1977-11-07

ROUTINE PROCEEDINGS


Mr. J. P. Nowlan (Annapolis Valley):: Mr. Speaker, under the provisions of Standing Order 43 I rise on a matter of urgent and pressing necessity. In view of the cabinet decision last Thursday which fundamentally affects the future of telecommunications in this country, and in view of the arrogant, arbitrary and regressive decision of the cabinet on Thursday last rejecting the decision of the CRTC of August 24 opposing the merger of Telesat with TCTS on the basis it was against the public interest, 1 move, seconded by the hon. member for Vegreville (Mr. Mazankowski):
That, since the Minister of Communications has become an advocate for monopolies and has failed to discharge her duty to defend and uphold the independence and integrity of the CRTC, she tender her resignation forthwith.


Mr. Speaker:: Order, please, the presentation of any such motion under the provisions of Standing Order 43 requires the unanimous consent of the House. Is there unanimous consent ?


Some hon. Members:: Yea.


Some hon. Members:: Nay.


TRANSPORT
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I rise too under the provisions of Standing Order 43.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Mr. Speaker, I should like to thank members of the Convervative party. Obviously, their convention was a rousing success and I note that their generosity has spilt over to this part of the House.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Mr. Speaker, in view of the fact that the railways have announced cutbacks affecting some 6,000 jobs in the recent past or in the early future, 1 move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House instructs the government to commit itself to a full implementation of the Hall Royal Commission report as one means of ensuring that more needed railway-related jobs will take place in the prairies, Quebec and Atlantic Canada.


Mr. Speaker:: This motion can only be presented under the provisions of Standing Order 43 with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Nay.


Some hon. Members:: Agreed.


REQUEST FOR STATEMENT ON NEW MARKETING STRATEGIES- MOTION UNDER S.O. 43
Mr. Don Mazankowski (Vegreville):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity.
Having regard to recent predictions advanced by the Economic Council of Canada of a gloomy future for prairie grain farmers because of rising costs, depressed prices and a poor export potential, and given the fact that senior marketing analysts have predicted that Canada's future grain exports will fall by more than 20 per cent by the mid-1980s, and further given the fact that outstanding farm debt has doubled in the last six years from $4.3 to $8.5 billion, I move, seconded by the hon. member for Elgin (Mr. Wise):
That the Minister of Agriculture and the Minister in charge of the Canadian Wheat Board make a statement on motions at the earliest possible date outlining to the farmers and the people of Canada what new initiatives and marketing strategies are being proposed by the Canadian Wheat Board and the government of Canada to improve our export position, and further indicate what export targets and income prospects may be attainable into the 1980s in order that the producers may plan their futures in a more orderly manner.


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


Some hon. Members:: Yea.


Some hon. Members:: Nay.

November 7, 1977
Energy


ROYAL CANADIAN MOUNTED POLICE
Mr. James Gillies (Don Valley):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity.
My motion relates to the revelation by the Prime Minister that it is not the responsibility of the cabinet or even of individual ministers to ensure that the security apparatus of the state obeys the law. In light of the fact that under the parliamentary system of government it has traditionally been common practice for ministers to accept responsibility for ensuring that officials and other servants of the Crown do uphold the law, I move, seconded by the hon. member for York-Simcoe (Mr. Stevens):
That this House condemns the former solicitor general, now the Minister for Consumer and Corporate Affairs, for his failure to exercise ministerial responsibility in the upholding of the law and demand that the minister resign.


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


Some hon. Members:: Yea.


Some hon. Members:: Nay.

[ Translation]


SUGGESTED REDUCTION OF TAX ON OIL PRODUCTS-MOTION UNDER S.O. 43
Mr. Eudore Allard (Rimouski):: Mr. Speaker, pursuant to Standing Order 43, I seek the unanimous consent of the House to move a motion on a matter of urgent and pressing necessity.
In view of the fact that the special 10 cent excise tax on a gallon of gas which the federal government imposed on June 24, 1975 is unevenly applied; that this tax is unfair and discriminatory because it applies to only one class of gas users; that the reimbursement system is complex, and that research has indicated that the price of gas exerts only minimal influence on consumption; I move, seconded by the hon. member for Villeneuve (Mr. Caouette):
That the House call upon the federal government to give immediate effect to the Canadian Automobile Association's recommendation to reconsider its policy by reducing the amount of this tax by 3 cents a gallon, and by taxing all oil product users, which would yield the same $600 million in annual revenues and eliminate in the process a cumbersome reimbursement system which entails nearly $3 million in annual expenditures.


Mr. Speaker:: Order, please. This motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: No.
[Mr. Speaker.)


ROYAL CANADIAN MOUNTED POLICE
Mr. Otto Jelinek (High Park-Humber Valley):: Thank you, Mr. Speaker. I have a motion under Standing Order 43 which I believe should receive special attention at this time by both sides of the House due to the important and pressing necessity of the matter.
In view of the revelations made during the last week or so, and notwithstanding the events which have led the government to look into allegations of improper and, at times, unlawful acts by some members of our national security forces; because of this, along with such recent irresponsible statements as the one made by Premier Rene Levesque whereby he referred to all members of the RCMP force as "jerks", I move, seconded by the hon. member for Selkirk (Mr. Whiteway):
That this House formally endorse and ratify to the people of Canada our over-all support and confidence in the rank and file members of the Royal Canadian Mounted Police who continue to exemplify the legend and tradition of national pride which has made them famous and respected throughout the world.
I place emphasis on my reference to the "rank and file" members.


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


Some hon. Members:: Yea.


Some hon. Members:: Nay.


VETERANS AFFAIRS
Mr. Jack Marshall (Humber-St. George's-St. Barbe):: Mr. speaker, I wish to move a motion under Standing Order 43 on a matter of urgent and pressing necessity. An editorial in the official publication "The Fragment" by the War Amputations of Canada entitled "Time to take the gloves off' expresses the wide concern of veterans' organizations across the country over the reluctance of the government to bring up to par the basic rate of disability pension for veterans, in line with the established formula to equate those pensions with the average salary of the five lowest categories in the public service. I therefore move, seconded by the hon. member for Norfolk-Haldimand (Mr. Knowles):
That, as he requested in his motion of November I, it is incumbent on the government to refer the matter to the Standing Committee on Veterans Affairs, and that the National Council of Veterans Organizations be called as witnesses to present the case on behalf of the veterans of Canada.
November 7, 1977


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


COMMUNICATIONS
Mr. Cyril Symes (Sault Ste. Marie):: Mr. Speaker, I rise to move a motion under the provisions of Standing Order 43. In view of the fact that the CRTC, the regulatory agency for telecommunications undertakings, has concluded that Telesat Canada's membership in the Trans-Canada telephone system would substantially prejudice the rate regulation process, and that the Liberal cabinet has overturned this CRTC decision thereby lessening public scrutiny and control over this important sector of the economy, I move, seconded by the hon. member for Cape Breton-East Richmond (Mr. Hogan):
That this House reaffirm CRTC decision 77-10 thereby nullifying the cabinet decision allowing Telesat Canada to join the Trans-Canada Telephone system and reaffirm the principle that this motion is in keeping with legislative principles adopted by the parliament of Canada in the Telesat Canada Act, the Broadcast Act and the Railway Act.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CRIMINAL CODE
Mr. Dean Whiteway (Selkirk):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In light of the promise of the Minister of Justice (Mr. Basford) to investigate the May 9 advertisement in the Ottawa Journal advertising legal abortions on demand, and in view of the fact that these abortions take place in Montreal at a cost of $250 on a same day, no questions asked basis, and are in obvious and direct violation of the Criminal Code, I move, seconded by the hon. member for Winnipeg South Centre (Mr. McKenzie):
That this House directs the Minister of Justice to make a statement on motions today outlining what actions have been taken in conjunction with the Ontario and Quebec ministers of justice and clearly indicate what charges have been laid.
Oral Questions


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, my question is to the Acting Solicitor General whom I presume to be the Minister of Consumer and Corporate Affairs. As we all know, the Prime Minister has consistently refused to appear before parliamentary committees. In that light, 1 would like to ask the Acting Solicitor General if it is the decision of the government of Canada that the McDonald Royal Commission shall have power to subpoena the Prime Minister and any present or former Solicitor General.


Hon. Ron Basford (Minister of Justice):: Mr. Speaker, it is clear from the terms of reference of the McDonald Royal Commission which were tabled in the House in June that those terms of reference are sufficiently wide, as has been stated many times by the Solicitor General, for that inquiry to determine the facts in this whole matter.


POSSIBLE LIMITATION ON DISCLOSURE IF MINISTERS SUBPOENAED BY MCDONALD COMMISSION
Charles Joseph Clark: I am surprised that the government is determined to keep the former minister so far from the Department of the Solicitor General. I rather wish it had been someone other than the acting minister who gave that reply, because then we might have got an answer.
My question now concerns a matter of policy-has the government decided whether the acting minister would answer a subpoena from the McDonald Royal Commission, and, if he did appear, whether there would be any limit placed on full disclosure of the role of the Prime Minister or any of his ministers on matters which are before the inquiry? I should like the Acting Prime Minister to tell the House of Commons whether any limits are to be placed on full disclosure by the Prime Minister or any of the ministers, and, if so, what those limits would be.


Hon. Jean Chretien (Acting Prime Minister):: First, Mr. Speaker, I should like to congratulate the Leader of the

November 7, 1977
Oral Questions
Opposition on the vote he received over the weekend. We all agree he has a great future as Leader of the Opposition.


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: I think the first thing he should know as leader of his party is that we do not answer hypothetical questions.


Charles Joseph Clark: One of the things we know as members of the Elouse of Commons is that ministers do not answer policy questions.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: 1 am interested in a question of policy based on the expectation that the government, knowing that the chairman of the Royal Commission has indicated that he is considering issuing a subpoena to the Prime Minister, will have established a policy on this question-any government which looks ahead would have done so. I want to know what is the policy of the government of Canada with regard to the response to a subpoena to the Prime Minister and whether any limit would be placed upon the Prime Minister or his colleagues with regard to disclosure relative to matters which are now before the McDonald Royal Commission.


Joseph Jacques Jean Chrétien: Mr. Speaker, the Minister of Justice said earlier that the terms of reference of the McDonald inquiry commission give them all the necessary powers to discover all the facts which are relevant to the inquiry.


Charles Joseph Clark: I have a supplementary. The essential question is whether the government of Canada is prepared to see the Prime Minister accept this subpoena by the McDonald inquiry commission, and if such a decision is made by the government, whether evidence by the Prime Minister or other ministers will be restricted.


Joseph Jacques Jean Chrétien: Mr. Speaker, I have nothing to add to what I said earlier. The Leader of the Opposition asked me a hypothetical question. We do not know whether it will be necessary to serve subpoenas. All the facts pertaining to the record will be available to the chairman and the commissioners, and 1 think they will really be in a position to make a quite useful report in the best interest of all Canadians.


ALLEGED ILLEGAL ACTIVITIES-SUGGESTION FORMER SOLICITOR GENERAL BE ALLOWED TO ANSWER QUESTIONS
Mr. Bill Jarvis (Perth-Wilmot):: A supplementary to the Acting Prime Minister. Given that the government will now allow the former solicitor general, the Minister of Consumer and Corporate Affairs, to testify before the McDonald Royal Commission, will the Acting Prime Minister, as a matter of policy, accept in a positive way a motion which would permit that minister to answer questions about government security services in this House of Commons?


Joseph Jacques Jean Chrétien: Mr. Speaker, I feel that I answered that very same question a while ago.


Mr. Speaker:: It seems to me there is a vast difference between the question asked by the hon. member and the question just asked by the Leader of the Opposition. I did not interfere during the earlier question because, although certain of its aspects were hypothetical, it seemed to me the hon. gentleman was inquiring as to present policy and whether the government was in a position to disclose any policy. But the hon. member for Perth-Wilmot is talking about a motion which has no existence at the moment and about circumstances which are purely hypothetical.


ALLEGED ILLEGAL ACTIVITIES-REASON FORMER SOLICITOR GENERAL HAD NO BRIEFINGS BY FORCE
William Herbert Jarvis: I would not have expected to get an answer anyway, Mr. Speaker. Let me put another question to the Acting Prime Minister in the absence of the Solicitor General. Given that the present Solicitor General apparently now has weekly briefings from security service officers, thereby at least acknowledging some degree of responsibility at the ministerial level for the activities of government security agencies, would the Acting Prime Minister tell this House why the present Solicitor General's predecessor apparently had no such briefings? In other words, the previous Solicitor General knew nothing about anything: the question is why?


Joseph Jacques Jean Chrétien: Mr. Speaker,
I do not think that the statement of the hon. member is based on the facts. All Solicitors General have received regular briefings from the RCMP on matters of security.


MANPOWER
John Edward Broadbent: Mr. Speaker, I have a question for the Minister of Employment and immigration. As the minister knows, the most recent government figures indicate that some 70,000 lay-offs are taking place each month in Canada, an alarming and worsening situation which affects almost every sector of our economy. I should like to ask the minister, with reference to a particular sector, namely the railways, what his department is now doing given the decision that has recently been made affecting the lay-offs of some 6,000 Canadians in that particular sector.


Hon. Bud Cullen (Minister of Employment and Immigration):: Mr. Speaker, without getting into specifics, I think the hon. member, of all people, should know the many splendid
November 7, 1977

services that are available from this particular department to cope with a lay-off situation.


John Edward Broadbent: That is why I asked the question.


Jack Sydney George (Bud) Cullen: The hon. member chooses to ignore the many excellent things which are being done in that field. In addition to that, we have regular discussions. We have an inter-departmental committee which meets on these specific problems. This is not something which has just come to light in recent statistics. This is something which we indicated would happen as early as October, 1976, when we were able to provide $358 million and later $458 million through Treasury Board to take care of this problem, which as 1 say we recognized some time ago and not as the result of a recent headline.


FINANCE
John Edward Broadbent: A supplementary question, Mr. Speaker, and maybe the Minister of Finance will answer the question. I asked what the government was doing specifically with regard to the 6,000 railway workers who are affected. I did not ask for one of the minister's old speeches. I now ask the Minister of Finance this question. Considering that the Hall royal commission recommendations, if they were implemented, would affect in a very positive way job creation and bring benefits to the prairies, Quebec and Atlantic Canada, and in particular provide jobs for up to 4,000 people in Pictou county and Cape Breton, Nova Scotia, where they manufacture railway cars and track, would the Minister of Finance now commit the government to implementing the central recommendations made by the Hall royal commission over the next two years?


Hon. Jean Chr6tien (Minister of Finance):: Mr. Speaker, the people involved are meeting with my colleague the Minister of Labour later this afternoon to discuss this problem. So far as the Hall report is concerned, we have received the report and we think it is an excellent one. We shall be looking at all policy aspects of the report, and as soon as policy is developed the House will be informed of its progress.


John Edward Broadbent: A final supplementary question, Mr. Speaker. The minister should know that the Minister of Transport has committed the government to spending only about one-fifth of what is required. He has committed the government to only $100 million over the next two years which will provide minimal upgrading. This is why I ask the Minister of Finance whether he would undertake on behalf of the government a reconsideration of this commitment and provide the needed $500 million on the ground that this would provide additional jobs, jobs that are important in three different areas of Canada. In addition, there is the important fact that it makes a lot more sense to provide people with jobs than with handouts.
Oral Questions


Joseph Jacques Jean Chrétien: Mr. Speaker, first I would like to say to the Leader of the New Democratic Party that $100 million is quite a lot of money, and of course we are looking at other alternatives, but I am not in a position to give more to the House at this moment.


PRIME MINISTER'S REFERENCE TO FINDING OF ELECTRONIC DEVICE IN OFFICE OF MEMBER FOR CENTRAL NOVA
Mr. Erik Nielsen (Yukon):: Mr. Speaker, before putting my question I would be remiss if I did not place on the record of this House a welcome to Your Honour upon your return from a recent visit to the Yukon where you performed a very pleasant and historic function in the presentation of a table to the Yukon Legislative Assembly. That was a ceremony I could not attend because of other pressing matters here in this part of the country.


Some hon. Members:: Hear, hear!


Erik Nielsen: I get it whether I am here or there.
The Prime Minister was quoted outside this House as saying that the device found in the office of the hon. member for Central Nova could be purchased in a five and ten cent store. May I ask the Minister of Justice, in connection with that remark and also the remark of the Prime Minister that it was amateurish in the manner of its installation, to advise the Prime Minister that the device found in the office of the hon. member for Central Nova cannot be purchased in Canada? Would he also advise the Prime Minister that it is an offence to have in one's possession the device found in the office of the hon. member?


Stanley Ronald Basford: Mr. Speaker, I made it clear in the House last Thursday that under the Criminal Code it is a serious offence to have in one's possession, unless authorized, any device for electronic surveillance of private communications. With regard to the specific question and that specific device I am unable to reply to the hon. member's question because as the hon. member may know, my officers or officers of the RCMP have not been allowed to investigate that particular matter because the investigation of the matter is quite properly under the jurisdiction of Mr. Speaker and his officers.


Erik Nielsen: The Prime Minister also suggested to the media that the hon. member for Central Nova advanced the notion that official authorities were responsible for placing this device in his office. Indeed, I think he put it in stronger terms. Would the minister undertake to inform the Prime Minister that at no time has such a statement been attributed to the hon. member for Central Nova. What he said was that-

November 7, 1977
Oral Questions


Mr. Speaker:: Order, please. I let the hon. member for Yukon get away with one statement by way of a question. I do not think I can let him get away with two.


COMMUNICATIONS
John Patrick (Pat) Nowlan: Mr. Speaker, my question is directed to the Minister of Communications, and it refers to the cabinet decision of Thursday rejecting the CRTC decision of August 24 which was against the merger of TCTS and Telesat because the CRTC felt it was against the public interest. Since the minister herself on November 23, 1976 in a letter to the President of Telesat said that the CRTC had jurisdiction irf this matter and since the CRTC found against a merger on broad issues of public interest as reported in its decision, 1 would like to ask the minister, in view of the decision of the cabinet, if she is prepared to tell the House that the cabinet, behind closed doors, is in a better position to define public interest than the independent regulatory authority created by parliament to do just that in an open public forum?


Hon. Jeanne Sauve (Minister of Communications):: Mr. Speaker, the reason for varying the decision of the CRTC was that the government had to refer to broader concerns of the government, that is, to ensure that Canadians would get the services which can be provided by this new technology in the north as in the south and at as reasonable a cost as possible. The prerogative of the CRTC remains, and it is in no way superseded by the agreement which will come to pass between Telesat and TCTS. If the hon. member would read the order in council precisely, he would note that it serves notice to both parties of the environment within which this agreement can occur, and that is to ensure and to say emphatically that in no way are the powers of the CRTC with regard to its responsibility to decide on the rate of return or the conditions under which someone can have access to the system to be superseded by anything that is in that agreement, just as my own powers under the Radio Act to look into matters such as ownership of earth stations are not superseded.


EFFECT OF MERGER OF TELESAT ON PUBLIC PARTICIPATION IN OPERATION
John Patrick (Pat) Nowlan: Mr. Speaker, I should like to direct my next question to that part of the minister's answer on public policy, as distinct from public interest. We will not get into a debate on how public interest is served. A public policy for Canada's participation in telecommunications was defined in the white paper on communications filed by one of the former ministers in this House in March 1968, which was the basis for the Telesat legislation. As set out in Hansard in 1969 that debate and policy dictated that the Canadian

government was to have an independent regulatory authority in telecommunications with public participation and not a minority of telephone companies. Since that was rejected, can the minister tell the House what factors have changed to allow now, in effect, a de facto telephone company monopoly of telecommunications, an effective amendment of Telesat and an elimination or a reduction of any hope of public participation in the Telesat operation?


Jeanne Sauvé: Mr. Speaker, the hon. member confuses too many things. CRTC is still existing and has to assume certain responsibilities under the law, which I have just reaffirmed and which were reaffirmed in the order in council amending the CRTC's decision. The general interest of the government was to preserve the right of Canadians to an effective telecommunication system which will become entirely effective the day when the land and spatial systems are fully integrated. It is not a matter of monopoly, Mr. Speaker. Telesat has never been designed to compete with the telecommunication industries; on the contrary, it is a complement to those industries. The agreement concluded between those two parties precisely confirms that such an integration will now be possible. As for the more general government policies involved in that agreement, it is my duty to preserve them. Hon. members have been referring since last week to ministerial responsibility. Such responsibility has been exercised in the case of the agreement between Telesat and the TCTS. The prerogatives of the CRTC and the general policies of the government have been maintained under the order in council.

[ English]


ENVIRONMENTAL AFFAIRS
Mr. John A. Fraser (Vancouver South):: Mr. Speaker, my question is for the Minister of State (Environment). Can the hon. minister tell this House whether the government is going to extend the time necessary to allow the Thompson inquiry into tanker superports on the west coast to hear all of the evidence of all the intervenors, keeping in mind that under the present terms of reference the hearings were to have been completed by the end of December and clearly they cannot be under the present schedule?


Hon. Len Marchand (Minister of State (Environment)):: Mr. Speaker, I and the other ministers involved in this particular inquiry will be meeting with Mr. Thompson tomorrow night, and this particular matter will be discussed then.


John Allen Fraser: Mr. Speaker, in view of the fact that the president and other members of the fishermen's union are here in Ottawa seeking an audience with the members of the cabinet on this particular matter, can we have the assurance of the hon. Minister that every effort will be made to give an
November 7, 1977

audience in the next day or so to members of the fishermen's union representing fishermen on the west coast of British Columbia?


Len Marchand: Mr. Speaker, I will take that under consideration. Of course, we members from British Columbia are always very much concerned with the views of the fishermen on the west coast.


INTERNATIONAL LABOUR ORGANIZATION
Mr. Claude-Andre Lachance (Lafontaine-Rosemont):: Mr. Speaker, I have a question for the Minister of Labour. Given President Carter's recent decision to get the United States of America out of the International Labour Organization and to cease contributing to its financing, could the minister tell the House whether the Canadian government intends to help the 1LO bridge the financial gap left by the U.S. withdrawal by increasing its usual contribution, and this in order to allow the organization to carry on its activities, if possible, at the same level as before; at the same time this would allow us to reassert Canadian support for the ILO?


Hon. John C. Munro (Minister of Labour):: Mr. Speaker, yes, we are concerned about the United States withdrawal from the ILO. There are many meetings going on right now in Geneva with respect to the restructuring of the ILO to make up for the deficiencies which will result from the United States withdrawal in terms of funding. Canada is very much a part of that. We will adopt as constructive an attitude as possible in an attempt to enable this organization to carry on the job it is trying to do in terms of upgrading the standards of workers.


AIRPORTS
Mr. Heath Macquarrie (Hillsborough):: Mr. Speaker, my question is for the Acting Minister of Transport. In light of the current and disturbing reports that the construction of an adequate airport in Charlottetown is now being further delayed for "economic reasons", will the minister advise or ascertain if such a decision, which inter alia will contribute to unemployment in Prince Edward Island, has in fact been taken?


Joseph Jacques Jean Chrétien: Mr. Speaker, that matter is now under study with the Department of
Oral Questions
Transport, and as soon as there is an announcement to make, the Minister of Transport will make it in the House. I believe there could be one during the next few weeks.


FINANCE
Reginald Cyril Symes: Mr. Speaker, my question is for the Minister of Finance. In view of the minister's announcement that his government would continue the $1.2 billion tax concessions for large corporations announced last March as a means to stimulate expansion and job creation; and in view of the fact that these concessions are worth $11 million to Alcan, which has announced lay-offs of 400 workers in Newfoundland, that Northern Telecom will gain $3 million and will be laying off over 1,000 workers, and that INCO will gain $10 million and is laying off nearly 4,000 workers, will the minister, in light of the failure of this policy in job creation, now cancel these tax concessions to corporations and direct them, instead, to ordinary Canadians to stimulate demand and hence job creation?


Joseph Jacques Jean Chrétien: Mr. Speaker, as 1 said earlier, we cannot apply a selective tax policy for one corporation and a different one for another.


John Edward Broadbent: That was not the question.


Joseph Jacques Jean Chrétien: Anyway, we will have a chance to deal with those things because we will be dealing with second reading of this bill later today.


Reginald Cyril Symes: Mr. Speaker, the minister has not answered my broad question on the relative merits of that tax policy. I should like to ask why he believes businesses will use these tax concessions to expand and create jobs when already industry is only operating at about 80 per cent capacity due to reduced demand? Surely, the fact that we have had over 34,000 lay-offs in manufacturing alone during the past eight months indicates-


Mr. Speaker:: Order, please.


ROYAL CANADIAN MOUNTED POLICE
Mr. G. W. Baldwin (Peace River):: Mr. Speaker, my question is directed to the Acting Solicitor General. I wonder if the hon. Minister can advise me if the cache of dynamite referred to by the Solicitor General as being stolen is the same dynamite which was the subject of a very impassioned discussion by the then minister of transport some years ago, and which the

November 7, 1977
Oral Questions
government obviously knew about, and which was the subject of questioning on this side of the House. At that time the Prime Minister and other members of the government indicated that it was one of the reasons for the apprehended insurrection. Is that the same dynamite which the government apparently has just rediscovered now?


Stanley Ronald Basford: Mr. Speaker, I would want to review the earlier debate to which the hon. member is referring, but I do not believe that is the case.


REQUEST FOR REPORT ON ALLEGED INFILTRATION OF PARTI
[Stage Direction]
qu£b£cois
Gerald William Baldwin: When the hon. minister is doing that, would he also look up the question of what happened to the request from the opposition benches as to the alleged infiltration of the Parti Quebecois by law enforcement agencies and intelligence units of the RCMP some years ago? What happened to the request from this side of the House for that type of investigation? Did that stay on the file? Is the government still aware of that particular request?


Stanley Ronald Basford: Mr. Speaker, I believe that was dealt with by the Prime Minister last week.


SOCIAL SECURITY
Eudore Allard: Mr. Speaker, I should like to put a question to the President of the Treasury Board. Can he enlarge on the statement he made in September 1977 to the effect that he was going to decrease family allowances in order to finance the public debt?


Hon. Robert K. Andras (President of the Treasury Board):: I made no such statement, Mr. Speaker, so I really cannot answer the hon. gentleman's question.


Eudore Allard: In September, the minister is reported as having said that he was going to decrease family allowances in order to finance the public debt. That is quite clear. It seems to me the minister could add a few details in that regard.


Robert Knight Andras: I am sorry, I did not make such a statement.


An hon. Member:: You are sorry?


EXTERNAL AFFAIRS
Mr. Gaston Isabelle (Hull):: Mr. Speaker, I should like to put a question to the Acting Prime Minister. In the light of the most recent developments concerning France and a part of Canada, can the minister tell the House whether economic relations between France and all of Canada will be improved?


Joseph Jacques Jean Chrétien: Mr. Speaker, relations between Canada and France are excellent, particularly in the field of economics. We know France has made considerable investments in Canada. 1 refer here to the Miche-lin company in Nova Scotia, uranium in Saskatchewan and oil in Alberta.


COMBINES
Mr. James A. McGrath (St. John's East):: Mr. Speaker, my question is for the Minister of Consumer and Corporate Affairs and it has to do with the unprecedented decision of the cabinet to overrule the CRTC decision on Telesat Canada. My question is based on a submission by counsel acting on behalf of the director of Combines Investigation when he appeared before CRTC and said:
... the Agreement in its proposed form is clearly anti-competitive, and .. . this anti-competitive nature renders the Agreement contrary to the public interest...
Since the minister and his colleagues are not above the law certainly in this case, I would like to ask him whether in fact the director of the Combines Investigation Branch has approved the decision of the government in overruling CRTC with respect to Telesat Canada.


Hon. Warren Allmand (Minister of Consumer and Corporate Affairs):: We have not had an opportunity yet to have a reaction from the Director of Investigation under the Combines Act but we did make the representations of the director well known to the cabinet during the discussions.


James Aloysius McGrath: Is it the position of the minister then that they would make a decision of this nature, unprecedented in its scope, overruling CRTC which had extensive hearings on this subject, without first consulting the law officers of the Crown? Surely one of the principal law officers of the Crown in this case would be the director of the Combines Investigation Branch. I ask the minister now if it is the position of the government that their decision to overrule CRTC is consistent with the decision taken by the director of the Combines Investigation Branch before CRTC?


William Warren Allmand: Mr. Speaker, as was pointed out earlier, the cabinet had the right to overrule the CRTC decision in law
November 7, 1977

and during the discussions on that subject the representations of the director of the Combines Investigation Branch were made well known to the cabinet.


FISHERIES
Mr. Lloyd R. Crouse (South Shore):: Mr. Speaker, I wish to direct my question to the Minister of Fisheries and the Environment. In view of the fact that the U.S. Department of Commerce news report B-127 of Tuesday, October 25, 1977 lists as imports fresh swordfish from Canada on the vessels Carlo Joyce on September 30, 1977 and the Sea Gull on October 5, 1977 at Boston, Massachusetts, a species that the minister has been telling us for years could not be landed in the United States, I would ask him whether there have been any recent developments in the fishery of which Canadian fishermen generally are unaware and, if not, would the minister enlighten the House as to why such a listing should occur in this U.S. publication?


Hon. Romeo LeBlanc (Minister of Fisheries and the Environment):: Mr. Speaker, I have not seen the publication in question. The hon. member knows very well, and I said it in the House, that it is the import regulation of the national government, that is the government whose seat of power is in Washington, which is causing difficulty through the Food and Drug Administration. There is nothing to stop individual states-in this case, if I understand the hon. member's statement, it was in Boston, therefore Massachusetts-from importing within their own landing ports fish from Canada. If the U.S. import regulations under the national government's regulations were lifted, we would certainly authorize the landing of swordfish.


Lloyd Roseville Crouse: For the minister's information, because obviously he is not informed of this matter, the publication to which I referred is U.S. Department of Commerce National Oceanic and Atmospheric Administration-


Mr. Speaker:: Order, please. Would the hon. member put his question.


Lloyd Roseville Crouse: Yes, Mr. Speaker. The publication to which I referred indicates that fresh swordfish were landed by Canadian registered vessels in Boston, Massachusetts, not by U.S. ships as the minister infers, and I gave him the names of the ships. I would ask the minister if he will check into this and ascertain under what regulations these landings were permitted and also when we can anticipate-in view of the fact that fish are being landed and that fishery represents a $5 million to $6 million industry to Atlantic Canada where there is massive unemployment at present-a statement from him regarding the possibility of reopening the swordfishery to all Atlantic Canada?
Oral Questions


Roméo LeBlanc: At the risk of being repetitious I must again tell the hon. member that there is nothing in the United States regulations, so far as we know, to stop fish from being landed in the port of a state. It is interstate trade which is not allowed by the Food and Drug Administration and also clearance by customs and excise-I do not know what the equivalent in the United States is- which is not given because of the regulations of the Food and Drug Administration. We are working through our Department of National Health and Welfare in trying to make the case that the regulations applying to swordfish, which is not eaten frequently, poses no threat to health. At the moment the health authorities in both countries have not come around to our point of view, but I am hoping they may do so eventually.


FINANCE
Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, my question is for the Minister of Finance. In his October 20 statement the minister offered a forecast of the level of inflation next year and of real growth in this country but he avoided very carefully any estimate as to what the level of unemployment might be, although he did acknowledge the current 8.3 per cent unemployment level. Would the minister now inform the House what he anticipates the level of unemployment to be next year in Canada?


Joseph Jacques Jean Chrétien: Mr. Speaker, I did not specify a figure in my speech, but I hope that with a growth rate of 5 per cent the unemployment rate in Canada will decline.


Sinclair McKnight Stevens: Again my question is for the Minister of Finance. As OECD has asked that all member countries belonging to that organization set targets, including targets for unemployment, would the minister indicate whether he is willing to accept the suggestion of establishing an unemployment target and, if so, what is the unemployment target level that he is heading for next year?


Joseph Jacques Jean Chrétien: It is a very complex issue because when the former minister of finance, the hon. member for Rosedale, introduced his last budget he made the prediction that 250,000 jobs would be created this year in Canada. In fact, we have achieved that level, but the increase in the participation rate of the labour force in Canada has been so large that, despite the fact we have created the 250,000 more jobs, unfortunately the level of unemployment has increased.


Sinclair McKnight Stevens: My question is directed again to the Minister of Finance. Accepting the fact that the question is complicated, may I point out that the minister has indicated that we are heading for a $9.2 billion deficit in the current fiscal year.

Oral Questions
Would the minister indicate, in estimating that deficit, what were the unemployment levels he anticipated?


Joseph Jacques Jean Chrétien: Mr. Speaker, we have used the figures that we have until the end of the year. I said at that time that the level of unemployment is too high. It is 8.3 per cent. This is giving us a basis to estimate the level of the cash requirement or the budgetary deficit at the end of the year.


EXTERNAL AFFAIRS
Mr. Maurice A. Dionne (Northumberland-Miramichi):: Mr. Speaker, my question to the Acting Prime Minister is supplementary to the question asked by the hon. member for Hull. The unwarranted and provocative interference by the government of France in Canadian affairs continues. Will the Canadian government give consideration to inviting to Ottawa the leaders of the separatist parties in Corsica and Brittany to encourage them to destroy the integral sovereignty of France?


Joseph Jacques Jean Chrétien: I have no answer, Mr. Speaker.


An hon. Member:: I should hope not.


SOCIAL SECURITY
Mr. Paul Yewchuk (Athabasca):: Mr. Speaker, my question is for the Minister of National Health and Welfare. A few days ago the minister told the House that it is her hope and her aspiration to bring in the guaranteed annual income for Canadians and that indeed she hopes to place legislation to that effect before the House soon. Can the minister tell the House whether she can estimate the cost of such a program on an annual basis and secondly, in view of the deficit the government faces and in view of its espoused policy of restraint, can she state where the funds for such a program would come from?


Hon. Monique Begin (Minister of National Health and Welfare):: Mr. Speaker, a few weeks ago when I assured the house of my interest and commitment to the progressive implementation of a guaranteed annual income program for Canadians, I intended doing it within the national budget and without any tax increase. I am pleased the hon. member asked me this question because it enables me to say precisely that I intend to develop this program for the benefit of the most needy groups. I am thinking, in particular, about three groups,

November 7, 1977
and not about the whole of Canada. Of course, any improvement in federal government social security programs means tax rearrangements of some kind.
[ English ]


Paul Yewchuk: 
POSSIBLE STUDY ON EFFECT OF GUARANTEED ANNUAL INCOME ON MOTIVATION TO WORK
Paul Yewchuk: Mr. Speaker, I am sure if the minister reviews the question she will find that she has not answered, so 1 would like to ask another. Has the minister conducted any study to determine what effect a guaranteed annual income might have on the motivation to work? If she has done such a study, can she report the results and if she has not, has she at least consulted her colleague, the Minister of Industry, Trade and Commerce to determine what his position on that subject would be?


Monique Bégin: Mr. Speaker, I will try to use my best English to answer in order that my colleague can try to understand me. I repeat, I am aiming at target groups, namely, three groups in Canada right now. My officials are working on these programs. 1 will just sum up my previous remarks by saying that I intend to do it within the present federal budget which means that I do not intend to ask for or recommend raising taxes. I intend to recommend instead a rearrangement of the existing tax structure and spending in my department.
This being said, the hon. member, who I believe is my official critic on the other side, should know that we are studying and have published reports on exactly his second question which, by the way, was not at all the same as the first one. There are three or four reports at least, including a profile of the low wage earner in Canada, which are available to the public. I will have great pleasure sending another set of these reports to the hon. member.


OIL-SUGGESTED SHORTAGE BY MID-1980'S-REQUEST FOR INCREASED COAL PRODUCTION IN NOVA SCOTIA
Mr. Andy Hogan (Cape Breton-East Richmond):: Mr. Speaker, my question is addressed to the Minister of Energy, Mines and Resources. The minister said recently in Paris and before that in Toronto, that by the middle 1980's or shortly thereafter Canada will have to import more and more oil, that the situation is like the tip of an iceberg in relation to the Titanic. Does the minister still feel that way in view of the recent findings and the talk there is about conventional oil being found in Alberta and other parts of Canada, as well as other parts of the world?
November 7, 1977


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources):: Yes Mr. Speaker, I believe the western world is facing a very serious energy crunch. Most experts forecast that it will occur some time in the mid-1980's, at which time oil will not be available in the quantities the western nations have built their economies upon.


Andrew Hogan: A supplementary question, Mr. Speaker. In view of that statement will the minister get together with the President of the Treasury Board and the Minister of Regional Economic Expansion and increase coal production in Cape Breton by opening new coal mines because we in Nova Scotia pay more for imported oil than any other province?


UNEMPLOYMENT INSURANCE
Mr. Howard Johnston (Okanagan-Kootenay):: Mr. Speaker,
I should like to put a question to the Minister of Employment and Immigration. Since the October 1 decision by the British Columbia Department of Human Resources to deny welfare benefits to those entitled to unemployment insurance benefits, what steps has the minister taken to streamline the processing of UIC claims in order to prevent the lengthy delays that prompted the decision of the B.C. government?


Jack Sydney George (Bud) Cullen: Mr. Speaker, some time ago we took action to see that the provinces, and particularly departments of welfare, would have an opportunity to make these advances and make some arrangement with the commission in order that cheques could be paid and they would be reimbursed so that there would not be a double payment of UI and welfare. 1 hope the British Columbia government will take advantage of that specific move.


Howard Earl Johnston: A supplementary question, Mr. Speaker. Can we assume that all existing manpower offices will shortly be able to handle UIC claims?


Jack Sydney George (Bud) Cullen: Mr. Speaker, that is going to be one of the strengths of the integration of manpower in UI offices so that we can have a one-step and a one-stop service and individuals, we hope, will find the administration even better than it is now.


PUBLIC SERVICE
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, my question is addressed to the President of the Treasury Board. In light of the statement attributed to him last Septem-
Oral Questions
ber to the effect that in his view the indexing formula may have to be changed so that increases in the public service pension will trail slightly behind the consumer price index and the statement attributed to the Prime Minister in a letter to one of the public service unions endorsing the principle of full indexation, was the minister expressing a view of the government at that time, is he floating a balloon or is something causing him or the Prime Minister to change the policy of the government in this respect and if so, what?


Robert Knight Andras: Mr. Speaker, there is no difference of opinion between the Prime Minister and myself on this matter. We respect the principle of protecting the purchasing power of retirement incomes. We are obviously awaiting the report of the independent actuarial consultants as to the efficacy and future projection of the financing of the Public Service pension plan, including indexation. We will make our decisions when we receive that report. In the interests of public servants enjoying pensions now and in the future, we want to ensure that the plan is properly financed. Based on that report we will have to address ourselves to the amount of indexation that is financially possible.


Donald W. Munro: A supplementary question, Mr. Speaker. In other words, the minister is saying the views he expressed in late September were not based on the report, suggesting that the report is not yet in his hands. I wonder whether he can tell the House when he expects that report and whether it will be made public immediately upon receipt in his office.


Robert Knight Andras: The report is not yet available. I expect it shortly, but I cannot give the hon. member a precise date. Of course, I have made a commitment in this House that it will be made public when we receive it.


UNEMPLOYMENT INSURANCE
Mr. Bill Clarke (Vancouver Quadra):: Mr. Speaker, my question is for the Minister of Employment and Immigration. It concerns the apparent flood of advertisements appearing in newspapers and magazines extolling the virtues of the unemployment insurance system. I want to ask the minister about the statement in the advertisements that unemployment insurance is not another kind of welfare but it is like any other kind of insurance. I want to know how that can be when we are told that the deficit is $1.7 billion for the current fiscal year, which will be borne by all taxpayers whether they are entitled to benefits or not.


Jack Sydney George (Bud) Cullen: Mr. Speaker, once again the hon. member is playing fast

November 7, 1977
Business of the House
and loose with figures. In point of fact, we have indicated that the premium rate will not be increased this year. It will remain at $1.50 per hundred. It is the figure we discussed with both labour and management. We indicated to them the actuarial soundness of the program. To spread this kind of malicious, imprecise information does a good program a disservice.


Some hon. Members:: Oh, oh!


William Hillary (Bill) Clarke: Mr. Speaker, the minister is ignoring the fact that there is a $1.7 billion deficit. He ignored my question, and I would like him to try to answer this one. This cost of $1.7 billion will be borne not by employers and not by employees who pay into the fund and are entitled to benefits, which we acknowledge, but by taxpayers who are not entitled to benefits. How can that be justified?


Jack Sydney George (Bud) Cullen: Mr. Speaker, if the hon. member would take the time to read the legislation, he would see how the system is set up, and I say he is being imprecise. He is using the word "deficit" when he knows it is a government commitment to pay a certain amount after the floating average figure has been established.


BUSINESS OF THE HOUSE
Mr. Cafik:: Mr. Speaker, 1 rise on a point of order resulting from a number of discussions which have taken place among opposition House leaders and myself respecting the disposition of Bill C-5. I would like to indicate to the House that the lack of a certain provision in the bill before the House, which may allow anonymous contributions under the Canada Elections Act in excess of $100, in the view of the government is not desirable.


Some hon. Members:: Hear, hear!


Norman Augustine Cafik: I am prepared to make a commitment to the House at this time that the government will be prepared to allow an amendment at the committee stage to eliminate the present anomaly.


Some hon. Members:: Hear, hear!


Norman Augustine Cafik: Secondly, there has been some concern expressed by members of parliament in relation to the escalation provisions of the bill. I would like to indicate that the government is going to adopt a flexible attitude toward this question and take into account the deliberations of the committee and the various positions brought before the committee with respect to this aspect of the bill. On the basis of those two commitments, 1 think there would be unanimous agreement to the following House order. I move:
That not later than 5.00 p.m. this day, Mr. Speaker shall put all questions necessary for the disposal of the second reading stage of Bill C-5, an act to amend the Canada Elections Act.

While I am on my feet, I should also indicate that it is the intention of the government, in the event that Bill C-5 is concluded prior to five o'clock-which is our hope-to call Bill C-3, the Air Canada bill, which is at the third reading stage. It is my understanding that there may be only one speaker on that bill, and hopefully we will dispose of it by five o'clock as well. Following that, we would move at eight o'clock this evening to tax measures.


Mr. Baker (Grenville-Carleton):: Mr. Speaker, I am delighted that the government has decided to accept the view which was first advanced by the Leader of the Opposition-


Some hon. Members:: Hear, hear!


Walter David Baker: -with respect to the iniquitous brown-bagging provisions allowing anonymous contributions under the bill referred to. Quite frankly, we welcome that. In view of the representation made today with respect to that situation, and the flexible and open attitude the government has displayed-it is marvellous what the cool weather brings on in this city-with respect to the principle of indexation and how it might apply, I am prepared to say that Her Majesty's Loyal Opposition is prepared to agree to the order put forward.
However, I want to make it clear, because my hon. friend has been very forthcoming, that we reserve completely our rights with respect to what our position might be after we have gone through the committee hearings to which this bill will be subjected, because we regard the election expenses legislation as a benchmark in electoral law and the principles of that bill ought not to be idly tinkered with by anyone.


Mr. Knowles (Winnipeg North Centre):: Mr. Speaker, we, too, are grateful that the government has seen the sense of the strong representations which were made on this matter by the hon. member for Sault Ste. Marie.


Stanley Howard Knowles: Since this seems to be a day for getting commercials in, I thought 1 might get one in as well. Given the commitments the minister has made this afternoon, we are prepared to let second reading be given fairly soon, and on that basis we are prepared to agree to the House order regarding the ending of this debate. Frankly, we doubt if it will take until five o'clock, but if the government would like to have the order to be sure, we do not mind agreeing to it.
However, we wish also to reserve our position with respect to the bill at later stages, depending on what is actually done when the bill is dealt with in the standing committee.


Eudore Allard: Mr. Speaker, I am somewhat reluctant to give my consent on behalf of the Social Credit Party of Canada because my colleagues are not here and I think that we have far more important pieces of legislation before us now including the one to amend the Canada Elections Act.


Some hon. Members:: Oh, oh!

November 7, 1977


Mr. Speaker:: The motion can be put at this time by the minister only with the consent of the House. Does the House give its consent?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.


[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Yvon Pinard (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, questions Nos. 49 and 61 will be answered today and 1 ask that the other questions be allowed to stand.


Mr. Speaker:: Does the House agree?


Some hon. Members:: Agreed.


Mr. Cossitt: 1.	Since April 20, 1968, how many accounts owing to CNR owned Chateau Laurier Hotel by Mr. Vic Chapman have been uncollected, written off, charged to business promotion by the Hotel or which have been unpaid?
2.	What was the total amount paid or unpaid to the Chateau Laurier since April 20, 1968 by or on behalf of Mr. Chapman?
3.	Is this Mr. Chapman the same Mr. Victor Chapman who has been employed by the Prime Minister?
4.	Were any attempts made by the Chateau Laurier to collect the accounts owing and (a) if so, what are all the details (b) if not, for what reason?


Hon. Otto E. Lang (Minister of Transport):: It is not
company policy to disclose details of its hotel guest lists or transactions between its hotels and guests.


Mr. Orlikow: 1.	Has the government ratified the OAS Convention on Nature Protection and Wildlife Preservation in the Western Hemisphere and, if not, is consideration being given to ratifying the Convention?
2.	On what date can action be expected on this matter?


Mr. Mike Landers (Parliamentary Secretary to Minister of State (Environment)):: 1. No; matter being considered.
2. Convention is being reviewed by the Canadian Wildlife Service, Parks Canada, Department of External Affairs and the provincial governments to determine if it is to Canada's advantage to sign.
Canada Elections Act


Mr. Paproski:: Mr. Speaker, I rise on a point of order. It has to do with the anticipated disposition of questions on the order paper and the form which Your Honour, the whips, the Clerk Assistant, the Journals office and the press gallery receive as soon as we are assembled in this chamber. The production of this form has been delayed half an hour. 1 would like to know why, because as the whip on this side I need this information to make sure that there are no points of order to be raised after the question period. I can anticipate points of order if I am given notice of the numbers of the questions which are going to be answered. There seems to be a delay, now, of half an hour, and this causes some difficulty on this side of the House.


Yvon Pinard: Mr. Speaker, the Standing Orders provide that we answer questions on the order paper at three o'clock in the afternoon or after the oral question period. It is only mere courtesy on our part to distribute in advance to hon. members the list of questions which will be answered. Last week the hon. member rightfully complained that he did not receive in advance the list of questions to be answered. He pointed out at that time that he would like to receive it half an hour in advance. Therefore I saw to it today that it be done and he did receive it at 2:30 p.m.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Monday, October 31, consideration of the motion of Mr. Cafik (for Mr. MacEachen) that Bill C-5, to amend the Canada Elections Act, be read the second time and referred to the Standing Committee on Privileges and Elections.
Mr. Harvie Andre (Calgary Centre):: Mr. Speaker, I say, through you, to the deputy House leader that I will not be long in my remarks. 1 understand I will be the last speaker for this party. In making this contribution to the second reading debate on Bill C-5, 1 offer congratulations to the Chief Electoral Officer, Mr. Hamel, and the all-party committee which worked so diligently for many months on the contents of Bill C-5, amendments to the Canada Elections Act passed by this parliament in 1974.
1 had the pleasure of participating in the committee. It spent many months going over the amendments to the Canada Elections Act. It produced two very important changes to our electoral procedure: first, contributions to election campaigns will now be declared publicly-the accusation can no longer be made about devious methods being used to finance political
638

November 7, 1977
Canada Elections Act
parties-and, second, there will be a limit on the amount of money spent on election campaigns.
My leader pointed out, in starting the second reading debate, that the amendments contained in Bill C-5 unfortunately seriously affected these two very important considerations. The deputy House leader of the government indicated today, certainly with regard to anonymous donations, that the government is prepared to entertain a motion. We offer our congratulations and thanks to the Minister of State (Small Business) (Mr. Abbott) who, through his contribution to the second reading debate, had a great deal to do with the government's change of attitude in this regard.
On the question of indexing, the whole manner in which the limits to election campaign spending were arrived at in the terms of the original bill at least contained a strong arbitrary component. Before we automatically attach spending limits to the consumer price index and index these limits automatically, there should be a much more careful examination than has previously been the case.
The third point I wish to make is with regard to the question of all-party co-operation. I had the pleasure of attending several meetings of the ad hoc, all-party committee which met with the Chief Electoral Officer. 1 know of the co-operation which existed among the members of the committee. It was something of a change from the type of attitude that sometimes exists in this House. It was, therefore, most distressing to find, when Bill C-5 was produced, that some of the recommendations agreed to by the all-party committee had been arbitrarily changed by cabinet. Every member of the House of Commons should promote opportunities for co-operation among all parties, for the common good of not only this institution but the country. It was disturbing to witness the type of action that was earlier intended.
The reaction of the government, in indicating it will reconsider these two provisions as a result of having heard the speech of the Leader of the Opposition (Mr. Clark), is a welcome step in the right direction. I can state, on behalf of members of my party who participated in the committee proceedings, that we intend to co-operate fully, as we have to this point. This bill can receive expeditious treatment in committee, be returned to this House and passed at third reading in ample time for the next election, whenever it might come. On that note, Mr. Speaker, I conclude my remarks.


Mr. Derek Blackburn (Brant):: Mr. Speaker, I, too, will be brief because the government is prepared to introduce an amendment to plug at least one very serious loophole in the bill as presented to us at second reading stage. I intend to participate in this debate when the committee reports to the House. This party has waited many years for electoral reform with regard to election expenses. For far too long the Liberal party and the Progressive Conservative party have received large sums of money from the big corporations. There has been literally no accounting whatever of those donations. I congratulate the government in finally seeing the light. We in this country must not only have political democracy, but economic democracy vis-a-vis elections. This bill will permit an ordinary

income earner to contribute to the party of his choice or, indeed, more than one party.
With regard to the indexing expenses clause of the bill, this party is not totally opposed to that. However, we sincerely hope that the committee will take a serious look at this part of the bill to ensure that the indexing is kept to an absolute minimum. What is the point of trying to control election expenses if they are permitted to escalate at a very rapid rate from one election to the next? That is not fair to the smaller parties in this country.
The main point I wish to deal with is the anonymous donations section of the bill. This was amply dealt with by my colleague, the hon. member for Sault Ste. Marie (Mr. Symes). I want to make clear at the outset how we define anonymous donations. Some members seem to think that an anonymous donation is a sum of money in cash handed to a candidate or party, with no name attached; under the table, or however you want to put it. Obviously, that cannot be permitted if this bill is to have any meaning. I hope the amendment which the government will introduce, or which the committee accepts, will do away with that kind of chicanery, because that is all it is.
There is another very important aspect with regard to anonymous donations. In American campaign politics, in growing numbers we see full page ads asking voters to elect or re-elect John Smith, Joe Blow, or Mary Brown. Underneath the ad it states, "This ad is sponsored and paid for by the citizens to elect", or "re-elect", a particular person. Will that kind of underhanded tactic be incorporated in this bill? That slipshod method is just a gimmick to show that a certain party has the support of the clergy, labour, big business, small business, women's groups, or whatever. What they do is get token individuals from each of these major groups within an electoral district in the United States. It takes away from the rather harsh partisanship. I agree that many people today are doing that. The candidate is made to appear more accessible to the voters because these advertisements are sponsored by an anonymous committee which could be called together perhaps several months before an election.
As members are aware, in the United States election dates are known in advance. I hope that under our system, every advertisement, whether on radio, television, in the newspapers or by way of leaflets or pamphlets, will be covered by the bill we are considering, to the extent that all such material would need to be publicly sponsored by a political party; it could not be sponsored privately and paid for by "citizens to back John Smith", and so on.
If such a provision is not in the amended bill, what is the point of bringing down a bill at all? As things are, the entire concept is nullified, because it would be very easy for a group of wealthy people to get together to organize a committee to support the candidate of their choice. What it really means is that a small group with a lot of money to spend on advertising could not contribute to the campaign of a particular candidate
November 7, 1977

without accounting for such expenditures, along lines which, surely, were envisaged when the elections act was debated.
I plead with members of the appropriate committee to make sure that my suggestion is given consideration and that ad hoc committees of the kind I have described are not permitted. In my view, they are frivolous and unacceptable groups whose activities go beyond the spirit of this bill. In short, if my suggestion is not accepted, the bill will mean nothing.



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 on the adjournment motion at 6 p.m. are as follows: the hon. member for Egmont (Mr. MacDonald)- Performing Arts; the hon. member for Sault Ste. Marie (Mr. Symes)-Finance; the hon. member for Dauphin (Mr. Ritchie)-Grain.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Cafik (for Mr. MacEachen) that Bill C-5, to amend the Canada Elections Act, be read the second time and referred to the Standing Committee on Privileges and Elections.
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, I should like to say a few words about the bill which is before us. When the acting House leader rose, he covered, I think quite adequately, two of the three concerns we have, one being anonymous contributions and, second, the desirability of taking a serious look at indexing in the bill before us. The third concern is one which I think is very important, that is, third party advertising, the subject dealt with by my hon. friend from Brantford (Mr. Blackburn).
There was a case very recently, the Roach case, where the judge ruled in favour of Mr. Roach and in favour of third party advertising. If that sets a precedent, then the whole effect of the elections act in controlling expenditures may be nullified. On October 24 this year, in a judgment, His Honour Judge Zimmerman said the following:
Canada Elections Act
Mr. Roach in his evidence made it clear, in my opinion, that the aims of CUPE, Local 767, were to oppose the anti-inflation program, that his own personal views on the issue were in accord with those aims, and that the means adopted by CUPE Local 767 were intended to attract publicity for the purpose of advancing those aims. Mr. Roach also made it clear in his evidence, and I accept the fact, that no contact was made with any candidates or official agents, so it cannot be said that the expense was related to any provision of the act limiting election expenses. It seems to me, therefore, to follow that the expense was made in good faith.
I do not quarrel, of course, with the judgment of His Honour, but I do think we as parliamentarians should concern ourselves with plugging the loopholes in the act so that this type of activity is not permitted, because if we were to allow what I would call third party advertising, we would be inviting nullification of the act. Not only would we be allowing private citizens to put advertisements in the media campaigning for a certain point of view during an election campaign, but we would also be allowing citizens' committees of all sorts to be formed, committees of concern, citizens in defence of freedom, citizens in defence of God knows what. We would also be allowing the Canadian Manufacturers Association, trade unions, mining associations, insurance companies, and so on, to get involved in election campaigns and campaign for certain ideas or for certain philosophies and not come under the scope of election expenditures. That could distort the whole intent of the act.
As this ruling says, Mr. Roach-and I do not disagree with the objectives Mr. Roach was talking about; this party opposed very vigorously the anti-inflation program-was putting forth his personal views opposing the program during a by-election campaign when the election expenses act had application. He made it clear this was his personal position and that he was in contact with no official agents or candidates of any political party. It was his own personal position in opposition to the anti-inflation program. As I say, I agree with him on that particular issue, but there might be other issues with regard to which I would not agree with him.
I think we have to set aside our personal feelings and look at the merits of this activity. He was trying to influence the outcome of the by-election and was acting totally outside the scope of the elections act. Before it passes the bill before us, I think parliament ought to plug that loophole so that associations cannot be formed during an election campaign in order to present certain points of view.
I recall very vividly the recent British Columbia election when the insurance companies were actively involved in a campaign of their own against the government of the day because it had set up auto insurance in the province. There could be many associations in the next election campaign attacking us, attacking the Conservatives or attacking the government for certain points of view. They would not come under the scope of the elections act as it is drafted, if the Roach decision is to become a precedent. I hope the government will take a serious look at this question. I know many members of the government are very concerned about this judgment being used as a precedent. I know many officials of the Liberal party are very concerned about it-as we are-and as, I am sure, are many members of the Conservative party.
80025-41 Vi

November 7, 1977
Canada Elections Act
Since we are all concerned about this matter, I hope members more directly involved will put their legal minds to work and come up with amendments to the elections law which will plug this loophole. Perhaps the acting House leader will have a response to the questions I am posing. I hope he does, because that perhaps would shorten the debate.


Norman Augustine Cafik: Mr. Speaker, I am pleased to rise at this time to conclude the debate on Bill C-5 and indicate-


The Acting Speaker (Mr. Turner):: Order, please. I must advise the House that if the minister speaks now he will close the debate on this matter. Does any other member wish to speak?


Norman Augustine Cafik: Thank you, Mr. Speaker. I took it for granted, because 1 introduced this bill, that my remarks now would conclude the debate. 1 appreciate the co-operation of all hon. members.
I will repeat very briefly the two points that I indicated to the House earlier. One is in relationship to anonymous contributions. It had been the view of the government, when this matter was being discussed in contemplation of amendments, that it was not a loophole which would allow for anonymous contributions. It is evident that other members of the House do not share that point of view. It is not as though there is some provision in the amendments which would directly allow anonymous contributions over $100. The question really arises because some suspect we have not taken measures to plug a loophole which existed in the original statute.
The legal officers of the Crown, as I understand it, originally felt that the existing statute did not require an amendment to prohibit anonymous contributions of over $100. But it is quite evident that hon. members do not share that view. Acting on behalf of the government, may I say I can see no objection to putting forward what I would call a "comfort" amendment to make sure that the law is absolutely clear and precise in this respect. Then all hon. members will know the law and how it is to be interpreted and they will be able to follow it without any doubt or question with respect thereto. That is our first position.
The second one, as I have already indicated, relates to the proposed escalation provisions. A whole number of approaches could be taken to correct some of the problems existing in the present statute in this regard. 1 have indicated that the government will have an open mind in the hearings before the committee; it will take into account the various approaches which may be proposed and, hopefully, arrive at an approach which is acceptable to both sides of the House.
It is quite evident, from discussions with my colleagues in caucus and from listening to the debate which has taken place in the House of Commons, that there are a number of other questions in the forefront of hon. members' minds in relation to this statute. I cannot make a commitment to the House at

this time as to specific resolutions which we might be willing to accept. However, it goes almost without saying that we are taking a pretty flexible approach to this statute. After all, it affects all of us as members of parliament; it affects our very existence as members of parliament.
I do not think it is a partisan matter, but one to which we all have to address our minds very specifically in the hope that we will pass a bill that will achieve the central purpose of the legislation, that of full disclosure and of getting rid of suspicions which may have existed in years gone by as to how parties and members of parliament are supported financially. That objective, of course, we all share. We shall examine whatever amendments and proposals are put forward to ensure that these central principles are left intact, so we can produce a law which will serve the public interest and to which individual members of parliament can relate.
I hope this matter will be dealt with expeditiously in committee, Mr. Speaker. I believe there is a broad basis of agreement. We will need sufficient time to formulate our approach to the specifics which have been mentioned in this debate, and I assure all hon. members that it is the government's intention to look at these matters very carefully. But any amendments to the bill should be put into the law as quickly as possible, since the Chief Electoral Officer requires the legislation so he will be prepared for any possible electoral opportunities which may present themselves to hon. members in the future.


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


Lorne Edmund Nystrom: Mr. Speaker, 1 wonder whether the minister would be prepared to answer a brief question.


Norman Augustine Cafik: Of course, Mr. Speaker, if it is agreeable to members of the House.


The Acting Speaker (Mr. Turner):: The hon. member for Yorkton-Melville (Mr. Nystrom) on a question.


Lorne Edmund Nystrom: At least, I hope the question will be brief. The minister did not refer to the Roach case when he was speaking a few moments ago. Would he make a comment or two as to whether or not it is the government's intention to try to plug some loopholes concerning third party advertising?


Norman Augustine Cafik: Mr. Speaker, I cannot speak on behalf of the whole government on this question; I am not the government, but only one member of it, as hon. members know. I can indicate, from a personal standpoint, that I have concerns which I share with the hon. member who raised this question. This is a matter of some importance to which the committee should address itself and make what the committee believes appropriate recommendations for amendment.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the Standing Committee on Privileges and Elections.
November 7, 1977

[Stage Direction]
The House resumed, from Thursday, November 3, consideration of the motion of Mr. Lang that Bill C-3, respecting the reorganization of Air Canada, be read the third time and do pass.
Donald W. Munro: Mr. Speaker,
I rise to speak briefly in this debate because I would like to call the minister's attention to an unacceptable development at Victoria International Airport, the bilingualization of security agents in that airport. Oddly enough, orders to that effect were issued in the name of Air Canada's president rather than the Minister of Transport (Mr. Lang). I will come back to this later.

In May of this year, a general instruction issued by Air Canada contained the requirement that the security checking teams clearing passengers through airports across Canada possess competency in both of Canada's official languages. Presumably this was pursuant to recommendations made to the president of Air Canada by the commissioner of official languages in his report of 1976. In this report, the sixth annual report of the commissioner of official languages, there was a recommendation specifically directed to Air Canada. 1 suggest it is an unusual recommendation. It appears under the heading "Bilingualism Policy and Guidelines for Implementation". It is recommendation No. 58, and reads as follows:
-wherever the word "practical" appears in reference to the use of the two official languages, delete it.
Then under the heading "Job Security" appears recommendation No. 68 which reads:
-ensure that the job security of its personnel is not jeopardized in implementing the recommendations listed in this report.
I find this second recommendation completely comprehensible since it applies to all of the Air Canada recommendations. I should like to turn to another document, one which I suggest is much more official, issued by the government. 1 suppose it might be called the "grey paper" on the official languages of Canada. It is entitled "A National Understanding", and I should like to refer to chapter 4, page 44. I have checked the English and the French versions, and they are identical. At page 44 the following appears:
Canadians should be able to communicate with, and to obtain service from, the federal institutions of government in the official language of their choice and arrangements should be made to this effect wherever there is sufficient demand for it.
I relate the words "wherever there is sufficient demand for it" to recommendation No. 58 of the commissioner of official languages, which reads:
-wherever the word "practical" appears-delete it.
I find a certain inconsistency there, Mr. Speaker. 1 think all members of the House would subscribe completely to this particular guideline. Canadians should be able to communi-
Air Canada
cate with, and to obtain service from, the federal institutions of government in the official language of their choice. That is fair enough. It goes on to say that arrangements should be made to this effect wherever there is sufficient demand for it.
Aside from my puzzlement as to why Air Canada should issue this general requirement in this area, Air Canada did not, as far as I know, make any attempt to determine the need at the Victoria international airport for competency in the French language by the staff at that checkpoint area. What triplicates the puzzlement in my mind about that basic instruction to the security check personnel is that they do not speak to the passengers. What this amounts to-and it becomes farcical, if not absurd-is that they are looking for mute bilinguals.
I find it difficult to understand why, at the Victoria international airport-where there has been no attempt to determine the need, as far as I know-they are seeking to recruit mute bilinguals.
I know that if the need should arise for use of the second official language at Victoria international airport-and this has happened in the past on rare occasions-in half an hour at the very outside, and more often in a matter of minutes, it could be satisfied. Bilingual people could be obtained very quickly, as there are French language teachers in the area and, in fact, bilingual employees at the airport during normal working days, all of whom I am sure would be happy to come forward and help. However, I find it quite absurd to insist, under this requirement, that there be competency in this particular area of the airport's activities.
When I got wind of this requirement 1 immediately wrote to the president of Air Canada. That was on September 20 last, some six weeks ago. I have not yet received a reply. I assure the House that I wrote to him outlining the extracts I have put on the record from the "grey paper" issued by the government. I wondered why he had found it necessary, at the Victoria international airport, to put forward this particular recommendation. I am still awaiting a reply to my letter. In the meantime, I must admit that he has succeeded in stirring up a veritable hornets' nest of aggravation in the area. There is no need for such aggravation at this time, in face of problems currently confronting this country. Certainly, there is no need for that kind of aggravation being thrust upon the community in this area.
I indicate, also, that two years ago a similar thing happened in respect of the car rental area, where a bilingual requirement was to be laid down. I intervened at the time. I asked members of the car rental area to check and find out how many times, at the Victoria international airport, there had been a requirement for the use of the other official language. I asked how many times they had been asked in the French language, during the years they had been operating there, about the possibility of renting a car. The answer was that it had not happened even once.
I agree completely that we should have bilingual forms, but I am puzzled by the requirement I have mentioned, when there

November 7, 1977
Air Canada
have been no verbal problems at all, as far as I am able to determine. Had there been any verbal problems in this regard, 1 would have come forward and helped had I been in the area. I know there are others in the area who would do the same.
I question the need for this competency at the Victoria airport. There are other international airports in Canada where such competency is required. I do not question that fact at all. I also question why Air Canada should be the agent for circulating this instruction. The area to which I refer is located in a Department of Transport building. Air Canada is not the only air service which uses the building. Why was it the president of Air Canada who issued the instruction? If the instruction had to be issued at all, it should have been issued by the Minister of Transport. Therefore, I feel there should be, in this reorganization bill about which we are now speaking, a clear understanding of the scope of the requirement of Air Canada. Air Canada is operating its aircraft on the ground and in the air, and in that capacity it has a responsibility in respect of bilingualism, which it is exercising. But surely it does not have the same responsibility with respect to federal properties such as airport buildings.
Let me end on a happy note, Mr. Speaker. I make it clear that, due to the very good sense of representatives of Air Canada in Victoria, supported by the president of Air Canada, it was agreed there would be no implementation of this requirement until vacancies occurred through attrition. There has been no change. Let me suggest to you, Mr. Speaker, that the form of aggravation which occurred in that area would be as great in Schefferville, for example, if Air Canada insisted upon English language competency in that area. I am just not sure about baggage handlers; probably they do not talk to the passengers, either. It may very well be that such a requirement would be circulated in that area, as well, by Air Canada.
As I have said, I have raised this matter with the president of Air Canada and I am awaiting a reply to my letter. I raise this question today because of the absurdity of the requirement and because of my puzzlement as to why the president of Air Canada would be the person to suggest such a requirement.
[ Translation]
There can be no objection to our Crown corporations' commitment to offer our citizens the required services in the official language of their choice, and take the necessary measures wherever there is sufficient demand. But requiring the second language in areas where demand is almost non existent can only worsen the language situation that is intricate enough already. I hope that Air Canada officers have learned their lesson and will apply bilingualism in places where there is sufficient demand for the second official language, whether it be English or French.


Reginald Cyril Symes: Mr. Speaker, I shall be brief at this stage of the debate. However, I wish to reiterate the concern of the NDP regarding the bill before us, which is to reorganize Air Canada. We know that certain clauses of the bill indicate the government wishes Air Canada to operate

primarily at a profit, even if that means-as we all know it will-reduction of service in certain areas. Because of the stated opinion of the Minister of Transport (Mr. Lang) here and elsewhere, we are concerned about the selling off of profitable parts of public enterprises to private enterprise. He voiced that opinion regarding Canadian National Railways and parts of Air Canada.
As I have said before in this debate, and as has been stated by my colleagues, our transportation system is vital to the unity and the economic strength of this country. Because we are a large geographic area with sparse population, it means that we cannot operate a transportation system solely on the concept of making a profit, whether it be rail or air service. If we want to bind the country together and service people in regions of low population, in order for them to have access to good transportation services like people in large urban centres we must realize that Air Canada and other modes of transportation will operate at a deficit at times in order to serve the public good.
We in the New Democratic Party are not saying we should abandon all fiscal responsibility and not worry about the kind of deficit that is mounting. Obviously, we are concerned about efficient operation. What worries us is that this bill and this Liberal government, supported by the Conservatives, seems to indicate that the concept of service will be secondary to the concept of making a profit. That principle is totally unacceptable. Air Canada and the CNR were formed in response to the public need for adequate service and transportation which the private industry was not willing or able to fulfil because such service could not be operated at a profit. Therefore, the government had to step in to provide a service. In any civilized society, surely that is the rational and correct thing to do.
Under the direction of the Minister of Transport, we see an attempt by this government to dismantle the great public enterprises which have been formulated in the past in order to service the public good. We in this party cannot accept that kind of philosophy. We see moves afoot to reduce Air Canada's service to the smaller centres and hear the argument of some transport advisory committees that Air Canada should drop the small-centres routes, such as the routes to many places in northern Ontario and Atlantic Canada, and turn those over to the smaller regional carriers.
We know from experience that the smaller regional carriers do not provide the same high level of service as Air Canada. In all likelihood, the smaller carrier will face a deficit, just as Air Canada does, in terms of servicing the smaller population centres. Whether it is the private carrier that is subsidized, or Air Canada, the taxpayers will foot the bill.
In the concept of public enterprise, we as members of parliament have some say in how that public enterprise operates, which we do not have in respect of private enterprise. Public enterprise should be the norm in our transportation system, not the private carriers. The reason Air Canada and the entire airline business is facing deficits in this country is
November 7, 1977

the degree of overcompetition which is allowed by this Liberal government. There is no sense in flying a half-empty Air Canada plane to Thunder Bay or Sault Ste, Marie, and at the same time flying a half-empty Transair plane to the same centres.
Overcompetition is reducing the load factor for the airlines. The only way an airline can be profitable is for it to keep the number of seats occupied at the highest level, and not fly half empty. The more competition we introduce into our national airline transportation system, the greater the likelihood of deficit on the part of individual carriers. We in this country realize that we do not have a large enough population to maintain a full load factor for the many airlines which are in existence.
The concept written into the bill, that profit must be the primary guideline, and not service, worries us. The minister's statements with regard to selling off parts of public enterprise worries us as well. For these reasons, we do not want this bill to go through as it is; we want to force a vote so that Canadians may see where their elected representatives stand on the vital issue of service in the transportation system of this country.


Mr. Charles Lapointe (Parliamentary Secretary to Minister of Transport):: Mr. Speaker, all last week and again today we heard many remarks about Bill C-3 respecting the reorganization of Air Canada. Having attended all the debates, Mr. Speaker, I am reminded of my college days when 1 frequently won first prize in literary analysis. I was quite surprised to see my hon. colleagues spend more than five days on four lines of subclause (1.1) of clause 7 (1), namely the concept of Air Canada profitability. I do not see why so much time was spent discussing that question because it seems to me only logical for a corporation, whether a Crown corporation or not, to operate on sound business principles, and especially for such a corporation to try to make a profit.
On the other hand, Mr. Speaker, no mention was made of the fact that clauses 8 and 9 of this bill are there precisely to ensure that notion of service that seems to be overly worrying our colleagues of the NDP. Clause 8 says, and 1 quote:
8. The Corporation shall, in the exercise of its capacities and the carrying out of its activities, comply with directions of a general nature given to it in writing by the Governor in Council.
It is quite obvious, Mr. Speaker, that in spite of the so-called lessons of history and geography that we were given by certain colleagues of the NDP, members of this House realize that our national carrier, Air Canada, must provide service to certain disadvantaged areas of this country, not in the large population centres of our capitals or our large provincial cities. And this clause 8 empowering the governor in council to give directions to Air Canada is there precisely to allow the governor in council to say to Air Canada: You are going to provide service in such and such areas of this country, and on the other hand, as provided in clause 9, the government will be able to reimburse any losses incurred through any such non-profitable service as the airline may be required to provide.
Air Canada
During all that debate last week, Mr. Speaker, we heard, for example, our colleague from York Simcoe (Mr. Stevens) accuse the government of nearly causing Air Canada to go bankrupt, of piling on government deficits, because of their socialist principles. Immediately after, we heard our friends of the NDP say that this was another case of mismanagement because we were sacrificing the objectives of our national transportation policy for the sake of profit.
I think that if we must choose between what the hon. member for York-Simcoe says and the criticism from our friends of the New Democratic Party concerning this bill, the government is right and the old Latin proverb in medio stat virtus applies once more.
We had another surprise during that debate, Mr. Speaker, and it brings me to say that it might be highly desirable to reflect on the work of this House. For almost two days we have been listening to our colleagues from the Edmonton area express their preoccupations concerning problems at the Edmonton airport. Mr. Speaker, however serious the problem I still do not believe that the Edmonton airport issue is very much related to the reform of Air Canada.
To conclude, Mr. Speaker, 1 wish to say very briefly how surprised I was to listen today to the hon. member for Esquimalt-Saanich (Mr. Munro) who seemed astonished that some Victoria airport employees had to speak both official languages of this country. Mr. Speaker, it does not matter whether this guideline was issued by Air Canada or the Department of Transport, it simply requires some employees dealing with security to be proficient in both official languages. My conclusion, Mr. Speaker, is that the official languages issue should not be hidden behind a series of regulations, that we should stop splitting hairs and consider that the use of both official languages of Canada is a matter of courtesy in public services. If we cannot or if, according to the hon. member for Esquimalt-Saanich, it is ridiculous to expect bilingual services from Victoria airport security personnel, this same principle will apply at Baie-Comeau, Sept-Iles, Roberval and other airports.
Mr. Speaker, with regard to that bilingualism policy, I should have thought that the hon. member for Esquimalt-Saanich would have rejoiced in the fact that an attempt is being made to have bilingual employees at the Victoria airport.
1 feel that only with that type of good will, everywhere in Canada, while protecting the persons who now hold those jobs, can bilingual employees replace unilingual ones as jobs become available. That is the only way true understanding of that bilingualism policy can be achieved.
Mr. Speaker, as I said earlier, Bill C-3 is well-balanced and I urge all hon. members to adopt it very quickly.


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

November 7, 1977
Air Canada


Some hon. Members:: Question.


The Acting Speaker (Mr. Turner):: All those in favour of the motion will please say yea.


Some hon. Members:: Yea.


The Acting Speaker (Mr. Turner):: All those opposed will please say nay.


Some hon. Members:: Nay.


The Acting Speaker (Mr. Turner):: In my opinion the yeas have it.
And more than five members having risen:


The Acting Speaker (Mr. Turner):: Call in the members.


Mr. Speaker:: I therefore declare the motion carried. Motion agreed to and bill read the third time and passed.
* *
*
(Division No. 8)


INCOME TAX ACT
[Stage Direction]
++YEAS
Messrs.
Abbott
Alexander
Anderson
Andras
(Port Arthur)
Andre
(Calgary Centre) Baker
(Grenville-Carleton) Baldwin Balfour Basford Beatty Begin (Miss)
Boulanger
Brisco
Buchanan
Caccia
Cadieu
Cafik
Caron
Chretien
Clark
(Rocky Mountain) Clarke
(Vancouver Quadra) Clermont Collenette Corbin Crouse Cullen Cyr Darling Daudlin Dawson Demers Dinsdale Dionne
(Northumberland-
Miramichi)
Drury
Duclos
Dupras
Epp
Ethier
Flynn
Foster
Fraser
Gauthier
(Ottawa-Vanier)
Gillespie
Gillies
Goodale
Gray
Guay
(St. Boniface)
Guay
(L6vis)
Guilbault
Halliday
Hargrave
Herbert
Holmes
Holt (Mrs.)
Hopkins
Horner
Huntington
Hurlburt
Isabelle
Jarvis
Jelinek
Johnston
Kempling
Knowles
(Norfolk-Haldimand)
Korchinski
Lachance
Lambert
(Edmonton West) Landers Langlois Laniel Lapointe Lawrence LeBlanc
(Westmorland-Kent)
Lefebvre
Lumley
MacDonald
(Cardigan)
MacDonald
(Egmont)
MacDonald (Miss)
(Kingston and the
Islands)
MacGuigan
Macquarrie
Maine
Marchand
Marshall
Mazankowski
McCain
McGrath
Mclsaac
McKenzie
McKinley
Muir
Munro
(Esquimalt-Saanich)
Munro
(Hamilton East) Murta Neil
Nicholson (Miss)
Nielsen
Nowlan
Oberle
O'Connell
Ouellet
Paproski
Patterson
Penner
Philbrook
Pigott (Mrs.)
Pinard
Portelance
Poulin
Railton
Raines
Reid
Ritchie
Robinson
Roche
Rompkey
Rooney
Roy
(Laval)
Sauv6 (Mrs.)
Joseph Jacques Jean Chrétien: that Bill C-l 1, to amend the statute law relating to income tax and to provide other authority for the raising of funds, be read the second time and referred to the Committee of the Whole.
He said: Mr. Speaker, Bill C-l 1 is now before the House for second reading. Its purpose is twofold: first, to implement amendments to the Income Tax Act as announced by myself on October 20 and as put forward by my predecessor, the hon. member for Rosedale (Mr. Macdonald), in his March 31 budget; second, to increase government borrowing authority.
This legislation is important. It is designed to assist in solving short and medium term economic problems. Tax rebates granted to individual taxpayers will have an immediate effect on consumer expenditures, hence promoting job creation. A number of investment incentive measures will be the basic landmarks for a sustained economic recovery. This legislation will help establish a climate of confidence which business needs badly to plan, expand and overcome problems inherent in changes and readjustments of industry. The bill is clearly directed towards the need to encourage job creation in the private sector, at present and in future. We must direct all our efforts to this purpose, but we must also pass these measures so they will have immediate results.

Let me turn to changes in the personal income tax. These measures will reduce by $500 million the taxes paid by individuals for 1977, and by $1,200 million for 1978. Together with the indexing adjustment, the changes will reduce by more than $2 million the income tax of individuals for 1978. The measures affecting individuals include an increase of $100 in the maximum of the employment expense deduction. It will now become $250.
[The Acting Speaker (Mr. Turner).]
November 7, 1977

There are two important changes in the federal tax credit. As proposed on October 20, the minimum credit is increased to $300 from $200. This $100 cut in taxes will benefit over 7,500,000 Canadians. Many will receive it in January and February. Also, as announced in March, a $50 credit for each dependent child was introduced. These changes are of most help to individuals with low and minimum incomes. For example, the effect of these measures will be to completely eliminate the federal tax payable next year by a taxpayer with earnings of $8,435 who supports a wife and two children.
We want to stimulate private investment. A number of measures in the bill will help achieve this objective. They will do this by improving the business and investment climate and by providing direct incentives. The 5 per cent investment tax credit was supposed to expire this year. The bill provides for a three-year exemption. Furthermore, it introduces the concept of differing benefits to reflect regional disparities. For certain designated areas the credit will be 1'h per cent instead of 5 per cent, and it will be 10 per cent in the Atlantic provinces and the Gaspe region of Quebec. It applies to new investment in Canada and will benefit manufacturing, the resource industry, forestry, fishing and farming. This, by the way, is an example of how the federal fiscal policy can, and does, take regional disparities into account.
The credit is also now being extended to include capital and current expenditures on scientific research. The cost of the measure is estimated at $385 million for the current year. This bill will help to reduce the effects of inflation on Canadian business. In Canada and elsewhere, a search is under way for an accounting system which accommodates inflation. In the meantime, business faces a cash flow problem in part because of inflation. The tax system already goes some way toward meeting the problem in the area of capital equipment by special concessions such as fast write-offs and the investment tax credit. But we still need to recognize the impact of inflation on inventories. The proposal to allow a special deduction of 3 per cent of the cost of inventories will ease the cash flow problem to the extent of some $300 million annually.
To stimulate investment further, the bill includes measures to help business borrowing abroad. It also expands the $1,000 dividend and interest exemption to include capital gains. It introduces special rules for replacement of business and farm properties. It increases the offset for capital losses and provides a guarantee of capital gains treatment on disposal of Canadian securities. These and other measures will assist all business. Many of them give special help to small business. Of particular significance in this vital area, the area of small business, are the measures to stimulate investment. These include the increase in the dividend tax credit from 33V) per cent to 50 per cent beginning next year, the special inventory allowance, and the extension of the investment tax credit.
The bill will facilitate expansion by Canadian-controlled private companies through joint ventures, business acquisitions and plant replacement. The special provisions for employee
Income Tax
stock options and share-purchase loans will permit smaller companies to better compete in attracting managerial expertise. Funds for small business will be encouraged by the guarantee of capital gains treatment for investors and the special accommodation of provincial venture investment corporations.

Mr. Speaker, a number of provisions in this legislation will also promote investment in Canadian equity. This will arise from the increase in the dividend tax credit. Another amendment will make dividends of public company stocks more attractive to shareholders. These measures will improve the market of transferable securities and promote those subscriptions of shares which are necessary to any business development. Amendments to the dividend tax credit relate to a series of measures announced in the budget concerning the distribution of corporate surplus. It is most urgent to simplify this very complex area of the legislation.
The amendment made to the provisions concerning dividends enables us to rationalize the various rules concerning the distribution of corporate surplus. The need for designated surplus is eliminated as well as the need for the other complicated regulations whose purpose was to prevent the taxation of dividends.
Following these changes, several business reorganizations which could not be carried out because of fiscal considerations will now take place only on the basis of strictly commercial considerations. Other amendments will further facilitate these reorganizations. For example, any unused commercial loss, any capital loss or investment tax credit of a corporation belonging to a group of corporations will be transferable to another corporation of that same group when there is a merger or a liquidation.
As I mentioned in my speech of October 20, I do not intend to carry through the proposal to make taxable upon the death of the insured that part of the life insurance proceeds which consitutes a revenue from an investment. This bill also contains important amendments affecting the insurance companies. Their main objective was to draft a set of regulations establishing a fair level of taxation for this important sector of our financial system, not only with regard to that industrial sector as a whole, but also for the companies as they relate toward each other. I will have to monitor carefully the implementation of these regulations to make sure that the objective is reached. These rules bear mainly on the treatment granted to the various reserves which insurance companies can claim and on the way the revenue from that investment is considered. In that past, the regulations have favoured multinational insurance companies. Had we not amended the already existing regulations, insurance companies operating only in Canada would have been placed in a very disadvantageous competitive position. It was then a pressing matter to solve this problem; this is what the bill does by guaranteeing an equitable share of the tax burden between multinational and strictly national insurers.
646

November 7, 1977
Income Tax

The bill proposes an increase in the statutory borrowing authority by $9 billion. The Financial Administration Act provides that "no money shall be borrowed or security issued by or on behalf of Her Majesty without the authority of parliament". This refers to "new" money only, as there is a continuing authority in the act for the government to borrow funds to repay maturing debt. The increase in borrowing authority sought at present is to cover estimated financial requirements into the next fiscal year and to provide a substantial margin for contingencies.
In the past, borrowing authority has normally been sought in one of the first appropriation acts of a new fiscal year. The long-established procedure was to attach a clause requesting new borrowing powers to supply bills brought before the House. However, as hon. members are aware, this procedure provided no opportunity to debate the authority being sought, in the past two years, following a recommendation by the Standing Committee on Procedure and Organization and agreement between the House leaders, one day was established for debate on this topic. Furthermore, it was agreed that the government would change the procedure for obtaining new borrowing authority. The government intends to introduce a bill soon providing a new procedure which will give ample opportunity for normal debate. In the meantime, there is need for an increase in the borrowing authority.
The size of the request for additional borrowing authority requires some explanation. Earlier this year, this House approved $7 billion of new borrowing authority. This amount was based on the $6.4 billion in cash requirements anticipated for the 1977-78 fiscal year. The cash requirements have now increased to $8.5 billion. Furthermore, the government has just announced a standby credit of $1.5 billion in the U.S.-Eurodollar market. Foreign loans, even of a standby nature, to replenish foreign exchange reserves are not part of the normal cash requirements. These loans are a charge on borrowing authority over and above the increased cash requirements announced for this fiscal year. The government also needs a large contingency amount to provide it with flexibility in planning next year's Canada Savings Bonds campaign. The increase in the borrowing authority will serve to cover our financial requirements well into the next fiscal year and will provide a cushion for contingencies.
It is essential to increase the borrowing authority as soon as possible. To date, we have raised approximately $4 billion in new money through the issue of marketable securities, and we have arranged a $1.5 billion U.S.-Eurodollar standby credit. This year's Canada Savings Bonds campaign is under way, and net sales of this series will also be charged against borrowing authority. As a part of the normal debt program, the government plans to raise some new money through November and December. As a result, the government is rapidly running out of borrowing authority. To meet current requirements, to provide for a margin to meet normal requirements for some months into the next Fiscal year, and to provide for a large

contingency, it is essential to increase borrowing authority in the amount of $9 billion.
Members of this House will appreciate the importance of this bill to a large segment of Canadian society. It is vital to avoid any unnecessary delay in proceeding with it. The implementing legislation for the tax changes in the budget of May 25, 1976, was not finally passed until late February of 1977. The delay caused very serious inconvenience and disruption for the thousands of taxpayers affected by those changes. I therefore urge members to consider the provisions of this bill, not hastily, for it is complex, but with dispatch. To a considerable extent, the economy depends on business confidence. Passage of the bill before us is extremely important in securing that confidence.


Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, as we tackle these income tax bills following recent budgets, we witness a variety of practices which seem to change almost from budget to budget. We had a March budget and we were expecting to have an income tax bill, but right in the middle of the throne speech debate the minister came forward and presented a mini-budget. Then, following the adoption of the throne speech resolution, a ways and means motion was put down, as well as what I call a bootleg motion, to increase the borrowing authority of the government of Canada. It has been a good smuggling effort on the part of the government.
Actually, Mr. Speaker, there should have been an appropriation bill for that purpose; but no, this was done by means of an income tax amendment bill. I see nowhere in the bill the royal recommendation with regard to increasing borrowing authority. I shall look into this matter and I reserve the right to question the practice of the government in not complying with the requirement of the royal recommendation with regard to this increase in borrowing authority.
When one compares the ways and means motion with the one moved last March, one is struck by the attempt of the government to inject some sort of stimulus into the economy by means of a tax cut and in other ways, having seen that its budget proposals of March 31 had run into difficulties. I am sure the Minister of Finance (Mr. Chretien) must have accumulated a file a couple of feet high, consisting of letters from supporters of the government as well as members of this House, protesting the proposal to tax as earned income payments made under insurance policies. That is to say, the minister was going to tax the earned surplus left after death benefits and premium contributions-


Joseph Jacques Jean Chrétien: I have changed that.


Marcel Joseph Aimé Lambert: Since the insurance companies themselves have not written to the minister, I am wondering whether this is merely a shuffling of the beans, whether it is part of a bean game, as was the case before. The minister must have made calculations as to whether this would result in an increase in government revenue or in a diminution of government revenue.
November 7, 1977

The original proposal, which was to eliminate taxation, as such, of insurance companies, or a portion thereof, under part XV of the act, and to transfer the burden of taxation to the beneficiaries as their policies matured, resulted in better cash flow for the insurance companies. 1 agree that taxing the profits of insurance companies on a multinational basis might somehow result in double taxation in that the government of Canada taxes as earned income proceeds from foreign-held policies. But what puzzles me is: What has been the change in the burden of taxation on life insurance companies as between the companies and their policyholders? Since a large number of Canadian insurance companies are mutual companies, we are taking money out of the right pocket instead of the left pocket.
If corporate revenues are taxed more, this will mean there is less money available to be added to the value of policies in the hands of participating policyholders. The shareholders of mutual insurance companies receive no profits because they are themselves the policyholders. The beauty of the insurance industry is that they are Canadians. The former minister of finance recognized the sterility and illogicality of his move to tax as earned income proceeds from insurance policies, insurance being a means of saving, and belatedly, after receiving representations and he and I having discussed the matter in committee, he came in with a threshold figure. This eliminated a good deal of the incidence of taxation of beneficiaries under insurance policies. This proposal has now been dropped, except that if one reads the minister's proposals regarding taxation of insurance companies-


Mr. Deputy Speaker:: 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, public bills. Then at six o'clock the House will take into consideration the adjournment motion.
It being five o'clock, we will proceed to private members' hour. The first order is No. 2, but I have been advised there was some understanding and agreement among members that, by unanimous consent, motions Nos. 2 to 9 would be stood, and the House would proceed with motion No. 10 appearing in the name of the hon. member for Edmonton West (Mr. Lambert).

Is the House ready, as suggested to the Chair, to defer the study of motions Nos. 2 to 9 and proceed immediately with motion No. 10 in the name of the hon. member for Edmonton West (Mr. Lambert)?


Some hon. Members:: Agreed.


Mr. Herbert:: Mr. Speaker, I have risen before on this subject. The rules of the House state that all items standing on the orders of the day shall be taken up according to precedent assigned to each order of the day. This is the second time in this session of parliament that motions have been called, and it
Private Members' Business
is my understanding that if certain motions are to be stood, it is being done possibly in accordance with Standing Order 19(1).
However, I should like to draw to the attention of the Chair Standing Order 49(1), which states clearly that when a private member's notice of motion shall be called by the Chair twice and not proceeded with, it shall be dropped. This is the second time notices of motions Nos. 2, 3, 4 and 5 have been called from the chair. I would request that the next time the motions are called, presumably next week, there be clarification from the Chair of the apparent discrepancy between Standing Order 19(1) and Standing Order 49(1), so that members will know whether we are to follow the order as it appears on the order paper or whether there is to be some other agreement of which we are not aware which would not enable us to prepare for a particular motion to be brought up at the time.


Mr. Deputy Speaker:: Order, please. The hon. member will have noticed, of course, that the Chair took it upon itself to refer to unanimous consent that had been brought to the Chair's attention. Normally, I think this initiative should have come from the President of the Privy Council (Mr. Mac-Eachen), his parliamentary secretary, or the Acting President of the Privy Council. These agreements are made between the parties, and I think the Chair should stay out of them.
Perhaps the hon. member is raising a valid point, in the sense that if House leaders cannot agree on organizing the work of the House, they should not expect the Chair to do the job for them. At the same time, the Chair would have no alternative, then, but to call the orders one by one. The hon. member will admit that when the notices of motions to which he has referred are called, they are stood at the request of the government. Thus, according to Standing Order 19, they retain their place.
At the same time, unanimous consent was given. If the hon. member does not wish to give unanimous consent at this time, my interpretation of the rules would be that these notices of motions would be considered as having been called once, and that the next time they are called, if not proceeded with they will disappear from the order paper unless there is a specific request from the government that they stand.
[ Translation]


Yvon Pinard: Mr. Speaker, that is correct. There is this specific request by the government to stand the other motions and keep them on the order paper until they are called again.


Mr. Reid:: Mr. Speaker, I just want to point out that these items come up during private members' hour. Whether a notice of motion is called depends, really, on the wish of the member who has placed the notice on the order paper. It is not for the government to say whether a member should bring forward a notice of motion or a bill. What the government does in this case is facilitate arrangements, which private members have made. The procedure, really, is one of finding out whether members are prepared to proceed with their
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November 7, 1977
Private Members' Business
motions at any given point in time. The government facilitates that procedure.
What the hon. member for Vaudreuil (Mr. Herbert) is trying to do is attack the role of private members to determine when the pieces of legislation they have proposed shall be brought before the House of Commons. While it may be something which irritates the hon. member, for many private members it is very important that they have some right to choose the time they want to bring forward a particular piece of legislation or a notice of motion. It would seem to me that any step by the Chair that forced members of parliament to bring their motions before the House when the Chair or the hon. member for Vaudreuil chose would indeed be a retrograde step.
All we really want to do is give members the opportunity to place their ideas before the House in the form of motions or private legislative items, allowing them to choose the time when those items should be brought forward. Let me point out to Your Honour that even though the orders of the day lists a whole series of things in numerical order, under government orders they are only brought forward when the government chooses to bring them forward after consultation. I would urge upon Your Honour to take into account the wishes of private members as a whole.


Mr. Deputy Speaker:: Does the hon. member wish to rise on this particular point of order?


Marcel Joseph Aimé Lambert: No, Mr. Speaker, I wish to proceed with my motion.


Stanley Howard Knowles: Mr. Speaker, I, too, would like to see the debate on the motion proceed. Therefore, I will be very brief. First, I should like to join in the view Your Honour expresses, namely, that motions 2, 3, 4 and 5 are really being called today for the first time in terms of the Standing Orders. When they were called previously, they were allowed to stand both at the request of the government and by unanimous consent. There is no problem there. Motions 7, 8 and 9 are, of course, being called for the first time on any account.
The point I want to make to the hon. member for Vaudreuil (Mr. Herbert) is, as the hon. member for Kenora-Rainy River (Mr. Reid) has said, this involves a matter of convenience to hon. members and there should not be any objection by the hon. member for Vaudreuil unless somebody is abusing something, such as trying to squeeze somebody out of order or play some other kind of trick. In that case he should complain. However, if it is just a matter of convenience which has been agreed upon in advance, 1 think the hon. member should go along with it.


Harold Thomas Herbert: Mr. Speaker, I, too, wish to be brief because I would like to see the debate proceed. I merely suggest that when the motions are brought forward again, presumably next week, Your Honour makes a ruling in relation to Standing Order 49(1).


Norman Augustine Cafik: Mr. Speaker, now that the question has been raised in such a way that it calls or asks for a ruling by the Chair, I think it should be fully understood that Standing Order 49(1) and Standing Order 19(1) are not in contradiction. There is really no discrepancy between the two. They can both be followed at exactly the same time. Standing Order 19(1) takes into account the situation where there was not a request by the government to stand a motion when it was called. In that case, It is quite clear that when it has been called twice it should disappear from the order paper. Standing Order 19(1) provides, also, that when the government has in fact made a request that a motion be set aside, it shall not be taken up but shall retain its rightful position. I do not see any discrepancy between the Standing Orders.
It may be there is a problem in terms of the government formally making a request to allow a motion to stand and retain its rightful place. In my role as the acting government House leader-or some other acting House leader-perhaps there should be a formal request, so that we will all know exactly what position a motion is in.


Mr. Deputy Speaker:: Order, please. As far as the Chair is concerned, there is not much difficulty in making a ruling on the request by the hon. member for Vaudreuil (Mr. Herbert). I think he would have great difficulty in making his position stand, unless he forgets Standing Order 19(1) which provides for the government's right to request that a private member's motion be stood.

I agree with the point raised by the hon. member for Kenora-Rainy River (Mr. Reid) as to the validity of this procedure which facilitates the workings of the House particularly in private members' hour. It gives members a chance to be present and, at the same time, to prepare their interventions; and perhaps that facilitates the debate.
At the same time, the Chair has to abide by the Standing Order. It is not the responsibility of the Chair to beg the government, as it sometimes has to do, to agree to the motion being stood at the request of the government. This is the complaint of the Chair at this time and I take advantage of the point of order raised by the hon. member for Vaudreuil to bring it to the attention of the government and the representative of the government.
The parliamentary secretary has already indicated that it is at the request of the government that motions Nos. 2 to 9 be stood, which is the right of the government. Therefore, 1 think we should proceed with motion No. 10 standing in the name of the hon. member for Edmonton West (Mr. Lambert).
November 7, 1977



PRIVATE MEMBERS' MOTIONS


Marcel Joseph Aimé Lambert: That, in the opinion of this House, the government should consider the advisability of enacting legislative proposals to raise the compulsory retirement age from 65 to 70 for any person aged 65 or more who does not so wish to retire and is prepared to give up his/her entitlements to any private pension plan or annuity.
He said: Mr. Speaker, I hope no persons over the age of 65 have died in the interval and that we will not prejudice the purpose of this motion. Briefly, 1 do not claim that I am the first to speak on this matter; I know in the other place there is a motion or some procedure related to it.
I am sure all hon. members have received, at one time or another, correspondence from constituents objecting to mandatory retirement at the age of 65. Over the years we have seen a population growing older, but in better condition. There are many instances where we have been amazed at men and women aged 65 being put out to pasture compulsorily. Retirement at age 65 is a legend from the make work philosophy of the depression years that has continued too long as an anachronism.
We cannot afford to lose the expertise, the physical strength and the productive capabilities of men and women aged 65 or more who are able to carry on their employment. Population studies in this country indicate that there has been a drastic reduction in the number of Canadian children being born, and that before too long we will face a domestically generated manpower crisis within this country. In part, my motion will take steps to alleviate that danger and to best utilize the capabilities in this country on a voluntary basis.
My motion does not refer to forcing people to work beyond 65. It does not penalize them, if they work, from drawing old age security benefits for which they have contributed. It is agreed that old age security will start at age 65, but it is not at the support level; it is part of the income that a person 65 or more receives from a variety of sources. Much of the post-65 support comes from subsidized housing in senior citizens' homes, dental care programs, programs for glasses and programs for additional drugs. It varies for persons over 65. Persons over the age of 65 have guaranteed income supplements available to them, income from private pensions and from one source or another.
It would be a form of national lunacy if this country did not say to people aged 65 or more that they must retire from certain occupations. Compulsory retirement at age 65 is rigidly adhered to in the public service and in a number of industrial concerns. In fact, it is compulsory under the Canada Pension Plan. Also, under the unemployment insurance plan there are discouragements or deterrents to persons working over the age of 70 because they cannot be insured under that plan. I do not think that is the answer to the employment
Age of Retirement
problem. What we have here is the question of utilizing the capabilities of Canadians who, having reached the age of 65, are still able and willing to contribute. They can make that decision.
I should like to refer hon. members to a bill recently passed in the House of Representatives in Washington. It has also been the subject of discussion in the United States Senate. I am referring to Bill HR-5383, to which reference is made in the Congressional Record of the House of Representatives under the date September 13, 1977. It is a piece of legislation amending a five-year old bill. It is entitled Age Discrimination and Employment Act Amendments, 1977. Earlier this year the House of Commons passed a bill on human rights indicating that there shall not be discrimination by reason of age, which I am afraid is observed more in the breach than in compliance with it. Compulsory retirement at the age of 65 is contained in the immigration regulations.
I should like to return to the United States legislation to which I referred a moment ago. There was some controversy about it and 1 cannot say that there was unanimity between the United States Senate and the House of Representatives.
It is not my purpose this afternoon to convince my colleagues that they should adopt the motion. This is the first time this subject has really hit the floor of the House for discussion. I want to initiate discussion among hon. members in order to examine this question in depth. It would be my hope that, rather than talking out this motion-which is the usual way-and having it go to the bottom of the list, our colleagues across the way on the government side would agree that at the adjournment time a motion be made that the subject matter of this motion and of related matters be referred to the appropriate House committee-it could be the committee on health and welfare-for public hearings and to receive representations.
I do not want to cram this idea down anyone's throat because I think it is a worthy idea but, on the other hand, there may be some points that organized labour might find difficult to accept with regard to this type of legislation. There might be difficulties from an industrial point of view, or from those organizations which provide pension plans. But, if I may say so, if it can be done in the United States, I think it can be done here in Canada. Let us consider the following:
The ADEA of 1967 was designed to promote employment of older persons based on their ability to perform in the job rather than on age and to prohibit arbitrary age discrimination in employment. The current act extends coverage to individuals who are at least 40 years of age but less than 65. The upper age limit of 65 was selected because it was a customary retirement age-
I would say it is one that grew out of a depression mentality.
-and the age at which many public and private pension benefits became payable rather than by any scientific objective standard. In 1974, protection to state, local and federal employees was added.
I am citing the proposer of the bill, Congressman Hawkins, who said the following:
Mr. Chairman, I believe the time has come to amend the age discrimination in employment act to take the essential first step toward eliminating mandatory

November 7, 1977
Age of Retirement
retirement on the basis of age and to clarify the exemption for bona fide retirement and pension plans in the current law.
During the ninety-fifth congress several of my colleagues authored legislation which I co-sponsored, in an effort to accomplish this goal. The legislation before us today is a culmination of those efforts.
As a result of studies by the subcommittee on employment opportunities and the committee on education and labour, an effort has been made to eliminate age as the sole criteria for hiring, firing, promotion or involuntary retirement. The congressman went on to say:
The major provisions included in H. R. 5383 are:
First, the upper age limit protected under the act for non-federal employees is extended from the current level of 65 years of age to 70 years of age 180 days after enactment.
Second, the upper age protection for federal employees is lifted entirely; and
Third, the exemption for bona fide retirement and pension plans under current law is clarified to prohibit involuntary retirement at an age less than the protected age under the act.
I do not want to go into further detail, because of the time requirement and because I think a number of my colleagues will want to speak on this matter.
Briefly, and in resume, my proposal is that the question of mandatory retirement at age 65 be the subject matter of inquiry by the appropriate committee of the House, with a view to lifting that mandatory age completely as being, first of all, not in the national interest with regard to utilization of the capabilities of Canadian residents and, secondly, that it is, in effect, an abuse and an offence, at least in spirit, of our human rights' legislation both at the federal level and the provincial level. We can provide examples to show that there is no mandatory retirement age in the House of Commons unless one is defeated. A number of members very effectively carry out their duties and they are over the age of 65.


Some hon. Members:: Hear, hear!


Marcel Joseph Aimé Lambert: Why should John Smith, working in the public service of Canada, the public service of Ontario or the city of Ottawa, be told that at the age of 65 he must stop work, but his brother, Adam Smith, a member of the House of Commons, may continue and render good service? There is discrimination between those two persons, and it seems to me that now is the convenient time to initiate studies by members of the House, either in a subcommittee of the Standing Committee on Health, Welfare and Social Affairs or in the committee itself, and investigate this matter. It might consult public bodies with regard to the question and report back to the House. In essence, the government could consider those as proposals which would do away with mandatory retirement age at 65.
Mind you, anybody who wishes to retire under a private or public plan at age 65 should not have to suffer any penalty. Such a person should be able to exercise his or her right; and if there are entitlements to retirement at the age of 60, then, of course, actuarial and financial provisions should be made for that. However, what I am saying is that we should eliminate mandatory retirement at age 65.


Mr. Ralph Stewart (Cochrane):: Mr. Speaker, the hon. member for Edmonton West (Mr. Lambert) is to be commended for focusing the attention of the House on the sometimes precarious situation facing the ever-expanding number of Canadians now in their 60s who, because of the dramatic life-saving advances in medicine and technology in recent years, can look forward with confidence to a considerably longer lifespan than previous generations could anticipate.
I am not talking just of a longer life, but also of a healthier and potentially more productive one. I had a good example of this in the last few days in my constituency office. A gentleman came to see me. He had been in touch with me in the past, and had retired at the age of 66 from the Canadian forces base at Lowther, near Kapuskasing, where he had been granted an optional extra year because there was no one else to take his place. But now this year, when he is 66 and they have someone else to fill his job, he is obliged to leave. Of course, this is very sad, particularly because this individual happens to be a very young 66; he is vigorous and capable and has a great deal to offer.
It can be a very tough problem. Of course there are other arguments, and I know this as do other hon. members, that mitigate against keeping people for a long time.
In view of the furor south of the border which Time magazine calls "the revolt of the old", I am not surprised to hear motions similar to that moved by the hon. member for Edmonton West. What is disappointing in the motion is the assumption that the Government of Canada has imposed a universal, compulsory retirement age of 65 in legislation. Let me read a portion of the motion, as follows:
-the government should consider the advisability of enacting legislative proposals to raise the compulsory retirement age from 65 ...
1 want to emphasize that the federal government has never enacted legislation to force all active, able-bodied Canadians to leave the work force at age 65. Dr. Selye, who is a world authority on the body's physiological response to stress, and who is a Companion of the Order of Canada, has made some very pertinent observations on retirement on the basis of 40 years of observation. He has remarked:
... for many older people, the most difficult aspect of retirement to bear is the feeling of being useless... The continuous leisure of enforced retirement is certainly not an attractive way of life.
To suggest that Canadian statutes currently impose mandatory retirement on each and every citizen who reaches 65 years of age is simply incorrect. If such were in fact the case, the courts of this country would be overflowing with the estimated 188,000 Canadian men and women, 65 or older who, according to Statistics Canada, were employed in September, 1977. In fact during that same month the participation rate for Canadian men aged 65 to 69 years of age, that is, the labour force in that group expressed as a percentage of the population for that group, was estimated to be 26.7 per cent. I said earlier that 188,000 Canadians 65 years of age and over were calculated to have been employed in the labour force in Septem-
November 7, 1977

ber, 1977. This figure can be classified further into two additional groups. Of these estimated 188,000 workers, 124,000 were 65 to 69 years of age, and 64,000 were 70 years of age and over.
If the motion of the member for Edmonton West were to be taken literally, these 64,000 Canadians would be tossed from their positions and legally forced to remove their experience and expertise from the labour market. Sixty-four thousand Canadians would find themselves ostracized from the work force simply because they were 70 and not 69. 1 do not think any member can honestly expect this or any government to take this kind of step. 1 do not think the hon. member for Edmonton West intended that such steps be taken; in fact I am sure it was not his intention.
Many of civilization's most significant contributions in the diverse fields of science, art, music, literature, law, philosophy, even in the realm of politics, were made by men and women who were leading productive lives long after age 70. Illustrious names such as Einstein, Galileo, Michelangelo, Goya, Picasso, Verdi, Voltaire, Socrates, Plato, Kant, Confucius, Queen Victoria, and Winston Churchill form a far from totally inclusive list. In fact hon. members need search no further than the confines of this Chamber to appreciate that the ability to make important contributions to society does not cease automatically once a person celebrates a birthday. We cannot afford callously to toss aside the resources, the rich vein of experience, knowledge and expertise to be mined from the most senior strata of our population.
Certainly we could not contest the assertion that, for some Canadians, to work beyond 65 years of age is the healthiest thing they can do not only for their own well-being, but also for the social and economic health of this nation. But is that the case for all Canadians? Do we all want to spend the twilight years of our lives toiling on a production line, drilling in a mine, or sitting behind a desk? I think not. After all, for many Canadians retirement is the culmination of a fruitful career, a fulfilling segment of life when time-consuming interests can be pursued. For others, it means simply that they can take a long awaited rest from their labours, in relative financial security. If it were ever possible for the Government of Canada to enact legislation such as the hon. member for Edmonton West has proposed, I fear it could well prove to be to the detriment of the needs and dreams of a vast segment of our population.
In this regard, I can appreciate that considerable attention of late has been focused on the United States' movement to enact such legislation. However, while it may be commendable to clamber aboard the United State's bandwagon on many issues, it is not clear that it would be appropriate in this case. The Canadian government has a limited mandate in this social area. I think that is the nub of the problem.
Much of the constitutional authority on the subject of pensions rests with the provinces. Hon. members will recall that the enactment of, first, the Old Age Security Act, and later the Canada Pension Plan, necessitated amendments to the British North America Act to grant the federal govern-
Age of Retirement
ment sufficient constitutional authority to proceed with the establishment of these programs. In the field of private pension plans the federal government has jurisdiction over only the limited number covering certain types of federally-regulated employment. The majority of private pension plans in Canada fall under provincial jurisdiction.
1 am quite concerned that Canadians might be led to believe that the federal government has somehow instituted a compulsory retirement age through our two national pension schemes. What must be underlined is that neither the Canada Pension Plan nor the old age security program imposes a compulsory retirement age on Canadians. The limits which both these programs contain are simply provisions setting a minimum age of 65 for receipt of retirement pensions. That point is clearly made by the hon. member for Edmonton West. I appreciate that.
Here, perhaps, is the root of the confusion. The government plans allow payment of benefits as early as age 65. For a variety of reasons, employers across the country have followed the pattern and instituted normal retirement ages of 65 for purposes of their pension plans as well. I should like to stress the word "normal" because many, perhaps even a majority of Canadian pension plans contain provisions which explicitly permit the deferment of a member's retirement date. In other words, even in the private sector the mechanism is flexible enough that retirement at age 65 is not a hard and fast rule. Of course it cannot be ignored that the private pension plan can be used as a rationale for retiring employees at 65. However, it should also be remembered that, for most private plans, the pension contract is subject to collective bargaining. Thus, employee representatives must share the responsibility for establishing a retirement date in these cases.
I have stated that both the Canada Pension Plan and the old age security program provide for the payment of benefits when the applicant reaches age 65. This was not, of course, always the case. Many members will remember that the decision to reduce to 65 the age for payment of these benefits received widespread acclaim. Also, it was not so very long ago when the Canada Pension Plan applied retirement and earnings tests to Canadians between the ages of 65 and 69 who were in receipt of retirement pensions. Under these tests, a Canadian who continued to work beyond age 65, for example, could not receive any benefits, while even those who had retired were subject to a test reducing their Canada Pension Plan retirement pension by half of all earned income on a specified salary band.
The rationale for these tests was the idea that a Canada Pension Plan retirement pension should be paid only to those who were truly retired. Parallels were drawn with the private pension field, where there is an implicit retirement requirement in the sense that an individual cannot be in receipt of a retirement pension from his employer's pension plan and simultaneously work for the same employer. Thus, at the time the plan was being designed it was decided to provide a pension on retirement rather than an annuity payable automatically at a prescribed age, such as the old age security
_________________________COMMONS DEBATES__________________________________November 7, 1977
Age of Retirement
benefit. The retirement pension was intended to provide a partial replacement of earnings lost due to retirement.
However, as time went on the rationale underlying the retirement and earnings tests was continually questioned and criticized. After all, why should an individual's retirement pension be reduced as a result of earnings received after retirement when the Canada Pension Plan retirement benefit is, in fact, an earned pension paid entirely from the contributions of Canadian workers and their employers? Clearly, the earnings test served as a deterrent even to part-time employment. It was argued that the decision on whether or not to remain in employment or to seek work after retirement ought to be the free choice of the individual, rather than being curtailed through artificial mechanisms such as retirement and earnings tests. For these reasons the retirement and earnings tests were removed under the authority of Chapter 4 of the Statutes of Canada for 1974-75.
Now a contributor can draw his Canada Pension Plan benefit at age 65 even if he continues to work. Moreover, he can decide not to draw his retirement pension at that age but continue to contribute for additional years, up to age 70, in order to increase the size of his benefit.
Clearly, then, while relaxing the conditions facing the Canada Pension Plan pensioners who choose to work, the amendment to the Canada Pension Plan did not in any way impose a mandatory retirement age of 65 on the Canadian public. On the contrary, by removing financial penalties it served to encourage those aged 65 to 69 to remain in the active work force. I might add parenthetically that only this year the Quebec Pension Plan followed the example of the Canada Pension Plan with respect to the earnings and retirement tests.
What about the old age security program? Universal old age security pensions began in January, 1952, and provided a universal benefit to every person in Canada aged 70 or over who met the residence requirements. Whether or not the person was employed did not enter the picture then, nor does it now.
Over the years successive amendments to the legislation have increased the level of benefits, lowered the age of eligibility, and relaxed the residence requirements. The Canada Pension Plan which, as we all know, went into operation in January of 1966, provided an additional earnings related retirement pension for all who contributed. When the Canada Pension Plan was passed, amendments were made to lower the pension age under the Old Age Security Act as well as the Canada Pension Plan. It was reduced one year at a time-and we all know that story-until finally, in 1970, the pensionable age under the old age security program had been lowered to 65 years. However, even with the lowered pensionable age an individual need not cease working to receive old age security benefits. This does not enter into the determination of his eligibility.
For these reasons it would be utterly incorrect to imply that the Canada Pension Plan or the old age security program

compel Canadian men and women to quit the work force when they are willing to continue working. On the contrary, these two government-administered programs give concrete financial support to those Canadians who exercise their right to work.
It cannot be denied that, for some, Benjamin Franklin's famous aphorism, "There is nothing wrong with retirement as long as one doesn't allow it to interfere with one's work", is fraught with truth.
Let me expound for a moment on the long-term implications of various retirement trends that are predicted to spread across this country. It has become clear that there are problems associated with early retirement. It does not take a mathematical wizard to reach the conclusion that the younger the age at retirement-and hence the longer the expectation of life thereafter-the more severe is the impact of inflation. Too many pensioners have discovered too late that they retired too early. The adverse effect of early retirement in an inflationary environment can destroy a life-time dream of a leisurely and rewarding retirement. It is for this reason that the Canada Pension Plan and old age security benefits are indexed to the cost of living.
In addition, if the predilection for an even lower retirement age gains widespread popularity, some experts foresee fiscal difficulties for the next generation of Canadians as the tidal wave of the so-called baby boom causes a flood of people to reach pensionable age at the same time. Within the lifetime of those Canadians the ratio of pensioners will double. This may result in a reversal of the current trend toward early retirement. However, there is no reason to expect that we will ever have to force people to work to a minimum age or force them to retire at some maximum age.
Hon. members must not lose sight of the fact that retirement itself is a social institution. When presented with a motion such as the one we have before us today we must first question the validity of a full cessation of work as a desirable end in itself. Even if it were within the constitutional realm of this House to do so, I cannot help but ponder aloud whether, as elected representatives of the people of this nation, we could in all good faith seek to impose legally such constraints upon the work force.
Secondly, we must weigh very carefully the import of giving any serious consideration to a proposal which could be construed as endorsing age 70 as an appropriate, normal retirement age. We must not inflict the hardship of prolonged working careers upon those Canadians who, quite rightly, feel that at age 65 they have contributed their just share to the well-being of our country and who wish to be free to spend their remaining days as their own masters.
Ideally one's later years will be years of self-realization, creativity, stimulation, development, growth and self-respect.
A motion such as the one we have before us today will bring us no closer to assisting Canadians to attain this objective. It might, however, impede us and them.


Mr. Max Saltsman (Waterloo-Cambridge):: Mr. Speaker, first I should like to congratulate the hon. member for Edmon-
November 7, 1977

ton West (Mr. Lambert) for raising the matter of retirement in this House. I should point out to the hon. member that I will stop shortly before six o'clock in order to give this House an opportunity to refer this matter to a committee. I do not want to be the one to talk it out.
1 disagree with the position taken by the hon. member for Edmonton West; not that I always have or always will. In the past I think I would have been very sympathetic to the proposal he put before us today, and I think that perhaps at some time in the future I might be. For the moment, however, I see our problem in a different light.
I suspect that we are going into a society which, despite the best efforts of governments to improve the situation in terms of employment-a great deal of improvement can take place at this time-there are not going to be enough good jobs to go around. This is true not just in Canada; it is true in the western world. We are facing a phenomenon in which, despite the growth of western economies, and despite the large number of highly educated people coming out of our school systems, the number of good jobs is becoming smaller and smaller.
We have a choice. We can keep those who are holding the good jobs in those good jobs longer, while we keep young people in school for a longer period of time or pay them unemployment insurance or give them jobs inadequate to their talent, or we can recognize what is happening to our civilization and try to do something about it.
In my experience, there seem to be two kinds of people working past the age of 65 or, for that matter, past the age of 60. There are those like ourselves, judges, executives and self-employed professionals who have very good jobs. They like their jobs. Their jobs are their hobbies, their entertainment. Their jobs are everything to them. They live and breathe their jobs. That is fine, because they are very exciting jobs to have. There are many problems associated with them, there is insecurity perhaps, but nevertheless they are exciting jobs, and these people are very reluctant to give up those good jobs regardless of their age. It is quite true that many people in these good jobs can function extremely well, well past the age of 65. Perhaps they can function even better after the age of 65.
However, there is another very large group of people who are working past the age of 65, not because they want to work and not because they have good jobs but simply because our pension schemes are inadequate, and they have to work.
When I go to my constituency, and I am sure this is the experience of other members, it is seldom that someone comes to me and says that we must raise the age of retirement to 70 or 75 because that person does not want to stop work. What I do get is people saying that it does not make much sense for them to slug it out in a factory until they are 65 when there are almost one million unemployed, half of them young people, who would like to work. "Why is there not a pension arrangement whereby people like myself could retire at age 63, 62 or 61? It would open up these jobs for younger people who want
Age of Retirement
them," they say, rather than having them live through a kind of debilitating unemployment. Some young people face almost a permanent state of unemployment as a result of what is happening in our society.
I say to the hon. member for Edmonton West, and 1 say it critically, that his sentiments do him justice. However, in light of what is happening in our society, is this the appropriate time to do it?
The question being put to this House to consider is important and should be debated. I hope the consequence of the debate will not be to raise the age of retirement. Rather, 1 hope it will be to increase the pension arrangement for people who want to retire because there are more of them than those who want to hang on to their jobs.
I know people who want to hang on to their jobs. They are the ones who have it made. They have seniority. They have mastered their work so they can almost do it with one hand tied behind their backs. They like the social benefits, the emoluments that come with the job. Because they are senior people they are looked up to, and they command a fair amount of respect. However, that is hardly a job.
However, the auto worker in a factory, slugging it out day after day tightening a nut, can hardly wait to retire at age 50. The same is true of the coke-oven worker, the miner, or the person operating a sewing machine. Those are difficult grinding jobs, as are most jobs in this world.
To advance a proposal that is really attractive to a minute section of our population under the guise of civil liberties or the freedom or right of the individual to do as he pleases, while our society has a serious social problem and economic dislocation, is not the correct way of going about it. If this House wants to do something about correcting a grave inequity in our society, it should lower the age of retirement for women to 60.


An hon. Member:: Men also.


Max Saltsman: Men later. Women's lib will not like it because in this area they have done a terrible disservice to the women of this country. Unfortunately, women have had some of the most rotten, lowest paying jobs. They are ready for retirement at 60. I guess we dare not talk about that because if men are not ready to retire at 60, then women should not retire at 60.
If the public were ever asked to give its opinion on this, I think it would be found that lowering the age of retirement to 60 for women, and for men progressively later, would be very much what people want. Certainly it would be good for our economy.
We really have one of three choices. We can go on having people work past the stage where they really want to work. That is what most people are doing. Most people work not because they are crazy about their jobs but because they cannot afford to quit. Our pension provisions are not adequate. If a working man wants to quit and his wife is not in receipt of the old age pension, even with the kind of supplementary arrangements that exist, it is still not sufficient.


Mrs. Pigott:: Some of you men are old at 35.

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Age of Retirement


Max Saltsman: Of course some men are old at 35, and some people are as young as the hon. lady at 27. One of the difficulties with an argument of this type is that if you talk about society generally, making over-all rules, you are bound to find examples of injustice in a particular case.
Somebody might say that if we had forced Einstein to retire at 65 or Madam Curie at 60, it would have been a terrible thing. Even if they had been forced to retire, their brains would not have retired. They would have kept on working. Therefore it is not much of an argument.
There is a great deal more I should like to say, but time is running out. I say to the hon. member for Edmonton West, through you, Mr. Speaker, that the motion is important and worthy. It should go to committee and it should get an opinion from the House. Therefore, I will resume my seat. I sincerely hope it will not be talked out but will find its way to the committee.


Eudore Allard: Mr. Speaker, first I would like to congratulate the hon. member for Edmonton West (Mr. Lambert) for having finally understood that for a long-may I call it six o'clock?


Some hon. Members:: It is not six o'clock yet.


Eudore Allard: There are only a few minutes left. I would like to congratulate the hon. member and others for having finally realized that for a long time we have been asking for such legislation to lower the pension eligibility age to 60. We do not want to make this compulsory, but we would like the worker who wishes to retire after many years of work to be able to do so. Of course, since these people have started working hard when they were 12 or 15, like the member of the New Democratic Party said earlier, when they reach 60 they have contributed at least 40 years of hard work to society, earning barely sufficient wages and trying to raise their families in spite of their hardships. Therefore, it would be quite natural for those people to take it easy finally and to be able to retire at 60.
The hon. member for Waterloo-Cambridge (Mr. Saltsman) said that women should be able to retire at 60, and I agree, but why should we discriminate? Men have the same needs as women and they should also be eligible for retirement at 60.
As I said earlier, for many years, we of the Social Credit Party have been asking that the pension eligibility age be lowered to 60 and that the amount of pensions be substantially increased. After a hard struggle, we have finally obtained that the basic old age pension be increased to $150 or $149, I believe. Mr. Speaker, in my opinion we can never do too much for those people who have worked hard for many years, and I very humbly submit that the pension eligibility age should be lowered to 60 on an optional basis, that is the individual concerned should be able to decide. If he wants or needs to keep on working, he should be able to do so. Sometimes it may

not be through love of work but because he has obligations. There are many people of 60 who still have children in school and they cannot afford to retire. This is why it should be up to the worker.


Mr. Deputy Speaker:: Order, please. The private members' hour has now expired.
[English)


Marcel Joseph Aimé Lambert: On a point of order, Mr. Speaker, I find this a little difficult, and I suppose there is this difficulty any time one has something to which hon. members would like to contribute and on which we would like a general disposition. However, private members' hour lost 15 minutes on what I considered a rather sterile debate on a point of order.


Mr. Deputy Speaker:: Order, please. The Chair has to apply the rule. One hour is allocated for private members' business and it has now expired.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. David MacDonald (Egmont):: Mr. Speaker, a few days ago I questioned the Secretary of State (Mr. Roberts) with respect to when we might expect a new film policy which would deal effectively with the difficulties which have been encountered for many years in terms of ensuring an adequate distribution system for Canadian films as well as a reasonable return for Canadian producers. I must say the minister's answer to my question the other day was not an encouraging one.
It was 12 years ago, on April 5, that we read in the Speech from the Throne:
You will be asked to consider... a measure to help the development of a feature film industry in Canada.
Since that time, with the exception of the formation of the Canadian Feature Film Production Corporation, which took place in 1967-68, there has been no reason to be over-confident with regard to the amount of support that the Canadian government has given to the development of this new industry. I want to be fair and recognize that the establishment of the Feature Film Development Corporation was a major initiative and that, without it, I doubt whether we would have seen the kind of film production which has taken place-I have in mind particularly the period immediately after its formation. But as
November 7, 1977

1 said at the time, and as I have been saying since, over the past decade, just having a government agency which assists in some way in the production of scripts and the provision of a certain amount of capital will not ensure the establishment of a nationally-developed feature film industry.
After almost ten years of the existence of the CFDC, the production of some 200 Canadian films, and the expenditure of about $20 million in public funds, we are faced with the fact that roughly 96 per cent of screen time in this country is dominated by foreign films. This means, of course, a much higher percentage in English-speaking Canada, probably closer to 98 per cent; the figure is less in French-speaking Canada. Around $250 million is spent by Canadians annually to see feature films and a large part of that sum is, of course, exported to the United States-something like $63 million in profits.
At the time the CFDC was set up, Canada was the sixth largest market for American productions, but since that time we have risen to become the largest foreign market for Hollywood. That is a depressing comment on the state of our own feature film industry. Last year the two major television networks, CBC and CTV, showed a certain number of Canadian films. The publicly-owned network, the CBC, showed four, and CTV showed five. For those who wish to argue that the private network is assuming a greater responsibility toward Canadian production than the public network, it is time to wave a flag. It is certainly a sorry statistic, a sorry admission for the CBC that it took so little responsibility with respect to the Canadian feature film industry.
In a recent article in the magazine Canadian Forum, Sandra Gathercole of the Council of Canadian Film Makers, writes:
The central fact of film production in Canada is that it is disconnected from its own market, and does not benefit from the enormous revenues generated by that market.
No less than 93 per cent of film rentals in Canada flow to seven American distributors, representing an annual outflow across the border of around $63 million. Think of the number of lost jobs, the loss of income to the Canadian economy, let alone the tremendous loss of opportunity for cultural communication.
As a matter of fact, American films have had for many decades a guaranteed access to Canadian screens through the two principal chains, Odeon and Famous Players, a functional quota vastly more effective than the weak voluntary arrangement worked out for Canadian films. In a television production, I think last year, called "The Great Canadian Culture Hunt", George Destounis, the president of Famous Players, made this comment:
It's been an historical fact that... major distributors align themselves with either one circuit or the other. People like Paramount, Warners and United Artists will play one hundred per cent Famous, and people like Columbia, and two thirds Universal, and one third Fox would play Odeon ... It was agreed, I understand, (in the) early forties how the breakdown (worked) when Odeon was first formed.
Adjournment Debate
If there is one area where there seems to be almost total control of the Canadian cultural system by foreign producers and foreign companies, it surely must be in the Canadian feature film industry. Indeed the CFDC, in its annual report published recently, acknowledged as much concerning the supposedly voluntary quota, which was vaunted by the previous secretary of state, for showing four weeks of Canadian films at regular theatres and one week at drive-ins. Neither Famous Players nor Odeon came even close to meeting their commitment. In the case of Odeon, less than 30 per cent either exceeded or even met the quota. In the case of Famous Players it was a bit better; the percentage was something like 42 per cent. Some 48 per cent of Famous Players theatres met less than one half the quota and 53 per cent of Odeon met less than one half the quota.
I think this is an indication that we are in a situation, to quote Sandra Gathercole again, where voluntary agreements have been about as successful as voluntary income tax. If we need a reminder from one of the ministers responsible for this matter, the Minister of Communications (Mrs. Sauve), speaking to the CAB last year, said that unless we take direct action to enhance the production capability of Canadian broadcasters, Canadian broadcasting will also go the way of The Saturday Evening Post.
I think we have a major dilemma on our hands, Mr. Speaker. It is not enough for the Secretary of State to say that he hopes to have an answer by the end of the year. Surely the whole question of culture and communication is basic to our sense of identity and our national unity. If the Secretary of State is genuinely concerned, as he seemed to suggest the other day in answer to me, surely we should have a more concrete and effective answer from the government than the one I have received to date.
Mr. Robert Daudlin (Parliamentary Secretary to Secretary
of State): Mr. Speaker, once again I should like on behalf of the minister to indicate our thanks to the hon. member for raising an issue which does not receive that much light in the House. As the hon. member has said, the minister agreed with the hon. member that questions of distribution are indeed the key to a resolution of the problems the industry is facing. He indicated as well that the government is now considering proposals concerning which it hoped to make an announcement before the end of the year.
That the hon. member would argue that this in fact is not a sufficient response is indeed a bit of a puzzle, Mr. Speaker, unless one is to argue that what the hon. member is saying is that the end of the year is not soon enough, that he wants something sooner, say today, or even yesterday. As I say, the minister is in fact committing himself to some kind of statement before the end of the year.
I stress the government's commitment to assist in whatever way it can the development of a Canadian film industry. I stress this general commitment because, in trying to resolve the many complex problems that arise in the film industry, the over-all objective is often forgotten, namely, the encouragement of the production of Canadian films because they are an

November 7, 1977
Adjournment Debate
important means of cultural expression that can teach Canadians about themselves.
Without in any way limiting the access of Canadians to foreign films, we need also, and should have, films that are produced by Canadians which reflect the Canadian experience. The government finances feature film production directly through the Canadian Film Development Corporation and indirectly through the 100 per cent capital cost allowance, which encourages Canadian taxpayers to invest in Canadian films. In the 38 Canadian productions certified for 100 per cent capital allowance to date, 88 per cent of the key creative positions were filled by Canadians. Further, only individuals and corporations paying Canadian taxes can benefit from this incentive, and these people, to become eligible for the 100 per cent capital cost allowance, assume ownership and control of the film.
I am glad that the hon. member acknowledged the government's incentive in regard to the feature film industry and the feature film development corporation. He indicated that the government has responded in some manner; but it is unfortunate he feels that it has not been a reasonable response together with the government's movement toward a film policy.
There is no doubt that this incentive is encouraging the production of films which are financed and created by Canadians. In the area of distribution, the situation is far more serious. As the hon. member has stated, the major distribution and exhibition companies in this country are foreign-owned, and the profits they earn in Canada are not usually reinvested in ways that benefit our film industry. As the minister indicated to the hon. member at an earlier date, this is a situation which greatly concerns the government. The government is considering proposals to deal with this situation and hopes it will be in a position to make an announcement before the end of the year.


FINANCE-EFFECT ON JOBS OF TAX INCENTIVES TO CORPORATIONS
Reginald Cyril Symes: Mr. Speaker, on October 25 I raised a question with the Minister of Finance (Mr. Chretien) concerning the income tax policy and job creation in industry. I should like to deal with that matter in more detail today, because I believe the minister did not answer my question fully enough.
I referred to the example of Northern Telecom, which is a subsidiary of Bell Canada. Under the budget announced last March, and subsequently introduced by the Minister of Finance under the general framework of the $1.2 billion in corporate tax concession to create jobs, Northern Telecom would receive approximately $3 million. At the same time as it is receiving this benefit, it has announced that it is laying off over 1,000 workers, mainly in Ontario and Quebec. Also I should like to draw to the minister's attention that Northern Telecom is not an isolated incident.
The Alcan Company of Canada, under the same tax provisions, will receive an $11 million tax break. That company has announced already that it has laid off 400 workers in Newfoundland in favour of expanding an operation in Mexico. Of course the House is aware that INCO has received $10 million in tax concessions under this provision, and it has announced laying off over 3,500 workers while it expands its operations in Indonesia and Guatemala. The Noranda Company will receive approximately $5 million under tax concessions in the budget, and it has already laid off 400 employees, and the future of some 1,700 employees in the Gaspe region is in doubt.
The corporate tax incentives announced in the budget for the purpose of expansion in industry, thereby creating jobs, are not working. The minister had better come clean and admit this in order that $1.2 billion will not be wasted in concessions to large corporations when they are not fulfilling the intended purpose of those concessions, namely, to create jobs.
Why should any businessman in his right mind use these incentives at this time to expand his operation when, even with these incentives, he realizes that industry in this country is working only at approximately an 80 per cent capacity? Because demand is down, business cannot sell its total potential of goods produced. Therefore any kind of incentive along this line at this time, when demand is so low, will be ineffective.
The statistics bear me out on that. Since the announcement of these concessions, in manufacturing alone we have had over 34,000 lay-offs despite the so-called incentives which were to create and produce new jobs. These particular incentives are the wrong ones at the wrong time. That kind of money could be better spent in this economy.
1 know the minister has advanced the argument that if we did not give this $1.2 billion to the corporations, the lay-offs could have been worse. We were not told this when the budget was first introduced. We were told that these incentives were necessary for expansion and new job creation, not to prevent the situation from getting worse. Also, it is very easy to make that kind of argument, that if we do not give these incentives, unemployment will be worse. 1 would like to know, if companies are claiming that, where is the guarantee on the part of the government that if it gives these kinds of tax breaks some condition must be attached to them?
If we are going to deprive the public Treasury of $1.2 billion in corporate taxes, some conditions should be attached to that kind of tax break. The minister has said that there is no scrutiny of the various industries to see that they are fulfilling the requirements or the promises that the minister announced in his budget.
The largest 1,000 corporations in this country have had more tax concessions than any other sector in our economy. I think immediately of the fact that they have been able to defer paying $9 billion in corporate income tax. That is like a $9 billion interest free loan. That, and the recent announcements in the budget, are the wrong kinds of programs in terms of

November 7, 1977

what we need for job creation. The result of all these kinds of tax breaks and concessions has been more lay-offs, more expansion by the multinationals outside of Canada, and the highest unemployment we have had since the depression.
1 would argue that it would be far better to take that $1.2 billion and redirect it, in terms of personal income tax cuts to stimulate demand by low and middle income Canadians, and some of that largesse should go to small businesses which are starved for capital, which still employ 60 per cent of the people in this country, and which for far too long have been ignored by the Liberal government whenever it gives tax breaks to stimulate employment.
I am asking the minister will he please explain to me how this kind of program makes sense when all the statistics indicate we are getting lay-offs instead of job creation.
Mir. Ed Lumley (Parliamentary Secretary to Minister of Finance): Mr. Speaker, as my minister replied to the hon. member on October 25, and again today during the question period, it is almost impossible to determine the long term benefits of any tax incentives by isolating one specific period of time. If the hon. member looked at past history he would recognize that the growth of jobs, which is the real solution to solving unemployment, has been the growth of employment in the private sector. If our private sector is to be competitive with its international competitors, tax incentives of this nature are imperative.
The hon. member talks about the capacity in the private sector here in Canada today. He must also consider that some of these incentives are not just to solve that situation but also for the modernization of equipment, again to maintain international competitiveness.
The extension of the investment tax credit proposed in the March 31 budget was one of a number of incentives announced at that time to stimulate business expansion and regional growth, to assist small business, and to encourage research and development. The beneficial impacts of such measures naturally take a little while to be fully felt. When they are, they will have a positive effect on economic growth and thereby on job creation. These measures, and the additional measures announced on October 20 by the Minister of Finance (Mr. Chretien) in his economic and fiscal statement, are necessary to overcome Canada's short term economic difficulties and to set the stage for sustained growth in the private sector.
The government therefore attaches a high priority to the passage of legislation to implement the various measures- including the corporate tax incentives-so that their impact on the economy will not be any longer delayed than is absolutely necessary. These measures are necessary to restore business confidence, to maintain Canada's competitive position and to get the economy moving-in short, to get on with the job of providing jobs.
The hon. member for Sault Ste. Marie (l$r. Symes) indicated that we should be putting more emphasis on small business. If he looks at specific details of the economic measures
Adjournment Debate
announced by the Minister of Finance on October 20, and by his predecessor on March 31, he will see there are many stimuli to provide incentives for small business to expand.


GRAIN-WHEAT-REQUEST FOR CHANGE IN UTILITY GRADES
Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, I am happy to have the opportunity to debate a problem which affects my constituents and a good number of the wheat producers in the west. It is a recurrent problem that has come with the rain we have had, particularly in the northern prairies. Last week, in reply to my question, the Minister of Agriculture (Mr. Whelan) gave a crop and weather report but did not shed much light on this problem, perhaps due to its technical nature.
The problem of low grades of wheat and their eventual disposal is an economic and recurring one in western Canada, particularly in wet seasons which seem to occur every three or four years. The old grading system which was changed a few years ago had more grades of grain, and therefore when wheat was weathered and damaged it was easier to fit it into a fairer grade in order to give the producer a better return for what he actually produced. The introduction of the new grading system for hard red spring wheat has created problems at the lower end of the scale. I think perhaps the grading system is satisfactory at the top end of the scale. By and large the top three grades seem to be accepted with a differential of something like ten cents a bushel each between No. 1 Canada Red Spring and No. 2 and No. 3. However, there is a 50 cents differential per bushel between No. 3 Canadian Red Spring wheat and No. 3 utility which gives cause for great complaints and grumblings and, furthermore, it is extremely damaging to the growers who live in the Parkland areas. I believe that the present grading of wheat is really designed for the hard spring wheat areas of the southern prairies, mainly in Saskatchewan, and that the Wheat Board and the Grain Commission have not dealt fairly with this problem in the Parkland areas of the northern prairies which, in years such as this, have an abnormally large amount of low grade wheat.
To show the wide range of grading, for instance, an hon. member showed me two samples that a constituent had sent to him, one of which is very good looking wheat that weighed 61 pounds to the bushel. The other was a very poor sample weighing 38 pounds to the bushel. Both were graded No. 3 utility and the producer will receive payment for this grade. Considering the vast difference in quality between the two samples, it is obvious that the grading system is a mess. I believe that part of the problem is due, at least in practice, to the workings of the Board of Grain Commissioners whereby wheat with hardly any damage at all is relegated to this No. 3 utility grade.
I must suspect that the Canadian Wheat Board and the grain handling companies are not all that unsympathetic to this arrangement. In times of surplus of wheat, all of this No. 3 utility will likely move into feed channels. But there are

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Adjournment Debate
certainly occasions, and I think this year is one of them, where as much as 50 million to 100 million bushels of wheat might move into the milling trade, particularly if world supplies of wheat become low. Although the world wheat surplus is quite large, recent market reports indicate that the Russians are now in the market for larger quantities of wheat than was anticipated and that the price of wheat has risen about 50 cents per bushel in the past month or so. Whether they would be interested in this low grade wheat we have produced on the prairies this year I am not sure, but any large cut in the American surplus would allow our wheat to fill markets around the world. The American grain trade may well bring that country much higher wheat prices because of the coup of the Canadian Wheat Board last fall in selling most of its wheat at very low prices. Prices in the Chicago exchange are more than 50 per cent over what they were last fall.
Now, Mr. Speaker, this problem is not a partisan one. It affects to a varying degree, all farmers, regardless of their party, on occasion, and should be explored. Surely more effort might work out a more reasonable solution such as the possibility of introducing a grade between No. 3 utility and No. 3 CRSW. If it is in the interests of the economy of handling, that a large amount of wheat is relegated to one grade with widely varying qualities and values, then we should very carefully consider whether or not some adjustments should be made in this area. I would hope that the minister would look at the problem and have his experts carefully study the situation. It is certainly to our national advantage to develop the best possible system of identifying the varying qualities of our wheat, while at the same time bearing in mind the economics of selling, handling and moving this wheat. I believe that the problem has been looked at before and that results have been inconclusive. 1 understand also that some government machinery may be in motion to look at the situation.
I have entered this adjournment debate, in which I am not a frequent participant, in order to pinpoint the gravity of the situation for the wheat farmer in my constituency as well as the many other farmers in the three prairie provinces that are affected this year.
[ Translation]


Mr. Yves Caron (Parliamentary Secretary to Minister of Agriculture):: It gives me pleasure to answer the question put by the member for Dauphin on the 26th of October 1967.
Schedule I of the Canada Grain Act now indicates classifications for three different grades of Canada utility wheat. These grades were established in 1971 and are applied for the classification of wheat in the rural terminal elevators. The first two grades consist namely of varieties designated for uses other than bakery. The third grade includes all the other varieties and types which do not belong to other classifications because of damage or excessive lightness.
The Board of Grain Commissioners for Canada has estimated that the percentage of No. 3 utility grade for this year's harvest is around 16 per cent because of the bad weather. The split of this grade into one or several other classifications will increase the stress on storage facilities and consequently will

not bring any benefit to either producers or consumers. Therefore, the Canadian classification system has enabled our clients to get the benefit of high quality products associated with standardized classifications. Depending upon their classification these products are in great demand by foreign customers. The assurance of a standard classification of our grains has always helped us in our sales.
The same situation happened again in 1974. After consultations, the government at that time decided not to change our classification system and it all worked out to the satisfaction of the buyers. However, because of an exceptional situation due to rainy conditions in the west, it might be necessary to consider the need for reviewing the wheat grading system. As the minister indicated in his answer on this subject on October 27, experts in this field are now considering the possibility of revising the grades. Indeed the committee on western grain classification will meet this week and when a decision is reached I will be pleased to advise the hon. member.


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


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



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Chretien that Bill C-ll, to amend the statute law relating to income tax and to provide other authority for the raising of funds, be read the second time and referred to committee of the whole.
Marcel Joseph Aimé Lambert: Mr. Speaker, before private members' hour I had been talking about some of the proposed changes in the insurance company provisions. Here we will need a much more detailed explanation from the minister than is contained in the ways and means motion and in the bill.
The language of the bill is like any income tax bill. 1 do not think one has to apologize to anyone. It is terribly complicated. If you want to apologize and say you do not understand it, you join 99.9 per cent of the people of the country. There are only a few tax lawyers, tax accountants and people at National Revenue who understand the Income Tax Act. I do not make any pretext of so doing; however, I think I understand some of the principles that apply to income tax.
November 7, 1977

In so far as declaring that a loan against the cash surrender value of a policy shall be to some degree taken into income, in so far as the income portion is there at the time the loan is made this seems to be in the present day something that may be justifiable. It would be very simple for the policy to have been built up, a loan taken and not repaid.
I do not agree with the provision that interest payable on that loan will not be chargeable by a businessman who borrows against his life insurance in order to get working capital, or for inventory purposes or something of that nature. There is a very arguable case that that interest is a source of capital which he has to borrow from someone.
He would be entitled to charge up the interest if he got a loan at a co-op, credit union, bank or trust company. Why not from his insurance company? He is paying interest on the money and it is being borrowed for purposes of business. It is more than nit-picking in so far as the Minister of Finance (Mr. Chretien) is concerned, not personally, but in so far as the proposals he had put forward are concerned.
There are some things that do not appear in this budget. I want to tell the minister I have a private bill to undo something that went through under the guillotine at the time of the last Income Tax Act amendment, that is, the requirement that social insurance numbers must be provided on the applications for Canada Savings Bonds and furnished to banks when Canada Savings Bonds coupons are cashed or the banks will withhold 25 per cent of the value of the coupons.
That is an unwarranted extension of the use of social security numbers. I refer the minister to Hansard of 1964 when the principal of social insurance numbers was introduced. There were exchanges between the then leader of the opposition, the right hon. member for Prince Albert (Mr. Diefenbaker), and the then minister of labour, now President of the Privy Council (Mr. MacEachen). In an exchange between the then leader of the opposition and the then Minister of Labour on April 8, 1964, at page 1918 of Hansard we have this:


Mr. Diefenbaker:: Mr. Speaker, the minister seems to have such difficulty answering this question. The question, repeated to him, is this: is it clear and definite on his part and on the part of the government that any information given in these application forms will be used exclusively by the Department of Labour and will not be passed over to any other department? That is what 1 want to know.


Mr. MacEachen:: Mr. Speaker, my hon. friend will recall that the Glassco commission made a proposal that there be a common system of government record keeping and I am saying-and this is all the responsibility I can take- that this information is to be used for the unemployment insurance system and for the Canada pension plan.


John George Diefenbaker: And nothing else?


Allan Joseph MacEachen: 1 am not in a position to indicate at this stage what system of government record keeping will be involved in the future, but that is the present attitude of the government.


John George Diefenbaker: Oh, income tax and so on.


Mr. Pearson:: Certainly not.
Here is a further extension!
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I asked the Minister of National Revenue (Mr. Guay) whether there were any agreements between his department and, say, the Unemployment Insurance Commission or the Department of National Health and Welfare with regard to the exchange of information, particularly regarding social insurance numbers. I wondered whether this was a method of cross-checking the identity of individuals. The minister refused to answer. He skated around the question. He gave details concerning the improper use of agreements with regard to income tax information as revealed in the Laycraft inquiry, but he did not answer the question. I asked the minister again whether there were any agreements between the Department of National Revenue, the Unemployment Insurance Commission, the Department of National Health and Welfare or any other department or agency affecting the disclosure of social insurance numbers as they appear on income tax returns.
This extension, or requirement, was in clause 75 of Bill C-22, which went through last year, and the record will show that it went through "on division". I was opposed to it then and I am opposed to it now. Indeed, I have introduced a private bill with the object of removing that particular section. It amounts to a bureaucratic invasion, on the totally unjustifiable pretext that because a taxpayer claims not to have a social insurance number he is in some respects prejudiced. Mr. Speaker, there is no obligation upon anyone to have a social insurance number. It is argued that such a person would lose 25 per cent of bond interest when funds are deposited in a bank or a trust company. But that money could always be reclaimed a year later when filing for the $1,000 exemption on bond interest. What I am saying is: there was no need for all this in the first place. I wonder whether the Minister of Finance and his officials, or the Minister of National Revenue and his officials know how many elderly persons do not possess social insurance numbers. Do they know what it is like to try to get a number? It is almost as difficult as getting a citizenship certificate.


Some hon. Members:: Oh, oh!


The Acting Speaker (Mr. Turner):: Order. The hon. member has the floor, and I suggest we should all listen.


Some hon. Members:: Hear, hear!


Marcel Joseph Aimé Lambert: 1 hear an observation by the Postmaster General (Mr. Blais). He should be out trying to settle the business of the Post Office, which is the lousiest operation going-and that opinion comes from government backbenchers. The hon. member for Welland (Mr. Railton) down there ought to begin worrying about social insurance numbers, too, and listen to what the elderly citizens in his constituency are telling him about that subject. After all, many of these persons 75 and over were not born Canadians. They migrated to this country and do not have evidence of their citizenship. Overseas marriage certificates are no good when it comes to applying for social insurance numbers. Other primary evidence is needed.

November 7, 1977
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Even elderly persons who were born in this country find difficulty getting a birth certificate. Then there has to be secondary evidence, for example, a driving licence. But very few people over the age of 75 have driving licences, particularly if they are women. Then there are tax notices if property happens to be held in joint tenancy. There are all sorts of things. 1 have received any number of phone calls at my constituency office about this. And it is all totally unnecessary from the point of view of the public.
Of course some bureaucrat thinks it is great. Mr. Speaker, we do not run this country for the benefit of the bureaucrats, or at least we should not. The bureaucrats should be there for the benefit of the people, not the people for the bureaucracy. Yet, I am sorry to say, that is what we have come to. We are now being enmeshed, roped in, tied together for the benefit of some bureaucratic machine.
1 can recall the days when social insurance numbers were introduced. It was clear then that they would be used more and more, that there would one day be an absolute requirement to be identified by such numbers. So help me, I am sure some bureaucrat is going to say that from the day a child is born, "We can get the footprint off that child and issue a social security number right away."
As far as 1 am concerned, clause 75 of Bill C-22 should never have been passed. Back in the summer, of course, government backbenchers didn't even know it existed. I am sure the present Minister of National Revenue did not even know it existed at that time. I want to ask him to tell us what he intends to do about it and I should like him to give us information with regard to agreements, some of them secret agreements which are never published-


Mr. Guay (St. Boniface):: They are not secret agreements.


Marcel Joseph Aimé Lambert: They were secret agreements because they were kept from the attorney general of Alberta. The minister and I have a difference of opinion here, because I have read the testimony given before the Laycraft inquiry and he has not. I do not think he is really aware of what went on at that inquiry.
I turn, now, to another area. Last fall, I believe, the department issued an interpretive bulletin having to do with loans to employees to purchase shares or to finance housing. The minister was arbitrarily fixing the rate of interest to these employers at 8 per cent because, somehow or other, the volume of these loans had grown to such a point that the department had decided to tax the benefit of the lower interest rate. Well, Mr. Speaker, 1 do not know that the nature of any of these loans was changed by their frequency.
Business institutions in this country often made loans to some of their executives or employees being transferred from one part of the country to another, in order to assist them to relocate-they were prepared to make a loan amounting to almost 50 per cent of the value of the house; there might be no interest payable for the first two years and perhaps an interest rate of 4 per cent or 5 per cent for the balance of the term. The
(Mr. Lambert (Edmonton West).]
same practice was followed with regard to the purchase of shares in the company to be held by employees.
The former minister said that in accordance with Section 6 of the Income Tax Act she was deeming this a benefit and arbitrarily setting the interest rate at 8 per cent. Therefore the difference between 8 per cent and the actual rate paid by the employee was deemed to be a benefit added on to income, and to be taxed at the marginal rate. We asked some questions about this. We now see the minister incorporating it, not through an interpretation bulletin but in a clause of Bill C-l 1.
Now there is an exemption. First of all, loans to employees to buy shares will be exempt. Therefore a company can lend $50,000 or $100,000 to a manager at 2 per cent, one per cent, or at no interest at all, to buy shares in the company, and this is not to be deemed a benefit. If a manager or junior executive in the firm is transferred, a mortgage of up to $50,000 at anything less than 8 per cent which is advanced will not be considered a benefit. Then we have what I might call a nuisance threshold whereby any benefit of less than $500 will not be taxed; it will be exempt.
Why get into this whole area in the first place, Mr. Speaker? A $50,000 low interest loan to buy a home goes a long way; I do not suppose there would be very many such advances. There will also be precious few $50,000 or $100,000 advances to buy shares in a company. I should like to tell both ministers that there are many other benefits which are given to employees, such as low cost meals in cafeterias, free parking and suchlike. If the Minister of National Revenue is going to interpret Section 6 of the act as granting certain benefits which are taxable, he will have to get up early in the morning and work until late at night because the list will be very long.
This practice was quite all right two years ago, but now this year the practice has become tainted because the minister apparently feels there is too much of it. He means there is not enough of it among the assessors of the department; they feel cheated. Perhaps the Department of National Revenue should start making loans to some of its employees as they are transferred across the country. If that were so I do not think we would hear too much about this practice. I suggest to both ministers that this particular provision in the Income Tax Act should be withdrawn because it is nitpicking. It will not raise very much revenue and will create further complications, so why get into it? Are Canadians not taxed enough as it is?
Let me cite some figures provided by both ministers. On March 31 the former minister of finance estimated that in the year 1976-77 $14,885 million would be collected in personal income taxes. The present Minister of Finance on October 20 revised this figure to $14,620 million; in other words, there was a drop of $265 million. But what is the forecast? Even with these cuts the figure is $14,100 million. This is almost three times the corporate income tax estimate.


Mr. Benjamin:: Shame!
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Marcel Joseph Aimé Lambert: I hear "shame" coming from the NDP. They do not know that business operations are so bad that there is a reduced forecast of corporate income tax because profits this year are not good. It is amazing, Mr. Speaker, but they feel there is one big herd of milk cows in this country known as corporations, which you milk four at a time. You just hang on tight and milk, and that is the solution to this country's economic ills and to government's shortage of funds. You milk the corporations.
I am talking about taxing individuals. Millions of people do not pay tax. Under the last budget, with the additional $200 cut which is to apply primarily next January and February, a lot of presently marginal taxpayers will be removed from the tax rolls. But because of inflationary pressures and increases, even a 6 per cent increase in salaries or wages will mean that by the end of the year such people will once again be back on the tax rolls. It is all very nice to be off the tax rolls at the beginning of the year, but if you find yourself back on the rolls at the end of the year it is very little relief. I would have much rather seen a tax credit.
Personal income taxes have had a very regressive influence in this country ever since 1972 with the coming into force of the so-called tax reforms under a former finance minister, Mr. Benson. At that time there were dire predictions from all sides. I remember the former treasurer for the province of Ontario arguing with the then minister of finance and proving that the tax system was far too heavy-handed, that the impost by government under personal income tax was far too heavy for the Canadian economy. This has been proved because every year there have been cutbacks, and the government has always tried to justify why it has taken another half a million people off the tax roll. The very next year, however, inflation was moving them right up again, and with the tax rates and the tax system being what they are, it was just a case of a revolving door; you took them out at budget time, and a few months later they were back in as taxpayers. It meant very little.
If we took the totals claimed by the successive ministers of finance since 1968 or 1970 as having been taken off the tax rolls, we would not have any taxpayers left.
A recent proposal which was started by the Minister of Energy, Mines and Resources (Mr. Gillespie), and adopted by the government, to save energy, was to increase insulation. This was the giving of a grant of up to $350 to certain persons owning rather older homes, which are to be insulated according to certain standards. The idea is fine. A lot of those homes require insulating, and undoubtedly there will be a lot of energy saving. But it is absolute gall then to turn around and say to an individual, "We will help you to the extent of $350, but we will add the $350 to your taxable income". It is given with one hand, and then it is taken back with two hands. That is totally wrong. Why do it that way? If the grant is to be $350 for this particular house or that particular house, that is how much it should be. Why tax the grant? It that is the case, then
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that should be the contribution of the economy toward energy saving.
I have heard of people insulating their houses at a cost of $800 or $1,000. This is what it costs to insulate some of the older, larger houses. But to tax that grant causes me to invite my colleagues to vote against that particular item in Bill C-l 1.
I could go through all of the ways and means motions, but the hon. member for Waterloo-Cambridge (Mr. Saltsman) has some original comments to make. Also some of my colleagues want to speak about other matters. I hope and trust that the members of the House, particularly those on the government side, will take a very good look at this particular bill, because there are some things said and done in the name of income tax that should never see the light of day. I invite them to participate in the discussion at this level. They must have embarrassing times when they are faced with constituents who say, "What did you say at that time?" and all they can do is grin or smile and say, "I did nothing and I said nothing. I took it at face value."


Mr. Alexander:: They raised it in caucus.


Marcel Joseph Aimé Lambert: Bill C-ll was never even discussed in caucus. People who are interested in taxes are told they will receive recommendations, but what recommendations come out of the Liberal caucus? Not one, not one.
I will put an end to my remarks concerning this somewhat disjointed amending bill and pass the mantle on to the hon. member for Waterloo-Cambridge. I know he is champing at the bit. 1 expect to have a good half hour session from some of the Liberal backbenchers who will expound on the values of this bill, since they are backing the Minister of Finance. I hope some of the provisions will merit the fate they deserve and be defeated in the committee of the whole.


Some hon. Members:: Hear, hear!


Andrew Hogan: Mr. Speaker, I cannot help but let the hon. member for Edmonton West (Mr. Lambert) know that this evening the rabbi has consented to giving his place up to me.
It would appear on the surface that the opposition of NDP members to Bill C-ll is simply an anti-corporation move on our part without any substantial basis in economic theory. If we leave the theory aside temporarily, which has come to us in the post-war period mainly through the policy implications of John Maynard Keynes, as they relate to control of the aggregate or over-all demand in the economy; and if we stick to the pragmatic or practical results of such large tax cuts for corporations and investors, which come to $1.2 billion, we find adequate reason for the NDP to be apprehensive about such tax cuts as they relate to the major problem which exists in the Canadian economy today as we see it, namely, the creation of jobs for at least a half a million more Canadians out of the approximate 1.2 million who are out of work.
Our leader has pointed out the failures of the measures to boost job creation. This is already reflected in the fact that

November 7, 1977
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some of the firms, which will receive great benefits from the new tax measures, are now actually decreating jobs in spite of these extremely large tax cuts announced in the budget of last March. Some prominent examples have already been noted.
The Aluminum Company of Canada will receive approximately $11 million because of these tax cuts. One might say, "Well, so what? Won't that mean they will be able to increase jobs or at least hold the jobs they have?" The fact is that the Aluminum Company of Canada is laying off 400 workers in Newfoundland, which has the highest unemployment rate of any province in this country.
Another large multinational firm, which we all refer to as INCO, will receive a tax break of $10 million under the terms of Bill C-11; but we all know that between Sudbury, Port Colborne and Thompson, INCO is in the process of laying off some 4,000 workers.
Northern Telecom, another large company, will receive approximately $3 million under this bill, and they are not creating jobs with this but are laying off 1,000 workers. Noranda Mines will receive approximately $5 million and plans to lay off at least 500 workers, and it may yet go up to 1,000 or more.
In March, and again in the mini-budget presented by the new Minister of Finance (Mr. Chretien), the government has failed to get the economy revitalized because it is not providing enough of a stimulant to consumer demand for non-durable goods, durable goods, and for many services that are needed by the ordinary Canadian family. By putting the emphasis on these large tax deductions for corporations, it is obvious from the examples given above that they are not reducing the present high degree of under-utilized human beings, as shown by our official and unofficial unemployment figures.
The large corporations are not responding to corporation tax cuts by creating new jobs, as is apparent in the increasing number of lay-offs that are occurring in the manufacturing sector of our economy which is operating at about 80 per cent capacity. Their profit levels which, from some points of view, are healthy, are well below those that have historically occurred in the recovery stage of the traditional Canadian business cycle. Therefore the conclusion of the NDP is that the investment stimuli given in this budget are obviously not going to do too much to improve our national economy. What was needed, and is needed, are even more substantial tax cuts for the lower and middle income families in this country to give a push to the investment sector to help revitalize the economy and get the spending income stream moving at levels which will bring back confidence in the management of the Canadian economy both inside the country and abroad.
The government has insisted, both implicitly and explicitly, that such tax cuts to consumers could result in even higher levels of inflation. They would have to be very large tax cuts indeed, given the under-utilized capacity of our manufacturing sector at present, before demand, that is, over-all aggregate demand, would outstrip the capacity to supply these goods and

services and hence increase the general level of prices, causing what we call the inflationary spiral, higher than what will occur, of course, as a result of the increasing cost of fuel and of other imports, because we have become a net importer of oil, as well as because of the lower value of our dollar.
However, I would argue as an economist that in the long run our exchange rate, accompanied by the type of consumer stimulation that I have mentioned earlier, would be advantageous to our export trade, which in turn would give a greater lift to the business sector of our economy than the action which the government is now proposing, which is an inefficient way of allocating our scarce resources. In other words, the government is stressing too much direct stimulation of the private sector by way of corporate taxes which amount to over $1 billion, and yet corporations continually show they lack the confidence necessary to create jobs in this country. In fact we note that some of them are doing the very opposite to creating jobs. The money which they receive from the government to improve their cash flow is used, in the case of multinationals, to help subsidiaries in other countries, and to concentrate the corporate sector further through the buying up of securities in other corporations. It does not go toward creating jobs in this country. All this occurs while we as a nation have a $10 billion deficit in manufactured products and an almost $3 billion deficit in debt services, that is, in interest payments abroad.
Now I wish to speak briefly about how the government, through public expenditures, can improve the economy in the Atlantic region and elsewhere across the country. It is obvious that in the first place we should invest in energy and conservation. One reason why the attempts of the government in this direction have not been too successful is that they have not followed through with a national energy policy which would make sense to any of us. I have put questions in the House to the Minister of Energy, Mines and Resources (Mr. Gillespie), concerning this matter and he has spoken on this subject in Toronto in September, and again in Paris at the International Energy Agency meeting, having listened to such experts as the head of the Venezuelan Oil Export Corporation. He said that all the studies that have been carried out until now show that a complete breakdown of the OPEC cartel will mean that Canada will have a deficit in oil imports of at least $2 billion by 1985. He woke up very late to the fact that we will have great difficulties in that respect.
My province of Nova Scotia is the second province after Prince Edward Island most dependent on oil, and yet the government which has set up the Cape Breton Development Corporation knows that by 1985, or shortly thereafter, Nova Scotia will have to import oil from somewhere at a very high price, as the Venezuelan minister said two weeks ago when he spoke at the Gas Association meeting in Toronto. In 1985 we will have to pay $20 in 1977 prices for a barrel of oil. Of course, no one can be 100 per cent right on this, but this is not information that comes solely from the Minister of Energy, Mines and Resources. It is also information which comes from MIT studies which were not done at government instigation but, one suspects, by the CIA in the United States and by
November 7, 1977

OECD, as well as from a source in which I put the greatest credence, that is, the minister in Venezuela, a country greatly dependent on oil and which knows what is going on in the OPEC countries. This, of course, does not take into account the types of difficulties that we could have as a result of political difficulties in the Middle East.
The fact is that in a few years we will be facing immense problems. Yet coal is one of our resources, a resource that in the past was not considered to be as valuable as oil because, in the 1950's in Canada as well as in western Europe and the United States, the oil industry drove the coal industry into a sharp decline in so far as the supply of energy was concerned. However, that has changed, and it will change still further in the next ten years.
I say that the government has been seriously deficient in its energy policy in not opening two new coal mines in the Cape Breton area, at a time when the minister in charge told us that we in Nova Scotia will be facing this kind of deficiency in oil in the near future, to say nothing about the situation in the whole of the nation. Given this, and given the high unemployment in our area, which has been a chronic and traditional situation since the coal industry started to decline in the 1950's we must put particular stress, as I have suggested, on close co-ordination between the Minister of Energy, Mines and Resources, the President of the Treasury Board (Mr. Andras), and the Minister of Regional Economic Expansion (Mr. Les-sard), who is also in charge of DEVCO. They should be saying, "We know the resources are there, so next year we will start a new coal mine in the Cape Breton area". I shall have a little more to say on that in closing, and I shall be quoting what the premier of Nova Scotia said recently in that connection.
As we know, there are other possibilities for the Maritime Energy Corporation and this is a step in the right direction, but we can legitimately criticize the government for setting up the corporation so late. There are also other possibilities for the whole of the Atlantic region which can now be viewed in another light, possibilities which not long ago could not be considered as being practical, such as the Fundy Tidal power project.
In view of the chronic unemployment problem in my constituency I see the possibility of the Government of Canada getting a tremendous return on investment in two new coal mines that would help our balance of payments and, as I have said before, would help industries in southern Quebec. We all hope it will remain part of Canada, and indeed most of us are willing to bet on that.
Some companies are now burning oil. Can you imagine what they will have to pay if they are to survive in the Canadian economy ten or 12 years from now if the leader of the Venezuelan Oil Export Corporation and these studies are right, as is likely? They should be converting to coal. It should be part of the energy policy of this country to use coal, instead of putting all kinds of unemployment insurance into areas like
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that where there are literally thousands and thousands of potential coal miners who are willing and able to go to work. Such an approach would rectify this situation which has been with us since the 1950's.
I could say much more about this, Mr. Speaker, but I just want to say now that there is a great lack of an energy policy in this country.
1 do not know if all members will agree with me but, looking ahead for the next 15 years in Canada, I see a tremendous gap in the field of transportation, especially rail transportation. The Mirabels and other white elephants that were built across this country use the most intensive energy consuming type of transportation, the airplane. Instead of looking ahead and seeing that we have to put more money into freight and passenger rail services, we are allowing the other expenditures to go ahead. Let me give an example of how important this is to the nation, Mr. Speaker.
The Ontario utilities and Ontario steel plants-Stelco, Dofasco, Algoma-will be running out of coal within the next 15 years-metallurgical coal-and they are now planning along with MOT, along with the utilities, along with the CNR, to rebuild the railbed from Alberta and parts of British Columbia to the terminal at the Lakehead in order to move unitrains to get those coal resources to Ontario where they are desperately needed. They know it is not going to be as easy as in the past to get coking coal, metallurgical coal and low sulphur coal from the United States, for making steel and for thermal purposes. It will cost at least $2 billion to do that. I should mention that the steel plant in Sydney produces rail, primarily.
While they are doing that, why does the government not seriously look at these other matters? I took this up with the CTC and they admitted they were not doing it because of the shortsightedness of the Minister of Transport (Mr. Lang) and probably of others before him. They have tunnel vision as far as the airways and highways are concerned. This is unfortunate, especially in view of the difficulties in the supply of petroleum which will become increasingly serious over the next 15 or 20 years. They should be starting now to do cost benefit studies on the improvement of railbeds from Sydney to Montreal so that goods could be moved more easily, so that the Sydney plant could sell more rail, and so that the plant in Pictou County which produces cars for the movement of grain could be built up. If this were done we would not have thousands of unemployed at the Sydney steel plant or in Pictou County. This sort of thing does harm to the unity of this nation, and it happens continually.


Walter David Baker: That is a good speech. Right on.


Andrew Hogan: 1 do not know if 1 am being kidded by the hon. member or if I am being encouraged.


Walter David Baker: You are right on.

November 7, 1977
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Andrew Hogan: Mr. Speaker, if the government has any thoughts on this problem it has never made them public. It is hard to get the Minister of Transport to say whether he is considering it. I write to him and talk to him, but all 1 can find out is that the emphasis is on air travel. In my opinion, as far as major public sector transportation is concerned, the concentration should be on rail-not to the exclusion of air travel of course.
It is obvious that we need tremendous public investment in the fishing sector in the Atlantic region, both offshore and inshore. As I have said before, one of the reasons the fishing industry on the Atlantic coast has suffered as opposed to the Pacific coast, is that the late Lester B. Pearson, whom many revered because of his co-operative federalism and his international stance, neglected to be a nationalist at a time when we could have used one. As a result of his policies, offshore fisheries came into the area. Big foreign fleets owned, controlled or subsidized by other governments, have depleted our resource. Now the Minister of Fisheries and the Environment (Mr. LeBlanc) tells us that the mistakes of the last 15 years have to be made up. Mr. Speaker, it will take a very large public sector expenditure to do that. The inshore fishery that constitutes the greater part of the Atlantic area must not be sacrificed in order to promote a monopoly or a few multinational corporations that want to control the offshore fishery-[DOT] as important as the offshore fishery is going to be, and I have no objection to that.
1 would remind members from the Atlantic region-and some of them know this better than I-that 90 per cent of our fishermen are inshore fishermen. They expect new policies from this government and new investment in order to rebuild that fishery as well as the offshore fishery.
There is another sector in the Atlantic region that requires a great deal of additional public expenditure over the next few years. One of the difficulties of Confederation is the administrative inflexibility of some of our large bureaucratic institutions. Like CMHC they may be well intentioned, but they cannot seem to adapt programs established for a national income level to areas of low income like the Atlantic region. I am concerned about new housing starts, public housing and co-operative housing, and also about the repair of existing housing.
1 put a proposal to the Minister of State for Urban Affairs (Mr. Ouellet), and I put it to the former minister. I thought 1 was getting to the former minister, but then he was shifted to the Department of National Defence. However, the new minister seems to agree that, in a region such as Cape Breton, where there are many old company houses it would be a worth-while investment to set up, between DEVCO and CMHC, their own repair company to give these houses a longer life. That would save the government immense amounts of money in terms of public housing. It would provide decent shelter in their old age for people who have been good Canadians all their lives, as well as short term and medium term employment. That is a

must, but not just for my region. It is also a must for other parts of the Atlantic region. I travelled through northern Ontario during the Ontario election campaign, and it is a must there too. It is time we started to think about these things.
Because of the INCO lay-offs the Ontario government and to some extent the federal government are now discovering that they have a potentially large problem. It can multiply, because wherever there is a natural resource base which is non-renewable it can move, and where there are many people involved governments must plan beforehand and try to broaden those resource bases. Unless communities in those areas are built up in other ways with good construction sectors and so on, eventually there will be big problems like the problem we now have in Sudbury.
DREE was established in 1969 as what I call the son of ADA. That is not a bad word. It means Area Development Agency. DREE was the grandson, if you will, of the Atlantic Development Board. It was supposed to make a big difference in closing the disparity gap as far as jobs and income are concerned between Atlantic Canada and the rest of Canada, especially the better-off provinces. However, only a few weeks ago in Halifax the Secretary of State for External Affairs (Mr. Jamieson), formerly the minister of regional economic expansion, said that "much of the DREE incentive program has been a failure". That is what the minister is quoted in the Halifax Chronicle-Herald as saying. The minister suggested that we must re-think our approaches to regional development because economic disparities are still glaringly with us.
I think there are indications that Nova Scotia's economic performance has worsened considerably in the last five years, despite what I hear from spokesmen for DREE. One indication of that is that, like the other Atlantic provinces, Nova Scotia is much more dependent on Ottawa for its revenues than ever. We pay almost the highest taxes in the country. Any income improvements in general are mainly due to transfer payments, and there is little indication that earned personal income or income per capita is growing.
If hon. members would look at the economic review of the Department of Finance for May, 1977-and I know they will not all go rushing out to do so-they will find that in the whole of the Atlantic region private investment, which is supposed to do the major job there, according to the thinking of many, excluding housing, actually dropped in 1976. That is a fact which was also true in the province of Quebec.
When we add public investment to private investment we find in that economic review that between 1970 and 1976 the increase was 135 per cent in New Brunswick, 96 per cent in Prince Edward Island, 63 per cent in Nova Scotia, and 60 per cent in Newfoundland.
Before preparing this speech I looked at the taxation statistics in the 1977 publication of the Department of National Revenue. I found there something I have spoken about often with regard to DREE, as the hon. member for Stormont-Dun-das (Mr. Lumley) knows from past experience, and it has been repeated by the hon. member for Halifax (Mr. Stanfield). What I found there were some startling figures, despite the
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growth of the metropolitan areas of the Atlantic region, for reasons we do not need to go into here, but primarily because their base is a government base, something like Ottawa, and DREE has built upon this. 1 am not saying that DREE has not done anything. But as the hon. member for Halifax noted about two years ago in a banquet given in his honour in Dartmouth, one of our great difficulties now is not only the disparity between the whole of the Atlantic region and the average for the whole country but also the disparities within the region between metropolitan areas and outlying areas.
Figures for 1975 are the latest figures, and they show the average income-which for these purposes means total income-to be $7,862 in Sydney, and of a hundred Canadian cities Sydney ranked 94. In Halifax the average income was $9,273, and its rank was 38th, which put the average income in Halifax at about 77 per cent of the Canadian average, and the average income in Sydney at 66 per cent. Of course the figures include only selected cities and exclude large towns like my own town of Glace Bay, which has some 24,000 people, and New Waterford, a mining town in my riding, which has a population of 10,000. The final figures in the 1971 census- they are not available from the 1976 census-showed Sydney as having 68 per cent of the national average while Glace Bay was at 54 per cent and New Waterford was at 48 per cent. There is obviously a desperate need for new jobs in these mining areas of my constituency in Cape Breton and in parts of other constituencies, such as the constituency of the hon. member for Cape Breton-The Sydneys (Mr. Muir), which has as its major industry a steel plant. There is a need for new jobs in the riding of the hon. member for Cape Breton Highlands-Canso (Mr. MacEachen). There is a desperate need for at least two new coal mines. The coal is there, and it happens to be within the confines of my constituency, in Glace Bay and in the New Waterford area.
We should not wait until 1979 or until an election for the people 1 have talked about to get together, in view of what the Minister of Energy, Mines and Resources is saying about what is going to happen in the mid-1980's or thereabouts. They must get together and build two new mines. This would probably cost the government $80 million. I admit that the government has already put a lot of money in, but this investment would guarantee viable operations. There would be new mines, and the only old one would be modernized. Hundreds of millions of dollars would be saved, if I am right in terms of what oil costs are going to be.
Some of this coal could be sent to the province of Quebec for the cement companies, which were the traditional markets in the 1950's. This would be a worth-while investment, and not just for a particular part of the country. It would not be money going down a sink hole. These are not the fifties. These are the 1970's and we must get ready for the 1980's, unless the assumptions about the price of oil are wrong-and it is hard to conceive that that could be so-and unless everybody is wrong about shortages which are going to occur.
We have a huge unemployment problem, and this proposal could have a good effect on our balance of payments deficit
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problem. Canada is going to need help. If the Minister of Energy, Mines and Resources is correct, we will have a deficit of $2 billion in our oil imports, as well as a deficit in our gas imports and other petroleum exports by the year 1985.
The Minister of Energy, Mines and Resources said last week, and it was quoted in a recent editorial, that what is facing us is like the tip of the iceberg that the Titanic did not see. Surely the government can see it now. It would not take that much co-ordination to put some kind of energy structure together.
Rather than putting so much unemployment insurance into places like Cape Breton, this investment should go into at least two new coal mines.
The premier of Nova Scotia was quoted in the Toronto Star of Saturday, October 29. I know the Liberals will believe him because he is a Liberal. There may be some on this side who will not take his word, but he should know whereof he speaks.
I quote:
Liberal Premier Gerald Regan of Nova Scotia blamed Ottawa for failing to act on its promises. Proposals to sink another coal mine in Nova Scotia have become entangled in federal government red tape, he said.
That is the difficulty as far as co-ordination is concerned. This is not good enough for many unemployed Cape Bretoners. Nor does it say much for this country's national energy policy and the co-ordination existing between the Department of Regional Economic Expansion, Energy, Mines and Resources, the Nova Scotia government and the Federal Treasury Board.
Is there any reason why those here tonight should not expect the NDP members to get excited about further handouts to private corporations at a time when more and more people are being laid off and jobs are not being created? We should go the reverse route. There should be deeper cuts to stimulate the economy and get national priorities assessed. Long term strategy goals should be established in the fields of energy, transportation, especially rail, housing and so on, so that the country can get moving again. We will then not have to worry about a relatively small group of separatists, 25 or 30 per cent, because they will not be able to move people, those who are content and have jobs, away from Confederation.


Mr. Frank Maine (Parliamentary Secretary to Minister of Public Works and Minister of State for Science and Technology):: Mr. Speaker, I want to talk about one outstanding feature or Bill C-11, clause 61, which deals with the incentives for scientific research.
It is in detail an investment tax credit, 5 per cent of current and capital expenditures on scientific research performed in this country with a regional aspect to it. If this research and development are done in regions of Canada designated under the Regional Development Incentives Act, the investment tax credit is Vh per cent, with the exception of the Atlantic provinces and the Gaspe Peninsula where it is 10 per cent.
This means that for research and development in the Gaspe and Atlantic provinces, 10 per cent of the total of the current

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and capital expenditures on scientific research will be a prepayment of tax payable. It will be a deduction from tax that is owned to the government. This is a very good, positive, concrete move, that is estimated to be worth $35 million to $40 million in this current fiscal year.
The reason I feel it is such a good move is that primarily it means there will be less government involvement and interference. This is to be admired. We have heard comments from both sides of the House, as well as across the country, on the problem of government interference. This gives industry the advantage of making the decision on what it wants to do and when. They are best fitted to make these kinds of decisions. It also avoids the bureaucratic involvement and the delays associated with this.
I wish to contrast this investment tax credit with another piece of good legislation that has gone through recently, but had handicaps because of the bureaucratic involvement. I refer to the Enterprise Development Program. The minister said it would be less cumbersome, there would be less paperwork, and it would be easier to administer. As far as the simplification of dealing with all the government alphabet programs is concerned, it was certainly a move in the right direction.
Unfortunately the bureaucrats in the department have managed to do a complete inversion and have made this simplification into a multiplication of paperwork and of the bureaucracy involved. They have managed to effect results contrary to the intentions of the government. It will be very advantageous if we can manage to avoid government involvement in the decision-making process as much as possible, leaving industry to make the decisions it is best able to make. For this reason I commend clause 61 of Bill C-l 1 and encourage the government to proceed more in this direction than in the direction evidenced by the Enterprise Development Program.
There is no question that to increase the number of jobs in this country in the long term, we need more industrial research and development. It has been well shown recently that high technology industry creates many more jobs than a low technology, more mature type of industry. I refer here, for example, to the textile industry and the footwear industry where increased involvement with technology in recent years has been minimal, as has been the creation of new jobs.
In high technology areas, especially in the electronics sector, we have seen very small companies increase in size quite dramatically in the last few years, with a consequent increase in the number of jobs available. There are several studies to verify the comment that it is the high technology industry which is creating the most jobs. Therefore as a government we should be doing more to encourage industrial research and development, especially in the high technology area of industry.
There are two areas which we can use to tackle this objective. One is in the small Canadian-owned and controlled companies involved in high technology. I refer to the electronics industry as a good example of this. Relatively good

progress has been made in encouraging some of these companies.
The "unsolicited proposal aspect" of the "Make or Buy" government program should be increased. At present it receives $12 million per year funding. It has demonstrated beyond any criticism that it has been very successful. We need more of that type of encouragement to increase the results and effectiveness.
If I am criticized for advocating more government spending, I would say it should not increase spending but divert money to this area which is very effective in creating jobs. Not only will it have the effect of creating high technology jobs, but in the long term there will be a much larger increase in jobs created for the technology applied to products by these companies.
If we really want to make a serious dent into the industrial area in this country, we have to tackle the large industries which make up the bulk of the industrial sector of the economy. When we talk about the large industries in this country, the ones which really have some effect on the economy, whether we like it or not, we are talking about multinational corporations. A large number of these multinationals are U.S.-based. We have to seek the reason why there is not more industrial research and development being done in Canada by these companies. We need to consider what we can do to encourage an increase in research and development in Canada by these companies. It is in this vein that I wish to draw the attention of the House to an article I came across earlier this year in Forbes Magazine, the issue of December 15 last. I think it explains very well why we do not see more industrial research and development being carried on by subsidiaries of large U.S.-based multinational corporations.
This article was written at a time when a change was proposed by the U.S. Treasury to increase the amount of money U.S. corporations were repatriating from foreign countries where their subsidiaries were operating. Let me briefly give a resume of the change which was proposed by the U.S. Treasury. Essentially U.S. companies could deduct the cost of research and development done in the United States against the cost of operations in foreign countries as a legitimate cost of doing business there. Applied to Canada, this meant Canadians were paying for research to be done in the United States by U.S. corporations and citizens. So why should these multinationals do research in Canada? They are already getting paid by Canada for doing it in the United States. There is no incentive at all for them to adopt a practice of spending money and doing research anywhere other than in the United States. This, of course, creates high technology jobs for their own university graduates. It is of no help to Canada, however, which also wants jobs for its university graduates in these high technology fields. The change which the U.S. Treasury proposed was to increase the amount of money which U.S, companies could repatriate from U.S. subsidiaries in foreign countries.
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The criticism which was levelled at this proposal in the article to which I referred was that foreign tax collectors might well disallow research and development deductions against sales in that country if the research and development were carried out, say, in New Jersey. Well, I don't ruddy well blame them. 1, for one, would certainly want to see Canada disallow increased amounts of money being used as deductions for research done in the United States for business in this country.
I think this was a very regressive measure. I do not know how many people in the Department of Finance knew this was going on, but certainly the scientific community was not aware of it. This is a very strong reason why there is so little research and development done in the industrial sector of the subsidiaries of foreign-based multinationals.
The situation is similar to the one which existed with respect to the Time and Reader's Digest legislation when it was brought before us. I feel we should take similar measures in this case, and not only reject any increase in the amount of money they want Canada to pay for research and development done in the United States, but even disallow that which is already being repatriated, a procedure which would come to grips with the problem of getting research and development done in Canadian industries here, whether they be foreign multinationals or Canadian-owned.
In my opinion it is a very serious situation but one which should be tackled if we really wish to increase the amount of research and development done by industry in Canada, the point at which it is translated into the economy, where it creates jobs and where it benefits the standard of living of all Canadians.
There is another aspect to the attack on this problem, that is, the general proposal to build on our strengths. Where are our strengths as far as research and development are concerned? They are in our universities and in our government laboratories. That is where most of our research and development are carried on and that is where most of our people who do the best work are located. I therefore think we should bring in measures to encourage the transfer to industry of the technology which already exists so that it can be translated into the economy.
Our universities should be working on problems of national concern, in addition to their fundamental curiosity-oriented research. Once they have done this work we should also make sure there are ways to integrate this into the economy so we can benefit in an economic, material way from the application of this research. The same applies to work done in government laboratories. How much of the work which has been carried on in these institutions has really gone into the economy in a way to benefit our industries and our economy? There are many cases in which this has happened, but there are, alas, also many examples to show that the work has not been transferred or, if it has been transferred to industry, that the benefits have not remained in Canada. In some cases it is foreign countries which have benefited from our government research, and our taxpayers which have paid for it.
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I realize that the measures I propose are quite wide. 1 realize a lot has to be done as far as legislation is concerned to implement them, but I feel the proposals brought in under the terms of Bill C-l 1 are a good start in the right direction. Much more action is needed in this direction to tackle the problem of job creation-long-term job creation, not short-term, stop-gap measures-and we need that action soon.


William Gordon Ritchie: Mr. Speaker, I would like to take the opportunity to speak on Bill C-11 in connection with the Income Tax Act because it gives us an opportunity to discuss in considerable detail our economic situation. Certainly our present economic situation must be considered one of the worst we have ever experienced, if not one of desperation. Some people are even calling it one of despair.
By all indexes, as a developed nation, the state of our economy can only be described as in a desperate situation. The Minister of Finance (Mr. Chretien), just a few weeks after assuming his new post, finds it necessary to bootleg in a budget which has been called an economic and fiscal statement. In fact he has a new budget in all but name. He had only a month or so to prepare this, and while it offers me my first opportunity to wish the minister personal regards on his appointment, it only shows the depth of the necessity which he has attached to these changes. It may be that the Minister of Finance can say, as Hamlet said, "This budget, 'tis a poor thing, but it is my very own". I suspect, however, that in this case he has to carry what he inherited from his predecessor, and we can discuss that, too.
It is true that part of these amendments are a hold-over from the May budget of the minister's predecessor, and it seems interesting that the previous minister of finance was not allowed, or did not wish to finish with the budget he had started. It should have been debated and passed and I think then the public would have been better informed, and we would know where we are going. It should have been done three or four months ago.
There is no doubt about the ballooning deficit. It is now estimated at $9.2 billion for the fiscal year ending next March, and even more for the next year cannot be considered as anything less than a disaster-and there is more yet to come. Moreover, there is the problem of national unity which arose in an acute form last November with the election of the Parti Quebecois and the headlong rush and steady progression of the province of Quebec to an independent, economic state. This certainly does not excite a feeling of economic stability such as we in this country have long been famous for in the international field. The possible negotiation of separation is, of course, a horrendous job. It also indicates that this will spill over into other sections.
All these political problems give rise to uncertainty as to whether government bonds, federal or provincial, will be met some time down the road. This year the federal government will need to borrow almost enough to increase our national debt by something like 20 per cent. Surely this booming

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deficit, in a period of peacetime, a time of relative world stability in the economy, is an indication that we are almost approaching wartime deficits.
It is true, according to some estimates I have seen, that we would be borrowing something like $25 billion a year if we were borrowing amounts comparable to those borrowed in the war years in the forties, but then it was recognized that the war would end one way or the other shortly and that borrowing was a necessity to preserve the country from external forces.
There is no sign of this massive government expenditure being curtailed. We cannot suddenly terminate transfer payments to the disadvantaged, to old age pensioners, the funding of health and welfare programs and education programs. We are already talking about huge amounts required to meet educational expansion and are asking the provinces to institute second language training, which will cost hundreds of millions of dollars and create an entirely new situation for our schools.
During the budget speech of his predecessor, the hon. member for Rosedale (Mr. Macdonald), the then minister suggested we would increase economic growth by 5 per cent. With the new cuts of some $600 million in income tax and $100 million in tax credits and other stimuli, nearly $1 billion in all, the present Minister of Finance cannot hope to achieve 5 per cent growth next year. Although the amount of the tax cuts, $700 million, is substantial, it amounts to only $100 for the typical married taxpayer earning between $9,000 and $16,000 per annum. Making it applicable in January and February means, presumably, that the Minister of Finance is looking for some kind of psychological impact and is trying to tell Canadians they are being too pessimistic.
As for wage and price controls, the minister has gone back on the promise of his predecessors to protect the real wages of workers by adjusting the anti-inflation guidelines to 6 per cent. That is to say, the guidelines remain at 6 per cent although inflation will likely be much higher than that. When the government set up the Anti-Inflation Board it said it would allow for increases in the real wages of workers. In order to do this the Minister should have allowed the ceiling to be 8 per cent, not 6 per cent.
Or does the government really want to bow out of inflation controls? This is an indication that the minister is paying lip service to the removal of controls and that he really very much wants them to continue. By choosing April 14 as the date for beginning the phase out period, he will sweep into the controls program for the whole year a large number of companies with an April 1 year end, coinciding with the end of the income tax year, as well as large unions, such as the inside postal workers and the railway workers.
All of us wonder whether the mini-budget is going to work. It certainly reflects the great uncertainty in our economy, and I wonder whether the approximately $1 billion stimulus which the finance minister has announced will be sufficient. Perhaps controls have the most significant effect on our economy, but since the controls were implemented nothing has been done to change the structure of the Canadian economy. The govern-

ment said it would gradually reduce controls, but it has done nothing to make sure that the same sequence of events will not occur again. If the government runs into the same sequence of events as occurred between 1973 and 1975, with rising prices followed by large wage increases, it must remember the lesson that it should have learned over the past few years, namely, that controls can hold down wages but have practically no effect on prices.
While in the long run there may be a connection between lower rates of wage increases and lower rates of price increases, wage settlements in the past year have dropped but inflation has increased. Yet the government continues to claim, in face of its own statistics, that controls have effectively restrained prices and given workers a bigger increase in real income. This really does not hold true.
As for the government's figures, the switch in economic priorities from inflation fighting of a year ago to unemployment fighting today is an interesting one. A year ago inflation was running at an annual rate of 6.2 per cent. The government said inflation was the most important obstacle to real growth. Inflation is now running at 8.4 per cent, yet unemployment has been labelled the most serious obstacle to economic growth. According to the 1976 throne speech, inflation was a destructive force which took jobs and incomes from workers, robbed the elderly, impeded the flow of capital, and obstructed the fight against poverty. But this year the villain is unemployment. It deprives Canadians, so says the throne speech, of the dignity of self-supporting work. It supposedly loads them with an unfair burden of worry and uncertainty which is unjust and intolerable.
Last year's all out attack on inflation has now been replaced by vague statements in the throne speech to the effect that the government, in stimulative actions, will not shrink from its objective of continuing to reduce inflation. Will Canada's 800,000 unemployed go the same way as the inflation fighters of the last throne speech? The fight to "reduce" inflation in Canada has resulted in an increase in inflation from 6.2 per cent to 8.4 per cent. The additional employment opportunities promised turned out to be 200,000 jobs, only about half the number needed to ensure growth of the labour force.
Last year the government promised to keep the rate of growth of the public service below one per cent and to see what could be turned over to private enterprise in order to reduce the size of government. The latest Statistics Canada figures show that the federal government has 580,000 employees, 2.4 per cent more than it had a year ago. I have not heard of the government turning anything over to private enterprise, but it has created three new enterprises, Petro-Canada, de Havilland Aircraft of Canada, and Canadair. So much for the government keeping its promise not to increase the public service and to turn over certain operations to private enterprise.
We now have some idea of what the government has in store for us. It is organizing under, wonder of wonders, Michael Pitfield, the DM-5. This sounds like a cell in the FLQ or the secret service. The government has finally decided that the economy is in some sort of disarray and the bureaucrats are
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rushing to fill the breaches, led so ably by Mr. Pitfield, the Clerk of the Privy Council. About the only thing the public knows is that whenever Mr. Pitfield is in the middle of the crowd something is up, something is amiss.
It will be remembered that Mr. Pitfield headed up DM-10 a year ago, which was a meeting of ten deputy ministers to chart a way out for the post control economy. At that time it was announced that it would "initiate a formal process of discussion, dialogue, and consultation with all elements of Canadian society; provincial governments, representatives of business, labour and consumer organizations, other special interest groups and individual Canadians." Ten months later it has not amounted to anything. Will half as many bureaucrats as the name DM-5 implies produce twice as much? What about the government's own 2,000 economists which it employs? Can it not find some gleam of talent to offset this high-powered DM-5?
There are a few things in the budget which will bear closer scrutiny as we progress through the committee stage. I think the Minister of Finance was too optimistic, when we look at what seems to be ahead. Almost certainly in 1978 unemployment will remain high and inflation will exceed the revised target of 6 per cent. Our trade deficits are scheduled to grow as we borrow more abroad, and particularly as the vast borrowings of the federal government in the domestic scene force provincial governments to borrow abroad.
What about this money that we are borrowing abroad? The OECD has suggested that in the group of the 24 richest countries of the world something like $31 billion was loaned outside their borders. Of that total last year, Canadian governments and companies borrowed $8.9 billion, or almost a third. This year, according to the OECD, borrowing by Canada has been running at an annual rate of $5.2 billion, a relatively low figure when compared with 1976. But even with these relatively low Canadian borrowings, they are bigger than those of any other country. In the first nine months of this year, Canadian bond sales came to $4 billion. Britain, Norway and Japan borrowed about $1.5 billion in the world markets. France borrowed about $1.3 billion, and the United States about $1 billion. These borrowings were generally company borrowings and not by governments.
Canada's federal government might consider borrowing abroad if it wanted to stop the descent of the Canadian dollar; but no other country in the world has come to the state where it borrows so much abroad as Canada. Canada is particularly unusual in its pattern of borrowing. Private corporations are the dominant foreign borrowers, but in Canada it is borrowing by our junior governments. Provincial and municipal governments sold 63 per cent of all the bonds put on the international market by Canadian borrowers. The rest was chiefly by companies.
Why do we borrow so much abroad? It seems as though our credit rating abroad is better than our economic management. The recent fall of the Canadian dollar indicates that as well as
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a political uncertainty facing Canada, people are now starting to question our economic stability. Because of our location and our wealth, Canada should be one of the most stable countries around. Commitments of Canadian governments have outrun their revenues by billions of dollars. The biggest deficits are in the federal fields, but the provincial ones are substantial. If the federal government is going to raise money locally then there is that much less for the junior governments.
All of this points to the problem that governments are now in a bind. To maintain the same level of services would mean extra borrowing is necessary. I think it is a vicious cycle. It is estimated that last year we had a deficit of something like $4.4 billion. It is estimated that in 1978 this will amount to $5 billion, and in 1979 it will amount to $6.3 billion. These estimates are according to Wood Gundy. There are many reasons for this. The Department of Finance has indicated that part of the over-all deterioration is cyclical; but the most recent period of rapid wage and price inflation in Canada has made it more difficult for Canadian manufacturers to compete.
Even if we have a surplus of merchandise trade, we must recognize that the huge borrowing abroad brings with it increased costs which must be met. While the Canadian dollar has only fallen 14 per cent as against the United States dollar, there is some indication of its real value when we compare it to 33 per cent as against the yen in the past year, 28 per cent as against the British pound, and 21 per cent as against the West German mark.
What can we do to increase the possibility of meeting our foreign obligations? Obviously the first area to tackle would be travel, but that would be difficult unless currency controls are instituted and travellers going abroad are prevented from carrying as much money as they would like, which politically would be a very discouraging thing. Increased borrowing for a while would meet these interest obligations, but eventually they would overpower us.
Obviously the best way to encourage meeting the foreign deficit is through exports. Perhaps we forget that we have been hewers of wood and drawers of water. If we do it well, and that is all we can do, we must look at it. We might consider increasing food exports, which seems possible and probable, if we do not have a stifling degree of boards to prevent production and to keep prices up in the interests of stability. We should consider the export of energy, particularly since recent finds have indicated that substantial amounts of natural gas are available and will likely be so for some time in the future. We have to remember that we are interdependent in energy and that we cannot sit on energy, because even when exporting manufactured goods, in a sense you are exporting energy.
It might be wise to consider that the whole thrust of the Foreign Investment Review Board has been wrong. One of the advantages of inviting a partner into a business is that when he does not make any money and the firm does not make any money, you do not pay dividends. But if you borrow from that person, you also incur interest and capital payments, even when the business is falling behind or going broke. In many
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ways the policies of discouraging foreign investment, and then on the other hand encouraging borrowing abroad with interest and capital payments, are not the best. I feel the foreign investment review thrust has been basically detrimental to our Canadian economy, unless we wish it to run at a much lower level.
As business activity decreases, heavier loads are placed on provincial governments to carry the same and even greater social welfare benefits. Today's Globe and Mail carried a headline to the effect that an Ontario hospital association director warned that the province's will have to discharge 4,000 staff members and charge an extra $5 a day because of provincial budget cuts. This is an indication of things to come. It states that Ontario's hospitals are scheduled to receive an increase of only 4 per cent, which is not nearly enough to meet the 8 per cent inflation rate and to keep them at the present level of operation.
Certainly very serious troubles lie ahead of us. But we are not quite alone and it is comforting to know that other countries face this problem. The Ottawa Journal of today carried an article taken from the London Economist on whether or not growth can continue without inflation. It is interesting that in the United States, which has a much better record than we have, inflation has been hovering around 6 per cent since 1975, a much lower rate of inflation than ours, but the projections are that this inflation rate will continue in the United States. It is obvious to me from discussions that we accept that there should be a lower rate of inflation, but this may well mean a loss of jobs and a loss in output. On the other hand, if we continue to expand our money supply to equal the inflation rate, disaster will occur.
All the western countries appear to be facing Hobson's choice. West Germany is keeping unemployment high but its growth is historically low. Even so, its unemployment rate seems to me considerably lower than ours. How do we reduce inflation without creating a slump in the economy? There seems to be some hope in tax incentive schemes linked to the performance of individual companies, or perhaps more important, a moratorium on cost-increasing legislation. Canadians have had more than their share of vast social programs and we should be wary of expanding them further. Surely we should not have social programs which stunt individual incentive and limit rewards. We must carefully assess whether or not our vast social programs dissuade individuals from saving. At present the only way in which an individual can cope with inflation is to spend as much as possible. In other words, ownership of things is certainly better than ownership of paper savings, such as stocks, bonds and bank accounts.
I believe that this mini-budget, or whatever else you want to call it, is only significant because it has been brought down at this time. I think that the minister has understated the gravity of our economic situation and that only the future will tell us how we have coped in this situation.


Mr. Stan Schellenberger (Wetaskiwin):: Mr. Speaker, Wetaskiwin is hard to pronounce, and I forgive you for mispronouncing it because members of my own party have had the same difficulty from time to time. I said I would point that out to get back at a member who mispronounced the name of my riding on a platform some time ago.
I consider Bill C-l 1 to be a very important piece of legislation in that it deals with income tax. The tax part of the legislation is important in that tax policy will determine whether or not our country will move ahead. Goodness knows, at this time we need the kind of guidance that will result in our economy moving ahead. The taxation tool must be used with discretion because, just as positive and progressive taxation measures can result in a vital and growth oriented economy, an ill-advised tax policy can contribute to a sluggish growth in the economy and high unemployment rates. Thus, these proposed amendments to the Income Tax Act must be carefully considered and their implications fully understood before final approval is granted to Bill C-l 1.
I would like to say at the outset that I find a number of proposals in this bill to be constructive. Measures pertaining to the taxation of the resource industries are proposals that we have been advocating for some time. I have listened to many members speak about the necessity of discovering more energy resources in our country and developing them. Just now we listened to the hon. member for Cape Breton-East Richmond (Mr. Hogan) say that we should encourage the development of the coal industry in Cape Breton as well as in Alberta and British Columbia. We welcome proposals that will help the oil industry in western Canada in particular look for pools of oil which we know exist in our province, and we need to encourage people to go out and look for them. Perhaps we are learning now the importance of making risk capital available to our small industries for oil discovery because anyone who is associated with the oil industry knows that every time you drill a hole in the ground oil does not come gushing to the surface.
I am also happy to see the measure dealing with the deferral of the capital gains tax, particularly for farmers. I represent a farming area and I know that the farmers in my riding will be looking at this proposal with favour. I am referring to the proposal of the former minister of finance, followed by the present minister, to defer the capital gains tax on the sale of a business or a farm when that amount of money is used to buy another similar business, another farm, equipment or buildings necessary to expand the farm or business. This measure has been advocated for years by the P.C. party. In fact in the last session I moved a private member's motion which advocated exactly the same kind of deferral of capital gains tax on money obtained from the sale of a farm when those proceeds are used to buy another farm or farm equipment.
The government has finally recognized the fact that in many instances a farmer may want to increase the size of his operation but in his area it might be impossible to find more land and therefore he must sell out entirely and buy a piece of property in another area. In the past his options were limited because, in order to do that, he had to sell his property and pay
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the capital gains tax on the proceeds, which deterred him from expanding his operation in another area. That is why I heartily endorse the amendments to the Income Tax Act in this bill which would allow farmers and small businessmen to defer the capital gains tax.
There is a definite need to change the capital gains tax legislation for corporate farms. In the motion I introduced last spring I also called for the government to defer capital gains tax on corporate farms where the farm was going to be transferred from the owner, whether father or mother, to the child. This idea is not new and many members on all sides of the House regard it as a necessary amendment. The thrust of such legislation would be to extend this roll-over provision to all family farms that are incorporated if it is desired to pass them on to sons or daughters.
The predecessor of the Minister of Finance (Mr. Chretien), explaining why such farms were not made eligible for capital gains tax deferral, stated that incorporated farms are normally larger, better financed, and spread over members of a family in order to be used for estate planning. To my way of thinking, the argument that incorporated farms are normally larger is nonsense. The truth of the matter is that many farmers, whether they have large or small scale operations, were strongly influenced some years ago by the Department of Agriculture and encouraged to incorporate. The department's support was apparently based on tax benefits that could result, as well as the more coherent estate planning to be gained from incorporation. Many farmers incorporated because of that advice.
An article in the November 16, 1976, issue of Farm and Country states as follows:
Forming a farm company has brought more headaches than happiness to many farmers. Producers who heeded earlier advice to incorporate their operations have often found themselves boxed into disadvantageous situations. Now the experts are advising against incorporation.
While this advice forewarns farmers who are considering incorporation, it does little to help those farmers who heeded that advice some years ago and have already incorporated.
The advice given at that time was sound. I should like to put on the record why they stated that farmers at that time-and it applies today-would derive some benefit from incorporation. There are five good reasons for incorporating.
First, a company can be useful for purposes of estate planning or estate freezing, depending upon to whom the shares are issued.
Second, there is preservation of capital. A farm making a net income of $20,000 would pay $5,400 in taxes. If incorporated and no salary was taken, the taxes would be only $4,800. On the other hand if the whole $20,000 were paid out- $10,000 to the farmer and $10,000 to his wife-the taxes would only be $3,800. There is obviously a benefit in taxes if a farm is incorporated.
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Third, if the corporation pays the wife a salary, both she and her husband are allowed to contribute to the Canada Pension Plan, and upon retirement would draw two pensions.
Fourth, because of limited liability, any act resulting in a judgment against the company would only go against the assets of the company and not against personal assets. That does not often happen, but it is a protection available upon incorporation.
The last reason is that the problems of a company operation after the death of one shareholder are very much smaller than those of an individually owned operation. These are the considerations that the agrologists have been using in giving advice to farm operations about incorporation.
It is my opinion that the roll-over provisions pertaining to capital gains tax which are set out in this bill should be extended to include incorporated family farms. It is not my intention that the wealthy professionals acting as gentlemen farmers should benefit from a roll-over. To my way of thinking the roll-over should be resticted to farm operations where 50 per cent plus of the shares are owned by a bona fide farmer.
I suggest that we put a limit on the assets of a farm which would qualify. Just off the top of my head I think $1 million in assets would be a nice figure with which to start. We should at least get into the act in order to help small incorporated farms. Today $1 million is not a lot of money when we consider how the price of land and machinery is increasing so rapidly.
In addition to extending the roll-over for farm corporations I think the minister should look very seriously at moving up the valuation date for capital gains tax. It is close to six years since the date of December 31, 1971, and at that time the value of farmland was very depressed. As we look at the agricultural situation today, with rising costs and the plummeting of prices, particularly grain prices, it is very difficult for farmers to make any profit to set aside as a retirement fund. The minister should look very seriously at moving up that date so that when a farmer decides to retire and sell his operation, he can use the larger amount of funds for his retirement.
Moving on to the last part of the bill, Part IV, this part asks us to extend some $9 billion in loans to the government. This is an admission by the government that it has lost control of spending. A government which has the audacity to tell Canadians to stop living beyond their means, as the Prime Minister (Mr. Trudeau) told us recently in the Speech from the Throne, now asks parliament to approve what amounts to a $9 billion deficit. Recently the Minister of Finance told us that we should stop saving money and that we should spend it on Canadian goods. This $9 billion is larger than the total budget of the last Progressive Conservative government in this country. It is a telling indictment of a government that long ago ceased to manage that it can look upon drift in our economy as leadership. Canada has become the highest cost producer in the world. Our wages are higher than those of our leading competitor, the United States. Our taxes are amongst the highest in the world. Our transportation costs are relatively
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November 7, 1977
Income Tax
higher than those in any other country, and that is because of our vast geography.
In terms of total merchandising trade this country has had a surplus since the early 1960's, with the exception of 1975, when our exports were severly curtailed by the recession in the United States. In the face of this evidence one might conclude that we do not have any trade problem, but our surpluses have obscured alarming trends in the secondary manufacturing area. All during the sixties there was an annual trade deficit in manufactured products of about $3 billion. This deficit has been growing since the turn of the decade. Last year it was over $10 billion. It is getting worse in every single commodity group.
We had been offsetting this deficit up until a few years ago by trade in our natural resource and farm products. Now the price of grain has dropped. Our dollar is worth very much less than it used to be. As well, many of our mineral and forest product prices have dropped.
How many lost jobs are we ignoring in the manufacturing sector by such a deficit? Economists tell us that a $10 billion trade deficit in manufactured goods translates into 175,000 jobs. We need policies, leadership, and confidence in that leadership to get the manufacturing sector going, and the decisions that are being made by hundreds of thousands of businessmen, consumers and people in trade unions must be the right kinds of decisions to get this country going again.
I now wish to speak on clause 13 of the bill. It deals with deductions allowed in respect of an outlay or expense incurred after September 21, 1977, for an advertisement directed primarily to a market in Canada and broadcast by a foreign radio or television station regardless of the date on which the contract of the advertisement was entered into. This gives an advantage to our Canadian broadcasting stations, the CBC, CTV and others. While I endorse the principle, I have some problems with what we are imposing on our businessmen and organizations in that we are restricting their ability to reach the greatest listening audience. As well, we may be forcing them to back a certain program or station they do not like in order to reach that audience and sell a product they are putting on the market.
A couple of weeks ago I moved a motion under Standing Order 43 to that effect that the CBC's presentation and the subject matter contained in the program "The Tar Sands" be referred to the Standing Committee on Broadcasting, Films and Assistance to the Arts. The reasons for doing that were that they used a mixture of fact and fiction in that program.
The capability of their doing damage to the reputations of prominent figures in this country was there. I was totally disgusted with the premise that a respected radio personality came on and said that part of the program was fact and part was fiction. How were the listening public to know which was which? How were they to discern what was fact and what was fiction?

People soon forgot the warning and believed that the drama was all true. This was particularly so because they used look-alike characters, mimicked voices, and used real names which are still very much part of the public world. We cannot allow this kind of character assasination to go on, particularly by our public broadcasting corporation which should be respected as an educational medium as well as a medium to promote harmony and unity. If they had a charge, they should have backed it with facts, and made it. We must protect our freedom and our responsibility to the public with our every efforts. If by supporting these amendments we are in any way encouraging businessmen or advertisers to back a program of this kind, we are doing a disservice to our country.
In conclusion, we can no longer regard the two major issues affecting our future, disunity and worsening economic conditions, as being unrelated. The two are closely intertwined. The days of our strongest unity have been the most prosperous years of our existence. A strong economy is by no means the only answer to national disunity, but it is an essential element of that unity. If this bill does anything to strengthen our economy, it can count on our support.


Mr. Stan Darling (Parry Sound-Muskoka):: Mr. Speaker, I am delighted to participate in the debate on Bill C-ll. Our economy is certainly in a serious state. As has been stated earlier, we are facing a $9.2 billion deficit. The minister brought in not long ago this whatever-he-calls-it, he did not call it a budget but it is a budget in everything but name, and in the days that followed, many of us on this side took exception to his smuggling it in so that he could shorten debate and cut off the opposition rather than spend the regular amount of time traditionally allotted to a budget debate. I said the budget was smuggled into the House. He was a smuggler. My hon. friend from Norfolk-Haldimand said it was bootlegged in.
I commend the minister for getting the cabinet to recant as far as the iniquitous legislation having to do with life insurance proceeds is concerned. But he did not go far enough. The legislation still contains certain clauses which will not be satisfactory to those who carry life insurance. Businessmen will be seriously affected. They have probably scrimped and saved to keep up their life insurance policies as a guarantee of security for their families, but also-and this is very important-as an ace-in-the-whole should their businesses run into difficulty and need additional financing.
At this point I must confess to some conflict of interest because I have held a life insurance agent's licence for many years, and I know that when talking to businessmen, as to many types of prospects, attention is drawn to the fact that while a policyholder is living the policy can come to their rescue if they run into hard times. From time to time businessmen go to the bank and the manager asks them to list their assets. And when they list their assets they find they are really not too liquid. One of the questions put to them is whether they have any life insurance. This is because life insurance has
November 7, 1977

a cash value and many businessmen are wise enough to carry life insurance. They are able to assign their policies to the bank and borrow money, using their policies as collateral. This is mostly in their earlier years. Now, if they take an insurance policy to a bank and put it up as security, they can borrow money, depending on their credit, at anywhere from 10 to 12 per cent. They then deduct the interest of 12 per cent as a perfectly legitimate business expense.
The government agrees with this wholeheartedly. With a $20,000 loan at 12 per cent interest, the interest amounts to $2,400. Yet if a person has an insurance policy with a large cash value so he can borrow on the proceeds direct from the insurance company, I can assure my hon. friend from Gren-ville-Carleton that the interest could be half as much. With many policies which were written a few years ago the borrowing rate is 5 per cent or perhaps 6 per cent. I do not think there are any over 7 per cent. Yet ironically, according to this legislation, Bill C-ll, if the rate is 12 per cent or whatever, interest payments on money borrowed for business purposes can be deducted provided the money is borrowed from a bank. Anyone who borrows money on a policy at 6 or 7 per cent is denied that privilege. How logical is that, Mr. Speaker? Money borrowed at 6 or 7 per cent means smaller expense, and the Minister of National Revenue (Mr. Guay) receives additional income tax. I feel consideration should be given to this point.
If a person has an insurance policy with a cash value of $10,000, and the premiums paid in amount to only $9,000, if the policy is cashed in the holder pays tax on the $ 1,000 since this is deemed to be income for the year. I suggest that is unfair. 1 see no reason why the situation should not remain as it was.


Walter David Baker: That is grossly unfair.


Stan Darling: That is right. I hope the Minister of Finance (Mr. Chretien) will see fit to withdraw that provision. Again congratulations to the government for doing what it did, though it certainly did not do it out of the goodness of its heart. I am sure it did it because of tremendous pressure, not only from all across the country but also from some of my very fine friends on the government side who influenced these wiseacres in the cabinet. I hope they will continue to exert the same pressure and see that the remaining clauses are removed as well.
Another matter I want to refer to was mentioned earlier by one of my colleagues. I refer to the generous $350 grant to homeowners to update the insulation of their homes. The kicker in this $350 is that it must be included in taxable
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income. This will not mean too much to a great many senior citizens and those on fixed incomes because they will not pay income tax on that amount, but I believe that insulating a home could cost as much as $800, $900 or $1,000, and $350 does not go a great way toward meeting that kind of cost. Although it is a help, it is not much help if a person has to pay income tax on the $350. At the present time we are aware that the only homes which will benefit are those homes built prior to 1921. I assume on a sliding scale, as the years go on, it will be upgraded, that is, slightly newer homes will be allowed to participate in this. As I have mentioned before, the grants are higher than this in two specific provinces, namely, Nova Scotia and Prince Edward Island, where the grants are $500 and are non-taxable. Why should there be discrimination against the other eight provinces and the territories? It hardly seems fair, because the amount is little enough at $350.
We are in an energy crisis, and those who live in the northern part of our country know that it costs quite a bit to heat homes. As I have said, $350 is not a big amount. I hope the Minister of Finance will see fit to say that the $350 should not be taxable and classed as income. Surely that is not asking too much.
All of us are trying to conserve energy in every way possible. What better way is there than to insulate our homes to the nth degree? 1 hope the minister will consider that, on the basis that Prince Edward Island and Nova Scotia receive $500 tax-free. I am well aware of the fact that they are entitled to it, but when one considers some of our northern areas, in the west, in the Yukon and so on, one realizes that it requires a lot of oil, gas or whatever, to heat a house during the winter. And one must not forget that the winters are longer up north. I hope the minister will give serious consideration to the request for that $350 to be tax-free and not added to income. I am aware of the fact that certain families can well afford to pay it; but even those in the $15,000 to $20,000 bracket are paying substantial taxes. A great many of them have young families. Perhaps both the husband and wife have to work in order to make that income.
Housing is an important thing in the country's economy. I know the minister in his budget is doing his best to see that the economy will be upgraded and unemployment will be reduced. One way to do that is to make it more attractive for people to buy older homes, which they can improve and insulate.
May I call it 10.30, Mr. Speaker?


Mr. Deputy Speaker:: Order, please. It being 10.30 p.m. this House stands adjourned until tomorrow at 2 p.m.
At 10.30 p.m. the House adjourned, without question put, pursuant to special order.

Tuesday, November 8, 1977