1977-12-07

ROUTINE PROCEEDINGS


Mr. Jack Murta (Lisgar):: Mr. Speaker, I rise under the provisions of Standing Order 43. My motion concerns the decision of the Canadian Transport Commission permitting domestic air charters, but only on a highly restricted basis. In view of the CTC's decision to hand over the air charter market to the very interests which have most consistently opposed the concept in the first place, and also in light of the extremely limited nature of the charter operation for the first year of operation, I move, seconded by the hon. member for Vegreville (Mr. Mazankowski):
That it is the opinion of this House that the question of a massive travel deficit, which is currently draining our prosperity, and of national unity, which threatens our collective future, are too important to permit the restriction on the use of the very important tool of widely available low cost air travel, and, further to these ends, that the decision announced by the CTC be extended to allow both the full participation of Canadian charter airlines and a greater use of the program by the Canadian public during the first year of operation.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


INDUSTRY
Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, I rise to move a motion under Standing Order 43 on a matter of urgent and pressing necessity.
As an unemployment person receives two-thirds of his former pay when he is drawing UIC benefits, and as the government at present pays about half the cost or about $2 billion of the $4 billion that will be paid out in UIC benefits
this year, I move, seconded by the hon. member for Hastings (Mr. Ellis):
That the government make available to potential employers an employment incentive amounting to half of the UIC benefits which an unemployed person is receiving so that the potential employer can then bid on contracts which were formerly out of his reach because of the low wages paid in the country from which the competition comes, and stand a good chance of obtaining the order. In this way he will be able to provide employment for those who would otherwise remain in idleness, and enable them to earn a pay cheque on which they will be paying income tax, and making a positive contribution to the economy.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Paproski:: Marc Lalonde said "no".


PROPOSAL TO STOP PAYMENT OF GRANTS TO NORTHERN TELECOM-MOTION UNDER S.O. 43
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, I too have a motion under Standing Order 43 regarding a matter that is both urgent and pressing. In view of the fact that Northern Telecom has announced lay-offs in Canada of over 1,000 workers, and more lay-offs are expected, and in view of the fact that the federal government through the Minister of Finance's budgetary statement has provided to this company $2 million in tax incentives, in addition to $10 million in federal grants and $44 million in federal income tax deferrals, and whereas Northern Telecom has just announced the purchase of two firms in the United States at an expense of $92 million, I move, seconded by the hon. member for Yorkton-Melville (Mr. Nystrom):
That this House urges the government to stop all federal grants and tax concessions which might assist Northern Telecom to purchase firms outside of Canada and lay off Canadian workers.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

December 7, 1977
Mirabel


ROYAL CANADIAN MOUNTED POLICE
Mr. Leonel Beaudoin (Richmond):: Mr. Speaker, pursuant to Standing Order 43, I ask for the unanimous consent of the House to present a motion on a matter of urgent and pressing necessity.
Considering the recent revelations about the RCMP operations and considering also that we forgot of late the positive actions of that police force as well as the recent arrest of an important group of drug traffickers due to the combined efforts of the RCMP, and the Quebec and Ontario provincial police forces, I move, seconded by the hon. member for Sherbrooke (Mr. Pelletier):
That the House commend the Royal Canadian Mounted Police, the Quebec Police Force and the Ontario Provincial Police for these outstanding operations.


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


CANADIAN NATIONAL RAILWAYS
Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, pursuant to Standing Order 43 I rise on a matter of urgent and pressing necessity. Whereas railways are the most energy efficient form of transportation, and major employers in this country, and in view of the impending nationwide lay-offs of CNR personnel during a time when employment is at unprecedented heights in this country, I move, seconded by the hon. member for Saskatoon-Biggar (Mr. Hnatyshyn):
That the Minister of Transport recommend cutbacks in the executive structure of the CNR, rather than laying-off personnel at operational levels, and request CNR management to become more competitive with other modes of transportation.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


Some hon. Members:: Agreed.


Some hon. Members:: No.


AIRPORTS
Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker, pursuant to Standing Order 43, I rise to put forward a motion of urgent and pressing necessity. In view of the fact that Mirabel airport has been described as the mistake of the decade, "a white elephant", suffering a $47 million loss last year, and in view of the fact that the Minister of Industry, Trade and Commerce, the hon. member for Crowfoot (Mr. Horner), has recommended "mothballing Mirabel for a couple of years", I move, seconded by the hon. member for Selkirk (Mr. Whiteway):
That this House direct the Minister of Transport not to allot any further funds for the recently announced building of a second air terminal at Mirabel, and that the funds be assigned to assist municipalities in major works programs such as the city of Winnipeg's storm drainage upgrading program which has a much higher priority than expanding Mirabel.


Mr. Speaker:: The hon. member is presenting a motion which can only be discussed with unanimous consent. Is there unanimous consent?
'


REQUEST FOR ACTION TO REDUCE DEFICIT IN AUTO PARTS WITH UNITED STATES-MOTION UNDER S.O. 43
Mr. Max Saltsman (Waterloo-Cambridge):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity connected with the news released yesterday that the average deficit on auto trade with the United States has increased by some 38 per cent over last year for the first ten months of this year, so that it is currently, to the end of October, over $969 million, and that the deficit in auto parts alone is expected to be $3 billion at the end of the year. In light of the large and growing deficit on auto trade, and in view of the 20,000 jobs lost because of this huge trade deficit, I move, seconded by the hon. member for Winnipeg North (Mr. Orlikow):
That the government be instructed to lay before this House before we adjourn a plan to reduce the over-all trade deficit in auto parts with the United States within a reasonable period of time, and to ensure that henceforth the Canadian economy receives its fair share of auto related jobs, both skilled and unskilled.


Mr. Speaker:: Presentation of such a motion for debate can be done only with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Some hon. Members:: Agreed


Some hon. Members:: No.
December 7, 1977


SMALL BUSINESS
Mr. Otto Jelinek (High Park-Humber Valley):: Mr. Speaker, I rise pursuant to the provisions of Standing Order 43 on a matter of urgent and pressing necessity related to the highest unemployment level in Canada since the war. Because, by the government's own definition, small business in this country even as recently as last year was responsible for 60 per cent of the labour force and roughly 50 per cent of the manufacturing sector; and in view of the fact that the government continues to ignore the problems and potential solutions of this vital sector of our economy, evidenced by the fact that not one realistic incentive oriented program has been introduced thus far, nor did the Minister of Finance (Mr. Chretien) see fit to even mention small business in his so-called minibudget on October 20, I move, seconded by the hon. member for Parry Sound-Muskoka (Mr. Darling):
That this House instruct the Minister of State responsible for Small Business, along with the Minister of Finance, to introduce forthwith realistic and comprehensive programs in accordance with numerous recommendations by various interest groups across Canada including those made by the official opposition regarding such specific programs as the employment tax credits, government set-asides, investment tax credits and many others.


Mr. Speaker:: Presentation of such a motion for debate can be done 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 was to be directed to the Minister of Finance whom we understood would be in his place in parliament today. In his absence, I should like to direct it to the Acting Prime Minister. The Minister of Finance has admitted to Canadian people that the tax measures in Bill C-ll are in effect already in the country. It is clear from the unemployment statistics this week that they are not working.
I see the minister entering the Chamber. I will wait for him. I welcome the minister to the House of Commons 15 minutes after the hour.


Some hon. Members:: Oh, oh!


Charles Joseph Clark: Outside the House the minister admitted that the tax measures in Bill C-ll are already in effect in the country. The unemployment statistics indicated this week that
Oral Questions
those measures are not working well enough. Yet, as we look at the order paper of the House of Commons, we see that there is not a single new finance measure proposed by this government to create jobs or growth for the economy. What new measures does the minister propose? Where are they? Why are they not on the order paper? When will they be before this parliament?


Some hon. Members:: Hear, hear!


Hon. Jean Chretien (Minister of Finance):: Mr. Speaker, I have not made any remarks when the hon. Leader of the Opposition was away trying to raise money, with great difficulty, for his party.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: When the hon. Leader of the Opposition was away, I said in the House that if Bill C-ll is passed, I hope to return very soon with tax credits for businesses to enable them to employ more people. It is very difficult for me, having been tied up in the House with Bill C-l 1 for five weeks, to be in my department at the same time.


Some hon. Members:: Oh, oh!


Charles Joseph Clark: I do not know when the Minister of Finance will stop crying to parliament and to the people about his problems and when he will bring before the House of Commons some new measures. I do not want to hear about hopes. I look at the Order Paper of this parliament, the agenda of the House, and I see that this government is proposing nothing at all that is new. I want to know when we are going to have these proposals, and I say this to the Minister of Finance and to the government: If the government can come up with some new proposals to bring before the House of Commons, then we on this side of the House are prepared to come back early after Christmas to deal with them. We want to know that there is business here to deal with, and I want to know from the Minister of Finance now what those measures will be.


Joseph Jacques Jean Chrétien: Mr. Speaker, there are some measures in front of the House at this time. The Leader of the Opposition would be well advised to tell his colleagues to pass Bill C-ll so that the business community will realize that despite the fact that those measures are in force since the spring budget, many of them do not believe that it is so-


Some hon. Members:: Oh, oh!


An hon. Member:: They don't believe you.


Joseph Jacques Jean Chrétien: Every day I receive phone calls from the business community inquiring about what we are doing with Bill C-ll, and I have to tell them it is being filibustered by the opposition.


Some hon. Members:: Hear, hear!


An hon. Member:: You don't know what a filibuster is.

December 7, 1977
Oral Questions
[ Translation]


Joseph Jacques Jean Chrétien: Moreover, Mr. Speaker, I am pleased to advise the House that if this legislation is adopted, people will see that all middle and low income taxpayers are entitled to $100 tax cuts for both January and February, which will increase the demand in this country, and if only I can find the time to work on the tax credit formula for companies which will hire new employees, I shall do so before Christmas. Mr. Speaker, I only hope that I shall be able to devote all my time to this, without having to remain in the House a couple of weeks more, just because the opposition will not adopt Bill C-ll.


Charles Joseph Clark: The minister-who for the second time refuses to answer my question-says that nobody believes the government. Of course, they do not believe this government. There is no reason why the business community or anyone else in the country should believe that the government will do anything to bring growth and direction back to the economy, particularly since the minister continues to refuse to tell us what is on the agenda of the House. My question-


Joseph Jacques Jean Chrétien: I would advise the hon. member to be in the House at the time when I make my speech and not to abuse the rules of the House.


Some hon. Members:: Hear, hear!


An hon. Member:: Sit down, you are not Mr. Speaker.


Mr. Speaker:: Perhaps the Leader of the Opposition could ask his final supplementary question.


Charles Joseph Clark: First of all the Minister of Finance refuses to answer questions that are asked and then he tries to answer questions that are not asked. In refusing to tell us what business he has for the House of Commons-there is a great deal of shouting from across the floor. This government hopes it can shout down questions from the opposition. Well, they cannot.


Some hon. Members:: Hear, hear!


DATE OF INTRODUCTION OF EMPLOYMENT TAX CREDITS
Charles Joseph Clark: The Minister of Finance has talked about employment tax credits. He has been talking about that for a long time now. Any normal Minister of Finance, whatever the pressures, would have been able to bring a bill before the House of Commons. Will the minister tell the House when he will be in a position to bring to parliament a specific proposal to embody that employment tax credit, when it will be before the House, and will we have it this month, as the Prime Minister promised?


Joseph Jacques Jean Chrétien: I will be able to come to the House with a statement seven days after Bill C-ll is passed.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: What I want to know from the Minister of Finance is if that bill regarding the investment tax credit is ready, can he bring it to the House of Commons today or tomorrow so that the people of the country who want to know what is in that measure will know exactly what the government is preparing, or will the minister admit that he does not know what to do in this matter?


Joseph Jacques Jean Chrétien: Mr. Speaker, the opposition has known since March what was in the budget of the hon. member for Rosedale. Hon. members opposite have not as yet been able to make up their minds about it. I know exactly what will be in that bill, and I will make a statement in the House before Christmas, if Bill C-ll can be passed.


Charles Joseph Clark: When will it be a bill? You have nothing to propose.


UNEMPLOYMENT-EFFECT OF INVESTMENT TAX CREDIT
Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, I have a supplementary question for the Minister of Finance, who has indicated that as of March 31 certain budgetary measures were in place. One of those budgetary measures was an investment credit plan costing the government about $485 million. The investment credit was a 5 per cent allowance to those corporations which chose to use that credit. Would the minister indicate to the House, now that it is over eight months since that March 31 announcement, to what extent he feels the credit has worked? To what extent has it been a stimulant? How many jobs does the minister feel have been created in Canada due to that $485 million tax credit?


Joseph Jacques Jean Chrétien: Mr. Speaker, if the hon. member thinks that credit is not good, he can vote against it in the Committee of the Whole this afternoon.


Steve Eugene Paproski: Why don't you answer the question?


Charles Joseph Clark: Chretien never answers questions.


UNEMPLOYMENT-SUGGESTION INVESTMENT TAX CREDIT BE CONDITIONAL UPON JOB CREATION
Sinclair McKnight Stevens: Mr. Speaker, I am sorry that the minister has not even attempted to indicate to the House to what extent the credit has worked for the jobless in this country. Speaking of the Committee of the Whole this afternoon and dealing with the investment credit to which I have referred, would the minister consider moving an amendment this afternoon to make it clear that those investment credits will be conditional upon job creation and for first decisions on future investment as far as corporations are concerned?


Joseph Jacques Jean Chrétien: Mr. Speaker-
December 7, 1977

Oral Questions


Mr. Speaker:: Order, please. That is a question which should be asked and answered in the committee, not here.


MANPOWER
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, perhaps the financial spokesman for the Conservative Party should think about a bill before he votes for it at second reading.


Mr. Alexander:: Just get on with your question.


John Edward Broadbent: I would like to ask a question of the Minister of Employment and Immigration. Yesterday when it was revealed that more Canadians are unemployed now than at any time since the great depression there were attributed to the minister some totally insensitive comments which I would like him to have the opportunity to clarify. He was quoted as saying that Canadians are "spoiled rotten," they are "living too high off the hog" and, presumably as a consequence of this, they "need a kick in the gut." I would like the minister to inform the House if those are accurate quotations.


Hon. Bud Cullen (Minister of Employment and Immigration):: Mr. Speaker, I have received an apology from the newspaper which printed that. The newspaper indicated it was wrong. The Canadian Broadcasting Corporation apologized this morning. I intend to raise a question of privilege on this particular statement because a false impression has been enunciated not only in newspapers and on radio but it has also been spread across the country by the hon. member, who had the gall to say he checked to confirm that this particular expression had been used. However, he did not bother to check the context, and I will be raising a question of privilege on that.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Before the minister raises a question of privilege I suggest he check the facts carefully.


Some hon. Members:: Oh, oh!


George Harris Hees: They are behaving like hoodlums.


Mr. Speaker:: Order. The hon. member for Oshawa-Whitby.


John Edward Broadbent: Mr. Speaker, the reason for my question- and I did not get a clear answer from the minister-is that I understand he has denied saying that Canadians need a kick in the gut. However, my understanding is that he did not retract his statement that Canadians are spoiled rotten and that they are living too high off the hog. That is why I asked him the question, and I would like him to clarify the record. Did he or did he not say that Canadians are spoiled rotten and are living too high off the hog?


Jack Sydney George (Bud) Cullen: Mr. Speaker, I am not going to aid and abet the hon. member in spreading any false rumours. I am going to put everything in context which the hon. member has refused to do and I will do it on a question of privilege.


FINANCE
Léonel Beaudoin: Mr. Speaker, I would like to direct a question to the Minister of Finance.
During his visit in Frankfurt those last few days, the Quebec Minister of Finance, who thinks of himself as a demigod, is reported as having said this, and I quote:
If Canada were to refuse a monetary union with Quebec, we would establish a Quebec currency.
I would like to ask the Minister of Finance if in such conditions he would accept that the Bank of Canada print the Quebec currency, as it has done for other foreign currencies.


Joseph Jacques Jean Chrétien: Mr. Speaker, 1 do not have much comment to make in that regard except that I know that many people now buying Quebec bonds on the market insist that it be made clear on the bonds that they will be redeemed in Canadian dollars.


REQUEST BANK OF CANADA ISSUE MONEY TO FINANCE PROVINCIAL AND MUNICIPAL PROJECTS
Léonel Beaudoin: Mr. Speaker, as the Minister of Finance, the premiers of every province and the Prime Minister of Canada would agree that the problem we now have in Canada, that is the lack of understanding between the federal government and the province of Quebec, depends mainly on our economic problems; as the creation of money is the work of man, why does the Minister of Finance not recommend to the Bank of Canada that it grant new credits to the federal government, in agreement with the provinces, in order to develop or finance new public services for municipalities and school boards, and that, with a view to alleviating unemployment and creating new jobs?


Joseph Jacques Jean Chrétien: Mr. Speaker, our monetary policy is public knowledge in Canada; it was set by the governor of the Bank of Canada and I do not intend to ask him to change his policy.


REASON INTEREST RATES ARE SO HIGH
Léonel Beaudoin: Mr. Speaker, I have another supplementary. Could the Minister of Finance say why we have to buy money at high interest rates the moment it is created, particularly with a stroke of the pen?

December 7, 1977
Oral Questions


Joseph Jacques Jean Chrétien: Mr. Speaker, I do not think it would be appropriate during the oral question period to have a long debate on the monetary theories of the party which the hon. member represents.


AIR TRANSPORT
Jack Burnett Murta: Mr. Speaker, I am disappointed that the Minister of Transport is not here today. In his absence I will direct my question to the Deputy Prime Minister. It concerns the decision of the Canadian Transport Commission for the provision of charter air services within Canada-a decision which effectively excludes Wardair, the pioneer of Canadian charters. Will the Deputy Prime Minister exercise the government's prerogative and ensure that Wardair is allowed to participate in next summer's experiment with domestic air charters?


Mr. Charles Lapointe (Parliamentary Secretary to Minister of Transport):: Mr. Speaker, the hon. member knows most certainly that the report of the committee of the Canadian Transport Commission was tabled only yesterday. I would like to tell the hon. member there is in this report an indication that the committee may happen to allow other Canadian carriers who have a class 4 licence to operate regional ABC's if a regional air carrier does not provide the service needed. I think we should be pleased about this report which will bring at last a little more competition in air fares in Canada. It is still too early to indicate how the government will react to this report.


Jack Burnett Murta: Mr. Speaker, the parliamentary secretary did not answer my question in connection with Wardair. It is my understanding that Mr. Ward has decided to appeal the decision of the CTC. In light of the fact that restricting the interregional domestic charters to the two main carriers which over the years have opposed the domestic charter concept and by restricting the number of flights to 50, the program will provide little change from the present situation, will the parliamentary secretary-if the Deputy Prime Minister is not going to answer-undertake to communicate with the Minister of Transport to see if he will expand the program to provide the option of low-fare travel for Canadians this summer?


Charles Lapointe: I think Mr. Speaker, that I already answered this question. Obviously we are not yet in a position to say how officials will react to this report as it was tabled yesterday. As far as the appeal of Wardair is concerned, they just have to

make it and then the minister will certainly accept to consider it.


ROYAL CANADIAN MOUNTED POLICE
Elmer MacIntosh MacKay: Mr. Speaker, I have a short question for the Acting Solicitor General, who I presume to be the Minister of Justice. Will the Solicitor General be making available to the McDonald Royal Commission the information which he has resisted, and is continuing to resist, providing to the Keable Commission of inquiry?


Hon. Ron Basford (Acting Solicitor General):: I would not want to answer that precisely because I have not reviewed the affidavit that has been filed with the Keable Commission. The Solicitor General has made it very clear in this House and elsewhere that he will be providing to the McDonald Commission everything that is pertinent to its terms of reference, and including all of the investigating techniques and practices-as I say, everything that is in any way relevant to the McDonald inquiry.


REASON KEABLE COMMISSION ASKED FOR PROCEDURAL MANUALS
Elmer MacIntosh MacKay: I want to thank the minister for his answer. I gather,then, that the position of the government is not that it will be restricting material or providing only those files which in its sole discretion it deems relevant as this would reflect very badly on the bona Tides of the inquiry. I would like to ask him, as a supplementary, if he knows the reason that the Keable Commission requested procedural manuals was to determine precisely which requirements had to be followed by the security service regarding authorization for entries to be made by officers of the security services for the installation of any sort of listening devices.


Stanley Ronald Basford: Mr. Speaker,
I am not aware that that is why the Keable Commission wanted those documents. I am not aware at the present time whether the Keable Commission has ever explained why they wanted those particular documents.


EXTERNAL AFFAIRS
Mr. Ray Hnatyshyn (Saskatoon-Biggar):: Mr. Speaker, I have a question for the Deputy Prime Minister. It concerns the embargo on the shipment of uranium to the EEC pending the adoption by those nations of Canadian safeguards. Will the

Deputy Prime Minister assure the House that no agreement will be concluded with the EEC which allows France access to Canadian uranium without that country accepting the full scope of Canadian safeguards on its use?


Hon. Allan J. MacEachen (Deputy Prime Minister and President of Privy Council):: Mr. Speaker, the Secretary of State for External Affairs advised the House last week that he has had discussions with the commissioner speaking for the EEC, and that quite a number of difficulties had been removed. The negotiation, as I understand it, is with the community as such and the safeguards arrangement would apply to the community, and accordingly to all members of the community.


Ramon John Hnatyshyn: This is the important point, Mr. Speaker, because as the minister knows one of the tenets of the Treaty of Rome is a full and absolute commitment to free trade within the community. Will the minister tell the House, assuming France will not accept our safeguards, whether the nations of the EEC have then agreed to abrogate the Treaty of Rome to accommodate the Canadian interests in this regard?


Allan Joseph MacEachen: I realize the question by the hon. member is an important one, but at the moment it is a speculative and hypothetical situation to which he is addressing himself. We ought to wait for the final result of the discussions to reach the conclusion the hon. member is suggesting.


REGIONAL ECONOMIC EXPANSION
Mr. Alexandre Cyr (Gaspe):: Mr. Speaker, my question is for the Minister of Regional Economic Expansion.
Yesterday the Quebec government signed a general agreement with the French government about mining in Quebec. Under this agreement, prospecting for copper in northwest Quebec will cost $240,000. On the other hand, on March 29, 1976 the government of Canada and the Province of Quebec signed a $28 million agreement for mineral resources development. Would the minister tell the House if the Quebec-France program mentioned yesterday in the agreement might have been realized through the Canada-Quebec agreement under which the federal government gives a 60 per cent contribution?


Hon. Marcel Lessard (Minister of Regional Economic Expansion):: Mr. Speaker, just as the hon. member, I have heard about this agreement signed in Paris by the Quebec and French governments about a $5 million participation in prospecting and mining for the next five years. In fact, according to press reports, since of course I have not seen the text of the official agreement, those works will cover research in geological and geophysical surveys. I must say, Mr. Speaker, that it is precisely the type of works covered under the agreement which has been signed with the government of Quebec 18 months ago
Oral Questions
and under which I committed the federal government to pay $17 million over the next five years. I would like to add this, Mr. Speaker: Probably it would have been much more profitable for the Quebec economy and especially for the mining sector had France preferred and judged wiser to buy the surplus copper that we have now in Canada and especially in Quebec and this would have helped create more jobs.


EXTERNAL AFFAIRS
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, my question is directed to the Deputy Prime Minister. Having the high regard I have for him as a parliamentarian who understands parliament, I direct a question to him. It concerns international affairs and the kaleidoscopic changes which have taken place in the Middle East, in the contemptuous way the U.S.S.R. is treating the Helsinki Agreement, and the refusal of the U.S.S.R. to assure fair treatment to dissidents whose only offence is to disagree democratically with what has been done. Would the minister set aside, between now and Christmas, two days of government time so that parliament will have some idea of what is going on other than what it reads in the press and understand at first hand what is taking place. It would also give the government the benefit of the views of other political parties concerning matters which have to do not only with the peace of the world now, but in the years ahead.


Some hon. Members:: Hear, hear!


Allan Joseph MacEachen: Mr. Speaker, I agree with the general direction of the right hon. member's suggestion, that it would be an extremely good idea to have an opportunity to debate these international issues. The right hon. member may recall, following a similar suggestion he made in the last session concerning debates on international affairs and questions of national unity, that there was arranged an opportunity to debate the issue of national unity with very good results-otherwise the House would not have had an opportunity to make its views known.
With respect to this particular suggestion, which I think is a good one, I will consult with the Secretary of State for External Affairs when he returns and try to arrange a time for discussion in the House on international affairs. I think it would be an extremely good idea and maybe, in the spirit of constructive co-operation which the right hon. member has shown, we may be able to accelerate other business so that time can be made available.

December 7, 1977
Oral Questions


CANADA-UNITED STATES AUTO PACT-ACTION TO ENSURE GREATER PRODUCTION OF PARTS IN CANADA
Max Saltsman: Mr. Speaker, I have a question for the Minister of Industry, Trade and Commerce. It arises out of the news released yesterday that the ten month trade deficit on auto trade with the United States had reached a new high of $969 million, which is some 38 per cent higher than at the same time last year and that this deficit arises chiefly because of a whopping deficit of $2.2 billion on our parts trade with the United States. In light of the fact that this continuing deficit means a loss of jobs that has been estimated to be in the range of 20,000 and that it is likely to get larger, can the minister be specific in telling the House what success he has had in convincing the major auto makers to either manufacture or buy more of their auto parts in Canada, particularly since the devaluation of the Canadian dollar has made our industry that much more competitive?


Hon. Jack H. Horner (Minister of Industry, Trade and Commerce):: Mr. Speaker, nothing would please me more than to be specific. However, talks with the three major auto manufacturers are still going on. As yet, no conclusion has been reached. Some of them are interested in expanding their automobile plants. They have not yet determined whether that will be in Canada or the United States. However, negotiations are continuing. We are aware of the deficit in parts manufacturing. I have spoken on this subject many times in the House. All I can say is that in the spirit of this time of the year, we hope we can reach a conclusion before the new year.


INDUSTRY
Max Saltsman: Mr. Speaker, may I give the minister a chance to be specific in a case with which I know he is familiar. In connection with the growing auto trade deficit, it is my understanding that the minister's department has been involved in the attempt to find a buyer for the Anaconda plant in Toronto which makes radiator parts and other auto components, which will be forced to close down, with the loss of some 750 to 800 jobs unless a buyer suitable to the American parent is found. Rumours abound that several potential buyers for the plant have been found, but that the American parent would prefer to simply close the plant rather than face a potential competitor if the plant were to continue to operate and export to the American market. What has the minister done to attempt to find a buyer? In light of the fact that the plant is, potentially, a major exporter of parts to the American market and a major employer, can the minister say what he plans to do if the American parent
[Mr. MacEachen.l
continues to refuse to sell? This is an indication of why we are having this problem of deficits.


John (Jack) Henry Horner: Mr. Speaker, I met with the management of the Anaconda plant and the union leaders at that plant some months ago. We were able to convince the parent company to keep the plant open until next April to give us time to find a buyer for the plant. It is now my understanding that the owners of the Anaconda plant have contacted an agency and, in essence, have put the plant up for sale. We have a couple of interested buyers. We are doing everything we can to assist with the successful transfer of ownership of the Anaconda plant in the hope of keeping it in production in Canada.


REASON FOR REFUSAL TO TAKE ACTION ON MERCURY POISONING-PROPOSED REFERENCE TO COMMITTEE OF REPORT OF SCIENCE COUNCIL
Mr. J. R. Holmes (Lambton-Kent):: Mr. Speaker, my question is for the Minister of National Health and Welfare. It is related to the serious problem of mercury poisoning, in particular among our native people. It relates to the recent figures of December 5 which revealed that 56 individuals had mercury levels above 50 parts per million. In the October report "Policies and Poisons" published by the Science Council of Canada, they stated and I quote:
In respect of mercury, the scientific community was asked to prove damage before action was taken, whereas more commonly, the demonstration of the existence of a hazard has provoked action, for example with vinyl chloride.
I would like to ask the minister how she can justify, for example, the banning of saccharin on the basis of rat studies, or the action taken to control the hazards of vinyl chloride, and yet refuse to take meaningful action with respect to mercury poisoning with the knowledge that cases of Minimata disease exists.


Hon. Monique Begin (Minister of National Health and Welfare):: Mr. Speaker, I have the pleasure to inform the House that on the contrary we are going to sign within a few days an agreement on a research project in which, incidentally, we will have the participation of the Quebec government, of McGill University and of various associations representing the Indian communities of Quebec, which proves that we are very much interested in research related to the control of mercury poisoning.
[English)


John Robert Holmes: Mr. Speaker, that has to be one of the most irresponsible answers I have heard yet.


Some hon. Members:: Hear, hear!


John Robert Holmes: May I simply say to the minister-
December 7, 1977


Mr. Speaker:: Order, please. If the hon. member has a supplementary, will he please put it?


John Robert Holmes: I would like to ask the minister if she would give very serious consideration to referring the report of the Science Council of Canada to the appropriate committee or subcommittees, and give very serious consideration to their recommendation to establish a national advisory council on occupational and environmental health in order to correct this serious problem with regard to mercury poisoning.


Monique Bégin: Mr. Speaker, I believe that question should be directed to the minister responsible for the Science Council. I understood the question to be on the urgent need for research.
I assured the hon. member that a major research project was going to be signed in a few days by myself and authorities of the Quebec government, McGill University and a representative of the Indian groups of Quebec. I can also say that further to the press release I issued on November 25, results of decisions made by my department for which I am responsible, and about which I am knowledgeable, are now being discussed with leaders of bands across the country.


TRANSPORT
Mr. Ron Huntington (Capilano):: Mr. Speaker, in the absence of the Minister of Transport, I will direct my question to the acting minister. In view of the fact the Minister of Transport has put four Vancouver shipyards, all in need of work, to the expense of preparing tenders and design specifications for a new Vancouver harbour patrol boat, and has called for requotes on these tenders, when will the minister take the initiative to provide a Canada built harbour control vessel for the port of Vancouver, the largest and busiest harbour on the west coast of the North American continent?


Charles Lapointe: Mr. Speaker, the suggestion made by the hon. member is very interesting and I will surely tell the minister about it as soon as he is back.


Arthur Ronald Huntington: Why did the Minister of Transport purchase through a straw company called Halifax Fishing Ventures Limited a United States built vessel that is nothing but a pile of junk, is not seaworthy and lies high and dry in shame under a Vancouver bridge?


Mr. Speaker:: Order, please. The question seems to be somewhat argumentative.


Some hon. Members:: Oh, oh!


Ramon John Hnatyshyn: On a point of order.
Oral Questions


Some hon. Members:: Order.


Mr. Speaker:: Order, please. Members will realize that the question asked by the hon. member is argumentative and seeks information which is available on the order paper.


Ramon John Hnatyshyn: On a point of order, Mr. Speaker.


Mr. Speaker:: Order, please. The hon. member for Algoma.


REGIONAL ECONOMIC EXPANSION
Mr. Maurice Foster (Algoma):: Mr. Speaker, my question is for the Minister of Regional Economic Expansion. In view of the special development problems facing northeastern Ontario-


Sinclair McKnight Stevens: Argumentative.


Maurice Brydon Foster: -and in view of the minister's recent meeting with Ontario government ministers responsible for regional development in the province of Ontario-


Mr. Gillies:: Argumentative.


Some hon. Members:: Order.


Mr. Nowlan:: Come on, let's have some order.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. The hon. member for Algoma.


Maurice Brydon Foster: In view of the special problems facing northeastern Ontario regarding development and in view of the minister's recent meeting with Ontario ministers, can he tell the House what progress has been made on new initiatives for regional development in northeastern Ontario, especially concerning the Michigan-Manitoulin ferry service which I understand was discussed.


Marcel Lessard: Mr. Speaker, we held a meeting this morning in Toronto where I took part in the discussions on possible joint development projects of both governments in this vast area of northern Ontario. I must say that our discussions were very positive, that several proposals were submitted to me and that we have agreed to carry on our negotiations. Indeed, I am confident that in the very near future we could conclude some agreements dealing with projects submitted this morning.
As for the specific project suggested by the hon. member, it is included among the many projects considered and we have agreed to continue to analyze it and possibly include it among those to be carried out.

December 7, 1977
Oral Questions


DATE AND AMOUNT OF STABILIZATION PAYMENT
Mr. Arnold Malone (Battle River):: Mr. Speaker, my question is for the Minister of Agriculture. When there will be a payout under the grain stabilization act and how much will it be?


Hon. E. F. Whelan (Minister of Agriculture):: Mr. Speaker, the member of the cabinet who administers the payout under the grain stabilization act is the minister in charge of the Wheat Board, and following discussions I have had with him no decision has yet been made at this time.


Arnold John Malone: A supplementary question, Mr. Speaker. Would the minister tell us whether or not the formula has been calculated yet?


Eugene Whelan: I am not in a position to say, sir.


WHEAT-POSSIBILITY OF INCREASE IN DOMESTIC PRICE
Mr. Don Mazankowski (Vegreville):: Mr. Speaker, my question is directed to the Minister of Agriculture. Given the fact that farm income has dropped very dramatically, particularly in the grains industry, given the fact that under the Two-Price Wheat Act there is provision for an annual escalation in the price of domestic wheat used for human consumption commensurate with the increase in the cost of production, and given the fact that Supplementary Estimates A have revealed a slashing of some $35 million under the provisions of the Two-Price Wheat Act, would the minister advise the House why the government is so reluctant to live within the spirit and intent of the Two-Price Wheat Act, and does this reduction of $35 million mean that we cannot anticipate an upward adjustment in the minimum price under the provisions of the Two-Price Wheat Act?


Eugene Whelan: Mr. Speaker, this matter is still very much under discussion.


Donald Frank Mazankowski: A supplementary question. These discussions have been going on since last July. I wonder whether the minister would tell the House when these discussions will be concluded?


Eugene Whelan: I hope by Christmas, Mr. Speaker.


MULTICULTURALISM
Lincoln MacCauley Alexander: Mr. Speaker, may I direct my question to the Minister of State (Multicul-turalism) who has been running up and down the country
[Mr. Lessard.1
indicating to the 30 per cent of the Canadian population who are minorities that this government has looked after the Anglophones, is now looking after the Francophones, and that the 30 per cent have been woefully neglected and he is going to see to it that some recognition is given to their talents so they will be brought into the public service. Would the minister indicate to the House when he is going to be in a position to give a definitive statement regarding his intentions in this matter, or is this window dressing just prior to the election?


Hon. Norman A. Cafik (Minister of State (Multiculturalism)):: Mr. Speaker, the hon. member can be assured that all actions taken under my portfolio will be more than window dressing. We are deeply concerned about the ethno-cultural communities of this country and are equally concerned, as is the hon. member, with seeing that all Canadians have equal opportunity to work and participate in the mainstream of Canadian life at all times.


Lincoln MacCauley Alexander: A supplementary question, Mr. Speaker. I have heard that statement for the past three or four months. My question to the minister-I hope he has also kept his colleague the President of the Treasury Board involved in this respect-is: When is the minister going to stand up in this House and give a definitive statement respecting how he is going to implement this very laudable project of his? That is all I want to know.


Norman Augustine Cafik: Well, Mr. Speaker, I am very pleased that hon. members are that much interested in the activities of my portfolio. 1 will give consideration to coming forward with a statement on motions in due course.


Mr. Speaker:: The hon. member for New Westminster.


Lincoln MacCauley Alexander: Mr. Speaker, this is a very important matter and I think I should be allowed one supplementary.


Mr. Speaker:: Order, please. The hon. member for New Westminster.


LABOUR CONDITIONS
Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, my question is directed to the Minister of Labour and it concerns the telephone strike in the province of British Columbia. Since 1972 this House has introduced dispute settlement legislation in a number of abrasive disputes, five of which affected workers on the coast of British Columbia. In view of the fact that the company has now rejected the intervention of the Minister of Labour in this increasingly bitter dispute, and in view of the fact that labour union has now accepted the conciliation report of Dr. Noel Hall, is the Minister of Labour intending to introduce legislation in the House in the near future based on the Noel Hall report?
December 7, 1977


Hon. John C. Munro (Minister of Labour):: Mr. Speaker, I think technically and legally this situation is considered a strike. I do not think it would be beneficial at this stage to start talking about further legislation to end the strike, or a lockout if that is how the hon. member personally may wish to interpret it. The fact of the matter is that I am hopeful we can still find a means of settling this dispute without provoking a situation where we agree we have to start talking about legislation. Mr. Collins is there. He was appointed yesterday, as the hon. member knows, and I think we should give him a chance to see what he can do over the course of the next few days.


Stuart Malcolm Leggatt: A supplementary question, Mr. Speaker. I agree with the minister we should give Mr. Collins perhaps a couple of days, but this is a strike which is becoming increasingly bitter and it is over just one clause in a previous union contract, namely the question of job security. The report called simply for an 18-month study of that particular clause. In view of the fact that seven times since 1972 we have forced workers back to work, is it not time that for once in this Housewe asked a company to accept a reasonable proposal and put the dispute back where it belongs?


John Carr Munro: Unfortunately, Mr. Speaker, I think the hon. member has a rather short memory. The last time I came in with legislation in this House affecting my own department was to end a lockout in the port of Halifax.


URBAN AFFAIRS
Mr. Dean Whiteway (Selkirk):: Mr. Speaker, in the absence of the Minister of State for Urban Affairs may I direct my question to the Deputy Prime Minister. It has to do with the report of the western premiers' task force on constitutional trends. Page 31 of the report talks about consultation with the provinces being non-existent. Can the Deputy Prime Minister tell us specifically what the government has in mind that it is going to do to correct the situation which is spoken about in this report, namely that consultation with the provinces in the area of housing and urban affairs is non-existent?


Allan Joseph MacEachen: Mr. Speaker, I have not studied the report referred to by the hon. member, but he will realize that the Prime Minister is currently holding a series of consultations with the provincial premiers, and I am sure that housing is one of the subjects which will be brought forward. In any event, I think I am fairly well founded in my statement that housing is one of the elements which will be in the minds of the Prime Minister and the premiers when they meet in the new year, as has been suggested. So I believe the hon. member need not be concerned that housing is being neglected in federal-provincial consultations.
Oral Questions AGRICULTURE


PROTECTION OF PRODUCER INTERESTS DURING GATT NEGOTIATIONS-GOVERNMENT ACTION-REFERENCE TO COMMITTEE OF TARIFF BOARD REPORTS
Mr. John Wise (Elgin):: Mr. Speaker, my question is directed to the Minister of Agriculture. Up to now, at least, the minister has refused to give any commitment or guarantee that Canadian agricultural interests would not be traded off at the present GATT talks. Is the minister prepared today to give any guarantee or commitment?


Eugene Whelan: Mr. Speaker,
I wish any member of the government could give a full commitment or guarantee regarding his desires for agriculture or for whatever department he is responsible. These negotiations are held at a very confidential level. We have made submissions. I am sure the hon. member knows fully my views on what I think should be done to protect agriculture, and I have not changed those views.


John Wise: Mr. Speaker, I think it is obvious that the minister is not prepared to give a guarantee, but would he be receptive to the suggestion that the two tariff board reports be referred to the Standing Committee on Agriculture so that the industry would have a further opportunity for input?


Eugene Whelan: Mr. Speaker, I think I intimated the other day that I had no objection to this. 1 have had discussions with the House leader and I will be discussing this further with him tomorrow.


SOCIAL SECURITY
Mr. Paul Yewchuk (Athabasca):: Mr. Speaker, my question is for the Minister of National Health and Welfare. On November 23 when I asked her whether she was planning to rearrange family allowances and the old age pension in order to get funds to pay for her proposed guaranteed annual income, as reported at page 1164 of Hansard she said she was studying rearrangements which would "take away from those who do not need universal programs." I asked her the same question on December 1, namely, whether she would take away from those who did not need the universal programs, family allowances and old age pensions, and she responded by saying there is no way that these programs will be modified. Her answer on December 1 directly opposes her answer of November 23. I should like to ask her now whether she is taking the position that she can have it both ways; that she can have these two programs simultaneously universal and selective?

December 7, 1977
Members' Salaries


Monique Bégin: Mr. Speaker, I just read in the clippings of today that the hon. member issued a press release yesterday nurturing unfounded fears and anxieties among the Canadian population as to the universality of payments of old age pensions and family allowances, which I think is absolutely unacceptable, irresponsible and wrong-false, of course. I should like to say that unfortunately they probably did not have the number of my office and I did not receive a copy of the member's said press release, and I would like to study that before answering the question.


Paul Yewchuk: Mr. Speaker, I was quoting from Hansard. If the minister will review Hansard of November 23 and of December 1 she will see where the quotations were found. In view of the fact that she seems to be unwilling or unable to explain herself, I would ask the Acting Prime Minister whether he will tell the House if family allowances and old age pensions will be made selective in order to pay for a guaranteed annual income, or will they remain universal programs? I would like an unequivocal answer?


Allan Joseph MacEachen: Mr. Speaker, I can be quite unequivocal on that point. No decision has been made.


Some hon. Members:: Oh, oh!


REMUNERATION OF MEMBERS
Mr. Speaker:: Order, please. Before hearing the Minister of Employment and Immigration (Mr. Cullen) on a question of privilege, of which he has given the Chair notice, I have two matters outstanding which I think I ought to address to the House. The first has to do with members' remuneration.
As the end of 1977 is approaching rapidly, I felt certain that all hon. members would want me to give some consideration to the question of the application of increases of indemnities paid to members for 1978 and their relationship to anti-inflation guidelines.
Members will recall last year, in an effort to conform with both the letter and the spirit of the anti-inflation program, arrangements were made to pay members less than the $2,400 permissible maximum, which was arranged through an increase of $2,200 consisting of $1,500 in salary and $700 in expense allowance.
It is not easy to express these kind of increases in terms of an individual member's remuneration because, as is well known, there are regional variations in the allowances for members and, of course, there are some members who receive salary differentials on the basis of additional responsibilities over those of the ordinary member. However, using the formula provided in the anti-inflation program, that increase
[Mr. Yewchuk.J
translated last year, under this formula which basically relates to the global amount paid to all as a group, to 5.59 per cent of the total sum paid to members for salaries, allowances and benefits.
It was evident that members wanted to continue with a similar arrangement for 1978 and so, after consultation with House leaders and through them with the party caucuses, I wish to advise hon. members that the 1978 increases will be $2,100, consisting of $1,400 in salary and $700 expense allowance. On the same basis of calculation this represents an increase of 4.96 per cent over the total sum paid to members of the House of Commons in salaries, allowances and benefits.
Special allowances, I think it should be emphasized, paid to members with additional responsibilities will remain unchanged, for the third consecutive year.


Mr. Speaker:: Order, please. A point of order was raised in respect of some items in the estimates which will be finalized tomorrow in the supplementary estimates. This relates to a point which was raised the last time around when items were contained in the supplementary estimates which were described as $1 items, and which basically were objected to on the grounds that they were not purely supply items but in fact went beyond the limits of the supply procedure and extended into legislative authority.
I think all hon. members understand that the supply process is confined in its method of debate and exposure to the House in that it is put forward by way of an estimate which is examined by the committees of the House, and, at the end of that process when the estimate is deemed to be reported or in fact reported back to the House, it is dealt with rather quickly by way of a supply bill on the final supply day of the particular semester in which the estimate was originally advanced.
This is a process which has long been adhered to by the House which provides for an examination of the estimates in rather great detail, but does not provide for extensive debate between the various stages of the supply bill. As a result of that, it has long been a tenet of the House that supply ought to be confined strictly to the process for which it was intended, that is to say, for the purpose of putting forward by the government the estimate of money it needs, and then in turn the voting by the House of that money to the government, and not to be extended in any way into the legislative area, because legislation and legislated changes in substance are not intended to be part of supply, but rather ought to be part of the legislative process in the regular way which requires three readings, committee stage, and, in other words, ample opportunity for members to participate in debate and amendment.
Accordingly, the last time this argument was raised I indicated I thought it unfortunate we felt cramped by the process of argument on these points and, in the future, we ought to experiment with a process which would give the Chair an opportunity to hear these arguments in advance, rather than attempting to deal with them on the last allotted day when the whole supply process is finalized.
December 7, 1977

Accordingly, last Wednesday I gave notice of the intention to hear arguments on this, and points of argument were registered with the Chair on Thursday, and arguments in fact took place on Friday. Since tomorrow is the final day I thought I should adjudicate on that now.
The argument put forward last Friday concerned two items raised by the hon. member for Calgary Centre (Mr. Andre) in a very able way. These related to two items in these estimates, the first being vote 31a under regional economic expansion concerning the Cape Breton Development Corporation. I think I should read it as follows:
Payment to the Cape Breton Development Corporation to be applied by the Corporation in payment of the losses incurred in the operation and maintenance of the coal mining and related works and undertakings acquired by the Corporation under Section 9 of the Cape Breton Development Corporation Act, including administrative expenses chargeable to the Coal Divison,-
And the following was the part objected to:
-and notwithstanding Section 31(2) of the said act, for grants to municipalities on Cape Breton Island not exceeding an amount equal to the taxes that might have been levied for their 1977-78 fiscal year by the municipalities in respect of the personal property of the Corporation if the Corporation were not an agent of Her Majesty ...
Then the amount stipulated is $21,976,000.
The second objection was in respect of Vote L56a under transport, which is as follows:
To authorize,
(a)	the Minister to purchase on behalf of and to hold in trust for Her
Majesty in right of Canada all of the issued common shares of VIA Rail
Canada Inc. and to pay $100,000 in consideration thereof; and-
The following is the portion to which objection was taken:
(b)	that all borrowings by VIA Rail Canada Inc. be exempted from the
interest rate limitation of six per cent per annum imposed by subsection
72(5) of the Railway Act, and all such borrowings for a term of more than
12 months be subject to the approval of the Minister of Finance ...
The total amount indicated is $100,000.
Members will recall that on the last occasion which I have referred to, we attempted to devise this better procedure which has led us to this point. The point at issue is whether the two items seek legislative authority which does now exist or does not exist. That is the nub of the problem, for if indeed the government already has legislative authority to do these things, then whether the amount is $1 or a billion dollars makes no difference to the Chair. If, on the other hand, the government does not possess the legislative authority to do these things, then neither does the amount of $1 or $1 billion make any difference. The test to which I put them is whether or not in these items the government is putting forward a spending estimate under authority it already possesses, or whether it is seeking new legislative authority for these two items.
In respect of the first vote, 31 a, a reading of Section 31 (2) of the act, which is the relevant section, clearly indicates that the government is entitled to pay to the Cape Breton Development Corporation amounts of money not to exceed amounts which would be levied in lieu of property taxes if in fact the Cape Breton Development Corporation were not a Crown corporation. As it turns out, the proposal here is to pay a sum
Estimates
of money to that corporation which in fact exceeds that which could be levied as property tax of the corporation and extends it to a new concept which is in lieu of personal tax, that is a tax on personal property. That seems to me to be directly contrary to the section because the section puts the limit as taxes that could be levied on property, and introduces a new kind of replacement. Therefore I feel that the words beginning "and notwithstanding Section 31 (2) of the said act" must be deleted from the item.
In my view the item can remain in. The total amount of money can remain a proper part of the estimate. If it turns out to be an over estimate of the amount that is required to pay amounts in lieu of property taxes, so be it. That is an administrative matter which can be dealt with. I do not think the amount ought to be altered. I think the item has to come out which relates to the new concept being introduced into the statute.
In the second item, paragraph (a), it is significant that the same principles apply, but even more so because it is noted that paragraphs (a) and (b) form part of the $100,000 estimate. Paragraph (a) seeks that exact amount of money, the full $100,000 for the purchases of stock in VIA Rail Canada Inc. Therefore, obviously paragraph (b) is not an estimate in any sense of the word, because it does not seek any money, not even $1. The whole amount of $100,000 is the total amount of the estimate. All of that is contained in paragraph (a). Therefore no money is sought in paragraph (b). In any case, even if some sum of money were sought, the language of it is simply to release the restriction, which is contained in present legislation, of a ceiling on interest rates that ought to be sought by way of an amendment to the legislation.
In respect of both cases, I accept the argument of the hon. member for Calgary Centre, pursuant to the ruling which I made in March of this year: both of these items seek legislative authority which does not now exist. In all cases I am encouraged by the fact that the dispute by the House was not with the principle but with the approach to be taken to these programs. In fact the House is interested in the programs, particularly with respect to Cape Breton Development Corporation, and espouses an extension to the program. Simply, the House wants to see it done in a regular way. Therefore I would be encouraged by the prospect that if legislation is introduced to regularize this intention through an amendment to the legislation, it will receive speedy consideration by the House at least. In saying that I am drawing upon the arguments made by all members.
Also I hope all members have gained from this experiment, which has enabled us to argue these very important and significant subjects in a more orderly and regular way than we have done in the past. By coming to this point today, we are able to indicate what items, by order of the Chair, must be deleted from the supply bill tomorrow, again to encourage a repetition of the practice we have followed in the last two or three years of seeing the introduction of a supply bill at an

December 7, 1977
Privilege-Mr. Cullen
early hour during the day, rather than have it introduced at the last hour of the day, which has always been an affront to members who are asked to make these considerations at a late hour.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Thus, I hope the entire process has been beneficial to members. I thank all members for their co-operation in this very interesting discussion.


Mr. Speaker:: May I just take one minute to indicate to the House, as I intended to do earlier in the day, that we are all delighted to see back among us, after a bout of very serious illness, the hon. member for Hamilton Mountain (Mr. MacFarlane).


Some hon. Members:: Hear, hear!


Mr. Gus MacFarlane (Hamilton Mountain):: Mr. Speaker, thank you very much. It is important to feel part of a club which sends greetings from all sides of the House. Certainly I have mentioned to my own members of caucus my appreciation for their efforts. I have a greater understanding of those who are in hospital, and I should like all members to know that their kind wishes and words were very important to me. Certainly they played a great role in my being back here, where I intend to stay.


Some hon. Members:: Hear, hear!


PRIVILEGE
Jack Sydney George (Bud) Cullen: Mr. Speaker, in my approximate ten years in the House of Commons, this is the first occasion I have had to rise on a question of privilege. That will give Your Honour some idea of the importance I attach to stances which I take as Minister of Employment and Immigration and the attitude I have to the unemployed.
My question of privilege arises out of statements made and questions asked in the House by the hon. Leader of the New Democratic Party (Mr. Broadbent) and the hon. member for St. John's West (Mr. Crosbie). Both left the impression that I said Canadians need a "kick in the gut", and the further impression that 8.4 per cent unemployment was the way to achieve it. Later the hon. Leader of the NDP stated that he had checked and confirmed that I had made that expression, but he carefully avoided the context.
In talking to a group of new Liberals at the University of Ottawa


Some hon. Members:: Oh, oh!


Steve Eugene Paproski: Was it Jack Horner?


Mr. Beatty:: Both of them!


Jack Sydney George (Bud) Cullen: Mr. Speaker, that is their title, and they are proud to wear it.


Some hon. Members:: Hear, hear!


Jack Sydney George (Bud) Cullen: At that time basically we were discussing the question of unemployment, primarily among young people, and I said the following:
The main feature this morning as I understand it is the question of unemployment and youth unemployment and the government's response to that specific problem. In so far as the federal government is concerned we look first of all at the statistics, which are frightening at the least, namely, that unemployment among youth is about twice the national average so that if unemployment is around eight or seven or eight among the adult male, among young people between the ages of fifteen and twenty-four it's somewhere in the fifteen per cent mark. And so that is a target group for us. The other area that we have to be so careful with and we get locked in all too often is "What in effect is full employment?" I was absolutely delighted, I guess I should say, that the NDP were finally coming around to recognize that full employment doesn't mean that everybody in Canada is working but they picked a very conservative figure of three per cent unemployment as full employment. Darcy McKeough, you may remember, picked 5.5 per cent and if 5.5 per cent of the work force was unemployed at any particular time that in fact was full employment. The truth probably lies somewhere in between the two figures.


Mr. Lambert (Edmonton West):: What is your question of privilege?


Jack Sydney George (Bud) Cullen: If the hon. member will wait, I will get to my question of privilege.


Marcel Joseph Aimé Lambert: That is what you are supposed to be doing now.


Jack Sydney George (Bud) Cullen: I continued by saying:
As a politician I'm not going to get locked into that. I don't think it's a particularly fruitful game for a member of parliament, particularly one on the government side, and particularly a minister who has responsibility for employment policies. Given those particular figures, I think we should remember that about 95 per cent of the people in Canada who wanted work are working and so our target group is that other 5 per cent or 6 per cent depending upon whose figures you're using.
That was the context of the unemployment debate and the words I used at that particular time.
Later I was asked a question by a member of the audience who said: "Mr. Cullen, is it not true that people are living beyond their means in Canada?" She went on to express in various ways how she thought this particular thing was taking place.
My response was as follows:
Well, I think your first comment is dead-on with what the Prime Minister has been saying, that you cannot get more out of the economy than you are prepared to put into it. I think one of the problems that we've had in Canada is that we've been spoiled rotten and that we've been living pretty high off the hog and, as a result of that, we expect that that is, in fact, going to continue. We haven't had what I call a kick in the gut the way the States had when they had this all-of-a-sudden oil embargo. They couldn't get what they required, they had to line up for gasoline and they had such an economic and psychological jolt that they're being a little more realistic in the prices they charge for their products. People that are bargaining as union leaders are taking a much more responsible attitude because they've had this shock value. Now, we've tried to shock the Canadian economy with wage and price controls and we've tried to give them a psychological shock.
December 7, 1977

At no time did I indicate that Canadians needed a kick in the gut. In fact I indicated that it had been administered in the United States.
When we brought this information to the attention of the CBC, they checked out the true facts, and this morning they apologized on the radio. When we brought this to the attention of the Ottawa Citizen, where the story had its birth, they put a correction in the newspaper today.
My responsibility, as Minister of Employment and Immigration, is to get across to the unemployed of this country that I am concerned. As a son of an individual who was laid off and unemployed, and as an individual who has suffered unemployment when working my way through school, I have a feeling for the unemployed. That kind of thing is important to me in acting as the Minister of Employment and Immigration.
I have received two apologies from the media. I think the very least I could expect from my colleagues is an apology that they made an error.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Mr. Speaker, I am not quite sure what member the minister had in mind when he was making his comments.


Mr. Goodale:: You.


John Edward Broadbent: I hear one of his backbenchers answering for him. Evidently the minister expects to receive apologies from this side of the House. He referred to the hon. member for St. John's West (Mr. Crosbie) and myself. I thought perhaps he would refer to the Deputy Prime Minister of Canada (Mr. MacEachen).
If the minister looks in yesterday's Hansard he will find some interesting quotations, not coming from this side of the House but coming from his own side.
The minister raises an important question which pertains directly to what he has brought before us, as well as the Prime Minister (Mr. Trudeau), members of the Conservative party, and some from our party, namely, questions that are raised in the House about quotations that are attributed to people outside the House. I want to tell the minister that questions were raised yesterday from this side. I moved two motions under Standing Order 43. In my motion I used the phrase "alleged statement," and subsequently during the question period I sought some clarification. The word "alleged" was used from time to time by members of the Conservative party and indeed by the Deputy Prime Minister, but sometimes it was not. Yesterday the Deputy Prime Minister said, as reported at page 1583 of Hansard, that he was dissociating himself-


An hon. Member:: Apologize, Broadbent.


John Edward Broadbent: -that it is not stated government policy. He said:
Privilege-Mr. Cullen
... I find much in his statements and comments with which I agree such as, for example, his statement that it is not the total obligation of the government... to provide jobs.
Further on he said, with reference to the statement which he took for granted was uttered:
They were general comments relating to what the minister conceives to be the lifestyle of Canadians,
My point is, and I want to stress it, that before I raised the issue in the House I saw not one newspaper but two, with two different stories, one a CP story and one a story by a reporter under a by-line in the Ottawa Citizen, presumably differently written stories-it could have been the same story but the paragraphs are quite different, the sequence is different-and in both stories the quotation is attributed to the minister. It seems to me that it is quite responsible for members on this side of the House to raise such questions.
At least when you use the word "allegation" there is a strong reason to believe-when you have two news stories before you in two different papers, presumably written by two different reporters attributing the words to the minister-that the story is true. But I want to go further, that if the minister really thought he had a case, as he says he has before the House now, yesterday morning he could have conveyed through his parliamentary secretary to members of the House of Commons-the story in the Ottawa Citizen is two days old-that he has been misquoted and we would have accepted his word. He could have conveyed this also to the Deputy Prime Minister.


Some hon. Members:: Oh, oh!


An hon. Member:: Apologize.


John Edward Broadbent: I am saying-oh, shut-up over there!


Mr. Speaker:: Order, please. The hon. member for Oshawa-Whitby (Mr. Broadbent) had put questions to the minister today which were deferred because the minister had indicated his intention to raise this question of privilege, and I think it is appropriate that the hon. member should have the opportunity to make his remarks.


John Edward Broadbent: If the minister thinks he has a question of privilege on this, the least he could have done before making accusations against members on this side of the House was to have informed his parliamentary secretary yesterday morning that what was alleged to have been said was not said, and he could have told the Deputy Prime Minister the same thing. As everyone in the House knows, yesterday the Deputy Prime Minister believed that the quotations were accurate and he was doing his best to disassociate the government from them. If the minister was so incensed about the opposition, why did he not ensure that the Deputy Prime Minister himself knew yesterday that he did not utter the words?
I will reply to what I think is not a question of privilege at all and end up my comments by saying that the minister has withdrawn his statement-and I accept his word entirely. He says he did not say Canadians deserve a kick in the gut, and I

December 7, 1977
Privilege-Mr. Cullen
accept that. What he has not withdrawn, in fact he confirmed it, was that he said that Canadians have been spoiled rotten and that Canadians have been living too high off the hog. I say to the minister, let him go down to Cape Breton and tell them that.


Lincoln MacCauley Alexander: The minister is a cry baby.


Ramon John Hnatyshyn: Mr. Speaker, I want to make a brief intervention in connection with this question of privilege. I believe, as the hon. member for Oshawa-Whitby (Mr. Broadbent) pointed out quite rightly, that this is not a question of privilege but rather an attempt to give an explanation of a rather unfortunate speech which he made to a group of Liberals, trying to tell them what they wanted to hear.
The minister, during the course of his so-called question of privilege, read from a transcript. He also has a recording of what he said during his speech or presentation to those students. I think it might be appropriate for the minister, if he wants to put the matter to rest, rather than read to the House an explanation and selected excerpts from his speech, if he would table the whole transcript and do us a further favour of allowing anyone who cares to hear the tape, which was recorded by his assistant at that meeting-because we on this side have checked the authenticity of the remarks quoted, we looked into the matter, and we understand that a recording was made by an assistant in the minister's office.
All I can say is that the minister has made utterances in the past outside the House which would lend credence to the authenticity of the statements that were attributed to him in the newspaper article, and I want to give a couple of examples. On March 31 of this year in the Ottawa Journal there was a report headlined "Tough-Talking Bud Cullen Finds Commons Irrelevant". It goes on to suggest-and there was no question of privilege raised in respect of this allegation-that he appears to enjoy developing a reputation as a tough guy since the Prime Minister (Mr. Trudeau) appointed him to the portfolio last September. He said that he regards parliament as being irrelevant to the point of embarrassment. Now he comes to parliament and attempts, on a question of privilege, to explain precisely what he has said.
At other times he indicated, with respect to the unemployed, that it was his contention that opposition members of parliament want to spoon feed the young people. He was alleging that, in defending the proposition which the Prime Minister put forward that if graduates from our universities could not find work in the country, they could go elsewhere. He underlined that kind of approach with the problems in seeking employment, so it is only natural, when we read another report of a tough guy speaking against people looking for jobs, for us to want to check it and to find out precisely what he said.
As the hon. member for Oshawa-Whitby says, when the minister speaks in the House, it is our obligation to accept what he says, and we accept the fact that, as he says, he did not say he wanted to give Canadians a kick in the gut. But I want to suggest to him that if he wants to demonstrate his

sincerity to us, he will table a transcript of his statement and allow members of the House or of the media to hear the recording that was made of his statement. I think that in this way he would do far more to clarify the situation than by trying to explain it as an alleged question of privilege.


Mr. Speaker:: Before recognizing the hon. member for St. John's West (Mr. Crosbie), I take it that the hon. member for Saskatoon-Biggar (Mr. Hnatyshyn) is attempting, while contributing to the question of privilege which remains open for decision, to import into the discussion a point of order relative to the tabling of a document. I am not sure that any of the precedents would apply to a document which is not now in existence and make them apply to some document which would have to be brought into existence presumably by the transcription of a tape. That would be an extension of the principle. However, it may be a matter for further consideration.


Mr. John C. Crosbie (St. John's West):: Mr. Speaker, I personally feel that I am an aggrieved, innocent party in this matter, and I submit that there is now a question of privilege here with reference to myself. If we look at yesterday's record we will see that a motion under Standing Order 43 was moved by the hon. member for Central Nova (Mr. MacKay) and seconded by myself, a party who has been seriously impugned by the Minister of Employment and Immigration (Mr. Cullen), which stated with regard to this matter that the minister made a number of comments to a group of new Liberals-whatever they are, they must be few in number. I am quoting from page 1581 of Hansard. He was reported as saying that Canadians need a kick in the gut and have been living too high off the hog. The motion went on to say:
Since most Canadians would like to read the full context of the minister's remarks in order to be aware of the heartlessness of this government.. .
That this House requests the Minister of Employment to make both a tape of his conversation last week end at the University of Ottawa and a transcript of those remarks available to all individuals who request such.
That was our motion, from which it can easily be seen that we were requesting the whole transcript so that we would know exactly what was said. I seconded that motion.
When I read the minister's comments in the newspaper, I was not surprised because he was merely following the lead of the Prime Minister (Mr. Trudeau), who has said that we are obsessed with unemployment, who has shrugged his shoulders at unemployment for the last four years, and who has suggested that Canadians are soft. It is all in the same pattern, so when I read that the minister said-and he has admitted it- that we have been spoiled rotten, I recognized that as part of the same campaign of stating that it is all our fault that Canada and the government are in the position they are in. When he said that Canadians have been living too high off the hog, which he admitted today, I felt myself that the pig has nothing left but a squeak.


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


John Carnell Crosbie: When I asked my question I was careful in phrasing it. It is found at page 1583 of Hansard. I asked the following:
Are the comments made by the Minister of Employment and Immigration last Saturday night in connection with unemployment that we have been spoiled rotten, that Canadians have been living too high on the hog and that we need a kick in the guts...
I quoted the minister as saying that we need a kick in the guts. I know the minister thinks we on this side of the House need a kick in the guts, but apparently he was not saying that all Canadians need a kick in the guts. He was saying we need an upset like the Americans had. I accept that.
Any mistake I made in my question is a very slim one. However, the Deputy Prime Minister (Mr. MacEachen) assured me that the statements alleged to be those of the Minister of Employment and Immigration do not represent any considered policy on the part of the government. In other words, it was an aberration of the Minister of Employment and Immigration and not an aberration of the government, although the Deputy Prime Minister found much in the statements and comments of the Minister of Employment and Immigration with which he agreed.
Then the Deputy Prime Minister went on to say, as reported at page 1854 of Hansard, and I quote:
Furthermore, I should draw to the hon. member's attention the fact that the quotations to which he referred as allegedly having been made by the minister did not refer to the unemployed of Canada. They were general comments relating to what the minister conceives to have been the lifestyle of Canadians, and that is not and has never been a question of government policy.
The Deputy Prime Minister was guilty of whatever I am guilty of, if Your Honour finds me guilty, but 1 plead not guilty in this matter.
Finally, the hon. gentleman made these alleged remarks Saturday night. They were in the press on Monday. The minister did not get up in this House on Monday to object-


An hon. Member:: He wasn't here.


John Carnell Crosbie: -to the fact that he had been wrongly quoted in the newspapers. He did not come to this House on Tuesday to object. I believe he went to his district. I suppose it is important for a member to go to his district but, if he was seriously concerned, he should have been in the House on Tuesday, and the record could have been corrected then.
The minister's parliamentary secretary could have corrected the record. The Deputy Prime Minister could have corrected it, but he did not do so. He endorsed what the minister said and agreed with it. The Deputy Prime Minister did not say the minister was misquoted.
Therefore, while I am willing to submit to Your Honour's ruling if Your Honour rules against me-I have great respect for Your Honour and Your Honour's rulings-I submit that I am an injured party.


Mr. Speaker:: Before hearing the contribution of the hon. member for Westmount (Mr. Drury), I think I ought to move now to clarify something said by the hon. member for St.
Privilege-Mr. Cullen
John's West (Mr. Crosbie) during the course of his remarks. He made reference to some quotation by the minister and followed that immediately by saying-if I am not mistaken;
I had to catch this quickly-"I thought to myself that the Pig-"


John Carnell Crosbie: "Has nothing left but a squeak".


Mr. Speaker:: I do not know if the hon. member for St. John's West was intending to use some sort of expression, but to me the clear effect of his language was that he was calling the minister a pig.


Lincoln MacCauley Alexander: Oh no, Sir. We wouldn't do that.


Mr. Speaker:: To me that was the effect of the hon. member's language, and I do not think it was intended seriously.


An hon. Member:: Withdraw.


Mr. Speaker:: This is a very serious matter of decorum. I honestly believe that the hon. member for St. John's West was attempting to introduce into his remarks an expression rather than an epithet about the minister, and I think it would be better for all if the hon. member were able to confirm that.


John Carnell Crosbie: Yes, Mr. Speaker. The minister said that Canadians are living too high on the hog, and I said I felt that the pig, meaning poor old Canadians-


Some hon. Members:: Oh, oh!


John Carnell Crosbie: -has nothing left but a squeak. I was not referring to the minister.


Hon. C. M. Drury (Westmount):: Mr. Speaker-


Mr. Nystrom:: Just "boar" in there, Bud!


Charles Mills (Bud) Drury: -I would like to address myself very briefly to the intervention of the hon. member for Saskatoon-Biggar (Mr. Hnatyshyn). I take exception to two of his propositions. Your Honour has dealt with them partially on the question of precedents, but I think it is even more fundamental than that. In this House we operate on a system of trust.


An hon. Member:: Ha!


Charles Mills (Bud) Drury: We do, in spite of the "ha". Some people do not seem to understand that. The machine will not work unless this assumption is made, and when the hon. member for Saskatoon-Biggar suggests, first, that reading from a transcript is inadequate and if the minister wishes to be believed and before-by implication-he, the hon. member for Saskatoon-Biggar, and his party will believe the minister, let him table a recording, that is an absence of trust, and I think contrary to one basic rule and that is: an hon. member's word, given in this House, is taken. Unless we operate on that basis the machine will not operate. Parliament will not work.
There is a second fundamental principle against which the hon. member for Saskatoon-Biggar, wittingly or unwittingly,
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Privilege-Mr. Cullen
has offended, and that is that you do not question the motives of other members. The hon. member suggested that he, because of the alleged previous performance of the Minister of Employment and Immigration (Mr. Cullen), had every reason to believe that the minister was a tough guy and so forth, and therefore he said those things. That is an example of questioning motives. Instead of examining what was said or not said, or its rightness or wrongness, the hon. member proceeded to try to impugn both the motives and the trustworthiness of the minister.
Unfortunately, recently we saw in Canada, through the polls, a popular referendum taken in which the public was asked in effect, "In matters of security, who would you sooner trust, the politicians or the police?" and the answer came back overwhelmingly, "We would sooner trust the police". I can understand this, and I suggest that unfounded allegations of untrustworthiness, and proceeding on assumptions that the motives and the trustworthiness of politicians should always be questioned, lead to a general public unwillingness to trust politicians, who themselves say they should not be trusted.
I suggest that the House should not follow or adopt rules or procedures which advertise or advocate untrusworthiness on the part of its members.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Before I hear the hon. member for Egmont (Mr. MacDonald) on a separate point of order I would like to deal with this matter.
The Minister of Employment and Immigration (Mr. Cullen) has raised, by way of a question of privilege, that which has been raised frequently in the past by way of questions of privilege, particularly in circumstances relating to incorrect quotations by the media which in fact turn into questions or points of some sort which have been raised in the House.
We have always in the past, in circumstances of this sort where there have been incorrect quotations which were perhaps misleading to the public on very important matters but which further have become matters of issue of some sort in the House, allowed, under the heading of privilege, opportunities for matters to be exposed to the House and for comments to be made by other parties perhaps affected. That does not, however, in any way alter the question, which is not a question of privilege under the circumstances, and therefore I feel it should not be considered as a priori a question of privilege, but ought to be finalized at this time.


Mr. MacDonald (Egmont):: Mr. Speaker, I rise on a point of order which relates to comments made by the hon. member for Westmount (Mr. Drury) and by the hon. member for Sas-katoon-Biggar (Mr. Hnatyshyn). I am very much concerned about the course of events this afternoon related to the question of privilege raised by the Minister of Employment and Immigration (Mr. Cullen).

December 7, 1977
In dealing with this matter Your Honour has referred to the fact that this was not just a question of the recollection of the minister, I assume, on the occasion of last Saturday. The minister quoted extensively, both by way of introduction and by way of exchange in terms of the specific events later referred to in the press story. There has been a long-standing tradition in this House that when documents are quoted from, as different from when they are referred to-


Mr. Macdonald (Rosedale):: Official documents.


David Samuel Horne MacDonald: No, any document. I am sorry that the former minister of finance (Mr. Macdonald) and one-time House leader does not recall. We have had a series of experiences, and my recollection is clear over the last 12 years that from time to time when ministers referred to documents and then quoted from them, that quotation was sufficient to require the tabling of that whole document. On occasion we have had some fairly stormy sessions about this, but the Chair has always upheld the principle that documents quoted from are subsequently tabled in this House. If this were not to be the case ministers who quote from documents would have a special advantage in dealing with the nature of the documents in the course of debate.
We are in a situation where the minister is not simply relying on his memory-I am sure he agrees with this, and I will give him a chance to clarify it if I am wrong-but he is obviously quoting from a transcript of the actual events as they took place. At this point the transcript is only available to the minister. To my mind it is a strange situation. If the minister is-and I believe he is-honestly attempting to clear the air on this matter, because I am sure he does not want to be identified with the comments as they were carried in the press last week, he would make the total document available. I assume that he has reviewed the total document to make sure there is no other comment made that would contradict what he said on the question of privilege this afternoon.
To be fair to the House, however, and more important to be consistent with the traditions of the House, Your Honour has referred to the fact that we are in a somewhat different situation. Normally when ministers refer to documents and quote from them in order to clear up a misunderstanding, or in this case a question of privilege, there is no question but that the documents are subsequently tabled.
In this case we are dealing with a document, in effect a transcript that the minister has made available to himself so that he can clarify the record. He quotes from the document specifically but selectively. What members are asking for here is, I think, reasonable and is consistent with the traditions of this House-that the transcript which is the basis on which the minister made his statement this afternoon should be tabled in this House. Only in that way can we be in conformity with the traditions of the House as well as satisfactorily clear the air, which is the minister's prime objective in this instance.
December 7, 1977


Donald Stovel Macdonald: Mr. Speaker, in response to the invitation of my clansman and friend I would refer him to paragraph 159 of Beauchesne's Fourth Edition which makes clear that it is state papers which must be tabled by the minister and not private documents or memoranda.
As a member who does not expect to be very long in this House I can only say that I agree with the hon. member for Westmount (Mr. Drury) that the approach taken by the hon. member for Saskatoon-Biggar (Mr. Hnatyshyn) is not in the best interests of the kind of parliamentary debate that we should be seeking in this House. I join the hon. member for Westmount in saying that I hope this kind of attitude will not continue.


Mr. Arnold Peters (Timiskaming):: Mr. Speaker, the point of order was raised, I gather, on three misquotes, or on statements that were not made. The minister has now read from a document that indicated two of them were correct and the other one was apparently misinterpreted as to whom it was applied. It did not apply to Canadians but to Americans. It was also in the past rather than the present. The point was raised on these three matters. I believe it should not be left for a member to rise on a question of privilege, making these three allegations of incorrect statements being attributed to him and then only be prepared to discuss one of them as not being factually correct and, on the other two, reading from a document which indicated they were correct.
I think if the documents were tabled that would re-establish this matter of trust. If someone claims he was misquoted and then reads from a document which indicates he was correctly quoted in two thirds of the quotations, it seems to me it would be to his advantage to have the document tabled so that the matter could be finalized.


Mr. Yvon Pinard (Parliamentary Secretary to President of Privy Council):: Mr. Speaker, as regards the obligation to lay down documents when a minister refers to them, I simply direct you to May's nineteenth edition, page 431, bottom of the page and upper part of page 432, where it is clearly stated that a minister is not bound to lay down a document if it is a private document or a memorandum. I quote:

The rule for the laying of cited documents cannot be held to apply to private letters or memoranda.

I suggest, Mr. Speaker, that in this case the minister was merely quoting an abstract from a personal note relating to a speech he had already delivered.


Ramon John Hnatyshyn: Mr. Speaker, you may want to reflect on this matter overnight and look at the precedents established in this House. I am reminded of the point raised by my colleague, the hon. member for Wellington-Grey-Dufferin-Waterloo (Mr. Beatty) with respect to the Minister of National Revenue (Mr. Guay) reading from his own letter. While the matter did
Question Period Procedure
not come up for further discussion the minister, through his parliamentary secretary, saw fit to table the letter, and that was acceptable and in accordance with the practices and traditions which have been developed in this House. I think it may be appropriate for Your Honour to consider this matter and reserve decision. It is something that comes up from time to time, and it may be worth making sure that all precedents have been properly attended in this case.
A final comment, Sir, with respect to the remarks of the hon. member for Westmount (Mr. Drury): I appreciated the tenor of his remarks, but as soon as the hon. member for Rosedale (Mr. Macdonald) made his contribution I realized I was on the right course.


Mr. Speaker:: Order, please. I am prepared to give the matter some consideration. I think my initial impression from the arguments made here today and from my knowledge of the precedents is that the extension of the precedent relating to the tabling of documents by ministers to cover speech notes would be an extension that goes quite far beyond the established precedent in that regard, and therefore it would seem most unlikely to me that it could be extended to fit that situation. This is particularly so in view of the fact that the minister has come into the House and said "I was misquoted. The relevant part of the speech is this." He has notes in front of him, and the argument is that then he should be able to go out and prepare the entire memorandum for the purpose of tabling it. In other words, the document is not in existence at the time he is citing it. That is not the document that must be tabled without alteration when that precedent applies, not one that will be brought into existence for the purpose of tabling. I think that is an important distinction.
In any case I indicated that I would reserve, and I shall do that and give a ruling just as soon as possible.


Ramon John Hnatyshyn: I rise on a point of order, Mr. Speaker, which relates to my attempt to be recognized during the question period on a question of privilege when Your Honour, in effect, made a judgment subsequently or did not recognize another questioner after the hon. member for Capilano (Mr. Huntington) presented a supplementary question. I raise this point of order because, as Your Honour will be aware, the temporary Standing Order with respect to the prohibition against raising questions of privilege during the question period is no longer in effect.
I think Your Honour has taken the position that only points of order are raised in this area that relate to questions of privilege. Your Honour will at least hear out a member rising on a point of order for the purpose of determining what precise point of order he or she raises.
As I understand what happened today during the course of that particular time, and I was not recognized, Your Honour then made some reference to the reasons why he did not allow the hon. member for Capilano to pose or have his question
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December 7, 1977
Question Period Procedure
answered on the basis that his question appeared to you to be argumentative. My point is this: I would have thought it would have been possible within the rules now followed that, before the decision was made, Your Honour would have wished to have heard some representations as to the adequacy or otherwise of the member's question. It will be interesting to see the transcript.
I think there is a distinction to be made between an argumentative question and one which contains adjectives. For example, as I understood it, the hon. member referred to a vessel as a piece of junk. I do not believe that is necessarily argumentative-it may be a statement of fact. Members in the House, during the course of presenting strongly held views, may use that kind of language and it should not necessarily be considered argumentative unless it goes beyond the line of being an information-seeking question.
Another point I wish to raise with respect to the question period is that I think we should be entitled to be heard on points of order until other rules are adopted. At the present time I understand we have the right to bring up points of order and to be heard prior to a decision being made with respect to a point of order.
A further point which occurred to me during the course of the question period concerned the operation of the microphones in the House. They are switched from the person asking the question to the government side or member of cabinet who is to reply, without any direction from Your Honour. What occurs to me most vividly is the occasion on which the Leader of the Opposition (Mr. Clark) was engaged in questioning the Minister of Finance (Mr. Chretien) and Your Honour stood, which I understand is a signal to have the microphone switched off. Indeed, what happened was that the microphone was then switched over to the government side, to the minister under question, without any direction from Your Honour or any recognition of the minister by the Chair.
I understand that when Your Honour stands up to intervene in a question there is some point you wish to make, either to rule the question out of order or for some other purpose. I have noted on occasion that the switching takes place automatically, to the point at which the cabinet minister being questioned apparently has the right, by virtue of this automatic process, of answering before the balance of the question can be put.
I bring these matters to Your Honour's attention because I believe them to be important if we are to conduct the question period in an orderly manner. You can understand, Sir, that we on the opposition side wish to co-operate as much as possible, but unless the rules are quite clear then there will of course be a sense of grievance. It is my feeling that Your Honour should recognize a person on a point of order when it arises as a result of procedures in the question period, and I would appreciate Your Honour looking into the question of the mechanical operation of the microphones without direction from yourself.


Mr. Speaker:: The hon. member in asking me to hear representations of the sort he has just made is asking me to offend the regulations under which we now proceed. The

precise terms of the procedures which we now follow are that I am not to hear points of order raised by way of objection on the part of members who are not recognized-that is the way it was before-I am not to hear those points of order until after the question period is over. That is precisely what I am doing now. I follow this procedure every day. If there are members who have grievances to raise which formerly they might have raised during the question period-I hear them at this stage, just as I have done today.
For me to entertain applications on matters of privilege or order during the question period when a member feels in some way aggrieved by a decision of the Chair would, in my opinion, be running counter to the order under which we are operating. Therefore I would invite the hon. member, if he wishes to do so, to persuade the House to return to the old procedure, one which I feel would be a retrograde step. However, it is the hon. member's right to decide that. For me to recognize the hon. member today, in his capacity as acting House leader, or to recognize the hon. member for Capilano (Mr. Huntington), or any other member who wanted to raise a grievance about not being recognized for a third supplementary, or things of that nature,""during the question period, and stop the question period at three o'clock, would be a method of proceeding which would create great difficulty. Instead, the House has directed that such matters should be left until the end of the question period. I believe it to be a preferable course, and one I am bound to follow.
If the hon. member wishes to examine the language of the hon. member for Capilano on his supplementary question today to try to persuade me that he indicated that a purchase was made in a manner it was made, which may be a proper allegation, but that it was nothing but a piece of junk-that was the language he used, I believe-if that is an informationseeking question and not an argumentative one in the terms I understand it, I would have a great deal of difficulty knowing what is an argumentative question. If I can be changed in that opinion, Fine. The supplementary question attempted by the hon. member for Capilano was, in my opinion, very clearly argumentative in its terms, and I therefore went on to another question.
Another difficulty we faced today, for example, was posed when the right hon. member for Prince Albert (Mr. Diefen-baker) put a question and was interested in pursuing a supplementary. His question was answered in the affirmative in every respect. It seems to me that the Chair, by attempting to control supplementaries in the interest of getting a broader participation in the question period, can scarcely permit a supplementary question to one which has been met with a full, affirmative answer. The right hon. member asked for something to be considered, and the leader of the government stood up to answer the question which he said contained a worthwhile suggestion, and promised active consideration. If I am to grant a supplementary in a situation like that, to follow up some further attack, I cannot imagine what the attack would be.
December 7, 1977

The hon. member for Hamilton West (Mr. Alexander) also was seeking another supplementary, as indeed were others. I have to make judgments every day, and the judgments I am inclined to make are those which benefit the cause of greater participation by the opposition in the question period.
I can easily relax and let every front bench member ask three questions. The result would be that only eight or nine members would be recognized in the question period, and it would be easier for me to do that. I can go in that direction, if that is what the hon. member is proposing. I believe, though, that the majority of members feel I should keep a tight rein in order to see to it that some members on the back benches have an opportunity to be recognized during the question period.


Some hon. Members:: Hear, hear!


Mr. Jones:: I do not know how other members feel about the question period, but it seems to me that if we were to have points of order raised during the 45-minute question period we would not have any question asked. The entire time would be taken up by points of order and questions of privilege. I would suggest Your Honour continue with the procedure which is presently followed. If the Conservative party decrees it should ask all the questions in the question period, then some of us in the south end will not get any, and are not likely to get proper answers. I find the questions from this end are often more intelligent than theirs.


David Samuel Horne MacDonald: Mr. Speaker, this matter has now been raised several times during the course of this present session, the third session of this parliament. I am somewhat confused by some of the comments Your Honour has just made.
I seem to recall that in the course of the second session, on the recommendation of the Committee on Procedure and Organization, certain changes were made with respect to the question period. One of the major changes was the deferment of points of order and questions of privilege until the end of the question period. I recall that this was a major recommendation of the committee, and it was agreed to by the House for the duration of the second session. As I further understand it, that was to have expired at the end of the second session. It was, I believe, very definitely just a recommendation of the committee. I see the chairman of the committee at that time shaking his head, and I would urge him and other hon. members to check the record.
It seemed to me that this particular recommendation and its acceptance by the House were for the period of time of the second session of this parliament. As I understand it, Your Honour, no subsequent agreement has been formally registered by the House to cover the third session. It may well be the Chair is utilizing the agreement covering the second session as a precedent in terms of the third session. That is why I am raising the point.
I very much accept what Your Honour has said with respect to the difficulties created by the number of questions which can be raised. There have been periods in previous parliaments
Question Period Procedure
where we have had far too many questions of privilege and points of order that cut off a number of questions and the chance of broader exchange during the question period.
I want to be clear in my understanding that the difference between the situation we are in today and the one we had during the second session was that during the second session we had agreement on the recommendation of the Standing Committee on Procedure and Organization, whereas in this session, if we are operating by that practice, it is basically because of some general acceptance of the precedents and not by any decision of this House. I do not think this decision has been taken with regard to this third session.
I invite Your Honour, officials of the House, and others to review that decision so that we can be clear as to the exact basis on which we have taken the position you have just enunciated.


Mr. Speaker:: On the point just raised by the hon. member for Egmont (Mr. MacDonald), it seems to me that at the beginning of the third session I made a number of remarks to the House and indicated that I would continue to be guided by that during the course of this session. I left it in that way until the House directs otherwise. I will turn up that reference, if I can. In any event, if I did not say it then, I say it now. It seems to me that the only intelligent choice is to continue the way we are now, unless the House requests me to do otherwise.


Elmer MacIntosh MacKay: Mr. Speaker, I rise briefly on the same point of order. In Your Honour's summation you did not come to the point raised by the hon. member for Saskatoon-Biggar (Mr. Hnatyshyn). At the risk of sounding unduly ingratiating or obsequious, I and all members of this House very much appreciate the job you do in your difficult position.
There is one thing, however, that I believe has been changed as a result of television in this Chamber and, perhaps, with the installation of the sound system. That has been alluded to by the hon. member for Saskatoon-Biggar. I have personally noted it. I believe other members may find some measure of agreement with me.
The synchronization between those who operate the microphones and those who occupy the chair has suddenly changed. While you, Sir, are undoubtedly the one to control the validity of the interpretation of the types of questions asked in this House, I have noticed at times the microphones of members are turned off before Your Honour has time to adjudicate on whether they should be closed off. That is the point, I believe, that should be considered.


Mr. Speaker:: The hon. member for Central Nova (Mr. MacKay) raises a point of order that was raised by the hon. member for Saskatoon-Biggar (Mr. Hnatyshyn). I did not refer to it. My understanding is that, as soon as I stand up, these microphones here are activated, and this de-activates all other microphones in the room. As long as I am on my feet to deal with or adjudicate upon a disputed point, even with the

December 7, 1977
Question Period Procedure
case today where I was on my feet and both the Leader of the Opposition (Mr. Clark) and the Minister of Finance (Mr. Chretien) were talking, they were not talking into active microphones. If it happened otherwise, it is extraordinary. When this microphone here is on, the other microphones are de-activitated. In any event, it is a legitimate point of concern and one we should watch.
I have no difficulty with the concept that if I get to my feet and my microphone is activated, the others are de-activated. I think everyone agrees with that basic concept. It would be unfair by that action to be able to precipitate the discontinuance of one microphone on one side of the House and activate the other. We shall check that.


Henry Perrin Beatty: Mr. Speaker, 1 wish to elaborate briefly on the same point. It might be useful for Your Honour to review a tape of today's question period, the television tape of the House proceedings. When one of my colleagues to my left, I forget which one, was asking a question, the minister in question began to stand up. I was watching. My colleague's microphone was turned off and then turned back on. It had nothing to do with Your Honour. I do not believe you were standing at the time.
The concern I have is now that television has been introduced into the House of Commons, if this happens it is impossible to have a proper electronic Hansard of the proceedings of parliament. It is impossible for a microphone across the House to capture what is being said by a member on this side if his microphone has been turned off. This was an instance which I think will show on the tape where Your Honour did not stand, but the microphone was temporarily turned off and turned back on. That might assist Your Honour in your work.


Mr. Sharp:: Mr. Speaker, I want to support you in the comments you made earlier about the way in which you would deal with points of order and questions of privilege during the question period. As I recall the rules, when we made the changes that put the Standing Order 43 motions at two o'clock and the questions following not later than 2:15, we made a great reform in this House. Up until that time there had been a question period of a certain length. It was always very difficult to determine when that question period came to an end. The intervention of points of order and questions of privilege sometimes resulted in the question period extending for a great deal longer than apparently was provided for in the rules.
I hope, Mr. Speaker, we will not revert to that situation. I believe it is important for order in this House that the question period should end at a particular time. That being so, I hope that you will follow your present practice of considering points of order and questions of privilege after the question period is over.


William Arnold Peters: Mr. Speaker, I support the idea of taking points of order and questions of privilege following the question period. It is more orderly. I would, however, ask Your Honour

to give some consideration to this particular period. It has now gone on for an hour.
A number of matters have been raised. The House would be better served if these matters were discussed privately in Your Hounour's chambers rather than in the House. Many problems affect Your Honour's particular jurisdiction. I have been very satisfied with Your Honour's decisions, something that was not always true with some of your predecessors.
I suggest that Your Honour be a little more firm with regard to disallowing pseudo points of order or pseudo points of privilege. I suggest it would be more orderly if Your Honour invited an hon. member to make his point directly. Many of these points of order and questions of privilege do not serve much purpose being raised in this House. I am sure that if Your Honour errs with regard to a certain matter, you will be pleased to make a correction.
I strongly urge Your Honour to be more firm and maybe rap the knuckles of those who raise questions of privilege which are in fact no questions of privilege.


Ramon John Hnatyshyn: Mr. Speaker, I simply asked about the rules that apply during the course of the question period. My purpose is not to suggest that the previous rule is better than the current rule under which we have been operating. The point which is important is that the rules were arrived at and instituted by agreement.
There are ancillary considerations that flow from the question of what rules apply, whether we have re-instituted these rules in the third session or not. I simply ask Your Honour to allow us to reserve our right, because this is an important matter of procedure, so that we can come to some understanding by virtue of the agreement that existed before. It is important for us to be able to understand the ramifications of what has transpired. I ask Your Honour to allow us to reserve our right so that we can find out precisely the terms of the order and agreement entered into, and whether they still apply.


Mr. Speaker:: There is nothing I can do or say today to take away the hon. member's right. If he wants to ask the House to go back to the other method, he ought to put his arguments forward.



ROUTINE PROCEEDINGS


Henry Perrin Beatty: for leave to introduce Bill C-410, to amend the Canada Evidence Act.


Some hon. Members:: Explain.
December 7, 1977


Henry Perrin Beatty: Mr. Speaker, I am pleased to accede to the request of my colleagues to explain my bill. The purpose of this bill is to allow evidence of a criminal conviction to be admitted in a subsequent civil action founded on the same facts. Such evidence was held to be inadmissible by the English Court of Appeal in the 1943 case of Hollington v. Hewthorn. Although Canadian courts have not applied the rule uniformly in this country, it poses a potential obstacle to evidence which is both relevant and of substantial probative value.


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

[ Translation]

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Yvon Pinard: Mr. Speaker, the following questions will be answered today: 129, 318, 353, 427, 495, 496, 499, 515, 696, 722 and 760.


Mr. Jones: To the knowledge of the government, is there a conference in Britain comparable to the Conference of Ministers of Youth and Sport from the French-speaking states to which Canada could send English representatives and, if so, in what manner are representatives chosen?


Hon. Iona Campagnolo (Minister of State (Fitness and Amateur Sport)):: In so far as the Minister of State for Fitness and Amateur Sport is concerned: No.


Mr. McKenzie: 1.	Has the Machinery and Equipment Advisory Board obtained (a) part-time
(b)	full-time employees from private employment agencies in (i) British Columbia (ii) Alberta (iii) Saskatchewan (iv) Manitoba (v) Ontario (vi) Quebec (vii) New Brunswick (viii) Nova Scotia (ix) Prince Edward Island (x) Newfoundland and, if so, in each case, how many?
2.	Are such employees paid from supplementary estimates and, if not, from what estimates are they paid?
3.	By province, what was the (a) average hourly rate paid to employment agencies (b) average hourly rate paid to employees (c) total amount paid by the Machinery and Equipment Advisory Board in (i) 1975 (ii) 1976?
Order Paper Questions


Mr. Bernard Loiselle (Parliamentary Secretary to Minister of Industry, Trade and Commerce):: 1. No.
2.	Not applicable.
3.	Not applicable.


Mr. Orlikow: 1.	How many public servants occupy positions at the SX-3 level?
2.	How many receive a salary between (a) $37,500 and $42,500 (b) $42,501 and $47,500 (c) $47,501 and $52,500?


Hon. Robert K. Andras (President of the Treasury Board):: 1.	The number of public servants* 01 2 3 whose substantive classification was SX-3 as of September 30, 1977, was 152.
2.	The number of public servants01 whose substantive classification was SX-3 and who were receiving salaries within the ranges specified as of September 30, 1977 are as follows:
Salary Range ($)	Number of public servants01
(a)	$37,500-42,500	44(b)	$42,501-47,500	93(c)	$47,501-52,500	15
01 Departments and agencies in Schedule 1, Part 1 of the Public Service Staff Relations Act.
Source: Senior Executive and Equivalent Information; Sub-System (SXEISS); Treasury Board Secretariat.


Mr. Elzinga: 1.	(a) What is the current method of calculating payments made to operators of sub-post offices and on what date did it come into effect (b) what was the previous method used and for what reason was it changed?
2.	By province, since 1974, what were operators of sub-post offices paid on an average, bi-weekly in the quarterly period (a) January, February and March (b) April, May and June (c) July, August and September (d) October, November and December?
3.	What effect has the new method of calculating payments had on the salaries of such operators?


Hon.   J.-J. Blais@Postmaster General: 1. (a) Effective April 1, 1974, the basic salary and the commissions paid to sub postmasters at sub post offices, under payment system "A", on postage sales and money order business are based on the volume of business for the previously completed quarter and are adjusted quarterly. Other commissions are paid, on a quarterly basis, for optional services which may be available at sub post offices, (b) Prior to April 1, 1974, sub postmasters were paid for their actual sales based on their volume of sales for the corresponding quarter of the previous year. The system was changed to allow sub postmasters to receive, as soon as audited data is available for a given quarter, a remuneration which is representative of the volume of work performed.

December 7, 1977
Order Paper Questions
2.
Average Bi-Weekly Remuneration Paid to Sub Post Office Operators-1974 to Date
Quarterly Period
(a)	January, February, March
(b)	April, May, June
(c)	July, August, September
(d)	October, November, December
(a)	January, February, March
(b)	April, May, June
(c)	July, August, September
(d)	October, November, December
(a)	January, February, March *(b) April, May, June
(c)	July, August, September
(d)	October, November, December
through December 1975.
(a)	January, February, March
(b)	April, May, June
(c)	July, August*
*Average Bi-Weekly Payments During the Partial Quarter July-August.
Alberta	British Columbia and Yukon	Manitoba	New Brunswick	New- foundland	Nova Scotia	Ontario	Prince Edward Island	Quebec	Saskatchewan$	S	S	S	$	$	$	$	$	$149.90	162.24	170.24	120.91	97.85	142.73	157.41	107.38	132.94	143.20156.43	164.38	178.67	151.39	78.67	134.39	162.53	119.63	135.98	146.70171.98	178.34	190.49	142.86	95.60	141.49	170.17	121.93	139.98	151.40136.66	148.64	182.46	130.40	82.26	139.41	144.20	84.20	121.91	128.62145.23	157.83	161.55	125.26	65.15	129.27	145.42	91.63	126.76	134.12201.49	219.35	219.46	160.09	97.88	168.35	195.51	140.32	149.94	178.58151.08	157.02	173.68	129.23	73.40	136.08	145.90	94.74	128.85	141.70151.27	161.56	173.23	114.23	69.05	131.76	148.67	87.48	119.13	139.84156.07	166.17	168.34	127.90	69.22	134.69	148.57	102.25	126.32	138.32134.04	153.79	159.05	106.22	59.00	119.97	142.75	102.39	95.01	133.37165.35	176.31	182.43	130.45	73.18	147.42	158.30	101.95	138.41	154.12162.91	173.75	174.99	168.86	71.26	139.59	154.56	103.99	134.07	147.59ide in the quarter April, May and June of 1976 was due to the Post Office Work Disruption that took place in October	174.46	175.24	182.39	165.61	63.61	153.24	158.11	116.07	138.21	150.43230.69	240.69	254.22	222.84	129.14	196.31	212.29	152.97	159.73	204.10207.94	203.64	217.57	189.40	103.71	183.87	188.04	113.79	172.75	181.253.	Sub postmasters remunerations are now adjusted on a more timely basis to reflect the volume of sales for a given quarter. As such sub postmasters do not have to wait for a complete year of operation to be remunerated in accordance with their sales.


Mr. Herbert: 1.	Has the Treasury Board developed a handbook of the approach and methods for the evaluation of projects to be used by departments?
2.	What reporting procedures are required when projects have been evaluated?


Robert Knight Andras: 1.	The Treasury Board has not developed a handbook solely dedicated to the approach and methods to be used by departments for the evaluation of projects. Projects are extremely diverse in nature ranging from major unique construction projects to repetitive project activities of a social or scientific research nature that are evaluated utilizing specific techniques. A considerable and rapidly expanding volume of relevant literature exists relating to evaluative techniques and methodology. The need to apply these techniques where appropriate is stressed in the Treasury Boards' policies on program performance measurement and program evaluation. Specific aspects of the evaluation of projects are referenced in such documents as the Treasury Board's Benefit Cost Guide.
2.	Widely diverse procedures pertain to the appropriate reporting of project evaluations depending upon the scope, nature, magnitude and significance of individual projects within departments and agencies. Departmental project

evaluation procedures may be categorized in three broad areas: (a) prospective evaluation in support of project selection; (b) evaluation during project implementation, and (c) post evaluation of completed project results and benefits.


Mr. Herbert: 1.	Were changes necessary in the organizational structure of senior management personnel in departments affected by decentralization and, if so, what were they?
2.	Has decentralization necessitated changes in the reporting lines and the responsibilities of such personnel and, if so, for what reason?


Robert Knight Andras: 1.	No.
2.	No.


Mr. Laprise: 1.	In (a) 1975 (b) 1976, did taxpayers claim exemption on income consisting of interest and, if so (i) how many (ii) what was the total amount claimed?
2.	During the same years, did taxpayers claim exemptions for nursery costs and, if so (a) how many (b) what was the total amount claimed?
3.	During the same years, did taxpayers claim exemptions for participation in a registered retirement savings plan through (a) employment (b) self-employment and, if so (i) how many (ii) what was the total amount claimed?


Hon. Joseph-Philippe Guay (Minister of National Revenue):: 1. (a) Filers claiming interest and dividend income deduction in 1975: (i) 4,922,399; (ii) $2,243,086,000. (b) (i)
December 7, 1977

and (ii) Information for the 1976 taxation year is not yet available.
2.	Filers claiming child care expenses in 1975:(a) 263,794; (b) $132,562,000. Similar information for the 1976 taxation year is not yet available.
3.	During the 1975 taxation year, 1,078,152 filers claimed registered retirement savings plan premiums and the total amount was $1,524,281,000. Statistics are not maintained on the number and amount claimed for participation in a registered retirement savings plan through employment or selfemployment. Information for the 1976 taxation year is not yet available.


Mr. Howie: As of November 1, 1977, how many PMQ units at CFB Gagetown were (a) unoccupied (b) occupied by non-military personnel or their dependents?


Hon. Barney Danson (Minister of National Defence):: (a)
367; (b) 159.


Mr. Howie: 1.	Since January 1, 1976, what amount did the National Research Council spend on researching of insulation used for underwater electrical cables?
2.	Was the National Research Council asked to assist in any way on the decision of what type of insulation that should be used on the electrical cable which was laid under the Northumberland Strait linking Prince Edward Island and New Brunswick?


Mr. Frank Maine (Parliamentary Secretary to Minister of Public Works and Minister of State for Science and Technology):: 1. NRC is presently doing research on insulation for electrical cables which will be used in a wet environment. The major application of this is for cables buried in wet ground but the work is also applicable to underwater cables. The amount spent by NRC on this research from January 1, 1976 to November 16, 1977 is approximately $130,000.
2. No.


Mr. Herbert: When the Queen Mary Veterans Hospital in Montreal is turned over to the provincial authorities in December, what does the government intend to do with the medical records of the veterans that are presently retained at the Hospital?


Hon. Daniel J. MacDonald (Minister of Veterans Affairs):: When Queen Mary Veterans Hospital is transferred some of the medical records of veterans will be maintained in the hospital and others will be transferred to the Public Archives Records Centre in Montreal. In the future, those medical records which no longer need to be maintained in the hospital will also be transferred to the Records Centre.
Motions for Papers INSPECTION OF BANKS


Mr. Howie: Since January 1, 1977, how many banks were inspected by the Inspector General of Banks and how many infractions were identified?


Mr.   Ed. Lumley@Parliamentary Secretary to Minister of Finance: Since January 1, 1977 12 banks and one Quebec Savings Bank were inspected by the Inspector General of Banks and no infractions were identified.

[ Translation]


Yvon Pinard: Mr. Speaker, would you be so kind as to call starred question No. 368?


Mr. Towers: 1.	For the Fiscal year 1976-77, what was the (a) total (b) overtime cost, excluding letter carriers, at the Red Deer Post Office?
2.	For the same years, what was the (a) total (b) overtime cost for letter carriers at the Red Deer Post Office?


Yvon Pinard: The answer is as follows: 1. (a) $495,842. (b) $52,706.
2. (a) $459,265. (b) $18,641.


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


Some hon. Members:: Agreed.


Yvon Pinard: Mr. Speaker, would Your Honour be good enough to call notices of motions for the production of papers Nos. 2, 3, 4, 50, 51, 52 and 53?
[ Text]


[Stage Direction]
Motion No. 2-Mr. Herbert:
That an humble Address be presented to His Excellency praying that he will cause to be laid before this House copies of all correspondence, notes, minutes of meetings, agreements and other communications between the government and the Province of Quebec concerning the transfer of the Queen Mary Veterans Hospital in Montreal.
1656
[Stage Direction]
December 7, 1977
Motions for Papers
Mr. Gilbert Parent (Parliamentary Secretary to Minister of Veterans Affairs):: Mr. Speaker, the papers requested deal with negotiations now under way which will probably lead to an agreement between the two governments and therefore cannot be divulged. I would therefore ask the hon. member to withdraw his motion.


Mr. Speaker:: Transferred for debate.


[Stage Direction]
Motion No. 3-Mr. Herbert:
That an humble Address be presented to His Excellency praying that he will cause to be laid before this House copies of all correspondence, notes, minutes of meetings, documents and agreements relating to the financing by the Export Development Corporation of a cane sugar complex in the Republic of the Ivory Coast to be built by Redpath Sugars Ltd.
Bernard Pierre Loiselle: Mr. Speaker, the documents requested include confidential material neither public nor official. Their release would divulge information supplied on a confidential basis by the EDC and which do not come from the government. I would therefore ask the hon. member to withdraw his motion.


Mr. Speaker:: Order, please. I have been in the habit in the past when members are not present to move these motions rather than simply demanding that someone move them on their behalf, to have them dealt with at the time they are raised. I may be taking a liberty with the procedures of the House in doing this. The hon. member for Vaudreuil (Mr. Herbert) does not happen to be in his seat at the present time. I wonder whether I could have some indication if it is agreeable that, in circumstances of this sort, it is expeditious to have the motion dealt with in this way when it is called, and to assume that it is transferred for debate. This would seem to me to be the most expeditious way to do it. Is that agreed?


Some hon. Members:: Agreed.


Mr. Speaker:: Then motion No. 3 in the name of the hon. member for Vaudreuil will be transferred for debate.


[Stage Direction]
Motion No. 4-Mr. Herbert:
That an Order of the House do issue for copies of all correspondence, notes, minutes of meeting and other communications relating to the decentralization of the Department of Veterans Affairs to the Province of Prince Edward Island.
Gilbert Parent: Mr. Speaker, I would ask the hon. member to withdraw his proposal, because we are not in a position to produce the required documents which are for departmental use only and of confidential nature.


Mr. Speaker:: Transferred for debate.

Motion No. 50, the hon. member for Brandon-Souris.


Steve Eugene Paproski: Mr. Speaker, on a point of order, in view of the fact that the hon. member for Brandon-Souris is at the United Nations, I think motions Nos. 50, 51, 52 and 53 should stand for debate.


Mr. Speaker:: Order, please. I think we are in a difficulty. 1 think we need a response. We can transfer them for debate, but not en bloc without a response from the House. I think we will have to call them individually.

COPY OF REPORT BY HAY ASSOCIATES LIMITED Motion No. 50-Mr. Dinsdale:
That an Order of the House do issue for a copy of the Report by Hay Associates Ltd., Management Consultants, concerning the management of the Post Office Department, together with a list of the recommendations implemented by the Department.
[ Translation]


Yvon Pinard: Mr. Speaker, the report prepared by Hay Associates Ltd. as well as the listing of the recommendations followed by the department are internal working documents of a confidential nature. Consequently, I would ask the hon. member to withdraw his motion.


Mr. Speaker:: Transferred for debate.


[Stage Direction]
Motion No. 51-Mr. Dinsdale:
That an Order of the House do issue for a copy of the recommendations compiled in conjunction with Hay Associates Limited report concerning the management of the Post Office Department.
[ Translation]
Yvon Pinard: Mr. Speaker, the recommendations compiled in conjunction with Hay Associates Limited report concerning the management of the Post Office Department are for departmental use only and confidential in nature. I therefore ask the hon. member to withdraw his motion.


Mr. Speaker:: Transferred for debate.
December 7, 1977


[Stage Direction]
Motion No. 52-Mr. Dinsdale:
That an Order of the House do issue for a copy of the Post Office Department, Climate Analysis Report carried out by Hay Associates Limited of Toronto, Ontario in October 1975.
Yvon Pinard: Mr. Speaker, the Climate Analysis Report carried out by Hay Associates Limited of Toronto is for departmental use only and confidential in nature. I therefore ask the hon. member to withdraw his motion.


Mr. Speaker:: Transferred for debate.


[Stage Direction]
Motion No. 53-Mr. Dinsdale:
That an Order of the House do issue for a copy of the legal opinion concerning the legality of the lastest postal rate increases, given by the Department of Justice to the Post Office Department.
Mr. Roger Young (Parliamentary Secretary to Minister of Justice):: Mr. Speaker, the legal advice provided by law officers of the Crown on a matter of state policy falls into the class of confidential documents. I would therefore ask the hon. member for Brandon-Souris to withdraw the motion.


Mr. Speaker:: Transferred for debate.


Sinclair McKnight Stevens: Mr. Speaker, I rise on a point of order. Last Wednesday at this time I drew attention to the fact that notices of motions Nos. 7 to 43 appearing on the order paper had not been answered. There has been no response or comment made with respect to these notices. At that time the parliamentary secretary stated that he would follow up on the matter and notify us when he had received word from the department. I was wondering whether the parliamentary secretary today could indicate to what extent he has been pressing the department for a response to these notices, bearing in mind there is an appeal pending with respect to Chief Justice Evans' decision. Some of these documents would be very helpful in framing that appeal.
[Translation\


Yvon Pinard: Mr. Speaker, I remember that last week I said to the hon. member that he alone had monopolized two thirds of the notices of motions on the order paper. I had then asked him to be patient. I think that if his patience can last another week, he has excellent chances of getting satisfaction next week.
Income Tax


Mr. Speaker:: Shall the remaining notices of motions for the production of documents be allowed to stand?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Tuesday, December 6, consideration in committee of Bill C-ll, to amend the statute law relating to income tax and to provide other authority for the raising of funds-Mr. Chretien-Mr. Turner in the chair.
The Deputy Chairman:: Order, please. When the committee rose on Tuesday, December 6, 1977, clause 14, with amendments, was under consideration.
On clause 14.


Sinclair McKnight Stevens: Mr. Chairman, on a point of order, I hope the committee will note that we have lost one hour and 20 minutes of our time, substantially due to a question of privilege raised by a minister of the Crown. I hope the Minister of Finance will bear this in mind and consider extending closure time, if necessary, in view of the fact that this is an extremely important bill. We have 116 clauses to deal with and we are only on clause 14. It is most unfortunate, when we are put under closure and gagged, to find that now is the time ministers choose to raise rather spurious questions of privilege in order to delay the House still further.


Charles Robert Turner: The hon. member for Surrey-White Rock.


Mr. Darling:: Mr. Chairman, at ten o'clock last night I was on my feet on this particular clause.


Charles Robert Turner: The hon. member for Parry Sound-Muskoka.


Stan Darling: Mr. Chairman, when ten o'clock was called last night I was questioning the minister on insurance items which are of great interest to a good many people in Canada. I commended him, much to the chagrin of some of my colleagues, on what he had done in allowing interest on business loans as a deductible expense, and other items which have been approved. I pointed out to the minister that the government had gone a considerable distance with the request of the opposition and of a great many members on his own side of the House. I said that in view of this step the great majority of the loans made on insurance policies would be made on policies of the type where no portion of the loan could be declared to be an investment but would have to be added into taxable income.
80027-36V2

December 7, 1977
Income Tax
I pointed out that in most cases these would be long-term policies such as whole life policies.
In the interest of the minister and his officials I have two specimen life insurance policies here from a reputable Canadian company, the National Life Assurance Company of Canada, a company with which I have had some dealings down through the years as an agent.
The first specimen policy is a whole life policy in the amount of $10,000 paying an annual dividend. The individual is 29 years of age and pays a premium of $182.30. If that policy continued for a considerable time, to age 60, he would have paid in $5,651.30. He might then want to borrow on the policy, in which case the loan or cash surrender value, these incidentally in most cases are pretty much the same, would be $4,810. In other words he would have paid in more than that amount.
In the other example I have the insured person is aged 35. This also is a policy for $10,000 with a premium of $193.90. If he paid for a 25 year period he would have paid in $4,847.55. The loan or cash surrender value would be $3,920. Again after that long period of payment the insured would not get back as much as he had paid in.
I have pointed out to the minister and his officials, and they have agreed, that in respect of probably 999 of every 1,000 policies the holders would not have any loan investment in them. Because of that I asked the minister why in the name of heaven he did not scrap the whole thing and forget about it. I can see the former minister clenching his fists. When I questioned him during the summer he took strong exception to the situations I have been presenting at this time to the government and the minister.
I have a letter here from the Life Insurance Underwriters of Canada, a part of which I should like to quote. They wrote the letter after hearing my comments in the House regarding the government's arguments. The letter states:
You mention the government's argument that taking out a policy loan is an unfair tax shelter. We suggest this argument is wrong. There might have been an argument that a policy loan could be used as a tax avoidance scheme when we were looking at the prospect of a tax being levied at death. A policyowner in later years might conceivably take out a maximum loan in anticipation of death and thereby reduce or eliminate tax. But this argument disappeared with the dropping of the death tax.
If a policy lapses as a result of failure to pay either premiums or policy loan interest or both, the present section 148 tax on a surrender comes into effect and the policyowner will be taxed as if there had been no loan and the entire cash value was received at that time. So there is no possibility of tax avoidance there.
In a later letter from the same association, again commending me for bringing this to the attention of the government, the following is stated:
We sincerely hope that the efforts being made by you and some other members in the House will be rewarded by the withdrawal of the Bill C-ll provisions which discriminate against policy loans.
I give full marks to the minister for going the second, the third and the fourth miles, but the clause which is left is insignificant, not worth while and should be scrapped. I would

ask the minister how he intends to police this. Will he set up another bureaucracy, a lot of officials with adding machines checking policies to determine cash value? I suggest it will cost more than it is worth. If you collect $50,000, which is probably the maximum under this provision, I am sure it will cost $200,000 to do so. Would you let me have your comments on that, Mr. Minister?


Joseph Jacques Jean Chrétien: I have looked into the problem referred to by the hon. member. We believe we must maintain the clause in the bill because of its importance. It is important that we retain the provisions included in a policy holder's income relating to the excess of policy loan he receives over his cost of the policy, otherwise this would lead to serious abuse.
The abuse is that a taxpayer would be permitted to withdraw his income on a policy without paying any tax at all. This would constitute a massive loophole. This probably does not apply to small policies, but let me give you an example of a man purchasing an insurance policy for the single payment of $100,000. It is reasonable to assume that, after a 12 year period, the cash surrender value of that policy would probably be about double the original investment, that is, $200,000. Treating the policy loan as a real loan would permit that person to withdraw the $200,000 entirely free of tax. He could then, by paying the policy loan interest, maintain the policy in force until his death. Since there is no tax at death, he would have received his earnings entirely free of tax.
I would like also to emphasize that our proposal will not mean a tax on all policy loans. In fact it will mean a tax on very few, as I said earlier. This is because of the example I have given the hon. member. A policy holder will be entitled to recover his costs before any income arises. Thus, if a policy holder has paid $3,000 in premiums he will be allowed to recover $3,000 in policy loans before any income arises.
Let me also remind the hon. member that we have made other provisions relating to policy holders exceedingly reasonable. Certainly in relation to policy loan interest, the rules are now far more generous than under the present act. For the first time we have given the majority of policy holders recognition for the interest they pay on policy loans. In addition, we continue to make it possible for Canadians who borrow through policy loans, for the purpose of earning income, to deduct policy loan interest currently.
As I indicated, if policy loans were to continue to be treated as loans, a major tax avoidance vehicle for the wealthy would result. It would also make the tax on surrenders during lifetime totally ineffective. We have to treat policy loans on the basis of what they are, and we need to keep the proposed rules relating to policy loans to prevent a major loophole for the wealthy.


Stan Darling: Mr. Chairman, I listened to the minister with interest. He was talking about the wealthy policy holder who will be the expert in getting around government regulations, beating the government out of the tax. The minister mentioned a $100,000 policy. Let me tell him that anyone putting money into a $100,000 policy as an investment certainly ought to see
December 7, 1977

a psychiatrist. That person should be investing in something like real estate where he could get a much better deal and a better return than from life insurance. This provision certainly will not be a moneymaker.
Let me quote again from this letter from the Life Underwriters Association. I was not going to read more of it, but in view of the minister's remarks I would like to continue. It is from Mr. R. L. Kayler, executive vice-president of that association. He has stated:
The argument that the interest rate on policy loans is low really begs the question because the policy loan privilege obviously costs something and this is paid for by policy owners as part of their premium cost. Actuaries do not normally give anything away in their premium structures.
Perhaps the minister is accompanied by some actuaries today. The letter continues:
If policy loan interest seems low one can be sure the policy owners are paying for that advantage either in higher premiums, lower dividends or both.


Mr. Rynard:: Mr. Chairman, I do not believe the Minister of Finance knows anything about the material he read. I do not believe he can sell a policy on the reading that he gave in the House today. No life insurance company will lend more than the value accrued. If the policy is to be used as collateral, then it has to be taken to a bank, and the policy owner is required to pay bank interest on the loan.
My next point has been well demonstrated by the hon. member for Parry Sound-Muskoka. I sold life insurance. People do not buy life insurance for the purpose of investment, because of the type of other investment opportunities which are available today. Every year they would lose 2 per cent under the present scheme. How much is expected to be gained? His actuaries are with him now. The minister should know what he is doing.


Joseph Jacques Jean Chrétien: Mr. Chairman, I think the hon. member is telling me that I do not know much about insurance.


Philip Bernard Rynard: That is correct.


Joseph Jacques Jean Chrétien: The hon. member is a doctor, and he has sold insurance policies. My father was the director of a small insurance company for 49 years. Also he sold insurance as a part time job for more than 50 years. Even though I am not an expert, I know a little about life insurance, but probably not as much as the hon. member.
Sometimes policies are designed by insurance companies in order to attract funds to create potential loopholes. As the hon. member said, I was reading from a text. I could recite it again in French to indicate that I understand a little bit about it. If people were to invest in one-payment insurance policies, a loophole would be created when their money is drawn out of the policies and they avoid paying taxes. We have been apprised of examples where people have done just that. Therefore we felt it was necessary to move in that direction. It is always the abusers who create the necessity for the government to plug loopholes such as this.
Income Tax
I agree with the hon. member for Parry Sound-Muskoka. This aspect will not be applied very often. We do not want to create a situation where life insurance companies will go to people who have money and suggest this loophole.
It is not a good investment if one has to pay taxes. If a person avoided taxes, it would be extremely attractive for him. We do not want to provide a tax shelter for these people. I realize people cannot draw more than they have contributed. That is the case in so far as most policyholders are concerned.


Stan Darling: Ninety-nine per cent.


Joseph Jacques Jean Chrétien: Ninety-nine per cent. Therefore this additional requirement is created for one person in a hundred. I do not want to create the impression that a new tax shelter has been devised because of one person abusing the system.


Philip Bernard Rynard: Can the minister cite one specific instance where this loophole was used? How can it protect a person's investment?


Joseph Jacques Jean Chrétien: Mr. Chairman, I just gave that answer. If a person buys a one-payment policy of $100,000, his investment will grow in the books of the company. After 12 years it will have a value of $200,000. On that gain, $100,000 will have been earned without any taxes. If this clause were not in effect, the person could withdraw the $200,000 and not be required to pay any tax on the second $100,000. He would be required to maintain his policy in force, but he would avoid paying taxes on $100,000 of gain.


Philip Bernard Rynard: The same principle applies with respect to Canada Savings Bonds. People buy bonds and hold them for ten years in order to double their investment. I challenge the minister on this point.


Joseph Jacques Jean Chrétien: Mr. Chairman, when a person cashes Canada Savings Bonds, he is required to pay taxes on the interest. That is also the case if he cuts his coupons. If this loophole were not plugged, a person could avoid paying taxes on the interest earned, namely, the second $100,000 which I referred to earlier.


Philip Bernard Rynard: When a person borrows money through his life insurance company, he is required to pay an interest rate of 6 per cent, whereas the ordinary interest rate is approximately 10 per cent. How long will it take for the interest rate provided by insurance companies to catch up? What mortality table is used? One must take into account the age of the person, as well as the much lower rate of interest.


Joseph Jacques Jean Chrétien: Mr. Chairman, the much lower rate of interest applied on old policies. At the present time the interest rate on new policies is closer to the prime rate offered by banking institutions. Old policies with the 6 per cent interest rate are still in existence, but the new ones have an 8 per cent rate of interest, or a rate of interest closer to the prime rate. This was changed a few years ago.

December 7, 1977
Income Tax


Philip Bernard Rynard: My impression was that the interest rate is 6 per cent. Certainly the prime rate is more than 6 per cent at the present time. It must be approximately 8.5 per cent.


Joseph Jacques Jean Chrétien: In so far as old policies are concerned, a person can borrow and pay interest at the rate of 6 per cent, and perhaps even 5 per cent. In so far as new policies are concerned, the formula used is closer to 8 per cent or 8.5 per cent.


Mr. Friesen:: Mr. Chairman, I should like to refer to retirement plans as they relate to insurance policies. As the minister knows, at age 70 policy holders are required to convert their retirement policies into an annuity program. Age 70 is a difficult time to face becase it is a period of transition. Sometimes when people reach that age they move from one locality to another. In fact I spoke to a constituent who indicated that last year he moved from Edmonton to White Rock. For these people this time is an unsettling period of life. They have paid for ten or 15 years into a retirement plan through an insurance policy, and had started their payments when the value of the dollar was much higher, and now they have to convert those hard earned and more expensive dollars into another form because this period in their lives is also unsettling in another way. There are many vicissitudes that come to elderly folk at this period in their lives and many emergencies, and therefore they need to have that liquid capital available to them in ready form.
Simply to convert all of their retirement savings out of their life insurance policy into, say, a series of small annuity packages so that they can be as available to them as possible, makes it more difficult for them. I understand the principle that the savings in that policy have been untaxed and therefore, from the government's point of view, they deserve to be taxed when they are converted into an annuity program. I understand that principle, but for the person who has been a small wage earner and who has worked hard for those dollars, the $8,000 or $10,000 that he has saved, which looked good 15 years ago, does not look very good now. I wonder if it would not be a reasonable proposal in the case of a retirement couple who have only $5,000 or $10,000 saved through the savings plan and insurance program, during an inflationary period not to tax the first $5,000 or $10,000, but where there are annuity programs going beyond that amount, they would be taxable because, as I said at the outset, these have been hard earned and good dollars which they invested and now they have to live off inflationary dollars. Is that an unreasonable question to ask, and would that not be a reasonable proposal to make on behalf of people who are retired and who do not have much in the way of savings?


Joseph Jacques Jean Chrétien: We are aware of this problem and we are looking into it. We are reviewing many aspects of pension plans and the problems of citizens with their pension plans. We will take note of the hon. member's representation. It is not directly related to the problem we are discussing at this time. I

would like to mention to him that if you take a small amount of money such as $5,000, it can be converted into an annuity, but there is a $1,000 exemption a year on it. So if you have converted that $5,000 into an annuity, it is likely you will have to pay less in payments at 70 years of age, and in fact it would not be taxable because of the $1,000 exemption. I know there is some problem with larger amounts of money, but inflation is a problem which faces everyone in the country and it is not a particular problem of the retired people.


Benno Friesen: What the minister is saying is that if that amount is converted into an annuity, obviously they can escape further taxation at present. My point is that people in this position need some liquid capital and it should be accessible to them. They should be able to have at least a small lump sum available to them, and that should escape taxation.
I want to draw the minister's attention to a related problem arising out of Canada Savings Bonds. I received a letter some time ago from a constituent, which I would like to read to the minister so that he can understand the problem which arises for people who plan for their retirement years and face the problems to which we have already alluded. My constituent, Mr. Schlichter, writes the following:
In November, 1969, a few months prior to my retirement, I purchased Canada Savings Bonds, S.24, in the amount of $20,000.
This particular issue was the first one to feature compound interest in the form of bonus coupons payable at maturity provided all coupons remained attached.
On November 1, 1978, series S.24 will mature and I have calculated that the interest due to me, at that time, will be $22,300.
My taxable income for the year 1975 was $1,397.20, for 1976 $919.84 and 1977 will be about the same. Adding $22,300 to this and the income tax payable will become quite substantial.
It is my intention to purchase an income averaging annuity contract which not only would reduce the tax payable to a more manageable level but would be a great help to me in coping with present day inflation.
In order to determine whether or not this payment would be considered as "qualifying income," I went to the taxation office in Vancouver and put the question before them. The spokesman there referred to Information Circular No. 72-21 dated August 29, 1972 which however does not specifically mention such income.
Perhaps the minister's officials could make note of that. The letter goes on to read:
His personal opinion was that this payment could very well qualify and as the situation would not arise until the taxation year 1978, an amendment covering it might be forthcoming.
That, basically, is my question: Will there be an amendment forthcoming? The individual goes on to say:
I then decided to write to Ottawa for a ruling whether or not I can go ahead with the plan to purchase the annuity for a term of ten years or less. Perhaps there is even a better suggestion and if so I would, of course, be happy to hear about it.
Not knowing to whom to write makes things difficult and I would appreciate it very much if you would be good enough to pass this letter along to the appropriate department or person.
What better place is there to do it than here where we have the accumulated wisdom of the minister and his officials who can give us an immediate and quick answer and a solution to Mr. Schlichter's problem? Will there be an amendment that will take care of this problem?
December 7, 1977


Joseph Jacques Jean Chrétien: Of course this is a very common problem for people who accumulate savings by not cashing their coupons and then decide to cash them at some point. They can decide not to cash them all at once but to spread them out. There is the averaging provision in the Income Tax Act that might be of some help to them. However, I will look into the matter mentioned by the hon. member and make sure that a reply is provided to his constituent.


Benno Friesen: May I make one other point to the minister? He makes the point that an individual does not have to cut the coupons, but the point of this series of bonds was that they accumulated interest, provided he would not cash in the coupons. In other words, the government wanted the advantage of a secure capital over these ten or 11 years and therefore asked the purchase of those bonds not to cash in the coupons. Is he going to be punished for doing what was helpful to the government and obviously providing the government with some capital?


Joseph Jacques Jean Chrétien: When we go into the market to raise some money, we offer many forms of bonds, and every individual decides what bonds he wants to purchase. When that series of bonds was offered, there were some advantages in the immediate future for the purchaser if his income was high enough at that time. Some people would buy those bonds and have the interest on them accumulate, knowing that in five years time they could cash them. Let us suppose that a member of parliament buys them knowing his average years of survival as a member of parliament and that in five or ten years time he will want to cash the bonds, so he can make some provision for that. Other people who are at the age of, for example, 50 and planning to retire at the age of 60 will have an incentive to buy that type of bond.
However, he knew what he was buying, and he is not punished when he cashes his coupons. Perhaps the person who sold the bonds to him misled him, but on the bond itself it is very clear that when cashing it the accumulated interest must be paid.


Benno Friesen: Mr. Chairman, I think this will be my final question to the minister on this topic. The gentleman is not complaining about the bonds, and he is not complaining about having been misled. He knew what he was buying, and he was satisfied with the bonds he bought. He is concerned that there is now no government information on what the requirements are relative to his income at this point. The only circular the official could give to him was circular 72-21, which does not fit the situation. Is there a specific piece of information in printed form which we can send to people like this who are facing a problem with an S-24 bond and facing problems arising out of that accumulated income?


Joseph Jacques Jean Chrétien: Mr. Chairman, I will certainly look into the matter to try to find some more precise information, and I will give it to the hon. member. We will be in touch with the
Income Tax
Department of National Revenue on that. Would the hon. member be gracious enough to send us a copy of his letter?


Benno Friesen: Sure.


Mr. Clarke:: Mr. Chairman, I want to ask the minister about the reasoning behind the change which is going to be brought about by the amendment to clause 14 in relation to interest on insurance policy loans. I am delighted to see that the interest which is paid to earn income is now going to be allowed as a deduction from business income. I am glad, because I made this point in my speech at second reading, but I specifically want to ask the minister what it was that caused his predecessor, in explaining at the introduction of this in the budget of March 31, to say that in the opinion of the government loans on insurance policies are not loans because there is no obligation to repay the amount received from the insurance company?
It seems that the government has had a change of heart and is now considering these amounts as real loans, and the interest which is paid to earn the real income is going to be allowed. I think I will stop there.


Joseph Jacques Jean Chrétien: I have no comment to add, Mr. Chairman.


William Hillary (Bill) Clarke: I was not asking for additional comments. I wanted an answer. Perhaps I can strip all of the preamble from my question. What was the reasoning of the government in saying, when Bill C-ll was initially introduced, that the interest on insurance policy loans would not be allowable as a deduction from income?


Joseph Jacques Jean Chrétien: Mr. Chairman, I think there were many good reasons, not the least of which was one given before a committee of this House by the insurance companies themselves. They did not want to be covered by the Borrowers and Depositors Protection Act. The insurance companies argued in that committee that those advances were not loans. Perhaps I can read from page 16 of the presentation of the Canadian Life Insurance Association to the Standing Committee on Health, Welfare and Social Affairs with regard to the Borrowers and Depositors Protection Act.
In January of this year that association said the following about the nature of policy loans:
"Policy Loans" represent an area in which the life insurance industry, in the eyes of the public, might be seen as making "loans". These are not, however, really loans at all despite the common terminology used to describe them, as the Supreme Court of Canada concluded in the case of Equitable Life Assurance Society v. Larocque, (1942) S.C.R. 205. There is no advancement of credit; no debt is created; nor is there any right on the part of the insurer to demand payment either of principal or of interest. Rather, the process represents essentially an advance of the benefits payable under the policy.
The same thing was argued in the Senate Banking Committee on March 16, 1977, as recorded in issue No. 22. The subject matter of the proceedings then was Bill C-16, the Borrowers and Depositors Protection Act. The life insurance companies themselves argued that this is not a loan, and consequently my predecessor said, "If I accept your argument

December 7, 1977
Income Tax
I have to amend the act and treat those advances as if they were not loans".
No one saw all the implications, so I examined the matter. I do not want to lay blame on anyone. The insurance companies made their presentation. I do not blame the insurance companies or my predecessor. I do not have to comment on their motivation. Elowever, I examined the matter. There was not much money involved. Some people were unhappy. I said "Let's change it". I used the only yardstick for measurement I have, my own judgment.


William Hillary (Bill) Clarke: Mr. Chairman, I am afraid the minister sometimes listens too much to the vested interests, in this case the insurance companies. If these are not loans by insurance companies to policy holders, how is it that when a policy holder dies the amount of the advance, loan or whatever is, at that time is collected from the estate by way of deduction from the payment of the proceeds of the policy?


Joseph Jacques Jean Chrétien: Mr. Chairman, I am sorry. I was talking, and I did not hear the question. Would the hon. member repeat it, please?


William Hillary (Bill) Clarke: Mr. Chairman, I would be delighted to repeat my question. If it is not considered a loan or if it is decided that an advance is not a loan, how can it be explained that upon death an insurance company collects the amount of a loan or advance from the proceeds before paying out the net proceeds to the estate?


Joseph Jacques Jean Chrétien: It is already paid out. It is calculated out of the payment which is being made on the policy. It is considered an advance. It was previously paid out, so it is not collected, unless the hon. member knows of a mechanism which is different from the one I know about. Perhaps there is a misunderstanding between the hon. member and me. However, a combination of changes proposed by me and changes proposed by the hon. member for Rosedale gives a better break to the ordinary policy holder than he had before because the cost base of the policy is adjusted.


Sinclair McKnight Stevens: Mr. Chairman, to help remove any uncertainties about the government's position, now that it has brought in the amendments we have before us, I think I should refer the minister to a letter sent by his predecessor to all members of the Liberal caucus. The letter is dated August 3. The then minister set out an 18-point memorandum explaining why he felt the provisions he announced with respect to life insurance policy holder loans, the treatment of interest on those loans, and the taxation of that investment income at death were justified. In this memorandum the minister asks questions and then sort of answers them. I thought we should get on the record whether the minister differs or otherwise with his predecessor.

Item 11 reads as follows:
The statement has been made that Canada is the only country in the world to tax the gain on a life insurance policy. It this true?
The former minister gave the following answer:
This statement may be true, but it must be recognized that one must consider the level of taxation the industry as a whole must bear and not just one isolated area.
Could the present minister tell us whether he agrees with that?


Alexandre Cyr: Mr. Chairman, in this bill there are some changes to the rate of taxation applicable to insurance companies where they are dealing with one aspect related to policyholders and what we consider as a loan on the policy. There are all sorts of changes applicable to the reserves and we have to calculate the reserves so that those companies can bear a reasonable share of income tax like other companies.


Sinclair McKnight Stevens: Perhaps the minister misunderstood my question. The statement was that we in Canada are the only country in the world to tax the gain on a life insurance policy. In other words, using the little formula that the bureaucracy has worked out where you take the cost of the policy and if there is a cash surrender value greater than that cost, then somehow there is deemed income, the statement was made that taxing such a gain would mean Canada is the only country in the world to do so. The previous minister said that was true. Does the present minister agree that what we are proposing makes us unique?


Joseph Jacques Jean Chrétien: Mr. Chairman, I do not intend to comment on that. I have looked at the problem and decided to make changes. I have not read this letter and I should like to analyze it before commenting. I do not have the letter but I do not think it will add much to the debate to see whether my thinking is the same as that of my predecessor. When I listen to the hon. member for York-Simcoe I know that very often his own thinking changes from one moment to the other.


Sinclair McKnight Stevens: On that last point, Mr. Chairman, I hope the minister will draw it to my attention anytime he believes my thinking has changed on a particular point.


Joseph Jacques Jean Chrétien: With pleasure.


Mr. Knowles (Winnipeg North Centre):: He is an old Tory; he never changes.


Sinclair McKnight Stevens: Let us forget about the letter. We are pleased that the minister has watered down the previous life insurance taxation even to the extent that he has. I should still like to know if the taxation of the gains contemplated in the amendment to subclause 14(1) makes it unique in the world.


Joseph Jacques Jean Chrétien: I am told we are not the only one, Mr. Chairman. I have not checked all the policies of all the world but those gains are taxable in different ways in different nations.
December 7, 1977


Sinclair McKnight Stevens: I wonder if the minister could indicate one nation where the gain we are proposing to tax is taxed in the same way?


Joseph Jacques Jean Chrétien: Mr. Chairman, I just said other nations tax in different ways, some indirectly. The gains are taxed in different nations. I do not have the repertoire of all these things in front of me. I can humbly admit I do not know which one, how much and so on. I think, with due respect, it is a little irrelevant. The hon. member says he is happy with the changes, so the best thing he could do at this time is let us vote.


Sinclair McKnight Stevens: Mr. Chairman, I will be very direct with the minister. We are happy with the changes, but why can the minister not go all the way and delete this silly tax? Why do we have to live with a mistake that the bureaucracy attempted to get by us?


Joseph Jacques Jean Chrétien: Mr. Chairman, I took the trouble earlier of explaining twice why we keep the taxation on certain parts of the insurance policy when we borrow. I gave the hon. member for Parry Sound-Muskoka (Mr. Darling) and the hon. member of the riding next to his a lengthy answer and I think it will not be necessary at this point to repeat it. I explained that it is possible in certain circumstances for some people inheriting a single policy to earn over a period of 12 years an amount equivalent to the amount of the investment and they could take it out without paying any tax. In the case of a very large amount this could provide a way of evading taxation and that is why we are keeping it in. But I explained that this would not apply to perhaps less than 1 per cent of the policies and hon. members should bear in mind that we should try to avoid allowing certain people to use this provision of the act to create loopholes for tax evasion.


Sinclair McKnight Stevens: Mr. Chairman, I think that half the time the minister does not understand the questions. We have many more clauses to deal with and I propose that we get on with this amendment. I wish the minister had dropped the idea of taxing gains on life insurance policies, but if we cannot talk reason into him we have no alternative but to accept the amendment.


Joseph Jacques Jean Chrétien: Mr. Chairman, I think if the hon. member had been here when I gave the explanation he would have understood.


Sinclair McKnight Stevens: I was here.


Joseph Jacques Jean Chrétien: That is even worse. After two explanations that satisfied everybody I could not satisfy the hon. member because he did not have any understanding at all.


The Chairman:: Maybe I should intervene at this point. The hon. member for York-Simcoe refers to the amendment and it is brought to my attention that while the minister moved the amendment yesterday, it was not put to the committee by the
Income Tax
Chairman. Maybe I should put the two amendments to the committee. I have to put them one at a time, and after the vote on one I shall put the other.


Joseph Jacques Jean Chrétien: That subclause 14(1) of Bill C-l 1 be amended as follows:
(a)	by striking out lines 32 to 35 page 21 thereof and substituting the following:
"the end of paragraph (ee) thereof and by adding thereto the following paragraphs:"; and
(b)	by striking out line 7 on page 22 thereof and substituting the following:
"365; and
Policy loans repayments
(hh) an amount in respect of all or any part of any policy loan repaid by the taxpayer in the year not exceeding the amount, if any, by which
(i)	the amount required by subsection 148(1) to be included in computing his income in the year or a previous year from a disposition described in subparagraph 148(9)(c)(ii) in respect of that policy
exceeds
(ii)	the part of any loan on that policy repaid by the taxpayer that was deductible under this paragraph in computing his income for a previous taxation year."


William Hillary (Bill) Clarke: Mr. Chairman, in my earlier questions I am afraid I may have confused the minister about the interest on policy loans because we got on to the definition of whether an advance was a loan. I think we dealt with that adequately, however. My question intended to address the problem of deductibility of interest. I refer to Section 20(1)(c) of the act which says that an amount can be deducted pursuant to a legal obligation to pay interest, and it mentions borrowed money, accounts payable and so on. Surely there is a legal obligation to pay interest on a loan or advance from an insurance company because they do make a demand for that, whether they demand the actual principal amount, before the death occurs.
Who decided that this interest which was legitimately laid out to earn income, which is a basic tenet of the Income Tax Act, should be changed and not be deductible?


Alexandre Cyr: Mr. Chairman, the hon. member is asking me about something which is no longer part of the legislation. I do not see why the committee should spend its time on something which is no longer in the legislation. I would not mind giving an explanation, but as it has been changed I would now rather discuss what we are doing than what we were doing before. I cannot give all the reasons why things were done during a time when I was not even there. I have looked at the problem again. I have changed it and now I want to discuss what is before the committee rather than what is no longer in the legislation, and therefore not part of the debate.
Now we will be permitting persons who borrow money on policies to deduct from their business income the payment they would be making, that is, the interest. It is not specifically interest and I do not want to get into the reasons why technically we have to use different language. We are re-establishing the situation as it was before, and the hon. member should be satisfied with that without forcing me to get into the

December 7, 1977
Income Tax
same old debates I have carried on with my officials and other people.


William Hillary (Bill) Clarke: May I ask the minister if he could give the committee his assurance that it is not the intention to change the basic principles embodied in the Income Tax Act, that is, legitimate expenses for commercial purposes? Will they continue to be deductible?


Joseph Jacques Jean Chrétien: I do not intend to change it.


Gérald Laniel: Shall the amendment carry?
Amendment (Mr. Chretien) agreed to.


Gérald Laniel: I will now put the amendment to subclause 14(2), as moved by Mr. Chretien. Shall the amendment to subclause 14(2) carry?


Sinclair McKnight Stevens: Mr. Chairman, I was wondering if we could stand clause 14 and perhaps deal with the other insurance subclauses, as we did with the insulation grant amendments? I think it is much easier for those who wish to join in the debate to deal with it all in a package rather than jumping back and forth into the same type of debate on subsequent clauses. I suggest we stand 14 for the time being and jump ahead so that we can deal with the amendments with respect to each of the clauses as we come to them.


Joseph Jacques Jean Chrétien: I think that is an excellent suggestion. We have a another series of consequential amendments related to this problem. One is related to subclause 52, and others on subclause 74 which I will table. Then we can clear up these amendments in one shot.


Gérald Laniel: I have no objection to this as long as we follow the same procedures as yesterday where, by unanimous consent, we suspended consideration of the clause before the committee. By unanimous consent we could go from one clause to another-move the amendment to the clause, adopt it and then, again by consent, go on to another clause and final clauses, and then return to clause 14. Is this agreed?


Some hon. Members:: Agreed.


Gérald Laniel: Does the committee give consent to stand clause 14?


Some hon. Members:: Agreed.
On clause 52.


Gérald Laniel: The committee will then proceed to the consideration of clause 52 on which there is an amendment moved by the Minister of Finance, which reads as follows:
That subclause 52(4) of Bill C-l 1 be amended by striking out lines 18 to 20 on page 100 thereof and substituting the following:
"(b) the amount, if any, by which
(i) the amount included by virtue of subsection 148(1) in computing the income of the taxpayer for the year in respect of the disposition of an interest in a life insurance policy exceeds 
(ii) the portion thereof arising from a disposition described in subparagraph 148(9)(c)(ii) in respect of that policy."


Gérald Laniel: Shall the amendment to subclause 52(4) carry?


Sinclair McKnight Stevens: Mr. Chairman, before we deal with the amendment, I thought that perhaps the minister could give us a brief description of how he understands it integrates with the previous two amendments.


Joseph Jacques Jean Chrétien: Mr. Chairman, this amendment is consequential upon the amendment to subclause 14(1) dealing with life insurance policy loans. The excess of a loan over the cost base of the policy is included in the policyholder's income at the time the loan is received. This amendment deals with loan repayment. Under the existing bill repayment of the loan is added to the cost base of the policy. The amendment to subclause 14 permits a deduction on the repayment of the loans which have previously been included in income. Because the policy loans may be deducted when repaid, it is no longer appropriate to allow the loans to qualify for the $ 1,000 investment income deduction provided in subsection 110.1 of the Income Tax Act. This amendment denies the $1,000 deduction for income raising on policy loans and is required to prevent abuse.


Gérald Laniel: Shall the amendment carry?


Some hon. Members:: Agreed.
Amendment (Mr. Chretien) carried.
Clause 52 stood.


Gérald Laniel: By unanimous consent the committee will now move to the consideration of subclause 74(4) on which there is an amendment by Mr. Chretien.
On clause 74.


Joseph Jacques Jean Chrétien: That subclause 74(4) of Bill C-l 1 be amended as follows:
(a)	by striking out line 44 on page 161 thereof and substituting the
following:
"year, subsection (1), section 16 or para-"
(b)	by striking out line 3 on page 162 thereof and substituting the following: "of interest thereon or any repayment of a loan that was deductible pursuant to paragraph 20(1 )(hh), and"
(c)	by striking out lines 9 to 12 on page 162 thereof and substituting the
following:
"as it would have read on that date if subsection (8) had not been applicable) of his interest in the policy on that date"


Sinclair McKnight Stevens: I was wondering if we could have an explanation of each of these amendments as they come up.


Joseph Jacques Jean Chrétien: Several technical changes are proposed to clause 74. Section 148 deals with insurance policies. The first change is in subclause 74(4). The amendments to subparagraph 149(a) (iii) adds a reference to Section 16. This section requires an amount to be included in the taxpayers' income where in the past he cashed in a part of a life annuity. To avoid double taxation the amount to be added to income
December 7, 1977

should increase the adjusted cost basis of the policy. This amendment provides for that result. Do you want me to read them all?


Sinclair McKnight Stevens: No. Read them each time we deal with an amendment.


Joseph Jacques Jean Chrétien: Subparagraph 148(9)(a)(iv) is consequential on the amendment to subclause 14(1) previously announced. This amendment avoids double-counting. It ensures that where a deduction has been made on the repayment of a policy loan, the deductible amount does not also increase the cost basis of the policy.
The amendment to subparagraph (v) is strictly technical. It merely clarifies that the time referred to in the parenthesis is the first anniversary date after March 31, 1977, and not the particular time at which the "adjustment cost basis" calculation is made.


Gérald Laniel: Shall the amendment to subclause 74(4) carry?


Some hon. Members:: Carried.
Amendment (Mr. Chretien) agreed to.


Gérald Laniel: I will put to the committee another amendment moved by Mr. Chretien. It is the amendment to subclause 74(6) of Bill C-ll.


Joseph Jacques Jean Chrétien: Mr. Chairman, the explanation is a very short one. Subclause 74(5)-


Sinclair McKnight Stevens: On a point of order. I thought the Chair said we were on subclause 74(6). I think we should be on subclause 74(5). The minister is responding to subclause 74(5).


Gérald Laniel: We are on clause 74 in which you find various subclauses, and the first amendment I just put to the committee was an amendment on subclause 74(5) which was carried.


Sinclair McKnight Stevens: No, that was 74(4).


Gérald Laniel: The next one I have is on 74(6). I do not have an amendment on 74(5).


Joseph Jacques Jean Chrétien: While the amendment is being tabled, Mr. Chairman, I will read the explanation. This is a minor technical amendment to the definition of a disposition of a life insurance policy. It is nescessary to treat all policy loans the same.


Gérald Laniel: I have the feeling that I mentioned the amendment to subclause 74(6). I want to make sure that the amendment to subclause 74(5) has been put and carried.


Sinclair McKnight Stevens: Not yet.
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Joseph Jacques Jean Chrétien: That subclause 74(5) of Bill C-ll be amended by striking out lines 37 to 40 on page 162 thereof and substituting the following:
"(ii) a policy loan made after March 31, 1978,"
Amendment (Mr. Chretien) agreed to.


Joseph Jacques Jean Chrétien: That subclause 74(6) of Bill C-l 1 be amended as follows:
(a)	by striking out line 28 on page 163 thereof and substituting the
following:
"respect of a policy loan other than interest deductible in the 1978 or any subsequent taxation year pursuant to paragraphs 20(1) (c) or (d);"; and
(b)	by striking out lines 8 to 12 on page 164 thereof and substituting the
following:
"(ii) in respect of a policy loan made after March 31, 1978, means the amount of the policy loan;"
He said: The amendment to paragraph 148(9) (e.2) of the Income Tax Act is related to the addition of paragraph 20(1 )(hh) of that act. Paragraph 20(1 )(hh) restored the deduction for interest paid on policy loans, the proceeds of which are used to earn income. If the interest is deductible in computing income it will not be treated as premium, and will not be added to the adjusted cost basis of the policy. Conversely if the interest is not deductible it will be treated as a further premium and added to the adjusted cost basis of the policy.
The amendment to paragraph 148(9)(e.2) is a minor technical amendment to the definition of proceeds of disposition of an insurance policy. It is necessary to treat all policy loans the same.
Amendment (Mr. Chretien) agreed to.


Joseph Jacques Jean Chrétien: That subclause 74(7) of Bill C-ll be amended as follows:
(a)	by striking out lines 15 to 24 on page 164 and substituting the following:
"subsection:
"(10) For the purposes of this section,"; and
(b)	by striking out line 34 on page 164 thereof and substituting the following:
"a reference to an annuitant under such a life".
He said: The first amendment to subclause 74(7) deletes subsection 148(10) of the Income Tax Act. This subsection is no longer necessary because of the decision to allow a deduction for interest on policy loans used to earn income.
The second amendment to this subclause is a relieving technical amendment. It affects life annuity contracts. The amendment will ensure that where a life annuity contract is terminated by death, no tax will arise on any death benefit paid under the policy. This change is necessary to fulfil completely our commitment to remove the tax on death.
Amendment (Mr. Chretien) agreed to.


Joseph Jacques Jean Chrétien: That subclause 74(8) of Bill C-l 1 be amended by striking out line 36 on page 164 thereof and substituting the following:
"(8) Subsections (1) and (2) are appli-"

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He said: Amendments are also required to subclauses 74(8), (10), (11) and (12) of this bill.
The amendments to subclauses (8) and (10) affect the date on which the new rules in section 148 take effect. The new rules for determining the adjusted cost basis of a life insurance policy are to be effective as of March 31, 1978, as proposed in budget resolution 71 rather than for the 1978 taxation year. Several technical anomalies would result if this change in the effective date were not made.
The changes affecting subclauses (11) and (12) and the reference to subclause (7) in subclause (10) are consequential upon deleting subsection 148(10) of the Income Tax Act.
Amendment (Mr. Chretien) agreed to.


Gérald Laniel: The last amendment to be put to the committee is on subclauses 74(10), (11) and (12).


Joseph Jacques Jean Chrétien: That subclauses 74(10, (11) and (12) of Bill C-l 1 be amended by striking out lines 1 to 9 on page 165 thereof and substituting the following:
"(10) Subsections (4), (5), (6) and (7) are applicable after March 31, 1978.
(11) With respect to the 1972 to 1977"


Gérald Laniel: The explanation has been given by the minister. Unless the minister wants to add something, I will ask whether this amendment carries.


Some hon. Members:: Agreed.
Amendment (Mr. Chretien) agreed to.


Gérald Laniel: Shall clause 74 stand and shall the committee revert to the consideration of clause 14?


Sinclair McKnight Stevens: Mr. Chairman, I take it it is agreed that these amendments will appear in Hansard as if you had read them in full each time.


Joseph Jacques Jean Chrétien: Agreed.


Gérald Laniel: Definitely they will. Does the committee give consent to stand clause 74 and accept the fact that 52 has been stood, I do not know if I mentioned that at the time, and revert to the consideration of clause 14?


Some hon. Members:: Agreed.
Clause 74 stood.
On clause 14.


William Arnold Peters: Mr. Chairman, my advisers from the city of Toronto have an interest in this.


Sinclair McKnight Stevens: Who is that who is advising?


William Arnold Peters: Osgoode Hall.


Sinclair McKnight Stevens: Who is the author?


William Arnold Peters: How do I know? It is a whole class. They all took sections and forwarded it to me.
[Mr. Chr6tien.J


Sinclair McKnight Stevens: Who forwarded it to you?


William Arnold Peters: The hon. member for Waterloo-Cambridge.


Sinclair McKnight Stevens: Whom did he consult with?


William Arnold Peters: You are too curious.


Joseph Jacques Jean Chrétien: On a point of order, Mr. Chairman, it seems evident that every party on the other side has spies.


Gérald Laniel: Order, please.


William Arnold Peters: As for the political direction, I am not sure. For at least an hour and a half I have listened to a discussion on clause 14 with regard to the problems of insurance. I do not think anyone in his right mind could decide on the political stripe of the various participants in that discussion. Therefore I am not sure there is too much politics in this very large income tax bill.
I am referring to the problem in clause 14(1 )(gg). At present, taxable business income includes holding gains in inventory which are merely a result of inflation. As the system is now, taxation is based on accounting measurements that largely ignore the effects of inflation and do not, for example, take into account the increased cost of replacing inventories in an inflationary period. Canadian tax laws require companies to calculate, using the FIFO-first in, first out-system of accounting, profits using costs of oldest, and during inflation, cheapest inventory. Increasing amounts of funds are required to maintain inventory levels, and although these funds are not available to business, they are being taxed as profits under FIFO.
The government expects this measure to provide a tax relief of $300 million a year and correspondingly increase the flow of internally generated funds available for business expansion. This goal is in response to the perceived need for liquidity relief and the problems of the high cost of financing the replacement of depreciable assets and inventories.
Specifically, this special inventory allowance is seen by the government as a simple and direct mechanism to provide business with relief from the taxation of illusory inventory profits arising from the impact of inflation on inventory values. This goes on to point out some of the effects that this will have.
I am curious from a personal point of view to know what has happened to this $300 million. Although this bill has not been passed, anything which goes into the budgetary hopper, so to speak, becomes law. I am curious to know how much this $300 million has been responsible for lay-offs at INCO and Falcon-bridge and may be responsible for the blowing up of power stations at INCO in the city of Sudbury.
This student points out that inventories may be purposefully inflated at year end in order to achieve excessive, unrepresentative deductions. It seems to me this may have been one of the reasons for so much overtime. Obviously there has been the
December 7, 1977

accumulation of a very large inventory and this may result in another large lay-off. This gentleman goes on to say this:
The government has introduced the inventory deduction to indicate recognition that the liquidity problem facing business is urgent and requires an immediate response, (a) The lack of constraint on purposely-inflated inventory levels at year end will lead to excessive deductions. This danger is diminished by the high carrying costs of inventories to businesses which would tend to offset any benefit derived from the deduction. In any event, firms would be hesitant to choose a year end which is at high inventory levels as this usually denotes the "busy" season, one in which firms would be unwilling to stop and count inventory.
This is not necessarily true of INCO in Sudbury. Their inventory is in the form of ingots or concentrates which would not be difficult to maintain at very high levels for the purpose of year end accounting. The accountants at INCO are very competent in income tax matters. Their experts are a hell of a lot better than the government's. It would be very interesting to find out how much income tax they pay and how much profit they appear to accumulate. I would be curious to know whether the minister or his parliamentary secretary could tell me how much INCO has been able to save as a result of this particular change.
This student goes on to say:
While this resolution is expected to provide an additional $300 million to business, there are no guarantees that it will be used for business expansion, although this may well be felt to be irrelevant.
This is really our objection to the whole bill. A concession of $300 million is no small indication that companies are being given an advantage. Today the "minister of unemployment" stood in the House and said that he was going to make a supreme sacrifice on behalf of the country to help the unemployed; he was going to give the unemployed a new program costing $100 million. Under this bill the minister is giving away $300 million. At a time when one out of every ten workers in Canada is unemployed the government gives the unemployed a concession of $100 million. Yet corporations and business in this country receive $300 million to do something which this young expert feels is probably irrelevant.
He continues in this way:
In addition, there is some doubt whether there is, in fact, a liquidity problem facing Canadian businessmen, rather than excess capacity and no desire for expansion.
This student must have been reading some NDP speeches. In fact, he puts it probably better than we have put it. He goes on to express doubt whether this $300 million would ever be used for expansion purposes, or whether there is even any desire to expand. We are pretty sure, and so is every sane businessman, that when plants are operating at only 80 per cent a business would be very foolish to expand capacity to 120 per cent, having 40 per cent of the plant's capacity unproductive instead of 20 per cent. This does not seem to me to make much sense.
The last point he makes, presumably for the benefit of the minister and the civil servants advising him, is as follows:
It is likely fair to say that the most important implication in this budget resolution is that it is a step towards accepting inflation accounting for tax purposes. The budget document implies that this is only an interim measure until an accounting system is found that fully recognizes the impact of inflation.
Income Tax
However, due to the difficulties in finding a system satisfactory to all, this "temporary" measure is likely to be in effect for an extended period.
I should like to ask the minister one or two questions of concern to me which have been touched on by these experts in training at Osgoode Hall, who frankly, I think, have done a very good job. If they are able to make some sense out of the bill and all its amendments, then they are a lot more qualified than all the members of parliament put together. Certainly I have not heard too much which has impressed me either from the officials or from members of parliament.
My first question is this: do the minister and his officials disagree with the contention of this budding young citizen who says there is no guarantee that the $300 million to be provided to businesses is going to be used for expansion purposes, even though this may be irrelevant since we already have over capacity in the business world?
Secondly, what is the calculation of the department of the amount of money that INCO, and probably Falconbridge as well, will receive from maintaining an unreasonably high inventory, and what will be the effect of the inflationary factor for inventory purposes when that inventory may be worth less today than when it was accumulated and may be worth even less a year from now?
Lastly, has the minister taken into consideration the decrease which may be involved in the establishment of this inventory allowance? If there are serious downturns in the business community and we have this inventory allowance, will consideration be made for a decrease in the inventory?


Joseph Jacques Jean Chrétien: Mr. Chairman, it is very difficult to determine the impact of this measure. I think the hon. member is in fact dealing with two different problems. When he talks about inventory allowance I should point out this is not really intended for the creation of more jobs, in a sense, but to help a corporation carry its inventory because of the inflation aspect. For the benefit of the member I could give him a more precise explanation.
The effect of inflation is to produce a very serious cash flow problem for business. Businessmen must replace existing inventories with ever higher priced goods. This measure responds to this cash squeeze. It makes it easier for companies to operate in Canada in the face of inflation.
The 3 per cent inventory allowance makes it easier for companies to carry inventories. The ability to finance inventories is directly related to jobs. The relevant question, which is obviously a matter of opinion, is how many jobs would have been lost if we did not have these measures? We think the answer is probably a very great many.
The inventory allowance is particularly necessary to maintain our competitive position while our inflation rate is above that of the United States and some other countries. I, too, wish we did not have to make concessions of this kind, but it is a simple fact of life that if we do not compensate to some extent for the effects of inflation we are going to lose more jobs. I see

December 7, 1977
Income Tax
this measure as extremely necessary and urgent in these circumstances and worthy of support from the entire House.
Let me now move to the hon. member's reference to INCO. INCO has been able this year to do something it has not done in the past. The problem arose because there has been a decrease in the market for nickel in the last two years. As a result, the company started to stockpile. This 3 per cent inventory allowance will help the company carry the cost of stockpiling. The company has never financed such a stockpile before. It has the equivalent of seven months' supply of nickel at this moment, and this allowance will permit the company to carry the cost of that stockpile even longer. This is probably one of the factors that allowed the company to postpone its decision to lay off some of the miners, and it has allowed them to carry the large inventory.
In fact, one of the propositions put forward by the hon. member for Nickel Belt was that the company should do even more stockpiling than it is at the present time. We discussed this with the company but felt it was not advisable at this time because, if the company were to stockpile even more, this would depress the market even more, and the prices the company would get from whatever sales it had would be lower and would diminish profits, eventually making life even more complicated for the company than it is right now. This 3 per cent inventory allowance has been of help to other companies, but especially INCO.
The hon. member has talked about tax credits. Of course if the companies do not invest for the creation of new jobs they will not have the tax credit. If a company does not have a tax credit it cannot be calculated as an advantage. It is a credit for people to invest in such a way as to create jobs. If they are not investing in Canada they will not be using the credit. Often the leader of the NDP refers to this tax bill as a rip-off for the corporations while some of the same corporations are ripping-off the people. That is not true. If a company is not investing in a way to create new jobs it does not have the advantage of the propositions we have before the House at the moment.


William Arnold Peters: I thank the minister for his explanation, but I think he is confused about what we have asked in terms of the inventory at INCO. What we have suggested is that the government could hold an inventory of nickel, as it did in respect of uranium. In this way it would not provide the company with finances for inventory. Let us not fool ourselves, INCO is not a poor company. It is the major nickel producer in the world and controls the price of nickel. It does not control the market and that is why the difficulty arises. The consumption of nickel is not as high as it has been.
I am sure the 3 per cent inventory allowance to offset the affect of inflation has resulted in INCO and Falconbridge working overtime for the last eight or nine months in order that it could end the year with an inventory as large as possible, getting as much in the way of an allowance as possible.
When we talk about maintaining an inventory we are talking about the government stockpiling and maintaining control
[Mr. Chr6tien.l
of that stockpile. The government might find itself, as it did in respect of agricultural products, in competition with other segments of the economy. In this way the government might find itself in competition with INCO, and I am not sure that would be such a bad thing.
As the young gentleman indicated, what the government is now putting into the law will stay in the law until another budget or financial bill is brought forward making the change. The government has not written into the bill any method of decreasing the inventory allowance when circumstances change. It has not spelled out why the inventory should be allowed to increase. In addition, as I understand it, the government has not written into the bill a year end basis for the taking of inventory. I suppose this will vary because of different fiscal year bases for different companies and other calendar year arrangements.
I am sure the minister will wish to consider the difference between the type of inventory or stockpiling by INCO and the inventories of other manufacturing sectors. Replacement costs represent a major factor, but INCO does not have such a replacement cost. It probably will not cost any more to produce nickel until the current contract runs out. It will not cost more to produce nickel this year than it did last year because the company has control. All it needs to do, as it has always done, is high grade. You always maintain the price of your product by the grade of ore you use. If you want to produce a cheaper product you use a higher grade, and if you want to produce at a more costly rate you use a lower grade. In this way the company has control. Is the minister giving consideration to other companies that experience a replacement factor in respect of inventory? Replacement will be a factor in-


Gérald Laniel: Order, please. I interrupt the hon. member as his time has expired. He posed a question to the minister and the minister answered, and the allotted 20 minutes are ended. I will now have to go to another member, and perhaps return to this hon. member afterward.
[ Translation]


Mr. Clermont:: Mr. Chairman, when I mentioned clause 14 of Bill C-ll yesterday, as reported at page 1626 of Hansard, respecting a loan taken out by an insured against his policy I gave the example of a $3,000 loan. In view of the answer of the Minister of Finance (Mr. Chretien) I believe he gave clarifications today when he answered other questions.
But if my loan is $3,000 and I have paid $3,200 in premiums so far, in the circumstances, Mr. Chairman, I do not have any amount to add to my income for the current year. Is this right or not?


Joseph Jacques Jean Chrétien: Offhand, Mr. Chairman, I think the hon. member for Gatineau (Mr. Clermont) is right.


Gaston Clermont: Mr. Chairman, I think this is right because based on my questions and the answer this can be correctly interpreted as such although in the discussion yesterday I
December 7, 1977

believe the Minister of Finance gave clarifications in that respect. That is why I wanted to put the question directly to the Minister of Finance to correct the impression that might have been left by him or myself-myself in my questions and him in his answer.


Joseph Jacques Jean Chrétien: Mr. Chairman, if the premiums paid by the insured exceed the amount of the loan, then no part of the loan can be considered as income. If, for example, it is less, it may be that part of the loan could be considered as income but in the case of small policies, as was explained this afternoon, 99 per cent are not covered. This is mainly to cover the case of single premium policies.
As I explained this afternoon, if someone had purchased a $100,000 insurance policy against payment of a single premium twelve years ago, his insurance policy would be worth $200,000 today, and he could borrow $200,000, so that there is an increase of $100,000 on which he would have paid no tax, and the only thing he would have to do to keep his insurance in force is to pay the interest. This could become a sort of loophole which he could use to circumvent the income tax legislation and we know people have used it as such in the past. That is what we want to prevent.
However, in the cases of most normal policies, people can rarely borrow less than the total value of their premiums.


Gaston Clermont: Mr. Chairman, while trying to catch 1 per cent of the people who borrow money on their insurance policies, is not the government overburdening the administration of insurance companies?


Joseph Jacques Jean Chrétien: I do not think so, Mr. Chairman.


Sinclair McKnight Stevens: Mr. Chairman, in response to the hon. member for Timiskaming I understood the Minister of Finance to say that the 3 per cent allowance which a company might receive on its inventory at the beginning of the year is something it would not be entitled to unless the money was invested. 1 am quite sure that is what the minister indicated. I know it is wrong, but I think the record should be corrected.


Joseph Jacques Jean Chrétien: Mr. Chairman, I do not know whether I indicated that or not. If I did, it was inadvertently. The allowance relates to inventory and not investment.


Sinclair McKnight Stevens: The minister was using INCO as an example at that time. He said INCO could not invest money in other countries because it would not be entitled to this type of allowance.


Joseph Jacques Jean Chrétien: Mr. Chairman, I was referring to the investment tax credit at that time, and not only the inventory allowance. I was trying to deal with the totality of the arguments by the New Democratic Party on that issue. I was attempting to segregate that from capital cost allowance.
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Members of the NDP party claim that it is a rip-off and there is no benefit from it.


Sinclair McKnight Stevens: When the previous minister of finance brought in the 3 per cent allowance with respect to inventory, he indicated that he was awaiting an acceptable inflation accounting system. Can the minister bring us up to date? I think most chartered accountants are familiar with this. They feel it is a lame duck, stop gap affair. What progress has the department made in getting an acceptable inflation accounting system with which businesses can live?


Joseph Jacques Jean Chrétien: Mr. Chairman, I am informed that this is a very difficult technical problem. Work is ongoing in the department with respect to this, particularly with the Canadian Institute of Chartered Accountants. The department is endeavouring to develop a proper mechanism to alleviate the problems created by inflation in terms of holding inventory. I hope the department, in association with the institute, can arrive at a solution in order for us to move on it.


Sinclair McKnight Stevens: When this scheme was first announced, the estimated cost to the Treasury Board was approximately $300 million. Is that still the situation eight months after the estimate?


Joseph Jacques Jean Chrétien: Mr. Chairman, I am informed that we have no reason to change that estimate.


Sinclair McKnight Stevens: As I understand it, this is a 3 per cent allowance regardless of the circumstances. A man may have $1 million worth of inventory on hand. For some reason he starts every year with $1 million worth of inventory. He receives a $30,000 deduction from his income per year. At the end of ten years he would have received the benefit of $300,000 because of that $1 million worth of inventory. Is my observation correct? Why is there no recapture provision if that person finally sells his inventory and receives $1 million? As I understand the present provision, it would be a complete windfall to the company under the circumstances I have just described.


Joseph Jacques Jean Chrétien: Mr. Chairman, I do not see any benefit to that person holding the same $1 million worth of inventory year after year, because inflation continues. He would receive a $30,000 deduction per annum for that $1 million worth of inventory. Therefore I do not consider that to be a loophole or a bonanza. I should like to advise the hon. member that I will check into that to see if there is any validity to his argument.


Gérald Laniel: It being six o'clock, it is my duty to rise, report progress, and request leave to consider the bill again at the next sitting of the House.
Progress reported.


Mr. Deputy Speaker:: It being six o'clock, this House stands adjourned until tomorrow at two o'clock, pursuant to Standing Order 2(1).
At 6.02 p.m. the House adjourned, without question put, pursuant to Standing Order.

Thursday, December 8, 1977