial rewards to those who work always exceed the benefits given those who do not work.
In addition to provisions for justifiable work-related expenses and compulsory deductions at source, "tax-back" rates for those on support could be reduced to 70 per cent. That is, for every dollar earned, the recipient would keep 30 cents while the remaining 70 cents would go toward reducing the social assistance benefit. Income supplementation would be made available to the most vulnerable members of the working poor-families with children, and singles and couples over 54. It would ensure that they need not fall back into the support system in the face of inadequate returns from employment. Those, such as young single individuals who are better able to increase their earnings through occupational or geographic mobility, would not be eligible for supplementation.
While the benefits available through supplementation are modest by most standards-a maximum of $80 per month for a family of four-they would be a welcome addition to the incomes of families currently struggling hard just to stay afloat. Furthermore, the "tax-back" rate on earnings in supplementation would provide an effective work incentive. For every dollar earned the recipient would keep 65 cents, while the remaining 35 cents would go to reduce the supplementary benefit. Thus the proposals would put in place strong and sensible financial incentives toward work and self-reliance.
These financial incentives would be reinforced by a requirement for periodic employment availability assessment of all recipients of both support and supplementation. To ensure a level of national consistency in this critically important feature of the system, the federal government has put forward a set of guidelines for these assessments. These guidelines require that an assessment be applied to all family units applying for benefits. Furthermore, the assessment would apply to all potential earners within each family, consistent with the objective of distributing available employment among applicant families in such a way as to minimize reliance on public support.
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February 7, 1977
Private Members' Motions


The Acting Speaker (Mr. Turner):: Order. I regret to interrupt the hon. parliamentary secretary, but his allotted time has expired.


Stanley Howard Knowles: Mr. Speaker, I wish to commend the hon. member for Bellechasse (Mr. Lambert) on bringing before us again today the idea of a guaranteed annual income. I understand that one of his colleagues hopes to be able to say a few words, and therefore I shall keep my remarks brief.
I could not be expected to agree with everything the hon. member said in his interesting speech, but with the main proposal he put forward I am in enthusiastic agreement. I doubt that the hon. member for Peel-Dufferin-Simcoe (Mr. Milne) is aware of what is involved in the concept of a guaranteed annual income otherwise he could hardly have contended that the government side of the House is moving in that direction. The government's review of social security is aimed at ironing out some of the injustices and difficulties which are in our present social security welfare programs, but the guaranteed annual income concept which we hold over here is really an attempt to put society itself on a more just and fairer basis.
As the hon. member for Bellechasse said, what he is asking is that the incomes people have be based on our production as a nation. The basic fact of a society like ours is that the production of wealth is a social process, a social accomplishment. It is not done individualistically any more. It is done by society. The sooner we realize that participation in our society involves the right to be in the work process but also the right to share the goods we produce on a reasonably equal basis, the sooner we will make progress.
We have moved in that direction in a number of ways. Indeed, the best things about our society are the things which we provide universally-education, hospitalization, health care, roads and highways, police and fire protection and those kinds of things, plus pensions on a universal basis to a considerable extent. I look forward to the day when we will have the kind of demogrant which hon. members over here are talking about and which we have been talking about for years. I insist that when that day comes it should be not on a means test basis but on the basis of an allowance that goes to people because they are people, because they are here, because they are part of the Canadian family. If some get too much, let the income tax system then take care of that. Therefore, Mr. Speaker, I like the idea that is before us. Let us get started on it soon. If we cannot start it soon for everybody then I should like to see it started soon for veterans. We could then do away with the means tests, the health tests and all the rest. We could say to all veterans over a certain age "Here is your guaranteed income for life."
At any rate, Mr. Speaker, I said I would try to be brief. I welcome this debate. I welcome this idea being thrown open for discussion today. If there are some who say it is futuristic and that it will take a long time to come, like a few others in this House I can say that I have been here long enough to see ideas, which were regarded as impossible when I first came

here, actually realized. I believe Canadians want a better society and that this whole idea of a universal demogrant or a guaranteed income for all our people moves in that direction.


Mr. Gilbert Rondeau (Shefford):: Mr. Speaker, time is running fast and as I want to be brief, I will sum up a little bit.
In February 1976, the Minister of National Health and Welfare (Mr. Lalonde) distributed written information on the federal proposals concerning income support and supplementation. On page 6, paragraph (b) of that document, we can read and I quote:
(b) That families drawing support allocations be subject to a minimum 70 per
cent reduction rate on gains, pensions and other incomes from private source.
In other words, every dollar earned would bring about a 70 cents reduction of
the support allocation-
Mr. Speaker, that formula the minister stated last year and which is explained in the brief he submitted to the House of Commons is to penalize people who work and follows the same philosophy as all existing legislation that is to deprive people who work to give to those who do not work. And people are tired of all this, because the one who works is at the same level as the one who does not work. There is hardly any difference between the two people.
That social system, Mr. Speaker, which is widely accepted today is rotten and disastrous for those who work as well as for those who do not work. For instance as we know some people work for a while and when they have enough unemployment stamps they quit and draw unemployment insurance benefits. Then they get another job only to join the unemployed again. They go back to work and once more fall victim to unemployment and the whole thing starts up all over again. At the end of the year, they have worked six months, pay less income tax, received unemployment insurance or welfare benefits while often getting a hidden supplementary income. Most employers nowadays-it is common knowledge-are unable to keep their employees. There is a monthly staff turnover of at least 20 per cent. Every month they must train at least 20 per cent of their personnel who work only long enough to get the number of stamps required to qualify for unemployment insurance.
Moreover, how many workers do we see nowadays who are not the least interested in working overtime because the net salary for overtime is about the same to the net salary for their regular hours because income tax is killing the desire to work. Our current non-social laws are based on such a socialistic mentality. It is bad for the population itself and for the country's economy. If all the unemployed workers and welfare recipients in the country had a guaranteed annual income as advocated today by my colleague, the member for Bellechasse (Mr. Lambert), and as recommended by the Social Crediters in Canada for over 30 years and by a social and non socialistic measure, the difference between a guaranteed annual income as we are proposing today and a redistribution of income and a socialistic formula, our national production could jump by 40 per cent if we put to work all those who are able to work today and are living off unemployment insurance and welfare benefits.
February 7, 1977

With a 40 per cent increase in national production, we would not have to take from the workers to give to those who are not working. Everyone would be better off without the government having to take away from anyone. As he has said on many occasions, the right hon. Prime Minister (Mr. Trudeau) would take from those who have to give to those who are not working anymore and those who do not want to work anymore, so that everyone would be on the same level. He wants to make everyone equally poor.
Mr. Speaker, before beginning to talk about charity in Canada, we should begin by talking about social justice and distribution justice because it is unthinkable to want to do charity when a country does not respect justice first of all because anyone can take from his neighbour to give to charity. Can the country spoliate those who work, in order to give those who have lost the courage to work because of work disincentives? I hope that if and when the Minister of National Health and Welfare tables information on his formula for a guaranteed annual income, his first aim will be social justice rather than social charity. Because there can be no effective social charity in Canada if we do not have first the social justice that would allow someone who earned something through his work to enjoy and retain it.
Mr. Speaker, if the government starts taking away the result of an individual's work to give it to those who would not work because of work disincentives, before long we will have a society where nobody works anymore, where nobody contributes anything to Canada's production and where everyone expects social help, some source of social pittance. Call it welfare allowance, unemployment insurance benefits, Works Canada or what have you. Such programs are work disincentives that in the current economic context induce people to count on some pittance, to live at the government's expense.


Mr. S. Victor Railton (Parliamentary Secretary to Minister of Veterans Affairs):: Mr. Speaker, I believe there is a fair amount of ignorance in Canada about our federal social security legislation. A great many people say that the government is trying to assume responsibilities that its own citizens should take unto themselves, that the government should abdicate its paternalistic role. However, there is no real foundation for this belief, since it is almost universally accepted that in some situations people are in definite need of income support and supplementation in addition to social and health services.
The federal government has been reviewing and discussing possible improvements in Canada's welfare system over the past three years. Family allowances, old age security, and the Canada Pension Plan provisions have been modified and improved. Federal-provincial discussions have indicated the need for wages to exceed unemployment insurance or any form of welfare benefits. In other words, though we guarantee a barely adequate income to those who are not working for good reason, we believe that financial incentives should be given
Income Tax Act
those who are employed, thus bolstering our belief in self-reliance and productivity. In fact, by periodic testing of employment availability of recipients of this kind of assistance, we make sure that everyone can participate in the available work to the full level of their capacity.
We propose at this time to provide a program of income support to the aged, the handicapped and to single parent families who cannot work, and also to those for whom no work is available. At the same time, we propose to supplement the incomes of those who receive inadequate pay. This would help the vulnerable members of the working poor, namely, families with children and those over 55 years of age. There are probably half a million families in the country who fall into this category. Some of them would be better off to accept some form of social assistance or welfare; however, their pride keeps them working. Nevertheless, they suffer from a marked economic disadvantage. These citizens on marginal incomes should be encouraged to remain active members of the work force but should have recognition and assistance.
Our intention is to introduce a new social services act during this session, following up the Speech from the Throne. We also intend to make it more desirable to work than to accept welfare. We have support services in mind which are designed to allow the aged, the sick, and the handicapped to live at home rather than in an institution. Meals on wheels, home nursing and homemakers will keep folks in their own community. Rehabilitation will often make the handicapped employable, and assistance in helping them find a job will keep them off welfare. Many people heretofore seemed to be locked into unemployment because if they are handicapped they cannot afford transportation to get to work.


The Acting Speaker (Mr. Turner):: Order, please. The hour appointed for the consideration of private members' business having expired, I do now leave the chair till eight p.m.
At six o'clock 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. Macdonald (Rosedale) that Bill C-22, to amend the statute law relating to income tax, be read the third time and do pass.
John R. Rodriguez: Mr. Speaker-


Mr. Ellis:: That ardent Tory from Nickel Belt.
80008-40(4

February 7, 1977
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John R. Rodriguez: I do not know about being an ardent Tory from Nickel Belt. The hon. member makes these remarks, but I want to assure him that the only known Tory in Nickel Belt is in the museum of anthropology at Laurentian University. We cannot find any live Tories in Nickel Belt. I challenge the hon. member from the Tory benches to come to Nickel Belt to see if he can find one. I must correct myself. There will be one Tory in Nickel Belt some time in the next month or so. The hon. member for Ottawa-Carleton (Mrs. Pigott) is going to address a girls' college in Sudbury, and she will be the only admitted live Tory in Nickel Belt.


John Raymond Ellis: What about the mayor?


John R. Rodriguez: What mayor? The Tory mayor has been defeated three times in the last three months. However, that is a diversion, and I do not want to digress tonight because I want to zero in-


The Acting Speaker (Mr. Ethier):: Order, please. The hon. member was recognized to address the House on the bill which is before us, Bill C-22, so would he please do so.


John R. Rodriguez: The diversionary tactics which are being used by the Tories prevent me from zeroing in on Bill C-22. If they would only cease their diversionary tactics, we could get on with this debate.
Prior to five o'clock I was raising some relevant points regarding Bill C-22, and I think it is only right, just, and proper that I should remind the House of the points I was raising before the supper hour. We members of the New Democratic Party have not been perverse in the way we have opposed this bill or in the way we have spoken on many clauses of it. We have said over and over again, and we intend to say over and over again during this debate, that a progressive tax system must serve to distribute wealth in Canada, not provide tax loopholes for the well-off. Every single time this government introduces a change with respect to taxation, we end up with loophole upon loophole upon loophole. We on this side of the House are in good company when we say that the tax system is nothing but loophole upon loophole for the well-off. I say that because of what no less a person than Marcel Belanger, president of the Canadian Institute of Chartered Accountants, said in a speech to the annual conference of the Canadian Tax Foundation in November, 1975.
I want to put what he said on the record for all hon. members of this House to peruse at their leisure. He said that changes have made Canada's tax system so complicated that even professional tax experts can barely follow it. He asked rhetorically how we can expect the ordinary taxpayer to understand this mess. He urged the federal government to declare a two-year moratorium on tax changes and to concentrate on simplifying the system. He also called for a revision of the income tax rate schedule to ease the burden on lower income Canadians. That is important, Mr. Speaker. He said that governments have modified the tax system time and time again, thus adding to the complications which already exist, and the same time they have unconsciously created loopholes.

Many of these tax changes have failed to produce the intended results, and he cited the registered home ownership savings plan as one example. We have dealt with the registered home ownership savings plan in this debate, and we have pointed out how it is used as a tax loophole for the well-off.
Mr. Belanger pointed out, as we have done in this House, that the RRSP was designed to help young people save in order to buy a house eventually, but it has degenerated into a loophole whereby spouses mutually transfer their property to take advantage of the deduction, and the barefaced aspect of it all is that this is blatantly advertised. Is that what a tax system is all about?
The members of my party have said time and again that the tax system ought to distribute wealth in the country, not accumulate it at the top levels and hope it will filter down. That is the trickle down theory which the government and its allies on the Tory benches have for a long time advocated. Look around, Mr. Speaker. The Liberals and Tories are all products of the trickle down theory. Just look at them. Incidentally, I see that the hon. member for Ottawa-Carleton is present. Mr. Belanger went on to say that a straightforward reduction in tax rates would have been simpler and much more effective.
The question which arises is, why not institute a tax rate reduction? Surely that would lead to savings, including savings connected with the bureaucracy of Canada which oversees the RRSP program. I have a sneaking suspicion that RRSPs were set up to help the insurance companies accumulate capital so that they could invest it. I have a sneaking suspicion that that is why the whole program was set up.


An hon. Member:: It is to help insurance companies invest in shopping plazas.


John R. Rodriguez: Yes, so that they can turn round and lend money for the building of sky towers and shopping plazas.
Mr. Belanger went on to say that, as a result of numerous modifications, the federal guide to filing income tax is now 45 pages of small print, the Quebec guide is 41 pages long, and the Ontario guide is 12 pages long. He said that governments have hired actors and performers to convince the little guy that it is simple to fill out his income tax return. Before the poor taxpayer suffers from an inferiority complex he ought to ask those performers, who fills out their income tax returns? Mr. Belanger went on to say that the present income tax rate schedule discourages effort and savings. It has too many brackets. The rates go up too quickly, especially in the lower brackets, and reach too high a level. The federal income tax schedule has 13 levels, he said, more than half of which apply to taxable incomes of less than $10,000. This means that the lower or middle income taxpayer who finds his income increasing because of inflation could easily jump one or even two brackets at a time, thus incurring a proportionately heavier tax burden.
February 7, 1977

Mr. Belanger went on to suggest that the tax schedule ought to be changed, by cutting the present number of brackets in half, by widening the income classes, and by setting the maximum marginal rate at 38 per cent, instead of as at present, at 47 per cent.
That is the view which I have tried to put forward in the present debate. Mr. Speaker, Mr. Belanger said these things in 1975, and we are now in 1977. It shows that the more things change around here, the more they stay the same. Actually, they deteriorate.
As I was saying earlier this afternoon, tax credits are the most advisable way of distributing wealth in Canada. Some provincial governments have used the tax credit system for social programs. What about the federal government? Has it ever used the tax credit system? The answer is yes. And where has it used the tax credit system? I do not want to be cynical, Mr. Speaker. The people of Canada, particularly the people of Nickel Belt, are not cynical, and I speak on their behalf. When I think of the way we have used the tax credit system, it makes me want to vomit in this House. 1 am thinking of going behind the curtains and doing it.


An hon. Member:: Withdraw.


John R. Rodriguez: We have used it in the election expenses act. All along it was said that we could not do it; but apparently we can do it when it helps to keep parties in power. The act provides for a write-off, for a deduction from income of contributions made to political parties. That is a crying shame. We cannot use the tax credit to bring in a guaranteed annual income for low income Canadians. I know that any mention of the guaranteed annual income is like waving a red flag in front of the Tories. Perhaps that is why the minister is afraid.
There are advantages to a tax credit system. We think that since provincial governments have used a tax credit system for social programs, the federal government ought to use that system for its social programs. That is the only fair way of doing it, because then those who earn a buck will pay tax on that buck. As well, a tax credit system could lead to a rationalization of expenditures and a reduction in the numbers of bureaucrats needed to run our present social services system. Clearly there are concrete advantages to a tax credit system. Such a system would be better than the system envisaged by Bill C-22, for we shall need to create a whole new bureaucracy to administer the changes in the act, an act which does nothing but create loophole upon loophole.
Another advantage connected with the tax credit system concerns the establishment of a guaranteed annual income. Surely a tax credit system is one of the best ways of maintaining a guaranteed annual income. It would work to the advantage particularly of those too poor to pay taxes. It could become a negative income tax and that, Mr. Speaker, is in line with our idea of how the tax system of this country should work.
Why is the minister so sensitive about this concept? Let me quote some of his words. I will put them on record, since I
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think they may give us a clue to his sensitivity concerning the guaranteed annual income. He said this:
We are not trying to slip a guaranteed income in through the back door. We have started from the premise that there will be no more new government expenditures on social programs. We've taken the pledge.
He has taken a pledge. The only pledge Liberals and Tories have taken in this House with respect to income tax is the pledge to make loopholes in the act so large that elephants could crawl through them.


Mrs. Pigott:: Don't be personal.


John R. Rodriguez: The hon. member for Ottawa-Carleton suggests that I am being personal. I am sorry; I could never equate her with an elephant, even though her hair may be white.
Why is the minister so sensitive? Perhaps 1 could illustrate my point by quoting what Mr. Stephen Duncan wrote in the Financial Post of November 6, 1976. He wrote in part:
During the tax reform debate in the early 1970's the Ontario government battled to convince federal planners to make more use of tax credits. Ottawa said no. In the early 1970's and until recently, it was good politics to hand out money. New programs with new bureaucracies were the most visible way of showing government largesse. The politics can flip flop again. It is not inconceivable that by the time the tax study concludes a year or more down the road Ottawa would be happy to have some new programs to announce possibly during a federal election. If so, this current exercise could come to nothing.
That is the way it goes, Mr. Speaker. That is a quote that Mr. Duncan includes in his article. It was a comment made by one official working on this so-called income tax study.
In the last few days of this debate we have said time and again that this kind of system under which we are operating permits loopholes, and we pointed them out. Here is one pointed out last year in the Financial Post, and I think it will warm the cockles of the hearts of all the business elite and apologists for corporations in this House. This article by D. W. Smith and G. K. Dowsley, entitled "How financial firms Can Diversify: Use a Loophole," reads as follows:
A new income tax provision that allows another avenue for taxfree corporate diversification will be of particular interest to financial institutions.
As part of the general expansion of the sections of the tax law dealing with reorganization, the ability now exists to expand "upstream" without creating any capital gains tax liability.
Tax rules allow taxfree "downstream" diversification, too. But since most financial institutions are not as free as other corporations to diversity through subsidiaries this new rule is an improvement in the tax system for a very large sector of corporate taxpayers.
Surprisingly, the possibility of this type of reorganization has not been widely publicized and Ottawa has not received the credit it should for creating this "government sponsored loophole."
It seems now possible for Canadian financial institutions to do what many U.S. banks did in the 1960's-create upstream parents in order to diversify and still meet the requirements of the regulatory authorities. Financial institutions, or, indeed, any company, will now be able to do so in Canada.
The procedure works as follows:
Company A wishes to create an upstream parent, X; company X is established with no assets. The shareholders of A exchange their shares for treasury shares in X. The shareholders now own X, whose sole assets are the shares of A.

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Subsequent acquisitions may be financed by additional share exchanges, loans secured by the shares of the subsidiary, and dividends from the income of controlled companies earned after reorganization.
The problem in the past was that once a shareholder exchanged shares of A for shares of X he was considered to have disposed of them and was thus subject to capital gains tax. The magnitude of the tax bill for major shareholders made this procedure prohibitive; so it was seldom, if ever, used in Canada.
That is the indication that there has to be a loophole created.
But now the exchange will take place without incurring tax, by passing the tax cost associated with the original shares on the new shares.
However, the taxpayer may elect to assume that a disposition occurs at market values if this is to his advantage, if for example, a loss is produced or the gain is absorbed by losses from previous transactions.
This would result in a higher base from which future gains will be determined. The cost base to corporation X of the acquired shares is unaffected by the option selected; market values are consistently used . . .
There are, of course, conditions which must be met but these are not unduly restrictive nor unreasonable. The main one is that shareholders in company X must deal at arm's length before the exchange. That is, there must be different directors for the new company, at least temporarily. In addition, no one shareholder may hold more than 50 per cent of X's shares after the exchange.
These restrictions do not affect legitimate business procedures but are designed to prevent owners of closely held corporations avoiding tax.
There are other advantages too. A reluctant shareholder could be paid by X to sell his shares to someone willing to make the exchange. This would be important when the market prices are depressed. If, say, Mr. Jones originally paid $30 for the stock but the market price had declined to $18 at the time of the exchange, company X could pay him $12 on the condition that he sells his shares to someone willing to make the exchange.
The taxfree zone carries through with the exchange and a corporate shareholder would not lose the addition of its pre-1972 gain to its "1971 capital surplus on hand."
The taxfree status of share exchanges is not affected if fractional shares are offered for cash or if certain shareholders are offered additional inducements; the tax status of the remaining shareholders is not jeopardized.
The possibilities of this provision seem so promising that it is hard to see why it has not been explored in more detail.
The problem in the past was that once a shareholder exchanged shares of A for shares of X, he was considered to have disposed of them and was thus subject to capital gains tax. The magnitude of the tax bill for major shareholders made this procedure prohibitive; so it was seldom, if ever, used in Canada.
But now the exchange will take place without incurring tax, by passing the tax cost associated with the original shares on to the new shares.
However, the taxpayer may elect to assume that a disposition occurs at market values if this is to his advantage, if, for example, a loss is produced or the gain is absorbed by losses from previous transactions.
This would result in a higher base from which future gains will be determined. The cost base to corporation X of the acquired shares is unaffected by the options selected; market values are consistently used.
Corporations would be able to use this method to obtain shares in a wide variety of companies. Commentators have talked about individual takeovers, but a large diversified portfolio could be created. The cost base to X of these newly acquired shares would be the fair market value at the time of the exchange.
However, if less than 10 per cent of the shares are acquired by the corporation then the tax base is deemed to be zero. Hence widespread offers for exchanges would be discouraged because of the large capital gains tax in the future.
One large financial institution, AIC corporation-
You see, Mr. Speaker, how all these things tend to get tied in.
-has announced its plans to phase into the banking field and other similar corporations are examining the prospects of entering this field.
It does not surprise us that they trotted out the corporate apologist from Edmonton West to make a speech in this House

recently against our filibuster or debate on the IAC private member's bill.
Reorganizing upstream offers another avenue to accomplish this and overcomes possible difficulties.
Leasing or insurance businesses separately regulated or not permitted by the Bank Act, could become subsidiaries of the upstream parent without affecting the operations of the main operating firm, or obliging the disposal of promising enterprises.
The list goes on, Mr. Speaker. That is another example. I do not know of too many people in Nickel Belt who could take advantage of that kind of chess game for the corporate world. As a matter of fact I do not know of anyone in Nickel Belt who could take advantage of this sort of thing.
As 1 mentioned before we broke for the supper hour, this debate on Bill C-22, like many other debates, tends to allow the House to really explore the thoughts and, so to speak, the psyche of members of the House. They tend to let their hair down and we get what they are thinking about. We had one such gem when the hon. member for Edmonton West (Mr. Lambert) spoke about women and indicated that women in the work force were a social phenomenon working only for the second car, and that day care centres result in raising only juvenile brats. Conservatives have to live with that. They cannot continue parading across this country as the friend of the worker, the friend of women, the friend of labour and the friend of young Canadians. A debate of this kind tends to unmask this sort of thing. It rips away the pretences. Then we get to the real Tory or Liberal.


William Arnold Peters: We see it as the same thing.


John R. Rodriguez: We know they are the same. We saw an example of that.
Remarks were made earlier in this debate by another member to my right, the hon. member for Calgary North (Mr. Woolliams). He apparently is the specialist in his party on policies on taxation. I will make myself clear on this; I am not so presumptuous as to suggest that the Conservative party at this time has a tax-policy. Far be it from me to do that. Who am I but a little school teacher from the backwoods of northern Ontario?


Mr. Blais:: Mr. Speaker, did I hear the hon. member right when he referred to his riding in pejorative terms as "the backwoods of Ontario?"


Stuart Malcolm Leggatt: You don't know what pejorative means.


William Arnold Peters: He was thinking about Nipissing when he said that.


John R. Rodriguez: I will repeat it, Mr. Speaker. I am just a little school teacher from the backwoods of northern Ontario, which includes the hon. member's riding of Nipissing. There are a lot of us there. We are proud to be backwoods people.


An hon. Member:: Backward you mean.


John R. Rodriguez: We look at things as they are. We look at the taxation policy and ask why can it not be simplified. We pride ourselves on coming from the backwoods of northern Ontario. We tend to be "grass-rootsy" people.


An hon. Member:: Grass-rootsy?


John R. Rodriguez: Yes, grass-rootsy. We look at the income tax system and ask pointed questions.


Elmer MacIntosh MacKay: Ask intelligent questions, not punchy questions.


John R. Rodriguez: Sometimes they are punchy, but they are always pungent. I want to comment on some of the remarks made by the hon. member for Calgary North during this debate. He said that what we need is "a group of men and women in this department", meaning the taxation department, "who will meet with the ordinary taxpayer". I can only assume that the object of the hon. member's suggestion is a simplification of the present income tax system in order to allow the ordinary taxpayer to understand better the complexities of an act that has baffled many of the legal minds in this House to this day.
The hon. member has called for a one-to-one relationship in the income tax jungle. I do not know what he is up to. 1 want to go on record as supporting simplicity in our tax system.


Mr. Hnatyshyn:: You are an expert in simplicity.


John R. Rodriguez: There is more to come. I would like to see the ordinary taxpayer understand the tax system in this country without the additional and unnecessary costs that would be entailed in the proposal by the hon. member for Calgary North. Imagine the number of bureaucrats that would be required to give advice to each and every taxpayer, to say, "If you do this, this is what will happen; but if you do that, that will happen."
The hon. member suggested that we have taxation personnel available to citizens across this country, people who would meet with the ordinary taxpayer. At this time when Canadians are being asked to practice restraint, Tory members are continually on their feet lambasting the government for being wasteful. I find this not only amusing but typical. The spokesman of that party is now asking the government to spend Lord knows how much of the taxpayers' money for guidance through a system that many of his collegues helped to construct under past Tory administrations. As I pointed out earlier, they are sucking and blowing at the same time. On one hand they talk about hiring bureaucrats to give advice to ordinary taxpayers, and on the other they talk about fiscal restraint. It just does not work. It just does not make sense.
Surely there is a better way of simplifying the income tax system than hiring bureaucrats to build empires. Rather than building empires, we should be dismantling them. 1 hope I am not doing an injustice to the hon. member's suggestion. Far be it from me, a school teacher from the backwoods of northern Ontario to tell a corporate lawyer his business, especially when
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he has just returned from a bar association convention. It would be absolutely presumptuous of me to lecture him on the income tax structure. God knows how complicated it is. I do not intend to try and heavy foot it through the income tax structure. I am merely trying to ask punchy, pungent, pointed, and direct questions. I hope I am not doing any injustice. 1 have tried diligently to come to terms with the letter and spirit of his recommendation. It is rather difficult when so many of the suggestions offered by the party on my right are so frivolous and poorly thought out. However, I cannot help but feel that the hon. member's scheme would require a considerable expenditure.
Under the hon. member's scheme, we would either have to hire and train additional staff all across the country to explain our unjust and retrogressive tax system, which we have been blessed with by the free enterprise administration, or transfer staff within the existing taxation service. Either way it would entail an unnecessary expenditure of funds and a misallocation of human resources. Why? I will tell you why.
Once upon a time, and this may sound like a Grimm fairy tale, and in some ways it is, in the halcyon days of the sixties, the predecessor of the Prime Minister (Mr. Trudeau), the late Lester B. Pearson, went to a man named Carter. He said Carter-


An hon. Member:: Jimmy?


John R. Rodriguez: No, not Jimmy. He asked him to determine what was wrong with our taxation system. And this man Carter did. And, much to the present Prime Minister's chagrin, he made a point of turning out one of the finest reports this country has ever seen. What was the cornerstone of that report on taxation? The cornerstone was that a buck was a buck was a buck and had to be taxed.
Mr. Carter did not even touch on the questions we socialists are concerned about. He did not talk about the redistribution of wealth. He talked about justice in the tax system. He talked about fairness. All he asked the government to do was to tax a buck every time a buck was made. Well, those Liberals are pretty tough. The Carter Commission made its recommendations to cabinet. It is now recorded history that when the first corporate delegation came to oppose Carter's recommendations they ran for cover. Instead of implementing a fair taxation system, they ran, because those were the same boys they would be asking for party contributions.


Stanley Howard Knowles: Would my hon. friend permit a question?


John R. Rodriguez: Certainly.


The Acting Speaker (Mr. Ethier):: Is the hon. member for Winnipeg North Centre (Mr. Knowles) rising on a point of order?

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Stanley Howard Knowles: I asked my hon. friend whether he would permit a question, and I believe he said, yes.


Some hon. Members:: Oh!


The Acting Speaker (Mr. Ethier):: 1 think the hon. member should address himself to the Chair and not to the hon. member for Nickel Belt. Does the hon. member accept the question?


John R. Rodriguez: Absolutely.


Stanley Howard Knowles: A moment ago the hon. member said, if I heard him right, that it was Mr. Pearson who asked the late Mr. Carter to produce that report. I wonder if I can refresh his memory and ask him whether it was not the present right hon. member for Prince Albert (Mr. Diefenbaker). In other words, it was a commission established by the Tories.


John R. Rodriguez: My memory is now coming back.


Some hon. Members:: Oh, oh!


John R. Rodriguez: It was the right hon. member for Prince Albert (Mr. Diefenbaker). That is one of the hazards which face one in the heat of debate and in making a point.
We have heard catcalls from across the way. I would point out that members over there have a chance to make speeches on this bill but they forwent the opportunity.


An hon. Member:: We are waiting for you to finish.


John R. Rodriguez: They gave up.


An hon. Member:: Why don't you?


John R. Rodriguez: They gave up their opportunity to speak on third reading. If they have any comments to make, they should wait until Friday when I finish speaking. They can make their contributions then.
I will say that my memory has come back. It was the right hon. member for Prince Albert who asked the Carter Commission to make recommendations. It was interesting to see how these two old line parties attacked that report because of its premise that a buck is a buck and should be taxed on that basis. Note how that document has been forgotten. Today that report is gathering dust in some office. They retreated before the corporations, but did they ever take a tough stand against labour in connection with the anti-inflation proposals? Those people over there really pride themselves on being tough. But when the delegations came from big business, they put their tails between their legs and ran for cover like a bunch of scared rabbits.


An hon. Member:: Does a rabbit have a tail?


John R. Rodriguez: The rabbit does have a tail. What has become of the Carter Report on taxation? It has been smothered. It was smothered in paper. They published a green paper,
[The Acting Speaker (Mr. Ethier).]
and then a white paper, and then went through the motions of participatory democracy as they always do when confronted by objective truth. Later, they forgot all about it. I do not wonder that the hon. member for Calgary North should have failed to mention the Carter Commission. The only charitable thing which could be said about this sorry government opposite is that at least it went through the motions. I imagine that the Tory party would have found the report alongside the M.A. thesis by the hon. member for Rocky Mountain (Mr. Clark) on the shortcomings of the Diefenbaker government.
I do not think we should forget for one moment the pivotal recommendation of the Carter Commission, because it is germane to our consideration of Bill C-22, as it is to any other bill relating to taxation. The contention that a buck was a buck and should be taxed every time it was made was one which sent Liberal and Tory bagmen running for cover.
The report went on to say other things. It said there should be no deductions, no exemptions, no more tax shelters for the rich and for the corporations, no more asking the lower and middle classes to carry an unfair tax burden, thus perpetuating the system under which the rich get richer and the poor get poorer. Since the Carter Commission report was filed away we have seen a deterioration in the quality of the lives of the people.
I realize that many of my friends and colleagues here will regret my spoiling their conception of this land as a land flowing with milk and honey, but I must tell them I had an opportunity recently to visit some of the poorest areas of Canada. I speak of the recent visit I made to Newfoundland and Cape Breton Island where unemployment has reached staggering proportions. The problem there was not inflation. The workers' wages were not sending up the prices of goods. After all, the average income there is only 70 per cent of the national average income. The problem there was unemployment. Nevertheless the government's so-called anti-inflation program is visited upon them as well as upon Canadians in other parts of the country. These are proud people, Mr. Speaker. They want to make a life for themselves and keep their families in some sort of dignity. They pay their taxes.
I cannot tell a lie. They are proud of their contributions to our nation's lifestyle. I speak of course of those who are still fortunate enough, in the face of Liberal and Tory federal and provincial governments, to have employment. These people are proud. They pay their share and help their neighbours across this great country. What are we as elected politicians to say to them when they ask us, as I was asked, why they must pay 25 per cent of their income in federal taxes when corporate giants, not struggling, poor, little corporations and small businesses-


Jean Elizabeth Pigott: Like mine.


John R. Rodriguez: The "Cookie Monster" over here says they are like hers.


Some hon. Members:: Oh, oh!
February 7, 1977


John R. Rodriguez: 1 am talking about such giants as Imperial Oil and International Nickel. Incidentally, I notice that the vice-president of International Nickel is now chairman of the Tory advisory board on policy. That is like asking Evel Knievel to park your car. It is ridiculous. Here are these giants which,
I submit, are not even Canadian-owned, which are paying less than one-half the rate of these people, less than 25 per cent of their income in taxes. That has to be a travesty in this country and it has to be forever. It has to be a postscript to these two old line establishment parties in Canada. Small wonder that there is so much cynicism in the land.


William Arnold Peters: It is interesting to note that all International Nickel people pay taxes, but not the company.


John R. Rodriguez: When I came back from Newfoundland I could not help but think about why I am a member of parliament here. Why am I here and why are we all here? I think that is something that all members should think about, especially when we come to look at the whole question of taxation. We have assumed this responsibility as elected members of parliament. People ask what we are going to do for them, what we are going to do about distributing wealth, what we are going to do about the serious problems facing our nation. I always find a great deal of solace in reading Matthew, Chapter 5, verses 1 to 16, and often I meditate on it. I will read these verses for the edification of members. I seriously suggest that members think of this because it is very germane to the job we are doing here. They read:
1.	And seeing the multitudes, He went up into a mountain:


Jean-Jacques Blais: Mr. Speaker, I rise on a point of order. I am quite ready to listen to the ramblings of the hon. member so long as he is dealing with the income tax legislation or the Carter Commission and who appointed the Carter Commission, but when he starts to indicate that the Bible is relevant to the bill presently under study, I think you should call him to order, Mr. Speaker.


Mr. Nystrom:: Mr. Speaker, I rise on the same point of order. I want to suggest one thing. Perhaps you should reflect on this before you make your ruling. The hon. member for Nipissing (Mr. Blais), even though he is Postmaster General, has not even heard what the hon. member for Nickel Belt (Mr. Rodriguez) is going to say. He will quote something that is relevant to this debate, and I think the hon. member for Nipissing should wait a few minutes and hear what my friend will say before he makes a fool of himself by suggesting my friend is out of order. I submit, Mr. Speaker, that you take that into account before making a ruling, and give the hon. member for Nickel Belt a chance to say what he wants to say. After that perhaps the hon. member for Nipissing can rise and make a statement.


William Arnold Peters: Mr. Speaker, it seems to me that what is relevant on third reading is to refer to the whole bill and the contents of the bill, not its details. It seems to me that from time immemorial, even though my athesistic friend objects to the reading of the Testament, there has always been, at least
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in the ordinary person, a desire to establish equality in taxation. From my limited reading of both the Old Testament and the New Testament it is my understanding that there is considerable relevance in the Bible to the collection of taxes and the way in which taxes are applied.


The Acting Speaker (Mr. Ethier):: Order, please. It is quite right that those hon. members who are recognized should address their remarks to the bill, and for that purpose I think we should hear the hon. member for Nickel Belt (Mr. Rodriguez). I hope he will continue his remarks on Bill C-22.


John R. Rodriguez: Again I read:
2.	And He opened his mouth, and taught them, saying,
3.	Blessed are the poor in spirit: for theirs is the kingdom of heaven.
4.	Blessed are they that mourn: for they shall be comforted.
5.	Blessed are the meek: for they shall inherit the earth.


The Acting Speaker (Mr. Ethier):: Order, please. The Chair recognized the hon. member for Nickel Belt for the purpose of commenting on Bill C-22. The Chair has difficulty in relating what he is reading now to Bill C-22. I hope the hon. member will limit his remarks to the bill now before the House.


Stanley Howard Knowles: Mr. Speaker-


William Arnold Peters: And this is a man of the cloth, Mr. Speaker.


Stanley Howard Knowles: Does Your Honour not think it might be useful to ascertain what it is that the member is reading from the New Testament, and what argument he wishes to draw from that with respect to the bill? I am sure his reference to the New Testament is for the purpose of commenting on the bill.


The Acting Speaker (Mr. Ethier):: It might be interesting, but I am sure all hon. members would agree with me that it might be better for the hon. member to conclude his remarks on the Old or New Testament and to revert to the contents of the bill.


John R. Rodriguez: I only have a few more lines to read, Mr. Speaker.
It continues:
6.	Blessed are they which do hunger and thirst after righteousness: for they shall be filled.
7.	Blessed are the merciful: for they shall obtain mercy.
8.	Blessed are the pure in heart: for they shall see God.
9.	Blessed are the peacemakers: for they shall be called the children of God.
10.	Blessed are they which are persecuted for righteousness' sake: for their's is the kingdom of Heaven.
11.	Blessed are ye, when men shall revile you, and persecute you, and shall say all manner of evil against you falsely, for my sake.


The Acting Speaker (Mr. Ethier):: Order, please. This could go on for days and days. There are many quotations from the Bible. Again I ask hon. members to co-operate with the Chair. There is sufficient content in Bill C-22 to discuss the bill alone. I ask the hon. member to revert to the bill.

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John R. Rodriguez: The point 1 was trying to make is that while this gives much spiritual comfort to the soul, it has been the rationale for parts of Atlantic Canada that we have always offered spiritual solace. That the meek shall inherit the land remains spiritual solace, but we have to put bread and potatoes on the table, and we have to do that through a tax system that is fair and just. That is what this quotation speaks about. It speaks about justice, fair play, and right.
The rulers of the country are the people who sit in judgment. Here we are sitting in judgment on Bill C-22. We have to make a decision on it. It seems to me that if there were some meekness in the hearts of the government, some righteousness and some mercy, they would not attempt to foist on the people of Canada a bill such as Bill C-22.
There is cynicism in the land. Some would put that cynicism down to experiences south of the border, and I suppose that is a good rationale. They have a right to be cynical, however, about the things they see in the government of Canada today. They see the Sky Shops Affair, bribes being paid to Argentinian government officials, agents being paid off in numbered Swiss bank accounts, and black lists being kept. Is it any wonder that we have that cynicism? We cannot rationalize it by saying it is the Nixon era. It is the same in Canada; we are no whiter than they are. People are being very cynical. The government is bringing forward at this time a very cynical bill, C-22, which we have criticized in detail on various points, and rightly so. We have pointed out how the system creates a loophole.
The hon. member for Calgary North has suggested that what we need to improve the tax system are more advisers. The root of the problem is that we are really treating the symptom, not the disease itself. In other words, we are applying a band-aid to a severed artery. What we need are not guidance sessions, with all the expense and manpower waste that entails; we need a serious commitment to major tax reform.
On top of that, the government's bill is limiting the 10 per cent surtax on high income earners for the 1976 taxation year. Removal of this meagre surtax will mean a substantial saving for these high income earners in the 1977 taxation year. This kind of subservience to the wealthy in Canada becomes clear in Leonard Shifrin's article which appeared in the December 29, 1976, edition of the Citizen and which I would like to quote as it is very apropos of the bill:
First, the government ends the freeze it imposed last year on the cost of living index for family allowances. Since the allowance is taxable, families at different income levels get to keep different proportions of the increase. Thus a family of two earning $10,000 will retain $32 of it, while the same size family with a $50,000 income only retains $21. To compensate the $50,000 a year family for getting $11 less benefit from the allowance boost, the government is going to give an extra $593 by abolishing the 10 per cent surtax on incomes of more than $30,000. Increasing family allowances will cost the government $115 million. That's $165 million it will pay out, less than $50 million it will tax back. Cancelling the surtax will cost $135 million. And every penny of it will go to the two or three per cent of Canadians with incomes of $30,000 plus.
[The Acting Speaker (Mr. Ethier).]
The elimination of the surtax for the 1977 taxation year represents a major step back from the supposed attempt to force everyone to make equal sacrifices of some kind under the anti-inflation program. Was not everybody supposed to make a sacrifice according to his means? This has been honoured more in the breach than in the observance.


William Arnold Peters: It sure didn't last long.


John R. Rodriguez: No, it did not. We know those who are not making sacrifices and who will be laughing even more when the surtax is removed. As a matter of fact, they will be laughing all the way to the bank. These people are not Jerry Beaulieu who spent last year cold and wet working 60 hour weeks in a downtown Toronto car wash. Do you know what he earned, Mr. Speaker? He earned $8,268. It will not be Mrs. Shirley Barga who works long and hard hours in my constituency office making $7,920 a year. The persons who will be laughing all the way to the bank will be people like medical doctors, whose incomes have just increased from $45,700 to $49,000, and this in a period of so-called wage restraint.


Reginald Cyril Symes: There goes the $2,400 limit.


John R. Rodriguez: Yes, as I have said, there are loopholes all the way through the system.


An hon. Member:: Where do you get those figures?


John R. Rodriguez: I realize that these are very conservative figures; they come from the Anti-Inflation Board. And let us not forget that the incomes of professionals and executives are not being restrained at all, despite the platitudes of the government. Just for the record, I think we ought to look at incomes by profession. I have the figures for the average net income of professional practitioners by category. The net income of architects is given as $46,100, having been increased from $43,400, an increase of $2,700, or a percentage increase of 6.2 per cent. Right off the bat I would ask, what about the $2,400 limit that is supposed to be placed on all increases?
As for chiropractors their average salary went from $27,500 to $29,100, an increase of $1,600, or in percentage terms 5.8 per cent. Consultants: their salaries went from $16,700 to $17,800, an increase of $1,100, or a percentage change of 6.6 per cent. Dentists; their base income went from $34,100 to $40,800, an increase of $6,700, or 19.6 per cent. That is almost three times as much as the supposed limit under the anti-inflation guidelines. I doubt whether the excess was ever collected. Engineers: their salaries went from $38,200 to $45,900, an increase of $7,700 or 20.2 per cent. As for lawyers-


Stuart Malcolm Leggatt: Shhhhhh!


John R. Rodriguez: The hon. member for New Westminster (Mr. Leggatt) is shushing me.


Stuart Malcolm Leggatt: No, I am not.


John R. Rodriguez: Lawyers went from $34,900 to $40,000, an increase of $5,100, or 14.6 per cent. The salaries of optome-
February 7, 1977

trists went from $29,000 to $31,600, an increase of $2,600, or 9 per cent. Salaries of public accountants went from $38,500 to $42,700, an increase of $4,200 or 10.9 per cent. Veterinarians: their salaries went from $25,100 to $26,500, an increase of $1,400, or 5.6 per cent. Doctors' salaries went from $45,700 to $49,000, an increase of $3,300, or 7.2 per cent. The average increase, Mr. Speaker, was from a base of $35,700 to $40,600, an average change in dollars of $4,900, and the average percentage change is 13.7 per cent.
What kind of game is being played here, Mr. Speaker? Every time the government permits a tax change, it is imposing it upon Figures and facts of this kind. This can only serve to heighten the disparities within the system. It gives it a warp and makes it unfair and unjust for people at the bottom end of the income ladder.
When implementing these tax changes from whom is the government asking a sacrifice? Who is the government asking to make a contribution to the national good and the national welfare of our country? Is it going to be Mr. Beaulieu, who washes cars for $8,000 a year or is it going to be that lady in my riding office who earns $7,900 a year? Who will it be? Will it be Mr. Albert Thornborough, the president of Massey-Ferguson Limited, who made $353,662 last year? My, but there is some restraint there! Last week I wanted to know how one man can earn $353,662 a year. The sky's the limit, and all we ever do is open up the floodgates so that more taxes can be written off, taxes which should be paid to this country. Mr. Thornborough ought to be proud to live in Canada, and he ought to learn to pay his fair share of taxes, but when he has handmaidens sitting over there, and when his mouthpieces support him over on this side every time a tax change is proposed, the Albert Thornboroughs of this world-


Some hon. Members:: Order!


Mr. Harquail:: Mr. Speaker, I rise on a point of order. On second thought I wonder if we should not consider allowing the hon. member to go back to the Bible. I am also curious about the time limit of the hon. member. He started at 4.20 this afternoon. I am a bit curious as to how much longer we have to suffer through this.


The Acting Speaker (Mr. Ethier):: For the information of the hon. member, I think the hon. member for Nickel Belt (Mr. Rodriguez) is allowed to talk as long as he wishes. He is the first spokesman at third reading.


John R. Rodriguez: The hon. member for Restigouche (Mr. Harquail) ought to relax because I am getting to the Old Testament. I particularly like some quotations from Genesis, and tomorrow I am going to quote from the Old Testament because it is very relevant to the Income Tax Act. We know that Matthew, whose name was Levi, was a publican. He was a tax collector, and he put more taxes into his pocket than he did into the church collection. Does that sound familiar? By golly, Bill C-22-
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An hon. Member:: You are going to be struck by lightning if you keep that up.


John R. Rodriguez: -is highly reminiscent of what had to be done to those moneychangers and tax collectors. They had to be cleaned out. Fortunately, we have abandoned capital punishment, and we are on the way to abandoning corporal punishment, so we cannot whip them any more. However, that might be a good idea.


Ramon John Hnatyshyn: We haven't done away with corporal punishment.


John R. Rodriguez: I am always very happy when hon. members interject because, when they do that, and rise on points of order, I know that the points I am making are really getting under their skin. I can understand the hon. member for Restigouche coming to the rescue of Mr. Thornborough, coming from a riding like his which has unemployment of over 30 per cent. He would like to defend a person who earns $353,662. He should be ashamed of himself.


Maurice James Harquail: How much longer are you going to hold up the House?


William Arnold Peters: Who cares?


John R. Rodriguez: Who else is being asked to contribute? Will it be a chap by the name of Borje Salming, a Toronto Maple Leaf hockey player, who makes $250,000 a year? Will it be H. R. Fraser, the chairman of Hudson Bay Mining and Smelting, who makes $160,000 a year? Will it be CTV news anchorman Lloyd Robertson, who makes $100,000 a year? Will it be Eric Trigg, the executive vice-president of Alcan Aluminum Limited, who in 1974 received a salary of $147,438 and in 1975 received a salary of $162,178, an increase of 10 per cent?


Some hon. Members:: Oh, oh!


John R. Rodriguez: Oh, but they are squealing now. All their Tory friends are being named. Will it be John Armstrong, chairman of the board and president of Imperial Oil, who made $234,333 in 1975, $36,000 more than in 1974? Will it be Clifford Hatch, president of Hiram-Walker-Gooderham and Worts Limited, who earned a salary of $225,000 last year? Will it be A. E. Feldmeyer, president and managing director of Canadian Superior Limited, who received a salary of $311,400 last year?
Will it be John Devlin, chairman of the board of Carling-O'Keefe Limited, who received a salary of $164,829? Will it be Edgar M. Bronfman, chairman of the board of Seagram's Company, who made a salary of $300,000 last year? Will it be Sandy Holly, a jockey, who made $450,000 last year? He is a racehorse jockey, not a disc jockey. At one end of the spectrum we have these corporate wheels.
I would like to know the yardstick by which one man can earn $350,000 or $450,000 and take advantage of many loopholes besides. For these people it is like the gates of Jerusalem opening. There is a new Jerusalem for them. But

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what about the other end of the scale, where Mr. Beaulieu, working 60 hours a week in a cold, wet, damp and dank car wash, makes $8,600 a year? Surely if the government has its priorities right and if its head is screwed on properly, the verses I quoted, Matthew chapter 5, verses 1-16, have some relevance to the whole question of justice, meekness, and getting something back from the tax system.


Maurice James Harquail: When were you ever meek?


John R. Rodriguez: If hon. members want to make comments, they can speak when they get the floor, whenever that may be. I do not know when they will get the floor, but when they do, they can get up and make a speech. The wraps were put on the hon. member. He has to keep his mouth shut.
To add to this immense inequality, Bill C-22 does not contain a single clause which recognizes that the tax burden is being shifted from the corporate tax to personal income tax. From 1970 to 1975 the effective rate of corporate tax on profits went down from 29.6 per cent to 26.6 per cent, and did hon. members ever hear them squeal louder? And what do they want now? They want tax breaks. They are all wanting more concessions. Mining companies want more write-offs. They want more of everything. That is the kind of solution they seek. And here we have the government bringing in a bill which does nothing to deal with this inequitable situation.
We have shifted the corporate tax burden to the individual taxpayer and while doing so corporate profits have skyrocketed from $7.7 billion to $17.8 billion. Add to that the fact that the Anti-Inflation Board, which is controlling wages, allowed an unspecified number of corporations to exceed AIB guidelines by $70 million in the first six months of the program. Corporate taxes were cut this year by 1 per cent, as was the case last year, the year before, and the year before that.
There has been a corporate tax cut every year since 1972 so that today the corporate tax rate has been reduced to 46 per cent from 50 per cent in 1972. This, of course, is not the actual rate at which most corporations paid tax; that is a little closer to 27 per cent, Mr. Speaker. The other tax concessions made notorious by David Lewis in his 1972 election campaign are still being enjoyed by the same corporate welfare bums. In fact they have both hands in our pockets now. It is indeed unfortunate that the present government, aided and abetted by the Tory opposition, has conned, and I can use no other word-has conned the middle class of this country into believing that the economic woes of this nation are caused by a working class that is alternately greedy, grasping, lazy, dishonest and unconscientious. Mr. Speaker, that is the kind of thing it would want us to believe.
I often become cynical, and I have to admit this. I share the same cynicism that large numbers of Canadians have. 1 have to be ashamed of it. But do you know what makes me cynical, Mr. Speaker? My experience in Canada is short for I am not a native born Canadian-just a lowly little immigrant who went to teach school in the backwoods of Ontario. However, when I
[Mr Rodriguez.]
look at the tax system I cannot think of any group of people for whom taxes on part of their incomes are waived but members of parliament.


William Arnold Peters: Don't get nasty now.


John R. Rodriguez: This party has argued against that kind of elitist attitude. I have to call a spade a spade, Mr. Speaker. We have argued the principle that a buck is a buck is a buck and should be taxed. Members of parliament are now getting 10,600 bucks on which they pay no tax. Is it any wonder people in Canada are looking askance at members of parliament and becoming cynical, like me? What do they say to themselves? They ask how different we are from them. They have expenses too but cannot write them off. They have to pay taxes on everything they earn. This party has said there should not be an amount allowed as expenses; it should all be wages and be taxed.
I become even more cynical when it comes to making arrangements about what is going to come under the antiinflation controls. That was always dumped on the non-taxable part. That is what the cynicism is all about. Every member has to stand up before his constituents and be honest with them, but how can we say we approve and advocate a fair taxation system? I know it is open season on Liberals in this country today, but that is another story that I have to deal with tomorrow sometime.
People are cynical about governments today that pass that kind of tax law. How quickly we could move to taxfree moneys for members of parliament, and look how long it takes to get old age pensions indexed! The hon. member for Winnipeg North Centre (Mr. Knowles) stands up in this House constantly and makes the argument for veterans' widows and widows 60 years of age.
It really hurts, Mr. Speaker. That is why I quoted from Matthew because it is relevant to what we are doing in this House. We pray every day before we start question period, but what does it all mean? We are just like those publicans in the Old Testament and the New Testament: we collect taxes and put them in our own pockets but do not put enough in the church poor box. That is what it is all about.
I get these black moments, but I come out of them pretty quickly, Mr. Speaker. As I was saying before, if we were to look at the percentages of tax payable to this government by the individual and corporate sectors the figures would show that the burden of taxation has been shifting from the corporate sector on to the individual in spite of all the froofraro, and public relations, and free enterprise, and all that sort of thing.
I get cynical about other things that I notice as well. I have here something handed out by the Minister of Manpower and Immigration (Mr. Cullen) called the Advisory Committee Annual Report, 1976. It contains exactly four pages on the work of a corporation that spent $3Vt billion last year. I do not know how much this report costs. We cannot find money for people at the bottom end of the income scale but we can find money for four pages of nonsense supposedly reporting on a
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corporation that spent $31/2 billion. They should put their heads in a bag in shame.
Never let it be said that the Liberals are not concerned about redistributing wealth in this country. They are never at a loss, but always flim-flam and whitewash a situation, and come up with something that takes the heat off the particular problem of the moment. I know they are concerned with income redistribution and they have come up with a unique way of doing it. Never let it be said they lack creativity or panache. They thought and thought about it, and came up with a national lottery. Some men in Montreal had a highfalutin' idea about the Olympics and ran up a billion dollar debt, and here is the solution-a lottery.
It was touched on in an article written by Russell Mills, editor of the Ottawa Citizen, on February 5, entitled "Lottery's Sweet Temptation Merely a Tax on Stupidity". He writes:
We've got to stop these whining do-gooders before they take away our lotteries. Their campaign is heating up.
This week a Toronto psychiatrist said that the unrealistic expectation of winning could be dangerous psychologically and that the lotteries were creating a generation of gamblers in Canada. Others maintain that they undermine the work ethic.
And there have always been those who claim that lotteries are a tax on the poor because many tickets are bought by desperate people.
But lotteries aren't really a tax on the poor, they're a tax on stupidity. And although it is true that a large number of the stupid do find themselves at the bottom of the economic heap they're not at all in the higher social classes.
Lotteries are a very effective way of isolating the stupid since with the absurdly low chances of winning that they offer, no one with a brain larger than an acorn would even consider buying a lottery ticket.
With the present odds, on Loto Canada, for example, you would have to spend $100,000 a year on tickets for 36 years-a total of $3.6 million, not including interest on the money-before you would even have a 50-50 chance of winning a $1 million prize. Who but a twit would buy a ticket at those odds?
That's precisely why our present lotteries are hopelessly inadequate and should be expanded and promoted far more than they are today.
How else are we going to get the stupid to pay their fair share of running the country?
Look at what they are costing us. The stupid are the ones who smoke and drink too much, don't exercise, don't wear seat belts, smoke in bed and drink and drive and thus add enormous amounts to our health costs.
They are the ones who drop out of school and then can't find jobs, run off and leave families without support, go bankrupt, quit their jobs or get fired and then expect us to support them with unemployment insurance or welfare.
Because most of the stupid don't make much money, they don't pay much in taxes, not nearly enough to pay for the trouble they cause.
Outside of a major slash in government services, the only way we can hope to reduce the cost of stupidity is to harness it, with lotteries. Because there's one thing about the stupid-they love to throw away their money.
But government promotion of the lotteries has been shamefully inadequate.
The average Canadian only spends $40 a year on lottery tickets now compared to an average of $150 a person in Britain and more than $200 in Japan.
With a little clever promotion this spending could be increased 10 times or more.
The advertising should take dead aim on the stupid and seek them out wherever they may be.
There should be lottery advertising included with all welfare and unemployment insurance cheques.
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And no more of this namby-pamby 'lifestyle' advertising that the do-gooders are so upset about, let's use straight guilt and hit the thick right where it hurts.
How about this for the insert with welfare cheques:
Are you feeling bad because your family eats macaroni seven days a week? When did they last have steak ? Do the other children laugh at the holes in their clothes? Give them a shot at a better life. Buy a Loto Canada ticket today!
Or how about this inserted with UIC cheques:
So you've lost your job. Do you realize that the unemployment rate is over seven per cent today and shows no signs of going down? You may never work again. Winning the lottery may be the only way out. You'd better buy a ticket!
Try guilt appeal.
All beer parlours and cheap bars should be saturated with guilt advertising and all waiters and bartenders paid commissions to push tickets on drunks.
Feeling guilty because you're drinking up the paycheque again? Taking food out of the kiddies' mouths? Give them a chance. Buy a lottery ticket along with the next round!
Hard-hitting lottery promotions should also be placed at other haunts of the dumb; on all cigarette machines, on bottles of Canadian sherry, at professional hockey games and horse-racing tracks and in all CB radio shops.
The ultimate aim should be to make enough profit from these tickets to pay for all government services. Then taxes could be reduced to zero and those of us too bright to chase the illusion of instant wealth could pursue our pleasures unimpeded by the burden of taxation.
It's all a matter of promotion. And for an advertising industry that can sell platform shoes, genital deodorants and electric shoebrushes, it should be a snap.
Lotteries apparently are the panacea for all our ills. We now have the Olympic lottery, the Ontario lottery, Loto Canada and the Quebec lottery. Lotteries, clearly, are the new wave.
We said, when we debated national lotteries in this country, that if part of the money derived from the national lottery were to be used for important programs like amateur sport and for health building programs, those activities ought to be supported under a budgetary provision and paid for with taxes collected from all Canadians working and earning a buck. That is the principle we have advocated consistently. We say a buck is a buck and should be taxed when it is earned. That principle this government has shied away from, for it wants to help its friends in the board rooms of Bay Street, Toronto, and St. Catharines Street in Montreal. 1 could even touch on who gets the distributorships for lotteries, but that is another subject with which I will not deal tonight. I can deal with it on Friday, when I return to this question. It seems to me that is a horse of a different colour.
I have talked about loopholes created in our tax laws. Lotteries are to be the substitute for a fair taxation system. While the government taxes the poor through lotteries, it subsidizes the rich with loopholes and reductions in tax. I have already talked about this, but it cannot be emphasized too much. If I am open to the charge that I repeat myself, I cannot help it.
Let us look at the question of interest earned in Canada. It is true that anyone earning interest income from investments can deduct the first $1,000 of such income before computing taxable income. But who uses that system? Who benefits? Each of the three million Canadians earning incomes of between $4,000 and $8,000 saved, on average, $35 from this provision. Yet each of the 225,000 people in the $25,000 to $50,000 category managed to save, on average, $216 in taxes, for a total of $49 million of unneeded tax breaks. That was the

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extent of the tax break to higher income brackets. They saved $49 million. There were 13 times more people in lower tax brackets, but their total tax saved was only twice that saved by people in the higher tax bracket. Yes, their total tax saving was only twice as large as that of the group at the top. In other words, this provision is heavily weighted in favour of the top brackets, precisely because they have disposable income to invest.
The point is that, for the $550 million total cost of the tax program to the treasury, the government could have increased family allowances by over 25 per cent, doubled the annual increase in the old age pension, or offered a substantial tax credit to those at the bottom of the income scale. But the Liberals did not want to do it that way. Instead they decided to distribute their largesse at the top.
Let us consider another tax gimmick. Our whole tax system is strewn with gimmickry. I said before that it is full of loopholes. I suppose the government can get away with it because lower income people are not able to comprehend the fine print in the income tax system. The gimmick to which I am referring is known as the Registered Home Ownership Plan, better known as RHOP. It was supposed to help moderate income people afford a house. It was supposed to help young people to save toward the purchase of a home. And how many people have used the program? Of those earning between $5,000 and $6,000 only one in 95 has used it. That is, just over 1 per cent of those people managed to sock away money under this program in 1974. They just did not have money to put away. But at the other end of the income scale, and I am speaking of people in the over $50,000 bracket most of whom own their own homes already and are thus ineligible, over 6 per cent took advantage of this gimmick. That is the crux of the point we are trying to make about this bill.
In effect, here was a program which, on the surface, was designed to help people to save for a house. That was commendable. Then the authorities said that if you already own your own home you can transfer ownership to your spouse's name. Then you can start collecting under the program and be eligible for the benefits and write-offs under the tax system. It is not fair. I just pointed out that six times as many people in the $50,000 and over bracket were able to take advantage of the benefits in 1974. If the minister and the government think that this is an effective means of helping the low income earners afford homes, they are just whistling Dixie. They are not telling it like it is.
Again with regard to this gimmick, the benefits are highly weighted in favour of top income earners. Let us not forget the spousal Registered Home Ownership Savings Plan. A home is registered in the name of one spouse or the other. One of them can put away $1,000 of non-taxable income for a future investment in furniture or another home. This was commented on by Marcel Belanger whom I quoted earlier in my speech this evening. He is quoted in the November 22, 1975, edition of the Financial Post.


Sinclair McKnight Stevens: That's old.


John R. Rodriguez: It may be old, but the same loophole is there. The government is talking about a fair taxation system. The reason I quoted from Matthew is because we are talking about justice and fair play. The hon. member for Simcoe North (Mr. Stevens) has the gall to say that is a fair tax proposal. The Bay Street barons may think so, but not those in northern Ontario whom I and other members of this House represent.
What Marcel Belanger said about the Registered Home Ownership Savings Plan is still applicable today. He said, and I quote:
Let's take the case of the Registered Home Ownership Plan. It was designed to help young couples save in order to eventually buy a house; it has degenerated into a loophole where spouses mutually transfer their property, should circumstances so require, to take advantage of the deduction.
There is a strange morality about that!


An hon. Member:: Immorality.


John R. Rodriguez: It is not doing anything illegal, merely taking advantage of a loophole which has been permitted by the government. If the tax on the $1,000 is not paid because of a spousal transfer, the rest of the population must pick up the deficit. That is not fair by any stretch of the imagination, even using Liberal or Conservative logic. There is not a member in this House, even those who make their remarks from behind the curtains, who is prepared to argue that is a fair proposal. That is why we are dead set against this bill and have argued against this particular clause.
There are other juicy loopholes in this bill. Let us not think that they are only limited to the federal income tax structure.
The province of Ontario came out with a $1,500 house grant. Who was the first in line applying for a grant on a $108,000 home in Carp? It was the Conservative member for High Park-Humber Valley (Mr. Jelinek). He received a $1,500 house grant on a $108,000 house. Surely that is not the purpose of the Ontario scheme. As a matter of fact, the Ontario minister responsible for this program, Arthur Meen, said that he is prepared to write off all those who rip off the system. If someone were to take the unemployment insurance fund to the cleaners, they would not write that off. They would hound him to the ground. However, here we have a well-to-do Tory member of parliament receiving a grant on a $108,000 home. This well-heeled minister without portfolio in the shadow cabinet is taking money right out of the hands of the poor people of Ontario. It is for this reason I quoted Matthew 5: 1-16 which talks about justice and fair play. Hon. members should spend more time reading and contemplating that.
We then come to half taxation on capital gains. The story is the same. When capital gains were brought in, we heard a great squealing. Even though it was only to be on 50 per cent of the gain, the Tories were squealing and squirming. They said it would take away all incentive. In fact the only policy that party has enunciated is that they would return to the 100 per cent tax free on capital gains.

February 7, 1977


Sinclair McKnight Stevens: Mr. Speaker, I rise on a point of order. I wonder if the hon. member would permit a question.


The Acting Speaker (Mr. Ethier):: Will the hon. member for Nickel Belt (Mr. Rodriguez) accept a question?


John R. Rodriguez: Yes, Mr. Speaker, when 1 am finished my address to the House I will certainly permit a question. However, I cannot say when that will be. I have a lot of material and many ideas to present. It looks now as though I will take until Friday. Possibly some time between 4.30 and 5 o'clock on Friday I will permit a question, no later because 1 have a flight to catch. However, at this point I would like to continue because I have some very precise comments. They might interest the hon. member. In fact they may lead to some more questions.


Sinclair McKnight Stevens: Mr. Speaker, I rise on a further point of order.
I believe the hon. member misunderstood me. I believe he would Find my question most helpful if he would give me an opportunity to put it. Perhaps he could give an answer that would be of great interest to the members of this House.


The Acting Speaker (Mr. Ethier):: Again, the Chair must seek permission from the hon. member for Nickel Belt. Will the hon. member accept a question?


John R. Rodriguez: Since the hon. member puts it that way, and as I am not a hard person to get along with, 1 do not mind him asking a question at this time. I have thought about it and the hon. member can ask his question.


Sinclair McKnight Stevens: After listening to the hon. member for two hours and 20 minutes I wish to ask him out of curiosity whether he can tell us of any country in the world that has a tax system which he feels is ideal? If so, will he mention the name of that country so we can perhaps take a look at it?


John R. Rodriguez: Mr. Speaker, in answer to the question, that has always been the approach of Tory governments in the past. They look outside the borders of Canada for models which do not necessarily Fit Canadian needs. Our party has come up with a taxation system that is fair and just. It follows the recommendations of the Carter Commission report. I do not know whether the hon. member was in the Chamber an hour and 20 minutes ago when I dealt with the Carter Commission report. Surely the hon. member cannot argue with the premise that a buck is a buck is a buck and it should be taxed when it is earned.
The next point in our program concerns tax credits. By using tax credits we could move toward what we have always called the GAI program.


An hon. Member:: The Gay program?


John R. Rodriguez: The guaranteed annual income program. We are not looking for a Shangri La outside Canada. We have the resources and the ability to enable us to build a tax system
Income Tax Act
which meets our needs. In the United States today they are looking for ways to revise the tax system-


Sinclair McKnight Stevens: Tell us about what they are doing in Russia.


John R. Rodriguez: The hon. member for York-Simcoe is holding up the example of the Russian model. That is a very conservative model. That is state capitalism. He would be good as a commissioner on financial matters in the central committee. And do you know something, Mr. Speaker? He would not look out of place in that line-up. Get him a uniform, get him a cap, get him the order of Lenin-the hon. member for Water-loo-Cambridge (Mr. Saltsman) brought several of those back-and he could take his place on the reviewing stand. He would Fit in. But we who believe in democracy and freedom of choice could never accept such a system.


Sinclair McKnight Stevens: What about the U.K., then?


John R. Rodriguez: As to the United Kingdom, I would point out again to the hon. member that we must use Canadian talent, Canadian resources to build a tax system of a kind which meets our needs. And we who support the New Democratic Party would not come up with these fly-by-night programs such as the Registered Home Ownership Savings Plan. We would outline a housing policy based on housing as a social need, which is more than the official opposition and their new leader have been able to do; he has been going around the country talking about the Conservatives as an alternative government, but they do not have an alternative policy, so how could they form an alternative government?
The story is the same when it comes to the capital gains tax, even though the rate is 50 per cent. The Tories rushed to oppose it. One would think it threatened to take away all the wealth from those they favour. We have found out since that those with income of $20,000 or more made an average of $1,056 in capital gains in 1974, half of which was untaxed, for a total cost to the treasury of $148 million.
At the other end of the scale, the 4.3 million people getting between $4,000 and $10,000 registered an average capital gain of $14 for a total of $13 million. This is what we have been criticizing. We have been saying that our tax system, our model, would not contain loopholes. We have shown conclusively that no less than $6 billion was lost because of these loopholes. Somebody has to pick up that amount. Just imagine what would happen if all of us took advantage of the loopholes. Who would be carrying the tax burden? Somebody has to pay.


An hon. Member:: The workers.


John R. Rodriguez: Every time I think about work I am reminded of the industrial freedom songs I learnt when I was in school. We had them put in a little red book long before we ever heard of Chairman Mao's little red book. One, in particular, is appropriate. Since the hon. member for York-Simcoe is interested in the Soviet model, I think he will be interested in this song. It goes:
Why don't you work like other men do?
How in Hell can I work when there's no work to do?

February 7, 1977
Adjournment Debate
Hallelujah, I'm a bum . ..
Why don't you save all the money you earn?


The Acting Speaker (Mr. Ethier):: Order. We have sung a song in the House, but is was for a certain occasion. I do not believe this refers to the bill and I must ask the hon. member to relate his observations thereto.


John R. Rodriguez: With all deference to the Chair, I was not singing. I was quoting the words of the working class people as they tried to bring out their feelings about the situation when they are unemployed and seek an opportunity of keeping their families going with some dignity.
Even education costs are going up, and we hear that only the children of the rich will be able to go to universities. I wanted to put those words on record because I think they are apropos when we are dealing with the question of who makes money in this country and who gets to keep it. It is certainly not the fellow singing that little rhyme.
We were talking about tax loopholes. I want to turn, now, to consider the loopholes which exist in the tax legislation as they relate especially to corporations, multi-national corporations.
May I call it ten o'clock?


Some hon. Members:: Hear, hear!



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. J. Robert Howie (York-Sunbury):: Mr. Speaker, on January 25 I raised again with the Minister of Energy, Mines and Resources (Mr. Gillespie) a theme I voiced in a speech in this House on May 4, 1976, that of a maritime energy pool to make development of electric and transmitting facilities a priority and achieve maximum economies of scale with resultant benefit to all maritime users of electric energy.
I feel strongly that this is the course to follow and that the minister should give leadership in this direction. Dramatic increases in the cost of electric power in areas of Atlantic Canada have placed the region at a competitive disadvantage in the expansion of its industrial and manufacturing sectors, and inflicted a great measure of hardship on large segments of the population. We live with the fact that Atlantic Canada will continue to import over 100 million barrels of oil per year to sustain its energy systems. A carefully planned pool of generation and distribution systems would achieve vastly improved economies of scale. Strong interconnection with adjacent areas of Canada and the U.S.A. would optimize power pool benefits.
[Mr. Rodriguez.)
These proposals are not new. Speaking in this House in May of last year I put forward similar suggestions. However, the government has done little about the situation, and now I find myself, once again, asking that something be done.
The challenge of meeting future energy requirements at a reasonable cost is one which cannot and should not be met by the Atlantic provinces individually. Co-ordination and co-operation are imperative if this goal is to be achieved. The provinces are interested. The federal government should provide the enlightened leadership and the imagination necessary for the implementation of such inter-governmental schemes. Until Ottawa can come up with a plan, long overdue, to assist in the setting up of a maritime power pool, the people of Atlantic Canada will suffer through bleak and expensive winters.
The government cannot abrogate its responsibility any longer. It is not enough to express interest and polite approval. The scheme deserves an investment which can pay great dividends: active leadership and a commitment of financial support.


Mr. Maurice Dupras (Parliamentary Secretary to Minister of Energy, Mines and Resources):: Mr. Speaker, I find it refreshing to hear the distinguished member for York-Sunbury (Mr. Howie) make his representations on behalf of his constituents after listening to the previous speaker who, in my opinion, has wasted the time of the House for the last two hours.
I can tell the hon. gentleman that the minister has exercised great leadership in this situation. I am sure the hon. member will be delighted to know that a decision will be announced probably tomorrow or the day after.


ENERGY-GOVERNMENT MEASURES TO INCREASE EXPLORATION IN FRONTIER AREAS
A. Daniel McKenzie: Mr. Speaker, in view of alarming reports in regard to the possibility of an energy shortage which would seriously affect all Canadians, I should like to register my concern over the government's lack of a clear energy policy. The recent report of the Organization for Economic Co-operation and Development has called for new government policies for conservation and energy development to head off shortages, but I wonder whether the government of Canada has taken heed. The government of Canada has a moral obligation to answer the question: how are we going to meet our energy needs, and to what extent?
For the record, Mr. Speaker, the OECD has urged its members, Canada included, to develop additional energy supplies by implementing such policies as providing incentives for improvements in oil recovery and support programs. Measures to increase production should be aimed at improving the climate for investment. That certainly is not the case at present in Canada. In many respects the government is hindering development through excessive regulations. The reaction of the government to energy problems has been to regulate. Virtually every aspect of the Canadian petroleum industry is

now tightly regulated. Canadians should really be concerned that one of our major industries is subject to regulations that are often unstable, unclear, and unco-ordinated to the point where the industry's performance is impaired.
The government must take a great deal of the blame for Canada's energy problems. Rather than assisting the oil industry by working in a spirit of co-operation on a problem that is vital to our nation, this government has put obstacles in the way of developing a positive energy policy.
The question of energy policy in the present and the future is among the most important issues facing Canada at this time. To most Canadians, energy policy is wrapped up in pricing- what we pay for home heating, electricity, of at the gasoline puihps. The government cannot hide from the fact that there is an energy shortage, and Canadians want to know what it intends to do about it. In 1974, Canada ceased being a net crude oil exporter. In 1975, Canada imported an average of 115 million barrels of crude oil per day. While Canada still exports 39 per cent of its natural gas production, this is expected to decline in the mid-1980's and create a serious balance of payments problem. Even by 1980 Canada is forecast to spend over $3 billion yearly for imported oil. Forecasts show the situation becoming progressively worse in the 1980's.
In addition to hindering the energy problem through excessive regulations, the government has also taken a large portion of revenue from the oil industry which could well be used in expanding the oil industry to meet rising energy demands. It must be pointed out that by far the greatest bulk of price increases in oil of late have resulted from increased government taxes. For instance, fully 60 per cent of the cost of a gallon of gas at the pump is federal, provincial of municipal tax. Only 38 per cent of the cost covers the oil itself, its refining, marketing, the dealer's wage, etc. Profit is approximately 2 per cent of the price. I for one reject the idea that the oil industry is enjoying excessive profits. The oil industry today is in worse position than it was prior to the fall of 1973. when the wellhead price of a barrel of crude oil was $3.
Taxes and royalties now consume, for example, about $6 of the $9.75 for a barrel of Alberta crude oil. After taxes, Mr. Speaker, the oil companies have little left for oil exploration and development. What can be said with certainty is that oil exploration costs are skyrocketing, not just because of inflation but because today drilling is at expensive sites since cheaper sites have already been explored. Returns from money invested in oil exploration are quite low compared to other investment opportunities. This too has discouraged investment in exploration. On top of all of that oil company profits are quite variable due to the uncertain nature of production.
While the energy problem continues to become serious, many Canadians are wondering what the government intends to do. Should we satisfy our energy needs from our own resources to the full extent possible at costs that offer Canada an economic advantage? I think most Canadians would answer yes, and yet the government is showing no leadership in developing such a policy. I would guarantee that our energy
Adjournment Debate
needs are met and mitigate the risks associated with massive oil imports.
As we all know, oil is a non-renewable resource. Canada's energy priorities should include an effort to minimize our use of energy. Producing our own energy resources where the costs are right may offer tremendous economic savings and benefits, but wringing out the waste in our use of energy offers even greater economic savings and benefits. Simply stated, our energy conservation objective should be the use of the minimum amount of energy required to meet our social and economic needs and aspirations. Conservation, however, cannot answer all of our energy needs.
In terms of the many challenges which today confront Canada, energy is only one challenge, but it will have inevitable effects on all the others. While there are no easy nor instant solutions to our energy challenge, that is not an excuse for the government to ignore the problem and drift along hoping the problem will solve itself.
As I stated earlier, the government has a moral obligation to answer the question of how we are going to meet our energy needs. If it does have a long range contingency plan, then it should be made public. Canadians will not tolerate secrecy on such a vital matter. I rather suspect, however, that it is not a case of secrecy but rather of no policy. I would urge the government to develop a clear policy for energy before it is too late.


Maurice Dupras: Mr. Speaker, in answer to the often raised questions from my distinguished colleague, the hon. member for Winnipeg South Centre (Mr. McKenzie), I should say, on top of what the minister and I have already said with regard to many of these interesting questions that, as regards the special revenues from oil and gas production that the federal government is collecting from the motor gasoline exise tax and from the oil export tax, these funds are specifically designated to maintain the oil import compensation fund to equalize gasoline prices across Canada and are not part of general revenues. As regards the prevailing financial environment, the hon. member should be aware of the incentive nature of the government's federal corporate tax system as related to the mineral resources industries.
Furthermore, as has been pointed out in the House before, it is the government's intention to monitor both the volume of cash flows accruing to the petroleum industry and the level of expenditures made by the industry in the search for new energy supplies. This monitoring will be conducted by the Department of Energy, Mines and Resources and will provide the government with the information it needs to ensure that industry is using its increased revenues to respond to the country's need for new oil and gas resources.
In the statement of policy on a proposed petroleum and natural gas act and new Canada oil and gas land regulations tabled in the House on May 19, 1976, by the Minister of Energy, Mines and Resources (Mr. Gillespie), he stated that the principles embodied in the legislation governing frontier

February 7, 1977
Adjournment Debate
exploration are designed to encourage exploration through ensuring a stable investment climate, allowing developers to hold their entire productive area, and imposing of equitable royalties. There are, however, at the present time significantly greater factors influencing the level of oil and gas activity on Canada's frontier regions than just the terms and conditions of the existing and proposed new oil and gas land regulations. One of the most significant overriding factors governing the frontier exploration in the territories is the uncertainty pertaining to the timing of a gas pipeline.
Comparing the federal government's terms and conditions with those of Alberta is not really appropriate.


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


Maurice Dupras: Mr. Speaker, this is unfortunate. Perhaps I could be allowed to inform the hon. member that recently, to further the national objective of increased exploration in Canada's frontier regions-


The Acting Speaker (Mr. Ethier):: Order, please. I regret to interrupt the parliamentary secretary, but the time allotted to him has expired.


Ramon John Hnatyshyn: Put it in a memo.


The Acting Speaker (Mr. Ethier):: Order, please. A motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 2 p.m.
Motion agreed to and the House adjourned at 10.12 p.m.

Tuesday, February 8, 1977