1977-11-08

ROUTINE PROCEEDINGS


Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, 1 rise on a matter of urgent and pressing necessity. In light of today's unemployment statistics showing that unemployment levels in this country remain at crisis levels and will go higher, 1 move, seconded by the hon. member for Vancouver Quadra (Mr. Clarke):
That the government introduce a budget better designed to restore full employment and stable prices and to ensure our economy will return to its real growth potential.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


PROPOSED NEW BUDGET TO CREATE JOBS-MOTION UNDER S.O.
Mr. Edward Broadbent (Oshawa-Whitby):: Considering that the Economic Council of Canada in its annual report which was published today forecasts unemployment remaining above eight per cent until the 1980's, even after the effects of the minibudget of the Minister of Finance (Mr. Chretien) are considered, considering that the same report points out that the recovery of the Canadian economy has been inferior to the recovery of other western economies and considering that the Economic Council recommends an additional $2 billion tax stimulus for the Canadian economy, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House instructs the Minister of Finance to bring in a new pre-Christmas budget which will have as its principal focus, the creation of jobs for the more than one million unemployed Canadians.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


IMPORTANCE OF ECONOMIC STABILITY IN RELATION TO NATIONAL UNITY-MOTION UNDER S.O. 43
Miss Flora MacDonald (Kingston and the Islands):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In view of the escalating economic problems that plague this country as a result of the government's inept handling of the economy, and in view of the fact that opposition members have consistently, but without success, been trying to direct the government's attention to the gravity of the economic situation, I move, seconded by the hon. member for St. John's East (Mr. McGrath):
That this House acknowledges that the profound, if belated, insight revealed by the minister in charge of federal-provincial relations that economic stability is the most urgent priority facing this country fundamental to national unity is one more instance where the Liberal government has belatedly adopted a position put forward by the Leader of the Opposition.


Mr. Speaker:: Order, please.


REQUEST FOR MEASURES TO DEAL WITH UNEMPLOYMENT IN ATLANTIC PROVINCES-MOTION UNDER S.O. 43
Mr. James A. McGrath (St. John's East):: Mr. Speaker, 1 rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Statistics Canada today released the unemployment figures for October which show a very substantial increase in the rate of unemployment for the four Atlantic provinces. It now stands seasonally adjusted at 13.5 per cent, an increase of over a full percentage point in one month. Newfoundland is once again leading at 17.4 per cent, up from 15.8 per cent in September, and up 3.5 per cent over the same period last year, thus setting the stage for a crisis of major economic proportions, not to mention the individual suffering that lies behind each one of the statistics. I would therefore move, seconded by the hon. member for Grenville-Carleton (Mr. Baker):
That this House directs the Minister of Employment and Immigration to make a statement in the House at the first opportunity outlining what steps the government proposes to take to deal with the growing crisis in the four Atlantic provinces and Quebec, which, while representing 37 per cent of the total work force, already account for 48 per cent of the total national unemployment rate.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

November 8, 1977
Social Security


ROYAL CANADIAN MOUNTED POLICE
Mr. Erik Nielsen (Yukon):: Mr. Speaker, I have a motion under the provisions of Standing Order 43. My motion concerns the many questions surrounding the activities of the security service while the present Minister of Consumer and Corporate Affairs (Mr. Allmand) was Solicitor General. In view of the fact that to date that hon. gentleman has not only neglected to make a personal statement about his involvement and responsibility to this House, but has also been unavailable for questioning, I move, seconded by the hon. member for Perth-Wilmot (Mr. Jarvis):
That the Minister of Consumer and Corporate Affairs be permitted to answer questions about his activities or lack of them as Solicitor General and further that he make a statement about his failure to control continuing illegal activities by officials for whom he was constitutionally responsible.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FINANCE
Mr. Roch La Salle (Joliette):: Mr. Speaker, pursuant to Standing Order 43,1 seek the unanimous consent of the House to move a motion on a matter of urgent and pressing necessity.
In view of the fact that the unemployment statistics released today show a constant and increasingly alarming rise in unemployment in Quebec as well as in the Atlantic provinces, that the steps taken by the government to fight unemployment have not given the expected results either in Quebec or the Maritime provinces, and that a serious economic imbalance is being created which runs the risk of becoming irreparable between these and other provinces, I move, seconded by the hon. member for St. John's East (Mr. McGrath):
That the House urge the Minister of Finance to meet immediately with his Quebec and Atlantic province counterparts to discuss with them special measures which could help correct the current economic imbalance and eliminate in the process any new problem which might disturb our national harmony.


Mr. Speaker:: Order, please. Pursuant to Standing Order 43, this motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: No!
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SOCIAL SECURITY
Mr. Eudore Allard (Rimouski):: Mr. Speaker, pursuant to Standing Order 43, I ask for the unanimous consent of the House to present a motion on an urgent and pressing matter.
Given the fact that widows aged 60 to 65 lose the spouse pension and since they are thus practically to return on the labour market or are forced to rely on social welfare, and given the fact that because of this blatant and inconceivable injustice these persons cannot enjoy peace of mind, I move, seconded by the hon. member for Abitibi (Mr. Laprise):
That this House urge the Minister of National Health and Welfare to put forward as soon as possible an amendment to the old age security legislation which would allow the spouse to enjoy the benefits of a rightfully entitled pensioner.


Mr. Speaker:: Order. Pursuant to Standing Order 43, such a motion cannot be presented without the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


SUGGESTION GATT NEGOTIATORS REQUEST INCREASED ACCESS TO MARKETS FOR AGRICULTURAL PRODUCTS-MOTION UNDER S.O. 43
Mr. John Wise (Elgin):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Having regard to the fact that the Canadian fruit and vegetable industry continues to suffer serious financial losses, primarily because of unfair and inadequate tariff levels, and given the fact that on November 1, 1977 the United States government gave notice to all nations taking part in the GATT negotiations that it wants increased market access for its agriculture exports, I ask leave to move, seconded by the hon. member for Lisgar (Mr. Murta):
That the government immediately serve similar notice to participating countries and that instructions be issued to Canadian negotiators to bargain vigorously on behalf of our domestic industry to ensure that Canadian farmers and food processing industries no longer bear the brunt of international trade-offs.


Mr. Speaker:: Such a motion requires unanimous consent before it can be put to the House. Is there unanimous consent?


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


Some hon. Members:: No!
November 8, 1977


RESOURCES
Mr. Andy Hogan (Cape Breton-East Richmond):: Mr. Speaker, I rise on a matter of urgent and pressing necessity. Premier Gerald Regan of Nova Scotia is quoted in the Toronto Star of October 29 as blaming Ottawa for failing to act on Nova Scotia's problems. According to Premier Regan, and I quote, "Proposals to sink another coal mine in Nova Scotia have become entangled in federal government red tape."
Since, as the minister knows, we are in desperate need of another coal mine in the province, 1 ask leave to move, seconded by the hon. member for Sault Ste. Marie (Mr. Symes):
That the federal officials involved remove such red tape in order to clear the way for the immediate opening of a new coal mine in Cape Breton.


Mr. Speaker:: Presentation of such a motion under Standing Order 43 requires unanimous consent. Is there unanimous consent?


Some hon. Members:: No!



TRANSPORT


Mr. Jack Murta (Lisgar):: Mr. Speaker, I rise under Standing Order 43 on a matter of urgent and pressing necessity, that being the lack of public commitment by the government to recommendations in the Hall Commission Report on grain transportation in relation to, first, the elimination of the stop-off charges for storage and milling of grain in Western Canada, and, second, the elimination of additional charges for moving rapeseed meal and hopper cars and removal of present inequities in rail rates for shipping various grains and livestock products.
Because of the lack of public commitment, I would move, seconded by the hon. member for Vegreville (Mr. Mazankow-ski):
That the Minister of Transport appear before the Standing Committee on Transportation to outline the government's proposals for the implementation of the above-mentioned Hall Commission recommendations.


Mr. Speaker:: Under the terms of Standing Order 43 such a motion can only be put forward with unanimous consent. Is there unanimous consent?


Some hon. Members:: No!
Oral Questions



ORAL QUESTION PERIOD


Sinclair McKnight Stevens: Mr. Speaker, in the absence of the Minister of Finance I will address my question to the Prime Minister. With today's unemployment figures confirming that regional disparities in our country with respect to the jobless are widening, for example, one in five of our youth in the Atlantic provinces now being out of work and over 50 per cent of those in the construction industry in Saint John, New Brunswick, being without jobs, would the Prime Minister confirm, as did the Minister of Finance, that we shall continue to experience an unemployment level of 8.3 per cent and that 1.1 million may well be without jobs during the winter months?


Right Hon. P. E. Trudeau (Prime Minister):: No, Mr. Speaker, I would not confirm that.


Sinclair McKnight Stevens: Having regard to today's disappointing unemployment figures would the Prime Minister tell us when we may expect further elaboration of the employment credit scheme first announced by the Minister of Finance on October 20, bearing in mind that if the scheme is to have any effect on unemployment this winter it must be implemented immediately?


Pierre Elliott Trudeau: Well, Mr. Speaker, the minister did indicate, as we have already indicated in the Speech from the Throne, that we wanted to move forward with this plan. We would be very appreciative if the opposition would co-operate in getting the stimulative measures which are now before the House passed, notably the tax cuts which the minister has moved, so that we can pass on to the next measure.


Sinclair McKnight Stevens: A final supplementary question, which again I will address to the Prime Minister, Mr. Speaker. The Prime Minister asks us to expedite that piece of legislation, but as he will realize, the bill was introduced only yesterday. With unemployment becoming more and more chronic in the country, particularly in Quebec where over 40 per cent of those out of work and looking for jobs have been out of work for three months or longer, would the Prime Minister indicate whether we have seen his entire government's program to relieve unemployment? Has it all been announced to the extent that it is available? In short, did he come up with any new plans which we could hear about while he was snorkeling in the Bahamas?


REQUEST FOR MEASURES TO RESTORE ECONOMIC EQUILIBRIUM IN QUEBEC AND MARITIMES
Roch La Salle: Mr. Speaker, I should like to put a question to the Minister of Finance. Considering the
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November 8, 1977
Oral Questions
statistics released this morning which show that problems are increasing in Quebec and the Maritimes, is the minister willing, under the circumstances, to summon immediately the finance ministers of those provinces so that together they may find solutions to correct that economic imbalance at the national level?


Hon. Jean Chretien (Minister of Finance):: Mr. Speaker, about a month ago I had the opportunity to meet all finance ministers for two days in Ottawa. We dealt with those problems and I told them about the general steps taken in the budget. By and large the finance ministers of Quebec and the Maritimes entirely agreed with the economic policy which I intended to follow.


INQUIRY AS TO MINISTER'S USE OF S100 MILLION PROVINCIAL CREDIT
Roch La Salle: Mr. Speaker, I would like to ask a supplementary question. I know that the Minister of Finance has referred to a $100 million credit for direct employment. Would he be prepared to tell us soon whether this $100 million will be spent mainly in these provinces, and could he tell us today to what type of program this $100 million will be allotted to correct the situation in these provinces?


Joseph Jacques Jean Chrétien: Mr. Speaker, in the bill I introduced in the House yesterday, we are using for the first time a formula providing for particular tax incentives for the Maritime provinces and Gaspesie. Instead of credits of 5 per cent, we are allowing credits of 10 per cent and IVi per cent for the rest of the province of Quebec. It is the first time our tax policy includes incentives of this nature which are to be applied on a regional basis.


INQUIRY WHETHER GOVERNMENT WILL AID CONSTRUCTION OF CONGRESS CENTRE
Roch La Salle: Mr. Speaker, I have another supplementary. The Minister of Finance met recently with the ministers of the province of Quebec who are responsible for economy-oriented departments, and I do not think we have heard any details about this meeting as yet. Is the Minister of Finance in a position to tell the House today what kind of concrete proposals were discussed and whether his government has made a decision on the funding of the congress center proposed by the government of Quebec in Montreal?


Joseph Jacques Jean Chrétien: As far as the
last part of the question is concerned, Mr. Speaker, this is of course a decision to be made by the provincial government. They have not yet determined the site nor the style of the congress center they would like to build, so it is up to them to make the necessary decision.
As to the particular situation of Quebec, 1 am constantly concerned because the unemployment level rises regularly and because the factors which were responsible for a decrease in

the unemployment rate in Ontario last month should have applied in Quebec. I think perhaps the government of Quebec should begin to contemplate removing the uncertainty among investors and holding its referendum as soon as possible.


REQUEST FOR NEW BUDGET TO CREATE JOBS
John Edward Broadbent: Mr. Speaker, the minister always has an excuse for his own government's failure. I should like to quote from the report of the Economic Council of Canada released this morning which states that the recovery of the Canadian economy has lagged behind that of other western countries. They suggested it has lagged behind, and, therefore, the government's excuse that we are suffering from some international problem does not hold water. Let me point out to the minister that the same council suggests we are going to have eight per cent unemployment well into the 1980's, and specifically suggested that the government ought to stimulate the economy by a further $2 billion. Will the Minister of Finance recognize at long last that his policies have been wrong and now promise the people of Canada he will bring in a budget before Christmas that will produce some jobs?


Joseph Jacques Jean Chrétien: Mr. Speaker, I would think that to borrow another $2 billion at this time in an attempt to buy our way out of the economic difficulties we are in would not be responsible. I think what is required is a joint effort by the federal government, the provincial governments and the private sector. It is not my belief that irresponsible action on the part of the Minister of Finance would be of any good to the nation.


UNEMPLOYMENT-MEASURES TO CREATE JOBS IN CERTAIN SECTORS OF THE ECONOMY
John Edward Broadbent: Mr. Speaker, that is the first time I have heard that stimulation of the consumer side would lead to unemployment or would be buying our way out. Every economist in the country except the minister's own advisers are recommending that course of action.
Considering that the real problem is a sector problem-and I agree with the minister in that regard, because the government has done nothing about it-will the minister tell us with reference to the shoe industry, the textile industry, the shipbuilding industry and/or the auto industry, all of which are in trouble now, what specific proposals his government has to produce jobs in those sectors?


Joseph Jacques Jean Chrétien: Mr. Speaker, I am thinking of all those sectors to which the hon. member referred. In particular, last November, when I was Minister of Industry, Trade and Commerce, I took it upon myself to impose quotas in the textile industry. A number of people on the other side blamed me for having done that. In addition to
November 8, 1977

that, in relation to the construction of naval equipment, and perhaps the hon. member does not know that, we have increased from 12 per cent to 20 per cent the subsidies in that construction field. Further to that, the statistics today indicated that within a year in Canada we have created 292,000 new jobs, which is in fact 40,000 more than was predicted by the Minister of Finance in the spring.


Some hon. Members:: Hear, hear!


SUGGESTED CANCELLATION OF TAX CONCESSIONS TO CORPORATIONS AND USE OF MONEY FOR DIRECT JOB CREATION
John Edward Broadbent: Just one million fewer than are required. If we consider the crucial manufacturing sector, comparing the number of jobs we had in October of this year with October of last year, we will find we have lost 59,000. That was a net loss of jobs in that manufacturing sector in spite of the minister's decision to give $1.2 billion in special corporate tax concessions for that industry to overexpand even more. Industry is not using that money to expand further because its directors are not stupid. Given the crucial importance of the manufacturing industry to Canada and the need for stimulation, will the minister cancel this ridiculous $1.2 billion corporate tax concession to encourage further unused capacity and use the same money in the form of direct job creation or as a tax stimulus to the consumer?


Joseph Jacques Jean Chrétien: Mr. Speaker, I think that in the budget which I presented in the House a few weeks ago I indicated 1 was giving more than $700 million-


Some hon. Members:: Oh, oh!


An hon. Member:: It was a budget?


Joseph Jacques Jean Chrétien: If you prefer I could call it an economic speech, but for me it was the same thing. Perhaps it was not the same thing for you.


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: I know that hon. members were complaining at the time that we were not acting. Now they are complaining that we are acting with imagination and too quickly for them.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: The best way to improve the Canadian economy is by making Canadian products more competitive in world markets. We have taken some very important steps in that regard as I outlined in the House of Commons, specifically when I asked all Canadians to reduce increased compensation to six per cent in order that our competitive position, as compared to other nations in the world, would improve. Considering the fact that the Canadian dollar has returned to a more reasonable level I think the situation will now improve by making Canadian products more competitive in the world, and the situation will correct itself.
Oral Questions
[DOT] (U27)


REASON FOR FAILURE TO PROVIDE EMPLOYMENT INCENTIVE PROGRAM FOR INDUSTRY
Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, I have a question for the Prime Minister. To begin with, I am sure all members of the House would join me in welcoming him back to the House from his holiday where he was scuba diving while the economy was nose diving.


Some hon. Members:: Hear, hear!


George Harris Hees: As a practical and workable plan containing an employment incentive for industry is our best hope, the same type of thing that I worked out and presented on January 25, 1977 in detail-and the government was well aware of the presentation I made at that time-I would ask the Prime Minister why it is that his government has waited so long and still shows no sign of presenting such an employment incentive to create jobs in our present economic atmosphere? In fact the government's plan is reported to be nothing more than having made available $100 million. Do we have to wait for the government to make up its mind as to what it is going to do?


Mr. Speaker:: Order, please.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. If the hon. member for Prince Edward-Hastings has a question, perhaps he can put it.


George Harris Hees: Mr. Speaker, in view of what I have said, I ask the Prime Minister why the government has not presented an employment incentive plan such as I have outlined to him? If the government ever intends to present such an incentive, when will that time be?


Pierre Elliott Trudeau: Mr. Speaker, I am very happy to be back in the House now that the opposition is turning its mind to economic questions, rather than knocking the RCMP.


Some hon. Members:: Hear, hear!


Mr. Paproski:: It is all your fault.


Mr. Hnatyshyn:: You will have to apologize twice today.


Pierre Elliott Trudeau: We plan to bring the tax incentive scheme for job creation, which the Minister of Finance talked about, before the House before Christmas.


Ramon John Hnatyshyn: Which Christmas? I hope it is not the Ukrainian Christmas.

November 8, 1977
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Oral Questions MANPOWER


MEASURES TO INCREASE EMPLOYMENT IN ATLANTIC PROVINCES-CONSULTATION WITH PROVINCES
James Aloysius McGrath: Mr. Speaker, my question is for the Minister of Employment and Immigration. Given the fact that the Statistics Canada report on unemployment today indicates that the five eastern provinces of this country, while representing only 37 per cent of the work force, have more than 48 per cent of the total unemployment-for example, 13.5 per cent in the Atlantic provinces and 11.4 per cent in Quebec; given the fact that the Economic Council of Canada in its report indicated that job creation incentives of the minister are not enough and that new initiatives are needed; and given the crisis situation we are facing in the Atlantic provinces and the province of Quebec, my question to the minister is: what response can the unemployed of those provinces expect from him as the Minister of Employment and Immigration?


Hon. Bud Cullen (Minister of Employment and Immigration):: Mr. Speaker, from time to time we have the doom and gloom emphasis of the hon. member; but in so far as his particular province is concerned-


An hon. Member:: When you lose your home, it is pretty sad.


Jack Sydney George (Bud) Cullen: Do you want to hear some figures? I have listened to the shouting. Perhaps we should hear some facts. Institutional and industrial trade for 1977-1978 for the province of Newfoundland alone will be $13.3 million; 8,000 jobs on Canada Works Phase II; 3,200 jobs on Canada Works Phase I; and Canada Works, 3,000 jobs.


Some hon. Members:: Oh, oh!


Jack Sydney George (Bud) Cullen: These were initiatives taken by the government recognizing the situation and not waiting for reports from OECD, from any other agency or newspaper headlines.


Some hon. Members:: Hear, hear!


James Aloysius McGrath: Mr. Speaker, I wish the minister would tell that to the 100,000 people in the Atlantic provinces who are unemployed.


Some hon. Members:: Hear, hear!


James Aloysius McGrath: Mr. Speaker, notwithstanding what the minister has said, 40 per cent of those looking for work have been unemployed for three months or more; their unemployment insurance benefits have thereby expired. Given the tragedy behind all these statistics, I ask the minister sincerely what he intends to present to the employment ministers of the four Atlantic provinces with whom he will meet on November 15. Is he prepared to broaden that meeting to include the manpower minister from the province of Quebec, and is he prepared to tell the House that indeed new initiatives are neces-

sary in order to prevent what everybody but the minister recognizes will be a crisis this winter?


Jack Sydney George (Bud) Cullen: Mr. Speaker, there was quite a bit in that speech. I think I should respond first by saying that I have pointed out to the unemployed people in the Atlantic provinces that these initiatives are being taken and that there is some hope. The gloom and doom approach of the opposition is not very helpful.
In so far as the meeting with the Atlantic ministers is concerned, that meeting is their initiative, and I have agreed to meet with them. They are meeting with me here in Ottawa, and I am prepared to meet with the minister from Quebec if that should be that minister's wish. However, they are the people setting the terms and conditions, and they are the people bringing other representations to me. In the interim we are looking at things like the spruce budworm situation in Nova Scotia to see what can be done. We are looking at the Gull Island project to see if something can be done there by way of an emergency response by the Canada Works program. There is a myriad of things. We recognize that we have a problem, particularly at this time. There has always been seasonal unemployment in that area, but we do not give up hope like the hon. member does.


James Aloysius McGrath: Mr. Speaker, this gloom and doom does not come from me; it comes from Statistics Canada. Given the fact that there has been an increase of only 6,000 jobs in the labour force of the Atlantic provinces so far but that there has been a net increase in the number of people coming on to the labour force of 20,000, a lag of 14,000 in this region alone, is the minister prepared to recognize that job creation programs, commendable and necessary as they are, by and of themselves are not enough? We need more right now.


An hon. Member:: We always need more.


Jack Sydney George (Bud) Cullen: Mr. Speaker, let us consider that thanks to the representations made by hon. members from Newfoundland- primarily on this side of the House-Newfoundland stands fourth in the gross amount of money made available under Canada Works and Young Canada Works. No one is suggesting that the government alone can meet this particular problem. It is not something which can be solved by one department alone. That is why I hope the initiatives taken by the Minister of Finance will receive speedy passage. They were introduced yesterday or the day before, and I say let us get on with those initiatives and create some jobs.


REGIONAL ECONOMIC EXPANSION
Mr. Robert Muir (Cape Breton-The Sydneys):: Mr. Speaker, my question is for the Minister of Regional Economic Expansion. In light of the latest tragic unemployment figures
November 8, 1977

released today and in view of the continuing, nauseating increasing unemployment figures on Cape Breton Island and eastern Nova Scotia, where at the moment it reaches 30 per cent-those are not my figures; they come from academics, clergymen, chambers of commerce and labour-what steps is the minister and his government taking at the moment, and what steps have been taken with the premier of Nova Scotia or the President of Sydney Steel Corporation, to provide the necessary funds to modernize and rejuvenate the Sydney steel mill? That would create more jobs.
[ Translation]


Hon. Marcel Lessard (Minister of Regional Economic Expansion):: Mr. Speaker, during the last few years my department and DEVCO in particular have invested each year an average of $40 million in Cape Breton to support and develop existing businesses and create new ones. That is what we have done. We are now considering a subsidy application from SYSCO for a plant upgrading program and we hope that a decision will soon be taken in that regard.


Robert Muir: Mr. Speaker, the hon. gentleman seems to be a bit confused. I asked a question about SYSCO, not DEVCO. I asked about the Sydney Steel Corporation. In view of the fact that the minister and other ministers sitting over there have told me in the past that moneys would be made available for modernization and rejuvenation of the Sydney Steel plant and that they have also made statements outside the House-and I should warn the minister and the government that if something is not done on Cape Breton Island we will have severe unrest this winter-for God's sake what is the minister, the Prime Minister and this government going to do?


Marcel Lessard: Mr. Speaker, obviously the hon. gentleman missed the latter part of my answer. We have received an application from SYSCO-


Robert Muir: I know that.


Marcel Lessard: -with regard to a proposal to modernize the existing facilities. This is being considered, and a decision should be arrived at very soon. However, that is only part of our activities in support of the economy of Cape Breton Island. The hon. gentleman knows very well that we have been very active in trying to bring industries and all kinds of development to Cape Breton Island over the last few years.


Robert Muir: Mr. Speaker, since we have been assured that money is going to be provided to rejuvenate the Sydney Steel plant, and the minister says soon, is it going to be next month or the month after, or do we have to wait until there is a provincial election or a federal election and let these poor people be used as pawns in an election?


Marcel Lessard: Mr. Speaker, election or not, every year we have been spending money through DEVCO and other agencies in Cape Breton, in Nova Scotia and in the maritimes, and we will carry on doing so for the purpose of meeting the needs of these people.
Oral Questions


ROYAL CANADIAN MOUNTED POLICE
Mr. Rene Matte (Champlain):: Mr. Speaker, my question is directed to the Solicitor General.
In view of the revelations made with regard to the Royal Canadian Mounted Police activities in 1973, which actions were revealed by the minister himself, can the minister tell the House whether or not he has checked to see if similar activities took place prior to 1973, and more specifically during and before the October 1970 crisis?


Hon. Francis Fox (Solicitor General):: Mr. Speaker, naturally, following my statement to the House in June of last year, we examined our files in an effort to determine whether or not the RCMP might possibly have committed other illegalities. As a result of that decision, Mr. Speaker, we decided to refer the whole matter to a royal commission of inquiry set up by the federal government whose terms of reference include the study of all practices and procedures, and the calling in of witnesses and taking of their depositions under oath to determine whether or not there may indeed have been other illegal activities. Mr. Speaker, I feel that that is now the responsibility of the commission. In any event, even if I were to say yes or no to the hon. member in this House, he would not be satisfied with my answer. To some extent that is why, Mr. Speaker, we ourselves set up a royal commission of inquiry in order that this type of activity might be completely brought to light.


René Matte: Mr. Speaker, I have a supplementary. I would ask the minister to be more specific since this is a very serious issue. Has he obtained, in respect of events of 1970, the same kind of information he has had about those of 1973? This is a very specific question.


Francis Fox: The question is extremely specific, Mr. Speaker. If my understanding of it is correct, it asked whether there were before 1970 indications of the type referred to in connection with the 1972-73 period. The answer is extremely clear, extremely specific. I have had no indication whatever of that type of activity in the period referred to by the hon. member.


TRANSPORT
Mr. Paul E. McRae (Fort William):: Mr. Speaker, my question is to the Minister of Transport. Given the serious divergence of opinion as between the St. Lawrence Seaway Authority and the many well informed users of the seaway from Sept lies to Thunder Bay, who believe that the near doubling of the tolls will create disastrous results, possibly some diversion of iron ore from Sept lies to Philadelphia and

Oral Questions
grain perhaps through the Mississippi system, is the minister looking at these serious concerns, and will he come up with a proposal which is a little more moderate than the present proposal and also a little more in keeping with the spirit of the anti-inflation program?


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, the question of the impact of the St. Lawrence Seaway tolls upon shipments through the seaway was taken very fully into consideration before proposals were made in relation to those tolls. I am not surprised that those who actually have to pay tolls would prefer lower rates. That is the group from whom we have been hearing. The fact is that other costs of transportation have increased much more in the period since 1959, and no toll increases have taken place since then. The new tolls will represent, generally speaking, a smaller portion of transportation costs than the tolls did in 1959. They will represent a smaller portion related to the value of the goods than was the case in 1959. While any increase may be cited later as a reason for one or other particular diversion, I think these facts should be borne in mind when analyzing that and recognizing that other costs have been increasing much more. I am confident that the volume of goods going through the seaway will continue to increase quite remarkably over the next three or four years, notwithstanding our going to a more sensible financial arrangement in relation to tolls.


MANPOWER
Mr. Perrin Beatty (Wellington-Grey-Dufferin-Waterloo):: Mr. Speaker, my question is for the Minister of Employment and Immigration. Today's figures show that unemployment among young people continues to run at two and a half times the unemployment rate for those over 25 and that this trend is accelerating. Will the minister tell the House why this government's programs to reduce unemployment among young people have failed so dismally and what he intends to do about this problem?


Jack Sydney George (Bud) Cullen: Mr. Speaker, if there were an area of major concern, it is the fact of youth unemployment. That is why I will be attending a meeting of the OECD in Paris to discuss with my colleagues from other countries the same problem that is being faced by them. In addition, we have a series and a myriad of programs that are in place. Our job experience training program for the summer will be increased sixfold for the winter component. We will be looking at that as only one of several avenues to be taken in dealing with what is a very, very difficult problem.

November 8, 1977


THE CANADIAN ECONOMY
Henry Perrin Beatty: Mr. Speaker, my supplementary question is for the Minister of Finance. The 1977 Review of the Economic Council of Canada forecasts unemployment rates of seven per cent or more into the 1980's. It notes that if their projections are correct the extra $150 million federal winter works projects and the new $100 million employment credit program will not be sufficient to bring about the reduction in either youth or adult unemployment that is needed. It cautions that additional measures at both levels of government are likely to be necessary in both 1978 and 1979. May 1 ask the minister what action he is prepared to take to reduce this level of unemployment among young people which is currently at the level of 383,000 young Canadians?


Joseph Jacques Jean Chrétien: Mr. Speaker, the most efficient step at this time would be to restore throughout Canada a spirit of confidence and a new belief in this country's future. In the budgets that were put forward we have stated I believe that there was no way the problem could be solved by a government or governments, the private sector must assume its responsibilities. For that reason we have decided to reintroduce the measures put forward by my predecessor the hon. member for Rosedale. It is our hope that the incentives proposed last spring in the budget, together with my economic statement of this fall, will create the kind of climate that is desirable for a strong economic recovery in Canada.


EXTERNAL AFFAIRS
Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, my question is for the right hon. Prime Minister. In view of the statement of the French premier, Raymond Barre in which he rebuffed the protest expressed by the Canadian ambassador, Mr. Gerard Pelletier, over the award of a high decoration to the premier of Quebec and who is quoted in the newspapers as saying that the French government is well brought up in the rules of international courtesy, does the Canadian government intend to express any further diplomatic initiative in reply to this statement?


Pierre Elliott Trudeau: No, Mr. Speaker, beyond pointing out to the people of Quebec, as I believe the Minister of Finance did the other day, that Quebec would be more interested in receiving investment from France as Saskatchewan, as Alberta or Nova Scotia does, than receiving medals.
November 8, 1977


William Gordon Ritchie: A supplementary question, Mr. Speaker. Does the Prime Minister and the government regard the expression as being within the rules and parameters of diplomatic usage?
[ Translation]


Pierre Elliott Trudeau: Well, once more, Mr. Speaker, that matter of medals has less significance to the Quebec people than that of investments. But as everyone knows, while France has numerous investments in other Canadian provinces, it seems that in Quebec the government will be satisfied with medals. I do not think the significance is any greater than that.


ROYAL CANADIAN MOUNTED POLICE
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, my question is addressed to the right hon. Prime Minister. No doubt it has been called to the attention of the Prime Minister that Senior Inspector Vermette, six weeks after the break-in at the APLQ, wrote to the Ottawa headquarters of the RCMP suggesting or recommending that matters in regard to the break-in be put at the disposition of the Prime Minister and/or the Security Council "because of the present political climate." I should like to ask the Prime Minister if he has checked to see if Inspector Vermette's advice or message was conveyed to anybody within the RCMP and if so, to whom?


Pierre Elliott Trudeau: Mr. Speaker, whether it would be conveyed to someone within the RCMP I believe would be a question to be directed to the Solicitor General. So far as it being directed to my office or myself, we have checked and there has been no reference of that kind.


Francis Andrew Brewin: A supplementary question which I think directly relates to the Prime Minister and his responsibilities. The suggestion that was made was that the matter also be called to the attention of Mr. Walter Luyendyk, who I understand was assistant secretary to the Cabinet committee on security and intelligence. Can the Prime Minister say whether in fact this break-in was called to the attention of the assistant secretary of the Cabinet committee at or about this time?


Pierre Elliott Trudeau: Mr. Speaker, I will check into that. I do know that if it was it certainly was not called to my attention but I doubt very much if it would have been called to the attention of the assistant secretary of Cabinet.


AIRPORTS
Mr. Eymard Corbin (Madawaska-Victoria):: Mr. Speaker, I have a question for the Minister of Transport.
Oral Questions
Since a 4,000-foot runway is under construction in St. Leonard for the northwestern New Brunswick airport, and since Eastern Provincial Airways filed an application with the Canadian Transport Commission to add St. Leonard to their flight schedule, is the minister inclined to recommend immediately that the runway be extended to 6,000 feet, and also to go forward with other airport projects in the Atlantic area, to improve significantly the chances of survival of the regional air carrier designated by the government?


Otto Emil Lang: Mr. Speaker, I am certainly prepared to discuss an even longer runway than that presently planned for St. Leonard. I will be going to Grand Falls on November 21 and will be glad to discuss that issue with the airport commission at that time. Of course, airports in the Atlantic region have been receiving a good deal of attention from us because, in addition to the improvements at St. Leonard, work is going on at Charlo, Wabush and Gander. I am happy to say we have today announced the decision to proceed with the major new improvements to the airport on Prince Edward Island.


ROYAL CANADIAN MOUNTED POLICE
Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, my question is to the Prime Minister and follows along the lines of the questions asked by the hon. member for Greenwood. In his answer the Prime Minister said with certainty that the communication referred to had not come to him. As he will recall from published news reports, the report was that the recommendation had been that it go either to the Prime Minister and or ministers. I assume since the Prime Minister has investigated his own case he has also investigated the case of his ministers. Can he give us a categorical assurance today that the communication referred to did not go to any of his ministers as well? If he cannot give us that today will he give an undertaking to report tomorrow? I understand he is going to be away again tomorrow so could he have somebody report tomorrow both upon whether there was a communication to any minister and whether there was a communication to the official of the Cabinet committee on security and intelligence?


Pierre Elliott Trudeau: Mr. Speaker, as far as the last part of the question is concerned, I just gave the undertaking to the hon. member for Greenwood. In so far as other ministers are concerned, the Solicitor General would be the minister to whom it would be conveyed other than myself. He has already stated that he did not receive that communication. I can ask him to ascertain once again that fact.

November 8, 1977
Oral Questions


Charles Joseph Clark: We are dealing here with the Solicitor General at least twice removed in this case. Are we to understand we now have from either the Prime Minister or the present Solicitor General an assurance that the correspondence or report referred to did not come to either the present Minister of Consumer and Corporate Affairs, the present Minister of Supply and Services or the present Solicitor General? Is that the case?


Pierre Elliott Trudeau: If the question is related to the break-in of the APLQ, yes, that assurance has been given to me by the previous Solicitor General.


ALLEGED ILLEGAL ACTIVITIES-POSSIBLE LIMITATION ON DISCLOSURE BY MINISTERS TO MCDONALD COMMISSION
Charles Joseph Clark: Mr. Speaker, I have a related question. It relates to the policy of the Government of Canada concerning testimony that the Prime Minister of Canada will be giving when he responds to any subpoena that might come from the McDonald royal commission. I would like to know whether it will be the policy of the government of Canada to have limits upon the full disclosure of the role of the Prime Minister or any minister in any matter before the McDonald inquiry.


Pierre Elliott Trudeau: Mr. Speaker, "in the modern world, governments have to authorize and follow some secret activities."


Some hon. Members:: Oh, oh!


Charles Joseph Clark: Mr. Speaker, I am not sure from where that quotation came which the Prime Minister so carefully read, but I would like him to stop keeping secrets from the House of Commons on the question of policy of the government. Is it the policy of the government that in any testimony he gives under subpoena to the McDonald royal commission there will be any limits upon the full disclosure of his role or the role of any minister in any matter relating to the terms of reference of the commission of Mr. Justice McDonald?


Pierre Elliott Trudeau: Mr. Speaker, the Leader of the Opposition wants to know from where I got that quotation. I got it from page 453 of Hansard. I was reading the beginning of the speech of the Leader of the Opposition.


Charles Joseph Clark: Mr. Speaker, this may appear to the Prime Minister to be good grammar, but I remind him that this is the House of Commons of Canada where he is responsible to parliament on questions relating to the policy of this government. Three times I have asked him what is the policy of his government on this question. Twice, as usual, he refused to answer questions on policy in this House. I would like him now to answer that question.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: Mr. Speaker, I do not think the Leader of the Opposition should be saying I am downgrading the House of

Commons when I share his opinion. Even the Leader of the Opposition realizes there are some areas of government which might operate in secrecy. Having stated that very wise piece of policy, I read in vain all of his speech on Monday night of last week and found nothing constructive as to what the policy should be for the government on revealing or not revealing what should be kept secret.
If there were a subpoena, and the question is hypothetical, issued to any member of this government, he would be guided by the law officers of the Crown as to what he would be entitled to say or not say under the Official Secrets Act. I can say for my part and the part of all members of my government that we would be anxious to tell the commission everything we knew. However, as the Leader of the Opposition has stated, there may be some areas which must be kept secret and we would be guided by the law officers of the Crown in that regard.


REGIONAL ECONOMIC EXPANSION
Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, I want to deal with a problem equally as pressing to those in the Atlantic provinces. I direct my question to the Minister of Regional Economic Expansion. In the words of the minister's colleagues, the regional economic programs of his department have failed. The Economic Council of Canada indicated in its second last report and other working papers that there is a surplus potential for development in the Atlantic provinces which has not been tapped. It can be tapped by an application of fiscal policies far beyond those suggested by the Minister of Finance the other night. Does the minister agree that it is now time to propose to his colleagues the very serious proposition that the basic philosophy and utilization of DREE, AIDA and other programs have failed and suggest a change in basic primary philosophy?


Marcel Lessard: Mr. Speaker, 1 obviously do not share the hon. member's point of view that the activities of DREE have been a failure. At the APEC meeting in Halifax the other day, the discussion, as I understand it, was that although DREE had not achieved all the expectations, it was not a failure. The support we receive from groups in the Atlantic area will be of great help in achieving solutions and new programs in that area which will help to alleviate unemployment. We are working with the people in the area as well as the provincial government in an attempt to bring in that development.


J. Michael Forrestall: Has the minister given consideration to changing the basic program and finding a program to alleviate the very desperate situation with regard to economic development in the Atlantic region? Is he saying that at this time consideration is not being given to the development of a new
November 8, 1977

philosophy and policy with regard to the development of the Atlantic economy?


Marcel Lessard: Mr. Speaker, the development program we have at present with each of the provinces is a very flexible mechanism. It can respond to any firm proposal from individuals as well as provincial governments. Through that mechanism we are engaged in promoting development of the area. We are in full consultation and cooperating with the provinces and private industry in this matter.


ECONOMIC COUNCIL STATEMENT LEVEL OF UNEMPLOYMENT EIGHT PER CENT UNTIL 1980-GOVERNMENT POSITION
Mr. Lincoln M. Alexander (Hamilton West):: Mr. Speaker,
I have a related question for the Minister of Regional Economic Expansion. It concerns the lack of concern shown by the Prime Minister and the Minister of Finance regarding the state of our unemployed. The minister is probably aware of this report which was recently released by the Economic Council of Canada. It states that even with the measures announced in October by the federal Minister of Finance, the unemployment rate will probably remain above the eight per cent level until the 1980's. In my view, that means we will be faced with an eight per cent unemployment rate until 1980 affecting some 1.3 million people. Does the minister agree with that statement? If not, what is the rate and the target that his government is proceeding with right now?


Marcel Lessard: I have not seen the report the hon. member quoted; it was issued only this morning. But we are working on a joint effort with provincial governments all over Canada, particularly in the Atlantic provinces, in conjunction with the private enterprise system. That is what we are doing. It is not only our responsibility. It is a responsibility shared with all three elements involved. We are doing everything possible to expand the opportunities available, to bring about development and reduce the number of the unemployed. It is not an easy task, but we are facing it.


Lincoln MacCauley Alexander: I wish the minister would quit foot dragging with me. I asked him a specific question. I asked him whether he accepts the statement of the Economic Council that we shall be faced with unemployment running at over eight per cent until the 1980s, and, if he disagrees with it, what target is the government considering. Don't play games, Sir. This is a very serious matter.


Some hon. Members:: Hear, hear!


Marcel Lessard: I am not playing any games with the hon. gentleman. I am not agreeing with any figures. What I am aiming to do is to reduce unemployment. There is no set level in my mind. My level will be enough jobs for all who wish to work.


Some hon. Members:: Hear, hear!
Privilege-Mr. Baldwin PRIVILEGE


MR. BALDWIN-ALLEGED &quot;BUGGING&quot; OF MEMBERS' OFFICES- PRIME MINISTER'S REMARKS
Mr. Speaker:: Order. There are two procedural matters outstanding. There is the question of privilege raised by the Leader of the Opposition on Thursday of last week concerning remarks made by the Prime Minister, and there is also the point of order raised by the hon. member for St. John's East concerning documents allegedly cited by the Solicitor General and by the Prime Minister. It would be appropriate, perhaps, to take first the question of privilege which is outstanding. A contribution was made initially by the Leader of the Opposition, while reserving his right to make further argument. Perhaps we might hear further argument at this time. 1 might add that the motion outstanding on the question of privilege is in the name of the hon. member for Peace River. The hon. member for Peace River.


Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I was, of course, following the excellent and wise course taken by the Leader of the Opposition when he first rose on this question. Despite all my yammering, friends opposite may say, it was legitimately and properly raised by the Leader of the Opposition who, unlike the Prime Minister does feel the House of Commons has an important part to play.
This is a very precise case, and the facts are fairly simple. I think probably the Prime Minister lost his cool. However, he has had an opportunity to cool off in the Bahamas. He should have taken the advice he so often gives to other people, to go placidly amid the noise and haste and remember what peace there may be in silence. At any rate, the Prime Minister, as reported at page 600 of Hansard, said this:
They can stand in their places and challenge them, if they have the courage, but I would suggest the way to do it is not by hiring private detectives, as that party does, and not by having some phony bugs planted in their office, which is the way they do it.
The right hon. gentleman might have been in a mood of impotence-


Some hon. Members:: Oh!


Gerald William Baldwin: -or political frustration. Leaders of governments often get into that position, especially when their governments are like the one he leads, and I sympathize with him in this respect. But when the statement to which I have just referred was called to the attention of the Prime Minister by the leader of my party, he saw fit to compound his offence by saying:
I have not, of course, said that he has been involved. I said the inference might be that members of the other party, no one particular person but the party itself-
After that, the Minister of Justice rose and said, in the course of a limited intervention, that what had been complained of constituted a criminal offence. Put those two together and there is no other inference to be drawn than that the Prime Minister was suggesting that members of Her

November 8, 1977
Privilege-Mr. Baldwin
Majesty's Loyal Opposition stood suspected of having committed a criminal offence.
If the Prime Minister had seen fit, when I started, to get up and make a generous withdrawal, it might not have been necessary to have taken the matter further. However, 1 do not see a look of generosity on his face at the moment, so I shall continue. It may be argued that this was a statement made against a number of members who were unnamed.
I would call to Your Honour's attention a number of precedents and, in particular, a very interesting brief by Mr. Laundy of the Library of Parliament research branch, dated May 28, 1969, in which reference is made to a famous case in England where a number of Conservative members who were holding private meetings in connection with government business were the subject of allegations that they were selling private information for food and drink provided by the press gallery.


Mr. Gillies:: It could never happen here.


Gerald William Baldwin: The following is from a report which was made by a committee which considered the issue:
An unfounded imputation in regard to such meetings involves an affront to the House as such. Your committee consider that an unjustified allegation that members regularly betray the confidence of private party meetings either for payment or whilst their discretion has been undermined by drink, is a serious contempt.
I maintain that what the Prime Minister said against us is such a statement as to bring the proceedings of the whole House into disrepute. In reverse, if the Prime Minister is allowed to make a statement of that kind, I would be perfectly justified in saying what millions of people may believe-I am putting it forward hypothetically-that it may well be that the government instituted the irregular proceedings which were complained of many years ago, knew about them immediately afterward, and has covered them up ever since. If the Prime Minister is allowed to make the kind of statement he has made, then I am entitled to make such a statement; one which, for the present at least, I have put forward hypothetically.


Pierre Elliott Trudeau: Mr. Speaker, the hon. member for Peace River has made my task considerably easier by the conclusion he has just reached. If I were able to make that general statement last Thursday, then surely that side of the House would be able, without breaking the rules of the House, to make general statements about this side having covered up an illegal act. Mr. Speaker, they have been saying nothing else for the past week.


Ramon John Hnatyshyn: Shame.


Pierre Elliott Trudeau: The hon. member may say "Shame", but to demonstrate the reality of the case put forward by the hon. member for Peace River, all I had to do was read one day's Hansard of last week. I chose Monday because members opposite made a lot of speeches that day. But Your Honour will note that during the whole of the week, if one accusation was made about a cover-up, there were 100. I shall refer to some of them-not to the entire 100, of course. Stop me when

you have heard enough. I intend to say, Mr. Speaker, that the Tory party is a bunch of cry babies.


Some hon. Members:: Hear, Hear!


Pierre Elliott Trudeau: They have been accusing the government, and not only the government but named ministers, myself and the Solicitor General, of an incredible number of illegal acts, not only by innuendo but by direct accusation. "Cover-up" is the phrase which is used all the time. They say there has been a cover-up of illegal acts, making the government an accomplice to illegalities committed by the RCMP, and so on.
Mr. Speaker, it seems to me that in this House, Speakers have frequently ruled that when the accusation is general, when it does not relate to a particular member, it is translated by a form of argument or suspicion. I was faced with the hon. member for Central Nova who, after having discovered a listening device in his office, accused the RCMP, said that he suspected them, and then went on to say-


Sinclair McKnight Stevens: You are wrong.


Steve Eugene Paproski: Read Hansard.


Pierre Elliott Trudeau: They ask me to read it, Mr. Speaker, and 1 will; but first let me outline my argument. I am faced with a member who impugns the RCMP and the services with having bugged him. I reverse the charges, Mr. Speaker. I say that if the hon. member for Central Nova has cause to suspect the RCMP, and I suggest he does not, then we might have cause to suspect the Tory party. After all, this bug was discovered on Monday afternoon of last week by an investigation officer who happened to be in town on that particular day.


Joseph Jacques Jean Chrétien: With the proper instrument.


Pierre Elliott Trudeau: With the proper instruments for debugging. He found a bug that could only have been placed, if the timing is correct, on Friday afternoon after the Solicitor General had made a statement on security. It all looked very suspicious, Mr. Speaker, but 1 told the House that I did not have anything more than suspicion. Your Honour can judge whether the kind of suspicion that I direct toward the Tory party is any different, not from suspicion but from the dozens and hundreds of direct accusations which they make in this House all the time about the government being dishonest, crooked, covering up and everything else. Let me read a few quotations, Mr. Speaker, from the hon. member for Central Nova, since I am asked by the opposition to do so. I read from several newspapers. If it were only one, perhaps we could wonder what the member had-


Mr. Baker (Grenville-Carleton):: Surely, Mr. Speaker, the Prime Minister is not going to be allowed to read excerpts from the press. This was said in the House.


Charles Joseph Clark: And I have Hansard here, sir.
November 8, 1977


Pierre Elliott Trudeau: The opposition does not rely on the press gallery, Mr. Speaker. It does not believe that one newspaper can be relied on to report correctly the hon. member for Central Nova.


Charles Joseph Clark: Your statement was made in the House of Commons.


Pierre Elliott Trudeau: Here is a quotation from the London Free Press for November 1, 1977:
-MacKay indicated "right off the top, I would have to say that those who would have motivations to put it there-"
That is, the bug.
"-would be some of the people in the security services."
Then the Toronto Star for November 1:
"Among the people who would have a motivation to do this would be some people in the (RCMP) security service or possibly Robin Bourne's group".
The Globe and Mail, November 1:
However, he said it was obviously planted by someone who had "some expertise". While he acknowledged that it could have been planted by a private detective, he said it seemed more like-


Walter David Baker: Mr. Speaker, do you realize the precedent you are setting?


Mr. Speaker:: Order, please. In respect to the point about the accusations previously made by the hon. member for Central Nova, it seems to me that the introduction of quotations of that hon. member in respect to that event are relevant to the argument. Two or three quotations have been given, but I do not think it is necessary to go on at any greater length. The point is well taken. Perhaps we could move on to another point.


Pierre Elliott Trudeau: All right, Mr. Speaker, I will not go on, but I can assure you that the next day, in different newspapers, the same kind of accusation was made by the hon. member for Central Nova. Whether it was made in the House or outside the House, the fact is that the RCMP was dragged in the dirt by the hon. member for Central Nova.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: The opposition suspect the RCMP. 1 suspect the Tory party. If Your Honour rules that that kind of suspicion is not becoming of the House of Commons, I will withdraw it. I would just suggest-and I am completely in accord with the hon. member for Peace River-that if I cannot make that kind of general statement in the heat of debate, when I have been constantly interrupted and heckled by the opposition-


Some hon. Members:: Cry baby.


George Harris Hees: Get out your crying towel, Pierre.


Pierre Elliott Trudeau: Now it turns out that I am the cry baby, Mr. Speaker. I did not raise a question of privilege when in this House the leader of the NDP and Tory members one after the other stood and accused the government of cover-up and
Privilege-Mr. Baldwin
worse. I was not crying about that. I simply said that if they wanted to suspect us, go ahead and say so; but let us hear what they think about government policy in regard to the RCMP. Let us hear them state it. Let me read once again what they said, Mr. Speaker, though I do not know whether 1 should start at the beginning or at the end.


John Edward Broadbent: No.


Pierre Elliott Trudeau: Perhaps I will start with the leader of the New Democratic Party. As reported at page 415 of Hansard, he moved a motion condemning the government, and most specifically the Prime Minister for his implication in the cover-up. I will skip over the members of the Creditiste party because they had a lot to say. Let me read what the hon. member for Peace River had to say. He moved a motion, but he had other things to say, and I will join him a little later, Mr. Speaker. Then the hon. member for Perth-Wilmot had this to say, as reported at page 417 of Hansard:
My motion relates to statements by the Prime Minister (Mr. Trudeau) and by the Solicitor General (Mr. Fox) condoning illegal activities-
I turn now to the hon. member for Prince George-Peace River, on the same page:
Having regard to serious allegations of a cover-up by the government and especially the Solicitor General of Canada-
Again the phrase "cover-up", Mr. Speaker. I now quote the Leader of the Opposition, page 419 of Hansard:
Mr. Speaker, in the interests of the continuing cover-up-
That is, by hon. members opposite. Who, Mr. Speaker? Us? We are covering up? Is the Leader of the Opposition accusing us of something? Are we crying and asking him to withdraw each time he says something like that?


Ramon John Hnatyshyn: You should have; it would have shown your bona fides.


Pierre Elliott Trudeau: I should have? I will do it now.


An hon. Member:: It's too late.


Pierre Elliott Trudeau: The hon. member for Saskatoon-Biggar says 1 should have raised a point of order.


Ramon John Hnatyshyn: If you were really bona fide, you would have.


Pierre Elliott Trudeau: If I were really bona fide, you say. I am just following the invitation of the hon. member for Peace River who suggested that if I could say that, then they should be allowed to say it too. They have been saying it all along. Let me continue my quotations. Again we hear from the Leader of the New Democratic Party, who said:
I do not use the word lightly and I use it carefully.
That is a bit of drama, Mr. Speaker.


Some hon. Members:: Oh, oh!

November 8, 1977
Privilege-Mr. Baldwin


Pierre Elliott Trudeau: He went on:
I think we are clearly involved in a cover-up in this matter involving the cabinet.
Another accusation, Mr. Speaker, in pretty specific terms.


An hon. Member:: Pure corn.


Pierre Elliott Trudeau: I said I was going to quote the hon. member for Peace River, He said:
-it being quite clear that under the doubtful use of security and for probably illegal methods this government and its agencies have had no compunctions about making improper inquiries into political parties and politicians-


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: The gentleman from the west.


Some hon. Members:: Oh, oh!


Lincoln MacCauley Alexander: Order; Mr. Speaker has risen.


Mr. Speaker:: Order, please. The right hon. Prime Minister began by indicating the purpose for the quotations, and the purpose is relevant to the argument; there can be no question about that. He also extended to the Chair the invitation to stop him when I heard otherwise.


Some hon. Members:: Oh, oh!


Mr. Speaker:: The point is, indeed, serious and relevant, but I think it has been documented in respect of the general accusations by members on one side or the other.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: Mr. Speaker, I accept your invitation, and 1 will skip about 100 pages of Hansard and go to page 496- which was rather late, I guess, in the debate-when the hon. member for St. John's wound up the debate, or just about did, for his party by summing up what I think has been their attitude as perceived by the country in this whole debate.


An hon. Member:: Which hon. member?


Pierre Elliott Trudeau: The hon. member for St. John's West. He said, in reference to the RCMP:
They have to be brought to heel, and their political masters who encouraged them, or who are hiding them, or who directed them or who condoned those acts, have to be brought to heel also.


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: I think the defence is not very difficult to make, and I accept Your Honour's ruling in advance. I know you will have a difficult job to arbitrate in these debates. If you think my words went beyond the bounds of propriety, you will just have to say so, Mr. Speaker, and you will hear my comments.


Some hon. Members:: Oh, oh!


An hon. Member:: Is that a threat?


Some hon. Members:: Oh, oh!


An hon. Member:: Take heed; another accusation.


Pierre Elliott Trudeau: Surely that is a proper statement, Mr. Speaker. If you make such a ruling, I will be called upon to do something; is that not right?


Some hon. Members:: Oh, oh!


Lincoln MacCauley Alexander: That sounds sort of like a threat, Pierre.


Pierre Elliott Trudeau: What is the hon. member for Hamilton West getting so worried about?


Lincoln MacCauley Alexander: I always get worried when you get up.


Pierre Elliott Trudeau: Why is he so worried, sitting in his seat? Does he share the views of his colleague, the hon. member for St. John's West, who suggests we have to bring the RCMP to heel?


Lincoln MacCauley Alexander: I always worry when I see you stand up.


Pierre Elliott Trudeau: Mr. Speaker, I do not know if the hon. member is speaking for his party, but I think that is a very nice compliment he has just uttered.


Some hon. Members:: Hear, hear!


An hon. Member:: He means he is worried for the country.


Pierre Elliott Trudeau: His party should be worried, after the performance its hon. members went through in this House last week. They are afraid to return to it now without shame. I think his party should be afraid when we stand up and defend the RCMP.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: It is clear that the Prime Minister is in fine performing form.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. I wonder if I might be permitted to listen to the hon. Leader of the Opposition.


Charles Joseph Clark: This shows, sir, that given four days' rest in preparation for participation in the House of Commons, he can from time to time rise to the occasion.


Some hon. Members:: Oh, oh!


Charles Joseph Clark: Government members, sir, are trying to shout me down. They may continue to do that, as I have a great deal of patience and I will speak over their shouting if they want to continue. The people of Canada have the right, as does the House of Commons, to know what is going on here and what precisely it was that the Prime Minister, by this little act just put on by him, was trying to divert attention away from.


Some hon. Members:: Hear, hear!
November 8, 1977


Charles Joseph Clark: The Prime Minister has quoted from a variety of sources, parliamentary and others, claiming some kind of grievance on the part of the government and claiming there was a question of privilege that could be raised. The Prime Minister, although he does not have much regard for this place, it seems, from time to time, must know the rules. He must know those rules. The rule is that if he had a legitimate grievance, or if he had a legitimate question of privilege or breach thereof which he has just been claiming, then he should have raised it at the time he was seized of that breach of privilege.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Putting aside the theatrics, Mr. Speaker, the fact of the matter is that the Prime Minister did not raise a question of privilege in relation to the matters he has just cited. I notice that in the absence of the hon. member for St. John's West, the Prime Minister attacks him.


Some hon. Members:: Oh, oh!


An hon. Member:: Where is he?


Charles Joseph Clark: That does not bother me so much as the fact that is was a very partial citation the Prime Minister gave. He did not read into the record everything said by my colleague, the hon. member for St. John's West. He did not quote the hon. member in the immediately preceding section, where he said: The RCMP is a fine police force, but I look at all police forces with a healthy skepticism and I am not afraid to say it.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: The Prime Minister did not, in his reference to "bringing to heel", quote the further words-


Some hon. Members:: Oh, oh!


Charles Joseph Clark: We hear from the Minister of National Revenue, from whom we always hear from his seat.


Mr. Guay (St. Boniface):: I did not read it all.


Charles Joseph Clark: The hon. member for St. John's West went on to say, and this very important, sir:
-their political masters who encouraged them, or who are hiding them, or who directed them or who condoned those acts, have to be brought to heel also.


Pierre Elliott Trudeau: That is what I said.


Charles Joseph Clark: That, sir, is precisely what is at issue here, because the issue here is one of ministerial responsibility.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: The issue throughout this debate has related to what kind of order or general direction was given by the Prime Minister or the Solicitor General of Canada that caused members of the security force to engage in illegal acts, and what offends us on this side of the House is that the government of Canada has tried consistently to make the Royal
Privilege-Mr. Baldwin
Canadian Mounted Police carry the can for the decisions it makes.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: That is a new point of order.


Charles Joseph Clark: At this moment I do not want to detain the House at length on the question of ministerial responsibility. In this affair, as in so many others, the government has seen fit to try to blame public servants for actions which have been taken by the government of Canada.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Let me deal with some of the matters to which the Prime Minister referred. The Prime Minister quoted the hon. member for Central Nova, but the nature of the observations by the hon. member were different from the accusation made by the Prime Minister. Also, they differed significantly in location. The Prime Minister could not find anything said by the hon. member for Central Nova in the record of Hansard which was at all similar to the accusation made by the Prime Minister against the Conservative party.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Charles Joseph Clark: He could not find it because it was not there. It is for that reason he then went well beyond the practices of the House of Commons and began to quote from newspapers. That was because he could not build his case upon what was said in this chamber.


Pierre Elliott Trudeau: So what?


Charles Joseph Clark: The Prime Minister says, "So what?" That indicates his understanding of the rules of the House of Commons. The Prime Minister has said other things about the House of Commons in the past, and today he says, "So what?"


Some hon. Members:: Hear, hear!


Mr. Harquail:: Apologize to the RCMP.


Gerald William Baldwin: That is the man who said, "Just watch me".


Charles Joseph Clark: Let me come to what the Prime Minister quoted the hon. member for Central Nova as having said. He quoted that hon. member as having said, "Among those who would have motivations would be . . ." Now, that is not an accusation-


Some hon. Members:: Oh, oh!


Charles Joseph Clark: "Among those who would have motivations .. was said outside the House. What the Prime Minister of Canada said in the House of Commons, in a direct accusation, can be found in Hansard. I am not quoting from some newspaper, because the record of what the Prime Minister said

November 8, 1977
Privilege-Mr. Baldwin
in the House of Commons can be found in Hansard. At page 600 of Hansard dated November 3, 1977, the Prime Minister is reported as saying:
-but I would suggest that the way to do it is not by hiring private detectives, as that party does-
He went on to say the following, and this is the matter Your Honour has to rule on:
-and not by having some phony bugs planted in their office, which is the way they do it.
That was a direct accusation against members of the Conservative party and, as the hon. member for Peace River has said, a direct breach of the privileges of this House. The Prime Minister has tried everything he can-going outside the House of Commons, gathering quotations from newspapers which he cannot find in the record of this House, coming back to parliament and trying to pretend that what he has done is something that other people have done. The fact is that there has not been a prime minister in the history of this country who has treated parliament with the same grimaces and disdain as this Prime Minister has done.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: To my knowledge of this place, certainly there has not been any prime minister who has stood in his place, as this Prime Minister has, made a direct accusation against another political party and then not had the courage or the courtesy either to bring forward proof or to withdraw the accusation.


Some hon. Members:: Hear, hear!


Lincoln MacCauley Alexander: Notice how glum they look now.


Charles Joseph Clark: The courtesies are well known. From time to time in the heat of debate, members may say something they do not intend, or they may say something which is extravagant. But most members, when they are caught in that type of extravagance, have the courtesy or the courage to come back to their colleagues in the House of Commons, if they respect this place, and withdraw the statement.
The Prime Minister has been given an opportunity to do that today, and he was given an opportunity to do it on the day the matter arose. Before the hon. member for Peace River raised the question of privilege, he was told that a question of privilege relating to his behaviour would be raised. Instead of staying to hear it, he went out, and what he said to me across the floor of the House was, "1 can't stay here for the proceedings of parliament. I have a press conference to go to". So he turned his back on the House of Commons in order to go to a press conference.


Some hon. Members:: Oh, oh!


Charles Joseph Clark: The courtesies are well known. Having made that accusation-


Maurice James Harquail: Apologize to the RCMP.


An hon. Member:: Say something.
[Mr. Clark.)


Mr. Speaker:: Order, please. I would prefer the opportunity of trying to decide this question on what I hear from the hon. Leader of the Opposition.


Charles Joseph Clark: Thank you very much, Mr. Speaker. Having made an accusation which is unlike any other accusation that he has been able to find-because if he had found one, he would have cited it-he did not have the courtesy to stand up and withdraw it. Because he knew it was an unfounded accusation when he made it, which was admitted later at the press conference to which he went, he did not have the ability to come here and lay evidence upon the table of the House of Commons.
The responsibility facing Your Honour at this stage is to decide whether there is a prima facie case of privilege here. If there is, the hon. member for Peace River will take the action which follows in that kind of case. I had no intention of getting involved in this debate.


Some hon. Members:: Oh, oh!


Charles Joseph Clark: I rose because-


Pierre Elliott Trudeau: You should have followed your instincts.


Lincoln MacCauley Alexander: Notice how effective he is.


Charles Joseph Clark: I rose because the Prime Minister of Canada stood in his place today, after four days of preparation in the Bahamas, and attempted deliberately to confuse the issue in an attempt to escape having to exercise toward the House of Commons the kind of courtesy which normal members of parliament and the people of Canada show toward this institution. That is why I wanted to rise. I think it is particularly important to note that the Prime Minister of Canada is prepared to make charges against a party in this House which he knows he cannot substantiate, then walks out of this chamber knowing the matter will be raised as a question of privilege.
Then, when given the opportunity honourably to withdraw his statements, he refuses honourably to withdraw those statements and instead establishes a smoke screen. When that kind of disrespect for the House is shown, I think the record has to be made very clear. The job is Your Honour's, and it is to decide whether, on the record, there is a clear accusation, without proof and without withdrawal, by the Prime Minister of Canada, and whether there is a prima facie case of privilege.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Mr. Speaker, I, too, had no intention of getting into this debate.


Some hon. Members:: Hear, hear!


An hon. Member:: But television being what it is ...!


John Edward Broadbent: I think the Prime Minister-


Maurice James Harquail: Apologize to the RCMP.
November 8, 1977


Some hon. Members:: Shut up.


Lincoln MacCauley Alexander: You do not make any speeches. You like to talk from your seat.


Some hon. Members:: Order, order.


Mr. Speaker:: Order, please.


John Edward Broadbent: Mr. Speaker, 1 was about to say that 1 had no intention of getting into the debate on what I regarded initially as a very serious question of privilege raised by the official opposition, until the Prime Minister, with his all too characteristic buffoonery, decided to rise on this issue. Historians and serious political journalists 5, 10 or 15 years down the road, will look at this as one of the most important events in Canadian history.
I want to deal with the substance of the Prime Minister's argument, because he said that the logic of the official opposition's position was somehow connected with unwarranted charges and that there was some kind of cover-up by this side of the House. The Prime Minister made the accusation that the Conservative party somehow planted a bug in its own offices. If one was vitiated, the other was: that was the logic of his argument.
I would like to deal with that matter. However, before I do I would like to deal with the substance, because my own reaction, as a Canadian and as a member of the opposition, when the accusation was made was one of serious disgust because it was made by the Prime Minister in the context of serious points which were being raised on this issue, an issue which brought down a government in the United States, I might add-and it was no frivolous matter there. A very serious accusation was being made by hon. members in this House about government involvement in a cover-up, and there are reasons to believe that, reasons with which I will deal.
In response, the Prime Minister one day throws off-off the top of his head-the idea of a referendum. Next he hurls a silly and frivolous accusation at the Leader of the Opposition and members of the opposition, that somehow they were planting bugs in their own offices. 1 do not know how anyone, when looking back on this period, will take this Prime Minister as anything but an uncaring buffoon for some ten years. I want to deal with the logic of his argument. With reference to me and other members of the opposition, he said that we were hurling serious accusations of a cover-up, presumably unsubstantiated.
1 want to quote something for the Prime Minister. This was not said by a member on this side and not by a backbencher on his side of the House, but by one of his fellow cabinet ministers who is quoted in the press as saying she thinks the Prime Minister and the Solicitor General are dead wrong. She is quoted as saying they misrepresented reality, that they did not tell the truth about the RCMP, and that she, for one, flatly disagrees. The logic of her argument was that there was a cover-up involved. I mentioned a cover-up, and the Prime
Privilege-Mr. Baldwin
Minister mocked me; he said, "With seriousness the hon. leader of the NDP moved his motion". I did so with seriousness because it is a serious matter.


Miss Begin:: Mr. Speaker-


Some hon. Members:: Sit down.


Lincoln MacCauley Alexander: He hasn't said anything yet.


John Edward Broadbent: On the issue of the cover-up, I want to quote this minister because I want to say something about the legitimacy of that accusation. She said, and I quote from the Carleton University press of a few days ago-


An hon. Member:: Identify her.


John Edward Broadbent: The Minister of National Health and Welfare said she disagreed with the Prime Minister and the Solicitor General. She said:
As a Quebecer, there is no way anyone is going to tell me there was a threat to national unity in 1973-
So much for the red herring of both the Prime Minister and the Solicitor General. The article continues:
Begin attacked Fox for not being honest with the Canadian public. "He should tell Canada he disagrees with the RCMP," she said.
Later on she is quoted as saying that the RCMP has grown so strong that the Trudeau government no longer has control.


Some hon. Members:: Oh, oh!


John Edward Broadbent: With reference to the RCMP, the minister said:
They're so big that if the ministers start trying to control them they wouldn't be able to.
My point is that what the Minister of National Health and Welfare is saying is that the Prime Minister and the Solicitor General have failed to control the RCMP. There was no lower level criticism here of junior members of the RCMP. There is, in fact, documentation to support the charge made by the official opposition and by ourselves over the past ten days that this government failed to exercise its ministerial responsibility. That is what is involved.


Some hon. Members:: Hear, hear!


John Edward Broadbent: That is why, Mr. Speaker, if I may just conclude-


Mr. Speaker:: 1 want to follow the hon. member's argument. I understand he is making the argument that if a general allegation is substantiated, it is permitted; but if it is unsubstantiated, it is not. 1 am not following the relevance of the hon. member's argument on the question of privilege.


Maurice James Harquail: It is pretty difficult.


John Edward Broadbent: We listened to curious twists of tortuous logic from the Prime Minister for 20 minutes. I will try to make my case very briefly and then sit down. The point I am

November 8, 1977
Privilege-Miss Begin
making is that when the accusation of cover-up came from this side, it related very substantially to the point that these ministers, including the Prime Minister, tried to obscure. They did not ask relevant questions when they should have, because if they had received the answers they might have been forced into assuming ministerial responsibility, which they never have done. Then they came back to the House and never acknowledged that the real fault lies, not with the RCMP, but the real problem is the government on the other side of the House.


Some hon. Members:: Hear, hear!


John Edward Broadbent: We on this side of the House could document the allegation of a cover-up, and apart from points we on this side of the House would make, the Minister of National Health and Welfare has provided the best possible argument by saying, as a member of the cabinet, that she thinks they were ignoring their responsibility. I would say that she thinks they were involved in a cover-up in burying their own essential role in this whole mess.

MISS BfiGIN-REMARKS IN NEWSPAPER ARTICLES


Monique Bégin: Mr. Speaker, a while ago I got up quickly and realized that, since two women ministers are present in the House at this time, it was not quite clear which of the two was being unfairly accused. It became clear that I was the person concerned-my name was mentioned-and I therefore rise on the question of privilege.
The leader of the New Democratic Party (Mr. Broadbent) should have had the decency to check with me about the unfounded serious allegations he has just made. He has just quoted an excerpt from the Toronto Sun, which I saw for the first time around ten minutes to two this afternoon and which seems to repeat word for word without giving any journalist's name, the text written by a student at Carleton University and published in the students' newspaper called The Charlatan.
In this regard, I need only add that I have always supported the work and actions-particularly with regard to the current parliamentary crisis which resembles more a media event than anything else-of my colleague the Solicitor General (Mr. Fox) and, naturally, the right hon. Prime Minister of Canada (Mr. Trudeau). Even now, in my office, I am in the process of writing a telegram to the newspapers the Toronto Sun and The Charlatan setting the record straight.


Walter David Baker: Mr. Speaker, I wish I could join in the love-in we have just witnessed from the Minister of National Health and Welfare, and I hope that when the Prime Minister gets his subpoena from the McDonald commission he will be as forthcoming with that commission as he tried to be with respect to the House of Commons this afternoon. I think this is very important because of ail that

has gone on here today, particularly the Prime Minister's accusation.
The Prime Minister has not withdrawn the accusation he made the other day in the House which affects all members of this House and one member very particularly. The Prime Minister has ignored the Standing Orders of the House and, indeed, the admonition in citation 157 of the fourth edition of Beauchesne's with respect to what is appropriate to be read into the record of the House of Commons with respect to a matter. The citation is on page 133 of Beauchesne's. He has done all those things.


Mr. Speaker:: Order, please. Let me clarify this point because there seems to be considerable concern about the use of a quotation from a newspaper, which is not a strange occurrence in the House. Before we go any further, if there is any argument about the use in the House of a quotation from a newspaper, I would want to make sure I was clear, because there seems to be some suggestion that I was establishing a precedent by allowing that to be done. I would be quite happy to prohibit, at any time, quotations from newspapers being used by hon. members. It would cut out a great deal of verbiage. However, it seems to me to be a well-established practice of the House.


Walter David Baker: That is not the point, Mr. Speaker.


Some hon. Members:: Oh, oh!


Walter David Baker: The point is, sir, that matters which are quoted from newspapers-whether correctly or incorrectly; and in the context in which the Prime Minister did so, even if they are correct-are not the subject of privilege in the House of Commons. That is the point. The hon. member for Central Nova was accused here in this House on a question of privilege.


Pierre Elliott Trudeau: He was not. It was your question of privilege, not mine.


Walter David Baker: The hon. member for Central Nova and the hon. member for Peace River raised a question of privilege with respect to things that were said to have been said, I assume, in this House of Commons. There is no record that the things the Prime Minister has said were said, and reported to have been said, in the House of Commons. That is the point, Mr. Speaker.


Pierre Elliott Trudeau: I am not claiming privilege.


Walter David Baker: Mr.Speaker, there is one other thing that bothers me very much as a member of the House. The Prime Minister put a question, in the course of his discourse, as to what was our view with respect to the question of ministerial responsibility; what was our view with respect to what ought to be done. He, having put that question, I think is entitled to an answer. It is the view of Her Majesty's Loyal
November 8, 1977

Opposition that there is no agency of government-no agency of government anywhere, whether it is the National Capital Commission or the Royal Canadian Mounted Police-that is not ultimately answerable to the civil authority in this country.


Some hon. Members:: Hear, hear!


Walter David Baker: In matters of security, when matters are given to a government, discretion is given to a government with respect to security, the people of the country and the parliament of the country entrust that government with the greatest responsibility that it can place upon a government. That responsibility and its operation will go unquestioned by parliament and by the people of Canada until something occurs which indicates that that trust has either been set aside or ignored, or has been betrayed-one or the other. Then certain questions arise, and that has been the purpose of the questions, the emergency debate, over how this government-I repeat, this government, sir-discharged its trusteeship for the security and intelligence protection of this country. That is the question.
Now, sir, the Prime Minister asks, as he puts it, what would we want to have done about it? I am going to say categorically that I do not want done about it what was done before. Mr. Speaker, I see you rising. I think it is important, since the Prime Minister has asked what our views are, that he should have our views.


Mr. Speaker:: That may be so. However, I have allowed the hon. member some latitude already in establishing an answer to that question. The matter that is at issue is a question of privilege, and it has been contributed to rather substantially by both sides. I should like to hear the hon. member's argument in respect of the merits of the question of privilege.


Walter David Baker: Mr. Speaker, I am trying to do so. I apologize to your Honour if I offend your sensibilities with respect to what ought to be heard in this House. There has been a very serious accusation made involving security; an allegation made by the Prime Minister that the hon. member for Central Nova has accused the security forces of this House of something. If, in reply to that, reserving the right of the hon. member for Central Nova when he comes, I cannot in the course of it deal with the questions raised by the Prime Minister, then I think I am not being allowed-and I say this with great respect-to express the view that I think is important and involves the security service.
I have indicated to you, sir, what I feel is the responsibility of the elected civic authority and the position of every other agency of government. Now, sir, with respect to what we do in the future here, surely we cannot have a repetition of that. Surely we cannot have a repetition of the position where the government of the day says that in the first place it turned its back on any service and allowed it to operate. We cannot have that; or, after the guidelines of 1975 were issued to the Royal Canadian Mounted Police, after those guidelines were given to the security service of the Royal Canadian Mounted Police,
Privilege-Miss Begin
they then turned their backs on the operation of that security and intelligence service. We just cannot have that.
If the Prime Minister wants to be constructive, two things will have to happen here with respect to the motion that is before Your Honour. The first thing is that Your Honour will have to decide the question of privilege on the accusation made by the Prime Minister, certainly, and I put it to you that there is a prima facie case for that. The second thing that will have to happen when that matter goes to the committee, when the motion which I hope Your Honour will find that the hon. member for Peace River can make with respect to the matter, goes to the committee of this House, that committee will have the opportunity-and I hope it will take the opportunity-to examine the whole question of parliamentary control and government control over the security services of this country. If that is the outcome of such an investigation, then this last week will have been worth while.


Some hon. Members:: Hear, hear!


Walter David Baker: But if the outcome is a continual refusal to answer questions in this House, which the government has every right to do, and if the outcome is to rely on a commission of inquiry which may not be reporting for years, then the people of Canada and this House have no guarantee that the same slipshod exercise of the civil authority that is vested in this government will not continue. That is the point, sir, and on that point I think the motion by the hon. member for Peace River will provide an admirable opportunity for the House to get to the heart of this problem immediately.


Some hon. Members:: Hear, hear!


Mr. Norman A. Cafik (Minister of State (Multiculturalism)):: Mr. Speaker, I am not going to prolong this debate, but I have a couple of points to make with respect to the question of privilege. It seems to me to be quite clear that the opposition is trying to have it both ways. When the government says something with respect to the opposition, they seem to take great exception, but as the Prime Minister pointed out in his remarks, they seem to want to have a free wheel to say anything, regardless of how irresponsible it may be. I know the Prime Minister offered a couple of quotations from the record of Hansard. I will only deal with two. They seem to be very, very specific. As reported at page 493 of Hansard, the hon. member for St. John's West said:
I say that the government was manipulating the RCMP, because I have heard nothing to persuade me otherwise.
That seems to imply not only a direct charge but, as well, justification for the charge. It seems to me that the opposition seem to believe that providing they have not heard anything to the contrary, they are entitled to say whatever they want in the House of Commons.


Some hon. Members:: Shame.


Norman Augustine Cafik: I do not think they ought to be entitled to make that kind of irresponsible and scandalous statement.


Some hon. Members:: Hear, hear!

November 8, 1977
Privilege-Miss Begin


Norman Augustine Cafik: Now to the second point, Mr. Speaker. As reported at page 489 of Hansard, another hon. member said:
We are trying to protect them-
Meaning the RCMP.
-from the machinations and manipulations of a vested interest within the Liberal government to use them for private interests within that government. That police force has been manipulated by this government in order to shore up and create a scaffolding for a doddering, decadent Bourassa government.
That is directly from Hansard. It is an absolutely clear and specific charge. In both cases, a very important point has been made as to why we did not stand up. I stood up in the case of the hon. member for St. John's West immediately following that statement and asked him to lay a specific charge. He indicated he was going to make a number of specific charges later in his speech, but from my reading of it he became less specific rather than more specific because he felt his seat might be on the line if he went any further.
I would simply say that if, in the mind of the hon. member for St. John's West, he made the statement he did because he had heard nothing to persuade him otherwise, and if that is good enough for the opposition, it certainly ought to be good enough for any hon. member on this side of the House. In my view, Mr. Speaker, if a question of privilege is found, with respect, to be consistent, we ought to ask all members to withdraw that kind of absolutely irresponsible allegation of a very specific nature.


Mr. Speaker:: Order, please. I thank all hon. members who have made such spirited and vigorous contributions to this interesting and very challenging question.
The question remains one of whether, in the totality of his remarks complained of, the Prime Minister had in fact gone beyond ihe privileges of the House. I will have to examine the details of the arguments and examine, again, the precedents. I have tried to develop some precedents with regard to accusations of a general, as opposed to a specific, nature. The bulk of the precedents, I must say, relate more to the insistence of a member who is under accusation having the right to be specifically charged before the matter is drawn off to some committee for an expedition and research on whether or not guilt or innocence prevails. Those precedents are not at all helpful in the situation.
The reverse is complained of here. A charge of a general nature is, in fact, the equivalent of a charge of a specific nature. I have to decide whether there is any precedent that can assist me in that question, and they are difficult to find. In any case, I will take under consideration and careful advisement the arguments that were made today, and examine the precedents carefully in an attempt to rule tomorrow, if I can, or at the earliest possible opportunity after proper study.
I indicated that there was another matter outstanding. The hon. member for St. John's East raised earlier two questions of order relating to references allegedly made in this argument by the Solicitor General and the Prime Minister in earlier discussions concerning documents, in which he was establishing the
[Mr. Cafik.)
point that according to the practices of the House, the documents had in fact been cited within the terms of the precedents and therefore ought to have been laid upon the table by both those ministers. Does the hon. member for St. John's East have anything further to add?


James Aloysius McGrath: No, Mr. Speaker.


Pierre Elliott Trudeau: Mr. Speaker, I do not know what you want to do on this, but I understand the documents are public documents. They have been tabled in the commission holding hearings in Montreal. Since they are public documents, I would have no objection to tabling them. However, I wonder if the rule calls for tabling documents which are already in the public domain.


James Aloysius McGrath: Mr. Speaker, it was never identified. I do not know what the Prime Minister was quoting from. It was setting a very dangerous precedent which I did not want the House to follow. Therefore, I think we should stick to the practices of the House.


Pierre Elliott Trudeau: With respect, Mr. Speaker, that is not correct. 1 was quoting a document which was mentioned in a question by the leader of the New Democratic Party. I just said I would ask a question about it.


Walter David Baker: How would we know it?


Pierre Elliott Trudeau: You just have to listen to the question and you will know it.


Mr. Speaker:: I had examined briefly, in preparation for this discussion today, the two incidents referred to by the hon. member for St. John's East. Without further argument, it was my impression that within the terms of our precedents the reference to documents by the Solicitor General fell short of a citation of the document and, therefore, no ruling of the Chair would apply.
With regard to the reference made by the Prime Minister, it seemed to me from reading his remarks that he had, in fact, made either sufficient reference to the contents of the document or a quotation from it. It was not clear from Hansard whether he was in fact quoting from a document. The Prime Minister has now confirmed that he was quoting from a document, or referring to it, and in fact it is a public document.
Obviously, if it is a public document it is available to be tabled and available to members without prejudice to the public good. Perhaps I might be permitted in the circumstances, since it is a public document, to take some time to examine the propriety of ordering a document like that tabled, and perhaps report to the House tomorrow.


John Edward Broadbent: Mr. Speaker, with regard to the document which you and the Prime Minister just referred to, I understand it is the affidavit that is signed by the Solicitor General. That is certainly the one from which I was quoting. It was written earlier this month. I would like to find out from the
November 8, 1977

Prime Minister, when he tables it, whether it will have the two errors that were in it originally, or have they been removed and are there any further errors in it?


Mr. Speaker:: Order, please.


Erik Nielsen: Mr. Speaker, I rise on a brief point with respect to the comments of the Prime Minister and the document already being available to the commission that is now sitting. I believe the purpose of the rule requiring the tabling of documents, to which reference has been made, is to make them part of the record of the House. I make that submission in reply to the Prime Minister's urging that it is not necessary, since it is already public. It should be part of the record.


Gerald William Baldwin: Mr. Speaker, it is important to note that the commission in the city of Montreal is operating under certain specific rules received from the legislature of Quebec. Documents in its possession may or may not be available to us. We do not know what the rules are. It is not necessarily in the public domain. We in this House are interested in having it in our domain, and that is done by tabling it.


Mr. Speaker:: Order, please. I have already undertaken to examine whether there is any conflict, in fact, in tabling a public document. If there is none, it will be done.


Walter David Baker: Mr. Speaker, I understand from what the Prime Minister said, and from a conversation he and I have had solto voce across the floor, that he is quite willing to table the document. I take it that by shaking his head in the affirmative he is undertaking to table the document referred to.


Pierre Elliott Trudeau: I repeat what I said, Mr. Speaker. If you order me to table it, I will table it.


Joseph Jacques Jean Chrétien: On a point of order, Mr. Speaker, are you carrying on with the investigation of the House? We have not heard anything about it.


Mr. Speaker:: I had intended to say something very briefly to the House at three o'clock-and that has now become a little after four o'clock-with regard to the two incidents brought to my attention by hon. members, one relating to the office of the hon. member for Central Nova and the other relating to the office of the Leader of the Opposition.
I indicated last week that with regard to the hon. member for Central Nova, I had advised him of the content of our preliminary investigation and asked his advice on whether the matter should go further. The hon. member for Central Nova has indicated to me that there is some information which he wishes to convey to me, and he wants to do that in response to my request tomorrow.
With regard to the office of the Leader of the Opposition, last Thursday it was understood that officials of Bell Canada and of our security staff would be able to meet with the advisers of the Leader of the Opposition. There were some
Income Tax
meetings on Thursday evening, and others on Friday. A further meeting was arranged for today.
I hope to be able to advise the House further if there are any significant developments as a result of the meeting that is taking place today. I should advise the House it is our understanding that Bell Canada will be provided with this piece of equipment to examine in their laboratories. I am unable to tell the House at this moment how long it will take the Bell Canada people to give me a report on that examination. As soon as I know, I will communicate it to the House.



ROUTINE PROCEEDINGS


[Stage Direction]
Mr. Robert C. Coates (Cumberland-Colchester North) presented the first report of the Standing Committee on Management and Members' Services, and moved that the report be concurred in.
Motion agreed to
[Editor's Note: For text of above report, see today's Votes and Proceedings.]

[ Translation]

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


Mr. Speaker:: Does the House agree?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Monday, November 7, consideration of the motion of Mr. Chretien that Bill C-11, to amend the statute law relating to income tax and to provide other authority for the raising of funds, be read the second time and referred to committee of the whole.
[Stage Direction]
November 8, 1977
Income Tax
Mr. Stan Darling (Parry Sound-Muskoka):: Mr. Speaker, when I was speaking last night at 10.30 I was discussing the $350 insulation grant for homes built prior to 1921. I also emphasized that the $350 was not a great deal and that some homes might cost as much as $1,000 to insulate. Housing is a very important part of our economy. As the construction industry goes, so goes the country. Housing today is beyond the means of the great majority of Canadians-and this is a tragedy, to say the least. The cost of mortgages is too high.
My party's housing committee has suggested a number of alternatives to assist the housing situation and to provide housing for those who need it most, that is, people in the low and medium-income brackets. We have suggested that mortgage interest should be deductible, and that property taxes should be deductible in an amount up to, possibly, $500 because property taxes and municipal taxes are a form of double-taxation and they should be deductible from income tax paid by homeowners. The committee also suggested the establishment of a federal mortgage exchange. The government has made no attempt to tighten up the inspection process under the National Housing Act. The National Housing Act should be amended to provide greater control over taxpayers' funds.
The success of the housing market in Canada depends to a very large extent on the economic environment the federal government provides. The economic outlook for Canada is bleak, at best, today. Single family home ownership is on the decline. Over 50 per cent of the people own their own homes. Many are not paid for. There are a great many homes occupied by only one or two persons. In 1951 it was 28 per cent, in 1961 it was 32 per cent, in 1971 it was 39 per cent, and the projection for 1981 is 45 per cent. These figures show we have a long way to go to provide housing for our younger people with growing families.
We have heard a great deal about solar heat and its importance in energy conservation. I feel the government should give serious consideration to some form of financial assistance or grants to those building homes and installing solar heat, in order to make it attractive, as it is a very expensive installation at the present time. This could be extended to cover existing homes whose owners might consider converting to solar heat.
I had the privilege this summer of visiting a model solar-heated home in my riding. The cost of the installation was in the neighbourhood of $10,000. The owner inquired whether there was any financial assistance available from the federal government. He was informed there was not. I am sure the minister would agree it would be common sense and good business to make it attractive for new homeowners to install solar heat equipment whether on a 100 per cent basis or on a partial basis.
As I mentioned before, the minister's budget provided some relief for the taxpayer. I think he is aware it will be necessary to generate revenue to pay for this. The tax cuts are very necessary, especially for those in the lower income brackets. The consumer price index has risen to 183 points, having

doubled in the last decade. The cost of food is higher. Those in the lower income group spend 26 per cent of their total income on food, whereas those in the middle and higher income groups spend about 19 per cent.
Unemployment has created a special problem for the young. By 1985 there will be two million people with university degrees, and jobs must be found for them. The unemployment rate for the last month remains about the same, but the Liberals should not take heart from this because although there has not been an over-all increase, the figure for the number of unemployed under the age of 24 rose. At present, only 38 out of every 100 young people entering the labour force can hope to find jobs. The Prime Minister (Mr. Trudeau) has suggested they should emigrate. Must we export the most valuable of all our resources to support this incompetent and irresponsible administration? The Prime Minister may lightly dismiss our youth and their problems in finding employment, but I cannot. Our youth deserves more than that. They have ambitions, they have hopes for their country, they want to work. It is a disgrace and an embarrassment to all of us that the Prime Minister and the government should behave so callously.
I was surprised to hear what the Minister of Finance (Mr. Chretien) said yesterday. I shall quote from Hansard. At page 646, toward the end of his address, he is reported as saying:
Members of this House will appreciate the importance of the bill to a large segment of Canadian society. It is vital to avoid any unnecessary delay in proceeding with it. The implementing legislation for the tax changes in the budget of May 25, 1976, was not finally passed until late February of 1977.
He then went on to say:
The delay caused very serious inconvenience and disruption for the thousands of taxpayers affected by those changes. I therefore urge members-
-to pass the bill with dispatch. Mr. Speaker, the bill was introduced last night, and already he is telling us to ram the measure through. He seems unwilling that we should have sufficient time to debate it. It certainly should be debated, though, because it is a very important piece of legislation. He also put out a press release dated yesterday, November 7, stating that members should not fail to appreciate the importance of the bill and the importance of getting it through with as much dispatch as possible. He also inferred that the opposition had held up the previous income tax bill last year, Bill C-22. He went on to say that the measures in the bill, which took effect on May 25, 1976, did not pass into law until February 24, 1977. This would infer that the opposition had been holding up the bill from May, 1976, until February, 1977.
I took the opportunity to check Hansard, Mr. Speaker, and 1 found that this bill was debated for a total of ten days only. Of those ten days, four were short days. It seems the government is making a very strong statement, one that is incorrect. Debate on the bill started on November 19 and was resumed on December 2. It was hauled out again and debated on December 15, December 17 and December 20. The Christmas recess then intervened, and it did not come back until January
November 8, 1977

31. The bill was debated on that day, and on February 3, 4, 7 and 10. I bring that to the minister's attention so that he cannot accuse the opposition parties of holding the bill up for any great length of time.
Another matter I want to mention is the 10-cent federal gasoline tax imposed by the government a little over two years ago, supposedly to conserve energy and provide funds to control the price of oil within Canada. That did have some merit, but this tax has hit hardest workers from rural areas and many other people who have to drive long distances between their homes and their places of business. This extra 10 cents amounts to a considerable sum over the course of a month.
A good many persons drive to work in my constituency of Parry Sound-Muskoka, as I have mentioned on several occasions. Some drive as much as 100 miles to and from work each day, five days a week. With the price of gasoline today, this extra 10 cents creates a real hardship for them. I am well aware that many business people, truckers and those engaged in commercial operations, have to pay the 10 cents, but they can deduct it as a legitimate business expense. But not the poor man who has to drive daily to work. If this kind of person did not drive a considerable distance to work, he would probably be on unemployment insurance or, even worse, some form of welfare. This is why I feel this particular tax creates hardship for people who can least afford to pay the tax. I bring this matter to the attention of the minister and I hope something will be done about it.
1 should also like to point out that the tourist industry has suffered greatly this year. To some extent, this can be blamed on the high cost of travel due to current gasoline prices. Since this tax was imposed, the government has been requested on many occasions to reduce it. In fact, 1 believe at one tourist convention in the past few weeks it was recommended that the government reduce the tax from 10 cents to 3 cents, and 1 am hoping that the government will look with a sympathetic eye on that recommendation. After all, the tourist industry is very important.
I will concede to the Minister of Finance that if he should reduce the 10 cents tax to 3 cents, he would lose a lot of money. Within the year a staggering amount of money is collected through this 10 cents tax. But I am sure the minister will agree that it is like casting your bread upon the waters; although you might lose money by reducing the tax, a great number of additional tourists would come to this country, and those who save 10 cents on a gallon of gasoline will spend the money and help the economy anyway. In other words, the minister will get this sales tax back in additional revenue. As 1 say, it might bring additional American tourists to Canada, and heaven knows, we certainly need them. Tourism has been down drastically this year.


Joseph Jacques Jean Chrétien: Mr. Speaker, may I ask the hon. member a question? 1 like listening to him because he offers some concrete proposals. The only question I should like to bring to his attention is this: If we reduce the tax on gasoline, what
Income Tax
effect would this have on the conservation of energy in Canada?


Stan Darling: So far as energy conservation is concerned, I am sure-and I bet the minister is sure-that probably not 100 gallons of gasoline less have been sold. People are still using their cars. There could be the odd Sunday driver who stays at home, and that is fine because it will make the highways a little safer. But I point out to the minister that this extra 10 cents tax is a real drain on the resources of a lot of people.
The minister represents a rural riding, one that does not have a buoyant economy. I am well aware that the minister has serious problems in his riding, and in this respect that is good because he may be a little more sympathetic than if he represented a riding composed of blue-eyed Arabs in Alberta or one of the Toronto ridings. I say it would be a wonderful idea to reduce this tax to 3 cents or to cut it out entirely. There is not a hell of a lot of gasoline saved, anyway. People are still driving their cars on journeys, the great majority of which are necessary.
Because Canada is such a vast country, many people have to drive great distances to work. We are not a country like Holland or Belgium, countries with 1,200 people or more to the square mile. As I have already said, in my riding of Parry Sound-Muskoka over half the people drive a considerable distance. I see the Minister of Employment and Immigration (Mr. Cullen) across the way. He originally came from North Bay and is familiar with the city. A great many people who live 35 or 40 miles south of North Bay drive into North Bay five days a week to their jobs, and they are fortunate to have jobs there. But 80 miles a day amounts to quite a gasoline bill at the end of the month. Therefore, I hope the minister will give serious consideration to this point.
High taxes and non-competitive wage rates in Canada are also having a serious effect on our communities and on companies which are competing directly with United States manufacturers. The situation has become very critical in the past year, so serious in fact that many small manufacturers of automobile parts have either gone out of business or have moved their operations to the United States. I am hoping that the new Minister of Industry, Trade and Commerce (Mr. Horner) is taking steps to rescue this particular industry before it ceases to exist in Canada or almost fades away. I was pleased and relieved to hear him say during an interview, or it could have been during a speech, a few days ago that he was aware of the serious situation and was hopeful that something could be done. I hope he will come up with some concrete solutions instead of vague and non-committal statements.
In my riding of Parry Sound-Muskoka, 122 jobs have been lost at a plant just south of Parry Sound in the township of Foley. This plant had a total of 222 jobs, 122 of which are being phased out. Some members may have seen reference to this on a television program last night and again this morning on the "Canada A.M." show. This points out the seriousness of the situation. These are jobs which are permanently lost.

November 8, 1977
Income Tax
As I mentioned during my speech in the throne speech debate, we are competing against the very tough competition of the United States, particularly the southern states. I understand our immediate neighbour, New York state, is in a serious position as well. If I can use the term, their industries are being raided by industries in the south which are offering very attractive bonuses. Some of these facts we must assume, rather than have them supported with proof. We are also aware of the fact that these industries do not contribute to the same social benefits provided in Canada for our people- benefits paid for by contributions from both employees and employers through unemployment insurance, workmen's compensation, and so on.
I hope something can be done to save these very necessary jobs and to help offset the imbalance of the auto pact. I understand there is a $1 billion deficit in this regard, and I heard it suggested in the news media not long ago that if the present projection continues in the future, the $1 billion will increase to as high as $2 billion.
I wonder whether the Minister of Finance-or, indeed, the government-is aware of the fact that by the end of this year Canadians will have experienced four years of inflation at a rate higher than 7 per cent. Although ministers of finance are notorious for their incredible lack of grasp of economic affairs, even they must be aware that Canadians have suffered unduly in the past decade. They have seen three years of unemployment at a rate higher than 7 per cent, four years with an economic growth below our 5 per cent growth potential, three years of trade deficits higher than $4 billion, and five years during which federal budget deficits have steadily increased.
The Minister of Finance has indicated that Canadians may have to face a lower standard of living. This will not be the result of a lack of hard work or initiative on the part of Canadians who are now told they will have to discipline themselves. The writing is on the wall. The Liberal government, through its incompetence, has lowered the living standard expectation of Canadians. The minister predicts a 6 per cent inflation rate for next year. I suggest it will be nothing short of a miracle if there is only a 6 per cent inflation rate in 1978. Indeed, that is probably what the Liberals are praying for, because on the basis of their past record they certainly will not attain such a rate by themselves. I am sure inflation will exceed 8 per cent this year. I do not say that because I am pessimistic by nature but, rather, because the government across the floor has forced me to be that way. The government has also forced Canadians to be pessimistic. In 1976 the inflation rate was 6.2 per cent, and it is now over 8 per cent. This government, by allowing inflation and everything else, with the exception of wages and expectations, to rise has demonstrated its incredible incompetence.
As to the minister's personal income tax cuts to lower and middle-income taxpayers, the benefits are not great. They will amount to $1.92 a week. That is of little comfort to Canadians who face soaring prices, or to those who face the prospect of joining the burgeoning ranks of the unemployed. This govern-

ment has stifled the economy. The word "deficit" seems to be a catch-all for Liberal actions during the last decade. If there had to be one word used in summation of the past nine or ten years, that would be it. We have a federal deficit, a trade deficit, a deficit in tourism, and we have been sorry witnesses to a continuing climb in our current accounts deficit. The Liberal government is long on speeches of restraint, but short on solutions.
Let me conclude by saying I am distressed to see the state of affairs in this nation. The economy, as I have indicated, is in an intolerable mess. The effect the economy has had on national unity is undeniable. It has compounded separatist sentiments and I want the government to know that, along with most other Canadians, I hold this government responsible for the precarious position into which it has brought this great nation of ours.
The government cannot pretend any longer that the two issues, the economy and national unity, are separate and distinct. They are not distinct. The government, by its negligence in one area and its misguidance in another, has fused the issues into one and brought this country to a danger of dismantlement it has never known.


Eudore Allard: Mr. Speaker, on April 1 1 last, a few days only after the former Minister of Finance (Mr. Macdonald) had delivered the budget speech on March 30 last, the following could be read in a paper entitled On Target:
The federal budget of Mr. Macdonald will literally put some restraint on the Canadian economy during the coming year-no appreciable tax reduction, no considerable cut of government expenditures, no apparent slowdown in public building construction (indeed we note an increase), finally no realistic endeavour to cope with the constant increase in the public debt and interests and to solve the famous unemployment problem. In short, the country is experiencing a most serious financial crisis, what with growing unemployment on one hand and demoralizing inflation on the other. As for the government, we are led to believe that it does not intend to alter its course and that the friends of the government in power will continue to enjoy its favours for still another year.
On March 21, 1977, Globe and Mail editor Richard S. Malone stated, and I quote:
Canada is now running the largest foreign debt in the western world.
Our average wages in manufacturing are now the highest in the world and our exports are dropping.
We hold the world's record for hours lost per thousand workers due to labour disputes and strikes, losing five times as many man-days per thousand workers as Britain.
Average wages in Canada last year increased by 14 per cent, nearly double the rates in the United States.
Since 1972 our labour cost per unit of output has increased more than 50 per cent compared to only 20 per cent in the United States and our productivity also suffers in comparison.
Our trade deficit on manufacturing last year was $10 billion.
Our money supply, a chief cause of inflation, was up 22.8 per cent of the annual rate last month.
Mr. Speaker, one will have to admit that we are dealing with an administration which is leading us to ponder over the coming years.
November 8, 1977

In fact, Mr. Speaker, on March 29, 1977, the same daily newspaper revealed in an editorial some figures which are very enlightening about Canada's public debt. In fact, it was said and I quote again:
As to any pump priming of the economy, it cannot be said that our government has made things easier for us. Expenses connected to public debt direct servicing have increased by 120 per cent during the last five years, that is 135 per cent at the federal level and 100 per cent at the provincial and municipal levels. The annual burden for each Canadian worked has risen from $444.44 for fiscal year 1971-72 to $822.92 for the fiscal year ending this month. The total cost for last year was $7.9 billion; what an amount of money for just servicing the debt. The direct public debt reached $96 billion by the end of 1976, that is $60 billion for the federal government, $25 billion for provincial governments and finally $11 billion for municipal governments yet these astronomical figures do not include the $24 billion guaranteed by the various governments on behalf of Crown corporations. This debt has been contracted in order to make up those deficits. Governments pay off only a small fraction of their debts. When a given debt is due, most governments will simply borrow again to pay it off. It is easier to do things this way than having to increase taxation or reduce government spendings.
Mr. Speaker, also in that same document entitled On Target and dated April 11, 1977, the following could be read, and I quote:
Were the federal government to exercise its sovereign right to create money (through the Bank of Canada and the chartered banks which are its agents), the interests or the expenses stemming from servicing the debt would disappear and there would be nothing left to pay other than minimal administrative expenses totalling up to probably less than 3 per cent. If the totality or at least a good part of the newly created money were circulated through consumer price subsidies aiming effectively at reducing wholesale prices for the consumer, the increase in the money supply or credit, far from causing any inflationary pressure, would have deflationary effects on consumer prices. This principle, even associated with financing through the budgetary deficit, served well the interests of Canada and other countries during the Second World War, and nowadays it is very usefully put to use by the Queensland state in Australia (the Petersen Plan).
Mr. Speaker, in view of this passage, could we not consider that this approach to the problems of debt and inflation deserve serious study and examination on the part of the Canadian government?
The article goes on to say:
Nevertheless, if inflation is now haunting governments, the spectre of unemployment is also becoming an obsession. All those who are at the controls in the government, the media, the business world or trade unions, warn us against the risks of disaster represented by growing unemployment. Paradoxically, people are now trying to obtain longer vacations, shorter work weeks and more time for recreation.
Indeed, Mr. Speaker, a few days ago I heard on the CBC news that the Minister of Employment and Immigration had gone to Toronto to suggest a four-day work week even if it meant that the Unemployment Insurance Commission would have to pay the workers involved for the fifth day which should normally have been a working day.
With your permission, Mr. Speaker, I would like to continue reading from the previously mentioned article:
We should make up our minds about what we expect from our industrial machine. More "work" (jobs) or increased production (goods and services). If what we really want is more work, more jobs, we should be logical and reject all modern commodities, tools for the garden and the farm, sophisticated machines which reduce manpower requirements in plants, and go back to the pick, shovel and wheelbarrow, the washboard as well as the means of production used before the industrial revolution. That is how we will achieve full employment and a lower standard of living.
Income Tax
If the seriousness of the economic and financial situation escapes anyone's attention, I would strongly urge them to consider the large number of young people between 15 and 25 years old who are now unemployed, while their parents, the workers, who are between 40 and 65, make our huge production system work and pay taxes in order to support all those young people. It would be time to change that system which is quite inadequate and to implement the measures the Social Credit has been advocating for so many years.
Indeed, Mr. Speaker, no wonder Canadian workers are increasingly demanding higher gross wages than those of their neighbours to the south. That is because their tax burden is much heavier. True, the government, of course, has the right to tax the workers' income, since it must indeed to find the money needed to finance its programs. A wide range of taxes are collected for that purpose, but the most significant in terms of money is, of course, personal income tax.
Indeed, Mr. Speaker, I would say that personal income tax has increased so much that for the average Canadian family it now represents a bigger expense than all others. Yet that income tax system is based on the principle that the proportion of income paid in the form of taxes increases with a person's income. That is commonly called the "ability to pay". You will agree with me that a poor head of family with a very low income needs all or nearly all his income to survive. In other words, to be more specific, he is practically unable to pay taxes and consequently should not be expected to pay any. On the other hand, it goes without saying that a person earning a higher income can, or is at least in a better position to pay part of it in the form of taxes. It seems to me that the higher a person's income the greater his ability to pay and the greater tax weight he should carry.
I remember, Mr. Speaker, when income tax systems based on the ability to pay were introduced, as I suggested earlier, in 1916, 61 years ago, they gave rise to very heated discussions. In any event, personal income tax now eats up nearly 20 per cent of the average Canadian family's income. Indeed, if one looks at the statistics one realizes the tax department's share is only 14 per cent. Let us not kid ourselves, Mr. Speaker, the gap comes from the fact that government now takes 43 per cent of the gross national product in Canada as compared with 35 per cent in the United States.
With respect to the deficit the federal government anticipates a deficit of $7.2 billion for this year, maybe $8 billion, and $12 billion for next year.
Mr. Speaker, the anticipated deficit for this year will cost every Canadian taxpayer about $60 more to make up, and do you think it will be made up? If you want to know right away, I will tell you. It will never be made up. Why? Our monetary system is wrong. Look at the national debt, and I will give you a few figures.
Indeed, in the seven seconds it takes to read this sentence the federal government went $1,600 deeper into debt. In the last minute the national debt increased by $13,700. It has gone

November 8, 1977
Income Tax
up by $820,000 in the last hour, and by almost $25 million since yesterday at this time. You will doubtless understand what a budget deficit of over $8 billion means. Some will say that the figure is so high that the average citizen cannot visualize its magnitude.
There is another way of looking at the national debt, and that is to compare it with past deficits. Indeed, between the end of World War II and 1975, the federal government has had 17 yearly deficits. If all those deficits were added, excluding the years where there was a surplus, they would total about the same as the deficit for 1977-78 alone. While we are supposed to be the best administrators in the land, the administration of the country leads to an $8 billion annual deficit.
In his economic and fiscal statement, the Minister of Finance said this, and I quote:
The government has decided to withdraw for further consideration the proposal whereby part of the investment income earned by a policyholder on the death of the person insured would be taxable.
On reading that, one suspects immediately that the measures announced in the last budget, that is on March 31 last, on the taxing of the income earned on life insurance policies are withdrawn only temporarily since the minister says:
The government has decided to withdraw for further consideration . ..
One may be sure, Mr. Speaker, that following the next federal election, they will come back with the same proposals. I have received hundreds of letters from my constituents who are against such budgetary pollution. And I have risen several times on that subject since last March 31. In fact, on May 4 last, pursuant to the provision of Standing Order 43, I asked that the Minister of Finance withdraw his proposals to that effect, since I felt they were unfair to those who provide for the financial security of their family by taking out life insurance instead of leaving it to the government to provide for their needs. And should the estate constituted by life insurance not serve exclusively the purpose intended by the insured, that is to ensure a minimum degree of well-being?
In a speech made on April 26 last in Quebec City, the former Minister of Indian Affairs and Northern Development commented on the difficulty of surviving in the business world. He mentioned that the percentage of Canadian businesses which went bankrupt within the last five years ranged from 60 to 80 per cent. Most businesses included in those statistics are small and medium firms. They are hard put to it to get in the market already saturated with products and distributors. Usually to set up a small business requires all the financial resources of the entrepreneur, and then the slightest setback forces him out of business.
So, Canadians are deprived of benefits that could be provided to them by thousands of businessmen who are service-oriented and of thousands of good ideas that are lost due to financial problems. Banks are responsible for the credit system which causes such problems. After all, why should banks be concerned about that situation, since their own bankruptcy rate is nil under the present government? In fact, the eleven chartered banks in Canada have increased their assets during

the five first months of the present year by $12 billion, from $121 to $133 billion, and their assets had increased by $16 billion during the previous year. At that rate, we may expect that within twelve months our banks will increase their assets by more than $25 billion.
Recently, in a booklet on the national dairy program for 1977-78, the Minister of Agriculture (Mr. Whelan) made this statement, and I quote this because it directly concerns the budget:
I believe that the 1977-78 dairy program is one of the best we have ever had. Your income as a milk producer has been increased over last year. As Minister of Agriculture I am sure that you will agree with me that your federal government has provided you with a very positive dairy program.
Well, no, Mr. Speaker, dairy producers do not think so. Be assured that I have full knowledge of the matter. As a matter of fact, as recently as last week I received from one of my fellow countrymen a letter which reads as follows: "You are probably aware that the Canadian Dairy Commission has not sent us our subsidy cheques since the month of April 1977. We ask you to join us in protesting before the Department of Agriculture. You probably know that farming incomes still decreased this year, which demonstrates that things must change." I call it five o'clock, Mr. Speaker.


The Acting Speaker (Mr. Ethier):: Order, please. It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely public bills.
Is motion No. 2 in the name of the hon. member for Matane (Mr. De Bane) allowed to stand?


Some hon. Members:: Stand.


The Acting Speaker (Mr. Ethier):: Stand at the request of the government.


PRIVATE MEMBERS' PUBLIC BILLS
Mr. Stanley Knowles (Winnipeg North Centre) moved: that Bill C-203, to amend the British North America Act, 1867 (abolition of the Senate) be read the second time and referred to the Standing Committee on Justice and Legal Affairs.
He said: Mr. Speaker, I suppose I should have remained in my seat in case hon. members were ready to vote on my motion without further debate. After all, that is an admission that this is not the first time I have brought in this bill, the purpose of which is to abolish the Senate and to establish the Parliament of Canada on the basis of democracy, namely, that it consist only of persons, men and women, elected by the people of this country and responsible back to them.
November 8, 1977

During the last few weeks I have had the privilege on at least two occasions of participating in debates on the Senate with prominent members of the other place-these debates took place on radio and television-so I think I am reasonably familiar with the kinds of arguments that are advanced by those who really believe in the Senate. I cannot imagine any persons who believe in the Senate more than those who are in it, except some of those around here who would like to get in it.


An hon. Member:: Does that include you?


Stanley Howard Knowles: In case that question is on the record, I am sure my hon. friend knows that the answer is absolutely no. The arguments that have been advanced in the debates in which I have participated lately centre mainly around the proposition that the men and women in the Senate are good persons, that they are hardworking and that they do a good job for the people of Canada. Mr. Speaker, that argument completely misses the point. I readily concede that there are good Canadians in the other place. I readily concede that somewhere between 20 and 25 of them work hard at the job, but I think that is about all. The rest are just there when they need to be. The number who really work at the job is probably not greater than 20 or 25.
I readily concede that some of the reports that committees of the other place have prepared have been good reports. They have been very useful. But, Mr. Speaker, those arguments completely miss the point that in the Senate we have a House of Parliament made up of persons not elected at all who get there solely by being appointed or nominated by the Prime Minister-persons who are responsible back to no one, not even to the Prime Minister who nominated them and yet who constitutionally have all the authority that we, the elected people, have here in this House of Commons.
Sir, we can make mistakes, and this House certainly does make mistakes-many of them when we have Liberals in power. But we have to go back to the people of Canada every three, four or five years, for it is to them that we are responsible. That other House never has to go back to anyone. As 1 say, even if a lady or gentleman has been appointed to the Senate on the nomination of the Prime Minister, he or she is not even responsible back to the Prime Minister at all. That is why I think we should take a whole new look at the make-up of parliament.
Maybe there was something to the idea 110 years ago that democracy could not be fully trusted; that you had to have some people around to check on what the elected people were doing. Surely, in 110 years we have grown up and reached the point where we realize that democracy calls for the laws of this country to be made by elected persons and not by appointed persons. Maybe in a moment or two I will define them a little more precisely than just by calling them "persons." It is for these reasons, namely, that in 1977 as opposed to 1867 surely we believe in democracy, that I think we ought to have a
Abolition of Senate
parliament consisting only of those elected by the people of Canada.
I could point out that in the early years of the history of this country a number of provinces had an upper House. My own province of Manitoba had one, Nova Scotia had one and so did several other provinces. They got rid of them one by one, and the last province to get rid of an upper House was Quebec. I do not see the government of any of those provinces suffering because they have legislatures consisting of only one House. 1 therefore contend that we should take the same step and go all out for the democratic principle of the people being represented and governed only by those whom they have actually elected. I regard there being a non-elected part of this institution as a blot on the democratic idea. I regard it as utterly stupid for us to have persons in another place not elected who have the same constitutional authority we have in this House of Commons.
This is brought out very forcibly-and quite often, too- when a person who has been a member of this House as run for re-election and has been defeated. In being defeated he has been told by the people of the constituency or province where he lives that those people do not want him in parliament. A few months later in many cases that individual, if he is a Liberal, is appointed to the Senate and gets into the very parliament where the people of his constituency and province said they did not want him. As 1 said, it is not only undemocratic; I think it makes us, in so far as we believe in democracy, look utterly stupid. 1 hope we will take a new look at the whole proposition.
It is argued, of course, that in the other place they do some good committee work. That is true. I could name some of the reports such as that on land use, poverty, aging, and so on, that have been exceptionally good. That is no reason for us keeping on a very high payroll 104 persons so that a dozen or 15 of them can do certain committee work. That committee work could be done by royal commissions, academic people, persons pulled in from the universities, the labour movement or farm movements for a specific job. But keeping 104 people on a very high payroll, with expense allowances and staff running into several millions of dollars per year spent on the other place, I think makes no sense at all.
It is argued that there are times in the other place that they find things wrong with some of the bills that we pass and send them back to us. Many of those things that are found wrong are found by the officials in the departments and are simply corrected over there, although some time ago when their Honours amended a bill in something over 100 clauses and felt very proud of what they had done, the bill came back here and the government did not reintroduce it. That is what the government thinks of the fine tooth-comb job the Senate did on that particular bill. Even if what they did was good, to give them the right to set aside what we decide in this House of Commons, where we are responsible to the people, is in my view completely contrary to the principles of democracy. Therefore, Mr. Speaker, I make the plea again, and I have been making it for a long time, that we take a serious look at
702

November 8, 1977
Abolition of Senate
our parliamentary structure. I think if we do that we will realize it should be a democratic structure and that it is not democratic when we have one House made up of persons who are responsible to no one.
That is the picture as it developed out of the way the place was established. That was it from the beginning: a House of non-elected persons responsible to no one who, nevertheless, could set aside the legislation of the House of Commons. That carries with it, of course, the right to do so not just once, twice or several times but, as Eugene Forsey once said in an excellent paper calling for the abolition of the Senate, which he wrote before he went there-


An hon. Member:: That was when he was still with the NDP.


Stanley Howard Knowles: That is right. That is when he was with the CCF, as our party was then called, and the Canadian Labour Congress, or Canadian Congress of Labour as it was when he wrote that paper. I still send out copies of his memorandum to students who want material on the Senate, because it is one of the best jobs that has ever been done. The only person who ever characterized the Senate more forcibly as a complete waste of time was Gratton O'Leary, and that was before he went to the Senate.


An hon. Member:: What about the Minister of Agriculture (Mr. Whelan)?


Stanley Howard Knowles: I hear some reference to the Minister of Agriculture (Mr. Whelan). I wish he were here some time when we have a vote on the other place, because he has expressed himself in the past as being just as opposed to the Senate as I am.
I have been talking about the Senate in terms of the structure that was a natural outgrowth of its establishment by the constitution back in 1867. I would like to make the point that two things have developed in recent decades that are really a blot on the other place. The first is that it has become a place where conflict of interest is really at its height. I do not have with me today-I do not have any papers here-the list of the directorships and presidencies of corporations that are enjoyed by members of the other place. The banking and financial interests of this country are extremely well represented in that other place.
Sometimes the Senate is referred to as an institution that is to protect the minorities. The only minority it protects is the rich. Of course, there have been politicians in this country who have said that the rich are a minority and have the right to protection. That is what the Senate has become. They have people there representing banks, financial institutions and corporations. The conflict of interest, therefore, is literally outrageous. On that score, it was not something that was envisaged when the Senate was established, but it has developed. It has become a place that we ought to have the sense to abolish.

Something else has developed in the last few decades of a parallel nature which I think is a shame and disgrace. The Senate has become a place where the Liberal party arranges for its chief organizers and money collectors to be put on the public payroll. What is the number? How many presidents of the National Liberal Federation have been Senators? This means they are on full pay until age 75 and receive a generous pension after that. They are secure. They can do the work of the Liberal party. It has always been the case that people have been rewarded with positions in the Senate because they had served the party in power, or have made contributions to it. There are persons there today who do not need the money, but because they gave money to the party, they are there.
This business of having an institution paid for by the taxpayers of Canada as a place where the officers, organizers and bagmen of the Liberal party can be put on the public payroll is a disgrace. I go further: it is a scandal that the parliament of Canada is used in this way. This is an argument I know will appeal to my friends in the Progressive Conservative party. Maybe some of them, even though they would like to get over there some day, will feel so strongly with me on this point that they will support my bill. For all these reasons, the time has come for us to get rid of the other place.
Judging by former debates on this issue, there may be some who will agree with me about the basic principle which I am putting forward, namely, that non-elected persons should not have the authority that we have. The argument may be made that we ould change it and have an elected Senate. At least it would be better than a non-elected Senate in terms of the principles of democracy. I do not have a closed mind with respect to that idea, but it would have to be considered in the whole context of what is good for this country.
We now have the conflict between the government and parliament right here in the House of Commons. We have the conflicts and confrontations that exist between the federal government and the provincial governments. If in addition to that, we had an upper chamber with moral authority to challenge our decisions, nothing would ever get done. If you had to get the federal government and the provincial governments together, if you had to get the federal government and the House of Commons seeing eye to eye, if you had to get the Senate and the House of Commons, both with equal authority, seeing eye to eye, I suggest nothing would ever be done. Just as some other countries have done away with their upper chambers, and just as all of our provinces have done away with them, we would do far better if we simply had one House of Commons comprising the Parliament of Canada. In order to be correct in terms of the legislation and in terms of my bill, parliament would consist of the Crown and the House of Commons.
What would we do with that other chamber? It is a beautiful room. Possibly it could be used for an art gallery. My friend from Edmonton Centre (Mr. Paproski) would probably suggest it would make an excellent gymnasium.


Mr. Douglas (Nanaimo-Cowichan-The Islands):: Or
museum.
November 8, 1977


Stanley Howard Knowles: My hon. friend from Nanaimo-Cowichan-The Islands (Mr. Douglas) suggests that it be a museum. That is what it is now. When I first came here, one of the current stories was that the hon. member for Nanaimo-Cowichan-The Islands used to take guests into the gallery of the Senate when that place was in session. The story is that on one occasion he took some guests in and said to them, "This is our waxworks. That is what those figures are down there." The guests sat quietly for a moment, looking at the various figures. Finally, one of them turned to the hon. member for Nanaimo-Cowichan-The Islands and said, "I just saw one of them move." That is his story, not mine.
Another point that may be made is that I am coming at the question this time by means of an amendment to the British North America Act, and maybe I should wait until the constitution is brought home and redone. I accept that argument, in a sense. I have been waiting a long while to get rid of the Senate, so I could wait another year or two. But do not put that up as an argument against abolishing the Senate. If we believe in democracy in Canada, we must have it as soon as we can by having a parliament made up only of persons elected by and responsible to the people of Canada.
I admit this is not the first time I have brought in this measure. I have been at this ever since the day I came here, which was quite a while ago. Sometimes it is said to me that I am not making much progress because the Senate is still there. I do not accept that. I think I have done rather well. The other day I looked at the list of persons who were in the Senate when I came here about 35 years ago. There are only three of them left. Two of them are in their eighties and one is in his nineties. Therefore, I have pretty well got rid of the Senate as it was when I came here.
I hope this House will have enough sense to take a stand today for the complete abolition of the Senate, so that parliament and Canada can be a place of real democracy.
| Translation]


Mr. Maurice Dupras (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, I thank you for giving me the opportunity to take part for the second or perhaps the third time in a debate on the bill of my colleague and friend, the hon. member for Winnipeg North Centre (Mr. Knowles) dealing with the abolition of the Senate. No personal interest can be imputed to me, Mr. Speaker. If I contribute to this debate it is not because I am interested in being appointed to the Senate; considering my young age, it will be obvious that the reason for my intervention is not based on personal interest. In my opinion, the comments of my learned colleague show that he has improved his position which seems much more comprehensive than it was in 1974, 1971 and 1968. He does not say that senators are old parliamentarians who do not serve their country as much as they should.
Mr. Speaker, it has often been said that the Senate is inadequately used, underpaid and undervalued and this for many reasons. One need only look at those who make up the
Abolition of Senate
Senate here in Canada. Personally, Mr. Speaker, as the majority of my colleagues, and certainly as my colleague from Winnipeg North Centre, I have a great deal of admiration and respect for the greatest majority of senators, and I have friends among senators on both sides of that House. Also, this admiration and respect are based on their contribution, not only to national unity, not only by the work they achieve, but also by the great quality of their contribution. Let us consider, for instance, the work done by Senator Lamontagne and his committee, the accomplishments of the committee on poverty, the committee on telecommunications, which have been a guide for the members of this House and a help in presenting and drafting bills that now serve the people of Canada.
Let us look also at those who make up the Senate. Of course, there are former politicians, but there are some elsewhere and I shall refer to them later. We find former members of the House of Commons as well as legislative assemblies across Canada. And then, we find former mayors who, let us face it, make a very important contribution because they proceed in a different way, having different views from the members of the House of Commons when drafting our legislation. There are university, academic and business people who have been successful and it is not yet a crime to be successful in Canada. And if the Canadian government institution can benefit from advantages and sound advice from those who have succeeded in business in Canada, I think we would be ill-advised indeed not to take advantage of those skills, those resources which are available to us. And that is what the Senate is doing when one considers its membership.
It also includes Canadians from all parts and all classes of the country. There are Indians, natives, Canadians from all provinces and we know that they are 102 members altogether. And what does it mean to the Canadian population? As for us, I will talk about it later on. But for some parts of the country such as Prince Edward Island for instance, one of the reasons which prompted that province to be part of the confederation was that it would be protected by the Canadian Senate. And it is stated in the Canadian constitution that no less than an equal number of members in the House of Commons, an equal number of members of the Senate will be in the House of Commons.
And this condition is very important to ensure national unity and guarantee rights. I notice that one of my hon. colleagues does not share my views. Perhaps he could rise after me and indicate where he feels what I have said does not reflect reality, and that Prince Edward Island joined the Canadian confederation because it felt protected by this provision of the constitution whereby an equal number of members of the House of Commons must come from this part of the country. This protection was due to the fact that it had a permanent number of members in the Senate.
I must also mention the quality of contributions by my hon. colleagues in the other place. That quality evolves naturally from their very high degree of independence. Our Canadian society is facing difficulties and there is a rush for greater and greater political power, not necessarily on the part of politi-
80025-45'/2

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Abolition of Senate
dans. Therefore, it is very important that the upper chamber, with a lot more time at their disposal, deal not only with legislation but also with special enquiries on specific matters. Senators have much more time than we do because we have elective responsibilities, constituency responsibilities requiring that we keep in touch with our constituencies.
Mr. Speaker, reference is often made to the independence of senators and the Senate. I would like to draw a parallel between the independence of members of the legislative power and members of the judiciary. For the simple reason that senators are named for life, they do not have to justify themselves to provide for their retirement, they do not have to favour corporations. A senator is guaranteed employment until age 75, so his contribution is much more important and much more valuable then if he were not independent and did not have such security.
On the other hand, the Senate is the place for a second process of scrutiny of the legislation sent by this House. So as I said, we can rely on a number of experts from various areas, people recognized for their serious nature, experience, ability, independence and wisdom.
Mr. Speaker, the Senate is often accused of being some kind of haven or retirement for former MPs or party members. Was not Mr. MacDonald, the former president of the Canadian Labour Council, a former member of Parliament? How many former members of Parliament are now part of what 1 call the labour union senate? I could name some, Mr. Speaker, who went back to private life and joined the senate of labour unions, that is they have found employment there and it is very good for labour unions to benefit from those talents. I know some, as 1 was saying, who are making a very important contribution to labour union activities. And I am sure those unions can be glad to have among them former members of Parliament, people who have been with unions before and whose experience in the House of Commons in drafting legislation now contributes greatly to union activities.


Yvon Pinard: Age has nothing to do with competence.


Maurice Dupras: Age, no. My colleague from Drummond (Mr. Pinard) just said that age has nothing to do with competence. The only restriction, Mr. Speaker, is that people called to the Senate must be at least 35 years old.
Mr. Speaker, I think that my hon. colleagues are fairly familiar with the business of the Senate. However, in order to emphasize the Senate activities and its importance for Canadian government institutions, I should also mention the Committee on External Affairs composed of 20 members with a quorum of five. This committee is mainly responsible for the study of bills, messages, petitions, the interpretation of documents and other matters related to external relations and to relations with the Commonwealth in general, including, Mr. Speaker, the study of international treaties and agreements, foreign trade, foreign assistance, defence, immigration, territorial affairs and matters arising off our coasts.
There is also the very important Committee on Finance composed of 20 members which has a motion to this effect;

once again, it is responsible for the study of bills, messages, petitions, and particularly for the study of national accounts and the report of the Auditor General, and God knows, Mr. Speaker, how essential it is to have the report of the Auditor General examined by as many experts as possible.
There is finally the Committee on Transport and Communications whose specific responsibilities are tourism, public vehicles, pipelines, transmission lines and energy transport, navigation, shipping and navigable waters. There is also the Committee on Legal and Constitutional Affairs, one on Banking, Trade and Commerce, one on Health, Welfare and Science, the Committee on Agriculture and so on.
Mr. Speaker, we have often heard that the senatorial office was of a special nature. In fact, it is of a judiciary nature. By reviewing our legislation, the senator must try to establish an equitable balance in the relations between men, between social classes and between various communities, without paying attention to the distribution of the votes. This is obvious because he is not accountable to Parliament.
1 will say in conclusion, Mr. Speaker, that to make the Senate an elective body would amount to destroying its present judiciary character. Just like the American Senate, it would become a second House of Commons, and in that respect it would encroach upon the rights of the House of Commons. The division of the elected representatives of the people between two houses would bring about few advantages and a lot of inconveniences.
Mr. Speaker, the members of the New Democratic Party are not the only ones who have questioned the very existence of the Senate. 1 now would like to conclude my remarks by giving a brief summary of the conclusions reached by Professor Konz of McGill University in his study on this part of the Canadian government system and I quote:
The most obvious are linked to the continuous expansion of the studies of the Senate committee in the field of legislation, control and inquiry but most particularly in the last two fields. Greatly helped by the flexibility of its calendar and its impartial spirit, the Senate could develop important and efficient means with which to control certain aspects of the financial administration, especially as it relates to Crown corporations ...
These remarks are quite pertinent, Mr. Speaker.
.. . and investigate certain practices of the executive, particularly with regard to legislative delegation. The Senate could also increase the number of special inquiries that it carries through each year and enlarge both their purpose and scope. All of it requires little external impulsion and could be achieved through creative leadership and a few changes in the internal structure. In fact, the best practical means to "reform" the Senate seems to reside in taking advantage of the inherent possibilities within the structure of that very institution.
Mr. Speaker, before closing my remarks, 1 would like to say a few words and I know that my hon. colleague from Winnipeg North Centre (Mr. Knowles) will bear a grudge against me if I did not say a few words on his Bill C-203, and particularly with regard to clause 9 at page 2, for 1 am a little disappointed by this part of the bill which states and I quote:
November 8, 1977

"Use of English and French languages":
133. Either the English or the French language may be used by any Person in the Debates of the House of Commons of Canada and of the Legislature of Quebec; and both those languages shall be used in the respective Records and Journals of those Houses; and either of those languages may be used by any Person or in any Pleading or Process in or issuing from any Court of Canada established under this Act, and in or from all or any of the Courts of Quebec.
There must be a reason for this, Mr. Speaker. I wonder why the sponsor of the bill limited this aspect of the bill to the House of Commons and the province of Quebec. Perhaps before the end of this debate he would be permitted to tell me why clause 9 refers only to the House of Commons and the province of Quebec in regard to pleadings in the courts and to the legislature.


Stanley Howard Knowles: Would the hon. member permit a question?


Maurice Dupras: Yes.


Stanley Howard Knowles: Does the hon. member not realize that what I have done in drafting this clause is simply to repeat section 133 of the British North America Act as worded at the present time, simply leaving out the reference to the Senate? In other words, does he not realize that I am not touching the language issue? 1 am not altering it as it now stands but dealing only with the question of abolishing the Senate.


Maurice Dupras: I thank my distinguished colleague for telling me his position. I knew he was only repeating and more or less renewing section 133, and that is why I posed the question. I was not criticizing my hon. friend; I was just asking him why he did not take advantage of this bill to widen the scope of this section so as to include all of the courts and legislative assemblies of the country.


Stanley Howard Knowles: Then the debate would be on two issues.


Ramon John Hnatyshyn: Mr. Speaker, my contribution will be brief so as to allow time for other colleagues who wish to participate in this debate. I should like to commence my remarks by congratulating the hon. member for Winnipeg North Centre (Mr. Knowles) on his tenacity in regard to this particular issue. 1 know this matter is near and dear to his heart. He mentioned the fact that he has survived a number of Senators who were here when he first came here. 1 trust that reference in no way indicates his support for the proposition that any member of the House of Commons should be obliged to retire at the age of 75, because this might deprive the House of the very valuable services of that hon. member. 1 am sure he appreciates the fact, while he has led the good life, many of those Senators have gone from the other place by virtue of this new provision in the statute as opposed to being less durable than the hon. member.
Abolition of Senate


Stanley Howard Knowles: in that respect, Mr. Speaker, like the right hon. member for Prince Albert (Mr. Diefenbaker), I plan to stay a long time.


Ramon John Hnatyshyn: This puts me in mind of a story, Mr. Speaker. We all know that lists of applicants for the Senate are placed before the Prime Minister in great numbers. In fact, it is a very popular place to be appointed to.


Maurice Dupras: You are too young for that.


Ramon John Hnatyshyn: I speak for the parliamentary secretary who appears to be a prime candidate on that side for the Senate, and who gave a very spirited defence of that institution.
This reminds me of a story concerning Sir John A. Macdonald who attended the funeral of a deceased Senator. He was standing beside the grave, and just as the coffin was being lowered into the ground one of the aspirants for the vacancy created by the death of the Senator approached Sir John and whispered in his ear, "Sir John, I want to take his place." Sir John is reported to have replied, "I am afraid it is too late."
I am afraid that we in Canada have to admit that we do have an institution which perhaps represents something of the spiritual nature of this country. I refer to the chamber regarding which it is said that, after a political death, there is indeed a heaven, and that heaven is the Senate of Canada.
At the outset I must declare, as seems to be the appropriate thing to do in parliamentary terms, a potential conflict of interest in addressing myself to this bill. At one time I served as an executive assistant, in what we call the good old days, when the right hon. member for Prince Albert (Mr. Diefenbaker) was Prime Minister. I was executive assistant to the government leader in the Senate. The distinction of that office was enhanced by the fact that our present Clerk of the House, Mr. Alistair Fraser, was at that time executive assistant to the leader of the opposition in the Senate, so I had good company in that august chamber.
I should also mention that my father was a member of the Senate. Therefore in addressing myself to this bill I must declare a potential conflict of interest in the sense that I have that particular background, that particular vantage point, with respect to the Senate.
I want to make two or three observations about the Senate which are based upon my experience of observing that particular body. Apparently the hon. member for Winnipeg North Centre desires to take a black or white approach to the Senate of Canada. In other words, if he is critical of the operation of that body then his facile answer is simply to abolish the institution. Before we do that I think we should look at this institution in the context of modern times and current political situations to see whether it in fact could perform some reasonable function, by way of examples, in the performance of preserving Confederation, possibly, or for the purpose of serving and representing more adequately than it now does the regional aspirations and interests of the country.

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Abolition of Senate
I think now, when we are talking in terms of national unity, keeping our country together and upholding the regional aspirations of different sections of the land, it may be time for us, prior to any consideration of abolishing that institution, to consider amendments to the existing constitution, or changes in existing constitutional legislation which would have the effect of improving that institution, making it more responsive to the purpose for which it was first created, and in fact making the Senate of Canada a part of the over-all plan of helping the people in the different regions in Canada feel that they are participating in a Confederation worth saving. As the Leader of the Opposition (Mr. Clark) has already suggested, provision might be made to allow for participation by the provinces in the appointments to the Senate.
1 say to the hon. member, when he makes the point that the Senate of Canada in fact has the official right to change legislation that comes from this House, that we should look seriously at changing those provisions by making it quite clear, through constitutional provision or otherwise, that the supreme body in the Parliament of Canada in respect of legislation should be, is, and will continue to be the House of Commons.
We should surely make it clear that, if there is a dispute between the two Houses, the decision taken ultimately by the House of Commons is the decision to be entered into the law, and that the position of the Senate is only an advisory position as opposed to a position carrying a constitutional right to hold up legislation that represents the will of the House of Commons.
The second point I wanted to make is that we may indeed have to look at the situation in terms of having a different method of appointing members to the Senate. 1 concur with the remarks and observations of the hon. member for Winnipeg North Centre. I agree there are very strong and appropriate criticisms to be made of the Senate by virtue of its present composition and the use being made by the government of appointments to that place. I refer, of course, to the fact, and it is no secret, that the Liberal party and government are populating that particular chamber with their party organizers, bagmen, political advisers and others. Those people are now being supported by the Canadian taxpayer. I join with that hon. member in criticizing the particular way in which the Government of Canada has regarded the Senate, and that is with the same sort of contempt with which it regards this part of the Parliament of Canada, the House of Commons. 1 join with the hon. member in his criticism of this particular tendency of the government.


Stanley Howard Knowles: Scandalous!


M. Hnatyshyn:: There may be ways in which to deal with that particular tendency. Whether we like it or not, the preponderance of government in the past 50 years has been that of the Liberal party. It has not taken upon itself to make sure that all areas and all points of view are represented. But it does make sure that all areas of the Liberal party are repre-

sented, and in this way brings the whole institution into disrespect.
It is my suggestion that we might consider an amendment or constitutional revision to limit the duration of a senator's tenure to possibly eight or ten years. In this way we would ensure a greater turnover, with more and differing points of view. An amendment should be made in such a way that the provinces might have more input in the appointments made to the Senate so that their points of view and perspectives could be brought to the Parliament of Canada in an unique way, strengthening our Confederation as opposed to weakening it. In that way the provinces would have a forum in which to discuss their points of view.
I do not wish to take much more time, because I know other members wish to speak. I simply make the point that whatever we say about the Senate, and we could talk for hours and hours about the relative merits, drawbacks, and even some of the abuses that have taken place, the fact of the matter is that the Senate is a legislative forum which would provide us with an opportunity, if we operate the institution properly by making sure appointments are based on reasonable and equitable rules, of having available to us in parliament the points of view of a wide variety of people who might not otherwise be involved in politics. It would give those people an opportunity to bring their expertise to parliament.
When we are considering this particular body one should realize that, while there may be abuses in respect of appointments, in other jurisdictions and in other countries political patronage often operates by way of appointments to the foreign service or important jobs within the public service.
I would ask this rhetorical question: are we not better off, aside from the question of abuses, in having failed politicians appointed to the other place, in that forum in which they can participate in debates, and in a setting in which they are more suited, rather than having them appointed to important public positions in which they could perhaps do a greater disservice to the country through incompetence or abuse? Are we not better off having them in a forum in which they can participate in debates, but in a place where they cannot by themselves cause a great deal of damage or cost the country an amount of money, such as might be the case were they put into positions holding great power?
Rather than populating our public service with failed politicians, or politicians who have not been successful, to put it more graciously, is there not some advantage in a continuation of the Senate?


Stanley Howard Knowles: I thought I was unkind to the Senate, but what the hon. member is saying is a lot worse.


Ramon John Hnatyshyn: I am not being unkind. I am trying to be as reasonable and equitable to that institution as possible.
I want to conclude by underlining my support for the hon. member's point of view in respect of the way in which the government has operated the Senate. I feel the hon. member
November 8, 1977

has made some valid observations about some of the abuses that have taken place, but the answer should not necessarily be abolition of that institution.
Let us make sure our conflict of interest rules in parliament are brought forward, applied, promulgated and enforced. We cannot have the senators operating by some unwritten rules unless we in parliament ourselves set down precisely what we want as far as conflict of interest rules are concerned. I have in mind the potential conflict of interest which could exist on the part of a member of the Senate who was a principal adviser to the Liberal party or the Prime Minister (Mr. Trudeau), and was involved in any sort of business transaction with the Government of Canada. I see that as a potential conflict of interest. That senator, or a prime minister, might shrug it off by suggesting they are good guys and would never do anything wrong or give any appearance of preferential treatment or things of that sort.
The fact of the matter is that when people become involved in the Parliament of Canada they should be subject to rules that all of us understand, specifically those which involve the possibility of a conflict of interest, so that not only is justice done but it will appear to be done. In this way there would be no perception on the part of the average person in the country that some special attention is being paid to a proposal by virtue of the fact that a senator was acting as an agent in communicating with the government.
What I am saying is that there are many reasons for criticizing the Senate, but I would prefer to change some of the constitutional aspects, making the Senate a more responsible body, utilizing it in many ways of value to the country including to assist in providing a solution to the unity question with which we are faced today.
For those reasons, and not because I am without sympathy for some of the points raised by the hon. member, 1 cannot support his position in suggesting the abolition of the Senate.


Maurice James Harquail: Mr. Speaker, from time to time one wonders how constructive members are in their approach to the private members' hour.
1 want to take the opportunity to compliment the sponsor of Bill C-203 which is before us this afternoon. I have gained even a greater respect for this man than I had before arriving in this Chamber. Without being tco facetious, I was wondering to whom he was referring when he attempted the humorous remarks about the House of Wax and people who appear to be of a certain vintage. We have heard it said many times that probably he should accept an invitation to go to the other place.


Stanley Howard Knowles: I thought you had some respect for him.


Maurice James Harquail: He has mentioned that he has attempted this motion many times over the last 10 or 15 years. He has
Abolition of Senate
boasted the fact that he has outlived most of the members of the Senate, save three or four.
Some years ago the hon. member for Winnipeg North Centre (Mr. Knowles) stated "I think this whole idea of a body of non-elected elder statesmen...". Certainly I would not think the hon. member for Winnipeg North Centre would have anything against elder statesmen, because I place him in that category. I place him there with more than due respect. It has to be said that all hon. members in this Chamber have expressed the great respect which we have for the hon. member for Winnipeg North Centre.


Some hon. Members:: Hear, hear!


Maurice James Harquail: Therefore I do not have much to say about what he said this afternoon, but 1 would like to comment upon what he failed to say. He did not refer to the position of the government as it was stated in the previous Speech from the Throne, where the government's position was made very clear, that in part there is some agreement with the hon. member's sentiments in regard to the existing Senate structure. He did not talk about the desire of today's government with respect to reform of the Senate. Indeed, the right hon. Prime Minister (Mr. Trudeau) has made his position very clear on more than one occasion, both inside and outside the House, with respect to his desire to see reform in the Senate.
The hon. member for Winnipeg North Centre did not take the opportunity this afternoon to make the position of his party clear with regard to the whole discussion on bringing back the constitution to Canada, or the repatriation of the constitution, which would enable us to proceed with the much talked about and desired reform. This would be one area which would permit us to act in that direction, which the hon. member has indicated he would like to see done. I do not agree with his over-all request for the abolition of the Senate.
Some of the excellent work carried out by the Senate has been referred to this afternoon, such as the excellent work by Senator Croll in the poverty committee; Senator Hastings in the penitentiaries studies; Senator Michaud in the agricultural studies, as well as Senator McElman in the communications inquiry. All the reports and committee work which have been undertaken by the Senate must be highly commended.
In so far as the hon. member for Winnipeg North Centre is concerned, he is well aware of the present structure of the Senate. It is a creation of the British North America Act, and as such plays a role in the making of laws. It acts as a protection for the provinces in terms of legislation which flows from this parliament to the other place.
I would have thought the hon. member for Winnipeg North Centre would have stuck to the subject of the bill. He mentioned that from time to time some mistakes are made in this House. I would have to agree with him in this regard: we have seen mistakes made in the last week or so by the Conservative party and the New Democratic Party with respect to the innuendoes and accusations which have been made. He did not talk about the hon. member for New Westminster (Mr. Leg-gatt) bringing in a document which he did not bother to verify

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Abolition of Senate
and correctly substantiate, and yet took it upon himself to take that one further step with respect to false accusations and innuendoes.
It surprises me that the hon. member for Winnipeg North Centre would refer to the fact that from time to time mistakes can be made. It was not the intention of the creators of this parliament to witness the type of errors and disrespect which has been expressed and shown by quite a few members opposite in recent days. I mention this only by virtue of the fact that the two previous speakers took it upon themselves to attempt to bring in some form of petty politics when we were discussing Bill C-203.


Mr. Dean Whiteway (Selkirk):: Mr. Speaker, because it is three minutes to six o'clock, because I appreciate even these three minutes to speak on the bill introduced by the hon. member for Winnipeg North Centre (Mr. Knowles), and because my colleague has been here for more years than I am old, I hope I will be able to teach an old dog new tricks.
I have read the speeches of the hon. member for Winnipeg North Centre which he has presented in his Chamber before. He is singing the same old tune. I thought along the way he would have picked up something more concrete than simply to abolish the other place. I hope to hear that elder statesman say that perhaps the Senate ought not to be abolished but reformed to make it meaningful.
it is equally astounding that my hon. colleague, who is well known in the country as a defender of the democratic system, would suggest that we ought to abolish the Senate and only have an elected House of Commons based on representation by population. That would leave regions of this country, especially the smaller provinces, without any system of checks or balances and without any equalized power to the central provinces, namely, Ontario and Quebec. I find it absolutely astounding he did not somehow suggest that the Senate would be that kind of compromise.
I wanted to trace the constitutional convention of 1789 in Philadelphia in order to demonstrate the problems they had with the same kind of dilemma, how to balance the power in a federal system between the larger provinces and the smaller provinces. I was disappointed that the hon. member for Winnipeg North Centre did not suggest that the Senate should consist of equal representation from each province, comprised of nine Senators appointed by provincial legislatures for a six-year term on a rotating one-third basis, and three Senators each for the Yukon and the Northwest Territories, and that this Senate would indeed be-


The Acting Speaker (Mr. Turner):: Order. I regret to interrupt the hon. member but the time for private members' business has expired.
(Mr. Harquail.]



PROCEEDINGS ON ADJOURNMENT MOTION

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

Charles Joseph Clark: Mr. Speaker, as Your Honour is aware, and as the House is aware, it is not the normal practice of the Leader of the Opposition to take part in the adjournment debate; but I am doing so today because, in my view, there is a fundamental principle of the parliamentary system which is at stake here and which is being violated by the Government of Canada. The principle is that ministers of the government must take responsibility for the acts of civil servants under their general direction. That is well established in all the writing about the parliamentary system in this country and elsewhere.
I quote briefly from McGregor Dawson's basic textbook "The Government of Canada" where Professor Dawson says:
The Minister at the head of every department is responsible for everything that is done within that department.
From "Constitutional Law" by Wade and Phillips, as reproduced in H. V. Wiseman's book, "Parliament and the Executive", we find the following:
For what an unnamed official does or does not do, his Minister alone must answer in Parliament and the official, who cannot be heard in his own defence, is therefore protected from attack. The positive liability of a Minister is essential to the performance by Parliament and, more particularly, by the House of Commons of its role of critic of the Executive.
That authority goes on to make a fundamental point in this case, and that is that no minister can shield himself by blaming his official.
What we have seen far too frequently in the practices of this government is precisely the practice of blaming officials where the ministers themselves should take responsibility. We saw that in the case of Larry Stopforth, in the case of the executive assistant to the present Minister of Supply and Services (Mr. Goyer), and now in this case we are seeing it in the case of the Royal Canadian Mounted Police.
The House and the country know that there were illegal acts, but what we have to determine is by whom were those illegal acts committed and at whose direction. Let me come to the question of "by whom". They were committed, so far as is known, by members of the security services, and here I make the distinction between members of the security service and members of the regular force of the RCMP.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: As the minister well knows-even though he has tried to keep this from the House-and as the House should
November 8, 1977

know, the security service reports, in theory, to the Commissioner of the RCMP. Actually, it is under the direction of a director-general who is not a member of the force. General Dare came from outside the force, as did his predecessor. The director-general reports directly to the Solicitor General of Canada and to the Prime Minister as well as to the Commissioner. So in the case of the security service, whose people stand accused of illegal acts, there is a very real question as to whether the activities of the security service are under the control of the Commissioner of the RCMP. There is a very real question as to that, and that is an important distinction for the government to begin to make clear to the people of Canada.
The more broad, fundamental question is: "at whose direction did the members of the security service act?" The answer to that at this stage of our knowledge in the House of Commons is that we do not know. We do not know what the Prime Minister or solicitors general said to the director-general of the security service. We do not know if the instructions which were given regarding the FLQ were so broad that any reasonable member of the security service would believe that he simply was doing what his master had directed him to do when he was in breach of the law of Canada. We do not know those things because we have not been told by the Government of Canada just what is going on here, and, indeed, we may never know because ministers refuse to give information here on the floor of the House.
Today in answer to a question of mine, the Prime Minister said that the government may put limits upon the testimony it gives to the McDonald inquiry regarding precisely what was the role of the Prime Minister and what was the role of the then solicitor general in the actions which occurred. Again the Prime Minister is setting himself up to blame another civil servant, because what he said in his answer to me today was that if they do not tell the whole truth to the McDonald inquiry the people they will blame are the law officers of the Crown, rather than accepting the responsibility themselves.
What we have been concerned with throughout this piece is that ministers have tried not to know what they should have known. That was the case with the Minister of Supply and Services when he was solicitor general and deliberately did not raise questions as to what had been done. Even though he received correspondence which should have caused any reasonable minister to ask questions, he did not. Now, of course, we have the Prime Minister making it clear that in the occasional briefings-in the regular briefings held by the government in these matters, the attitude of the government is, by and large, a passive one, receiving information, not asking questions as to how the security services are carrying out the general direction of the Government of Canada. What disturbs us-


The Acting Speaker (Mr. Turner):: Order, please. I regret to inform the hon. Leader of the Opposition (Mr. Clark) that his time has expired.
Adjournment Debate


Francis Fox: Mr. Speaker, given the fact that in this kind of debate the leader of the opposition (Mr. Clark) has seven minutes speech time and the government has only four minutes to reply, I will have to stick rather tightly to what has already been said by the hon. leader of the opposition. Briefly put, Mr. Speaker, having listened to the leader of the opposition and having noted that his presence in the House at this time of day is rather extraordinary, we can wonder about the purpose of his motion. I for one thought that he was referring to the exchange of questions that occurred yesterday in the House relating to the powers that have been vested in the royal commission of inquiry.

Mr. Speaker, 1 should like to point out that it seems time and time again people in the House are refusing to read the terms of reference that have been given to the Royal Commission of Inquiry. I believe that any fair observer would say the terms of reference that have been given to the Royal Commission are extremely wide.
Why did we set up a Royal Commission of Inquiry? A Royal Commission of Inquiry was set up last July in response to a number of allegations that were made known to the government at that time. Prior to that the Leader of the Opposition was pressing for a royal commission. He then asks the following question during this debate: by whom were these acts committed and at whose direction? 1 would venture to suggest that the basic purpose of the Royal Commission of Inquiry is to get at the bottom of exactly who committed the acts and at whose direction. I think if you look at the terms of reference-
Mr. Speaker, an hon. member on the other side says change the terms of reference. If you look at the terms of reference-


Charles Joseph Clark: We have.


Francis Fox: If you have, I suggest you re-read them. They are extremely wide. 1 should like to make one point very clear once again, a point that has been made time and time again in the course of debate in the House, that is, that the chairman and members of that commission have all the powers required under the terms of reference to look at an illegal act, if there is one, and to follow the nexus all the way up to wherever it leads.
I see that the Leader of the Opposition is nodding, and I trust he is nodding in agreement. He is nodding in disagreement. I wish he would point out to me-I believe I have read the terms of reference in as impartial a manner as I possibly can and 1 am sure the Leader of the Opposition has done the same thing. I am personally convinced that the Commission of Inquiry has all the powers necessary to do that. And I would suggest that if it does not, if the Leader of the Opposition feels that it does not, I would imagine that the chairman of the commission would also have that feeling and would come back to us and say, "We really feel that you just have not gone as far as you wanted to go. We need additional powers to be able
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Adjournment Debate
to complete an investigation." 1 for one believe it is necessary that the Commission of Inquiry have the powers necessary-


The Acting Speaker (Mr. Turner):: Order, please. I regret to inform the minister that his time has expired.


VETERANS AFFAIRS-REQUEST FOR INCREASE IN BASIC PENSION-GOVERNMENT POSITION
Stanley Howard Knowles: Mr. Speaker, my question relates to a different matter but it is equally serious. The reason I say it is equally serious is because it involves good faith.
May I say at the outset that the Minister of Veterans Affairs (Mr. MacDonald) explained to me satisfactorily why it is not possible for him to be here at this time, but I trust that the message I shall try to get to him through his parlamentary secretary will be very seriously considered.
My question arises from answers that the Minister of Veterans Affairs has given both to my friend, the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall), and me, regarding the basic rate of the war disability pension. The history is long, but it can be put in a nutshell.
Originally the war disability pension, which was established shortly after World War 1, was related to a certain level of pay in the then civil service. Over the years it got way behind that. As a result of the Woods commission study, the matter was reviewed and in 1973, following a study by a special tripartite committee, the 100 per cent disability pension was geared to the average income of five designated levels in the public service. Therefore in 1973 we got back to where we were in the early twenties.
When that new basis was established in 1973, the urging of the tripartite committee and of the Standing Committee on Veterans Affairs was that that level be maintained, that as the wages of those five categories of public servants went up, the basic pension should go up accordingly. The government refused to accept that part of the recommendation, and said instead that from 1973 on the basic rate would go up in accordance with the rise in the cost of living. That, Mr. Speaker, we regarded as unfair, breaking faith with the veterans of several decades, but the government put it through.
Between 1973 and now, even with the raising of the pension according to the rise in the cost of living, there has developed a $500 a year gap between what the veterans are receiving and the average wage of those five designated groups. In other words, what we predicted in 1973, because the government refused to accept our recommendation at that time, has come true, and come true with vengeance. Our veterans today are close to $540 a year behind the counterpart average in the public service.
A year or so after the 1973 change, because of representations members like my friend and some of the rest of us were making, the government began to show interest. We had so

many favourable answers to our questions last year that the veterans of Canada thought it was going to be done. I certainly thought so. It looked to me as though we had made the point, that the Minister of Veterans Affairs would not let the veterans down.
Last Wednesday and Thursday the minister answered the two of us by saying the government haddecided not to increase the basic rate, in other words not to put it back to the standard that was accepted in 1973. As if that were not enough, refusing to make an increase, the minister made a statement which veterans across Canada feel is insulting. He said he was sure that, as good Canadians, they would accept the decision of the government and not ask for this increase in this time of restraint.
My experience with veterans' organizations is that, although they press their point, they do it with care and dignity. They refrain from using strong language. However, the word I am getting now from veterans' organizations through letters and their publications is to the effect that they have to take the gloves off. Good faith has not been kept with the veterans by the government in refusing to keep the proposal that the basic pension should be geared to the standard in those five designated groups and kept at that level.
I have every reason to believe that the minister agrees with this proposition. Last spring he told us, time and again, that it was being considered, that he was hopeful he would be able to do it. It is his colleagues in cabinet who have turned him down.
I hope he has fought his level best with the cabinet. They have done a disservice to him and a disservice to the veterans by this decision.
I know the government is in economic trouble. However, the last people the government should take its economic troubles out on are the veterans of this country. But it is doing it on the veterans, it is doing it on the senior citizens, and to my mind this is extremely serious. I am glad the veterans organizations are saying the time has come to take the gloves off. I put it to the minister, through his parliamentary secretary, that the answer he gave the week before last cannot stand.
I see some of the members on the Standing Committee on Veterans Affairs, including the chairman, sitting over there during this adjournment debate. I hope there will be support from all sides of the House, and that the answer the minister gave will not be allowed to stand. The veterans long ago have shown that they are good Canadians and that they deserve to have the promises made to them kept. I therefore call upon the parliamentary secretary not to try to defend what has happened but to assure the House he will put the case to the minister as strongly as he can. This battle must be won.


Mr. Gilbert Parent (Parliamentary Secretary to Minister of Veterans Affairs):: Mr. Speaker, I welcome the intercession of the hon. member for Winnipeg North Centre (Mr. Knowles). There is no question that these veterans are good Canadians. We know that. They have proven it over the years.
November 8, 1977

The hon. member has raised the question of the government's intended action with respect to increasing the basic rate of pension for veterans who suffer disability because of their military service, or for their surviving dependants.
The problems of these pensions have been before the government on numerous occasions in recent months. The hon. member will, 1 am sure, agree with this statement on the basis of the consultation he himself has had with the minister in this regard. Recently, as the hon. member pointed out, the minister stated that the government had decided it was not possible at this time to increase the basic rate of pension for death or disability related to military service. The normal increase of 7.2 per cent related to consumer price index changes will, however, come into effect on January 1, 1978. Additional funds over and above the amount needed for this purpose are just not available at the present time. This does not mean the minister is in disagreement with what the hon. member has said.
Although it cannot provide an additional increase, 1 would remind the House that the government has had the well-being of veterans very much in mind over the years.


Stanley Howard Knowles: Prove it!


Gilbert Parent: I will. In January, 1971, for example, the rate of pension for a veteran whose disability was assessed at 100 per cent and who was unmarried with no dependants, was $255. Increases granted since then, together with annual consumer price index changes, have resulted in a substantial increase. As of January 1, 1978, the basic rate for an unmarried 100 per cent pensioner will be $596.70 a month-an increase of 125 per cent in the period mentioned.
I might point out, also, that a married 100 per cent pensioner will receive a basic rate of $745.88; if he and his wife have two dependent children, the rate will increase to $880.15 a month. A widow without children will receive $447.53, and if she has two dependent children her pension will be $716.06. These are not the actions of a government which has no heart and which does not care.
Yes, there is still a great deal to be done but it is no use throwing up our hands and saying that everything which has gone on so far has been of no avail.


Stanley Howard Knowles: Still $500 behind.


The Acting Speaker (Mr. Turner):: I am sorry to interrupt the hon. parliamentary secretary, but the time allotted to him has expired.


FINANCE-REQUEST FOR DETAILS OF $150 MILLION JOB CREATION PROGRAM
James Aloysius McGrath: Mr. Speaker, on October 27 I asked the Minister of Finance (Mr. Chretien) for an assurance that the new funds allocated by the minister's mini-budget for the Federal Labour Intensive Program would not be allocated on the basis of patronage. I almost made a slip
Adjournment Debate
of the tongue there; 1 nearly said Federal Liberal Intensive Program. We do not want a federal Liberal intensive program; we want a fair distribution of these make work funds.
My question was prompted by the fact that under Phase II of Canada Works the Minister of Employment and Immigration (Mr. Cullen) changed the rules. Up until Phase I of the program, and under the previous Local Initiatives Program, funds had been fairly distributed on the basis of Statistics Canada unemployment figures and projections of unemployment by Statistics Canada.
Then on July 9, Mr. Speaker, we were informed in a letter from the minister, and I quote:
I am sure you will be pleased to learn that my department has, for Phase II, produced a new data base for use in the allocations of funds-
Mr. Speaker, we are not pleased. Nobody who examines the record can be pleased. An examination of the record will convince any objective observer that the government is using the old pork barrel technique, that, in the words of one of my colleagues, there is hanky-panky at work. The formula used for determining allocations for Canada Works Phase II uses as a data base the number of unemployment insurance beneficiaries within a given constituency. This does not reflect the true unemployment rate in the constituency. For example, it does not take into account people who have never had a job but who are looking for work, such as our youth.
As evidenced by the figures released today by StatCan, the formula does not and cannot take into account people in the Atlantic provinces, for example, who represent 40 per cent of the figures, people who have been unemployed for more than three months and hence whose benefits are expiring. These people will no longer be reported for the allocation of funds under this program.
The formula also does not take into account pockets of unemployment within a riding. For example, a rural-urban riding, with an over-all unemployment rate of under 7 per cent, would qualify for only the basic $100,000 allocation, but there might well be areas in the riding where the unemployment rate is well above 7 per cent, as is the case in my own constituency.
Here is what my examination of the allocation of funds has shown, and this is just a very brief examination of the experience we have had to date. The grant for the Newfoundland Liberal riding of Bonavista-Trinity-Conception jumped from $1.6 million to $5.5 million. Next door, the funds for the neighbouring Conservative riding, my own constituency of St. John's East, were cut from $1.9 million to $1.8 million.
Cardigan, the one P.E.I. riding that went Liberal in 1974, had the largest increase of any P.E.I. riding, jumping from $0.3 million to $1.8 million. That riding is held by the Liberal cabinet minister from P.E.I., the Minister of Veterans Affairs (Mr. MacDonald).
Allocations to the Nova Scotia Liberal riding of South Western Nova jumped to $2.8 million from $0.3 million, an 800 per cent increase, an increase grossly disproportionate to the two neighbouring Conservative ridings. Grants to the PC
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November 8, 1977
Adjournment Debate
ridings of Annapolis Valley and South Shore were less than half of this.
Further, allocations to the riding of the government House leader, Cape Breton Highlands-Canso, jumped from $0.7 million to $3 million, an increase of 435 per cent. While allocations to Nova Scotia Liberal ridings jumped by over 500 per cent, two Conservative ridings actually had their allocations cut in that province. Allocations to the riding of the independent member for Moncton were cut by $130,000, while allocations to surrounding ridings were actually increased.
On the west coast of the country, allocations to the Liberal riding of Vancouver East, won by only 66 votes, I might add, in the 1974 election, were increased by $350,000, while all surrounding ridings held by other than government suporters had their allocations cut. Allocations to this riding, for example, are grossly disproportionate to the surrounding ridings, most of which received only the bare minimum allocation of $100,000. Nine ridings in British Columbia received the $100,000 minimum allocation. Eight of those ridings happen to be held by Conservative members of parliament, which 1 suggest is more than a coincidence.
If this program of job creation, which has assumed a new importance because of the growing rate of unemployment and because this is the only positive response we have had from the government to this growing rate of unemployment, is to be fairly and impartially administered, then I suggest the new method of allocating funds cannot stand up to the scrutiny of the light of day. Therefore I suggest to the minister that he should resort to the old allocation system.
Further, it is our intention to pursue this matter when the minister comes before the committee, and 1 would urge the minister to examine what he has done in this regard because it is indefensible. This is the only response we have had thus far to the rising unemployment situation. Not only to be fair, but in order to be credible, this program must be seen to be fair by all Canadians.


Mr. Thomas H. Lefebvre (Parliamentary Secretary to President of the Treasury Board):: Mr. Speaker, the hon. member for St. John's East (Mr. McGrath) has indeed brought forward a subject which interests all active members in this House, especially those of us who represent ridings where we are always seeking opportunities for our constituents to be employed. Both of us represent areas which are in great need of funds such as those he has mentioned.
I was under the impression the hon. member was going to deal with the topic of FLIP. As he is aware, a new FLIP program has recently been announced. Without any commitments having been made to it, I understand over $500 million worth of applications by various government departments have already come to the attention of the Treasury Boad, and others are being submitted.
I should like to refer to last year's FLIP program, which was much less than this year's program. Out of the $40,949,000

spent, Newfoundland received $4,082,000 for 2,995 man months; Prince Edward Island received $559,000 for 527 man months; Nova Scotia received $4,377,000; New Brunswick received $2,812,000; Quebec received $9,353,000; Ontario received $7,634,000; Manitoba received $1,697,000; Saskatchewan received $2,242,000; Alberta received $1,736,000; British Columbia received $5,909,000; the Northwest Territories received $196,000; and the Yukon received $352,000. Based on those figures, the FLIP program was very well administered.
Dealing with the subject he raised in regard to certain ridings receiving vast amounts and others receiving a bare minimum under Canada Works, if we had had the time to go through the 264 constituencies I am sure we would have noted that there are a great many ridings held by Liberal members of parliament which also received the very basic minimum.
My own riding received an increase to S2Vi million this year, but the great need for this program is evidenced by the more than $6 million in applications which were made by the people. I am sure I will never be satisfied, nor will my constituents, with the budget announced for my riding. The fact is that there is a great interest, and indeed $216 million may seem like a great amount to a riding not too far away from mine which received $100,000. If you compare the applications, the unemployment, and the needs in these ridings, perhaps that would be a more fair way of making a comparison.
The hon. member is to be congratulated. I think we are both in agreement that government funds must be spent where they are needed to create jobs. No one argues that point.
It is unfair to mention two or three Conservative ridings when we both know who got the barest minimum. If we want to put it on the record, there are a great many Liberal ridings on the very-


The Acting Speaker (Mr. Turner):: Order, please. I regret to inform the parliamentary secretary that his allotted time has expired. The motion to adjourn the House is now deemed to have been withdrawn.
Motion withdrawn.


The Acting Speaker (Mr. Turner):: 1 do now leave the chair until eight o'clock tonight.
At 6.32 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
November 8, 1977


[Stage Direction]
The House resumed consideration of the motion of Mr. Chretien that Bill C-ll, to amend the statute law relating to income tax and to provide other authority for the raising of funds, be read the second time and referred to committee of the whole.
Eudore Allard: Mr. Speaker, when five o'clock was called, I was saying that the farmer's income declined again this year. That has to change. In that respect, I would like to quote a letter I just received which reads as follows:
In this matter which has been going on for too long, the Federation always maintained a positive attitude and met its commitments so that this week the trustee again informed the Canadian Dairy Commission that an amount of over $2 million was available to it as soon as it can prove it is entitled to it and met its obligations by sending the subsidy cheques to the producers.
Contrary to rumours you might have heard the Federation has in trust all the monies withheld and so informs the Commission, asking it to provide in writing a legal opinion concerning its right to withhold 25 cents on every class 1 hundredweight. We are still waiting for the written legal opinion. Is the Commission trying to use blackmail to withhold an amount without having jurisdiction to do so?
The stratagem used by the Canadian Dairy Commission is as old as the world. "If you want to defeat your enemy, cut off his supplies."
So we were mistaken because we thought we were partners in the provisional comprehensive milk marketing plan, not enemies.
However, Quebec fluid milk producers do not give in to blackmail wherever it comes from.
The Minister of Agriculture, the Canadian Dairy Commission and all Quebec members of Parliament in Ottawa must be made aware of this situation. Therefore, all Quebec consumer milk producers will show their solidarity and voice clearly and loudly their intention not to give up to this kind of blackmail. They are respectable businessmen who meet their obligations and who expect the same from those with whom they deal.
In this regard, why does the Treasury Board not make the necessary funds available to the Minister of Agriculture to enable him to pay a part of the cost of the milk distribution program in schools put forward by the province of Quebec? Surely such a program can only result in increasing the consumption of dairy products among our youth while improving their nutrition habits. Besides, it can be expected that the school milk program which I have referred to will reach 175,000 school boys and girls no later than next December. Is it not a real success, Mr. Speaker? Why should the federal government not do the same in other economic sectors?
A few weeks ago, I read the following in a paper:
Quebec furniture industry, a victim of the federal government.
As a matter of fact, the article read as follows:
The federal government is responsible for the decline of another Quebec industry which was supposed to be viable, namely the furniture industry.
Why, Mr. Speaker? Simply because of a lack of leadership by the federal government which resulted in the Canadian furniture market being flooded with foreign products, so that
Income Tax Act
furniture imports have increased by 26.3 per cent last year. Needless to say, the situation is such that an estimated 3,000 Quebec workers in the industry have lost their jobs since the beginning of the year. And yet, does the Quebec furniture industry not have an interesting future? Because of its inaction, the present government is the big culprit. Indeed, the market continues to be flooded with imports at the expense of local businesses. The furniture industry is not the only one affected, just consider what has happened in the footwear industry. In both these industries, the federal government has failed to protect local producers and has allowed the market to be flooded with foreign products.
With regard to the changes made in the Income Tax Act concerning the individual, we see that Bill C-ll recommends an increase of $100 in the amount that can be deducted as employment expenses, raising the maximum to $250. In this regard, on March 28 last, I asked the House, pursuant to the terms of Standing Order 43, for unanimous consent to present a motion to that effect. In short, I was asking, no more and no less, that section 8(1 )(a) of the Income Tax Act be amended to allow deduction of all travelling expenses incurred by working people to get to work and come back home using public transportation, for tax purposes, provided vouchers were filed. In my humble opinion, the $100 increase granted by the federal government is really not adequate.
Subject of course to some exemptions, most wage earners under the act as it stands can claim only up to $150, a deduction equal to 3 per cent of the income from a job, when in fact it costs them anywhere between $300 to $600 a year to get to work and come back. I sincerely feel that it would be more advantageous if most workers or wage earners generally were encouraged to use public transportation to shuttle back and forth from work because, on the one hand, it would save a whole lot of energy, and on the other, it would save hundreds of millions of dollars paid out in subsidies by the various levels of government. So, in short, with my motion of March 28 last,
1 was asking the government to allow for income tax purposes, certain tax benefits to those who have to get to work; I feel that would have had rewarding results first, as I said, by saving energy, and then, by benefitting the worker. As usual, unfortunately, the federal government did not see fit to give effect to my motion. They tend to brush aside with a flick of the hand everything that comes from the opposition.
Then, there is inflation about which I should like to say a few words. The crux of the inflation problem lies in prices. Any inquiry into the causes of the inflation in prices should start out with an in-depth study of the mechanisms of prices as they relate to our monetary system. In addition, as price setting is an integral part of the monetary system, such a survey should of necessity include a detailed examination of the operations of that system. That being recognized, one can easily wonder why the mechanism whereby prices are set is so sadly lacking in our society. It has never been updated by our own bankers.
The rigidity of the transaction pattern has revealed itself as one of the major obstacle to mankind's progress and often only

November 8, 1977
Income Tax
a very serious crisis or an impending catastrophe succeeds in breaking up this deadlock. It is precisely a disaster of that sort which is facing the western world today. Prices in Canada have been going up steadily for the last 19 years. It was back in 1953 that we saw the consumer price index go down for the last time. Under the present pricing pattern, the public must assume all the production costs for a given period, while it should pay only for all the goods consumed during that same period. So, inflation is a legalized robbery which deprives elder people of their savings and an anticipated robbery of future generations since they will have to pay a price on capital which will have lost an equal value tomorrow. That is the situation which has to be changed as soon as possible.


Mr. F. A. Philbrook (Halton):: Thank you, Mr. Speaker, for the opportunity of speaking on Bill C-ll. I am pleased to speak on this bill because I did not have an opportunity to speak during the throne speech debate. That is one of the difficulties of this House. However, I share with all the constituency of Halton the joy we had in having the Queen here for our opening ceremonies.
Second, I wish to congratulate the Minister of Finance (Mr. Chretien) on his new post.


George Harris Hees: Apple polishing.


Frank A. Philbrook: Anyone who knows this minister will agree that he has brought valuable qualities to the federal government, qualities of reason, discipline, and dedication. From what I and my constituents saw during his recent visit to my riding in Oakville and the nearby suburb of Toronto, he comes across to the public as not only a very popular but a very promising minister. I do not mean he just makes promises but shows promise.
I wish to consider this an economic statement, not a statement on the budget because this is what the minister did. In addition, it gives an opportunity to speak a little more broadly, rather than just on the budget. I wish to talk about what is important in the financing of this country, on the economic arrangements.


George Harris Hees: You have finished the first apple, now start on the second.


Frank A. Philbrook: I hear a little noise coming from the other side. It is a little difficult to see who it is behind the gangster glasses.
1 wish to begin with a few general and long-term comments. They are important in terms of orientation. If they are repetitious, it is because they need repeating.
A lot of people, businessmen in particular, feel that with this economic statement the minister is moving in the right direction. He is doing as much as is presently possible, given the very difficult circumstances under which he is operating. There is very little room to manoeuvre.

The present position could be characterized as tax relief and incentives for both business and consumers. The important part is not what is being offered at present, but the fact that if the response is good and the economy begins to grow, as many are predicting, we should be following up with more of the same. This may seem a small step. However, it is the greatest step this minister could take for this country at the present time. Over a long period of time we have had one very clear inclination, that is, toward the social policies of this country during a period of very easy economic times. It now takes strong leadership to change that emphasis back to free enterprise, the private sector, making very difficult decisions and running a tight ship.
I think it was Tolstoy who said the longest journey starts with one small step. At least we are seeing that now. I think those in the official opposition will agree that this is the right emphasis; however, those in the other parties may not agree.
The emphasis for some time to come will be on working through the private sector, through free enterprise, not with the government running so many activities in this country. This was signalled in the white paper "The Way Ahead" of a few months ago. It started in the March, 1977, budget and is being confirmed by the removal of controls.
Many people, including myself, would like to have seen controls removed sooner. I am prepared to accept the argument that this may be a very difficult winter in many ways and we might have regretted taking off controls now. However, in terms of getting the economy rolling, it would have been preferable if they could have been removed this fall.
There is another problem that is as difficult as running the country. I refer to the old problem of communicating with the people. We do not seem to be able to share the facts and our mutual experiences with the people back home. We must work as hard at that as running this country. I say that, in spite of televising the proceedings in this House, although that is capable of being edited just like the newspapers. Even though we find we are able to conduct our business well, we still cannot seem to get this across. There are people who still wonder.
This morning I noticed an announcement by the Minister of National Health and Welfare (Miss Begin) on a subject which is due to be raised again shortly, namely, a guaranteed annual income with accompanying tax credits, the so-called negative taxation and so on.
I suggest to the minister that we should at least make a start in three needy areas. There are the low-income workers, the one-parent families, and unemployed workers between 60 and 65. We know these are serious problems. We should be looking for some better way to support these people and give them reassurance. But if this is to be the main social plan in this country, many of us are worried about it being the main disincentive. We found we had trouble with all our programs, getting the wrong effect through disincentives and so on. I hope we can work this out before getting into a general social support program.
November 8, 1977

I mentioned the business of communicating with constituents. I find when 1 get back home and talk to constituents there that there are certain things they want to know in the financial and economic area. They can be divided into two groups, the negative things, the things they really do not want, and the positive things, the things they want and are not getting. First the negative things. Why do we have to have them? Near the top of the list is the very complicated tax system. Somehow or other we must do something about this sooner or later, or we shall bog down beneath the weight of our own figures and paperwork.
I wonder how many people are able to fill out their own tax forms these days, the way they used to. The way things are now, it may be a haven for tax accountants, but the average citizen gets very little satisfaction. It is a hard nut to crack, now we have got this monster with us, but I feel it is a top priority.
Next, there seem to be a number of nuisance moves coming along. People are wondering why we must have them since there are more important things on which to work. The minister is obviously trying to do something about this. He issued a statement recently about life insurance tax. He has frozen that and put it on the shelf for now. I am talking about the business of collecting from beneficiaries after the death of the policyholder. But we still have the problem of the effect of any new tax law on those who use insurance policies as collateral for loans. What can we do about this? That practice is very popular, but such a provision is something which people are not accepting well.
I should like to read part of a letter 1 received from someone 1 consider to be a very concerned if somewhat overwrought constituent. He wrote:
Sorry, but perhaps there is a misunderstanding with regard to the October 25 budget. It appears that for the time being the "death tax" on life insurance is being withheld. However, there will still be tax changes affecting individuals borrowing on their policies. This is a most controversial issue since it changes the whole attitude toward the individual life insurance policy as compared with the practice which has emerged after years of study by the federal Department of Insurance as well as previous studies on life insurance. At no time did any investigation group ever recommend such a change in attitude with regard to borrowing against one's policy. Here, we have an issue which has been raised for some obscure reason and, as you can understand, Frank, there is only peanuts in tax revenue involved. But think of the extra administrative costs to insurance companies and policy holders as well as to the federal government. In other words, the "bucks" are not in it, so why go to this trouble to inconvenience and annoy the individual Canadian? Obviously, no civil servant will ever have to borrow on his own life insurance, so consequently they do not understand the problem. By the same token, it is in the interests of the Financial institutions that this tax should go through. After all, if an individual wants to borrow a thousand dollars it is far better to charge him 13 per cent or 14 per cent or 15 per cent rather than, say, 6 per cent on the older policies. Again, Frank, there are no other words for it than "this concept of taxation is stupid". Here we are in a time when we are trying to simplify tax legislation and reduce costs of doing business, and this is an example of the way in which we have lost our ability to increase productivity and reduce costs-a beautiful example of additional costs being created by the very people who are preaching restraint. The federal government is snowballing more and more legislation. We need less legislation, less complicated forms, fewer delays.
A similar problem seems to have come up in terms of low interest loans from one's own employers, from one's own
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company. Again, I do not understand this. 1 have heard the arguments against it and they make sense. Everybody benefits in some ways from their own companies. Airline employees, for example, get free trips around the world, and so on. Why should a person not get a low interest loan from his own company if he can, without being taxed extra by the government? This is another nuisance thing, a way of irritating the public at a time when we ought to be concentrating on other areas.
Excessive paperwork is a complaint which seems to be levelled against Statistics Canada and our tax system. Then, of course, there are the big general complaints about the excess of size and the inefficiency of the government and the civil service, government spending and budgets. People want absolute cuts, not just a scaling down of the increase in growth of the bureaucracy but an absolute reduction, perhaps one per cent per year in the size of the civil service and in the size of government budgets for a period of five years until we can get them back to something sensible, for example, all governments taking 35 per cent of the gross national product instead of 45 per cent.
There is the issue of abuses and disincentives. There is a great deal of concern among the Canadian people about this problem, particularly in areas like unemployment insurance. However, that seems to have improved a bit. In short, what people seem to want is small, clean, efficient government- streamlined government. And who is to make those decisions? Nobody except the cabinet, the ministers themselves. We have pretty well proven it is not possible for any of the rest of us to make those changes.


Mr. Benjamin:: That's your side!


Frank A. Philbrook: Well, have you made any? I have not noticed the government implementing any of your suggestions.
Those are the sort of clean-up things that people seem to want.
There are also some positive things they want. They say, "Why don't we do these things, because we obviously need to get cracking in some areas and there are some suggestions?" Of course, tax cuts for all sectors-the minister has made a start on this-especially in the area of sales taxes. But that is both a federal and provincial concern and we need more co-operation between those two levels of government. If we do this, the suggestion is that it will stimulate domestic buying and also stimulate our ability to sell export goods because prices will be lower. Why cannot this be brought in, at least with application to Canadian-made goods? Discrimination, yes, but it is discriminatory on Canada's behalf in an extremely competitive world.
Why can we not have tax exemptions to buy Canadian stocks, bonds, and so on, to invest in Canadian capital formation? They say savings are high at the moment, that too much money is locked up, but people are asking, "Why is that money not being put into Canadian capital investment by the big institutions, the insurance companies, the banks and so on?" Why cannot we do something about that?

November 8, 1977
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Why cannot we have more federal-provincial co-operation in planning, programs, budgets, restraint, and even foreign borrowing? This is what the people want to know. In another area another plea we hear is that more breaks and more money should be given to small business as opposed to big business. We have talked about it ourselves and we hear about it in certain ridings such as my own, in Halton, where there is a lot of small business.
This morning there was an article in the Toronto paper by Andrew Kniewasser, the President of the Investment Dealers' Association of Canada. He had this to say:
Too little has been committed to new equity financing, permanent ownership capital to build new businesses or expand existing ones, and too little of this flow of capital has been directed to financing small and medium firms or regional firms.
I think a lot of us will certainly agree with that.
As for better industrial relations, we have talked a lot about this matter, but do not seem to be able to get very far, certainly not without the co-operation of big business and labour. However, it is the key, and people are hungering for better industrial relations very much. They are fed up with the squabbling that goes on in the market place between these two giants.


An hon. Member:: Are you hungering to get to cabinet?


Frank A. Philbrook: There are more important things than getting to cabinet, my friend. If there is anyone who should appreciate that, it is you folks on the other side, because your chances are not very good.


Leslie Gordon Benjamin: Just have patience.


Frank A. Philbrook: With a caucus like yours it will need patience.
There is another area which is quite sensitive but we will have to address ourselves to it because the people are doing so.
I refer to crippling strikes in what are called essential services. Some people say we cannot define what are essential services. I do not believe that. I think the people can define that for us. I think they would probably say they include all areas of transportation and communication, the public service, and all security services such as the police and firemen.


An hon. Member:: What about health services?


Frank A. Philbrook: Health is included in security. We must find a better way to solve our differences than having strikes, because I think the people are fed up with losing essential services.
Our businessmen also worry about what is going on in GATT and they want more information about it. They do not want to be shut out of this crucial area, because some of our businesses may have to close down. There is also still a little concern about foreign ownership, although the situation is quiet at the moment.

Along with all this there is another painful area which we shall have to examine. I refer to long range planning. We have heard the arguments on this matter. We have heard it said that we do not need long range strategies because we have a multitude of policies, and I guess we do. The only trouble is that it is like looking at thousands of small things at the same time; the people cannot see any direction. They cannot see any direction from the leadership, from the government of this country, and they wonder where on earth we are going. So as difficult as it is, Mr. Speaker, it is essential that we get down to examining this, and I cannot think of any better government to do this than the present Liberal government.
If we are going to cope with shortages and competition and let this country reach its potential, we will need some more effective, more impressive, long range policies than the public has seen until now. And this despite short range politics. Indeed, I think we can assume a fair degree of stable government. I am not sure why we worry about forming these long range policies and carrying them out because I do not see much chance of a change of government.
I also think it is very important that we work with the provincial governments and the private sector. This is easier said than done, but again worth underlining. What are the main areas here? Certainly public transportation is one. My constituents as well as this House know where I stand on that matter, particularly in terms of commuter transit and the disappointment we have had in not financing that more than we have. We have discussed it quite a lot, and we will be talking about it again some time.
Another area which should be examined is science technology and research; I think my colleague, the hon. member for Wellington (Mr. Maine) would support that. This field has been badly short-changed in recent years. It is the basis of all our industry, all our manufacturing, and along with the private sector we must do a better job in this regard. Energy is another area requiring attention.
If I may be permitted a brief aside, one of the questions we will have to solve, a matter some of us are working on now, is this question of world population. We really have a time bomb ticking away, whether we realize it or not from our comfortable position here in Canada.
However, the big question is industrial strategy. Here I would like to give credit to my own colleagues who have worked hard on this question for several months, and perhaps do not yet have the final answers though they do have a great deal more insight. I refer in particular to my colleague from Scarborough East who has recently published a paper of which I think the government is well aware.
Before I wrap up my remarks, Mr. Speaker, I should like to place on the record a short statement published by the Science Council of Canada. It is a statement of concern which is based on a larger background paper called "Uncertain Prospects: Canadian Manufacturing Industry, 1971-1977". If the House will bear with me, I should like to put this excerpt on the record, because I really think it says it all.
November 8, 1977

Canadian manufacturing industry is at risk and its future is uncertain. This uncertainty obviously extends into a distinct and pressing concern about our ability to employ the wide range of talents and skills that make the Canadian labour force such an exceptional national resource. Last year, Canada's deficit on manufactured goods was more than $10 billion. Nearly every branch of Canadian manufacturing displays weakness. Textiles, clothing, leather goods, consumer electronics-all are succumbing to fierce foreign competition. Many of our high technology industries have, since 1971, developed increasingly large deficits in balances of payment. The problems are long term and reflect fundamental structural deficiences.
Contrary to popular opinion, the 1960's were a period of relative decline in Canadian manufacturing. Canada did not progress by comparison with other industrial and semi-industrial countries. The seeds of our current distress were being sown in the so-called "golden era''. In the past two decades, the various policies bearing on industrial growth in Canada, while partially successful as short-term palliatives, have not helped to create a strong technological base. A superficial, stunted form of industrialization was produced by policies that created growth through import substitution.
Too many Canadian exports are actually a reflection of intracorporate transfers. Without the Auto-Pact, for instance, Canada would have practically no exports of manufactured goods. Between 1965 and 1970, the proportion of finished manufactures in total exports-a sector that provides productive employment and creates an indigenous base of engineering and scientific expertise-grew by 3.22 per cent (autos excluded). Denmark increased its proportion by 11.3 per cent, France by 5.5 per cent, Mexico by 16.8 per cent, and Sweden by 10.8 per cent. In relative terms, Canada fell seriously behind.
The responses of many businessmen to the current economic situation are indicative of current problems. Too much government control through regulation and interference in private entreprise; profit controls put forward by the AntiInflation Board; high taxes; uncertainty about nationalist sentiment and its possible policy implications; loss of competitively advantageous wage-rates relative to our major market area; stress on the part of government on the provision of social benefits as opposed to emphasis upon productivity-these are the elements that businessmen complain of as part of the poor business climate in Canada.


Walter David Baker: Ha, ha!


Frank A. Philbrook: I wonder why such a responsible member on the opposite side considers that funny, because I doubt that Canadians do.


Walter David Baker: On a point of order, Mr. Speaker-


The Acting Speaker (Mr. Turner):: Order. The hon. member for Grenville-Carleton (Mr. Baker) is rising on a point of order.


Walter David Baker: Did the hon. member have a question for me? He said something to me.


The Acting Speaker (Mr. Turner):: Order. The hon. member for Halton. (Mr. Philbrook).


Frank A. Philbrook: 1 find it a most unusual piece of behaviour, Mr. Speaker, but we will let it go because we are used to it.
To continue my quotation:
These problems are not only grave in themselves, they also reflect an even deeper malaise that has to be exposed and diagnosed. The Science Council background paper, "Uncertain Prospects Canadian Manufacturing Industry, 1971-1977" describes the difficulties of Canada's manufacturing sector. It shows that the central problem has to do with a failure to create and agree on coherent national policies aimed at restoring and enhancing our industrial base. Such policies are needed urgently and should address specialization, ownership, gov-
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ernment procurement, major programs, domestic market aggregation, international science and technology, agreements, and other areas where there is significant potential for promoting existing strengths and opportunities. Brilliant examples of Canadian industrial and innovative successes already exist. They must be built upon and multiplied.
It goes without saying that is the responsibility of government and of government economic and financing policies, and therefore of the Minister of Finance to set the proper climate to make sure those things are realized. It is forecast that 1978 will be a better year, a year of much improved economic growth, and perhaps the start of a more clearcut long term growth.


Mr. Orlikow:: Who said that? It was not the Economic Council of Canada. They said it was going to be worse.


Frank A. Philbrook: I think if the hon. member does some reading he will discover that most groups say that.
In summary, what the Canadian people want to know and need to know is where we are going and how we can get Canada moving. The position taken by the new Minister of Finance is a very encouraging sign that we will get that kind of leadership in Canada.


Some hon. Members:: Hear, hear!


Leslie Gordon Benjamin: Mr. Speaker, I rise on a point or order. Before the hon. member has used up all his time, I wonder if he would permit a question.


The Acting Speaker (Mr. Turner):: Will the hon. member for Halton (Mr. Philbrook) accept a question from the hon. member for Regina-Lake Centre (Mr. Benjamin)?


Frank A. Philbrook: Yes, Mr. Speaker.


Leslie Gordon Benjamin: Mr. Speaker, the hon. gentleman cited four of five countries where exporting of manufactured goods has assumed marked improvement over that of Canada's. On the one hand he has indicated that there has been too much regulation and government interference. On the other hand, these countries which were referred to as having a better record than Canada all have socialist or national economic planning and have now, or have had, socialist governments which interfere in the private sector. How does he reconcile the differences between the two?


Frank A. Philbrook: Mr. Speaker, the countries I mentioned were Denmark, France, Sweden and Mexico. I really have to wonder what Denmark and France would think about the hon. member's remarks concerning their socialist societies with a great deal of government interference. I think they would differ entirely on that. It simply proves that under various forms of government there can be good government. It depends on what the people of those countries want, but in the short term they can do a good job.


Leslie Gordon Benjamin: They have more interference than we do.


Frank A. Philbrook: I do not see any contradiction there at all.

November 8, 1977
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George Harris Hees: Mr. Speaker, tonight I would like to discuss the need for this country to process more of our raw materials to their finished state, and the use of tax incentives to bring this about.
For far too long we have been shipping out of this country a far too large proportion of our primary products to be processed to their final stages of production in other countries, which thereby gain the many advantages of employment, taxes and profits which accrue from this further processing.
We have in Canada the skilled manpower, managerial skill, cheap power, and excellent transportation facilities which are needed for this further processing, and it is about time we started doing something about getting more of this work for Canada. Now, what should and can be done?
Thirty years ago the government of Ontario introduced a plan which has been largely responsible for the spectacular expansion of the pulp and paper industry in that province during the intervening years. It required companies to process in the province a far higher proportion of the logs which they cut, a large proportion of which they had been shipping in the raw state to paper mills in the United States.
What has worked so well in the case of the pulp and paper industry in Ontario can work equally well in other primary industries right across the country. It should apply to all raw materials which we ship to other countries for further processing, and can succeed equally well because of the great dependence of other countries on our primary products to feed their manufacturing processes.
It is obvious that a certain proportion of the raw materials we produce must be exported in the raw state, but not nearly the proportion that is the case today. The Department of Industry, Trade and Commerce should now undertake an intensive study of our primary industries to determine what proportion of the primary products we produce can reasonably be required to be processed to their finished state in this country.
Having decided what proportions of our various primary products should be further processed in Canada, we must produce an incentive which will be sufficiently attractive to persuade those who normally export our raw materials that it will be profitable for them to build the plants which will be necessary to carry out this additional processing in Canada.
It has become painfully obvious that the grants now provided by the Department of Regional Economic Expansion, although useful, have not proved sufficiently attractive to bring to our areas of slow growth sufficient new industry to reverse the dangerously high rates of unemployment that have persisted in those areas for many years.
I believe that in addition to the DREE grants, which are now available to areas of slow growth, we must also make available an additional incentive in the form of a graduated scale of federal taxation which will permit a new plant processing primary products in an area of slow growth to pay no federal taxes in the first full year of profitable operation, and gradually increase its tax payments until it is paying full
[Mr. Philbrook.J
taxation in the fifteenth year. My conversations with leading businessmen across the country have convinced me that this incentive, added to the present DREE grants for slow growth areas, will prove sufficiently attractive to accomplish what has to be done.
The incentive which I have outlined will pay for itself many times over in the years ahead in the following ways: it will reduce the present far too high expenditure on unemployment insurance by stimulating the economy and enabling more people to find work. And we can increase tax revenues because (a), more people will be working and paying income taxes; (b) more commodities will be sold and will be raising additional commodity taxes; and (c), the increased volume of business will lower unit costs of production and make available more profits to tax.
In conclusion, the time is long overdue for us to stop shipping such a large proportion of our raw materials out of the country to provide jobs for other people. We must process a far higher proportion of them here in Canada for the benefit of Canadian production and employment.


Some hon. Members:: Hear, hear!


Hon. A. C. Abbott (Minister of State (Small Business)):: Mr. Speaker, I hope the hon. member for Grenville-Carleton (Mr. Baker) will have a chance to speak, because we will be very anxious to hear his remarks.
I want to add my congratulations to the Minister of Finance (Mr. Chretien) for his excellent presentation the other night and for the great skill, frankness, and ability which he has brought to his post in these difficult times.


An hon. Member:: Why are you smiling?


Anthony Chisholm Abbott: I am smiling because I am speaking the truth, and because a lot of other Canadians are smiling with the knowledge that the Minister of Finance has the courage and the ability to make decisions.
We are facing difficult times now, and we are facing great problems. These problems are not simply those of Canada, but are shared by other countries, notably our great neighbour to the south.
I was interested to see the other day that the Bethlehem Steel Corporation was showing a loss of $450 million for the first nine months, the largest loss in the history of the United States by any single corporation. It even exceeds the loss the Pennyslvania Railroad faced when it went into bankruptcy. Therefore it is evident that great problems are facing the major corporations here and in the United States. These have been highlighted by the recent lay-offs which have taken place in our mining industry and in other industries in Canada. About these we are deeply concerned.
I have been struck-and that is why I wanted to cite the mining problem-as I think many hon. members have been, by the enormous publicity and the extraordinary concern shown,
November 8, 1977

understandably, by everybody involved with the lay-offs at the International Nickel Company. Why 1 raise this is that I think there seems to be a singular contrast in the kind of reaction to the problems of the smaller business community and to the fact that all across the country there are many small businesses which are finding it perhaps even more difficult, particularly in the face of situations such as that suffered by 1NCO. I think it emphasizes that while the major industries in this country are having difficult times, we have paid frequently, and throughout our economic history in this country, too high a tribute to the great industries and perhaps too little attention to the hundreds of thousands of small business which exist here.


Stan Darling: Right on!


Anthony Chisholm Abbott: We speak of our small businesses, and we seem to brush them off as not worthy of nearly as much attention as the great industries; whereas, as some of my colleagues and others have said, the future of the Canadian economic community largely depends on whether the small business community is able to grow and thrive. We have in Canada today something over a million enterprises ranging, 1 suppose, from momma and poppa milk stores right up to highly technologically oriented businesses with millions of dollars invested, which turn over millions of dollars a year. Of these some one million enterprises there are some 350,000 incorporated small businesses, accounting for over 65 per cent of the work force of this country.
Since my recent elevation to the post of Minister of State (Small Business) 1 have been studying the question of what it is that small businesses want and what governments can do to respond to those wants. Naturally, any of us who have been associated with small businesses, operated small businesses or known people who have, recognize that what they really want is to run profitably and to earn a comfortable living for their proprietors so that they do not have to work night and day seven days a week, and possibly so that they can transfer such businesses ultimately to members of the family who might have worked with the proprietors.


Stan Darling: They need less government red tape.


Anthony Chisholm Abbott: I would like to come to that. The essential character of small business, I think, is the fact that it normally is under the control and operation of a single human being. That man or woman may be the proprietor of a very small business or of a larger one, but that person faces the same basic problem. Every morning he or she has to get up, go to work, and try to keep the business going. Frequently some of those people in the community may be regarded, deservedly, as people of real substance and success, but on a day-to-day basis they are facing the possibility that their businesses will be submerged by problems and that they will not be able to meet the challenges of every day.
My hon. friend opposite said that we should eliminate some of the red tape. I sincerely share that view. 1 think that governments have inflicted in increasing volumes a heavy
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degree of paper work. Much of it has been the result of the voracious appetite for information which such organizations as Statistics Canada feel they must gain from the business community. Through the introduction recently of the CALURA amendments which I hope we can pass quickly, we can eliminate some 70,000 small firms from responding to questionnaires from Statistics Canada.
I am advised that some 25 per cent of the paper work burden emanates from Statistics Canada, whereas almost 75 per cent emanates from the normal paper work burdens imposed by governments through various agencies and departments such as the UIC and the Customs Tariff. There is a vast and complicated apparatus that makes up modern government. Too often there is an unchecked zeal on the part of governments at all levels and in all departments to arm themselves with the most complex possible forms and to impose them on the business community willy-nilly, whether they need them or not, and whether or not they have done analyses to see if there is an element of over-kill. If I can do anything, I want to attack this problem, though I have found that it is easier to make speeches than actually come to grips with this problem.


Stan Darling: Good for you.


Anthony Chisholm Abbott: However, I hope that we can find it possible to set up some sort of check by which new legislation and new departments will not create programs without first measuring the efficacy of what they are trying to do against the paper work they are proposing to impose on the community.


Some hon. Members:: Hear, hear!


Anthony Chisholm Abbott: I would like to see a greater willingness on the part of governments to look at the existing paper work burden and to demand of each of my colleagues that they ask their responsible officers to examine carefully the kind of burden that they feel is essential or necessary, and take away the necessity of the kind of material they know has become complex, irrelevant, and probably unnecessary for the carrying out of their responsibilities.
When one talks to businessmen one finds that a major problem which is always with them is the problem of money. There is no question that this is an equally difficult problem. It is perhaps even more difficult to meet than trying to lift the paper work burden. However, it is clear that Canadians are great savers. There are large pools of existing capital in this country. There are men and women who, presented with possibilities of attractive and potentially rewarding ventures, do want to get into the action, as the saying goes, and I think one of our problems is that we have not set up a satisfactory apparatus, a satisfactory governmental clearing house, incentives, a tax system or what have you, to encourage people to venture their capital in the kind of smaller businesses that create high levels of employment.
There are those who are already in business who are finding it increasingly difficult to stay in business. Statistics show that bankruptcies are some 35 per cent over what they were in the

November 8, 1977
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first six months of last year. This is true particularly in the building industry.
1 think we have to recognize that the working capital requirements and the cash flow problems of businesses are very critical, and I hope that in the weeks to come I will be able to talk to my colleague, the Minister of Finance, and encourage him to look at even more good works, beyond those he has been able to create for us through Bill C-l 1.
1 would like to spend a few moments talking about the actual contributions the Minister of Finance and his predecessor have been able to make to the small business community because 1 think that there are a number of aspects of the bill which go a long way to helping that sector.
The 5 per cent investment tax credit which was to have expired this year will be subject to a three-year exemption. Also, there is the concept of recognizing regional disparities by providing in some areas IVi per cent instead of 5 per cent, and 10 per cent in the Atlantic provinces and the Gaspe regions of Quebec.
In attempting to reduce the effects of inflation, all businesses, but particularly small businesses, face a cash flow problem, in part because of inflation. The tax system, to a certain extent, helps meet the problem in the area of capital equipment by special concessions such as fast write-offs and the investment tax credit. The proposal to allow a special deduction of 3 per cent of the cost of inventories will ease the cash flow problem by some $300 million annually.
The bill expands the $1,000 dividend and interest exemption to include capital gains. By introducing special rules for replacement of businesses and farm properties, and increasing the offset for capital losses, as well as guaranteeing a capital gains treatment on disposal of Canadian securities, businesses will be substantially assisted. 1 welcome them as being particularly helpful to the small business sector.
Of all the items in the bill of special value to small business are those measures to stimulate investment. These include the increase in the dividend tax credit from 33!6 per cent to 50 per cent beginning next year, the special inventory allowance of 3 per cent, and the extension of the investment tax credit.
The bill will also contribute to the small business sector by facilitating the expansion by Canadian-controlled private companies through joint ventures, business acquisitions, and plant replacement. Special provisions are contained for employee stock options and share purchase loans. These are designed to permit smaller companies to compete better in attracting managerial expertise. The Minister of Finance has further provided encouragement of funds for small business by the guarantee of capital gains treatment for investors and the special accommodation of provincial venture investment corporations.
These are steps taken by the minister and I know that they enjoy support from those opposite who have taken the trouble to acquaint themselves with these measures and their benefits.

I suppose I get even greater support for these measures from my friends opposite when I say this, and I know my colleague, the minister, would agree, that we must do more. I think as we go into this difficult year I want to try to convince my colleagues and other people in the community of the great importance of the creation of small business enterprises, particularly those of a high technology nature. I think it is clearly evidenced by the experience of the past that it is in these areas that enormous increases in employment can take place.
A study done in the United States some time ago contrasted the mature corporations, resource-oriented corporations, and high technology innovative corporations. For very heavy investment in the mature or resource based industries there was a very modest increase in hiring and employment. It showed what a dramatic effect can take place in a successful, innovative high technology type of company. Thousands were employed for a fraction of the investment in the other. 1 think the case can readily be made that the former minister of finance, given the circumstances he found himself in last spring and the circumstances his successor found himself in this fall, did the maximum possible to achieve the results we have.
I submit, Mr. Speaker, that we must look with new eyes, new sympathy, new enthusiasm on the small business sector. We must recognize that it is in this area that perhaps the greatest opportunities for the future and of Canada and its citizens lie.


Some hon. Members:: Hear, hear!


Walter David Baker: Mr. Speaker, 1 am honoured-I think I am honoured-to follow the Minister of State (Small Business) (Mr. Abbott) in his first speech in that portfolio. I want to congratulate him on ascending to the portfolio, but that really depends on which direction he was pointed at the outset, whether he is ascending or descending. The proof of the pudding will be his performance in the portfolio. That will best be judged by the small businessmen of Canada whom he is now equipped to serve, at least in terms of jurisdiction. I hope for his sake, but more for their sake, that they do not have a repeat by the minister of the unfortunate handling of the consumer and corporate affairs portfolio under his jurisdiction. I am thinking particularly of the competition policy which was so complicated, so out of touch that it had to be withdrawn and the department had to go back to the drawing board in order to deal with it again.


Anthony Chisholm Abbott: Mr. Speaker, on a point of order, 1 feel certain the hon. member would not want to mislead the House even unintentionally. I wonder if, in his very profound study of the competition bill-although I do not recall his being in the committee but he speaks of its great complexity-he was aware that the bill was introduced last year with the clearly announced purpose of withdrawing it after the session for the particular reason of enjoying the comments of the committee.
I hope it will re-introduced, but I just wanted to take issue with that.
November 8, 1977


Mr. Lambert (Edmonton West):: It was a dead duck from the time it started.


Walter David Baker: Mr. Speaker, I think the hon. member for Edmonton West (Mr. Lambert) put his finger on the issue. It may well have been initiated for that purpose. I do not want to make a great issue of it because we will deal with it as time goes on, and history will also deal with it. It was introduced very hurriedly shortly after the minister took the portfolio. It was condemned out of hand by most of the business community.
I make these remarks, Mr. Speaker, because there is no one in this House who does not wish the minister success in his new portfolio, not as a minister but in terms of the segment of the economy which he is going to serve. I think it is important at the outset that he does not mislead the House, even though 1 think he did it in good fun. He had to be doing it in good fun, otherwise it would be deliberately misleading the House to say that Canadians are smiling because the Minister of Finance (Mr. Chretien) is doing such a fine job. It may well be, as Canadians look upon this minister and the situation he inherited from another minister who is equally troubled in violent travail, that the facial expression he calls a smile is the result of a digestive upset when they contemplate the extent of the damage done to the economy.
It is not proper or right for the minister to say that other countries are in the same position. In his speech he relied heavily on the fact that the situation was equally confusing, difficult, and foreboding for the future of the United States as Canada, as if that were some solace to Canadians. More important, it is not in accordance with the facts, and the minister should know that.
In the United States there is less unemployment, less inflation, and twice the real growth rate of Canada. There is a trade surplus on current account in the United States compared to a trade deficit on current account in Canada. Not only do the words give no comfort to Canadians, they are not factual.
A minister embarking on his first speech should not delude himself. He should ask what small business wants. I can tell him some of the things I would like to see.
I talk to a lot of small businessmen in my constituency. They would like certain stability with respect to government policy, whether it is this minister's policy, that of the Minister of Finance, or of any other ministerial portfolio in the Government of Canada. They want to know there is a government in Ottawa which is concerned with small business. They want to know what is going to happen from one day to the next. The right hand should know what the left is doing, it has become painfully evident to me in the five years I have been here that this government does not know what it is doing.
The government's attack on problems is uncoordinated. Perhaps that is the reason why we find ourselves in this situation. Businessmen want a commitment from government.
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They want a simple, ordinary, everyday service that is also provided to those who are not in business, namely, the operation of the mails.
I know solicitors, accountants, and many others who depend upon the mail for business. Today they cannot rely on Her Majesty's mail for the purpose of affecting a contract in the legal sense. As a result, this important service to business is being by-passed. They would like something of that nature.
They would like some co-ordination between provincial and federal business development programs. There is not very much at the moment. It is developing, but we have a long way to go in that regard.
These people want to be assured that when parliament debates small loans legislation or the new Federal Business Development Bank, as we did some time ago, that those agencies of government answer the needs of small business. They do not today. Government policy with regard to business is not related to the small business sector. It may come to be that way, but it is not that way now.
The minister issues press statements and uses brave words with regard to what he hopes for small business. However, there has to be some meat put on that skeleton. The minister must deal with his colleagues, which he has indicated will take some time. They do not quite understand him. I can understand why. It is not because the minister will not speak about it but because of the nature of the ministry. The problems of small business in this country must be addressed.
We do nothing but give lip service to the importance of small business as a place of employment. We owe more to the small businessman and the thousands of people looking for jobs in that sector which provides 50 per cent of the employment capacity in Canada. We must do more for them than merely utter small words.
I am honoured to follow in this debate the hon. member for Prince Edward-Hastings (Mr. Hees) who, during his tenure of office as minister of trade and commerce, became the most energetic and productive member of any ministry in that period in that important portfolio.
What is left of our markets abroad? They have been affected in many ways by the policies of the government. What is left are the vestiges of those areas which were the beneficiaries of that hon. member's knowledge and ability.
I listened in absolute dismay to the speech by the hon. member for Halton (Mr. Philbrook). I heard him say that small business needs more breaks, and that there is too little commitment to investment in Canada. A Liberal member of parliament said that tonight in this House. He sits on the back bench of the Liberal party. He said we need better industrial relations, that there is too much squabbling. Of course he is right.
What initiative did the government bring forward in the last session with regard to labour relations and an improvement in relations between employers and employees? There were none. The hon. member for Halton is absolutely right.

November 8, 1977
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We have to find a better way than strikes. If there were a better way to deal with economic problems and problems between employers and employees, there is not a working man or woman in Canada who would not move in that direction, whether it be through labour courts, binding arbitration, or a host of other remedies that are available.
For the ten years that the government has been in power in Canada, more people have suffered from strikes. More have been engaged in strikes. This government sat on its butt and did absolutely nothing to meet with business and labour to find a way to bring the two sides together on some common ground. In that sense Ministers failed. They failed because they are tired, irritable, and more concerned about their own position than about those elements of society which cry out for some form of leadership. I am talking about the men and women who carry the lunch pails, the members of the work force in Canada. There is not a working person anywhere who wants to strike.
Government members have made great speeches about what they are going to do, about the great conferences they will hold and the seminars they will fund. However, we have a strike record in Canada that is second only to Italy. Of course, we need a better way.
The Liberal member for Halton pointed out that businessmen are worried about GATT. Of course they are worried about it. What is the position of this government? Is it to go out in the world as a Boy Scout and fight for absolute free trade? What is it going to do for the shoe manufacturer or the textile worker? What is its position with respect to GATT?
The Minister of Industry, Trade and Commerce (Mr. Horner) says one thing, the Minister of Finance says another, and the Prime Minister (Mr. Trudeau), like a philosopher king, presides over that kind of disorder. Businessmen in Canada are asking the government where they stand. They want to know what position the government is taking in the world. They ask how the government is meeting opposition from other countries whose businesses and industries are subsidized or supported by government in a way that affects their basic ability to compete. These are some questions to which the ministry should address itself.
The hon. member for Halton talked about the necessity of long-range planning. I did not know that Liberal member is a closet socialist, but I guess he is. We in Canada would be satisfied with some short-range planning. At present we have no planning at all. Even some short-range policy-making would be of assistance.
Whether it is with regard to energy, industry or what have you, we talk about strategies. We do not talk about plans to develop. We move from band-aid to band-aid, while the country jolts from difficulty to difficulty. The government of the day, which asked for and received a mandate from the people in 1974, produced this so-called mini-budget, and now Bill C-ll. It is inadequate to meet the difficulties that face the country.

The hon. member went on to talk about science and technology. We in Canada have really stripped ourselves bare. The science and research community in Canada do not really ask for very much. They have asked the government to give them something so that we can develop our own technology rather than continue to be borrowers of technology as we have done over the past few years. They ask that the grants be stable so that they can count on them, because they must priorize their projects. There has been no stability in this very fundamental area.
No one knows me as a pessimist but let us get to what the Minister of State (Small Business) said about his Minister of Finance and his predecessor. By the end of 1977 Canadians will have experienced four years of inflation higher than 7 per cent, three years of unemployment at or higher than 7 per cent, four years of economic ruin below our 5 per cent growth potential, three years of trade deficits higher than $4 billion, and five years in which the federal budgetary deficit has increased. That is what we shall have experienced by the end of this year.
The hon. member for Halton said we wanted small, clean, streamlined government. I think Canadians would be prepared to settle for a government perhaps not quite so clean and perhaps not so streamlined, but reasonably responsive to the conditions we face today.
What does the minister offer us? After all the euphemisms used by speakers on the other side, all he can offer Canadians in 1978 is an inflation rate of 6 per cent, real economic growth of 5 per cent, and even larger federal debts. The Minister of Finance refuses to give us any forecasts, but that, in essence, is what we are offered.
We have a lot of things to concern ourselves about in this country in economic terms, but I am convinced, now, and I do not like to say it, that this government has proven itself so inept that we can expect nothing from it. It has lost its fighting spirit. The ministers have ceased to be responsive in a political sense to the needs of the country. They behave more like a board of directors, insensitive to the shareholders. That is the situation in which we find ourselves and, over-all, that is the economic situation in which we find ourselves.
I am concerned that we have young men and women in Canada crying out for work, men and women who have qualified themselves because we as a nation have said to them, "Go and get an education because the world will then be your oyster." We find them today up against the reality of a situation where their skills and learning cannot be used; they not only waste their lives but they cannot and do not make a contribution to their country.
I refuse to believe that this country, properly led, with the tremendous resources in human and material terms at its disposal, with an educational system that we tout as being the second-best in the world, sitting beside a large market, and with a tradition of exporting our goods, must look forward to the stagnation and gloom which the minister has predicted. If
November 8, 1977

the government continues to adopt the attitude that only it can do things, that its job is to do things for people, rather than create an atmosphere in which people can do things for themselves, then should it continue in office the Minister of Finance is absolutely right. That is precisely what we face-a bleak future.


Mr. Lumley:: He never said that!


Walter David Baker: The hon. member says he never said that. 1 think the parliamentary secretary had better re-read the minister's statement. He had better read between the lines of the statement the minister made in the House.


Some hon. Members:: Oh!


An hon. Member:: Between the lines, eh?


Walter David Baker: I hear interruptions from the Parliamentary Secretary to the Minister of Finance (Mr. Lumley), the hon. member for Niagara Falls (Mr. Young), and one of the Toronto members who is probably getting ready to speak. When they are given an opportunity they can make what comments they wish in the course of their remarks. If they go to their constituencies and ask what their constituents really think of this government in terms of economic leadership, or if they go to the small business community and ask what businessmen think of this government as the great helper of small business, I think they will find that the euphemisms about Canadians smiling because they have the Minister of Finance at the controls are not true at all.
1 have always found that when I am getting pretty close to the truth members on the other side begin to wake up and shift in their seats as they are doing now. I can understand them. If 1 were over on the other side tonight, if 1 had to answer for the economic policies of the government, 1 would feel the same sense of discomfort as members obviously do on the other side.
The government is not completely unresponsive, though, 1 must say that. I recall reading the defence the minister put out of the new government policy to change the rules in midstream with respect to the taxation of benefits from insurance policies, a proposal which created such a hue and cry among the 12 million life insurance policy holders in Canada. Those life insurance policies represent, in many respects, aside from the home, perhaps, the most important form of saving for the future in which a family engages.
When the ministry dealt with this matter it decided to withdraw the death tax. I could not believe it. 1 could not believe they were at last retreating from the position which successive governments had taken, namely, that of imposing a death tax, increasing death duties whether upon insurance policies or by way of estate duties or otherwise. But the government tried it. There was a hue and cry. The issue was raised in the House, and I am sure it was raised in the Liberal caucus. The government decided it would be wise to back off.
The Leader of the Opposition (Mr. Clark) wrote to the Minister of Finance on September 21, 1977, putting forward the position of the official opposition with respect to the
Income Tax
matter. As a result, the government decided to withdraw, pending further study, the proposals which would have made taxable a portion of the investment income from certain life insurance policies realized on death. The remaining proposals, announced in the minister's statement, relate to the taxation of policy holders other than on the death of the insured, and these are now included in the measure which we are being asked to pass. What they have done with respect to the 12 million life insurance policy holders in Canada is this: they have changed in midstream the rules with respect to their rights and benefits in respect to these policies. The government has brought in a new form of taxation.
The hon. member for Parry Sound-Muskoka (Mr. Darling), who is experienced in the field of insurance, indicated last night what it means to the average person who may decide to use proceeds from an insurance policy to finance a business or suchlike. For years and years members of the Canadian public who were holders of insurance policies have had certain rights. The government has now decided, without notice, to take those rights and benefits away from them. If a policy holder takes a loan on his policy and then has to pay a capital gains tax on that loan, if he then pays the loan back he does not regain the capital gains tax paid. In addition, he cannot use the interest charged by the company as a deduction against his income tax when that loan is used for financial purposes. For some reason or other, a man who takes a loan from an insurance company rather than a bank loses that deduction. This means that policy holders will have to go to the bank to borrow money, using the policy as collateral. It means, in effect, that policy holders will pay higher rates of interest at the bank, losing their advantageous interest rate from the insurance company.
The hon. member for Parry Sound-Muskoka put it very well last night. He said that policy holders with long standing policies could borrow money against their policies at a rate not exceeding 7 per cent, whereas if they went to the bank today they would have to pay 12 per cent. The government should think about this. Liberal members do not speak up in the House, but they should certainly raise this matter in caucus.


An hon. Member:: We do speak up in our caucus.


Walter David Baker: 1 am glad to hear that. If the hon. member will continue to do it, perhaps the government will change its position. We have been asking the government, year after year, to consider the urgent need to ease the great burden on Canadian taxpayers so far as residential taxes are concerned. They are not allowed to deduct at least part of these taxes, and this creates a kind of double taxation. Not only are taxpayers taxed heavily, as 1 have said, but they are the victims of double taxation.
it is my view, which I believe is shared by many people in this country, that those who dwell in owner-occupied homes, and tenants of rooming houses and apartment houses, deserve favourable consideration in this regard on the part of the Minister of Finance. 1 thought that when the minister brought

November 8, 1977
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forward his mini-budget he would have thought of these people, but he did not. The federal government has a stake in the provision of adequate housing for its citizens, the creation of incentives to increase employment, and the lending of money to municipalities which must provide many services to their residents. Since federal government involvement in our cities is limited by the constitution, provincial governments are mostly responsible for land use planning, regional economic planning, and education.
In Canada, use of federal taxation power lays into the hands of the federal government an opportunity to help the property owner. As I have said, the person who pays property taxes in effect pays a double tax. The hard earned money with which Canadians pay their property taxes has already been taxed to death by the provincial and federal governments, not to mention the municipal governments. Many tax experts have described municipal residential taxes as inequitable and regressive, and I rather think they are right. They bear heavily on those who can least afford them.
At the present time property taxes paid by businessmen are deductible. Property taxes paid by apartment owners are deductible. Property taxes on single family homes rented to tenants are also deductible by the owners. Furthermore, an apartment building owner can take advantage of the corporate tax law and deduct his operating expenses, whereas dwellers in owner-occupied homes, tenants in boarding houses and apartment buildings, do not get any such relief in computing their federal income tax.
Not only are cities plagued with rising costs to meet the demands for more services, increased welfare payments and public works to provide jobs, but the ordinary citizen has been hard pressed with rising taxes at the federal, provincial, and especially the municipal level.
I have been quoting Hansard for February 26, 1971, Mr. Speaker, a proposition advanced by the hon. member for Parkdale (Mr. Haidasz). This is a proposition which has been supported in this House by Progressive Conservative members. Again in 1973 I joined in the debate and asked the government if it would consider this form of tax relief-because that is what is needed. To date, Mr. Speaker, even in what has been described as the mini-budget, the government has failed to act. It has failed to grant this tax relief to a segment of society for whom relief should be granted in order to assist in stimulating Canada's construction industry. I cannot understand why the government has refused this request.
What has the government done to assist in this matter? It has announced a $350 grant in Ontario, I think $500 in other parts of Canada, to upgrade insulation in houses. It has told Canadians to insulate their homes and has offered them $350. But what it has forgotten to tell Canadians, though it did put it in small print, is that they are going to be taxed on that grant. The grant becomes part of their taxable incomes.


Mr. Gauthier (Ottawa-Vanier):: What is wrong with that?


Walter David Baker: More than that, the assessment provisions are such that every time a person spends $350

on his house to improve it he is reassessed. When I improve my property the assessor comes around and raises my municipal taxes.


Jean-Robert Gauthier: That is a provincal matter, not federal.


Walter David Baker: I do not care. It makes no difference at all. I am saying that here is an opportunity for the federal government of which it has not taken advantage to grant relief to these people. If the hon. member for Ottawa-Vanier (Mr. Gauthier), who has just roused himself from his sleep, cannot understand that, then I do not think there is very much hope for him.
That is the situation, Mr. Speaker. There are a host of other areas where the government has taken this kind of midstream approach. Is it any wonder that I said at the outset of my speech, through you to the Minister of State (Small Business) that what Canadian businessmen want in order to provide jobs is a better business and investment climate. Part of this climate is stability. But the business communities and other communities in Canada who depend upon the government for leadership do not have confidence that there is stability in government. In fact what is happening is that Canadians in all walks of life are looking at the government and asking themselves: by what right can it be said that it still has a mandate to lead?
The Minister of State for Federal-Provincial Relations (Mr. Lalonde) announced the other day that he had come to the realization that the key to saving Canada was a sound economic climate. Yet when the government had an opportunity, at the beginning of this session, to bring in a budget, what did it do? It brought in a band-aid, instead of looking to the structures of our economic society to see where they could be changed, improved, and enhanced. We had this government giving with one hand and taking away with another. There is not a member on the other side of the House of Commons who is not ashamed of what the Minister of Finance did in this House of Commons.
The government has indicated that it wants this taxation bill passed quickly. It is important for members to know, and for the country to know, that we are not just debating the ministerial statement made a few nights ago in the House of Commons. We are only on the second day of the bill arising out of that. We are debating the budget of March 31, 1977, which announced all kinds of legislation that the government never saw fit to bring in, even though parliament was sitting for most of the summer.
When ministers stand in their places and state that members of parliament, who have been denied an opportunity for a general discussion of the government's economic program which a budget would allow, are under an obligation to pass quickly this piece of legislation, which is actually half a loaf, then I think the government had better think twice. Members of parliament were denied the rights and privileges of a budget
November 8, 1977

debate, and that is well known in the country. They were legally denied it, but slickly or politically denied it. Members of parliament are entitled to the opportunity for comment on the economic posture of the country and the government as it affects their constituencies.
It is our intention to use this debate to examine, hopefully for the benefit of the minister and hopefully for the benefit of the economic growth and welfare of the country, what Bili C-ll means; what the government's programs mean in terms of the country; and how they have failed. This is in the hope that the government will change its mind and realize that granting only three of the matters raised by Her Majesty's Loyal Opposition, and not the six major items proposed, is not satisfactory to us, nor is it satisfactory to the country, and I suspect it is not satisfactory to a good number of government backbenchers.
I am glad the Parliamentary Secretary to the President of the Privy Council (Mr. Pinard) is present in the Chamber. Perhaps he will understand the course this debate is taking. While we would not for one moment put any unnecessary impediment in the way of the passage of the bill, it is our intention to allow parliament the opportunity to debate this bill fully.
I am delighted that some Liberal members are standing up and debating this bill as well and are, indeed, criticizing the government. I believe the government is worthy of criticism.
1 thought 1 should make that point clear, and 1 want to thank my friends for the attention they have given to my very short speech tonight.


Some hon. Members:: Hear, hear!


Edward C. Lumley: Mr. Speaker, I rise on a point of order. I wonder if the hon. member for Grenville-Carleton (Mr. Baker) would permit a question in his time remaining?


The Acting Speaker (Mr. Turner):: Order, please. Due to the fact that the hon. member's allotted time has expired, I have to ask for the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Edward C. Lumley: Mr. Speaker, when the hon. Leader of the Official Opposition (Mr. Clark) wrote his letter to the Minister of Linance (Mr. Chretien) regarding the death benefit tax, did he take into consideration that the real beneficiaries of that proposal would be the low and middle income people and it would be an expense to the high income people?


Walter David Baker: Mr. Speaker, 1 am sure the Parliamentary Secretary to the Minister of Linance (Mr. Lumley) has seen the letter which the Leader of the Official Opposition (Mr. Clark) sent to the Minister of Linance (Mr. Chretien). I am sure the Leader of the Official Opposition took into consideration all of the ramifications which flowed from the original proposal of the government. The proposal
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was admitted by the government to be so silly that it found itself bound to withdraw a third of the proposal put forward.
I hope the government, in the course of committee hearings and the committee of the whole on this taxation bill, will consider looking at the insurance provisions and withdrawing the balance of them. In terms of revenue raising for the government, they mean nothing; but in terms of 12 million Canadians who rely on their insurance policies as a reasonable way to create investment capital and to borrow funds which can be used for legitimate purposes, the proposals really damage Canadians from that point of view.
I hope the government will consider those things. That is precisely the reason why the hon. Leader of the Official Opposition wrote the Minister of Linance.


Yvon Pinard: Mr. Speaker, with consent of the House, would the hon. House leader of the opposition allow me a question?


The Acting Speaker (Mr. Turner):: The hon. member's allotted time has expired, and the hon. member for Waterloo-Cambridge (Mr. Saltsman) wants to speak tonight.


Mr. Max Saltsman (Waterloo-Cambridge):: Mr. Speaker, as the previous hon. member for York South used to say in opening up his remarks, with the greatest respect to the two previous speakers, and with the utmost humility and deference, I think it is time for an expert to wade into this debate.


Some hon. Members:: Hear, hear!


Max Saltsman: One of the problems with formulating a policy for small business in this country is that the policy inevitably gets formulated by people with outstanding qualities in the field of law who have never met a payroll.
Having listened to the two very distinguished hon. members who preceded me, the hon. Minister of State (Small Business) (Mr. Abbott) and the hon. member for Grenville-Carleton (Mr. Baker), it is no wonder that small business is in trouble.
1 have some qualifications in this area, and therefore 1 feel I should say something about the state of small business and who are the real friends of small business.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Max Saltsman: I see hon. members opposite are anticipating the truth which I propose to place before the House. I am delighted to see their powers of perception are as sharp as they are. There is no doubt in my mind the best friends small business ever had were the socialists of Canada.


Some hon. Members:: Hear, hear!

November 8, 1977
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Max Saltsman: Also it is true that this is not always recognized by small business. I have to admit to that. I sometimes wonder why that is. I can only come to the conclusion, while the training of law may not give people experience in small business, it certainly gives them the oratorical qualities of persuasion and illusion.
We have heard great flag-waving speeches about free enterprise, how to go about doing things for small business, and how small business is the backbone of the country. Yet if small businesses were to listen to the kind of advice which comes from both these advisors, they would continue to be in the difficulty they are in now. I want to go beyond simply making this assertion and try to demonstrate some of the things I am saying.
The Minister of State (Small Business) said that the big problem small businesses face is that they have to fill out too many government forms, and as a way of saving small businesses he is going to make sure they do not have to fill out as many forms. If that were all that was necessary to save small businesses, the solution would be very simple; you would simply cancel all forms, and everybody would be prosperous. Surely the patent falsehood of that kind of proposition is clear.
The prescription of the hon. member for Grenville-Carleton does not strike me as being any more appetizing. His solution is that we have to do something about the Post Office. He says that the real problem of small business in this country is the way the Post Office is being run, and if only we could improve the Post Office, everything would be all right. I presume the bills would all go out a little faster and people would pay a little faster, if they have the money with which to pay. Unfortunately this is the kind of advice and speeches small businesses hear at annual conventions and chamber of commerce meetings, and this is the kind of thing they start to believe in, to their own detriment.
Small businesses are willing to pay $2 and $3 to couriers to deliver letters. Yet they are not willing to give the Post Office two cents more in order to get adequate postal service. They pay 12 cents to send a letter, and they complain. They compare a 12-cent letter with service for which they are paying a courier $3. If they pay the Post Office two or three cents more, 15 cents a letter, they could get better service than any courier service could provide. But that is not a government enterprise, and one must not have a successful government enterprise!
Neither the Liberals nor the official opposition want a successful government enterprise because that would give the lie to the cry that private enterprise does everything better. Yet whenever a bill comes into this House-and I have been somewhat critical of my own party in this regard-to increase postal rates, and despite the plea of the Postmaster General (Mr. Blais), who says that virtually all mail that moves in Canada is business mail and who asks for two or three cents more, the official opposition vote against it. Then they have

the nerve to say, "If only we could improve postal service, small business would be all right."


Sinclair McKnight Stevens: Hear, hear!


Max Saltsman: I see that the distinguished hon. member for York-Simcoe (Mr. Stevens) agrees that that is the way to solve the small business problem in Canada. On the one hand we have a government which says that the solution to small business problems is to get rid of forms. On the other hand, the official opposition says that the real way to make small business prosperous is to improve the Post Office. How simple these problems are, and how simple are their solutions! There are no simple solutions.
I started off by saying that the best friend the small businessman has, or ever had, in this country are the socialists, the people who are members of the NDP or who were members of the CCF before us. I have been involved in small business, as have others in the House-


Sinclair McKnight Stevens: Mr. Speaker, I wonder if the hon. member for Waterloo-Cambridge (Mr. Saltsman) would be willing to accept a question.


Max Saltsman: I am always willing to accept a question from my hon. friend, and if he feels that his question cannot wait until the end of my speech and if he wants so terribly to put it at this time, I would be very glad to answer it.


Sinclair McKnight Stevens: Would the hon. member indicate why the Post Office was able to operate at a marginal profit in 1970 when postage rates were 50 per cent less than they are today, yet the Post Office now runs up a S700 million deficit with twice the postal rates?


Leslie Gordon Benjamin: Other rates have gone up more than twice.


Max Saltsman: I do not know exactly, but perhaps if the hon. member would help me out in my answer, he could explain why I was able to buy coffee for $1.25 at that time and I now have to pay $7.


J. Michael Forrestall: You don't pay $7 for it. Don't exaggerate.


Max Saltsman: I want only to hint at this because I am not certain, but it seems to me that since that period of time there was a little thing called inflation, and while I do not use this as any justification, I feel quite confident about it. I get somewhat sick and tired of people running down our government services. We must consider the problems in the Post Office. We must consider the problem of logistics in moving quantities of mail.
There is business mail, junk mail, dunning letters, credit cards and other very important stuff. What can you buy for 12 cents? Can you send a letter from Vancouver to Halifax for that kind of money and then say that the Post Office is a terrible institution because it does not always deliver the mail on time? The mail should be delivered on time, but it is not going to be delivered on time until we stop running down our
November 8, 1977

Post Office and start giving it more money, and perhaps paying the employees more money.


Sinclair McKnight Stevens: More money?


Max Saltsman: That's right. We must stop subsidizing junk mail, newspapers, and everything under the sun, because when the Post Office shut down during the last strike, as it turned out it was not the average citizen who called me telling me we must get the Post Office going again; the businessmen of my community were the ones who suddenly discovered that without the Post Office they could not even survive. Yet they are the ones who have done the most toward destroying the Post Office under the guise that it is a government operation and not free enterprise. They are willing to pay free enterprise ten or 15 times as much as they pay the Post Office for almost identical service.
However, that is an aside. 1 simply use it as an example to show how people get caught up in simplistic solutions which really do not relate to the problems.
Let me talk about the situation in Sudbury. Again the assumption is that you must stimulate small business in some direct way and that that is the answer. The truth of the matter is that while small businesses deserve to be helped, as do other elements of society, small businesses cannot be prosperous when there are almost a million people unemployed. You do not set out just to save small businesses; you set out to do something about the economy and to get people back to work, because if people are not working small businesses will not be prosperous, no matter what this government does and no matter what the official opposition might do if it were the government.
Let us take a look at the Sudbury situation where 1NCO laid off a number of people, at the Falconbridge lay-offs, and the lay-offs in other places. How are we going to help small business in Sudbury? The best way is to get those who are being laid off back to work. Otherwise, the whole downtown and most of the firms there are going to be in serious trouble. I am not talking just about retailers; 1 am talking about welders, electricians, maintenance people, and all the people who are associated with small companies which provide services. That is really what small businesses do; they provide specialized and highly personal services to some of the larger corporations. You cannot save small businesses in isolation. You cannot bring in policies for small businesses in isolation, without doing something about the economy generally.
Let us go back a number of years. It is unfortunate that small businesses have not seen the importance and value of what democratic socialists have done in this country. I remember years and years ago talking to many of my colleagues in small businesses, and they were complaining and unhappy because they had people working for them but their businesses were too small to have their own pension schemes. They knew that some of the loyal people who had been with them years and years would not have pensions, and one of the great things that saved them, and one of the great joys small employers experienced, was the beginning of the Canada Pension Plan.
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Sure, a large company can put in a pension scheme, but how does a small company do that? They have to depend on a government scheme in order to do something decent for their employees. Most small businessmen are decent people who want to do it. Old age pensions were the same. They could not make provision for them by paying the premiums the insurance companies wanted in order to provide a decent retirement pension. And what happens with the labour code and minimum wages is Gresham's law-the bad employer drives out the good employer. A decent employer welcomes labour codes and minimum wages because it means that his competitors have to be as decent as he is himself.
If you talk to small businessmen they complain about government interference, but ask a man who has seriously thought about it if he wants to go back to the days when he did not have old age pension, Canada Pension Plan, medical services and hospital insurance programs for his employees. Even with all the complaints about unemployment insurance, do they want to go back to a time when they laid a man off and he had to go on welfare rather than being able to collect unemployment insurance? It is the conventional wisdom to be critical of all these things as an imposition on small business, yet the intelligent, decent, small businessman would not do without them.
Let us look at unemployment insurance in another way. Aside from the personal benefits that accrue to the person being laid off, many small businessmen could not maintain a labour force without unemployment insurance. Very often unemployment insurance is a greater boon to the business than it is to the employees who are laid off.
If we take what is happening in the economy at the moment, this serious recession, the terrible mismanagement, the perversity of government policies, and if that $4 billion that is coming out of the unemployment insurance were not being pumped back into the economy, what would happen to small business? Suppose the unemployment insurance payments were not being made in the depressed areas of Canada where unemployment is reaching close to 16 and 17 per cent, you would have a wave of bankruptcies in small business. It is the only thing that is sustaining those areas at the moment, this terrible socialistic policy.
It is the conventional wisdom to be against these things. There are abuses in all systems; nothing is perfect. I would be the last to claim we should not be trying to improve these measures, but the truth of the matter, from my observation, is that were it not for the so-called socialist measures we would be undergoing a depression that would make that of the thirties look pale. The chief victims would be the small businessmen of Canada who depend on the immediate purchasing power of the people.
It seems to me that whether or not hon. members agree with my general statement, if you place the arguments that I am putting forward against the solutions being offered by the government side-let us get rid of forms and we would have prosperity, and then improve the Post Office according to the

November 8, 1977
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official opposition, as the second way of getting prosperity for small business-then there have to be questions about the judgment of such well intentioned spokesmen.
1 am not normally a believer in the Adam Smith, "invisible hand" theory except when I see the actions of this government. Then I am almost converted to it. Sometimes I suspect no hand on the rudder of the ship of state could have done as much damage as the perverse policies of this government have done in the kind of crisis we face today.
When I look at the Minister of Finance (Mr. Chretien), 1 am reluctant to be rough with him. He is a very decent chap. Everybody likes him. I am sure he means well. I feel for him as I felt for his predecessor. What a rotten thing to do to a nice guy, make him Minister of Finance and saddle him with the insanities of the preceding policies of that government, expecting him to put a good face on it. At the moment, he is carrying it off.
He is a new minister. There is a sort of will on the part of the public to want to believe that perhaps this man will be able to do something the others were not able to do. It has driven more than one minister into exile. One got out completely. The other decided that he needed to go back to his family. I do not blame him for that.
I do not know where this minister will go. He has turned down the leadership of the Quebec Liberals. After a few months in the office of Minister of Finance, being leader of the Quebec Liberals might look very attractive. In any event, we wish him well. We are not saying things about the minister with malice. We know these are difficult times, not only in Canada but in other countries of the western world. We do not want to say they and they alone did it.
What I can be critical about is not that a miracle has not taken place in that the old budget plus the new mini-budget are just perverse and will do no good. In fact they may do a lot of harm. Therefore, whether we pass this measure or not is of no concern to me. In fact I think the greatest mercy we could show the country would be to make sure it does not pass. However, it will pass. But it is not worth passing because it is dangerous and damaging.
What is disturbing is that this kind of realization is not sinking in. Every once in a while the minister comes upon a piece of truth. The other day he said we may be saving too much, and just left it hanging in the air. We are saving too much, but whose fault is it? It is the fault of the government.
Who brought in registered retirement plans, incentives for savings, depreciation allowances, and the 5 per cent forgiveness of one kind or another? Who is continuing this policy? These are policies designed to increase savings. However, the minister says we are saving too much. I agree. We are saving ourselves right into a depression.
Does the minister do anything about it? Is he doing anything about it through the budget? The people who receive the benefits of the registered retirement savings plans are not the

poor. It is the better off, middle class and upper class, who are getting the chief benefits.
Businesses have more savings than they need. They do not know what to do in terms of investment. Why not save? They cannot spend it. There is a limit to how much a person can eat, how many cars he can drive, and how many washing machines he can own. But those who need it have not got it. Even the tax saving being proposed is for people with taxable incomes.
What about those who do not have taxable incomes? This is the great dichotomy, the reason we cannot get out of this terrible situation. Those who do not need to spend any more are getting the benefits of savings. Those who have great needs and would spend if they had it, are getting no benefit at all.
Unless we get a redistribution of income from those who have the money to those who do not, so that there will be more spending as a result of these tax cuts, it will simply result in it being socked away in the bank. The banks cannot even get more of their money out.
What is the consequence? Who is going to invest? Why give business more money? In what will they invest? They are only using 80, 82 or 83 per cent of their plant capacity now.


An hon. Member:: Modernize.


Max Saltsman: We have modern plants. The problem is not modernization. The problem is, we do not have people to buy goods. It is the same problem that the world experienced to some extent following the second world war.
What we need, in blunt terms, is another Marshall Plan, or, rather, a Marshall Plan for our own poor and a Marshall Plan for the rest of the world. Western civilization has become satiated and self-centred, and unless we are prepared to redistribute income both to our own people and to other people in the world, Western civilization is in serious trouble. This does not affect Canada alone. Others are finding themselves in similar positions. Europeans are beginning to recognize this problem to a greater extent than we are doing, and they are already increasing foreign aid because they recognize that unless there is a redistribution of income they will find themselves in a serious situation.
The kind of budget we are being asked to pass as quickly as possible for the sake of the country does not even hint at these problems. Instead, we have a minister who, in a moment of truth and insight, recognized that we were saving too much but insisted on bringing in a budget which will increase the savings of business and of people who already have lots of money. Not only that, he reintroduced the Big Mac budget with its mayonnaise. I do not like mayonnaise on hamburger. Whether you put mayonnaise on hamburger or not, it is still hamburger, and unfortunately it is debilitating.


Stanley Howard Knowles: I never touch it!


Max Saltsman: That budget contained provision for $1.2 billion in savings and tax benefits for large business. This is at
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a time when the minister says we are saving too much. This is at a time when business does not want to invest because there is no point in investing.
We may have to go back to a national plan, something like that of Sir John A. Macdonald-a kind of fortress Canada. It is not something any of us like, but the economy has been so mismanaged that we may have to retreat before we can go out again as good citizens. Either that, or we must really go out as good citizens and start redistributing income. These are our choices. We can redistribute income in this country and take a chance, redistribute it to our own poor and to the world's poor, or retreat into fortress Canada and build up our own economy.
The foreign ownership chickens are coming home to roost. I listened with a good deal of interest to the speeches made by the hon. member for Halton (Mr. Philbrook) and the hon. member for Prince Edward-Hastings (Mr. Hees). They both made a number of points which were well worth noting. The hon. member for Halton raised the question of what happens as a consequence of foreign ownership.
The great benefits of foreign ownership are felt in the early stages. There is a lot of investment to begin with, but as soon as things get tough in the home country the gears are thrown into reverse. 1 am not condemning foreign ownership for taking this approach. That is the way things operate. We would do it ourselves. In fact we do have a Canadian company which is mining for nickel in Asia. Because miners are being laid off in this country, we say, "Stop mining for nickel in Asia and mine it in our own country because there is unemployment here." It is a natural tendency for any governing body to say in such circumstances, "Come home. Bring your jobs home.
It is natural in the United States, which is also faced with large scale unemployment, to say to its multinational corporations, "We do not want you investing your money around the world. That is fine so long as we do not need jobs here. But we do need jobs at home now and we want you to invest back here". This is precisely what is happening, Mr. Speaker. You see it happening with the Canada-U.S. auto agreement. In the initial stages Canada was reaping considerable benefit in terms of the number of jobs created in this country versus the number of automobiles purchased in this country. But in the last number of years the situation has been reversing itself and we are now running a serious deficit with the United States, if you include parts and finished cars.
If you look at the figures in the Auditor General's report showing what is happening to skilled jobs in the automobile industry, the same pattern emerges. The hon. member for Don Valley (Mr. Gillies) should be grateful for this: we are becoming the hewers of wood and drawers of water when it comes to making automobiles. The skilled jobs are going to the United States. We will be facing a serious situation unless something is done about it.
What we need is an industrial strategy. Today my leader issued a press release in which he said that we have to come to grips with an industrial strategy in the field of textiles, shoes.
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and the auto industry. If these limited free trade arrangements do not do the job, we will have to do more than that; we will have to protect our own industry. This is of particular importance in view of the delicate situation in Confederation. I use the word "delicate"; I presume I could use other words. Many people think that Quebec cannot do it alone. Many people labour under the illusion that the advantages of Confederation are so great that the people of Quebec would never try it on their own. The advantages of Confederation, when one looks at the state of the Canadian economy today, are not that great that the people of Quebec would say they dare not try something else.
I predict that within a short time you will see what is the strategy of the Parti Quebecois. They will opt for an economically buoyant Quebec. They will say to the people of Quebec, "The Canadian government in Ottawa, which is supposed to represent all of us, is unable to solve the economic problems of this country, particularly unemployment; we will show you that in Quebec, even with our limited authority, we will do better than the federal government." When they find they cannot do better and they fail in some areas because a province does not have the power that the federal government has, they will tell Quebecers, "If we had federal powers this is what we could do for you".
I do not want to see Quebec separate, and I do not think any member of the House does. I hesitate even to talk about it for fear the talk itself may hurt. The reason I do talk about it is that I think silence may hurt more. If we do not face the reality of the bankruptcy of federal economic policies, then we will lose this country. When the country is strong and not under stress, we can put up with all kinds of inane solutions to solve the problems of small business and of the economy. But under the circumstances we need far more from the government than the kind of perverse and misguided policies which it has introduced.
I would settle, and I am sure many of my colleagues would too, not for the government solving our problems overnight; not for the government saying it has pulled a great big lever and created 100,000 jobs. 1 would settle for less than that. 1 would settle for a statement from the government that it understood the serious difficulties that we are facing. I would settle for a statement from the government which indicated that it understood the serious difficulties it is facing; that it understands the policies it has been bringing in for the last number of years have been working to the disadvantage of the country, and it is now prepared to move in a new direction and say, "We will swallow a bit of our pride." I do not want it to make an abject confession.


Mr. Blackburn:: You are expecting too much.


Max Saltsman: Perhaps that is so, but that is the trouble with socialists; we are always too optimistic about human nature and we always think everyone is capable of being reformed, including Liberals. Perhaps that is too optimistic, though there are some good fellows over there.

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An hon. Member:: Two or three.


Max Saltsman: Yes. They just strayed a little bit. They are just "poor little lambs who have lost their way." I am sure my colleagues will joint in the chorus-"baa, baa, baa."
In conclusion, I appreciate the attention the House has given to my remarks, but this is a serious matter. It is not just playing games and bashing the government for the sake of bashing the government. We need some indication from that side of the House that it is prepared to change its policies and move in new directions.
As far as the benefits in this budget are concerned, I realize most people have already made arrangements to take the benefits; but somewhere down the line we must hear the government say, "We understand what the problem is. We understand we have to move in these new directions, as difficult as they may be". At least the government would then provide some encouragement.
Whether this budget is passed or not, as things now stand, for the ordinary person it would be of little consequence. It would do the government a great deal of good if it ran into a real debate on this issue. Also it would do the government good if, during the course of that debate, it had a chance to think better about what it has been doing, and it brought in positive rather than perverse policies.


Some hon. Members:: Hear, hear!


Mr. Jake Epp (Provencher):: Mr. Speaker, this is an important period of time in the history of our country, and especially in the matter of our economic future.
Despite the seriousness of the situation all Canadians face, I must admit there is a certain amount of humour which can creep into the debate and into this House of Commons. Possibly the position the hon. member for Waterloo-Cam-bridge (Mr. Saltsman) put forward, that the greatest friend of small business in this country had been the CCF, the NDP, or what he preferred to call democratic socialists, is not correct. If members of this House left the Chamber this evening and took a poll of small businessmen, asking them whether the NDP was their best friend, the results would be somewhat less than that mentioned by the hon. member. In fact the natural alliance of the NDP in Manitoba, for example, was not with small business.
It was the small businessmen and their employees who got together on October 11 and turfed out the provincial NDP government. It was the small business community which saw business investment was down in the province, and employment was down. It was the small businessmen, along with their employees, who wanted security and realized that the NDP government of Manitoba had gone beyond the pale of taxation and had gone into the area of confiscation. Not only did the NDP government of Manitoba do this, but I suggest the government opposite has as well.
It is a commonly held opinion by many Canadians that in fact this country has been governed by a socialist prime minister for the last number of years. The hon. member for

Waterloo-Cambridge says that the best friend of small business is a social democrat. I do not know how he can say that, because a social democrat has been the leader of this Liberal government. Liberals who have been members of that party for many years have left the party simply because they cannot accept the Liberal-left association that the Prime Minister (Mr. Trudeau) has allowed. Nor can they accept his economic policies.


Stanley Howard Knowles: Tell us about the hon. member for Crowfoot (Mr. Horner).


Arthur Jacob (Jake) Epp: The hon. member for Waterloo-Cambridge expressed some rather interesting economic theories. He slipped them in as if they were new, but I believe they go back to a man named Karl Marx and his writings, and hon. members know what he was the forerunner of, Mr. Speaker. I have to paraphrase the hon. member because I cannot get Hansard at this moment, but he said we should redistribute income on the basis that those who have money should distribute their income among those who do not. I believe if we look to the Union of Soviet Socialist Republics and their sixtieth anniversary, we will find that that is pretty close to what Karl Marx said, and that it is on that they have based their economy.
Despite the fact that the former minister of state for small business went to the USSR to see what he could learn about small business there-and I hope the present minister does not follow that example-the fact remains that I do not think a lot of small businesses can be found in the USSR, and the reason is very simple. The natural extension of the philosophy of the hon. member for Waterloo-Cambridge, of the NDP and of the socialist democratic Prime Minister of this country would simply destroy business.


Mr. Gillespie:: The Tory philosophy is take it from people who haven't got it and give it to people who have.


Arthur Jacob (Jake) Epp: The Minister of Energy, Mines and Resources (Mr. Gillespie) is trying to intervene. He has so many problems in his department he should stick with them and try to solve a few. He should not try to get into economics. He has made enough of a mess already.


Alastair William Gillespie: Why don't you go back to the philosophy you were talking about? Tell us what is the Tory philosophy.


Arthur Jacob (Jake) Epp: Bill C-ll is known to everyone as a mini-budget. In fact in question period the Minister of Finance (Mr. Chretien) said it was a budget. Very surreptitiously the government plays its games. It decided to have a mini-budget slipped into the throne speech debate. Therefore, as our House leader has already stated, we will use this debate to bring forward the position of this party on economic affairs and to show to Canadians once again that the great failure of this country is the economic leadership, or lack of it, that the government has displayed throughout its tenure of office. This government and this Prime Minister have been abject failures,
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and the unity question upon us today is upon us for one simple reason, and that is that the Prime Minister has literally destroyed the hopes of Canadians, especially those Canadians in depressed regions. For this reason the unity question is upon us to a greater degree than it would otherwise have been. Mr. Speaker, may I call it 10.30?
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Mr. Deputy Speaker:: Order, please. It being 10.30 p.m., pursuant to the order previously adopted, this Elouse stands adjourned until tomorrow at 2 p.m.
At 10.30 p.m. the House adjourned, without question put, pursuant to Special Order.

Wednesday, November 9, 1977